G.R. No.
74246 January 26, 1989 The Court agrees with the Solicitor General, who takes the same position as the petitioners, that such an
MARIWASA MANUFACTURING, INC., and ANGEL T. DAZO, petitioners,
vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of Ministry of Labor and
Employment judgment, and JOAQUIN A. DEQUILA, respondents.
NARVASA, J.:
There is no dispute about the facts in this case, and the only question for the Court is whether or not,
Article 282 of the Labor Code notwithstanding, probationary employment may validly be extended beyond
the prescribed six-month period by agreement of the employer and the employee.
Private respondent Joaquin A. Dequila (or Dequilla) was hired on probation by petitioner Mariwasa
Manufacturing, Inc. (hereafter, Mariwasa only) as a general utility worker on January 10, 1979. Upon the
expiration of the probationary period of six months, Dequila was informed by his employer that his work
had proved unsatisfactory and had failed to meet the required standards. To give him a chance to improve
his performance and qualify for regular employment, instead of dispensing with his service then and there,
with his written consent Mariwasa extended his probation period for another three months from July 10 to
October 9, 1979. His performance, however, did not improve and on that account Mariwasa terminated his
employment at the end of the extended period. 1
Dequila thereupon filed with the Ministry of Labor against Mariwasa and its Vice-President for
Administration, Angel T. Dazo, a complaint for illegal dismissal and violation of Presidential Decrees Nos.
928 and 1389.2 His complaint was dismissed after hearing by Director Francisco L. Estrella, Director of the
Ministry's National Capital Region, who ruled that the termination of Dequila's employment was in the
circumstances justified and rejected his money claims for insufficiency of evidence. 3 On appeal to the
Office of the Minister, however, said disposition was reversed. Respondent Deputy Minister Vicente
Leogardo, Jr. held that Dequila was already a regular employee at the time of his dismissal, therefore,
could not have been lawfully dismissed for failure to meet company standards as a probationary worker.
He was ordered reinstated to his former position without loss of seniority and with full back wages from the
date of his dismissal until actually reinstated. 4 This last order appears later to have been amended so as
to direct payment of Dequila's back wages from the date of his dismissal to December 20, 1982 only. 5
Mariwasa and Dazo, now petitioners, thereafter be sought this Court to review Hon. Leogardo's decision
on certiorari and prohibition, urging its reversal for having been rendered with grave abuse of discretion
and/or without or in excess of jurisdiction. 6
The petition, as well as the parties' comments subsequently submitted all underscore the fact that the
threshold issue here is, as first above stated, the legal one of whether employer and employee may by
agreement extend the probationary period of employment beyond the six months prescribed in Art. 282 of
the Labor Code, which provides that:
Art. 282. Probationary Employment. — Probationary employment shall not exceed six
(6) months from the date the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The services of an employee who
has been engaged on a probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his engagement. An employee
who is allowed to work after probationary period shall be considered a regular
employee.'
extension may lawfully be covenanted, notwithstanding the seemingly restrictive language of the cited
provision. Buiser vs. Leogardo, Jr . 7 recognized agreements stipulating longer probationary periods as
constituting lawful exceptions to the statutory prescription limiting such periods to six months, when it
upheld as valid an employment contract between an employer and two of its employees that provided for
an eigthteen-month probation period. This Court there held:
'It is petitioners' submission that probationary employment cannot exceed six (6)
months, the only exception being apprenticeship and learnership agreements as
provided in the Labor Code; that the Policy Instruction of the Minister of Labor and
Employment nor any agreement of the parties could prevail over this mandatory
requirement of the law; that this six months prescription of the Labor Code was
mandated to give further efficacy to the constitutionally-guaranteed security of tenure of
workers; and that the law does not allow any discretion on the part of the Minister of
Labor and Employment to extend the probationary period for a longer period except in
the aforecited instances. Finally, petitioners maintain that since they are regular
employees, they can only be removed or dismissed for any of the just and valid causes
enumerated under Article 283. of the Labor Code.
We reject petitioners' contentions. They have no basis in law.
Generally, the probationary period of employment is limited to six (6) months. The
exception to this general rule is when the parties to an employment contract may agree
otherwise, such as when the same is established by company policy or when the same
is required by the nature of work to be performed by the employee. In the latter case,
there is recognition of the exercise of managerial prerogatives in requiring a longer
period of probationary employment, such as in the present case where the probationary
period was set for eighteen (18) months, i.e. from May, 1980 to October, 1981 inclusive,
especially where the employee must learn a particular kind of work such as selling, or
when the job requires certain qualifications, skills experience or training.
xxx
We therefore, hold and rule that the probationary employment of petitioners set to
eighteen (18) months is legal and valid and that the Regional Director and the Deputy
Minister of Labor and Employment committed no abuse of discretion in ruling
accordingly.
The single difference between Buiser and the present case: that in the former involved an eighteen-month
probationary period stipulated in the original contract of employment, whereas the latter refers to an
extension agreed upon at or prior to the expiration of the statutory six-month period, is hardly such as to
warrant or even suggest a different ruling here. In both cases the parties' agreements in fact resulted in
extensions of the period prescribed by law. That in this case the inability of the probationer to make the
grade became apparent only at or about the end of the six-month period, hence an extension could not
have been pre-arranged as was done in Buiserassumes no adverse significance, given the lack, as
pointed out by the Solicitor General, of any indication that the extension to which Dequila gave his
agreement was a mere stratagem of petitioners to avoid the legal consequences of a probationary period
satisfactorily completed.
For aught that appears of record, the extension of Dequila's probation was ex gratia, an act of liberality on
the part of his employer affording him a second chance to make good after having initially failed to prove
his worth as an employee. Such an act cannot now unjustly be turned against said employer's account to
compel it to keep on its payroll one who could not perform according to its work standards. The law,
surely, was never meant to produce such an inequitable result.
By voluntarily agreeing to an extension of the probationary period, Dequila in effect waived any benefit
attaching to the completion of said period if he still failed to make the grade during the period of extension.
The Court finds nothing in the law which by any fair interpretation prohibits such a waiver. And no public
policy protecting the employee and the security of his tenure is served by prescribing voluntary
agreements which, by reasonably extending the period of probation, actually improve and further a
probationary employee's prospects of demonstrating his fitness for regular employment.
Having reached the foregoing conclusions, the Court finds it unnecessary to consider and pass upon the
additional issue raised in the Supplemental Petition 8 that the back wages adjudged in favor of private
respondent Dequila were erroneously computed.
WHEREFORE, the petition is granted. The orders of the public respondent complained of are reversed
and set aside. Private respondent's complaint against petitioners for illegal dismissal and violation of
Presidential Decrees 928 and 1389 is dismissed for lack of merit, without pronouncement as to costs.
G.R. No. 192571 April 22, 2014
ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA
T. YABUT-MISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz) Motion for Reconsideration dated August 23,
2013 of the Court's Decision dated July 23, 2013 (Decision).1
At the outset, there appears to be no substantial argument in the said motion sufficient for the Court to
depart from the pronouncements made in the initial ruling. But if only to address Akaraz's novel
assertions, and to so placate any doubt or misconception in the resolution of this case, the Court proceeds
to shed light on the matters indicated below.
A. Manner of review.
Alcaraz contends that the Court should not have conducted a re-weighing of evidence since a petition for
review on certiorari under Rule 45 of the Rules of Court (Rules) is limited to the review of questions of law.
She submits that since what was under review was a ruling of the Court of Appeals (CA) rendered via a
petition for certiorari under Rule 65 of the Rules, the Court should only determine whether or not the CA
properly determined that the National Labor Relations Commission (NLRC) committed a grave abuse of
discretion.
The assertion does not justify the reconsideration of the assailed Decision.
A careful perusal of the questioned Decision will reveal that the Court actually resolved the controversy
under the above-stated framework of analysis. Essentially, the Court found the CA to have committed an
error in holding that no grave abuse of discretion can be ascribed to the NLRC since the latter arbitrarily
disregarded the legal implication of the attendant circumstances in this case which should have simply
resulted in the finding that Alcaraz was apprised of the performance standards for her regularization and
hence, was properly a probationary employee. As the Court observed, an employee’s failure to perform
the duties and responsibilities which have been clearly made known to him constitutes a justifiable basis
for a probationary employee’s non-regularization. As detailed in the Decision, Alcaraz was well-apprised of
her duties and responsibilities as well as the probationary status of her employment:
(a) On June 27, 2004, [Abbott Laboratories, Philippines (Abbott)] caused the publication in a
major broadsheet newspaper of its need for a Regulatory Affairs Manager, indicating therein the
job description for as well as the duties and responsibilities attendant to the aforesaid position;
this prompted Alcaraz to submit her application to Abbott on October 4, 2004;
(b) In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz was to be employed on a
probationary status;
(c) On February 12, 2005, Alcaraz signed an employment contract which specifically stated, inter
alia, that she was to be placed on probation for a period of six (6) months beginning February 15,
2005 to August 14, 2005;
(d) On the day Alcaraz accepted Abbott’s employment offer, Bernardo sent her copies of Abbott’s
organizational structure and her job description through e-mail;
(e) Alcaraz was made to undergo a pre-employment orientation where [Allan G. Almazar]
informed her that she had to implement Abbott’s Code of Conduct and office policies on human
resources and finance and that she would be reporting directly to [Kelly Walsh];
(f) Alcaraz was also required to undergo a training program as part of her orientation;
(g) Alcaraz received copies of Abbott’s Code of Conduct and Performance Modules from [Maria
Olivia T. Yabut-Misa] who explained to her the procedure for evaluating the performance of
probationary employees; she was further notified that Abbott had only one evaluation system for
all of its employees; and
(h) Moreover, Alcaraz had previously worked for another pharmaceutical company and had
admitted to have an "extensive training and background" to acquire the necessary skills for her
job.2
Considering the foregoing incidents which were readily observable from the records, the Court reached
the conclusion that the NLRC committed grave abuse of discretion, viz.:
[I]n holding that Alcaraz was illegally dismissed due to her status as a regular and not a probationary
employee, the Court finds that the NLRC committed a grave abuse of discretion.
To elucidate, records show that the NLRC based its decision on the premise that Alcaraz’s receipt of her
job description and Abbott’s Code of Conduct and Performance Modules was not equivalent to being
actually informed of the performance standards upon which she should have been evaluated on. It,
however, overlooked the legal implication of the other attendant circumstances as detailed herein which
should have warranted a contrary finding that Alcaraz was indeed a probationary and not a regular
employee – more particularly the fact that she was well-aware of her duties and responsibilities and that
her failure to adequately perform the same would lead to her non-regularization and eventually, her
termination.3
Consequently, since the CA found that the NLRC did not commit grave abuse of discretion and denied the
certiorari petition before it, the reversal of its ruling was thus in order.
At this juncture, it bears exposition that while NLRC decisions are, by their nature, final and
executory4 and, hence, not subject to appellate review,5 the Court is not precluded from considering other
questions of law aside from the CA’s finding on the NLRC’s grave abuse of discretion. While the focal
point of analysis revolves on this issue, the Court may deal with ancillary issues – such as, in this case,
the question of how a probationary employee is deemed to have been informed of the standards of his
regularization – if only to determine if the concepts and principles of labor law were correctly applied or
misapplied by the NLRC in its decision. In other words, the Court’s analysis of the NLRC’s interpretation of
the environmental principles and concepts of labor law is not completely prohibited in – as it is
complementary to – a Rule 45 review of labor cases.
Finally, if only to put to rest Alcaraz’s misgivings on the manner in which this case was reviewed, it bears
pointing out that no "factual appellate review" was conducted by the Court in the Decision. Rather, the
Court proceeded to interpret the relevant rules on probationary employment as applied to settled factual
findings. Besides, even on the assumption that a scrutiny of facts was undertaken, the Court is not
altogether barred from conducting the same. This was explained in the case of Career Philippines
Shipmanagement, Inc. v. Serna6 wherein the Court held as follows:
Accordingly, we do not re-examine conflicting evidence, re-evaluate the credibility of witnesses, or
substitute the findings of fact of the NLRC, an administrative body that has expertise in its specialized
field. Nor do we substitute our "own judgment for that of the tribunal in determining where the weight of
evidence lies or what evidence is credible." The factual findings of the NLRC, when affirmed by the CA,
are generally conclusive on this Court.
Nevertheless, there are exceptional cases where we, in the exercise of our discretionary appellate
jurisdiction may be urged to look into factual issues raised in a Rule 45 petition. For instance, when the
petitioner persuasively alleges that there is insufficient or insubstantial evidence on record to support the
factual findings of the tribunal or court a quo, as Section 5, Rule 133 of the Rules of Court states in
express terms that in cases filed before administrative or quasi-judicial bodies, a fact may be deemed
established only if supported by substantial evidence.7(Emphasis supplied)
B. Standards for regularization;
conceptual underpinnings.
Alcaraz posits that, contrary to the Court’s Decision, one’s job description cannot by and of itself be
treated as a standard for regularization as a standard denotes a measure of quantity or quality. By way of
example, Alcaraz cites the case of a probationary salesperson and asks how does such employee
achieve regular status if he does not know how much he needs to sell to reach the same.
The argument is untenable.
First off, the Court must correct Alcaraz’s mistaken notion: it is not the probationary employee’s job
description but the adequate performance of his duties and responsibilities which constitutes the inherent
and implied standard for regularization. To echo the fundamental point of the Decision, if the probationary
employee had been fully apprised by his employer of these duties and responsibilities, then basic
knowledge and common sense dictate that he must adequately perform the same, else he fails to pass
the probationary trial and may therefore be subject to termination.8
The determination of "adequate performance" is not, in all cases, measurable by quantitative specification,
such as that of a sales quota in Alcaraz’s example. It is also hinged on the qualitative assessment of the
employee’s work; by its nature, this largely rests on the reasonable exercise of the employer’s
management prerogative. While in some instances the standards used in measuring the quality of work
may be conveyed – such as workers who construct tangible products which follow particular metrics, not
all standards of quality measurement may be reducible to hard figures or are readily articulable in specific
pre-engagement descriptions. A good example would be the case of probationary employees whose tasks
involve the application of discretion and intellect, such as – to name a few – lawyers, artists, and
journalists. In these kinds of occupation, the best that the employer can do at the time of engagement is to
inform the probationary employee of his duties and responsibilities and to orient him on how to properly
proceed with the same. The employer cannot bear out in exacting detail at the beginning of the
engagement what he deems as "quality work" especially since the probationary employee has yet to
submit the required output. In the ultimate analysis, the communication of performance standards should
be perceived within the context of the nature of the probationary employee’s duties and responsibilities.
The same logic applies to a probationary managerial employee who is tasked to supervise a particular
department, as Alcaraz in this case.1âwphi1 It is hardly possible for the employer, at the time of the
employee’s engagement, to map into technical indicators, or convey in precise detail the quality standards
by which the latter should effectively manage the department. Factors which gauge the ability of the
managerial employee to either deal with his subordinates (e.g., how to spur their performance, or
command respect and obedience from them), or to organize office policies, are hardly conveyable at the
outset of the engagement since the employee has yet to be immersed into the work itself. Given that a
managerial role essentially connotes an exercise of discretion, the quality of effective management can
only be determined through subsequent assessment. While at the time of engagement, reason dictates
that the employer can only inform the probationary managerial employee of his duties and responsibilities
as such and provide the allowable parameters for the same. Verily, as stated in the Decision, the
adequate performance of such duties and responsibilities is, by and of itself, an implied standard of
regularization.
In this relation, it bears mentioning that the performance standard contemplated by law should not, in all
cases, be contained in a specialized system of feedbacks or evaluation. The Court takes judicial notice of
the fact that not all employers, such as simple businesses or small-scale enterprises, have a sophisticated
form of human resource management, so much so that the adoption of technical indicators as utilized
through "comment cards" or "appraisal" tools should not be treated as a prerequisite for every case of
probationary engagement. In fact, even if a system of such kind is employed and the procedures for its
implementation are not followed, once an employer determines that the probationary employee fails to
meet the standards required for his regularization, the former is not precluded from dismissing the latter.
The rule is that when a valid cause for termination exists, the procedural infirmity attending the termination
only warrants the payment of nominal damages. This was the principle laid down in the landmark cases of
Agabon v. NLRC9 (Agabon) and Jaka Food Processing Corporation v. Pacot10 (Jaka). In the assailed
Decision, the Court actually extended the application of the Agabon and Jaka rulings to breaches of
company procedure, notwithstanding the employer’s compliance with the statutory requirements under the
Labor Code.11 Hence, although Abbott did not comply with its own termination procedure, its non-
compliance thereof would not detract from the finding that there subsists a valid cause to terminate
Alcaraz’s employment. Abbott, however, was penalized for its contractual breach and thereby ordered to
pay nominal damages.
12
As a final point, Alcaraz cannot take refuge in Aliling v. Feliciano (Aliling) since the same is not squarely
applicable to the case at bar. The employee in Aliling, a sales executive, was belatedly informed of his
quota requirement. Thus, considering the nature of his position, the fact that he was not informed of his
sales quota at the time of his engagement changed the complexion of his employment. Contrarily, the
nature of Alcaraz's duties and responsibilities as Regulatory Affairs Manager negates the application of the
foregoing. Records show that Alcaraz was terminated because she (a) did not manage her time
effectively; (b) failed to gain the trust of her staff and to build an effective rapport with them; (c) failed to
train her staff effectively; and (d) was not able to obtain the knowledge and ability to make sound
judgments on case processing and article review which were necessary for the proper performance of her
duties.13 Due to the nature and variety of these managerial functions, the best that Abbott could have
done, at the time of Alcaraz's engagement, was to inform her of her duties and responsibilities, the
adequate performance of which, to repeat, is an inherent and implied standard for regularization; this is
unlike the circumstance in Aliling where a quantitative regularization standard, in the term of a sales quota,
was readily articulable to the employee at the outset. Hence, since the reasonableness of Alcaraz's
assessment clearly appears from the records, her termination was justified. Bear in mind that the quantum
of proof which the employer must discharge is only substantial evidence which, as defined in case law,
means that amount of relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.14 To the Court's
mind, this threshold of evidence Abbott amply overcame in this case.
All told, the Court hereby denies the instant motion for reconsideration and thereby upholds the Decision
in the main case.
WHEREFORE, the motion for reconsideration dated August 23, 2013 of the Court's Decision dated July
23, 2013 in this case is hereby DENIED.
G.R. No. 164156 September 26, 2006
ABS-CBN BROADCASTING CORPORATION, petitioner,
vs.
MARLYN NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE
LERASAN, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP
No. 76582 and the Resolution denying the motion for reconsideration thereof. The CA affirmed the
Decision2 and Resolution3 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-
000762-2001 (RAB Case No. VII-10-1661-2001) which likewise affirmed, with modification, the decision of
the Labor Arbiter declaring the respondents Marlyn Nazareno, Merlou Gerzon, Jennifer Deiparine and
Josephine Lerasan as regular employees.
The Antecedents
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and
owns a network of television and radio stations, whose operations revolve around the broadcast,
transmission, and relay of telecommunication signals. It sells and deals in or otherwise utilizes the airtime
it generates from its radio and television operations. It has a franchise as a broadcasting company, and
was likewise issued a license and authority to operate by the National Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants
(PAs) on different dates. They were assigned at the news and public affairs, for various radio programs in
the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN
employees’ identification cards and were required to work for a minimum of eight hours a day, including
Sundays and holidays. They were made to perform the following tasks and duties:
a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of
respondent ABS-CBN;
b) Coordinate, arrange personalities for air interviews;
c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming
reports;
d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints;
e) Assist, anchor program interview, etc; and
f) Record, log clerical reports, man based control radio.4
Their respective working hours were as follows:
Name Time No. of Hours
1. Marlene Nazareno 4:30 A.M.-8:00 A.M. 7 ½
8:00 A.M.-12:00 noon
2. Jennifer Deiparine 4:30 A.M.-12:00M.N. (sic) 7 ½
3. Joy Sanchez 1:00 P.M.-10:00 P.M.(Sunday) 9 hrs.
9:00 A.M.-6:00 P.M. (WF) 9 hrs. 1. Complainants were engaged by respondent ABS-CBN as regular and full-time employees for a
continuous period of more than five (5) years with a monthly salary rate of Four Thousand (P4,000.00)
4. Merlou Gerzon 9:00 A.M.-6:00 P.M. 9 hrs.5 pesos beginning 1995 up until the filing of this complaint on November 20, 2000.

The PAs were under the control and supervision of Assistant Station Manager Dante J. Luzon, and News Machine copies of complainants’ ABS-CBN Employee’s Identification Card and salary vouchers are hereto
Manager Leo Lastimosa. attached as follows, thus:

On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a Collective I. Jennifer Deiparine:
Bargaining Agreement (CBA) to be effective during the period from December 11, 1996 to December 11,
1999. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were Exhibit "A" - ABS-CBN Employee’s Identification Card
not included to the CBA.6
Exhibit "B", - ABS-CBN Salary Voucher from Nov.
On July 20, 2000, petitioner, through Dante Luzon, issued a Memorandum informing the PAs that effective
August 1, 2000, they would be assigned to non-drama programs, and that the DYAB studio operations Exhibit "B-1" & 1999 to July 2000 at P4,000.00
would be handled by the studio technician. Thus, their revised schedule and other assignments would be
as follows:
Exhibit "B-2"
Monday – Saturday
Date employed: September 15, 1995
4:30 A.M. – 8:00 A.M. – Marlene Nazareno.
Length of service: 5 years & nine (9) months
Miss Nazareno will then be assigned at the Research Dept.
II. Merlou Gerzon - ABS-CBN Employee’s Identification Card
From 8:00 A.M. to 12:00
Exhibit "C"
4:30 P.M. – 12:00 MN – Jennifer Deiparine
Exhibit "D"
Sunday
Exhibit "D-1" &
5:00 A.M. – 1:00 P.M. – Jennifer Deiparine
Exhibit "D-2" - ABS-CBN Salary Voucher from March
1:00 P.M. – 10:00 P.M. – Joy Sanchez
1999 to January 2001 at P4,000.00
Respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo
Lastimosa. Date employed: September 1, 1995

On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Length of service: 5 years & 10 months
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and
13th Month Pay with Damages against the petitioner before the NLRC. The Labor Arbiter directed the III. Marlene Nazareno
parties to submit their respective position papers. Upon respondents’ failure to file their position papers
within the reglementary period, Labor Arbiter Jose G. Gutierrez issued an Order dated April 30, 2001, Exhibit "E" - ABS-CBN Employee’s Identification Card
dismissing the complaint without prejudice for lack of interest to pursue the case. Respondents received a
copy of the Order on May 16, 2001.7 Instead of re-filing their complaint with the NLRC within 10 days from
May 16, 2001, they filed, on June 11, 2001, an Earnest Motion to Refile Complaint with Motion to Admit Exhibit "E" - ABS-CBN Salary Voucher from Nov.
Position Paper and Motion to Submit Case For Resolution.8 The Labor Arbiter granted this motion in an
Order dated June 18, 2001, and forthwith admitted the position paper of the complainants. Respondents Exhibit "E-1" & 1999 to December 2000
made the following allegations:
Exhibit :E-2" 4. Unpaid service incentive leave benefits;

Date employed: April 17, 1996 5. Sick leave;

Length of service: 5 years and one (1) month 6. Holiday pay;

IV. Joy Sanchez Lerasan 7. Premium pay;

Exhibit "F" - ABS-CBN Employee’s Identification Card 8. Overtime pay;

Exhibit "F-1" - ABS-CBN Salary Voucher from Aug. 9. Night shift differential.

Exhibit "F-2" & 2000 to Jan. 2001 Complainants further pray of this Arbiter to declare them regular and permanent employees of respondent
ABS-CBN as a condition precedent for their admission into the existing union and collective bargaining
Exhibit "F-3" unit of respondent company where they may as such acquire or otherwise perform their obligations
thereto or enjoy the benefits due therefrom.
Exhibit "F-4" - Certification dated July 6, 2000
Complainants pray for such other reliefs as are just and equitable under the premises.10
Acknowledging regular status of
For its part, petitioner alleged in its position paper that the respondents were PAs who basically assist in
the conduct of a particular program ran by an anchor or talent. Among their duties include monitoring and
Complainant Joy Sanchez Lerasan receiving incoming calls from listeners and field reporters and calls of news sources; generally, they
perform leg work for the anchors during a program or a particular production. They are considered in the
Signed by ABS-CBN Administrative industry as "program employees" in that, as distinguished from regular or station employees, they are
basically engaged by the station for a particular or specific program broadcasted by the radio station.
Officer May Kima Hife Petitioner asserted that as PAs, the complainants were issued talent information sheets which are
updated from time to time, and are thus made the basis to determine the programs to which they shall
later be called on to assist. The program assignments of complainants were as follows:
Date employed: April 15, 1998
a. Complainant Nazareno assists in the programs:
Length of service: 3 yrs. and one (1) month9
1) Nagbagang Balita (early morning edition)
Respondents insisted that they belonged to a "work pool" from which petitioner chose persons to be given
specific assignments at its discretion, and were thus under its direct supervision and control regardless of
nomenclature. They prayed that judgment be rendered in their favor, thus: 2) Infor Hayupan

WHEREFORE, premises considered, this Honorable Arbiter is most respectfully prayed, to issue an order 3) Arangkada (morning edition)
compelling defendants to pay complainants the following:
4) Nagbagang Balita (mid-day edition)
1. One Hundred Thousand Pesos (P100,000.00) each
b. Complainant Deiparine assists in the programs:
and by way of moral damages;
1) Unzanith
2. Minimum wage differential;
2) Serbisyo de Arevalo
3. Thirteenth month pay differential;
3) Arangkada (evening edition)
4) Balitang K (local version) (d) Sayri ang Lungsod

5) Abante Subu (e) Haranahan11

6) Pangutana Lang Petitioner maintained that PAs, reporters, anchors and talents occasionally "sideline" for other programs
they produce, such as drama talents in other productions. As program employees, a PA’s engagement is
c. Complainant Gerzon assists in the program: coterminous with the completion of the program, and may be extended/renewed provided that the
program is on-going; a PA may also be assigned to new programs upon the cancellation of one program
and the commencement of another. As such program employees, their compensation is computed on a
1) On Mondays and Tuesdays: program basis, a fixed amount for performance services irrespective of the time consumed. At any rate,
petitioner claimed, as the payroll will show, respondents were paid all salaries and benefits due them
(a) Unzanith under the law.12

(b) Serbisyo de Arevalo
(c) Arangkada (evening edition)
(d) Balitang K (local version)
Petitioner also alleged that the Labor Arbiter had no jurisdiction to involve the CBA and interpret the same,
especially since respondents were not covered by the bargaining unit.
On July 30, 2001, the Labor Arbiter rendered judgment in favor of the respondents, and declared that they
were regular employees of petitioner; as such, they were awarded monetary benefits. The fallo of the
decision reads:

(e) Abante Sugbu

WHEREFORE, the foregoing premises considered, judgment is hereby rendered declaring the
complainants regular employees of the respondent ABS-CBN Broadcasting Corporation and directing the
(f) Pangutana Lang same respondent to pay complainants as follows:

2) On Thursdays I - Merlou A. Gerzon P12,025.00

Nagbagang Balita II - Marlyn Nazareno 12,025.00

3) On Saturdays III - Jennifer Deiparine 12,025.00

(a) Nagbagang Balita IV - Josephine Sanchez Lerazan 12,025.00

(b) Info Hayupan _________

(c) Arangkada (morning edition) P48,100.00

(d) Nagbagang Balita (mid-day edition) plus ten (10%) percent Attorney’s Fees or a TOTAL aggregate amount of PESOS: FIFTY TWO
THOUSAND NINE HUNDRED TEN (P52,910.00).
4) On Sundays:
Respondent Veneranda C. Sy is absolved from any liability.
(a) Siesta Serenata
SO ORDERED.13
(b) Sunday Chismisan
However, the Labor Arbiter did not award money benefits as provided in the CBA on his belief that he had
(c) Timbangan sa Hustisya no jurisdiction to interpret and apply the agreement, as the same was within the jurisdiction of the
Voluntary Arbitrator as provided in Article 261 of the Labor Code.
Respondents’ counsel received a copy of the decision on August 29, 2001. Respondent Nazareno
received her copy on August 27, 2001, while the other respondents received theirs on September 8, 2001.
Respondents signed and filed their Appeal Memorandum on September 18, 2001.
For its part, petitioner filed a motion for reconsideration, which the Labor Arbiter denied and considered as
an appeal, conformably with Section 5, Rule V, of the NLRC Rules of Procedure. Petitioner forthwith
appealed the decision to the NLRC, while respondents filed a partial appeal.
In its appeal, petitioner alleged the following:
1. That the Labor Arbiter erred in reviving or re-opening this case which had long been dismissed without
prejudice for more than thirty (30) calendar days;
2. That the Labor Arbiter erred in depriving the respondent of its Constitutional right to due process of law;
3. That the Labor Arbiter erred in denying respondent’s Motion for Reconsideration on an interlocutory
order on the ground that the same is a prohibited pleading;
4. That the Labor Arbiter erred when he ruled that the complainants are regular employees of the
respondent;
5. That the Labor Arbiter erred when he ruled that the complainants are entitled to 13th month pay, service
incentive leave pay and salary differential; and
6. That the Labor Arbiter erred when he ruled that complainants are entitled to attorney’s fees.14
On November 14, 2002, the NLRC rendered judgment modifying the decision of the Labor Arbiter. The
fallo of the decision reads:
WHEREFORE, premises considered, the decision of Labor Arbiter Jose G. Gutierrez dated 30 July 2001
is SET ASIDE and VACATED and a new one is entered ORDERING respondent ABS-CBN Broadcasting
Corporation, as follows:
1. To pay complainants of their wage differentials and other benefits arising from the CBA as of 30
September 2002 in the aggregate amount of Two Million Five Hundred, Sixty-One Thousand Nine
Hundred Forty-Eight Pesos and 22/100 (P2,561,948.22), broken down as follows:
a. Deiparine, Jennifer - P 716,113.49
b. Gerzon, Merlou - 716,113.49
c. Nazareno, Marlyn - 716,113.49
d. Lerazan, Josephine Sanchez - 413,607.75
Total - P 2,561,948.22
2. To deliver to the complainants Two Hundred Thirty-Three (233) sacks of rice as of 30 September 2002
representing their rice subsidy in the CBA, broken down as follows:
a. Deiparine, Jennifer - 60 Sacks
b. Gerzon, Merlou - 60 Sacks
c. Nazareno, Marlyn - 60 Sacks
d. Lerazan, Josephine Sanchez - 53 Sacks
Total 233 Sacks; and
3. To grant to the complainants all the benefits of the CBA after 30 September 2002.
SO ORDERED.15
The NLRC declared that the Labor Arbiter acted conformably with the Labor Code when it granted
respondents’ motion to refile the complaint and admit their position paper. Although respondents were not
parties to the CBA between petitioner and the ABS-CBN Rank-and-File Employees Union, the NLRC
nevertheless granted and computed respondents’ monetary benefits based on the 1999 CBA, which was
effective until September 2002. The NLRC also ruled that the Labor Arbiter had jurisdiction over the
complaint of respondents because they acted in their individual capacities and not as members of the
union. Their claim for monetary benefits was within the context of Article 217(6) of the Labor Code. The
validity of respondents’ claim does not depend upon the interpretation of the CBA.
The NLRC ruled that respondents were entitled to the benefits under the CBA because they were regular
employees who contributed to the profits of petitioner through their labor. The NLRC cited the ruling of this
Court in New Pacific Timber & Supply Company v. National Labor Relations Commission.16
Petitioner filed a motion for reconsideration, which the NLRC denied.
Petitioner thus filed a petition for certiorari under Rule 65 of the Rules of Court before the CA, raising both
procedural and substantive issues, as follows: (a) whether the NLRC acted without jurisdiction in admitting
the appeal of respondents; (b) whether the NLRC committed palpable error in scrutinizing the reopening
and revival of the complaint of respondents with the Labor Arbiter upon due notice despite the lapse of 10
days from their receipt of the July 30, 2001 Order of the Labor Arbiter; (c) whether respondents were
regular employees; (d) whether the NLRC acted without jurisdiction in entertaining and resolving the claim
of the respondents under the CBA instead of referring the same to the Voluntary Arbitrators as provided in
the CBA; and (e) whether the NLRC acted with grave abuse of discretion when it awarded monetary
benefits to respondents under the CBA although they are not members of the appropriate bargaining unit.
On February 10, 2004, the CA rendered judgment dismissing the petition. It held that the perfection of an
appeal shall be upon the expiration of the last day to appeal by all parties, should there be several parties
to a case. Since respondents received their copies of the decision on September 8, 2001 (except
respondent Nazareno who received her copy of the decision on August 27, 2001), they had until
September 18, 2001 within which to file their Appeal Memorandum. Moreover, the CA declared that
respondents’ failure to submit their position paper on time is not a ground to strike out the paper from the
records, much less dismiss a complaint.
Anent the substantive issues, the appellate court stated that respondents are not mere project employees,
but regular employees who perform tasks necessary and desirable in the usual trade and business of
petitioner and not just its project employees. Moreover, the CA added, the award of benefits accorded to
rank-and-file employees under the 1996-1999 CBA is a necessary consequence of the NLRC ruling that
respondents, as PAs, are regular employees.
Finding no merit in petitioner’s motion for reconsideration, the CA denied the same in a Resolution17 dated
June 16, 2004.
Petitioner thus filed the instant petition for review on certiorari and raises the following assignments of
error:
1. THE HONORABLE COURT OF APPEALS ACTED WITHOUT JURISDICTION AND GRAVELY ERRED
IN UPHOLDING THE NATIONAL LABOR RELATIONS COMMISSION NOTWITHSTANDING THE
PATENT NULLITY OF THE LATTER’S DECISION AND RESOLUTION.
2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE
NLRC FINDING RESPONDENTS REGULAR EMPLOYEES.
3. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE
NLRC AWARDING CBA BENEFITS TO RESPONDENTS.18
Considering that the assignments of error are interrelated, the Court shall resolve them simultaneously.
Petitioner asserts that the appellate court committed palpable and serious error of law when it affirmed the
rulings of the NLRC, and entertained respondents’ appeal from the decision of the Labor Arbiter despite
the admitted lapse of the reglementary period within which to perfect the same. Petitioner likewise
maintains that the 10-day period to appeal must be reckoned from receipt of a party’s counsel, not from
the time the party learns of the decision, that is, notice to counsel is notice to party and not the other way
around. Finally, petitioner argues that the reopening of a complaint which the Labor Arbiter has dismissed
without prejudice is a clear violation of Section 1, Rule V of the NLRC Rules; such order of dismissal had
already attained finality and can no longer be set aside.
Respondents, on the other hand, allege that their late appeal is a non-issue because it was petitioner’s
own timely appeal that empowered the NLRC to reopen the case. They assert that although the appeal
was filed 10 days late, it may still be given due course in the interest of substantial justice as an exception
to the general rule that the negligence of a counsel binds the client. On the issue of the late filing of their
position paper, they maintain that this is not a ground to strike it out from the records or dismiss the
complaint.
We find no merit in the petition.
We agree with petitioner’s contention that the perfection of an appeal within the statutory or reglementary
period is not only mandatory, but also jurisdictional; failure to do so renders the assailed decision final and
executory and deprives the appellate court or body of the legal authority to alter the final judgment, much
less entertain the appeal. However, this Court has time and again ruled that in exceptional cases, a
belated appeal may be given due course if greater injustice may occur if an appeal is not given due
course than if the reglementary period to appeal were strictly followed.19 The Court resorted to this
extraordinary measure even at the expense of sacrificing order and efficiency if only to serve the greater
principles of substantial justice and equity.20
In the case at bar, the NLRC did not commit a grave abuse of its discretion in giving Article 22321 of the
Labor Code a liberal application to prevent the miscarriage of justice. Technicality should not be allowed to
stand in the way of equitably and completely resolving the rights and obligations of the parties.22 We have
held in a catena of cases that technical rules are not binding in labor cases and are not to be applied
strictly if the result would be detrimental to the workingman.23
Admittedly, respondents failed to perfect their appeal from the decision of the Labor Arbiter within the
reglementary period therefor. However, petitioner perfected its appeal within the period, and since
petitioner had filed a timely appeal, the NLRC acquired jurisdiction over the case to give due course to its
appeal and render the decision of November 14, 2002. Case law is that the party who failed to appeal
from the decision of the Labor Arbiter to the NLRC can still participate in a separate appeal timely filed by
the adverse party as the situation is considered to be of greater benefit to both parties.24
We find no merit in petitioner’s contention that the Labor Arbiter abused his discretion when he admitted
respondents’ position paper which had been belatedly filed. It bears stressing that the Labor Arbiter is
mandated by law to use every reasonable means to ascertain the facts in each case speedily and
objectively, without technicalities of law or procedure, all in the interest of due process.25 Indeed, as
stressed by the appellate court, respondents’ failure to submit a position paper on time is not a ground for
striking out the paper from the records, much less for dismissing a complaint.26 Likewise, there is simply
no truth to petitioner’s assertion that it was denied due process when the Labor Arbiter admitted
respondents’ position paper without requiring it to file a comment before admitting said position paper. The
essence of due process in administrative proceedings is simply an opportunity to explain one’s side or an
opportunity to seek reconsideration of the action or ruling complained of. Obviously, there is nothing in the
records that would suggest that petitioner had absolute lack of opportunity to be heard.27 Petitioner had
the right to file a motion for reconsideration of the Labor Arbiter’s admission of respondents’ position
paper, and even file a Reply thereto. In fact, petitioner filed its position paper on April 2, 2001. It must be
stressed that Article 280 of the Labor Code was encoded in our statute books to hinder the circumvention
by unscrupulous employers of the employees’ right to security of tenure by indiscriminately and absolutely
ruling out all written and oral agreements inharmonious with the concept of regular employment defined
therein.28
We quote with approval the following pronouncement of the NLRC:
The complainants, on the other hand, contend that respondents assailed the Labor Arbiter’s order dated
18 June 2001 as violative of the NLRC Rules of Procedure and as such is violative of their right to
procedural due process. That while suggesting that an Order be instead issued by the Labor Arbiter for
complainants to refile this case, respondents impliedly submit that there is not any substantial damage or
prejudice upon the refiling, even so, respondents’ suggestion acknowledges complainants right to
prosecute this case, albeit with the burden of repeating the same procedure, thus, entailing additional
time, efforts, litigation cost and precious time for the Arbiter to repeat the same process twice.
Respondent’s suggestion, betrays its notion of prolonging, rather than promoting the early resolution of
the case.
Although the Labor Arbiter in his Order dated 18 June 2001 which revived and re-opened the dismissed
case without prejudice beyond the ten (10) day reglementary period had inadvertently failed to follow
Section 16, Rule V, Rules Procedure of the NLRC which states:
"A party may file a motion to revive or re-open a case dismissed without prejudice within ten (10) calendar
days from receipt of notice of the order dismissing the same; otherwise, his only remedy shall be to re-file
the case in the arbitration branch of origin."
the same is not a serious flaw that had prejudiced the respondents’ right to due process. The case can still
be refiled because it has not yet prescribed. Anyway, Article 221 of the Labor Code provides:
"In any proceedings before the Commission or any of the Labor Arbiters, the rules of evidence prevailing
in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the
Commission and its members and the Labor Arbiters shall use every and all reasonable means to
ascertain the facts in each case speedily and objectively and without regard to technicalities of law or
procedure, all in the interest of due process."
The admission by the Labor Arbiter of the complainants’ Position Paper and Supplemental Manifestation
which were belatedly filed just only shows that he acted within his discretion as he is enjoined by law to
use every reasonable means to ascertain the facts in each case speedily and objectively, without regard
to technicalities of law or procedure, all in the interest of due process. Indeed, the failure to submit a
position paper on time is not a ground for striking out the paper from the records, much less for dismissing
a complaint in the case of the complainant. (University of Immaculate Conception vs. UIC Teaching and
Non-Teaching Personnel Employees, G.R. No. 144702, July 31, 2001).
"In admitting the respondents’ position paper albeit late, the Labor Arbiter acted within her discretion. In
fact, she is enjoined by law to use every reasonable means to ascertain the facts in each case speedily
and objectively, without technicalities of law or procedure, all in the interest of due process". (Panlilio vs.
NLRC, 281 SCRA 53).
The respondents were given by the Labor Arbiter the opportunity to submit position paper. In fact, the
respondents had filed their position paper on 2 April 2001. What is material in the compliance of due
process is the fact that the parties are given the opportunities to submit position papers.
"Due process requirements are satisfied where the parties are given the opportunities to submit position
papers". (Laurence vs. NLRC, 205 SCRA 737).
Thus, the respondent was not deprived of its Constitutional right to due process of law.29
We reject, as barren of factual basis, petitioner’s contention that respondents are considered as its talents,
hence, not regular employees of the broadcasting company. Petitioner’s claim that the functions
performed by the respondents are not at all necessary, desirable, or even vital to its trade or business is
belied by the evidence on record.
Case law is that this Court has always accorded respect and finality to the findings of fact of the CA,
particularly if they coincide with those of the Labor Arbiter and the National Labor Relations Commission,
when supported by substantial evidence.30 The question of whether respondents are regular or project
employees or independent contractors is essentially factual in nature; nonetheless, the Court is
constrained to resolve it due to its tremendous effects to the legions of production assistants working in
the Philippine broadcasting industry.
We agree with respondents’ contention that where a person has rendered at least one year of service,
regardless of the nature of the activity performed, or where the work is continuous or intermittent, the
employment is considered regular as long as the activity exists, the reason being that a customary
appointment is not indispensable before one may be formally declared as having attained regular status.
Article 280 of the Labor Code provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT.—The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer except where the employment has
been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be performed
is seasonal in nature and the employment is for the duration of the season.
In Universal Robina Corporation v. Catapang,31 the Court reiterated the test in determining whether one is
a regular employee:
The primary standard, therefore, of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or business of the
employer. The test is whether the former is usually necessary or desirable in the usual business or trade
of the employer. The connection can be determined by considering the nature of work performed and its
relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been
performing the job for at least a year, even if the performance is not continuous and merely intermittent,
the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if
not indispensability of that activity to the business. Hence, the employment is considered regular, but only
with respect to such activity and while such activity exists.32
As elaborated by this Court in Magsalin v. National Organization of Working Men:33
Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to
ensure a "regular" worker’s security of tenure, however, can hardly be doubted. In determining whether an
employment should be considered regular or non-regular, the applicable test is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or trade of the
employer. The standard, supplied by the law itself, is whether the work undertaken is necessary or
desirable in the usual business or trade of the employer, a fact that can be assessed by looking into the
nature of the services rendered and its relation to the general scheme under which the business or trade
is pursued in the usual course. It is distinguished from a specific undertaking that is divorced from the
normal activities required in carrying on the particular business or trade. But, although the work to be
performed is only for a specific project or seasonal, where a person thus engaged has been performing
the job for at least one year, even if the performance is not continuous or is merely intermittent, the law
deems the repeated and continuing need for its performance as being sufficient to indicate the necessity
or desirability of that activity to the business or trade of the employer. The employment of such person is
also then deemed to be regular with respect to such activity and while such activity exists.34
Not considered regular employees are "project employees," the completion or termination of which is
more or less determinable at the time of employment, such as those employed in connection with a
particular construction project, and "seasonal employees" whose employment by its nature is only
desirable for a limited period of time. Even then, any employee who has rendered at least one year of
service, whether continuous or intermittent, is deemed regular with respect to the activity performed and
while such activity actually exists.
It is of no moment that petitioner hired respondents as "talents." The fact that respondents received pre-
agreed "talent fees" instead of salaries, that they did not observe the required office hours, and that they
were permitted to join other productions during their free time are not conclusive of the nature of their
employment. Respondents cannot be considered "talents" because they are not actors or actresses or
radio specialists or mere clerks or utility employees. They are regular employees who perform several
different duties under the control and direction of ABS-CBN executives and supervisors.
Thus, there are two kinds of regular employees under the law: (1) those engaged to perform activities
which are necessary or desirable in the usual business or trade of the employer; and (2) those casual
employees who have rendered at least one year of service, whether continuous or broken, with respect to
the activities in which they are employed.35
The law overrides such conditions which are prejudicial to the interest of the worker whose weak
bargaining situation necessitates the succor of the State. What determines whether a certain employment
is regular or otherwise is not the will or word of the employer, to which the worker oftentimes acquiesces,
much less the procedure of hiring the employee or the manner of paying the salary or the actual time
spent at work. It is the character of the activities performed in relation to the particular trade or business
taking into account all the circumstances, and in some cases the length of time of its performance and its
continued existence.36 It is obvious that one year after they were employed by petitioner, respondents
became regular employees by operation of law.37
Additionally, respondents cannot be considered as project or program employees because no evidence
was presented to show that the duration and scope of the project were determined or specified at the time
of their engagement. Under existing jurisprudence, project could refer to two distinguishable types of
activities. First, a project may refer to a particular job or undertaking that is within the regular or usual
business of the employer, but which is distinct and separate, and identifiable as such, from the other
undertakings of the company. Such job or undertaking begins and ends at determined or determinable
times. Second, the term project may also refer to a particular job or undertaking that is not within the
regular business of the employer. Such a job or undertaking must also be identifiably separate and distinct
from the ordinary or regular business operations of the employer. The job or undertaking also begins and
ends at determined or determinable times.38
The principal test is whether or not the project employees were assigned to carry out a specific project or
undertaking, the duration and scope of which were specified at the time the employees were engaged for
that project.39
In this case, it is undisputed that respondents had continuously performed the same activities for an
average of five years. Their assigned tasks are necessary or desirable in the usual business or trade of
the petitioner. The persisting need for their services is sufficient evidence of the necessity and
indispensability of such services to petitioner’s business or trade.40 While length of time may not be a sole
controlling test for project employment, it can be a strong factor to determine whether the employee was
hired for a specific undertaking or in fact tasked to perform functions which are vital, necessary and
indispensable to the usual trade or business of the employer.41 We note further that petitioner did not
report the termination of respondents’ employment in the particular "project" to the Department of Labor
and Employment Regional Office having jurisdiction over the workplace within 30 days following the date
of their separation from work, using the prescribed form on employees’ termination/
dismissals/suspensions.42
As gleaned from the records of this case, petitioner itself is not certain how to categorize respondents. In
its earlier pleadings, petitioner classified respondents as program employees, and in later pleadings,
independent contractors. Program employees, or project employees, are different from independent
contractors because in the case of the latter, no employer-employee relationship exists.
Petitioner’s reliance on the ruling of this Court in Sonza v. ABS-CBN Broadcasting Corporation43 is
misplaced. In that case, the Court explained why Jose Sonza, a well-known television and radio
personality, was an independent contractor and not a regular employee:
A. Selection and Engagement of Employee
ABS-CBN engaged SONZA’S services to co-host its television and radio programs because of SONZA’S
peculiar skills, talent and celebrity status. SONZA contends that the "discretion used by respondent in
specifically selecting and hiring complainant over other broadcasters of possibly similar experience and
qualification as complainant belies respondent’s claim of independent contractorship."
Independent contractors often present themselves to possess unique skills, expertise or talent to
distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of his
unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance
indicative, but not conclusive, of an independent contractual relationship. If SONZA did not possess such
unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with
SONZA but would have hired him through its personnel department just like any other employee.
In any event, the method of selecting and engaging SONZA does not conclusively determine his status.
We must consider all the circumstances of the relationship, with the control test being the most important
element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA
asserts that this mode of fee payment shows that he was an employee of ABS-CBN. SONZA also points
out that ABS-CBN granted him benefits and privileges "which he would not have enjoyed if he were truly
the subject of a valid job contract."
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If
SONZA were ABS-CBN’s employee, there would be no need for the parties to stipulate on benefits such
as "SSS, Medicare, x x x and 13th month pay which the law automatically incorporates into every
employer-employee contract. Whatever benefits SONZA enjoyed arose from contract and not because of
an employer-employee relationship.
SONZA’s talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of
the ordinary that they indicate more an independent contractual relationship rather than an employer-
employee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of
SONZA’S unique skills, talent and celebrity status not possessed by ordinary employees. Obviously,
SONZA acting alone possessed enough bargaining power to demand and receive such huge talent fees
for his services. The power to bargain talent fees way above the salary scales of ordinary employees is a
circumstance indicative, but not conclusive, of an independent contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as
an independent contractor. The parties expressly agreed on such mode of payment. Under the
Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee
accruing under the Agreement.44
In the case at bar, however, the employer-employee relationship between petitioner and respondents has
been proven.
First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status
was required from them because they were merely hired through petitioner’s personnel department just
like any ordinary employee.
Second. The so-called "talent fees" of respondents correspond to wages given as a result of an employer-
employee relationship. Respondents did not have the power to bargain for huge talent fees, a
circumstance negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and
respondents are highly dependent on the petitioner for continued work.
Fourth. The degree of control and supervision exercised by petitioner over respondents through its
supervisors negates the allegation that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular business of the employer
and when the worker, relative to the employer, does not furnish an independent business or professional
service, such work is a regular employment of such employee and not an independent contractor.45 The
Court will peruse beyond any such agreement to examine the facts that typify the parties’ actual
relationship.46
It follows then that respondents are entitled to the benefits provided for in the existing CBA between
petitioner and its rank-and-file employees. As regular employees, respondents are entitled to the benefits
granted to all other regular employees of petitioner under the CBA.47 We quote with approval the ruling of
the appellate court, that the reason why production assistants were excluded from the CBA is precisely
because they were erroneously classified and treated as project employees by petitioner:
x x x The award in favor of private respondents of the benefits accorded to rank-and-file employees of
ABS-CBN under the 1996-1999 CBA is a necessary consequence of public respondent’s ruling that
private respondents as production assistants of petitioner are regular employees. The monetary award is
not considered as claims involving the interpretation or implementation of the collective bargaining
agreement. The reason why production assistants were excluded from the said agreement is precisely
because they were classified and treated as project employees by petitioner.
As earlier stated, it is not the will or word of the employer which determines the nature of employment of
an employee but the nature of the activities performed by such employee in relation to the particular
business or trade of the employer. Considering that We have clearly found that private respondents are
regular employees of petitioner, their exclusion from the said CBA on the misplaced belief of the parties to
the said agreement that they are project employees, is therefore not proper. Finding said private
respondents as regular employees and not as mere project employees, they must be accorded the
benefits due under the said Collective Bargaining Agreement.
A collective bargaining agreement is a contract entered into by the union representing the employees and
the employer. However, even the non-member employees are entitled to the benefits of the contract. To
accord its benefits only to members of the union without any valid reason would constitute undue
discrimination against non-members. A collective bargaining agreement is binding on all employees of the
company. Therefore, whatever benefits are given to the other employees of ABS-CBN must likewise be
accorded to private respondents who were regular employees of petitioner.48
Besides, only talent-artists were excluded from the CBA and not production assistants who are regular
employees of the respondents. Moreover, under Article 1702 of the New Civil Code: "In case of doubt, all
labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the
laborer."
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The assailed Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 76582 are AFFIRMED. Costs against petitioner.
G.R. No. 122653 December 12, 1997
PURE FOODS CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, RODOLFO CORDOVA, VIOLETA CRUSIS, ET
AL., *respondents.
DAVIDE, JR., J.:
The crux of this petition for certiorari is the issue of whether employees hired for a definite period and
whose services are necessary and desirable in the usual business or trade of the employer are regular
employees.
The private respondents (numbering 906) were hired by petitioner Pure Foods Corporation to work for a
fixed period of five months at its tuna cannery plant in Tambler, General Santos City. After the expiration of
their respective contracts of employment in June and July 1991, their services were terminated. They
forthwith executed a "Release and Quitclaim" stating that they had no claim whatsoever against the
petitioner.
On 29 July 1991, the private respondents filed before the National Labor Relations Commission (NLRC)
Sub-Regional Arbitration Branch No. XI, General Santos City, a complaint for illegal dismissal against the
petitioner and its plant manager, Marciano Aganon. 1 This case was docketed as RAB-11-08-50284-91.
On 23 December 1992, Labor Arbiter Arturo P. Aponesto handed down a decision 2 dismissing the
complaint on the ground that the private respondents were mere contractual workers, and not regular
employees; hence, they could not avail of the law on security of tenure. The termination of their services
by reason of the expiration of their contracts of employment was, therefore, justified. He pointed out that
earlier he had dismissed a case entitled "Lakas ng Anak-Pawis-NOWM v. Pure Foods Corp." (Case No.
RAB-11-02-00088-88) because the complainants therein were not regular employees of Pure Foods, as
their contracts of employment were for a fixed period of five months. Moreover, in another case involving
the same contractual workers of Pure Foods (Case No. R-196-ROXI-MED-UR-55-89), then Secretary of
Labor Ruben Torres held, in a Resolution dated 30 April 1990, that the said contractual workers were not
regular employees.
The Labor Arbiter also observed that an order for private respondents' reinstatement would result in the
reemployment of more than 10,000 former contractual employees of the petitioner. Beside, by executing a
"Release and Quitclaim," the private respondents had waived and relinquished whatever right they might
have against the petitioner.
The private respondents appealed from the decision to the National Labor Relations Commission (NLRC),
Fifth Division, in Cagayan de Oro City, which docketed the case as NLRC CA No. M-001323-93.
On 28 October 1994, the NLRC affirmed the Labor Arbiter's decision. 3 However, on private respondents'
motion for reconsideration, the NLRC rendered another decision on 30 January 1995 4 vacating and
setting aside its decision of 28 October 1994 and holding that the private respondent and their co-
complainants were regular employees. It declared that the contract of employment for five months was a
"clandestine scheme employed by [the petitioner] to stifle [private respondents'] right to security of tenure"
and should therefore be struck down and disregarded for being contrary to law, public policy, and morals.
Hence, their dismissal on account of the expiration of their respective contracts was illegal.
Accordingly, the NLRC ordered the petitioner to reinstate the private respondents to their former position
without loss of seniority rights and other privileges, with full back wages; and in case their reinstatement
would no longer be feasible, the petitioner should pay them separation pay equivalent to one-month pay
or one-half-month pay for every year of service, whichever is higher, with back wages and 10% of the
monetary award as attorney's fees.
Its motion for reconsideration having been denied, 5 the petitioner came to this Court contending that
respondent NLRC committed grave abuse of discretion amounting to lack of jurisdiction in reversing the
decision of the Labor Arbiter.
The petitioner submits that the private respondents are now estopped from questioning their separation
from petitioner's employ in view of their express conformity with the five-month duration of their
employment contracts. Besides, they fell within the exception provided in Article 280 of the Labor Code
which reads: "[E]xcept where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee."
Moreover, the first paragraph of the said article must be read and interpreted in conjunction with the
proviso in the second paragraph, which reads: "Provided that any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed . . ." In the instant case, the private
respondents were employed for a period of five months only. In any event, private respondents' prayer for
reinstatement is well within the purview of the "Release and Quitclaim" they had executed wherein they
unconditionally released the petitioner from any and all other claims which might have arisen from their
past employment with the petitioner.
In its Comment, the Office of the Solicitor General (OSG) advances the argument that the private
respondents were regular employees, since they performed activities necessary and desirable in the
business or trade of the petitioner. The period of employment stipulated in the contracts of employment
was null and void for being contrary to law and public policy, as its purpose was to circumvent the law on
security of tenure. The expiration of the contract did not, therefore, justify the termination of their
employment.
The OSG further maintains that the ruling of the then Secretary of Labor and Employment in LAP-NOWM
v. Pure Foods Corporation is not binding on this Court; neither is that ruling controlling, as the said case
involved certification election and not the issue of the nature of private respondents' employment. It also
considers private respondents' quitclaim as ineffective to bar the enforcement for the full measure of their
legal rights.
The private respondents, on the other hand, argue that contracts with a specific period of employment
may be given legal effect provided, however, that they are not intended to circumvent the constitutional
guarantee on security of tenure. They submit that the practice of the petitioner in hiring workers to work for
a fixed duration of five months only to replace them with other workers of the same employment duration
was apparently to prevent the regularization of these so-called "casuals," which is a clear circumvention of
the law on security of tenure.
We find the petition devoid of merit.
Article 280 of the Labor Code defines regular and casual employment as follows:
Art. 280. Regular and Casual Employment. — The provisions of written agreement to
the contrary notwithstanding and regardless of the oral argument of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph; Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment shall
continue while such activity exists.
Thus, the two kinds of regular employees are (1) those who are engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer; and (2) those casual employees
who have rendered at least one year of service, whether continuous or broken, with respect to the activity
in which they are employed.6
In the instant case, the private respondents' activities consisted in the receiving, skinning, loining, packing,
and casing-up of tuna fish which were then exported by the petitioner. Indisputably, they were performing
activities which were necessary and desirable in petitioner's business or trade.
Contrary to petitioner's submission, the private respondents could not be regarded as having been hired
for a specific project or undertaking. The term "specific project or undertaking" under Article 280 of the
Labor Code contemplates an activity which is not commonly or habitually performed or such type of work
which is not done on a daily basis but only for a specific duration of time or until completion; the services
employed are then necessary and desirable in the employer's usual business only for the period of time it
takes to complete the project.7
The fact that the petitioner repeatedly and continuously hired workers to do the same kind of work as that
performed by those whose contracts had expired negates petitioner's contention that those workers were
hired for a specific project or undertaking only.
Now on the validity of private respondents' five-month contracts of employment. In the leading case
of Brent School, Inc. v. Zamora, 8 which was reaffirmed in numerous subsequent cases, 9 this Court has
upheld the legality of fixed-term employment. It ruled that the decisive determinant in term employment
should not be the activities that the employee is called upon to perform but the day certain agreed upon by
the parties for the commencement and termination of their employment relationship. But, this Court went
on to say that where from the circumstances it is apparent that the periods have been imposed to
preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as
contrary to public policy and morals.
Brent also laid down the criteria under which term employment cannot be said to be in circumvention of
the law on security of tenure:
1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any
force, duress, or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other on more or less
equal terms with no moral dominance exercised by the former over the latter. 10
None of these criteria had been met in the present case. As pointed out by the private respondents:
[I]t could not be supposed that private respondents and all other so-called "casual"
workers of [the petitioner] KNOWINGLY and VOLUNTARILY agreed to the 5-month
employment contract. Cannery workers are never on equal terms with their employers.
Almost always, they agree to any terms of an employment contract just to get employed
considering that it is difficult to find work given their ordinary qualifications. Their
freedom to contract is empty and hollow because theirs is the freedom to starve if they
refuse to work as casual or contractual workers. Indeed, to the unemployed, security of
tenure has no value. It could not then be said that petitioner and private respondents
"dealt with each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter. 10
The petitioner does not deny or rebut private respondents' averments (1) that the main bulk of its
workforce consisted of its so-called "casual" employees; (2) that as of July 1991, "casual" workers
numbered 1,835; and regular employee, 263; (3) that the company hired "casual" every month for the
duration of five months, after which their services were terminated and they were replaced by other
"casual" employees on the same five-month duration; and (4) that these "casual" employees were actually
doing work that were necessary and desirable in petitioner's usual business.
As a matter of fact, the petitioner even stated in its position paper submitted to the Labor Arbiter that,
according to its records, the previous employees of the company hired on a five-month basis numbered
about 10,000 as of July 1990. This confirms private respondents' allegation that it was really the practice
of the company to hire workers on a uniformly fixed contract basis and replace them upon the expiration of
their contracts with other workers on the same employment duration.
This scheme of the petitioner was apparently designed to prevent the private respondents and the other
"casual" employees from attaining the status of a regular employee. It was a clear circumvention of the
employees' right to security of tenure and to other benefits like minimum wage, cost-of-living allowance,
sick leave, holiday pay, and 13th month pay. 11 Indeed, the petitioner succeeded in evading the application
of labor laws. Also, it saved itself from the trouble or burden of establishing a just cause for terminating
employees by the simple expedient of refusing to renew the employment contracts.
The five-month period specified in private respondents' employment contracts having been imposed
precisely to circumvent the constitutional guarantee on security of tenure should, therefore, be struck
down or disregarded as contrary to public policy or morals. 12 To uphold the contractual arrangement
between the petitioner and the private respondents would, in effect, permit the former to avoid hiring
permanent or regular employees by simply hiring them on a temporary or casual basis, thereby violating
the employees' security of tenure in their jobs. 13
The execution by the private respondents of a "Release and Quitclaim" did not preclude them from
questioning the termination of their services. Generally, quitclaims by laborers are frowned upon as
contrary to public policy and are held to be ineffective to bar recovery for the full measure of the workers'
rights. 14 The reason for the rule is that the employer and the employee do not stand on the same
footing. 15
Notably, the private respondents lost not time in filing a complaint for illegal dismissal. This act is hardly
expected from employees who voluntarily and freely consented to their dismissal. 16
The NLRC was, thus, correct in finding that the private respondents were regular employees and that they
were illegally dismissed from their jobs. Under Article 279 of the Labor Code and the recent
jurisprudence, 17 the legal consequence of illegal dismissal is reinstatement without loss of seniority rights
and other privileges, with full back wages computed from the time of dismissal up to the time of actual
reinstatement, without deducting the earnings derived elsewhere pending the resolution of the case.
However, since reinstatement is no longer possible because the petitioner's tuna cannery plant had,
admittedly, been close in November 1994, 18 the proper award is separation pay equivalent to one month
pay or one-half month pay for every year of service, whichever is higher, to be computed from the
commencement of their employment up to the closure of the tuna cannery plant. The amount of back
wages must be computed from the time the private respondents were dismissed until the time petitioner's
cannery plant ceased operation. 19
WHEREFORE, for lack of merit, the instant petition is DISMISSED and the challenged decision of 30
January 1995 of the National Labor Relations Commission in NLRC CA No. N-001323-93 is hereby
AFFIRMED subject to the above modification on the computation of the separation pay and back wages.
G.R. No. 120969 January 22, 1998
ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) composed of Presiding
Commissioner RAUL T. AQUINO, Commissioner ROGELIO I. RAYALA and Commissioner
VICTORIANO R. CALAYCAY (Ponente), VIC DEL ROSARIO and VIVA FIMS, respondents.
DAVIDE, JR., J.:
By way of this special civil action for certiorari under Rule 65 of the Rules of Court, petitioners seek to
annul the 10 February 1995 Decision 1 of the National Labor Relations Commission (hereafter NLRC), and
its 6 April 1995 Resolution 2 denying the motion to reconsider the former in NLRC-NCR-CA No. 006195-
94. The decision reversed that of the Labor Arbiter in NLRC-NCR-Case No. 00-07-03994-92.
The parties present conflicting sets of facts.
Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on 18 July
1989 as part of the filming crew with a salary of P375.00 per week. About four months later, he was
designated Assistant Electrician with a weekly salary of P400.00, which was increased to P450.00 in May
1990. In June 1991, he was promoted to the rank of Electrician with a weekly salary of P475.00, which
was increased to P539.00 in September 1991.
Petitioner Paulino Enero, on his part, claims that private respondents employed him in June 1990 as a
member of the shooting crew with a weekly salary of P375.00, which was increased to P425.00 in May
1991, then to P475.00 on 21 December 1991.3
Petitioners' tasks consisted of loading, unloading and arranging movie equipment in the shooting area as
instructed by the cameraman, returning the equipment to Viva Films' warehouse, assisting in the "fixing" of
the lighting system, and performing other tasks that the cameraman and/or director may assign.4
Sometime in May 1992, petitioners sought the assistance of their supervisors, Mrs. Alejandria Cesario, to
facilitate their request that private respondents adjust their salary in accordance with the minimum wage
law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree to increase their
salary only if they signed a blank employment contract. As petitioners refused to sign, private respondents
forced Enero to go on leave in June 1992, then refused to take him back when he reported for work on 20
July 1992. Meanwhile, Maraguinot was dropped from the company payroll from 8 to 21 June 1992, but
was returned on 22 June 1992. He was again asked to sign a blank employment contract, and when he
still refused, private respondents terminated his services on 20 July 1992. 5 Petitioners thus sued for
illegal dismissal6 before the Labor Arbiter.
On the other hand, private respondents claim that Viva Films (hereafter VIVA) is the trade name of Viva
Productions, Inc., and that it is primarily engaged in the distribution and exhibition of movies — but not in
the business of making movies; in the same vein, private respondent Vic del Rosario is merely an
executive producer, i.e., the financier who invests a certain sum of money for the production of movies
distributed and exhibited by VIVA.7
Private respondents assert that they contract persons called "producers" — also referred to as "associate
producers"8 — to "produce" or make movies for private respondents; and contend that petitioners are
project employees of the association producers who, in turn, act as independent contractors. As such,
there is no employer-employee relationship between petitioners and private respondents.
Private respondents further contend that it was the associate producer of the film "Mahirap Maging Pogi,"
who hired petitioner Maraguinot. The movie shot from 2 July up to 22 July 1992, and it was only then that
Maraguinot was released upon payment of his last salary, as his services were no longer needed. Anent
petitioner Enero, he was hired for the movie entitled "Sigaw ng Puso," later re-tired "Narito and Puso." He
went on vacation on 8 June 1992, and by the time he reported for work on 20 July 1992, shooting for the
movie had already been completed.9
After considering both versions of the facts, the Labor Arbiter found as follows:
On the first issue, this Office rules that complainants are the employees of the
respondents. The producer cannot be considered as an independent contractor but
should be considered only as a labor-only contractor and as such, acts as a mere agent
of the real employer, the herein respondent. Respondents even failed to name and
specify who are the producers. Also, it is an admitted fact that the complainants
received their salaries from the respondents. The case cited by the
respondents, Rosario Brothers, Inc. vs. Ople, 131 SCRA 72 does not apply in this case.
It is very clear also that complainants are doing activities which are necessary and
essential to the business of the respondents, that of movie-making. Complainant
Maraguinot worked as an electrician while complainant Enero worked as a crew
[member]. 10
Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as follows:
WHEREFORE, judgment is hereby rendered declaring that complainants were illegally
dismissed.
Respondents are hereby ordered to reinstate complainant to their former positions
without loss [of] seniority rights and pay their backwages starting July 21, 1992 to
December 31, 1993 temporarily computed in the amount of P38,000.00 for complainant
Paulino Enero and P46,000.00 for complainant Alejandro Maraguinot, Jr. and thereafter
until actually reinstated.
Respondents are ordered to pay also attorney's fees equivalent to ten (10%) and/or
P8,400.00 on top of the award.11
Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No. 006195-94). In its
decision 12 of 10 February 1995, the NLRC found the following circumstances of petitioners' work "clearly
established:"
1. Complainants [petitioners herein] were hired for specific movie projects and their
employment was co-terminus with each movie project the completion/termination of
which are pre-determined, such fact being made known to complainants at the time of
their engagement.
xxx xxx xxx
 2 Each shooting unit works on one movie project at a time. And the work of the shooting
units, which work independently from each other, are not continuous in nature but
depends on the availability of movie projects.
3. As a consequence of the non-continuous work of the shooting units, the total working
hours logged by complainants in a month show extreme variations. . . For instance,
complainant Maraguinot worked for only 1.45 hours in June 1991 but logged a total
of 183.25 hours in January 1992. Complainant Enero logged a total of only 31.57 hours
in September 1991 but worked for 183.35 hours the next month, October 1991.
4. Further shown by respondents is the irregular work schedule of complainants on a
daily basis. Complainant Maraguinot was supposed to report on 05 August 1991 but
reported only on 30 August 1991, or a gap of 25 days. Complainant Enero worked on 10
September 1991 and his next scheduled working day was 28 September 1991, a gap of
18 days.
5. The extremely irregular working days and hours of complainants' work explain the
lump sum payment for complainants' services for each movie project. Hence,
complainants were paid a standard weekly salary regardless of the number of working
days and hours they logged in. Otherwise, if the principle of "no work no pay" was
strictly applied, complainants' earnings for certain weeks would be very negligible.
6. Respondents also alleged that complainants were not prohibited from working with
such movie companies like Regal, Seiko and FPJ Productions whenever they are not
working for the independent movie producers engaged by respondents . . . This
allegation was never rebutted by complainants and should be deemed admitted.
The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances, taken
together, indicated that complainants (herein petitioners) were "project employees."
After their motion for reconsideration was denied by the NLRC in its Resolution 13 of 6 April 1995,
petitioners filed the instant petition, claiming that the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in: (1) finding that petitioners were project employees; (2) ruling
that petitioners were not illegally dismissed; and (3) reversing the decision of the Labor Arbiter.
To support their claim that they were regular (and not project) employees of private respondents,
petitioners cited their performance of activities that were necessary or desirable in the usual trade or
business of private respondents and added that their work was continuous, i.e., after one project was
completed they were assigned to another project. Petitioners thus considered themselves part of a work
pool from which private respondents drew workers for assignment to different projects. Petitioners
lamented that there was no basis for the NLRC's conclusion that they were project employees, while the
associate producers were independent contractors; and thus reasoned that as regular employees, their
dismissal was illegal since the same was premised on a "false cause," namely, the completion of a
project, which was not among the causes for dismissal allowed by the Labor Code.
Private respondents reiterate their version of the facts and stress that their evidence supports the view
that petitioners are project employees; point to petitioners' irregular work load and work schedule;
emphasize the NLRC's finding that petitioners never controverted the allegation that they were not
prohibited from working with other movie companies; and ask that the facts be viewed in the context of the
peculiar characteristics of the movie industry.
The Office of the Solicitor General (OSG) is convinced that this petition is improper since petitioners raise
questions of fact, particularly, the NLRC's finding that petitioners were project employees, a finding
supported by substantial evidence; and submits that petitioners' reliance on Article 280 of the Labor Code
to support their contention that they should be deemed regular employees is misplaced, as said section
"merely distinguishes between two types of employees, i.e., regular employees and casual employees, for
purposes of determining the right of an employee to certain benefits."
The OSG likewise rejects petitioners' contention that since they were hired not for one project, but for a
series of projects, they should be deemed regular employees. Citing Mamansag v. NLRC, 14 the OSG
asserts that what matters is that there was a time-frame for each movie project made known to petitioners
at the time of their hiring. In closing, the OSG disagrees with petitioners' claim that the NLRC's
classification of the movie producers as independent contractors had no basis in fact and in law, since, on
the contrary, the NLRC "took pains in explaining its basis" for its decision.
As regards the propriety of this action, which the Office of the Solicitor General takes issue with, we rule
that a special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one
who complains that the NLRC acted in total disregard of evidence material to or decisive of the
controversy. 15 In the instant case, petitioners allege that the NLRC's conclusions have no basis in fact and
in law, hence the petition may not be dismissed on procedural or jurisdictional grounds.
The judicious resolution of this case hinges upon, first, the determination of whether an employer-
employee relationship existed between petitioners and private respondents or any one of private
respondents. If there was none, then this petition has no merit; conversely, if the relationship existed, then
petitioners could have been unjustly dismissed.
A related question is whether private respondents are engaged in the business of making motion pictures.
Del Rosario is necessarily engaged in such business as he finances the production of movies. VIVA, on
the other hand, alleges that it does not "make" movies, but merely distributes and exhibits motion pictures.
There being no further proof to this effect, we cannot rely on this self-serving denial. At any rate, and as
will be discussed below, private respondents' evidence even supports the view that VIVA is engaged in the
business of making movies.
We now turn to the critical issues. Private respondents insist that petitioners are project employees of
associate producers who, in turn, act as independent contractors. It is settled that the contracting out of
labor is allowed only in case of job contracting. Section 8, Rule VIII, Book III of the Omnibus Rules
Implementing the Labor Code describes permissible job contracting in this wise:
Sec. 8. Job contracting. — There is job contracting permissible under the Code if the
following conditions are met:
(1) The contractor carries on an independent
business and undertakes the contract work on his
own account under his own responsibility according
to his own manner and method, free from the
control and direction of his employer or principal in
 all matters connected with the performance of the
work except as to the results thereof; and
(2) The contractor has substantial capital or
investment in the form of tools, equipment,
machineries, work premises, and other materials
which are necessary in the conduct of his business.
Assuming that the associate producers are job contractors, they must then be engaged in the business of
making motion pictures. As such, and to be a job contractor under the preceding description, associate
producers must have tools, equipment, machinery, work premises, and other materials necessary to make
motion pictures. However, the associate producers here have none of these. Private respondents'
evidence reveals that the movie-making equipment are supplied to the producers and owned by VIVA.
These include generators, 16 cables and wooden platforms, 17 cameras and "shooting equipment;" 18 in
fact, VIVA likewise owns the trucks used to transport the equipment. 19 It is thus clear that the associate
producer merely leases the equipment from VIVA. 20 Indeed, private respondents' Formal Offer of
Documentary Evidence stated one of the purposes of Exhibit "148" as:
To prove further that the independent Producers rented Shooting Unit No. 2 from Viva to
finish their films. 21
While the purpose of Exhibits "149," "149-A" and "149-B" was:
[T]o prove that the movies of Viva Films were contracted out to the different
independent Producers who rented Shooting Unit No. 3 with a fixed budget and time-
frame of at least 30 shooting days or 45 days whichever comes first. 22
Private respondent further narrated that VIVA's generators broke down during petitioners' last movie
project, which forced the associate producer concerned to rent generators, equipment and crew from
another company. 23 This only shows that the associate producer did not have substantial capital nor
investment in the form of tools, equipment and other materials necessary for making a movie. Private
respondents in effect admit that their producers, especially petitioners' last producer, are not engaged in
permissible job contracting.
If private respondents insist that the associate producers are labor contractors, then these producers can
only be "labor-only" contractors, defined by the Labor Code as follows:
Art. 106. Contractor or subcontractor. — . . .
There is "labor-only" contracting where the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by
such persons are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers
in the same manner and extent as if the latter were directly employed by him.
A more detailed description is provided by Section 9, Rule VIII, Book III of the Omnibus Rules
Implementing the Labor Code:
Sec. 9. Labor-only contracting. — (a) Any person who undertakes to supply workers to
an employer shall be deemed to be engaged in labor-only contracting where such
person:
(1) Does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises and other materials;
and
(2) The workers recruited and placed by such person are performing
activities which are directly related to the principal business or
operations of the employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is
hereby prohibited and the person acting as
contractor shall be considered merely as an agent
or intermediary of the employer who shall be
responsible to the workers in the same manner and
extent as if the latter were directly employed by
him.
(c) For cases not falling under this Article, the
Secretary of Labor shall determine through
appropriate orders whether or not the contracting
out of labor is permissible in the light of the
circumstances of each case and after considering
the operating needs of the employer and the rights
of the workers involved. In such case, he may
prescribe conditions and restrictions to insure the
protection and welfare of the workers.
As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere
agent or intermediary of the direct employer. But even by the preceding standards, the associate
producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the
workers. In the instant case, it was Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA,
who recruited crew members from an "available group of free-lance workers which includes the
complainants Maraguinot and Enero." 24 And in their Memorandum, private respondents declared that the
associate producer "hiresthe services of . . . 6) camera crew which includes (a) cameraman; (b) the utility
crew; (c) the technical staff; (d) generator man and electrician; (e) clapper; etc. . . . ." 25 This clearly
showed that the associate producers did not supply the workers required by the movie project.
The relationship between VIVA and its producers or associate producers seems to be that of agency, 26 as
the latter make movies on behalf of VIVA, whose business is to "make" movies. As such, the employment
relationship between petitioners and producers is actually one between petitioners and VIVA, with the
latter being the direct employer.
The employer-employee relationship between petitioners and VIVA can further be established by the
"control test." While four elements are usually considered in determining the existence of an employment
relationship, namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer's power to control of the employee's conduct, the most important
element is the employer's control of the employee's conduct, not only as to the result of the work to be
done but also as to the means and methods to accomplish the same. 27 These four elements are present
here. In their position paper submitted to the Labor Arbiter, private respondents narrated the following
circumstances:
The words "supervisors" and "Top Management" can only refer to the "supervisors" and "Top
Management" of VIVA. By commanding crew members to observe the rules and regulations promulgated
by VIVA, the appointment slips only emphasize VIVA's control over petitioners.
Aside from control, the element of selection and engagement is likewise present in the instant case and
exercised by VIVA. A sample appointment slip offered by private respondents "to prove that members of
the shooting crew except the driver are project employees of the Independent Producers" 29 reads as
follows:

[T]he PRODUCER has to work within the limits of the budget he is given by the VIVA PRODUCTIONS, INC.
company, for as long as the ultimate finish[ed] product is acceptable to the company . . . 16 Sct. Albano St.
Diliman, Quezon City
The ensure that qualify films are produced by the PRODUCER who is an independent
contractor, the company likewise employs a Supervising PRODUCER, a Project PEDRO NICOLAS Date: June 15, 1992
accountant and a Shooting unit supervisor. The Company's Supervising PRODUCER is
Mr. Eric Cuatico, the Project accountant varies from time to time, and the Shooting Unit
Supervisor is Ms. Alejandria Cesario.

The Supervising PRODUCER acts as the eyes and ears of the company and of the
Executive Producer to monitor the progress of the PRODUCER's work accomplishment.
He is there usually in the field doing the rounds of inspection to see if there is any
problem that the PRODUCER is encountering and to assist in threshing out the same
so that the film project will be finished on schedule. He supervises about 3 to 7 movie
projects simultaneously [at] any given time by coordinating with each film
"PRODUCER". The Project Accountant on the other hand assists the PRODUCER in
monitoring the actual expenses incurred because the company wants to insure that any
additional budget requested by the PRODUCER is really justified and warranted
especially when there is a change of original plans to suit the tast[e] of the company on
how a certain scene must be presented to make the film more interesting and more
commercially viable. (emphasis supplied).
APPOINTMENT SLIP
You are hereby appointed as SOUNDMAN for the film project entitled "MANAMBIT".
This appointment shall be effective upon the commencement of the said project and
shall continue to be effective until the completion of the same.
For your services you shall receive the daily/weekly/monthly compensation of P812.50.
During the term of this appointment you shall comply with the duties and responsibilities
of your position as well as observe the rules and regulations promulgated by your
superiors and by Top Management.

VIVA's control is evident in its mandate that the end result must be a "quality film acceptable to the Very truly
company." The means and methods to accomplish the result are likewise controlled by VIVA, viz., the
movie project must be finished within schedule without exceeding the budget, and additional expenses (an illegib
must be justified; certain scenes are subject to change to suit the taste of the company; and the signature
Supervising Producer, the "eyes and ears" of VIVA and del Rosario, intervenes in the movie-making
process by assisting the associate producer in solving problems encountered in making the film.
CONFORME:

It may not be validly argued then that petitioners are actually subject to the movie director's control, and
_________________
not VIVA's direction. The director merely instructs petitioners on how to better comply with VIVA's
requirements to ensure that a quality film is completed within schedule and without exceeding the budget.
At bottom, the director is akin to a supervisor who merely oversees the activities of rank-and-file Name of appointee
employees with control ultimately resting on the employer.
Signed in the presence of:
Moreover, appointment slips 28 issued to all crew members state:
___________________
During the term of this appointment you shall comply with the duties and responsibilities
of your position as well as observe the rules and regulations promulgated by your Notably, nowhere in the appointment slip does it appear that it was the producer or associate producer
superiors and by Top Management. who hired the crew members; moreover, it is VIVA's corporate name which appears on the heading of the
 appointment slip. What likewise tells against VIVA is that it paid petitioners' salaries as evidenced by
BAKIT KAY TAGAL NG SANDALI 6/26/90 10/20/90 E. MANUEL
vouchers, containing VIVA's letterhead, for that purpose. 30
BAKIT KAY TAGAL (2nd contract) 8/10/90 9/23/90 E. MANUEL
All the circumstances indicate an employment relationship between petitioners and VIVA alone, thus the
inevitable conclusion is that petitioners are employees only of VIVA. HINUKAY KO NA ANG LIBINGAN MO 9/6/90 10/20/90 JUN CHING

The next issue is whether petitioners were illegally dismissed. Private respondents contend that MAGING SINO KA MAN 10/25/90 12/8/90 SANDY STA. MARIA
petitioners were project employees whose employment was automatically terminated with the completion
of their respective projects. Petitioners assert that they were regular employees who were illegally M. SINO KA MAN (2nd contract) 12/9/90 1/22/91 SANDY S
dismissed.
NOEL JUICO 1/29/91 3/14/90 JUN CHING
It may not be ignored, however, that private respondents expressly admitted that petitioners were part of a
NOEL JUICO (2nd contract) 3/15/91 4/6/91 JUN CHING
work pool; 31 and, while petitioners were initially hired possibly as project employees, they had attained the
status of regular employees in view if VIVA's conduct.
ROBIN GOOD 5/7/91 6/20/91 M. ONG

A project employee or a member of a work pool may acquire the status of a regular employee when the UTOL KONG HOODLUM # 1 6/23/91 8/6/91 JUN CHING
following concur:
KAPUTOL NG ISANG AWIT 8/18/91 10/2/91 SANDY S.
1) There is a continuous rehiring of project employees even after cessation of a project;32 and
DARNA 10/4/91 11/18/91 E. MANUEL
2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the
DARNA (addl. 1/2) 11/20/91 12/12/91 E. MANUEL
usual business or trade of the employer. 33
MAGNONG REHAS 12/13/91 1/27/92 BOBBY GRIMALT
However, the length of time during which the employee was continuously re-hired is not
controlling, but merely serves as a badge of regular employment.34 M. REHAS (2nd contract) 1/28/92 3/12/92 B. GRIMALT

In the instant case, the evidence on record shows that petitioner Enero was employed for a total of two (2) HIRAM NA MUKHA 3/15/92 4/29/92 M. ONG
years and engaged in at least eighteen (18) projects, while petitioner Maraguinot was employed for some
three (3) years and worked on at least twenty-three (23) projects. 35 Moreover, as petitioners' tasks HIRAM (2nd contract) 5/1/92 6/14/92 M. ONG
involved, among other chores, the loading, unloading and KAHIT AKO'Y BUSABOS 5/28/92 7/7/92 JERRY OHARA

SIGAW NG PUSO 7/1/92 8/4/92 M. ONG

FILM DATE DATE ASSOCIATE PRODUCER
STARTED COMPLETED
SIGAW (addl. 1/2) 8/15/92 9/5/92 M. ONG

LOVE AT FIRST SIGHT 1/3/90 2/16/90 MARIVIC ONG NGAYON AT KAILANMAN 9/6/92 10/20/92 SANDY STA. MARIA

PAIKOT-IKOT 1/26/90 3/11/90 EDITH MANUEL

While Maraguinot was a member of Shooting Unit III, which made the following movies
ROCKY & ROLLY 2/13/90 3/29/90 M. ONG
(Annex "4-A" of Respondents' Position Paper; OR, 29):
PAIKOT-IKOT (addl. 1/2) 3/12/90 4/3/90 E. MANUEL
FILM DATE STARTED DATE ASSOCIATE PRODUCER
ROCKY & ROLLY (2nd contract) 4/6/90 5/20/90 M. ONG COMPLETED
GUMAPANG KA SA LUSAK 1/27/90 3/12/90 JUN CHING
NARDONG TOOTHPICK 4/4/90 5/18/90 JUN CHING
PETRANG KABAYO 2/19/90 4/4/90 RUTH GRUTA
LUSAK (2nd contract) 3/14/90 4/27/90 JUN CHING
P. KABAYO (Addl 1/2 contract) 4/21/90 5/13/90 RUTH GRUTA that private respondents were an integral part of a work pool from which petitioners
drew its workers for its various projects.
BADBOY 6/15/90 7/29/90 EDITH MANUEL
BADBOY (2nd contract) 7/30/90 8/21/90 E. MANUEL
In a final attempt to convince the Court that private respondents were indeed project
ANAK NI BABY AMA 9/2/90 10/16/90 RUTH GRUTA employees, petitioners point out that the workers were not regularly maintained in the
A.B. AMA (addl 1/2) 10/17/90 11/8/90 RUTH GRUTA payroll and were free to offer their services to other companies when there were no on-
A.B. AMA (addl 2nd 1/2) 11/9/90 12/1/90 R. GRUTA going projects. This argument however cannot defeat the workers' status of regularity.
We apply by analogy the vase of Industrial-Commercial-Agricultural Workers
BOYONG MANALAC 11/30/90 1/14/91 MARIVIC ONG
Organization v. CIR [16 SCRA 526, 567-568 (1966)] which deals with regular seasonal
HUMANAP KA NG PANGET 1/20/91 3/5/91 EDITH MANUEL employees. There we held: . . .
H. PANGET(2nd contract) 3/10/91 4/23/91 E. MANUEL
B. MANALAC (2nd contract) 5/22/91 7/5/91 M. ONG Truly, the cessation of construction activities at the end of every project is a foreseeable
ROBIN GOOD (2nd contract) 7/7/91 8/20/91 M. ONG suspension of work. Of course, no compensation can be demanded from the employer
because the stoppage of operations at the end of a project and before the start of a new
PITONG GAMOL 8/30/91 10/13/91 M. ONG one is regular and expected by both parties to the labor relations. Similar to the case of
P. GAMOL (2nd contract) 10/14/91 11/27/91 M. ONG regular seasonal employees, the employment relation is not severed by merely being
GREASE GUN GANG 12/28/91 2/10/92 E. MANUEL suspended. [citing Manila Hotel Co. v. CIR, 9 SCRA 186 (1963)] The employees are,
strictly speaking, not separated from services but merely on leave of absence without
ALABANG GIRLS (1/2 contract) 3/4/92 3/26/92 M. ONG
pay until they are reemployed. Thus we cannot affirm the argument that non-payment of
BATANG RILES 3/9/92 3/30/92 BOBBY GRIMALT salary or non-inclusion in the payroll and the opportunity to seek other employment
UTOL KONG HOODLUM (part 2) 3/22/92 5/6/92 B. GRIMALT denote project employment. 37 (emphasis supplied)
UTOL (addl. 1/2 contract) 5/7/92 5/29/92 B. GRIMALT
MANDURUGAS (2nd contract) 5/25/92 7/8/92 JERRY OHARA While Lao admittedly involved the construction industry, to which Policy Instruction No. 20/Department
Order No. 19 38 regarding work pools specifically applies, there seems to be no impediment to applying
MAHIRAP MAGING POGI 7/2/92 8/15/92 M. ONG the underlying principles to industries other than the construction industry. 39 Neither may it be argued that
a substantial distinction exists between the projects undertaken in the construction industry and the
arranging of movie equipment in the shooting area as instructed by the cameramen, returning the motion picture industry. On the contrary, the raison d' etre of both industries concern projects with a
equipment to the Viva Films' warehouse, and assisting in the "fixing" of the lighting system, it foreseeable suspension of work.
may not be gainsaid that these tasks were vital, necessary and indispensable to the usual
business or trade of the employer. As regards the underscored phrase, it has been held that this At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty
is ascertained by considering the nature of the work performed and its relation to the scheme of to re-hire a project employee even after completion of the project for which he was hired. The import of
the particular business or trade in its entirety. 36 this decision is not to impose a positive and sweeping obligation upon the employer to re-hire project
employees. What this decision merely accomplishes is a judicial recognition of the employment status of a
A recent pronouncement of this Court anent project or work pool employees who had attained the status project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by
of regular employees proves most instructive: the employer of project or work pool employees who perform tasks necessary or desirable to the
employer's usual business or trade. Let it not be said that this decision "coddles" labor, for as Lao has
ruled, project or work pool employees who have gained the status of regular employees are subject to the
The denial by petitioners of the existence of a work pool in the company because their
"no work-no pay" principle, to repeat:
projects were not continuous is amply belied by petitioners themselves who admit that: .
..
A work pool may exist although the workers in the pool do not receive salaries and are free to seek other
employment during temporary breaks in the business, provided that the worker shall be available when
A work pool may exist although the workers in the pool do not receive salaries and are
called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can
free to seek other employment during temporary breaks in the business, provided that
likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned.
the worker shall be available when called to report of a project. Although primarily
This is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor
applicable to regular seasonal workers, this set-up can likewise be applied to project
at the expense of capital" and at the same time enables the workers to attain the status of regular
workers insofar as the effect of temporary cessation of work is concerned. This is
employees.
beneficial to both the employer and employee for it prevents the unjust situation of
"coddling labor at the expense of capital" and at the same time enables the workers to
attain the status of regular employees. Clearly, the continuous rehiring of the same set The Court's ruling here is meant precisely to give life to the constitutional policy of strengthening the labor
of employees within the framework of the Lao Group of Companies is strongly indicative sector, 40 but, we stress, not at the expense of management. Lest it be misunderstood, this ruling does not
mean that simply because an employee is a project or work pool employee even outside the construction
industry, he is deemed, ipso jure, a regular employee. All that we hold today is that once a project or work
pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same employer for
the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual
business or trade of the employer, then the employee must be deemed a regular employee, pursuant to
Article 280 of the Labor Code and jurisprudence. To rule otherwise would allow circumvention of labor
laws in industries not falling within the ambit of Policy Instruction No. 20/Department Order No. 19, hence
allowing the prevention of acquisition of tenurial security by project or work pool employees who have
already gained the status of regular employees by the employer's conduct.
In closing then, as petitioners had already gained the status of regular employees, their dismissal was
unwarranted, for the cause invoked by private respondents for petitioners' dismissal, viz.: completion of
project, was not, as to them, a valid cause for dismissal under Article 282 of the Labor Code. As such,
petitioners are now entitled to back wages and reinstatement, without loss of seniority rights and other
benefits that may have accrued. 41 Nevertheless, following the principles of "suspension of work" and "no
pay" between the end of one project and the start of a new one, in computing petitioners' back wages, the
amounts corresponding to what could have been earned during the periods from the date petitioners were
dismissed until their reinstatement when petitioners' respective Shooting Units were not undertaking any
movie projects, should be deducted.
Petitioners were dismissed on 20 July 1992, at a time when Republic Act No. 6715 was already in effect.
Pursuant to Section 34 thereof which amended Section 279 of the Labor Code of the Philippines
and Bustamante v. NLRC, 42 petitioners are entitled to receive full back wages from the date of their
dismissal up to the time of their reinstatement, without deducting whatever earnings derived elsewhere
during the period of illegal dismissal, subject however, to the above observations.
WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations
Commission in NLRC NCR CA No. 006195-94 dated 01 February 1995, as well as its Resolution dated 6
April 1995, are hereby ANNULLED and SET ASIDE for having been rendered with grave abuse of
discretion, and the decision of the Labor Arbiter in NLRC NCR Case No. 00-07-03994-92 is REINSTATED,
subject, however, to the modification above mentioned in the computation of back wages.
No pronouncement as to costs.
G.R. No. 170351 March 30, 2011
LEYTE GEOTHERMAL POWER PROGRESSIVE EMPLOYEES UNION - ALU - TUCP, Petitioner,
vs.
PHILIPPINE NATIONAL OIL COMPANY - ENERGY DEVELOPMENT CORPORATION, Respondent.
DECISION
NACHURA, J.:
Under review is the Decision1 dated June 30, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 65760, which
dismissed the petition for certiorari filed by petitioner Leyte Geothermal Power Progressive Employees Union –
ALU―TUCP (petitioner Union) to annul and set aside the decision 2 dated December 10, 1999 of the National Labor
Relations Commission (NLRC) in NLRC Certified Case No. V-02-99.
The facts, fairly summarized by the CA, follow.
[Respondent Philippine National Oil Corporation]-Energy Development Corporation [PNOC-EDC] is a
government-owned and controlled corporation engaged in exploration, development, utilization,
generation and distribution of energy resources like geothermal energy.
Petitioner is a legitimate labor organization, duly registered with the Department of Labor and Employment
(DOLE) Regional Office No. VIII, Tacloban City.
Among [respondent’s] geothermal projects is the Leyte Geothermal Power Project located at the Greater
Tongonan Geothermal Reservation in Leyte. The said Project is composed of the Tongonan 1 Geothermal
Project (T1GP) and the Leyte Geothermal Production Field Project (LGPF) which provide the power and
electricity needed not only in the provinces and cities of Central and Eastern Visayas (Region VII and
VIII), but also in the island of Luzon as well. Thus, the [respondent] hired and employed hundreds of
employees on a contractual basis, whereby, their employment was only good up to the completion or
termination of the project and would automatically expire upon the completion of such project.
Majority of the employees hired by [respondent] in its Leyte Geothermal Power Projects had become
members of petitioner. In view of that circumstance, the petitioner demands from the [respondent] for
recognition of it as the collective bargaining agent of said employees and for a CBA negotiation with it.
However, the [respondent] did not heed such demands of the petitioner. Sometime in 1998 when the
project was about to be completed, the [respondent] proceeded to serve Notices of Termination of
Employment upon the employees who are members of the petitioner.
On December 28, 1998, the petitioner filed a Notice of Strike with DOLE against the [respondent] on the
ground of purported commission by the latter of unfair labor practice for "refusal to bargain collectively,
union busting and mass termination." On the same day, the petitioner declared a strike and staged such
strike.
To avert any work stoppage, then Secretary of Labor Bienvenido E. Laguesma intervened and issued the
Order, dated January 4, 1999, certifying the labor dispute to the NLRC for compulsory arbitration.
Accordingly, all the striking workers were directed to return to work within twelve (12) hours from receipt of
the Order and for the [respondent] to accept them back under the same terms and conditions of
employment prior to the strike. Further, the parties were directed to cease and desist from committing any
act that would exacerbate the situation.
However, despite earnest efforts on the part of the Secretary of Labor and Employment to settle the
dispute amicably, the petitioner remained adamant and unreasonable in its position, causing the failure of
the negotiation towards a peaceful compromise. In effect, the petitioner did not abide by [the] assumption
order issued by the Secretary of Labor.
Consequently, on January 15, 1999, the [respondent] filed a Complaint for Strike Illegality, Declaration of
Loss of Employment and Damages at the NLRC-RAB VIII in Tacloban City and at the same time, filed a
Petition for Cancellation of Petitioner’s Certificate of Registration with DOLE, Regional Office No. VIII. The
two cases were later on consolidated pursuant to the New NLRC Rules of Procedure. The consolidated
case was docketed as NLRC Certified Case No. V-02-99 (NCMB-RAB VIII-NS-12-0190-98; RAB Case
No. VIII-1-0019-99). The said certified case was indorsed to the NLRC 4th Division in Cebu City on June
21, 1999 for the proper disposition thereof.3
In due course, the NLRC 4th Division rendered a decision in favor of respondent, to wit:
WHEREFORE, based on the foregoing premises, judgment is hereby rendered as follows:
1. Declaring the officers and members of [petitioner] Union as project employees;
2. Declaring the termination of their employment by reason of the completion of the project, or a
phase or portion thereof, to which they were assigned, as valid and legal;
3. Declaring the strike staged and conducted by [petitioner] Union through its officers and
members on December 28, 1998 to January 6, 1999 as illegal for failure to comply with the
mandatory requirements of the law on strike[;]
4. Declaring all the officers and members of the board of [petitioner] Union who instigated and
spearheaded the illegal strike to have lost their employment[;]
5. Dismissing the claim of [petitioner] Union against PNOC-EDC for unfair labor practice for lack
of merit[;]
6. Dismissing both parties’ claims against each other for violation of the Assumption Order dated
January 4, 1999 for lack of factual basis[;]
7. Dismissing all other claims for lack of merit.4
Petitioner Union filed a motion for reconsideration of the NLRC decision, which was subsequently denied.
Posthaste, petitioner Union filed a petition for certiorari before the CA, alleging grave abuse of discretion
in the decision of the NLRC. As previously adverted to, the CA dismissed the petition for certiorari, thus:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING the
Petition. The assailed Decision dated December 10, 1999 of the NLRC 4th Division in NLRC Certified
Case No. V-02-99 (NCMB-RAB VIII-NS-12-0190-98; RAB Case No. VIII-1-0019-99) and its Order dated
March 30, 2001 are hereby AFFIRMED.
Costs against the Petitioner.5
Hence, this appeal by certiorari filed by petitioner Union, positing the following questions of law:
1. MAY THE HONORABLE COURT OF APPEALS SUSTAIN THE "PROJECT CONTRACTS" THAT ARE
DESIGNED TO DENY AND DEPRIVE THE EMPLOYEES’ THEIR RIGHT TO SECURITY OF TENURE BY
MAKING IT APPEAR THAT THEY ARE MERE PROJECT EMPLOYEES?
2. WHEN THERE ARE NO INTERVALS IN THE EMPLOYEES’ CONTRACT, SUCH THAT THE SO-
CALLED UNDERTAKING WAS CONTINUOUS, ARE THE EMPLOYEES PROPERLY TREATED AS
PROJECT EMPLOYEES?
3. MAY THE HONORABLE COURT OF APPEALS IGNORE THE FIRM’S OWN ESTIMATE OF JOB
COMPLETION, PROVING THAT THERE IS STILL 56.25% CIVIL/STRUCTURAL WORK TO BE
ACCOMPLISHED, AND RULE THAT THE EMPLOYEES WERE DISMISSED FOR COMPLETION [OF]
THE "PROJECT?"
4. MAY A FIRM HIDE UNDER THE SPURIOUS CLOAK OF "PROJECT COMPLETION" TO DISMISS EN
MASSE THE EMPLOYEES WHO HAVE ORGANIZED AMONG THEMSELVES A LEGITIMATE LABOR
ORGANIZATION TO PROTECT THEIR RIGHTS?
5. WHEN THERE IS NO STOPPAGE OF WORK, MAY A PROTEST ACTIVITY BE CONSIDERED AS A
STRIKE CONTRARY TO ITS CONCEPTUAL DEFINITION UNDER ARTICLE 212 (O) OF THE LABOR
CODE OF THE PHILIPPINES?
6. WHEN THE DISMISSAL IS AIMED AT RIDDING THE COMPANY OF MEMBERS OF THE UNION, IS
THIS UNION BUSTING?6
Stripped of rhetoric, the issues for our resolution are:
1. Whether the officers and members of petitioner Union are project employees of respondent;
and
2. Whether the officers and members of petitioner Union engaged in an illegal strike.
On the first issue, petitioner Union contends that its officers and members performed activities that were
usually necessary and desirable to respondent’s usual business. In fact, petitioner Union reiterates that its
officers and members were assigned to the Construction Department of respondent as carpenters and
masons, and to other jobs pursuant to civil works, which are usually necessary and desirable to the
department. Petitioner Union likewise points out that there was no interval in the employment contract of
its officers and members, who were all employees of respondent, which lack of interval, for petitioner
Union, "manifests that the ‘undertaking’ is usually necessary and desirable to the usual trade or business
of the employer."
We cannot subscribe to the view taken by petitioner Union.
The distinction between a regular and a project employment is provided in Article 280, paragraph 1, of the
Labor Code:
ART. 280. Regular and Casual Employment.— The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for
a specific project or undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be performed is seasonal in nature and
the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such actually exists.7
The foregoing contemplates four (4) kinds of employees: (a) regular employees or those who have been
"engaged to perform activities which are usually necessary or desirable in the usual business or trade of
the employer"; (b) project employees or those "whose employment has been fixed for a specific project or
undertaking[,] the completion or termination of which has been determined at the time of the engagement
of the employee"; (c) seasonal employees or those who work or perform services which are seasonal in
nature, and the employment is for the duration of the season;8 and (d) casual employees or those who are
not regular, project, or seasonal employees. Jurisprudence has added a fifth kind— a fixed-term
employee.9
Article 280 of the Labor Code, as worded, establishes that the nature of the employment is determined by
law, regardless of any contract expressing otherwise. The supremacy of the law over the nomenclature of
the contract and the stipulations contained therein is to bring to life the policy enshrined in the Constitution
to "afford full protection to labor."10 Thus, labor contracts are placed on a higher plane than ordinary
contracts; these are imbued with public interest and therefore subject to the police power of the State.11
However, notwithstanding the foregoing iterations, project employment contracts which fix the employment
for a specific project or undertaking remain valid under the law:
x x x By entering into such a contract, an employee is deemed to understand that his employment is
coterminous with the project. He may not expect to be employed continuously beyond the completion of
the project. It is of judicial notice that project employees engaged for manual services or those for special
skills like those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is not a valid
reason for bestowing special treatment on them or for invalidating a contract of employment. Project
employment contracts are not lopsided agreements in favor of only one party thereto. The employer’s
interest is equally important as that of the employee[s’] for theirs is the interest that propels economic
activity. While it may be true that it is the employer who drafts project employment contracts with its
business interest as overriding consideration, such contracts do not, of necessity, prejudice the employee.
Neither is the employee left helpless by a prejudicial employment contract. After all, under the law, the
interest of the worker is paramount.12
In the case at bar, the records reveal that the officers and the members of petitioner Union signed
employment contracts indicating the specific project or phase of work for which they were hired, with a
fixed period of employment. The NLRC correctly disposed of this issue:
A deeper examination also shows that [the individual members of petitioner Union] indeed signed and
accepted the [employment contracts] freely and voluntarily. No evidence was presented by [petitioner]
Union to prove improper pressure or undue influence when they entered, perfected and consummated
[the employment] contracts. In fact, it was clearly established in the course of the trial of this case, as
explained by no less than the President of [petitioner] Union, that the contracts of employment were read,
comprehended, and voluntarily accepted by them. x x x.
xxxx
As clearly shown by [petitioner] Union’s own admission, both parties had executed the contracts freely
and voluntarily without force, duress or acts tending to vitiate the worker[s’] consent. Thus, we see no
reason not to honor and give effect to the terms and conditions stipulated therein. x x x.13
Thus, we are hard pressed to find cause to disturb the findings of the NLRC which are supported by
substantial evidence.
It is well-settled in jurisprudence that factual findings of administrative or quasi-judicial bodies, which are
deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded
not only respect but even finality, and bind the Court when supported by substantial evidence.14 Rule 133,
Section 5 defines substantial evidence as "that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion."
Consistent therewith is the doctrine that this Court is not a trier of facts, and this is strictly adhered to in
labor cases.15 We may take cognizance of and resolve factual issues, only when the findings of fact and
conclusions of law of the Labor Arbiter or the NLRC are inconsistent with those of the CA.16
In the case at bar, both the NLRC and the CA were one in the conclusion that the officers and the
members of petitioner Union were project employees. Nonetheless, petitioner Union insists that they were
regular employees since they performed work which was usually necessary or desirable to the usual
business or trade of the Construction Department of respondent.
The landmark case of ALU-TUCP v. NLRC17 instructs on the two (2) categories of project employees:
It is evidently important to become clear about the meaning and scope of the term "project" in the present
context. The "project" for the carrying out of which "project employees" are hired would ordinarily have
some relationship to the usual business of the employer. Exceptionally, the "project" undertaking might not
have an ordinary or normal relationship to the usual business of the employer. In this latter case, the
determination of the scope and parameters of the "project" becomes fairly easy. x x x. From the viewpoint,
however, of the legal characterization problem here presented to the Court, there should be no difficulty in
designating the employees who are retained or hired for the purpose of undertaking fish culture or the
production of vegetables as "project employees," as distinguished from ordinary or "regular employees,"
so long as the duration and scope of the project were determined or specified at the time of engagement
of the "project employees." For, as is evident from the provisions of Article 280 of the Labor Code, quoted
earlier, the principal test for determining whether particular employees are properly characterized as
"project employees" as distinguished from "regular employees," is whether or not the "project employees"
were assigned to carry out a "specific project or undertaking," the duration (and scope) of which were
specified at the time the employees were engaged for that project.
In the realm of business and industry, we note that "project" could refer to one or the other of at least two
(2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is
within the regular or usual business of the employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company. Such job or undertaking begins and
ends at determined or determinable times. The typical example of this first type of project is a particular
construction job or project of a construction company. A construction company ordinarily carries out two or
more [distinct] identifiable construction projects: e.g., a twenty-five-storey hotel in Makati; a residential
condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired
for the carrying out of one of these separate projects, the scope and duration of which has been
determined and made known to the employees at the time of employment, are properly treated as "project
employees," and their services may be lawfully terminated at completion of the project.
The term "project" could also refer to, secondly, a particular job or undertaking that is not within the regular
business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from
the ordinary or regular business operations of the employer. The job or undertaking also begins and ends
at determined or determinable times.18
Plainly, the litmus test to determine whether an individual is a project employee lies in setting a fixed
period of employment involving a specific undertaking which completion or termination has been
determined at the time of the particular employee’s engagement.
In this case, as previously adverted to, the officers and the members of petitioner Union were specifically
hired as project employees for respondent’s Leyte Geothermal Power Project located at the Greater
Tongonan Geothermal Reservation in Leyte. Consequently, upon the completion of the project or
substantial phase thereof, the officers and the members of petitioner Union could be validly terminated.
Petitioner Union is adamant, however, that the lack of interval in the employment contracts of its officer
and members negates the latter’s status
as mere project employees. For petitioner Union, the lack of interval further drives home its point that its
officers and members are regular employees who performed work which was usually necessary or
desirable to the usual business or trade of respondent.
We are not persuaded.
Petitioner Union’s members’ employment for more than a year does equate to their regular employment
with respondent. In this regard, Mercado, Sr. v. NLRC19 illuminates:
The first paragraph [of Article 280 of the Labor Code] answers the question of who are regular employees.
It states that, regardless of any written or oral agreement to the contrary, an employee is deemed regular
where he is engaged in necessary or desirable activities in the usual business or trade of the employer,
except for project employees.
A project employee has been defined to be one whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the engagement of
the employee, or where the work or service to be performed is seasonal in nature and the employment is
for the duration of the season, as in the present case.
The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fall
under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular
employees those "casual" employees who have rendered at least one year of service regardless of the
fact that such service may be continuous or broken.
Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their
case and that the Labor Arbiter should have considered them regular by virtue of said proviso. The
contention is without merit.
The general rule is that the office of a proviso is to qualify or modify only the phrase immediately
preceding it or restrain or limit the generality of the clause that it immediately follows. Thus, it has been
held that a proviso is to be construed with reference to the immediately preceding part of the provision to
which it is attached, and not to the statute itself or to other sections thereof. The only exception to this rule
is where the clear legislative intent is to restrain or qualify not only the phrase immediately preceding it
(the proviso) but also earlier provisions of the statute or even the statute itself as a whole.
Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of
regular and casual employees was designed to put an end to casual employment in regular jobs, which
has been abused by many employers to prevent so – called casuals from enjoying the benefits of regular
employees or to prevent casuals from joining unions. The same instructions show that the proviso in the
second paragraph of Art. 280 was not designed to stifle small-scale businesses nor to oppress agricultural
land owners to further the interests of laborers, whether agricultural or industrial. What it seeks to
eliminate are abuses of employers against their employees and not, as petitioners would have us believe,
to prevent small-scale businesses from engaging in legitimate methods to realize profit. Hence, the
proviso is applicable only to the employees who are deemed "casuals" but not to the "project" employees
nor the regular employees treated in paragraph one of Art. 280.
Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees,
their employment legally ends upon completion of the project or the [end of the] season. The termination
of their employment cannot and should not constitute an illegal dismissal.
Considering our holding that the officers and the members of petitioner Union were project employees, its
claim of union busting is likewise dismissed.
On the second issue, petitioner Union contends that there was no stoppage of work; hence, they did not
strike. Euphemistically, petitioner Union avers that it "only engaged in picketing,"20 and maintains that
"without any work stoppage, [its officers and members] only engaged in xxx protest activity."
We are not convinced. Petitioner Union splits hairs.
To begin with, quite evident from the records is the undisputed fact that petitioner Union filed a Notice of
Strike on December 28, 1998 with the Department of Labor and Employment, grounded on respondent’s
purported
unfair labor practices, i.e., "refusal to bargain collectively, union busting and mass termination." On even
date, petitioner Union declared and staged a strike.
Second, then Secretary of Labor, Bienvenido E. Laguesma, intervened and issued a Return-to-Work
Order21 dated January 4, 1999, certifying the labor dispute to the NLRC for compulsory arbitration. The
Order narrates the facts leading to the labor dispute, to wit:
On 28 December 1998, [petitioner Union] filed a Notice of Strike against [respondent] citing unfair labor
practices, specifically: refusal to bargain collectively, union busting and mass termination as the grounds
[therefor]. On the same day, [petitioner] Union went on strike and took control over [respondent’s] facilities
of its Leyte Geothermal Project.
Attempts by the National Conciliation and Mediation Board –RBVIII to forge a mutually acceptable solution
proved futile.
In the meantime, the strike continues with no settlement in sight placing in jeopardy the supply of much
needed power supply in the Luzon and Visayas grids.
xxxx
The on-going strike threatens the availability of continuous electricity to these areas which is critical to
day-to-day life, industry, commerce and trade. Without doubt, [respondent’s] operations [are]
indispensable to the national interest and falls (sic) within the purview of Article 263 (g) of the Labor Code,
as amended, which warrants (sic) the intervention of this Office.
Third, petitioner Union itself, in its pleadings, used the word "strike."
Ultimately, petitioner Union’s asseverations are belied by the factual findings of the NLRC, as affirmed by
the CA:
The failure to comply with the mandatory requisites for the conduct of strike is both admitted and clearly
shown on record. Hence, it is undisputed that no strike vote was conducted; likewise, the cooling-off
period was not observed and that the 7-day strike ban after the submission of the strike vote was not
complied with since there was no strike vote taken.
xxxx
The factual issue of whether a notice of strike was timely filed by [petitioner] Union was resolved by the
evidence on record. The evidence revealed that [petitioner] Union struck even before it could file the
required notice of strike. Once again, this relied on [petitioner] Union’s proof. [Petitioner] Union[’s] witness
said:
Atty. Sinsuat : You stated that you struck on 28 December 1998 is that correct?
Witness : Early in the morning of December 1998.
xxxx
Atty. Sinsuat : And you went there to conduct the strike did you not?
Witness : Our plan then was to strike at noon of December 28 and the strikers will be positioned at their
respective areas.22
Article 263 of the Labor Code enumerates the requisites for holding a strike:
Art. 263. Strikes, picketing, and lockouts. – (a) x x x.
x x x x.
(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a
notice of strike or the employer may file a notice of lockout with the Department at least 30 days
before the intended date thereof. In cases of unfair labor practice, the period of notice shall be 15
days and in the absence of a duly certified bargaining agent, the notice of strike may be filed by
any legitimate labor organization in behalf of its members. However, in case of dismissal from
employment of union officers duly elected in accordance with the union constitution and by-laws,
which may constitute union busting, where the existence of the union is threatened, the 15-day
cooling-off period shall not apply and the union may take action immediately.
(d) The notice must be in accordance with such implementing rules and regulations as the
Department of Labor and Employment may promulgate.
(e) During the cooling-off period, it shall be the duty of the Department to exert all efforts at
mediation and conciliation to effect a voluntary settlement. Should the dispute remain unsettled
until the lapse of the requisite number of days from the mandatory filing of the notice, the labor
union may strike or the employer may declare a lockout.
(f) A decision to declare a strike must be approved by a majority of the total union membership in
the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that
purpose. A decision to declare a lockout must be approved by a majority of the board of directors
of the corporation or association or of the partners in a partnership, obtained by secret ballot in a
meeting called for that purpose. The decision shall be valid for the duration of the dispute based
on substantially the same grounds considered when the strike or lockout vote was taken. The
Department may, at its own initiative or upon the request of any affected party, supervise the
conduct of the secret balloting. In every case, the union or the employer shall furnish the
Department the results of the voting at least seven days before the intended strike or lockout,
subject to the cooling-off period herein provided.
In fine, petitioner Union’s bare contention that it did not hold a strike cannot trump the factual findings of
the NLRC that petitioner Union indeed struck against respondent. In fact, and more importantly, petitioner
Union failed to comply with the requirements set by law prior to holding a strike.1avvphi1
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 65760 is
AFFIRMED. Costs against petitioner Union.
SO ORDERED.
G.R. No. 116781 September 5, 1997
TOMAS LAO CONSTRUCTION, LVM CONSTRUCTION CORPORATION, THOMAS and JAMES
DEVELOPERS (PHIL.), INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MARIO O. LABENDIA, SR., ROBERTO LABENDIA,
NARCISO ADAN, FLORENCIO GOMEZ, ERNESTO BAGATSOLON, SALVADOR BABON, PATERNO
BISNAR, CIRPRIANO BERNALES, ANGEL MABUHAY, SR., LEO SURIGAO, and ROQUE
MORILLO, respondents.
BELLOSILLO, J.:
From October to December 1990 private respondents individually filed complaints for illegal dismissal
against petitioners with the National Labor Relations Commission Regional Arbitration Branch No. VIII
(NLRC — RAB VIII), Tacloban City. Alleging that they were hired for various periods as construction
workers in different capacities they described their contractual terms as follows: (a) Roberto Labendia,
general construction foreman, from 1971 to 17 October 1990 at P3,700/month; (b) Narciso Adan, tireman,
from October 1981 to November 1990 at P75.00/day; (c) Florencio Gomez, welder, from July 1983 to July
1990 at P260.00/day; (d) Ernesto Bagatsolon leadman/checker, from June 1982 to October 1990 at
P2,800/month; (e) Salvador Babon, clerk/timekeeper/paymaster, from June 1982 to October 1990 at
P3,200/month; (f) Paterno Bisnar, road grader operator, from January 1979 to October 1990 at 105/day;
(g) Cipriano Bernales, instrument man, from February 1980 to November 1990 at P3,200/month; (h) Angel
Mabulay, Sr., dump truck driver, from August 1974 to October 1990 at P90/day; (I) Leo Surigao, payloader
operator, from March 1975 to January 1978 at P100/day; (J) Mario Labendia, Sr. surveyor/foreman, from
August 1971 to July 1990 at P2,900/month; and, (k) Roque Morillo, company watchman, from August
1983 to October 1990 at P3,200/month.1
Within the periods of their respective employments, they alternately worked for petitioners Tomas Lao
Corporation (TLC), Thomas and James Developers (T&J) and LVM Construction Corporation (LVM),
altogether informally referred to as the "Lao Group of Companies," the three (3) entities comprising a
business conglomerate exclusively controlled and managed by members of the Lao family.
TLC, T&J and LVM are engaged in the construction of public roads and bridges. Under joint venture
agreements they entered into among each other, they would undertake their projects either
simultaneously or successively so that, whenever necessary, they would lease tools and equipment to one
another. Each one would also allow the utilization of their employees by the other two (2). With this
arrangement, workers were transferred whenever necessary to on-going projects of the same company or
of the others, or were rehired after the completion of the project or project phase to which they were
assigned. Soon after, however, TLC ceased its operations2 while T&J and LVM stayed on.
Sometime in 1989 Andres Lao, Managing Director of LVM and President of T&J,3 issued a
memorandum4 requiring all workers and company personnel to sign employment contract forms and
clearances which were issued on 1 July 1989 but antedated 10 January 1989. These were to be used
allegedly for audit purposes pursuant to a joint venture agreement between LVM and T&J. To ensure
compliance with the directive, the company ordered the withholding of the salary of any employee who
refused to sign. Quite notably, the contracts expressly described the construction workers as project
employees whose employments were for a definite period, i.e., upon the expiration of the contract period
or the completion of the project for which the workers was hired.
Except for Florencio Gomez5 all private respondents refused to sign contending that this scheme was
designed by their employer to downgrade their status from regular employees to mere project employees.
Resultantly, their salaries were withheld. They were also required to explain why their services should not
be terminated for violating company rules and warned that failure to satisfactorily explain would be
construed as "disinterest" in continued employment with the company. Since the workers stood firm in
their refusal to comply with the directives their services were terminated.
NLRC RAB VIII dismissed the complaints lodged before it, finding that private respondents were project
employees whose employments could be terminated upon completion of the projects or project phase for
which they were hired. It upheld petitioners' contention that the execution of their employment contracts
was to forestall the eventuality of being compelled to pay the workers their salaries even if there was no
more work to be done due to the completion of the projects or project phases. The labor court however
granted each employee a separation pay of P6,435.00 computed at one-half (1/2) month salary for every
year of service, uniformly rounded at five (5) years.6
The decision of Labor Arbiter Gabino A. Velasquez, Jr., was reversed on appeal by the Fourth Division of
the National Labor Relations Commission (NLRC) of Cebu City which found that private respondents were
regular employees who were dismissed without just cause and denied due process. The NLRC also
overruled the fixing by the Labor Arbiter of the term of employment of complainants uniformly at five (5)
years since the periods of employment of the construction workers as alleged in their complaints were
never refuted by petitioners. In granting monetary awards to complainants, NLRC disregarded the veil of
corporate fiction and treated the three (3) corporations as forming only one entity on the basis of the
admission of petitioners that "the three (3) operated as one (1), intermingling and commingling all its
resources, including manpower facility."7
Petitioners now lay their cause before us and assign the following errors: (a) NLRC erred in classifying the
employees as regular instead of project employees; (b) assuming that the workers were regular
employees, NLRC failed to consider that they were terminated for cause; (c) assuming further that the
employees were illegally dismissed, NLRC erred in awarding back wages in excess of three (3) years;
and, (d) assuming finally that the decision is correct, NLRC erred when it pierced the veil of corporate
personality of petitioner-corporations.
The main thrust of petitioners' expostulation is that respondents have no valid cause to complain about
their employment contracts since these documents merely formalized their status as project employees.
They cite Policy Instruction No. 20 of the Department of Labor which defines project employees as those
employed in connection with a particular construction project, adding that the ruling in Sandoval
Shipyards, Inc. v. NLRC8 applies squarely to the instant case because there the Court declared that the
employment of project employees is co-terminous with the completion of the project regardless of the
number of projects in which they have worked. And as their employment is one for a definite period, they
are not entitled to separation pay nor is their employer required to obtain clearance from the Secretary of
Labor in connection with their termination. Petitioners thus argue that their dismissal from the service of
private respondents was legal since the projects for which they were hired had already been completed.
As additional ground, they claim that Mario Labendia and Roberto Labendia had absented themselves
without leave giving management no choice but to sever their employment.
We are not convinced. The principal test in determining whether particular employees are "project
employees" distinguished from "regular employees" is whether the "project employees" are assigned to
carry out "specific project or undertaking," the duration (and scope) of which are specified at the time the
employees are engaged for the project. "Project" in the realm of business and industry refers to a
particular job or undertaking that is within the regular or usual business of employer, but which is distinct
and separate and identifiable as such from the undertakings of the company. Such job or undertaking
begins and ends at determined or determinable times.9
While it may be allowed that in the instant case the workers were initially hired for specific projects or
undertakings of the company and hence can be classified as project employees, the repeated re-hiring
and the continuing need for their services over a long span of time (the shortest, at seven [7] years) have
undeniably made them regular employees. Thus, we held that where the employment of project
employees is extended long after the supposed project has been finished, the employees are removed
from the scope of project employees and considered regular employees.10
While length of time may not be a controlling test for project employment, it can be a strong factor in
determining whether the employee was hired for a specific undertaking or in fact tasked to perform
functions which are vital, necessary and indispensable to the usual business or trade of the employer. In
the case at bar, private respondents had already gone through the status of project employees. But their
employments became non-coterminous with specific projects when they started to be continuously re-
hired due to the demands of petitioners' business and were re-engaged for many more projects without
interruption. We note petitioners' own admission —
[t]hese construction projects have been prosecuted by either of the three petitioners, either
individually or in a joint venture with one another. Likewise, these construction projects have
been prosecuted by either of the three petitioners, either simultaneously, one construction project
overlapping another and/or one project commencing immediately after another project has been
completed or terminated. Perhaps because of their capacity to prosecute government projects
and their good record and performance, at least one of the three petitioners had an on-going
construction project and/or one of the three petitioners' construction project overlapped that of
another.11
The denial by petitioners of the existence of a work pool in the company because their projects were not
continuous is amply belied by petitioners themselves who admit that —
All the employees of either of the three petitioners were actually assigned to a particular project
to remain in said project until the completion or termination of that project. However, after the
completion of that particular project or when their services are no longer needed in the project or
particular phase of the project where they were assigned, they were transferred and rehired in
another on-going project.12
A work pool may exist although the workers in the pool do not receive salaries and are free to seek other
employment during temporary breaks in the business, provided that the worker shall be available when
called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can
likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned.
This is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor
at the expense of capital" and at the same time enables the workers to attain the status of regular
employees. Clearly, the continuous rehiring of the same set of employees within the framework of the Lao
Group of Companies is strongly indicative that private respondents were an integral part of a work pool
from which petitioners drew its workers for its various projects.
In a final attempt to convince the Court that private respondents were indeed project employees,
petitioners point out that the workers were not regularly maintained in the payroll and were free to offer
their services to other companies when there were no on-going projects. This argument however cannot
defeat the workers' status of regularity. We apply by analogy the case of Industrial-Commercial-
Agricultural Workers Organization v. CIR13 which deals with regular seasonal employees. There we held
—
That during the temporary layoff the laborers are free to seek other employment is natural, since
the laborers are not being paid, yet must find means of support. A period during which the
Central is forced to suspend or cease operation for a time . . . should not mean starvation for
employees and their families (emphasis supplied).
Truly, the cessation of construction activities at the end of every project is a foreseeable suspension of
work. Of course, no compensation can be demanded from the employer because the stoppage of
operations at the end of a project and before the start of a new one is regular and expected by both
parties to the labor relations. Similar to the case of regular seasonal employees, the employment relation
is not severed by merely being suspended.14 The employees are, strictly speaking, not separated from
services but merely on leave of absence without pay until they are reemployed.15 Thus we cannot affirm
the argument that non-payment of salary or non-inclusion in the payroll and the opportunity to seek other
employment denote project employment.
Contrary to petitioners' assertion, our ruling in Sandoval Shipyards is inapplicable considering the special
circumstances attendant to the present case. In Sandoval, the hiring of construction workers, unlike in the
instant case, was intermittent and not continuous for the "shipyard merely accepts contracts for
shipbuilding or for repair of vessels from third parties and, only on occasions when it has work contract of
this nature that it hires workers to do the job which, needless to say, lasts only for less than a year or
longer."16
Moreover, if private respondents were indeed employed as "project employees," petitioners should have
submitted a report of termination to the nearest public employment office every time their employment was
terminated due to completion of each construction project.17 The records show that they did not. Policy
Instruction No. 20 is explicit that employers of project employees are exempted from the clearance
requirement but not from the submission of termination report. We have consistently held that failure of
the employer to file termination reports after every project completion proves that the employees are not
project employees.18 Nowhere in the New Labor Code is it provided that the reportorial requirement is
dispensed with. The fact is that Department Order No. 19 superseding Policy Instruction No. 20 expressly
provides that the report of termination is one of the indicators of project employment.19
We agree with the NLRC that the execution of the project employment contracts was
"farcical."20 Obviously, the contracts were a scheme of petitioners to prevent respondents' from being
considered as regular employees. It imposed time frames into an otherwise flexible employment period of
private respondents some of whom were employed as far back as 1969. Clearly, here was an attempt to
circumvent labor laws on tenurial security. Settled is the rule that when periods have been imposed to
preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to
public morals, good customs or public order.21 Worth noting is that petitioners had engaged in various joint
venture agreements in the past without having to draft project employment contracts. That they would
require execution of employment contracts and waivers at this point, ostensibly to be used for audit
purposes, is a suspect excuse, considering that petitioners enforced the directive by withholding the salary
of any employee who spurned the order.
We likewise reject petitioners' justification in re-hiring private respondents i.e., that it is much cheaper and
economical to re-hire or re-employ the same workers than to train a new set of employees. It is precisely
because of this cost-saving benefit to the employer that the law deems it fair that the employees be given
a regular status. We need not belabor this point.
The NLRC was correct in finding that the workers were illegally dismissed. The rule is that in effecting a
valid dismissal, the mandatory requirements of substantive and procedural due process must be strictly
complied with. These were wanting in the present case. Private respondents were dismissed allegedly
because of insubordination or blatant refusal to comply with a lawful directive of their employer. But willful
disobedience of the employer's lawful orders as a just cause for the dismissal of the employees envisages
the concurrence of at least two (2) requisites: (a) the employee's assailed conduct must have been willful
or intentional, the willfulness being characterized by a wrongful and perverse attitude; and, (b) the order
violated must have been reasonable, lawful, made known to the employee and must pertain to the duties
which he has been engaged to discharge.22 The refusal of private respondents was willful but not in the
sense of plain and perverse insubordination. It was dictated by necessity and justifiable reasons — for
what appeared to be an innocent memorandum was actually a veiled attempt to deny them their rightful
status as regular employees. The workers therefore had no option but to disobey the directive which they
deemed unreasonable and unlawful because it would result in their being downsized to mere project
workers. This act of self-preservation should not merit them the extreme penalty of dismissal.
The allegation of petitioners that private respondents are guilty of abandonment of duty is without merit.
The elements of abandonment are: (a) failure to report for work or absence without valid or justifiable
reason, and, (b) a clear intention to sever the employer-employee relationship, with the second element
as the more determinative factor manifested by some overt acts.23 In this case, private respondents
Roberto Labendia and Mario Labendia were forced to leave their respective duties because their salaries
were withheld. They could not simply sit idly and allow their families to starve. They had to seek
employment elsewhere, albeit temporarily, in order to survive. On the other hand, it would be the height of
injustice to validate abandonment in this particular case as a ground for dismissal of respondents thereby
making petitioners benefit from a gross and unjust situation which they themselves created.24 Private
respondents did not intend to sever ties with petitioner and permanently abandon their jobs; otherwise,
they would not have filed this complaint for illegal dismissal.25
Petitioners submit that since private respondents were only project employees, they are not entitled to
security of tenure. This is incorrect. In Archbuild Masters and Construction, Inc. v. NLRC26 we held —
. . . a project employee hired for a specific task also enjoys security of tenure. A termination of his
employment must be for a lawful cause and must be done in a manner which affords him the
proper notice and hearing . . . . To allow employers to exercise their prerogative to terminate a
project worker's employment based on gratuitous assertions of project completion would destroy
the constitutionally protected right of labor to security of tenure (emphasis supplied).
The burden of proving that an employee has been lawfully dismissed therefore lies with the employer. In
the case at bar, the assertions of petitioners were self-serving and insufficient to substantiate their claim of
proximate project completion. The services of the employees were terminated not because of contract
expiration but as sanction for their refusal to sign the project employment forms and quitclaims.
Finding that the dismissal was without just cause, we find it unnecessary to dwell on the non-observance
of procedural due process. Suffice it to state that private respondents were not priorly notified of their
impending dismissal and that they were not provided ample opportunity to defend themselves.
Petitioners charge as erroneous the grant to private respondents by NLRC of back wages in excess of
three (3) years or, in the alternative, to an award of separation pay if reinstatement is no longer feasible.
We disagree. Since the illegal dismissal was made in 1990 or after the effectivity of the amendatory
provision of RA No. 6715 on 21 March 1989, private respondents' back wages should be computed on the
basis of Art. 279 of the Labor Code which states that "(a)n employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full back
wages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement."
Conformably with our ruling in Bustamante v. NLRC27 the illegally dismissed employees are entitled to full
back wages, undiminished by earnings derived elsewhere during the period of their illegal dismissal. In the
event that reinstatement is no longer feasible, back wages shall be computed from the time of illegal
termination until the time of the finality of the decision.28 The award shall be based on the documents
submitted by private respondents, i.e. affidavits, SSS and Medicare documents, since petitioners failed to
adduce competent evidence to the contrary. The separation pay shall be equivalent to "at least one (1)
month salary or to one (1) month salary for every year of service, whichever is higher, a fraction of at least
six (6) months being considered as one whole year."29
Finally, public respondent NLRC did not err in disregarding the veil of separate corporate personality and
holding petitioners jointly and severally liable for private respondents' back wages and separation pay. The
records disclose that the three (3) corporations were in fact substantially owned and controlled by
members of the Lao family composed of Lao Hian Beng alias Tomas Lao, Chiu Siok Lian (wife of Tomas
Lao), Andrew C. Lao, Lao Y. Heng, Vicente Lao Chua, Lao E. Tin, Emmanuel Lao and Ismaelita Maluto. A
majority of the outstanding shares of stock in LVM and T&J is owned by the Lao family. T&J is 100%
owned by the Laos as reflected in its Articles of Incorporation. The Lao Group of Companies therefore is a
closed corporation where the incorporators and directors belong to a single family. Lao Hian Beng is the
same Tomas Lao who owns Tomas Lao Corporation and is the majority stockholder of T&J. Andrew C.
Lao is the Managing Director of LVM Construction, and President and Managing Director of the Lao Group
of Companies. Petitioners are engaged in the same line of business under one management and use the
same equipment including manpower services. Where it appears that [three] business enterprises are
owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect
the rights of third persons, disregard the legal fiction that the [three] corporations are distinct entities, and
treat them as identical.30
Consonant with our earlier ruling,31 we hold that the liability of petitioners extends to the responsible
officers acting in the interest of the corporations. In view of the peculiar circumstances of this case, we
disregard the separate personalities of the three (3) corporations and at the same time declare the
members of the corporations jointly and severally liable with the corporations for the monetary awards due
to private respondents. It should always be borne in mind that the fiction of law that a corporation as a
juridical entity has a distinct and separate personality was envisaged for convenience and to serve justice;
therefore it should not be used as a subterfuge to commit injustice and circumvent labor laws.
WHEREFORE, the petition is DENIED and the decision of the National Labor Relations Commission
dated 05 August 1994 is AFFIRMED. Petitioners are ordered to reinstate private respondents to their
former positions without loss of seniority rights and other privileges with full back wages, inclusive of
allowances, computed from the time compensation was withheld up to the time of actual reinstatement. In
the event that reinstatement is no longer feasible, petitioners are directed to pay private respondents
separation pay equivalent to one month salary for every year of service, a fraction of at least six (6)
months being considered one (1) year in the computation thereof, and full back wages computed from the
time compensation was withheld until the finality of this decision. All other claims of the parties are
DISMISSED for lack of merit. Costs against petitioners.
SO ORDERED.
G.R. No. L-21465 March 31, 1966
INDUSTRIAL-COMMERCIAL-AGRICULTURAL WORKERS' ORGANIZATION (ICAWO), petitioner-
appellant,
vs.
COURT OF INDUSTRIAL RELATIONS, CENTRAL AZUCARERA DE PILAR and/or ANTONIO
BELZARENA as Manager, CENTRAL AZUCARERA DE PILAR ALLIED WORKERS ASSOCIATION
(CAPAWA), respondents-appellees.
A. Velez for the petitioner.
Tirol and Tirol for the respondent.
REYES, J.B.L., J.:
Appeal from a decision of the Court of Industrial Relations (Case No.
44-ULP-Iloilo) dismissing charges for unfair labor practice.
On 9 February 1956, the petitioner, Industrial-Commercial-Agricultural Workers' Organization (hereinafter
referred to as the "ICAWO"), declared a strike against the respondent Central Azucarera de Pilar. The
strike was amicably settled the following day, and among the provisions of the "Amicable Settlement"
(Exhibit "C") reads:
That the company shall not discriminate against any worker and the same treatment shall be
accorded to workers (ICAWO affiliates) who declared a strike or not. A petition for Certification
Election will be filed by the ICAWO in view of the other labor union, CAPAWA, with whom the
company has an existing collective bargaining contract, a union which is considered by the
ICAWO as a company union.
The CAPAWA therein referred to is the herein respondent Central Azucarera de Pilar Allied Workers
Association and the collective bargaining contract, likewise therein referred to, entered into in 1955,
provided:
The EMPLOYER agrees that in hiring unskilled employees and laborers, the members of the
WORKERS ASSOCIATION should be given preference and the management should notify
accordingly the WORKERS ASSOCIATION of any vacancy existing in all Departments. New
employees and laborers hired who are members of the WORKERS ASSOCIATION will be on
TEMPORARY STATUS and the EMPLOYER agrees that before they will be considered regular
employees and laborers they have to become members of the CENTRAL AZUCARERA DE
PILAR ALLIED WORKERS' ASSOCIATION within thirty (30) days from the date of employment
and if they refuse to affiliate with the said labor organization within this time they will be
immediately dismissed by the EMPLOYER;
Among the strikers were 101 seasonal workers, some of whom have worked as such for the company
since pre-war years.
On the opening of the milling season for the year 1956-1957, the respondent company refused to re-admit
these 101 seasonal workers of the ICAWO on the ground that it was precluded by the closed-shop clause
in its collective bargaining agreement with the CAPAWA. Thus, on 8 May 1958, the ICAWO filed an unfair
labor practice charge against the company. The Court of Industrial Relations, in its decision dated 27
November 1961, ordered the reinstatement, with back wages, of these laborers; but on a motion for
reconsideration, the said court, en banc, reversed the said decision in its resolution dated 13 August 1962.
Not satisfied with the reversal, the ICAWO filed the present petition for certiorari to review the industrial
court's resolution.
The arguments gravitate around the status of the seasonal workers, the petitioner contending that they
are regular and old employees and, as such, they should have been re-hired at the start, in the month of
October, of each milling season, which usually lasts 5 months. The respondents, on the other hand, urge
that these laborers are new, their employment terminating at the end of each milling season and,
therefore, could not be re-admitted without the company violating the closed-shop agreement with the
CAPAWA.1äwphï1.ñët
In an almost identical case, involving practically the same parties, G.R. No. L-17422, 28 February 1962,
the Court interpreted the closed shop agreement, jam quot, as referring "to future or new employees or
laborers". This interpretation, however, does not resolve the present issue because it does not classify the
seasonal workers one way or the other. A direct precedent, however, exists in the case of Manila Hotel
Company vs. Court of Industrial Relations, et al., L-18873, 30 September 1963, wherein this Court,
alluding to certain employees in the Pines Hotel in Baguio, stated:
x x x x Their status is that of regular seasonal employees who are called to work from time to
time, mostly during summer season. The nature of their relationship with the hotel is such that
during off season they are temporarily laid off but during summer season they are reemployed, or
when their services may be needed. They are not strictly speaking separated from the service
but are merely considered as on leave of absence without pay until they are re-employed. Their
employment relationship is never severed but only suspended. As such, these, employees can
be considered as in the regular employment of the hotel.
The respondent company, however, relies upon the case of Hind Sugar Company vs. Court of Industrial
Relations, et al., L-13364, 26 July 1960. This citation cannot be considered authoritative in the present
case because the Hind case did not actually rule on the temporary character of the employment of
seasonal workers; instead, it affirmed their reinstatement, which the labor court had ordered under Section
10 of the Industrial Peace Act as a solution to a strike, without regard to the permanent or seasonal nature
of the employment of the strikers. Definitely, the Hind case did not deal with seasonal employees that had
been recalled to work year after year during the milling season, thereby creating a reasonable expectation
of continued employment; and for this reason, the Manila Hotel case (supra) sets a rule more in accord
with justice and equity under the conditions shown by the record now before us.
Our conclusion is that petitioners, even if seasonal workers, were not "new workers" within the scope of
the closed shop contract between the sugar central and the CAPAWA union; hence their discharge was
illegal.
In filing the unfair labor practice complaint on 8 May 1958, the petitioner union, under the circumstances,
did not incur laches, because there was no work for these seasonal workers during the off-season, from
March to October. Moreover, the seat of the prosecutor's office was in Cebu, not in Panay, and a
certification election had intervened to absorb the attention of the complainants.
For the foregoing reasons, the resolution under review is hereby set aside, and the court of origin is
directed to order the reinstatement of the 101 seasonal workers to their former positions in the respondent
sugar milling company.
With regard to the petitioners' claim for backpay, this matter should be threshed out in the court below
where the parties must be given opportunity to submit evidence to prove or disprove the employer's good
faith as well as the amounts that petitioners have earned or should have earned during their wrongful lay
off, such amounts being deductible from the backpay due to petitioners (National Labor Union vs. Zip
Venetian Blind Co., L-15827, 31 May 1961; Aboitiz & Co. vs. C.I.R., L-8418, 29 Nov. 1962).
Let the records be returned to the Court of Industrial Relations for further proceedings, in consonance with
this opinion. So ordered.
Bengzon, C.J., Concepcion, Barrera, Regala, Makalintal, Bengzon, J.P., Zaldivar and Sanchez, JJ.,
concur.
Dizon, J., is on leave.
RESOLUTION
August 23, 1966
REYES, J.B.L., J.:
Respondents Central Azucarera de Pilar and its manager have asked this Court to reconsider and reverse
its decision of March 31, 1966. They insist that the seasonal character of the milling activities of the
respondent Central each year necessarily implies that the employment of petitioners ceases after each
milling season.
We do not find this position tenable. The cessation of the Central's milling activities at the end of the
season is certainly not permanent or definitive; it is a foreseeable suspension of work, and both Central
and laborers have reason to expect that such activities will be resumed, as they are in fact resumed, when
sugar cane ripe for milling is again available. There is, therefore, merely a temporary cessation of the
manufacturing process due to passing shortage of raw material that by itself alone is not sufficient, in the
absence of other justified reasons, to sever the employment or labor relationship between the parties,
since the shortage is not permanent. The proof of this assertion is the undenied fact that many of the
petitioner members of the ICAWO Union have been laboring for the Central, and reengaged for many
seasons without interruption. Nor does the Central interrupt completely its operations in the interval
between milling seasons; the office and sales force are maintained, precisely because operations are to
be later resumed.
That during the temporary layoff the laborers are considered free to seek other employment is natural,
since the laborers are not being paid yet must find means of support. A period during which the Central is
forced to suspend or cease operation for a time (whether by reason of lack of cane or by some accident to
its machinery) should not mean starvation for the employees and their families. Of course, the stopping of
the milling at the end of each season, and before the next sugar crop is ready, being regular and foreseen
by both parties to the labor relation, no compensation is expected nor demanded during the seasonal
layoff.
Neither does the fact that the laborers assent to their medical examination at the beginning of each milling
season indicate that a new labor contract is being entered into, in the absence of stipulation to such effect.
Said examination is in the interest not only of the Central but also of the labor force itself and is a mere
precautionary measure.
The seasonal stoppage of work does not, therefore, negate the reasonable expectation of the laborers to
be subsequently allowed to resume work unless there be other justifiable reasons for acting otherwise.
We note again that in the Hind case (Hind Sugar Go. vs. C.I.R., L-13364, July 26, 1960) the
pronouncement of the Industrial Court that reemployment of the seasonal laborers was discretionary in
the employer was not in issue before this Court. All that was declared therein was that the Company
should not be compelled to pay for work not done as it would be inconsistent with the C.I.R.'s own
pronouncement, the legal correctness of which was not being contested. In Manila Hotel Co. vs. C.I.R., L-
18873, September 30, 1963, on the contrary, it was squarely ruled that the employment of the seasonal
laborers is not severed, but only suspended, during the seasonal layoff.
In remanding the case to the Court of Industrial Relations for determination whether the Central acted in
good faith and the employees should be declared entitled to backpay, and the amount due the latter, this
Court took into account that these are matters dependent upon circumstances that the C.I.R. had not
previously inquired into, and particularly the requirement of the Industrial Peace Act (Republic Act 875) in
its section 5(c), that where a person is found engaging in any unfair labor practice, the Industrial Court,
besides issuing a cease and desist order, must.
take such affirmative action as will effectuate the policies of this Act,
a rule that implies exercise of judgment and discretion by the Industrial Court, based on facts and
considerations not now brought to our attention.
Wherefore, the motion for reconsideration is denied.
Concepcion, Barrera, Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur.
Regala, J., is on leave.
G.R. No. 193493 June 13, 2013
JAIME N. GAPAYAO, Petitioner,
vs.
ROSARIO FULO, SOCIAL SECURITY SYSTEM and SOCIAL SECURITY COMMISSION, Respondents.
DECISION
SERENO, CJ.:
This is a Rule 45 Petition1 assailing the Decision2 and Resolution3 of the Court of Appeals (CA) in CA-G.R.
SP. No. 101688, affirming the Resolution4 of the Social Security Commission (SSC). The SSC held
petitioner Jaime N. Gapayao liable to pay the unpaid social security contributions due to the deceased
Jaime Fulo, and the Social Security System (SSS) to pay private respondent Rosario L. Fulo, the widow of
the deceased, the appropriate death benefits pursuant to the Social Security Law.
The antecedent facts are as follows:
On 4 November 1997, Jaime Fulo (deceased) died of "acute renal failure secondary to 1st degree burn
70% secondary electrocution"5 while doing repairs at the residence and business establishment of
petitioner located at San Julian, Irosin, Sorsogon.
Allegedly moved by his Christian faith, petitioner extended some financial assistance to private
respondent. On 16 November 1997, the latter executed an Affidavit of Desistance6 stating that she was
not holding them liable for the death of her late husband, Jaime Fulo, and was thereby waiving her right
and desisting from filing any criminal or civil action against petitioner.
On 14 January 1998, both parties executed a Compromise Agreement,7 the relevant portion of which is
quoted below:
We, the undersigned unto this Honorable Regional Office/District Office/Provincial Agency Office
respectfully state:
1. The undersigned employer, hereby agrees to pay the sum of FORTY THOUSAND PESOS
(₱40,000.00) to the surviving spouse of JAIME POLO, an employee who died of an accident, as
a complete and full payment for all claims due the victim.
2. On the other hand, the undersigned surviving spouse of the victim having received the said
amount do [sic] hereby release and discharge the employer from any and all claims that maybe
due the victim in connection with the victim’s employment thereat.
Thereafter, private respondent filed a claim for social security benefits with the Social Security System
(SSS)–Sorosogon Branch.8 However, upon verification and evaluation, it was discovered that the
deceased was not a registered member of the SSS.9
Upon the insistence of private respondent that her late husband had been employed by petitioner from
January 1983 up to his untimely death on 4 November 1997, the SSS conducted a field investigation to
clarify his status of employment. In its field investigation report,10 it enumerated its findings as follows:
In connection with the complaint filed by Mrs. Rosario Fulo, hereunder are the findings per interview with
Mr. Leonor Delgra, Santiago Bolanos and Amado Gacelo:
1. That Mr. Jaime Fulo was an employee of Jaime Gapayao as farm laborer from 1983 to 1997.
2. Mr. Leonor Delgra and Santiago Bolanos are co-employees of Jaime Fulo.
3. Mr. Jaime Fulo receives compensation on a daily basis ranging from ₱5.00 to ₱60.00 from
1983 to 1997.
Per interview from Mrs. Estela Gapayao, please be informed that:
1. Jaime Fulo is an employee of Mr. & Mrs. Jaime Gapayao on an extra basis.
2. Sometimes Jaime Fulo is allowed to work in the farm as abaca harvester and earn 1/3 share
of its harvest as his income.
3. Mr. & Mrs. Gapayao hired the services of Jaime Fulo not only in the farm as well as in doing
house repairs whenever it is available. Mr. Fulo receives his remuneration usually in the
afternoon after doing his job.
4. Mr. & Mrs. Gapayao hires 50-100 persons when necessary to work in their farm as laborer and
Jaime Fulo is one of them. Jaime Fulo receives more or less ₱50.00 a day. (Emphases in the
original)
Consequently, the SSS demanded that petitioner remit the social security contributions of the deceased.
When petitioner denied that the deceased was his employee, the SSS required private respondent to
present documentary and testimonial evidence to refute petitioner’s allegations.11
Instead of presenting evidence, private respondent filed a Petition12 before the SSC on 17 February 2003.
In her Petition, she sought social security coverage and payment of contributions in order to avail herself
of the benefits accruing from the death of her husband.
On 6 May 2003, petitioner filed an Answer13 disclaiming any liability on the premise that the deceased was
not the former’s employee, but was rather an independent contractor whose tasks were not subject to
petitioner’s control and supervision.14 Assuming arguendo that the deceased was petitioner’s employee,
he was still not entitled to be paid his SSS premiums for the intervening period when he was not at work,
as he was an "intermittent worker who was only summoned every now and then as the need
arose."15 Hence, petitioner insisted that he was under no obligation to report the former’s demise to the
SSS for social security coverage.
Subsequently, on 30 June 2003, the SSS filed a Petition-in-Intervention16 before the SSC, outlining the
factual circumstances of the case and praying that judgment be rendered based on the evidence adduced
by the parties.
On 14 March 2007, the SSC rendered a Resolution,17 the dispositive portion of which provides:
WHEREFORE, PREMISES CONSIDERED, this Commission finds, and so holds, that Jaime Fulo, the late
husband of petitioner, was employed by respondent Jaime N. Gapayao from January 1983 to November
4, 1997, working for nine (9) months a year receiving the minimum wage then prevailing.
Accordingly, the respondent is hereby ordered to pay ₱45,315.95 representing the unpaid SS
contributions due on behalf of deceased Jaime Fulo, the amount of ₱217,710.33 as 3% per month penalty
for late remittance thereof, computed as of March 30, 2006, without prejudice to the collection of additional
penalty accruing thereafter, and the sum of ₱230,542.20 (SSS) and ₱166,000.00 (EC) as damages for the
failure of the respondent to report the deceased Jaime Fulo for SS coverage prior to his death pursuant to
Section 24(a) of the SS Law, as amended.
The SSS is hereby directed to pay petitioner Rosario Fulo the appropriate death benefit, pursuant to
Section 13 of the SS Law, as amended, as well as its prevailing rules and regulations, and to inform this
Commission of its compliance herewith.
SO ORDERED.
On 18 May 2007, petitioner filed a Motion for Reconsideration,18 which was denied in an Order19 dated 16
August 2007.
Aggrieved, petitioner appealed to the CA on 19 December 2007.20 On 17 March 2010, the CA rendered a
Decision21 in favor of private respondent, as follows:
In fine, public respondent SSC had sufficient basis in concluding that private respondent’s husband was
an employee of petitioner and should, therefore, be entitled to compulsory coverage under the Social
Security Law.
Having ruled in favor of the existence of employer-employee relationship between petitioner and the late
Jaime Fulo, it is no longer necessary to dwell on the other issues raised.
Resultantly, for his failure to report Jaime Fulo for compulsory social security coverage, petitioner should
bear the consequences thereof. Under the law, an employer who fails to report his employee for social
security coverage is liable to [1] pay the benefits of those who die, become disabled, get sick or reach
retirement age; [2] pay all unpaid contributions plus a penalty of three percent per month; and [3] be held
liable for a criminal offense punishable by fine and/or imprisonment. But an employee is still entitled to
social security benefits even is (sic) his employer fails or refuses to remit his contribution to the SSS.
WHEREFORE, premises considered, the Resolution appealed from is AFFIRMED in toto.
SO ORDERED.
In holding thus, the CA gave credence to the findings of the SSC. The appellate court held that it "does not
follow that a person who does not observe normal hours of work cannot be deemed an employee."22 For
one, it is not essential for the employer to actually supervise the performance of duties of the employee; it
is sufficient that the former has a right to wield the power. In this case, petitioner exercised his control
through an overseer in the person of Amado Gacelo, the tenant on petitioner’s land.23 Most important,
petitioner entered into a Compromise Agreement with private respondent and expressly admitted therein
that he was the employer of the deceased.24The CA interpreted this admission as a declaration against
interest, pursuant to Section 26, Rule 130 of the Rules of Court.25
Hence, this petition.
Public respondents SSS26 and SSC27 filed their Comments on 31 January 2011 and 28 February 2011,
respectively, while private respondent filed her Comment on 14 March 2011.28 On 6 March 2012, petitioner
filed a "Consolidated Reply to the Comments of the Public Respondents SSS and SSC and Private
Respondent Rosario Fulo."29
ISSUE
The sole issue presented before us is whether or not there exists between the deceased Jaime Fulo and
petitioner an employer-employee relationship that would merit an award of benefits in favor of private
respondent under social security laws.
THE COURT’S RULING
In asserting the existence of an employer-employee relationship, private respondent alleges that her late
husband had been in the employ of petitioner for 14 years, from 1983 to 1997.30 During that period, he
was made to work as a laborer in the agricultural landholdings, a harvester in the abaca plantation, and a
repairman/utility worker in several business establishments owned by petitioner.31 To private respondent,
the "considerable length of time during which [the deceased] was given diverse tasks by petitioner was a
clear indication of the necessity and indispensability of her late husband’s services to petitioner’s
business."32 This view is bolstered by the admission of petitioner himself in the Compromise Agreement
that he was the deceased’s employer.33
Private respondent’s position is similarly espoused by the SSC, which contends that its findings are duly
supported by evidence on record.34 It insists that pakyaw workers are considered employees, as long as
the employer exercises control over them. In this case, the exercise of control by the employer was
delegated to the caretaker of his farm, Amado Gacelo. The SSC further asserts that the deceased
rendered services essential for the petitioner’s harvest. While these services were not rendered
continuously (in the sense that they were not rendered every day throughout the year), still, the deceased
had never stopped working for petitioner from year to year until the day the former died.35 In fact, the
deceased was required to work in the other business ventures of petitioner, such as the latter’s bakery
and grocery store.36 The Compromise Agreement entered into by petitioner with private respondent should
not be a bar to an employee demanding what is legally due the latter.37
The SSS, while clarifying that it is "neither adversarial nor favoring any of the private parties x x x as it is
only tasked to carry out the purposes of the Social Security Law,"38 agrees with both private respondent
and SSC. It stresses that factual findings of the lower courts, when affirmed by the appellate court, are
generally conclusive and binding upon the Court.39
Petitioner, on the other hand, insists that the deceased was not his employee. Supposedly, the latter,
during the performance of his function, was not under petitioner’s control. Control is not necessarily
present even if the worker works inside the premises of the person who has engaged his
services.40 Granting without admitting that petitioner gave rules or guidelines to the deceased in the
process of the latter’s performing his work, the situation cannot be interpreted as control, because it was
only intended to promote mutually desired results.41
Alternatively, petitioner insists that the deceased was hired by Adolfo Gamba, the contractor whom he had
hired to construct their building;42 and by Amado Gacelo, the tenant whom petitioner instructed to manage
the latter’s farm.43 For this reason, petitioner believes that a tenant is not beholden to the landlord and is
not under the latter’s control and supervision. So if a worker is hired to work on the land of a tenant – such
as petitioner – the former cannot be the worker of the landlord, but of the tenant’s.44
Anent the Compromise Agreement, petitioner clarifies that it was executed to buy peace, because
"respondent kept on pestering them by asking for money."45 Petitioner allegedly received threats that if the
matter was not settled, private respondent would refer the matter to the New Peoples’ Army.46 Allegedly,
the Compromise Agreement was "extortion camouflaged as an agreement."47 Likewise, petitioner
maintains that he shouldered the hospitalization and burial expenses of the deceased to express his
"compassion and sympathy to a distressed person and his family," and not to admit liability.48
Lastly, petitioner alleges that the deceased is a freelance worker. Since he was engaged on a pakyaw
basis and worked for a short period of time, in the nature of a farm worker every season, he was not
precluded from working with other persons and in fact worked for them. Under Article 280 of the Labor
Code,49 seasonal employees are not covered by the definitions of regular and casual
employees.50 Petitioner cites Mercado, Sr. v. NLRC,51 in which the Court held that seasonal workers do not
become regular employees by the mere fact that they have rendered at least one year of service, whether
continuous or broken.52
We see no cogent reason to reverse the CA.
I
Findings of fact of the SSC are given weight and credence.
At the outset, it is settled that the Court is not a trier of facts and will not weigh evidence all over again.
Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally accorded not only respect but
finality when affirmed by the CA.53 For as long as these findings are supported by substantial evidence,
they must be upheld.54
II
Farm workers may be considered regular seasonal employees.
Article 280 of the Labor Code states:
Article 280. Regular and Casual Employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for
a specific project or undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is seasonal in nature and
the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one year of service whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such actually exists.
Jurisprudence has identified the three types of employees mentioned in the provision: (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
performed for the duration of the season; and (3) casual employees or those who are neither regular nor
project employees.55
Farm workers generally fall under the definition of seasonal employees. We have consistently held that
seasonal employees may be considered as regular employees.56 Regular seasonal employees are those
called to work from time to time. 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.57 They are in regular employment because of the nature of their job,and not because of
the length of time they have worked.58
The rule, however, is not absolute. In Hacienda Fatima v. National Federation of Sugarcane Workers-
Food & General Trade,59 the Court held that seasonal workers who have worked for one season only may
not be considered regular employees. Similarly, in Mercado, Sr. v. NLRC,60 it was held that when seasonal
employees are free to contract their services with other farm owners, then the former are not regular
employees.
For regular employees to be considered as such, the primary standard used is the reasonable connection
between the particular activity they perform and the usual trade or business of the employer.61 This test
has been explained thoroughly in De Leon v. NLRC,62 viz:
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.
A reading of the records reveals that the deceased was indeed a farm worker who was in the regular
employ of petitioner. From year to year, starting January 1983 up until his death, the deceased had been
working on petitioner’s land by harvesting abaca and coconut, processing copra, and clearing weeds. His
employment was continuous in the sense that it was done for more than one harvesting season.
Moreover, no amount of reasoning could detract from the fact that these tasks were necessary or
desirable in the usual business of petitioner.
The other tasks allegedly done by the deceased outside his usual farm work only bolster the existence of
an employer-employee relationship. As found by the SSC, the deceased was a construction worker in the
building and a helper in the bakery, grocery, hardware, and piggery – all owned by petitioner.63 This fact
only proves that even during the off season, the deceased was still in the employ of petitioner.
The most telling indicia of this relationship is the Compromise Agreement executed by petitioner and
private respondent. It is a valid agreement as long as the consideration is reasonable and the employee
signed the waiver voluntarily, with a full understanding of what he or she was entering into.64 All that is
required for the compromise to be deemed voluntarily entered into is personal and specific individual
consent.65 Once executed by the workers or employees and their employers to settle their differences, and
done in good faith, a Compromise Agreement is deemed valid and binding among the parties.66
Petitioner entered into the agreement with full knowledge that he was described as the employer of the
deceased.67This knowledge cannot simply be denied by a statement that petitioner was merely forced or
threatened into such an agreement.1âwphi1 His belated attempt to circumvent the agreement should not
be given any consideration or weight by this Court.
III
Pakyaw workers are regular employees,
provided they are subject to the control of petitioner.
Pakyaw workers are considered employees for as long as their employers exercise control over them. In
Legend Hotel Manila v. Realuyo,68 the Court held that "the power of the employer to control the work of the
employee is considered the most significant determinant of the existence of an employer-employee
relationship. This is the so-called control test and is premised on whether the person for whom the
services are performed reserves the right to control both the end achieved and the manner and means
used to achieve that end." It should be remembered that the control test merely calls for the existence of
the right to control, and not necessarily the exercise thereof.69 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.70
In this case, we agree with the CA that petitioner wielded control over the deceased in the discharge of his
functions. Being the owner of the farm on which the latter worked, petitioner – on his own or through his
overseer – necessarily had the right to review the quality of work produced by his laborers. It matters not
whether the deceased conducted his work inside petitioner’s farm or not because petitioner retained the
right to control him in his work, and in fact exercised it through his farm manager Amado Gacelo. The
latter himself testified that petitioner had hired the deceased as one of the pakyaw workers whose salaries
were derived from the gross proceeds of the harvest.71
We do not give credence to the allegation that the deceased was an independent contractor hired by a
certain Adolfo Gamba, the contractor whom petitioner himself had hired to build a building. The allegation
was based on the self-serving testimony of Joyce Gapay Demate,72 the daughter of petitioner. The latter
has not offered any other proof apart from her testimony to prove the contention.
The right of an employee to be covered by the Social Security Act is premised on the existence of an
employer-employee relationship.73 That having been established, the Court hereby rules in h1vor of
private respondent.
WHEREFORE, the Petition for Review on Certiorari is hereby DENIED. The assailed Decision and
resolution of the Court of Appeals in CA-G.R. SP. No. 101688 dated 17 March 2010 and 13 August 2010,
respectively, are hereby AFFIRMED.
SO ORDERED.
G.R. No. L-48494 February 5, 1990
BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners,
vs.
RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President, and
DOROTEO R. ALEGRE, respondents.
Quasha, Asperilla, Ancheta, Peña & Nolasco for petitioners.
Mauricio G. Domogon for respondent Alegre.
NARVASA, J.:
The question presented by the proceedings at bar 1 is whether or not the provisions of the Labor
Code, 2 as amended,3 have anathematized "fixed period employment" or employment for a term.
The root of the controversy at bar is an employment contract in virtue of which Doroteo R. Alegre was
engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. 4 The contract
fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the
agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973,
and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those
contained in the original contract of July 18, 1971. 5
Some three months before the expiration of the stipulated period, or more precisely on April 20,1976,
Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the
termination of his services effective on July 16, 1976. The stated ground for the termination was
"completion of contract, expiration of the definite period of employment." And a month or so later, on May
26, 1976, Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the phrase,
"in full payment of services for the period May 16, to July 17, 1976 as full payment of contract."
However, at the investigation conducted by a Labor Conciliator of said report of termination of his
services, Alegre protested the announced termination of his employment. He argued that although his
contract did stipulate that the same would terminate on July 17, 1976, since his services were necessary
and desirable in the usual business of his employer, and his employment had lasted for five years, he had
acquired the status of a regular employee and could not be removed except for valid cause. 6 The
Regional Director considered Brent School's report as an application for clearance to terminate
employment (not a report of termination), and accepting the recommendation of the Labor Conciliator,
refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent
employee," to his former position without loss of seniority rights and with full back wages. The Director
pronounced "the ground relied upon by the respondent (Brent) in terminating the services of the
complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite oddly, as prohibited by Circular No.
8, series of 1969, of the Bureau of Private Schools. 7
Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded
the case to the Secretary of Labor for review. 8 The latter sustained the Regional Director. 9 Brent
appealed to the Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack of
merit and affirmed the Labor Secretary's decision, ruling that Alegre was a permanent employee who
could not be dismissed except for just cause, and expiration of the employment contract was not one of
the just causes provided in the Labor Code for termination of services. 10
The School is now before this Court in a last attempt at vindication. That it will get here.
The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time
when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. Indeed, the Code did
not come into effect until November 1, 1974, some three years after the perfection of the employment
contract, and rights and obligations thereunder had arisen and been mutually observed and enforced.
At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity of
term employment. It was impliedly but nonetheless clearly recognized by the Termination Pay Law, R.A.
1052, 11 as amended by R.A. 1787. 12 Basically, this statute provided that—
In cases of employment, without a definite period, in a commercial, industrial, or
agricultural establishment or enterprise, the employer or the employee may terminate at
any time the employment with just cause; or without just cause in the case of an
employee by serving written notice on the employer at least one month in advance, or in
the case of an employer, by serving such notice to the employee at least one month in
advance or one-half month for every year of service of the employee, whichever is
longer, a fraction of at least six months being considered as one whole year.
The employer, upon whom no such notice was served in case of termination of
employment without just cause, may hold the employee liable for damages.
 The employee, upon whom no such notice was served in case of termination of
employment without just cause, shall be entitled to compensation from the date of
termination of his employment in an amount equivalent to his salaries or wages
corresponding to the required period of notice.
There was, to repeat, clear albeit implied recognition of the licitness of term employment. RA 1787 also
enumerated what it considered to be just causes for terminating an employment without a definite period,
either by the employer or by the employee without incurring any liability therefor.
Prior, thereto, it was the Code of Commerce which governed employment without a fixed period, and also
implicitly acknowledged the propriety of employment with a fixed period. Its Article 302 provided that —
In cases in which the contract of employment does not have a fixed period, any of the
parties may terminate it, notifying the other thereof one month in advance.
The factor or shop clerk shall have a right, in this case, to the salary corresponding to
said month.
The salary for the month directed to be given by the said Article 302 of the Code of Commerce to
the factor or shop clerk, was known as the mesada (from mes, Spanish for "month"). When
Article 302 (together with many other provisions of the Code of Commerce) was repealed by the
Civil Code of the Philippines, Republic Act No. 1052 was enacted avowedly for the precise
purpose of reinstating the mesada.
Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on
August 30,1950, itself deals with obligations with a period in section 2, Chapter 3, Title I, Book IV; and with
contracts of labor and for a piece of work, in Sections 2 and 3, Chapter 3, Title VIII, respectively, of Book
IV. No prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise
deducible therefrom.
It is plain then that when the employment contract was signed between Brent School and Alegre on July
18, 1971, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof
Stipulations for a term were explicitly recognized as valid by this Court, for instance, in Biboso v. Victorias
Milling Co., Inc., promulgated on March 31, 1977, 13 and J. Walter Thompson Co. (Phil.) v. NLRC,
promulgated on December 29, 1983. 14 The Thompson case involved an executive who had been
engaged for a fixed period of three (3) years. Biboso involved teachers in a private school as regards
whom, the following pronouncement was made:
What is decisive is that petitioners (teachers) were well aware an the time that their
tenure was for a limited duration. Upon its termination, both parties to the employment
relationship were free to renew it or to let it lapse. (p. 254)
Under American law 15 the principle is the same. "Where a contract specifies the period of its duration, it
terminates on the expiration of such period." 16 "A contract of employment for a definite period terminates
by its own terms at the end of such period." 17
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor
Code (Presidential Decree No. 442), which went into effect on November 1, 1974. The Code contained
explicit references to fixed period employment, or employment with a fixed or definite period.
Nevertheless, obscuration of the principle of licitness of term employment began to take place at about
this time
Article 320, entitled "Probationary and fixed period employment," originally stated that the "termination of
employment of probationary employees and those employed WITH A FIXED PERIOD shall be subject to
such regulations as the Secretary of Labor may prescribe." The asserted objective to was "prevent the
circumvention of the right of the employee to be secured in their employment as provided . . . (in the
Code)."
Article 321 prescribed the just causes for which an employer could terminate "an employment without a
definite period."
And Article 319 undertook to define "employment without a fixed period" in the following manner: 18
An employment shall be deemed to be without a definite period for purposes of this
Chapter where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
The question immediately provoked by a reading of Article 319 is whether or not a voluntary agreement on
a fixed term or period would be valid where the employee "has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer." The definition seems
a non sequitur. From the premise — that the duties of an employee entail "activities which are usually
necessary or desirable in the usual business or trade of the employer the" — conclusion does not
necessarily follow that the employer and employee should be forbidden to stipulate any period of time for
the performance of those activities. There is nothing essentially contradictory between a definite period of
an employment contract and the nature of the employee's duties set down in that contract as being
"usually necessary or desirable in the usual business or trade of the employer." The concept of the
employee's duties as being "usually necessary or desirable in the usual business or trade of the employer"
is not synonymous with or identical to employment with a fixed term. Logically, the decisive determinant in
term employment should not be the activities that the employee is called upon to perform, but the day
certain agreed upon by the parties for the commencement and termination of their employment
relationship, a day certain being understood to be "that which must necessarily come, although it may not
be known when." 19 Seasonalemployment, and employment for a particular project are merely instances
employment in which a period, where not expressly set down, necessarily implied.
Of course, the term — period has a definite and settled signification. It means, "Length of existence;
duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a bound;
conclusion; termination. A series of years, months or days in which something is completed. A time of
definite length. . . . the period from one fixed date to another fixed date . . ." 20 It connotes a "space of time
which has an influence on an obligation as a result of a juridical act, and either suspends its
demandableness or produces its extinguishment." 21 It should be apparent that this settled and familiar
notion of a period, in the context of a contract of employment, takes no account at all of the nature of the
duties of the employee; it has absolutely no relevance to the character of his duties as being "usually
necessary or desirable to the usual business of the employer," or not.
Subsequently, the foregoing articles regarding employment with "a definite period" and "regular"
employment were amended by Presidential Decree No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the
reference to persons "employed with a fixed period," and was renumbered (becoming Article 271). The
article 22 now reads:
. . . Probationary employment.—Probationary employment shall not exceed six months
from the date the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been
engaged in a probationary basis may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with reasonable standards made known by
the employer to the employee at the time of his engagement. An employee who is
allowed to work after a probationary period shall be considered a regular employee.
Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra) by
(a) deleting mention of employment with a fixed or definite period, (b) adding a general exclusion clause
declaring irrelevant written or oral agreements "to the contrary," and (c) making the provision treat
exclusively of "regular" and "casual" employment. As revised, said article, renumbered 270, 23 now reads:
. . . Regular and Casual Employment.—The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or service to be
employed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to he casual if it is not covered by the preceding
paragraph: provided,that, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such actually exists.
The first paragraph is identical to Article 319 except that, as just mentioned, a clause has been
added, to wit: "The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreements of the parties . . ." The clause would appear to be
addressed inter alia to agreements fixing a definite period for employment. There is withal no
clear indication of the intent to deny validity to employment for a definite period. Indeed, not only
is the concept of regular employment not essentially inconsistent with employment for a fixed
term, as above pointed out, Article 272 of the Labor Code, as amended by said PD 850, still
impliedly acknowledged the propriety of term employment: it listed the "just causes" for which "an
employer may terminate employment without a definite period," thus giving rise to the inference
that if the employment be with a definite period, there need be no just cause for termination
thereof if the ground be precisely the expiration of the term agreed upon by the parties for the
duration of such employment.
Still later, however, said Article 272 (formerly Article 321) was further amended by Batas Pambansa
Bilang 130, 24 to eliminate altogether reference to employment without a definite period. As lastly
amended, the opening lines of the article (renumbered 283), now pertinently read: "An employer may
terminate an employment for any of the following just causes: . . . " BP 130 thus completed the elimination
of every reference in the Labor Code, express or implied, to employment with a fixed or definite period or
term.
It is in the light of the foregoing description of the development of the provisions of the Labor Code bearing
on term or fixed-period employment that the question posed in the opening paragraph of this opinion
should now be addressed. Is it then the legislative intention to outlaw stipulations in employment contracts
laying down a definite period therefor? Are such stipulations in essence contrary to public policy and
should not on this account be accorded legitimacy?
On the one hand, there is the gradual and progressive elimination of references to term or fixed-period
employment in the Labor Code, and the specific statement of the rule 25 that—
. . . Regular and Casual Employment.— The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or service to be
employed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: provided,that, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such actually exists.
There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the
validity and propriety of contracts and obligations with a fixed or definite period, and imposes no restraints
on the freedom of the parties to fix the duration of a contract, whatever its object, be it specie, goods or
services, except the general admonition against stipulations contrary to law, morals, good customs, public
order or public policy. 26 Under the Civil Code, therefore, and as a general proposition, fixed-term
employment contracts are not limited, as they are under the present Labor Code, to those by nature
seasonal or for specific projects with pre-determined dates of completion; they also include those to which
the parties by free choice have assigned a specific date of termination.
Some familiar examples may be cited of employment contracts which may be neither for seasonal work
nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas
employment contracts, for one, to which, whatever the nature of the engagement, the concept of regular
employment will all that it implies does not appear ever to have been applied, Article 280 of the Labor
Code not withstanding; also appointments to the positions of dean, assistant dean, college secretary,
principal, and other administrative offices in educational institutions, which are by practice or tradition
rotated among the faculty members, and where fixed terms are a necessity, without which no reasonable
rotation would be possible. Similarly, despite the provisions of Article 280, Policy, Instructions No. 8 of the
Minister of Labor 27 implicitly recognize that certain company officials may be elected for what would
amount to fixed periods, at the expiration of which they would have to stand down, in providing that these
officials," . . . may lose their jobs as president, executive vice-president or vice-president, etc. because the
stockholders or the board of directors for one reason or another did not re-elect them."
There can of course be no quarrel with the proposition that where from the circumstances it is apparent
that periods have been imposed to preclude acquisition of tenurial security by the employee, they should
be struck down or disregarded as contrary to public policy, morals, etc. But where no such intent to
circumvent the law is shown, or stated otherwise, where the reason for the law does not exist, e.g., where
it is indeed the employee himself who insists upon a period or where the nature of the engagement is
such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non,
would an agreement fixing a period be essentially evil or illicit, therefore anathema? Would such an
agreement come within the scope of Article 280 which admittedly was enacted "to prevent the
circumvention of the right of the employee to be secured in . . . (his) employment?"
As it is evident from even only the three examples already given that Article 280 of the Labor Code, under
a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which
the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable
distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement,
it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given
a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term
employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's
using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose
to spite the face or, more relevantly, curing a headache by lopping off the head.
It is a salutary principle in statutory construction that there exists a valid presumption
that undesirable consequences were never intended by a legislative measure, and that
a construction of which the statute is fairly susceptible is favored, which will avoid all
objecionable mischievous, undefensible, wrongful, evil and injurious consequences. 28
Nothing is better settled than that courts are not to give words a meaning which would
lead to absurd or unreasonable consequences. That s a principle that does back to In re
Allen decided oil October 27, 1903, where it was held that a literal interpretation is to be
rejected if it would be unjust or lead to absurd results. That is a strong argument against
its adoption. The words of Justice Laurel are particularly apt. Thus: "The fact that the
construction placed upon the statute by the appellants would lead to an absurdity is
another argument for rejecting it. . . ." 29
. . . We have, here, then a case where the true intent of the law is clear that calls for the
application of the cardinal rule of statutory construction that such intent of spirit must
prevail over the letter thereof, for whatever is within the spirit of a statute is within the
statute, since adherence to the letter would result in absurdity, injustice and
contradictions and would defeat the plain and vital purpose of the statute. 30
Accordingly, and since the entire purpose behind the development of legislation culminating in the present
Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent
circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately
and completely ruling out all written or oral agreements conflicting with the concept of regular employment
as defined therein should be construed to refer to the substantive evil that the Code itself has singled out:
agreements entered into precisely to circumvent security of tenure. It should have no application to
instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent, or where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms with no moral dominance whatever being
exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply
to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust
in its effects and apt to lead to absurd and unintended consequences.
Such interpretation puts the seal on Bibiso 31 upon the effect of the expiry of an agreed period of
employment as still good rule—a rule reaffirmed in the recent case of Escudero vs. Office of the
President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served
by her school a notice of termination following the expiration of the last of three successive fixed-term
employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her
employment was probationary, contractual in nature, and one with a definitive period. At
the expiration of the period stipulated in the contract, her appointment was deemed
terminated and the letter informing her of the non-renewal of her contract is not a
condition sine qua non before Reyes may be deemed to have ceased in the employ of
petitioner UST. The notice is a mere reminder that Reyes' contract of employment was
due to expire and that the contract would no longer be renewed. It is not a letter of
termination. The interpretation that the notice is only a reminder is consistent with the
court's finding in Labajo supra. ...32
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last
contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written
advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending
expiration of his contract, not a letter of termination, nor an application for clearance to terminate which
needed the approval of the Department of Labor to make the termination of his services effective. In any
case, such clearance should properly have been given, not denied.
WHEREFORE, the public respondent's Decision complained of is REVERSED and SET ASIDE.
Respondent Alegre's contract of employment with Brent School having lawfully terminated with and by
reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement
and the other relief awarded and confirmed on appeal in the proceedings below. No pronouncement as to
costs.
SO ORDERED.
G.R. No. 170087 August 31, 2006
ANGELINA FRANCISCO, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI,
TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON
ESCUETA, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the
Decision and Resolution of the Court of Appeals dated October 29, 2004 1 and October 7,
2005, 2 respectively, in CA-G.R. SP No. 78515 dismissing the complaint for constructive dismissal filed by
herein petitioner Angelina Francisco. The appellate court reversed and set aside the Decision of the
National Labor Relations Commission (NLRC) dated April 15, 2003, 3 in NLRC NCR CA No. 032766-02
which affirmed with modification the decision of the Labor Arbiter dated July 31, 2002, 4 in NLRC-NCR
Case No. 30-10-0-489-01, finding that private respondents were liable for constructive dismissal.
In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as
Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liaison Officer to the City of Makati to secure business permits,
construction permits and other licenses for the initial operation of the company. 5
Although she was designated as Corporate Secretary, she was not entrusted with the corporate
documents; neither did she attend any board meeting nor required to do so. She never prepared any legal
document and never represented the company as its Corporate Secretary. However, on some occasions,
she was prevailed upon to sign documentation for the company. 6
In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant
in lieu of petitioner. As Acting Manager, petitioner was assigned to handle recruitment of all employees
and perform management administration functions; represent the company in all dealings with
government agencies, especially with the Bureau of Internal Revenue (BIR), Social Security System
(SSS) and in the city government of Makati; and to administer all other matters pertaining to the operation
of Kasei Restaurant which is owned and operated by Kasei Corporation. 7
For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary
was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. 8
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was
required to sign a prepared resolution for her replacement but she was assured that she would still be
connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting of all
employees of Kasei Corporation and announced that nothing had changed and that petitioner was still
connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR
matters. 9
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to
September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her
mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did not
receive her salary from the company. She made repeated follow-ups with the company cashier but she
was advised that the company was not earning well. 10
On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was
informed that she is no longer connected with the company. 11
Since she was no longer paid her salary, petitioner did not report for work and filed an action for
constructive dismissal before the labor arbiter.
Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that
petitioner was hired in 1995 as one of its technical consultants on accounting matters and act concurrently
as Corporate Secretary. As technical consultant, petitioner performed her work at her own discretion
without control and supervision of Kasei Corporation. Petitioner had no daily time record and she came to
the office any time she wanted. The company never interfered with her work except that from time to time,
the management would ask her opinion on matters relating to her profession. Petitioner did not go through
the usual procedure of selection of employees, but her services were engaged through a Board
Resolution designating her as technical consultant. The money received by petitioner from the corporation
was her professional fee subject to the 10% expanded withholding tax on professionals, and that she was
not one of those reported to the BIR or SSS as one of the company’s employees. 12
Petitioner’s designation as technical consultant depended solely upon the will of management. As such,
her consultancy may be terminated any time considering that her services were only temporary in nature
and dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private respondents submitted a list of
employees for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among
the employees reported to the BIR, as well as a list of payees subject to expanded withholding tax which
included petitioner. SSS records were also submitted showing that petitioner’s latest employer was Seiji
Corporation. 13
The Labor Arbiter found that petitioner was illegally dismissed, thus:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. finding complainant an employee of respondent corporation;
2. declaring complainant’s dismissal as illegal;
3. ordering respondents to reinstate complainant to her former position without loss of seniority rights and
jointly and severally pay complainant her money claims in accordance with the following computation:
a. Backwages 10/2001 – 07/2002 275,000.00
(27,500 x 10 mos.)
b. Salary Differentials (01/2001 – 09/2001) 22,500.00
c. Housing Allowance (01/2001 – 07/2002) 57,000.00
d. Midyear Bonus 2001 27,500.00
e. 13th Month Pay 27,500.00
f. 10% share in the profits of Kasei
Corp. from 1996-2001 361,175.00
g. Moral and exemplary damages 100,000.00
h. 10% Attorney’s fees 87,076.50
P957,742.50
If reinstatement is no longer feasible, respondents are ordered to pay complainant separation pay with
additional backwages that would accrue up to actual payment of separation pay.
SO ORDERED. 14
On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter, the dispositive
portion of which reads:
PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby MODIFIED as follows:
1) Respondents are directed to pay complainant separation pay computed at one month per year of
service in addition to full backwages from October 2001 to July 31, 2002;
2) The awards representing moral and exemplary damages and 10% share in profit in the respective
accounts of P100,000.00 and P361,175.00 are deleted;
3) The award of 10% attorney’s fees shall be based on salary differential award only;
4) The awards representing salary differentials, housing allowance, mid year bonus and 13th month pay
are AFFIRMED.
SO ORDERED. 15
On appeal, the Court of Appeals reversed the NLRC decision, thus:
WHEREFORE, the instant petition is hereby GRANTED. The decision of the National Labor Relations
Commissions dated April 15, 2003 is hereby REVERSED and SET ASIDE and a new one is hereby
rendered dismissing the complaint filed by private respondent against Kasei Corporation, et al. for
constructive dismissal.
SO ORDERED. 16
The appellate court denied petitioner’s motion for reconsideration, hence, the present recourse.
The core issues to be resolved in this case are (1) whether there was an employer-employee relationship
between petitioner and private respondent Kasei Corporation; and if in the affirmative, (2) whether
petitioner was illegally dismissed.
Considering the conflicting findings by the Labor Arbiter and the National Labor Relations Commission on
one hand, and the Court of Appeals on the other, there is a need to reexamine the records to determine
which of the propositions espoused by the contending parties is supported by substantial evidence. 17
We held in Sevilla v. Court of Appeals 18 that in this jurisdiction, there has been no uniform test to
determine the existence of an employer-employee relation. Generally, courts have relied on the so-called
right of control test where the person for whom the services are performed reserves a right to control not
only the end to be achieved but also the means to be used in reaching such end. In addition to the
standard of right-of-control, the existing economic conditions prevailing between the parties, like the
inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee
relationship.
However, in certain cases the control test is not sufficient to give a complete picture of the relationship
between the parties, owing to the complexity of such a relationship where several positions have been
held by the worker. There are instances when, aside from the employer’s power to control the employee
with respect to the means and methods by which the work is to be accomplished, economic realities of the
employment relations help provide a comprehensive analysis of the true classification of the individual,
whether as employee, independent contractor, corporate officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employer’s
power to control the employee with respect to the means and methods by which the work is to be
accomplished; and (2) the underlying economic realities of the activity or relationship.
This two-tiered test would provide us with a framework of analysis, which would take into consideration
the totality of circumstances surrounding the true nature of the relationship between the parties. This is
especially appropriate in this case where there is no written agreement or terms of reference to base the
relationship on; and due to the complexity of the relationship based on the various positions and
responsibilities given to the worker over the period of the latter’s employment.
The control test initially found application in the case of Viaña v. Al-Lagadan and Piga, 19 and lately
in Leonardo v. Court of Appeals, 20 where we held that there is an employer-employee relationship when
the person for whom the services are performed reserves the right to control not only the end achieved
but also the manner and means used to achieve that end.
In Sevilla v. Court of Appeals, 21 we observed the need to consider the existing economic conditions
prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the
employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee
relationship based on an analysis of the totality of economic circumstances of the worker.
Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, 22 such as: (1) the extent to which the services performed
are an integral part of the employer’s business; (2) the extent of the worker’s investment in equipment and
facilities; (3) the nature and degree of control exercised by the employer; (4) the worker’s opportunity for
profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the
claimed independent enterprise; (6) the permanency and duration of the relationship between the worker
and the employer; and (7) the degree of dependency of the worker upon the employer for his continued
employment in that line of business. 23
The proper standard of economic dependence is whether the worker is dependent on the alleged
employer for his continued employment in that line of business. 24 In the United States, the touchstone of
economic reality in analyzing possible employment relationships for purposes of the Federal Labor
Standards Act is dependency. 25 By analogy, the benchmark of economic reality in analyzing possible
employment relationships for purposes of the Labor Code ought to be the economic dependence of the
worker on his employer.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because
she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical Consultant.
She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical
Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is,
rendering accounting and tax services to the company and performing functions necessary and desirable
for the proper operation of the corporation such as securing business permits and other licenses over an
indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal, receiving
check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well
as deductions and Social Security contributions from August 1, 1999 to December 18, 2000. 26 When
petitioner was designated General Manager, respondent corporation made a report to the SSS signed by
Irene Ballesteros. Petitioner’s membership in the SSS as manifested by a copy of the SSS specimen
signature card which was signed by the President of Kasei Corporation and the inclusion of her name in
the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship
between petitioner and respondent corporation. 27
It is therefore apparent that petitioner is economically dependent on respondent corporation for her
continued employment in the latter’s line of business.
In Domasig v. National Labor Relations Commission, 28 we held that in a business establishment, an
identification card is provided not only as a security measure but mainly to identify the holder thereof as a
bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioner’s
salaries for the months stated therein, these matters constitute substantial evidence adequate to support a
conclusion that petitioner was an employee of private respondent.
We likewise ruled in Flores v. Nuestro 29 that a corporation who registers its workers with the SSS is proof
that the latter were the former’s employees. The coverage of Social Security Law is predicated on the
existence of an employer-employee relationship.
Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that petitioner
never acted as Corporate Secretary and that her designation as such was only for convenience. The
actual nature of petitioner’s job was as Kamura’s direct assistant with the duty of acting as Liaison Officer
in representing the company to secure construction permits, license to operate and other requirements
imposed by government agencies. Petitioner was never entrusted with corporate documents of the
company, nor required to attend the meeting of the corporation. She was never privy to the preparation of
any document for the corporation, although once in a while she was required to sign prepared
documentation for the company. 30
The second affidavit of Kamura dated March 7, 2002 which repudiated the December 5, 2001 affidavit has
been allegedly withdrawn by Kamura himself from the records of the case. 31 Regardless of this fact, we
are convinced that the allegations in the first affidavit are sufficient to establish that petitioner is an
employee of Kasei Corporation.
Granting arguendo, that the second affidavit validly repudiated the first one, courts do not generally look
with favor on any retraction or recanted testimony, for it could have been secured by considerations other
than to tell the truth and would make solemn trials a mockery and place the investigation of the truth at the
mercy of unscrupulous witnesses. 32 A recantation does not necessarily cancel an earlier declaration, but
like any other testimony the same is subject to the test of credibility and should be received with caution. 33
Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent
Kasei Corporation. She was selected and engaged by the company for compensation, and is
economically dependent upon respondent for her continued employment in that line of business. Her main
job function involved accounting and tax services rendered to respondent corporation on a regular basis
over an indefinite period of engagement. Respondent corporation hired and engaged petitioner for
compensation, with the power to dismiss her for cause. More importantly, respondent corporation had the
power to control petitioner with the means and methods by which the work is to be accomplished.
The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from
January to September 2001. This amounts to an illegal termination of employment, where the petitioner is
entitled to full backwages. Since the position of petitioner as accountant is one of trust and confidence,
and under the principle of strained relations, petitioner is further entitled to separation pay, in lieu of
reinstatement. 34
A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive
dismissal is an involuntary resignation resulting in cessation of work resorted to when continued
employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee. 35 In Globe Telecom, Inc. v. Florendo-Flores, 36 we ruled that where an
employee ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation
arises which creates an adverse working environment rendering it impossible for such employee to
continue working for her employer. Hence, her severance from the company was not of her own making
and therefore amounted to an illegal termination of employment.
In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race
or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between
employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor Code
to a greater number of employees. This would enable employees to avail of the benefits accorded to them
by law, in line with the constitutional mandate giving maximum aid and protection to labor, promoting their
welfare and reaffirming it as a primary social economic force in furtherance of social justice and national
development.
WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of Appeals dated
October 29, 2004 and October 7, 2005, respectively, in CA-G.R. SP No. 78515 are ANNULLED and SET
ASIDE. The Decision of the National Labor Relations Commission dated April 15, 2003 in NLRC NCR CA
No. 032766-02, is REINSTATED. The case is REMANDED to the Labor Arbiter for the recomputation of
petitioner Angelina Francisco’s full backwages from the time she was illegally terminated until the date of
finality of this decision, and separation pay representing one-half month pay for every year of service,
where a fraction of at least six months shall be considered as one whole year.
SO ORDERED.
G.R. No. 192558 February 15, 2012
BITOY JAVIER (DANILO P. JAVIER), Petitioner,
vs.
FLY ACE CORPORATION/FLORDELYN CASTILLO, Respondents.
DECISION
MENDOZA, J.:
This is a petition under Rule 45 of the Rules of Civil Procedure assailing the March 18, 2010 Decision1 of
the Court of Appeals (CA) and its June 7, 2010 Resolution,2 in CA-G.R. SP No. 109975, which reversed
the May 28, 2009 Decision3 of the National Labor Relations Commission (NLRC) in the case entitled Bitoy
Javier v. Fly Ace/Flordelyn Castillo,4 holding that petitioner Bitoy Javier (Javier) was illegally dismissed
from employment and ordering Fly Ace Corporation (Fly Ace) to pay backwages and separation pay in lieu
of reinstatement.
Antecedent Facts
On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries and other labor
standard benefits. He alleged that he was an employee of Fly Ace since September 2007, performing
various tasks at the respondent’s warehouse such as cleaning and arranging the canned items before
their delivery to certain locations, except in instances when he would be ordered to accompany the
company’s delivery vehicles, as pahinante; that he reported for work from Monday to Saturday from 7:00
o’clock in the morning to 5:00 o’clock in the afternoon; that during his employment, he was not issued an
identification card and payslips by the company; that on May 6, 2008, he reported for work but he was no
longer allowed to enter the company premises by the security guard upon the instruction of Ruben
Ong (Mr. Ong), his superior;5 that after several minutes of begging to the guard to allow him to enter, he
saw Ong whom he approached and asked why he was being barred from entering the premises; that Ong
replied by saying, "Tanungin mo anak mo;" 6 that he then went home and discussed the matter with his
family; that he discovered that Ong had been courting his daughter Annalyn after the two met at a fiesta
celebration in Malabon City; that Annalyn tried to talk to Ong and convince him to spare her father from
trouble but he refused to accede; that thereafter, Javier was terminated from his employment without
notice; and that he was neither given the opportunity to refute the cause/s of his dismissal from work.
To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who alleged that Javier
was a stevedore or pahinante of Fly Ace from September 2007 to January 2008. The said affidavit was
subscribed before the Labor Arbiter (LA).7
For its part, Fly Ace averred that it was engaged in the business of importation and sales of groceries.
Sometime in December 2007, Javier was contracted by its employee, Mr. Ong, as extra helper on
a pakyaw basis at an agreed rate of ₱ 300.00 per trip, which was later increased to ₱ 325.00 in January
2008. Mr. Ong contracted Javier roughly 5 to 6 times only in a month whenever the vehicle of its
contracted hauler, Milmar Hauling Services, was not available. On April 30, 2008, Fly Ace no longer
needed the services of Javier. Denying that he was their employee, Fly Ace insisted that there was no
illegal dismissal.8 Fly Ace submitted a copy of its agreement with Milmar Hauling Services and copies of
acknowledgment receipts evidencing payment to Javier for his contracted services bearing the words,
"daily manpower (pakyaw/piece rate pay)" and the latter’s signatures/initials.
Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the complaint for lack of merit on the ground that Javier failed to
present proof that he was a regular employee of Fly Ace. He wrote:
Complainant has no employee ID showing his employment with the Respondent nor any document
showing that he received the benefits accorded to regular employees of the Respondents. His contention
that Respondent failed to give him said ID and payslips implies that indeed he was not a regular employee
of Fly Ace considering that complainant was a helper and that Respondent company has contracted a
regular trucking for the delivery of its products.
Respondent Fly Ace is not engaged in trucking business but in the importation and sales of groceries.
Since there is a regular hauler to deliver its products, we give credence to Respondents’ claim that
complainant was contracted on "pakiao" basis.
As to the claim for underpayment of salaries, the payroll presented by the Respondents showing salaries
of workers on "pakiao" basis has evidentiary weight because although the signature of the complainant
appearing thereon are not uniform, they appeared to be his true signature.
xxxx
Hence, as complainant received the rightful salary as shown by the above described payrolls,
Respondents are not liable for salary differentials. 9
Ruling of the NLRC
On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the argument of Javier and
immediately concluded that he was not a regular employee simply because he failed to present proof. It
was of the view that a pakyaw-basis arrangement did not preclude the existence of employer-employee
relationship. "Payment by result x x x is a method of compensation and does not define the essence of the
relation. It is a mere method of computing compensation, not a basis for determining the existence or
absence of an employer-employee relationship.10 " The NLRC further averred that it did not follow that a
worker was a job contractor and not an employee, just because the work he was doing was not directly
related to the employer’s trade or business or the work may be considered as "extra" helper as in this
case; and that the relationship of an employer and an employee was determined by law and the same
would prevail whatever the parties may call it. In this case, the NLRC held that substantial evidence was
sufficient basis for judgment on the existence of the employer-employee relationship. Javier was a regular
employee of Fly Ace because there was reasonable connection between the particular activity performed
by the employee (as a "pahinante") in relation to the usual business or trade of the employer (importation,
sales and delivery of groceries). He may not be considered as an independent contractor because he
could not exercise any judgment in the delivery of company products. He was only engaged as a "helper."
Finding Javier to be a regular employee, the NLRC ruled that he was entitled to a security of tenure. For
failing to present proof of a valid cause for his termination, Fly Ace was found to be liable for illegal
dismissal of Javier who was likewise entitled to backwages and separation pay in lieu of reinstatement.
The NLRC thus ordered:
WHEREFORE, premises considered, complainant’s appeal is partially GRANTED. The assailed Decision
of the labor arbiter is VACATED and a new one is hereby entered holding respondent FLY ACE
CORPORATION guilty of illegal dismissal and non-payment of 13th month pay. Consequently, it is hereby
ordered to pay complainant DANILO "Bitoy" JAVIER the following:
1. Backwages -₱ 45,770.83
2. Separation pay, in lieu of reinstatement - 8,450.00
3. Unpaid 13th month pay (proportionate) - 5,633.33
TOTAL -₱ 59,854.16
All other claims are dismissed for lack of merit.
SO ORDERED. 11
Ruling of the Court of Appeals
On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a former employee of Fly
Ace and reinstated the dismissal of Javier’s complaint as ordered by the LA. The CA exercised its
authority to make its own factual determination anent the issue of the existence of an employer-employee
relationship between the parties. According to the CA:
xxx
In an illegal dismissal case the onus probandi rests on the employer to prove that its dismissal was for a
valid cause. However, before a case for illegal dismissal can prosper, an employer-employee relationship
must first be established. x x x it is incumbent upon private respondent to prove the employee-employer
relationship by substantial evidence.
xxx
It is incumbent upon private respondent to prove, by substantial evidence, that he is an employee of
petitioners, but he failed to discharge his burden. The non-issuance of a company-issued identification
card to private respondent supports petitioners’ contention that private respondent was not its employee.12
The CA likewise added that Javier’s failure to present salary vouchers, payslips, or other pieces of
evidence to bolster his contention, pointed to the inescapable conclusion that he was not an employee of
Fly Ace. Further, it found that Javier’s work was not necessary and desirable to the business or trade of
the company, as it was only when there were scheduled deliveries, which a regular hauling service could
not deliver, that Fly Ace would contract the services of Javier as an extra helper. Lastly, the CA declared
that the facts alleged by Javier did not pass the "control test."
He contracted work outside the company premises; he was not required to observe definite hours of work;
he was not required to report daily; and he was free to accept other work elsewhere as there was no
exclusivity of his contracted service to the company, the same being co-terminous with the trip
only.13 Since no substantial evidence was presented to establish an employer-employee relationship, the
case for illegal dismissal could not prosper.
The petitioners moved for reconsideration, but to no avail.
Hence, this appeal anchored on the following grounds:
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
PETITIONER WAS NOT A REGULAR EMPLOYEE OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
PETITIONER IS NOT ENTITLED TO HIS MONETARY CLAIMS. 14
The petitioner contends that other than its bare allegations and self-serving affidavits of the other
employees, Fly Ace has nothing to substantiate its claim that Javier was engaged on a pakyaw basis.
Assuming that Javier was indeed hired on a pakyaw basis, it does not preclude his regular employment
with the company. Even the acknowledgment receipts bearing his signature and the confirming receipt of
his salaries will not show the true nature of his employment as they do not reflect the necessary details of
the commissioned task. Besides, Javier’s tasks as pahinante are related, necessary and desirable to the
line of business by Fly Ace which is engaged in the importation and sale of grocery items. "On days when
there were no scheduled deliveries, he worked in petitioners’ warehouse, arranging and cleaning the
stored cans for delivery to clients."15 More importantly, Javier was subject to the control and supervision of
the company, as he was made to report to the office from Monday to Saturday, from 7:00 o’clock in the
morning until 5:00 o’clock in the afternoon. The list of deliverable goods, together with the corresponding
clients and their respective purchases and addresses, would necessarily have been prepared by Fly Ace.
Clearly, he was subjected to compliance with company rules and regulations as regards working hours,
delivery schedule and output, and his other duties in the warehouse.16
The petitioner chiefly relied on Chavez v. NLRC,17 where the Court ruled that payment to a worker on a per
trip basis is not significant because "this is merely a method of computing compensation and not a basis
for determining the existence of employer-employee relationship." Javier likewise invokes the rule that, "in
controversies between a laborer and his master, x x x doubts reasonably arising from the evidence should
be resolved in the former’s favour. The policy is reflected is no less than the Constitution, Labor Code and
Civil Code."18
Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally dismissed by the latter’s
failure to observe substantive and procedural due process. Since his dismissal was not based on any of
the causes recognized by law, and was implemented without notice, Javier is entitled to separation pay
and backwages.
In its Comment,19 Fly Ace insists that there was no substantial evidence to prove employer-employee
relationship. Having a service contract with Milmar Hauling Services for the purpose of transporting and
delivering company products to customers, Fly Ace contracted Javier as an extra helper or pahinante on a
mere "per trip basis." Javier, who was actually a loiterer in the area, only accompanied and assisted the
company driver when Milmar could not deliver or when the exigency of extra deliveries arises for roughly
five to six times a month. Before making a delivery, Fly Ace would turn over to the driver and Javier the
delivery vehicle with its loaded company products. With the vehicle and products in their custody, the
driver and Javier "would leave the company premises using their own means, method, best judgment and
discretion on how to deliver, time to deliver, where and [when] to start, and manner of delivering the
products."20
Fly Ace dismisses Javier’s claims of employment as baseless assertions. Aside from his bare allegations,
he presented nothing to substantiate his status as an employee. "It is a basic rule of evidence that each
party must prove his affirmative allegation. If he claims a right granted by law, he must prove his claim by
competent evidence, relying on the strength of his own evidence and not upon the weakness of his
opponent."21 Invoking the case of Lopez v. Bodega City,22 Fly Ace insists that in an illegal dismissal case,
the burden of proof is upon the complainant who claims to be an employee. It is essential that an
employer-employee relationship be proved by substantial evidence. Thus, it cites:
In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an
employee was for a valid cause. However, before a case for illegal dismissal can prosper, an employer-
employee relationship must first be established.
Fly Ace points out that Javier merely offers factual assertions that he was an employee of Fly Ace, "which
are unfortunately not supported by proof, documentary or otherwise."23 Javier simply assumed that he was
an employee of Fly Ace, absent any competent or relevant evidence to support it. "He performed his
contracted work outside the premises of the respondent; he was not even required to report to work at
regular hours; he was not made to register his time in and time out every time he was contracted to work;
he was not subjected to any disciplinary sanction imposed to other employees for company violations; he
was not issued a company I.D.; he was not accorded the same benefits given to other employees; he was
not registered with the Social Security System (SSS)as petitioner’s employee; and, he was free to leave,
accept and engage in other means of livelihood as there is no exclusivity of his contracted services with
the petitioner, his services being co-terminus with the trip only. All these lead to the conclusion that
petitioner is not an employee of the respondents."24
Moreover, Fly Ace claims that it had "no right to control the result, means, manner and methods by which
Javier would perform his work or by which the same is to be accomplished."25 In other words, Javier and
the company driver were given a free hand as to how they would perform their contracted services and
neither were they subjected to definite hours or condition of work.
Fly Ace likewise claims that Javier’s function as a pahinante was not directly related or necessary to its
principal business of importation and sales of groceries. Even without Javier, the business could operate
its usual course as it did not involve the business of inland transportation. Lastly, the acknowledgment
receipts bearing Javier’s signature and words "pakiao rate," referring to his earned salaries on a per trip
basis, have evidentiary weight that the LA correctly considered in arriving at the conclusion that Javier was
not an employee of the company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javier’s alleged illegal dismissal is anchored on the existence of an
employer-employee relationship between him and Fly Ace. This is essentially a question of fact. Generally,
the Court does not review errors that raise factual questions. However, when there is 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."26 In dealing with factual issues in labor cases,
"substantial evidence – that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion – is sufficient."27
As the records bear out, the LA and the CA found Javier’s claim of employment with Fly Ace as wanting
and deficient. The Court is constrained to agree. Although Section 10, Rule VII of the New Rules of
Procedure of the NLRC28 allows a relaxation of the rules of procedure and evidence in labor cases, this
rule of liberality does not mean a complete dispensation of proof. Labor officials are enjoined to use
reasonable means to ascertain the facts speedily and objectively with little regard to technicalities or
formalities but nowhere in the rules are they provided a license to completely discount evidence, or the
lack of it. The quantum of proof required, however, must still be satisfied. Hence, "when confronted with
conflicting versions on factual matters, it is for them in the exercise of discretion to determine which party
deserves credence on the basis of evidence received, subject only to the requirement that their decision
must be supported by substantial evidence."29 Accordingly, the petitioner needs to show by substantial
evidence that he was indeed an employee of the company against which he claims illegal dismissal.
Expectedly, opposing parties would stand poles apart and proffer allegations as different as chalk and
cheese. It is, therefore, incumbent upon the Court to determine whether the party on whom the burden to
prove lies was able to hurdle the same. "No particular form of evidence is required to prove the existence
of such employer-employee relationship. Any competent and relevant evidence to prove the relationship
may be admitted.http://www.lawphil.net/judjuris/juri2009/may2009/gr_179652_2009.html - fnt31 Hence,
while no particular form of evidence is required, a finding that such relationship exists must still rest on
some substantial evidence. Moreover, the substantiality of the evidence depends on its quantitative as
well as its qualitative aspects."30 Although substantial evidence is not a function of quantity but rather of
quality, the x x x circumstances of the instant case demand that something more should have been
proffered. Had there been other proofs of employment, such as x x x inclusion in petitioner’s payroll, or a
clear exercise of control, the Court would have affirmed the finding of employer-employee relationship."31
In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such
claim by the requisite quantum of evidence.32 "Whoever claims entitlement to the benefits provided by law
should establish his or her right thereto x x x."33 Sadly, Javier failed to adduce substantial evidence as
basis for the grant of relief.
In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace.
By way of evidence on this point, all that Javier presented were his self-serving statements purportedly
showing his activities as an employee of Fly Ace. Clearly, Javier failed to pass the substantiality
requirement to support his claim. Hence, the Court sees no reason to depart from the findings of the CA.
While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made to work
in the company premises during weekdays arranging and cleaning grocery items for delivery to clients, no
other proof was submitted to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was
unsuccessful in strengthening Javier’s cause. In said document, all Valenzuela attested to was that he
would frequently see Javier at the workplace where the latter was also hired as stevedore.34 Certainly, in
gauging the evidence presented by Javier, the Court cannot ignore the inescapable conclusion that his
mere presence at the workplace falls short in proving employment therein. The supporting affidavit could
have, to an extent, bolstered Javier’s claim of being tasked to clean grocery items when there were no blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of
scheduled delivery trips, but no information was offered in this subject simply because the witness had no the established facts and the applicable law and doctrine.39
personal knowledge of Javier’s employment status in the company. Verily, the Court cannot accept
Javier’s statements, hook, line and sinker. WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of the Court of Appeals and its June
7, 2010 Resolution, in CA-G.R. SP No. 109975, are hereby AFFIRMED.
The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests to
determine the existence of an employer-employee relationship, viz: (1) the selection and engagement of SO ORDERED.
the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee’s conduct. Of these elements, the most important criterion is whether the employer controls or
has reserved the right to control the employee not only as to the result of the work but also as to the G.R. No. 155207. April 29, 2005
means and methods by which the result is to be accomplished.35
WILHELMINA S. OROZCO, Petitioners,
In this case, Javier was not able to persuade the Court that the above elements exist in his vs.
case.1avvphi1 He could not submit competent proof that Fly Ace engaged his services as a regular THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS, PHILIPPINE DAILY INQUIRER,
employee; that Fly Ace paid his wages as an employee, or that Fly Ace could dictate what his conduct AND LETICIA JIMENEZ MAGSANOC, Respondents.
should be while at work. In other words, Javier’s allegations did not establish that his relationship with Fly
Ace had the attributes of an employer-employee relationship on the basis of the above-mentioned four- RESOLUTION
fold test. Worse, Javier was not able to refute Fly Ace’s assertion that it had an agreement with a hauling
company to undertake the delivery of its goods. It was also baffling to realize that Javier did not dispute TINGA, J.:
Fly Ace’s denial of his services’ exclusivity to the company. In short, all that Javier laid down were bare
allegations without corroborative proof.
Ostensibly, the question raised in this present petition is of general interest to students of law¾whether a
newspaper columnist is an employee of the newspaper which publishes the columns. However, for failure
Fly Ace does not dispute having contracted Javier and paid him on a "per trip" rate as a stevedore, albeit to file the appeal bond required by law, the Court is impelled to defer the settlement of the above issue
on a pakyaw basis. The Court cannot fail to note that Fly Ace presented documentary proof that Javier until the jurisdictional requirement has been duly complied with.
was indeed paid on a pakyaw basis per the acknowledgment receipts admitted as competent evidence by
the LA. Unfortunately for Javier, his mere denial of the signatures affixed therein cannot automatically
sway us to ignore the documents because "forgery cannot be presumed and must be proved by clear, This Petition for Review under Rule 45 of the Rules of Court assails the Resolution1 of the Court of
positive and convincing evidence and the burden of proof lies on the party alleging forgery."36 Appeals Fifth Division denying the Motion for Reconsideration filed by Wilhelmina Orozco (Orozco) and
the Decision2 of the same division in CA-G.R. SP No. 50970, the dispositive portion of which provides:
Considering the above findings, the Court does not see the necessity to resolve the second issue
presented. WHEREFORE, based on the foregoing, the petition is hereby GRANTED. The assailed decision of the
public respondent NLRC affirming the decision of the Labor Arbiter that private respondent Wilhelmina
Orozco is an employee of petitioner PDI is hereby SET ASIDE. Private respondent Orozco’s complaint is
One final note. The Court’s decision does not contradict the settled rule that "payment by the piece is just hereby DISMISSED for lack of merit.
a method of compensation and does not define the essence of the relation."37 Payment on a piece-rate
basis does not negate regular employment. "The term ‘wage’ is broadly defined in Article 97 of the Labor
Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or SO ORDERED.3
ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of
compensation and does not define the essence of the relations. Nor does the fact that the petitioner is not The above ruling of the Court of Appeals reversed the Decision4 of the National Labor Relations
covered by the SSS affect the employer-employee relationship. However, in determining whether the Commission (NLRC) which affirmed the Decision5 of the Labor Arbiter,6 the decretal portion of which
relationship is that of employer and employee or one of an independent contractor, each case must be stated:
determined on its own facts and all the features of the relationship are to be considered."38 Unfortunately
for Javier, the attendant facts and circumstances of the instant case do not provide the Court with
WHEREFORE, judgment is hereby rendered, finding complainant to be an employee of respondent
sufficient reason to uphold his claimed status as employee of Fly Ace.
company; ordering respondent company to reinstate her to her former or equivalent position, with
backwages.
While the Constitution is committed to the policy of social justice and the protection of the working class, it
should not be supposed that every labor dispute will be automatically decided in favor of labor.
Respondent company is also ordered to pay her 13th month pay and service incentive leave pay.
Management also has its rights which are entitled to respect and enforcement in the interest of simple fair
play. Out of its concern for the less privileged in life, the Court has inclined, more often than not, toward
the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not Other claims are hereby dismissed for lack of merit.
SO ORDERED.7
This case arose out of the complaint filed by Orozco against private respondents Philippine Daily Inquirer
(PDI) and Leticia Jimenez-Magsanoc (Magsanoc), the editor-in-chief of the PDI at that time, for illegal
dismissal, underpayment, non-payment of allowance, separation pay, retirement pay, service incentive
leave pay, 13th month pay, moral and exemplary damages, discrimination in pay and for attorney’s
fees8 with the Arbitration Branch of the NLRC on 1 June 1993.9
Based on the records of this case, Orozco was engaged as a columnist by PDI on 8 March 1990. She
penned the column "Feminist Reflections" which appeared in the Lifestyle Section under the editorship of
Lolita T. Logarta.10
Orozco worked by submitting weekly columns with a per article wage of Two Hundred Fifty Pesos
(₱250.00) which was later increased to Three hundred Pesos (₱300.00).11
In June 1991, Magsanoc as editor-in-chief of PDI discussed how to improve the Lifestyle section of the
newspaper with the Lifestyle editor. They agreed to cut down the number of columnists and for this
reason, PDI decided to drop or terminate Orozco’s column in November 1992.12
Orozco’s column thus appeared in PDI for the last time on 7 November 1992. Upon inquiry at the office of
Magsanoc as to why her column was stopped, the secretary told Orozco that it was Eugenia Apostol
(Apostol), the chairperson of PDI, who had decided to stop her column.13
Apostol was out of the country at that time so Orozco waited until February 1993 to talk to her. In a
telephone conversation with Orozco, Apostol stated that she had been told by Magsanoc that there were
too many columnists in the Lifestyle Section.14
Aggrieved at the stoppage of her column, Orozco filed the instant case against private respondents before
the NLRC. The PDI raised as primary defense the claim that Orozco was not an employee of the
newspaper. However, in a Decision dated 29 October 1993, Labor Arbiter Arthur L. Amansec ruled that
Orozco had been illegally dismissed, after concluding that Orozco had indeed been an employee of the
PDI.
The PDI, through counsel, received a copy of the Labor Arbiter’s Decision on 16 December 1993.15 It
timely filed a Notice and Memorandum dated 24 December 1993, but it did not lodge a cash or surety
bond in the amount equivalent to the monetary award in the judgment appealed from. PDI adverted to
such failure on its part before the NLRC but justified the same on the ground that the Decision of the
Labor Arbiter did not fix any amount but merely stated that Orozco was entitled to backwages.
The NLRC dismissed the appeal in its Decision dated 23 August 1994. In this Decision, it made note of
the failure of PDI to perfect the appeal by filing the cash or surety bond. Nonetheless, the NLRC ventured
to delve on the merits, and thereupon, affirmed the finding of the Labor Arbiter that Orozco was an
employee of PDI.
Private respondents elevated the case to the Supreme Court by way of the special civil action of certiorari.
Pursuant to the ruling in St. Martin Funeral Homes v. NLRC,16 this Court referred the case to the Court of
Appeals.
On 11 July 2002, the Court of Appeals reversed the decision of the NLRC by holding that Orozco is not an
employee of PDI. The reversal was grounded on factual premises, the appellate court concluding that the
NLRC had misappreciated the facts and rendered a ruling wanting in substantial evidence. It thereby
dismissed Orozco’s complaint for lack of merit. The Court of Appeals likewise dismissed Orozco’s motion
for reconsideration on 11 September 2002. Hence, this petition.
In her Memorandum, Orozco posits that the Court of Appeals should have dismissed outright the private
respondent’s petition for certiorari for their failure to file a cash bond or a surety bond as provided for in
Article 223 of the Labor Code.
In support of the argument, Orozco contends that a grievous error tantamount to grave abuse of discretion
was committed by the Court of Appeals when it failed to appreciate the observation of the NLRC that
private respondents did not perfect their appeal as they did not deposit on time any cash or surety bond in
compliance with the provision of Art. 223 of the Labor Code when they filed an appeal of the Labor
Arbiter’s decision at the NLRC. Orozco argues that the posting of the cash or surety bond is mandatory
and must be made by the employer within the reglementary period of ten (10) days from receipt of the
Labor Arbiter’s decision so as to perfect his appeal. Failing to do so, the employer loses the right to
appeal, and the Labor Arbiter’s decision becomes final and executory, regardless of whether or not the
NLRC declares it so, by operation of law.17
The NLRC in its decision concluded that it had no jurisdiction over PDI’s appeal but proceeded
nonetheless to discuss the merits of the case. On the other hand, the Court of Appeals made no mention
at all of the jurisdictional defect, whether in its recital of facts or discussion of the arguments.
The novelty of the argument on the merits aside, it is essential not to lose sight of the jurisdictional issue,
as it determines whether or not an appeal had indeed been perfected.
The provisions of the Labor Code are quite clear cut on the matter. The relevant portion of Article 223
states:
ART. 223. Appeal. - Decisions, awards or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. . .
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only
upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by
the Commission in the amount equivalent to the monetary award in the judgment appealed from.
(emphasis supplied)
By explicit provision of law, an appeal is perfected only upon the posting of a cash or surety bond. The
reason behind the imposition of this requirement is not difficult to divine. As the Court said in Viron
Garments Mftg., Co., Inc. v. NLRC:18
The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently
intended to assure the workers that if they prevail in the case, they will receive the money judgment in
their favor upon the dismissal of the employer's appeal. It was intended to discourage employers from
using an appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful
claims.19
But while the posting of a cash or surety bond is jurisdictional and is a condition sine qua non to the "xxx Respondents-appellants however manifest that they are able and willing to post a bond that this
perfection of an appeal, there is a plethora of jurisprudence recognizing exceptional instances wherein the Commission may fix if the latter finds it necessary." (Notice and Memorandum on Appeal dated 24
Court relaxed the bond requirement as a condition for posting the appeal. December 1993, p. 7).32(Emphasis in the original)

In Olacao v. NLRC20 for example, the NLRC had discovered that the separation pay awarded by the Labor
Arbiter had already been paid by the employer. Since a modification of the Labor Arbiter’s Decision was
the only way to forestall the grant of separation pay twice, the NLRC allowed the appeal perfected only on
the twelfth (12th) day.21 In Cosico, Jr. v. NLRC,22 the employer timely posted the bond based on the
monetary award for back wages and thirteenth month pay, but excluding the exorbitant award for moral
and exemplary damages. The Court ruled that there was substantial compliance, owing to the fact that the
NLRC had since excluded the award of damages from the computation of the surety bond.23 And in Star
Angel Handicraft v. NLRC,24 the Court noted that a motion for reduction of the appeal bond had been filed
within the reglementary period, and that the appeal should not be deemed perfected until the NLRC has
acted on the motion and the appellant has filed the bond as fixed by the NLRC.25
In YBL v. NLRC,26 the appeal was interposed by the employers on 11 September 1989, or only six (6) days
from the effectivity of the Interim Rules on Appeals which incorporated for the first time the appeal bond
requirement imposed by Republic Act No. 6715, an amendatory law to the Labor Code. The Court therein
considered the apparent fact that neither the counsel for the employer nor that for the employee was
already aware of the then new requirement requiring the posting of a bond on appeal.27 The same
justification was cited with approval by the Court in Blancaflor v. NLRC,28 and the same circumstance is
likewise apparent in Rada v. NLRC.29
In the case of Taberrah v. NLRC,30 the Court made note of the fact that the assailed decision of the Labor
Arbiter concerned did not contain a computation of the monetary award due the employees, a
circumstance which is likewise present in this case. In said case, the Court stated,
In the case of NFLU v. Ladrido III,33 this Court postulated that "private respondents cannot be expected to
post such appeal bond equivalent to the amount of the monetary award when the amount thereof was not
included in the decision of the labor arbiter."34 The computation of the amount awarded to petitioner not
having been clearly stated in the decision of the labor arbiter, private respondents had no basis for
determining the amount of the bond to be posted.
Thus, while the requirements for perfecting an appeal must be strictly followed as they are considered
indispensable interdictions against needless delays and for orderly discharge of judicial business,35 the law
does admit of exceptions when warranted by the circumstances. Technicality should not be allowed to
stand in the way of equitably and completely resolving the rights and obligations of the parties.36 But while
this Court may relax the observance of reglementary periods and technical rules to achieve substantial
justice,37 it is not prepared to give due course to this petition and make a pronouncement on the weighty
issue obtaining in this case until the law has been duly complied with and the requisite appeal bond duly
paid by private respondents.
WHEREFORE, without giving due course to the petition, the Labor Arbiter is hereby ordered to clarify the
amount of the award due the petitioner. Private respondents are ordered to post the requisite bond in
accordance with Article 223 of the Labor Code, whereupon, the petition will be given due course. No
pronouncement as to costs.
SO ORDERED.

As a rule, compliance with the requirements for the perfection of an appeal within the reglamentary period
is mandatory and jurisdictional. However, in National Federation of Labor Unions v. Ladrido as well as in
several other cases, this Court relaxed the requirement of the posting of an appeal bond within the
reglementary period as a condition for perfecting the appeal. This is in line with the principle that
substantial justice is better served by allowing the appeal to be resolved on the merits rather than
dismissing it based on a technicality.31

The judgment of the Labor Arbiter in this case merely stated that petitioner was entitled to backwages,
13th month pay and service incentive leave pay without however including a computation of the alleged
amounts. As the private respondents asserted in their motion for reconsideration anent the NLRC
decision:

III. NO BOND WAS FILED BECAUSE OF THE VAGUENESS OF THE AWARD

The award as contained in the appealed 29 October 1993 decision did not state the exact amount to be
awarded. In particular, while it may be assumed, as stated in the decision subject of this motion, the award
be based on the ₱300.00 per column/article basis, this is not clear in the decision which likewise
mentioned an award for thirteenth (13th) month pay and service incentive leave pay. Noteworthy is the
fact that the complainant, not being an employee, was not being paid a fixed salary. Hence, herein
respondents-appellants requested in their memorandum on appeal that the Commission fixes (sic) the
amount of the bond, if it finds the same necessary in exceptional cases like the present case, to wit: