January 18, 2012. G.R. No. 177498.* rise to a cause of action against the erring party.
e of action against the erring party.—We rule that distinction must be
STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI SHIP
MANAGEMENT, petitioners, vs. SULPECIO MEDEQUILLO, JR., respondent.
Civil Law; Obligations; Novation; Novation is the extinguishment of an obligation
by the substitution or change of the obligation by a subsequent one which extinguishes or
modifies the first, either by changing the object or principal conditions, or, by
substituting another in place of the debtor, or by subrogating a third person in the rights
of the creditor.—Novation is the extinguishment of an obligation by the substitution or
change of the obligation by a subsequent one which extinguishes or modifies the first,
either by changing the object or principal conditions, or, by substituting another in
place of the debtor, or by subrogating a third person in the rights of the creditor. In
order for novation to take place, the concurrence of the following requisites is
indispensable: 1. There must be a previous valid obligation, 2. There must be an
agreement of the parties concerned to a new contract, 3. There must be the
extinguishment of the old contract, and 4. There must be the validity of the new
contract.
_______________
* SECOND DIVISION.
292
Labor Law; Evidence; Substantial Evidence; Factual findings of labor officials,
who are deemed to have acquired expertise in matters within their jurisdiction, are
generally accorded not only respect but even finality by the courts when supported by
substantial evidence.—Equally settled is the rule that factual findings of labor officials,
who are deemed to have acquired expertise in matters within their jurisdiction, are
generally accorded not only respect but even finality by the courts when supported by
substantial evidence, i.e., the amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion. But these findings are not infallible.
When there is a showing that they were arrived at arbitrarily or in disregard of the
evidence on record, they may be examined by the courts. In this case, there was no
showing of any arbitrariness on the part of the lower courts in their findings of facts.
Hence, we follow the settled rule.
Same; Seafarers; Recruitment; Philippine Overseas Employment Administration
(POEA) Standard Employment Contract; The Philippine Overseas Employment
Administration (POEA) Standard Employment Contract provides that employment shall
commence “upon the actual departure of the seafarer from the airport or seaport in the
port of hire.”—The POEA Standard Employment Contract provides that employment
shall commence “upon the actual departure of the seafarer from the airport or seaport
in the port of hire.” We adhere to the terms and conditions of the contract so as to credit
the valid prior stipulations of the parties before the controversy started. Else, the
obligatory force of every contract will be useless. Parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and law.
Same; Same; Same; Employer-Employee Relationship; Even before the start of any
employer-employee relationship, contemporaneous with the perfection of the employment
contract was the birth of certain rights and obligations, the breach of which may give
made between the perfection of the employment contract and the commencement of the
employer-employee relationship. The perfection of the contract, which in this case
coincided with the date of execution thereof, occurred when petitioner and respondent
agreed on the object and the cause, as well as the rest of the terms
293
and conditions therein. The commencement of the employer-employee
relationship, as earlier discussed, would have taken place had petitioner been actually
deployed from the point of hire. Thus, even before the start of any employer-employee
relationship, contemporaneous with the perfection of the employment contract was the
birth of certain rights and obligations, the breach of which may give rise to a cause of
action against the erring party. Thus, if the reverse had happened, that is the seafarer
failed or refused to be deployed as agreed upon, he would be liable for damages.
Same; Same; Same; Penalties; Failure of the agency to deploy a worker within the
prescribed period without valid reasons shall be a cause for suspension or cancellation of
license or fine. In addition, the agency shall return all documents at no cost to the
worker.Thirty (30) calendar days from the date of processing by the administration of
the employment contracts of seafarers. —The POEA Rules and Regulations Governing
Overseas Employment dated 31 May 1991 provides for the consequence and penalty
against in case of non-deployment of the seafarer without any valid reason. It reads:
Section 4. Worker’s Deployment.—An agency shall deploy its recruits within the
deployment period as indicated below: xxx b. Failure of the agency to deploy a
worker within the prescribed period without valid reasons shall be a cause
for suspension or cancellation of license or fine. In addition, the agency shall
return all documents at no cost to the worker. (Emphasis and underscoring
supplied) The appellate court correctly ruled that the penalty of reprimand provided
under Rule IV, Part VI of the POEA Rules and Regulations Governing the Recruitment
and Employment of Land-based Overseas Workers is not applicable in this case. The
breach of contract happened on February 1992 and the law applicable at that time was
the 1991 POEA Rules and Regulations Governing Overseas Employment. The penalty
for non-deployment as discussed is suspension or cancellation of license or fine.
Same; Same; Same; Migrant Workers Act (R.A. No. 8042); The absence of the
Philippine Overseas Employment Administration (POEA) Rules with regard to the
payment of damages to the affected seafarer does not mean that the seafarer is precluded
from claiming the same, the Supreme Court decreed the applicability of Section 10 of
Republic Act No. 8042 (Migrant Workers Act) which provides for money claims by reason
of a contract involving Filipino workers for
294
overseas deployment.—The POEA Rules Governing the Recruitment and
Employment of Seafarers do not provide for the award of damages to be given in favor
of the employees. The claim provided by the same law refers to a valid contractual claim
for compensation or benefits arising from employer-employee relationship or for any
personal injury, illness or death at levels provided for within the terms and conditions
of employment of seafarers. However, the absence of the POEA Rules with regard to the
payment of damages to the affected seafarer does not mean that the seafarer is
precluded from claiming the same. The sanctions provided for non-deployment do not
end with the suspension or cancellation of license or fine and the return of all
documents at no cost to the worker. As earlier discussed, they do not forfend a seafarer
from instituting an action for damages against the employer or agency which has failed
to deploy him. We thus decree the application of Section 10 of Republic Act No. 8042
(Migrant Workers Act) which provides for money claims by reason of a contract
involving Filipino workers for oversea10. s deployment. The law provides: Sec. Money
Claims.—Notwithstanding any provision of law to the contrary, the Labor Arbiters of
the National Labor Relations Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of
any law or contract involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damages. x x x (Underscoring supplied)
Civil Law; Damages; Actual Damages; One is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved.—
Applying the rules on actual damages, Article 2199 of the New Civil Code provides that
one is entitled to an adequate compensation only for such pecuniary loss suffered by
him as he has duly proved. Respondent is thus liable to pay petitioner actual damages
in the form of the loss of nine (9) months’ worth of salary as provided in the contract.
This is but proper because of the non-deployment of respondent without just cause.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.295
Rodello B. Ortiz for petitioners.
Linsangan, Linsangan & Linsangan for respondent.
PEREZ,J.:
Before the Court is a Petition for Review on Certiorari1 of the Decision2 of the First
Division of the Court of Appeals in CA-G.R. SP No. 91632 dated 31 January 2007,
denying the petition for certiorari filed by Stolt-Nielsen Transportation Group, Inc. and
Chung Gai Ship Management (petitioners) and affirming the Resolution of the National
Labor Relations Commission (NLRC). The dispositive portion of the assailed decision
reads:
“WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed
Decision promulgated on February 28, 2003 and the Resolution dated July 27, 2005
are AFFIRMED.”3
The facts as gathered by this Court follow:
On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before the
Adjudication Office of the Philippine Overseas Employment Administration (POEA)
against the petitioners for illegal dismissal under a first contract and for failure to
deploy under a second contract. In his complaint-affidavit,4 respondent alleged that:
On 6 November 1991 (First Contract), he was hired by Stolt-Nielsen Marine
Services, Inc on behalf of its principal Chung-Gai Ship Management of
Panama as Third 1.
_______________
1 Rule 45, Rule on Civil Procedure.
2 Penned by Associate Justice Mariano C. Del Castillo (now a Member of this
Court) with Presiding Justice Ruben T. Reyes (former Member of this Court)
and Associate Justice Arcangelita Romilla Lontok, concurring. Rollo, pp. 38-
54.
3 Id., at p. 53.
4 Id., at pp. 134-139.
296
Assistant Engineer on board the vessel “Stolt Aspiration” for a period of nine (9)
months;
He would be paid with a monthly basic salary of $808.00 and a fixed overtime
pay of $404.00 or a total of $1,212.00 per month during the employment
period commencing on 6 November 1991; 2.
On 8 November 1991, he joined the vessel MV “Stolt Aspiration”; 3.
On February 1992 or for nearly three (3) months of rendering service and while
the vessel was at Batangas, he was ordered by the ship’s master to
disembark the vessel and repatriated back to Manila for no reason or
explanation; 4.
Upon his return to Manila, he immediately proceeded to the petitioner’s office
where he was transferred employment with another vessel named MV
“Stolt Pride” under the same terms and conditions of the First Contract;
5.
On 23 April 1992, the Second Contract was noted and approved by the POEA;
6.
The POEA, without knowledge that he was not deployed with the vessel,
certified the Second Employment Contract on 18 September 1992. 7.
Despite the commencement of the Second Contract on 21 April 1992, petitioners
failed to deploy him with the vessel MV “Stolt Pride”; 8.
He made a follow-up with the petitioner but the same refused to comply with the
Second Employment Contract. 9.
On 22 December 1994, he demanded for his passport, seaman’s book and other
employment documents. However, he was only allowed to claim the said
documents in exchange of his signing a document; 10.
He was constrained to sign the document involuntarily because without these
documents, he could not seek employment from other agencies. 11.
He prayed for actual, moral and exemplary damages as well as attorney’s fees for
his illegal dismissal and in view of
297
the Petitioners’ bad faith in not complying with the Second Contract.
The case was transferred to the Labor Arbiter of the DOLE upon the effectivity of
the Migrant Workers and Overseas Filipinos Act of 1995.
The parties were required to submit their respective position papers before the
Labor Arbiter. However, petitioners failed to submit their respective pleadings despite
the opportunity given to them.5
 On 21 July 2000, Labor Arbiter Vicente R. Layawen rendered a judgment 6 finding
that the respondent was constructively dismissed by the petitioners. The dispositive
portion reads:
“WHEREFORE, premises considered, judgment is hereby rendered, declaring the
respondents guilty of constructively dismissing the complainant by not honoring the
employment contract. Accordingly, respondents are hereby ordered jointly and
solidarily to pay complainant the following:
$12,537.00 or its peso equivalent at the time of payment.” 1.7
The Labor Arbiter found the first contract entered into by and between the
complainant and the respondents to have been novated by the execution of the second
contract. In other words, respondents cannot be held liable for the first contract but are
clearly and definitely liable for the breach of the second contract. 8 However, he ruled
that there was no substantial evidence to grant the prayer for moral and exemplary
damages.9
_______________
5 Id., at p. 61.
6 Id., at pp. 59-62.
7 Id., at p. 62.
8 Id.
9 Id.
298
The petitioners appealed the adverse decision before the National Labor Relations
Commission assailing that they were denied due process, that the respondent cannot be
considered as dismissed from employment because he was not even deployed yet and
the monetary award in favor of the respondent was exorbitant and not in accordance
with law.10
On 28 February 2003, the NLRC affirmed with modification the Decision of the
Labor Arbiter. The dispositive portion reads:
“WHEREFORE, premises considered, the decision under review is hereby,
MODIFIED BY DELETING the award of overtime pay in the total amount of Three
Thousand Six Hundred Thirty Six US Dollars (US $3,636.00).
In all other respects, the assailed decision so stands as, AFFIRMED.”11
Before the NLRC, the petitioners assailed that they were not properly notified of the
hearings that were conducted before the Labor Arbiter. They further alleged that after
the suspension of proceedings before the POEA, the only notice they received was a
copy of the decision of the Labor Arbiter.12
The NLRC ruled that records showed that attempts to serve the various notices of
hearing were made on petitioners’ counsel on record but these failed on account of their
failure to furnish the Office of the Labor Arbiter a copy of any notice of change of
address. There was also no evidence that a service of notice of change of address was
served on the POEA.13
The NLRC upheld the finding of unjustified termination of contract for failure on
the part of the petitioners to present evidence that would justify their non-deployment
of the re-
_______________
10 Id., at p. 64.
11 Id., at p. 68.
12 Id., at pp. 64-65.
13 Id., at p. 65.
299
spondent.14 It denied the claim of the petitioners that the monetary award should be
limited only to three (3) months for every year of the unexpired term of the contract. It
ruled that the factual incidents material to the case transpired within 1991-1992 or
before the effectivity of Republic Act No. 8042 or the Migrant Workers and Overseas
Filipinos Act of 1995 which provides for such limitation.15
However, the NLRC upheld the reduction of the monetary award with respect to the
deletion of the overtime pay due to the non-deployment of the respondent.16
The Partial Motion for Reconsideration filed by the petitioners was denied by the
NLRC in its Resolution dated 27 July 2005.17
The petitioners filed a Petition for Certiorari before the Court of Appeals alleging
grave abuse of discretion on the part of NLRC when it affirmed with modification the
ruling of the Labor Arbiter. They prayed that the Decision and Resolution promulgated
by the NLRC be vacated and another one be issued dismissing the complaint of the
respondent.
Finding no grave abuse of discretion, the Court of Appeals AFFIRMED the Decision
of the labor tribunal.
The Court’s Ruling
The following are the assignment of errors presented before this Court:
I.
THE COURT A QUO ERRED IN FINDING THAT THE SECOND CONTRACT
NOVATED THE FIRST CONTRACT.
_______________
14 Id., at p. 66.
15 Id., at p. 67.
16 Id.
17 Id., at p. 72.
300
THERE WAS NO NOVATION OF THE FIRST CONTRACT BY THE SECOND
CONTRACT; THE ALLEGATION OF ILLEGAL DISMISSAL UNDER THE
FIRST CONTRACT MUST BE RESOLVED SEPARATELY FROM THE
ALLEGATION OF FAILURE TO DEPLOY UNDER THE SECOND
CONTRACT. A.
THE ALLEGED ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT
TRANSPIRED MORE THAN THREE (3) YEARS AFTER THE CASE WAS
FILED AND THEREFORE HIS CASE SHOULD HAVE BEEN DISMISSED
FOR BEING BARRED BY PRESCRIPTION. B.
II.
THE COURT A QUO ERRED IN RULING THAT THERE WAS CONSTRUCTIVE
DISMISSAL UNDER THE SECOND CONTRACT.
IT IS LEGALLY IMPOSSIBLE TO HAVE CONSTRUCTIVE DISMISSAL
WHEN THE EMPLOYMENT HAS NOT YET COMMENCED. A.
ASSUMING THERE WAS OMISSION UNDER THE SECOND CONTRACT,
PETITIONERS CAN ONLY BE FOUND AS HAVING FAILED IN DEPLOYING
PRIVATE RESPONDENT BUT WITH VALID REASON. B.
III.
THE COURT A QUO ERRED IN FAILING TO FIND THAT EVEN ASSUMING
THERE WAS BASIS FOR HOLDING PETITIONER LIABLE FOR “FAILURE TO
DEPLOY” RESPONDENT, THE POEA RULES PENALIZES SUCH OMISSION WITH
A MERE “REPRIMAND.”18
The petitioners contend that the first employment contract between them and the
private respondent is different from and independent of the second contract
subsequently executed upon repatriation of respondent to Manila.
We do not agree.
_______________
18 Id., at pp. 20-21.
301
Novation is the extinguishment of an obligation by the substitution or change of the
obligation by a subsequent one which extinguishes or modifies the first, either by
changing the object or principal conditions, or, by substituting another in place of the
debtor, or by subrogating a third person in the rights of the creditor. In order for
novation to take place, the concurrence of the following requisites is indispensable:
There must be a previous valid obligation, 1.
There must be an agreement of the parties concerned to a new contract, 2.
There must be the extinguishment of the old contract, and 3.
There must be the validity of the new contract. 4.19
In its ruling, the Labor Arbiter clarified that novation had set in between the first
and second contract. To quote:
“xxx [T]his office would like to make it clear that the first contract entered into by
and between the complainant and the respondents is deemed to have been novated by
the execution of the second contract. In other words, respondents cannot be held liable
for the first contract but are clearly and definitely liable for the breach of the second
contract.”20
This ruling was later affirmed by the Court of Appeals in its decision ruling that:
“Guided by the foregoing legal precepts, it is evident that novation took place in this
particular case. The parties impliedly extinguished the first contract by agreeing to
enter into the second contract to placate Medequillo, Jr. who was unexpectedly
dismissed and repatriated to Manila. The second contract would not have been
necessary if the petitioners abided by the terms and conditions of Madequillo, Jr.’s
employment under the first contract. The records
_______________
19 Philippine Savings Bank v. Sps. Maňalac, Jr., 496 Phil, 671, 686-687; 457 SCRA
203, 217 (2005); Azolla Farms v. Court of Appeals, 484 Phil. 745, 754-755; 442 SCRA
133, 143 (2004).
20 Rollo, p. 61.
302
also reveal that the 2nd contract extinguished the first contract by changing its object
or principal. These contracts were for overseas employment aboard different vessels.
The first contract was for employment aboard the MV “Stolt Aspiration” while the
second contract involved working in another vessel, the MV “Stolt Pride.” Petitioners
and Madequillo, Jr. accepted the terms and conditions of the second contract. Contrary
to petitioners’ assertion, the first contract was a “previous valid contract” since it had
not yet been terminated at the time of Medequillo, Jr.’s repatriation to Manila. The
legality of his dismissal had not yet been resolved with finality. Undoubtedly, he was
still employed under the first contract when he negotiated with petitioners on the
second contract. As such, the NLRC correctly ruled that petitioners could only be held
liable under the second contract.”21
We concur with the finding that there was a novation of the first employment
contract.
We reiterate once more and emphasize the ruling in Reyes v. National Labor
Relations Commission,22 to wit:
“x x x [F]indings of quasi-judicial bodies like the NLRC, and affirmed by the Court of
Appeals in due course, are conclusive on this Court, which is not a trier of facts.
xxxx
x x x 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 Court of Appeals. Such findings deserve full respect and, without
justifiable reason, ought not to be altered, modified or reversed.” (Emphasis supplied)23
With the finding that respondent “was still employed under the first contract when
he negotiated with petitioners on the
_______________
21 Id., at pp. 45-46.
22 G.R. No. 160233, 8 August 2007, 529 SCRA 487.
23 Id., at pp. 494 and 499.
303
second contract,”24 novation became an unavoidable conclusion.
Equally settled is the rule that factual findings of labor officials, who are deemed to
have acquired expertise in matters within their jurisdiction, are generally accorded not
only respect but even finality by the courts when supported by substantial evidence, i.e.,
the amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion.25 But these findings are not infallible. When there is a showing
that they were arrived at arbitrarily or in disregard of the evidence on record, they may
be examined by the courts.26 In this case, there was no showing of any arbitrariness on
the part of the lower courts in their findings of facts. Hence, we follow the settled rule.
We need not dwell on the issue of prescription. It was settled by the Court of
Appeals with its ruling that recovery of damages under the first contract was already
time-barred. Thus:
“Accordingly, the prescriptive period of three (3) years within which Medequillo Jr.
may initiate money claims under the 1st contract commenced on the date of his
repatriation. xxx The start of the three (3) year prescriptive period must therefore be
reckoned on February 1992, which by Medequillo Jr.’s own admission was the date of
his repatriation to Manila. It was at this point in time that Medequillo Jr.’s cause of
action already accrued under the first contract. He had until February 1995 to pursue a
case for illegal dismissal and damages arising from the 1st contract. With the filing of
his Complaint-Affidavit on March 6, 1995, which was clearly beyond
_______________
24 Rollo, p. 46.
25 Prince Transport, Inc. v. Garcia, G.R. No. 167291, 12 January 2011, 639 SCRA
312, 324 citing Philippine Veterans Bank v. National Labor Relations Commission, G.R.
No. 188882, 30 March 2010, 617 SCRA 204.
26 Id., at pp. 324-325 citing Faeldonia v. Tong Yak Groceries, G.R. No. 182499, 2
October 2009, 602 SCRA 677, 684.
304
the prescriptive period, the cause of action under the 1st contract was already time-
barred.”27
The issue that proceeds from the fact of novation is the consequence of the non-
deployment of respondent.
The petitioners argue that under the POEA Contract, actual deployment of the
seafarer is a suspensive condition for the commencement of the employment. 28 We
agree with petitioners on such point. However, even without actual deployment, the
perfected contract gives rise to obligations on the part of petitioners.
A contract is a meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service. 29 The contracting
parties may establish such stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law, morals, good customs, public
order, or public policy.30
The POEA Standard Employment Contract provides that employment shall
commence “upon the actual departure of the seafarer from the airport or seaport in the
port of hire.”31 We adhere to the terms and conditions of the contract so as to credit the
valid prior stipulations of the parties before the controversy started. Else, the obligatory
force of every contract will be useless. Parties are bound not only to the fulfillment of
what has been expressly stipulated but also to all the consequences which, according to
their nature, may be in keeping with good faith, usage and law.32
Thus, even if by the standard contract employment commences only “upon actual
departure of the seafarer,” this does
_______________
27 Rollo, pp. 47-48.
28 Id., at p. 48.
29 Article 1305, New Civil Code.
30 Article 1306, New Civil Code.
31 Rollo, p. 48.
32 Article 1315, New Civil Code.
305
not mean that the seafarer has no remedy in case of non-deployment without any valid
reason. Parenthetically, the contention of the petitioners of the alleged poor
performance of respondent while on board the first ship MV “Stolt Aspiration” cannot
be sustained to justify the non-deployment, for no evidence to prove the same was
presented.33
We rule that distinction must be made between the perfection of the employment
contract and the commencement of the employer-employee relationship. The perfection
of the contract, which in this case coincided with the date of execution thereof, occurred
when petitioner and respondent agreed on the object and the cause, as well as the rest
of the terms and conditions therein. The commencement of the employer-employee
relationship, as earlier discussed, would have taken place had petitioner been actually
deployed from the point of hire. Thus, even before the start of any employer-employee
relationship, contemporaneous with the perfection of the employment contract was the
birth of certain rights and obligations, the breach of which may give rise to a cause of
action against the erring party. Thus, if the reverse had happened, that is the seafarer
failed or refused to be deployed as agreed upon, he would be liable for damages. 34
Further, we do not agree with the contention of the petitioners that the penalty is a
mere reprimand.
The POEA Rules and Regulations Governing Overseas Employment35 dated 31 May
1991 provides for the consequence and penalty against in case of non-deployment of the
seafarer without any valid reason. It reads:
4. “SectionWorker’s Deployment.—An agency shall deploy its recruits within the
deployment period as indicated below:
_______________
33 Rollo, p. 50.
34 Santiago v. CF Sharp Crew Management, Inc., G.R. No. 162419, 10 July 2007,
527 SCRA 165, 176.
35 Section 4, par. (b), Rule II, Book III.
306
xxx
Thirty (30) calendar days from the date of processing by the administration of the
employment contracts of seafarers. b.
Failure of the agency to deploy a worker within the prescribed period without
valid reasons shall be a cause for suspension or cancellation of license or
fine. In addition, the agency shall return all documents at no cost to the
worker.” (Emphasis and underscoring supplied)
The appellate court correctly ruled that the penalty of reprimand 36 provided under
Rule IV, Part VI of the POEA Rules and Regulations Governing the Recruitment and
Employment of Land-based Overseas Workers is not applicable in this case. The breach
of contract happened on February 1992 and the law applicable at that time was the
1991 POEA Rules and Regulations Governing Overseas Employment. The penalty for
non-deployment as discussed is suspension or cancellation of license or fine.
Now, the question to be dealt with is how will the seafarer be compensated by
reason of the unreasonable non-deployment of the petitioners?
The POEA Rules Governing the Recruitment and Employment of Seafarers do not
provide for the award of damages to be given in favor of the employees. The claim
provided by the same law refers to a valid contractual claim for compensation or
benefits arising from employer-employee relationship or for any personal injury, illness
or death at levels provided for within the terms and conditions of employment of
seafarers. However, the absence of the POEA Rules with regard to the payment of
damages to the affected seafarer does not mean that the seafarer is precluded from
claiming the same. The sanctions provided for non-deployment do not end with the
_______________
36 Section 1 (C) 4. Failure to deploy a worker within the prescribed period without
valid reason:
1st Offense – Reprimand.
307
suspension or cancellation of license or fine and the return of all documents at no cost to
the worker. As earlier discussed, they do not forfend a seafarer from instituting an
action for damages against the employer or agency which has failed to deploy him.37
We thus decree the application of Section 10 of Republic Act No. 8042 (Migrant
Workers Act) which provides for money claims by reason of a contract involving Filipino
workers for overseas deployment. The law provides:
10. “Sec.Money Claims.—Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages.
x x x” (Underscoring supplied)
308
but proper because of the non-deployment of respondent without just cause.
WHEREFORE, the appeal is DENIED. The 31 January 2007 Decision of the Court
of Appeals in CA-G.R. SP. No. 91632 is hereby AFFIRMED. The Petitioners are hereby
ordered to pay Sulpecio Medequillo, Jr., the award of actual damages equivalent to his
salary for nine (9) months as provided by the Second Employment Contract.
SO ORDERED.
Carpio (Chairperson), Sereno, Reyes and Perlas-Bernabe,** JJ., concur.
Petition denied, judgment affirmed.
Notes.—Novation may either be extinctive or modificatory, much being dependent
on the nature of the change and the intention of the parties. (Azarcon vs. People, 622
SCRA 341 [2010])
Article 291 of the Labor Code is the law governing the prescription of money claims
of seafarers, a class of overseas contract workers; Article 291 prevails over Section 28 of
the Standard Employment Contract for Seafarers which provides for claims to be
brought only within one year from the date of the seafarer’s return to the point of hire;
Section 28 insofar as it limits the prescriptive period within which the seafarers may
file their money claims, is hereby declared null and void. (Medline Management, Inc. vs.
Roslinda, 630 SCRA 471 [2010])
——o0o——

Following the law, the claim is still cognizable by the labor arbiters of the NLRC
under the second phrase of the provision.
Applying the rules on actual damages, Article 2199 of the New Civil Code provides
that one is entitled to an adequate compensation only for such pecuniary loss suffered
by him as he has duly proved. Respondent is thus liable to pay petitioner actual
damages in the form of the loss of nine (9) months’ worth of salary as provided in the
contract.38 This is
_______________
37 Santiago v. CF Sharp Crew Management, Inc., supra note 34 at pp. 176-177.
38 In Legahi v. National Labor Relations Commission, 376 Phil. 557, 566; 318 SCRA
446, 457 (1999), we held: Petitioner’s dismissal without a valid cause constitute a
breach of contract. Consequently, he should only be paid the unexpired portion of his
employment contract.
 G.R. No. 93666. April 22, 1991.*
GENERAL MILLING CORPORATION and EARL TIMOTHY CONE,
petitioners, vs. HON. RUBEN D. TORRES, in his capacity as Secretary of Labor and
Employment, HON. BIENVENIDO E. LAGUESMA, in his capacity as Acting Secretary
of Labor and Employment, and BASKETBALL COACHES ASSOCIATION OF THE
PHILIPPINES, respondents.
Contracts; Provisions of applicable laws especially those relating to matters
affected with public policy, are deemed written into contracts.—Neither can petitioners
validly claim that implementation of respondent Secretary’s decision would amount to
an impairment of the obligations of contracts. The provisions of the Labor Code and its
Implementing Rules and Regulations requiring alien employment permits were in
existence long before petitioners entered into their contract of employment. It is firmly
settled that provisions of applicable laws, especially provisions relating to matters
affected with public policy, are deemed written into contracts. Private parties cannot
constitutionally contract away the otherwise applicable provisions of law.
Labor Law; The Department of Labor is the agency vested with jurisdiction to
determine the question of availability of local workers.—Petitioners’ contention that
respondent Secretary of Labor should have deferred to the findings of Commission on
Immigration and Deportation as to the necessity of employing petitioner Cone, is again,
bereft of legal basis. The Labor Code itself specifically empowers respondent Secretary
to make a determination as to the availability of the services of a “person in the
Philippines who is competent, able and willing at the time of application to perform the
services for which an alien is desired.” In short, the Department of Labor is the agency
vested with jurisdiction to determine the question of availability of local workers. The
constitutional validity of legal provisions granting such jurisdiction and authority and
requiring proof of non-availability of local nationals able to carry out the duties of the
position involved, cannot be seriously questioned.
PETITION for certiorari to review the decision of the Department of Labor and
Employment.
_______________
* THIRD DIVISION.
216
The facts are stated in the resolution of the Court.
Sobrevinas, Diaz, Hayudini & Bodegon Law Office for petitioners.
Rodrigo, Cuevas & De Borja for respondent BCAP.
RESOLUTION
FELICIANO, J.:
On 1 May 1989, the National Capital Region of the Department of Labor and
Employment issued Alien Employment Permit No. M-0689-3-535 in favor of petitioner
Earl Timothy Cone, a United States citizen, as sports consultant and assistant coach for
petitioner General Milling Corporation (“GMC”).
On 27 December 1989, petitioners GMC and Cone entered into a contract of
employment whereby the latter undertook to coach GMC’s basketball team.
On 15 January 1990, the Board of Special Inquiry of the Commission on
Immigration and Deportation approved petitioner Cone’s application for a change of
admission status from temporary visitor to prearranged employee.
On 9 February 1990, petitioner GMC requested renewal of petitioner Cone’s alien
employment permit. GMC also requested that it be allowed to employ Cone as full-
fledged coach. The DOLE Regional Director, Luna Piezas, granted the request on 15
February 1990.
On 18 February 1990, Alien Employment Permit No. M-0290-3-881, valid until 25
December 1990, was issued.
Private respondent Basketball Coaches Association of the Philippines (“BCAP”)
appealed the issuance of said alien employment permit to the respondent Secretary of
Labor who, on 23 April 1990, issued a decision ordering cancellation of petitioner Cone’s
employment permit on the ground that there was no showing that there is no person in
the Philippines who is competent, able and willing to perform the services required nor
that the hiring of petitioner Cone would redound to the national interest.
Petitioner GMC filed a Motion for Reconsideration and two (2) Supplemental
Motions for Reconsideration but said Motions were denied by Acting Secretary of Labor
Bienvenido E.
217
Laguesma in an Order dated 8 June 1990.
Petitioners are now before the Court on a Petition for Certiorari, dated 14 June
1990, alleging that:
1. 1.respondent Secretary of Labor gravely abused his discretion when he revoked
petitioner Cone’s alien employment permit; and
2. 2.Section 6 (c), Rule XIV, Book I of the Omnibus Rules Implementing the Labor
Code is null and void as it is in violation of the enabling law as the Labor
Code does not empower respondent Secretary to determine if the employment
of an alien would redound to national interest.
Deliberating on the present Petition for Certiorari, the Court considers that petitioners
have failed to show any grave abuse of discretion or any act without or in excess of
jurisdiction on the part of respondent Secretary of Labor in rendering his decision,
dated 23 April 1990, revoking petitioner Cone’s Alien Employment Permit.
The alleged failure to notify petitioners of the appeal filed by private respondent
BCAP was cured when petitioners were allowed to file their Motion for Reconsideration
before respondent Secretary of Labor.1
Petitioner GMC’s claim that hiring of a foreign coach is an employer’s prerogative
has no legal basis at all. Under Article 40 of the Labor Code, an employer seeking
employment of an alien must first obtain an employment permit from the Department
of Labor. Petitioner GMC’s right to choose whom to employ is, of course, limited by the
statutory requirement of an alien employment permit.
 Petitioners will not find solace in the equal protection clause of the Constitution. As
pointed out by the Solicitor-General, no comparison can be made between petitioner
Cone and Mr. Norman Black as the latter is “a long time resident of the country,” and
thus, not subject to the provisions of Article 40 of the Labor Code which apply only to
“non-resident aliens.” In any case, the term “non-resident alien” and its obverse
“resident alien,” here must be given their technical connotation under our law on
immigration.
_______________
1 De Leon v. Commission on Elections, 129 SCRA 117 (1984).
218
Neither can petitioners validly claim that implementation of respondent Secretary’s
decision would amount to an impairment of the obligations of contracts. The provisions
of the Labor Code and its Implementing Rules and Regulations requiring alien
employment permits were in existence long before petitioners entered into their
contract of employment. It is firmly settled that provisions of applicable laws, especially
provisions relating to matters affected with public policy, are deemed written into
contracts.2 Private parties cannot constitutionally contract away the otherwise
applicable provisions of law.
Petitioners’ contention that respondent Secretary of Labor should have deferred to
the findings of Commission on Immigration and Deportation as to the necessity of
employing petitioner Cone, is, again, bereft of legal basis. The Labor Code itself
specifically empowers respondent Secretary to make a determination as to the
availability of the services of a “person in the Philippines who is competent, able and
willing at the time of application to perform the services for which an alien is
desired.”3 In short, the Department of Labor is the agency vested with jurisdiction to
determine the question of availability of local workers. The constitutional validity of
legal provisions granting such jurisdiction and authority and requiring proof of non-
availability of local nationals able to carry out the duties of the position involved,
cannot be seriously questioned.
Petitioners apparently also question the validity of the Implementing Rules and
Regulations, specifically Section 6 (c), Rule XIV, Book I of the Implementing Rules, as
imposing a condition not found in the Labor Code itself. Section 6 (c), Rule XIV, Book I
of the Implementing Rules, provides as follows:
“Section 6. Issuance of Employment Permit—The Secretary of Labor may issue an
employment permit to the applicant based on:
1. (a)Compliance by the applicant and his employer with the requirements of
Section 2 hereof;
2. (b)Report of the Bureau Director as to the availability or non-
_______________
2 E.g., Pakistan International Airways Corporation v. Hon. Blas F. Ople, et al., G.R.
No. 61594, 28 September 1990; Commissioner of Internal Revenue v. United States
Lines Co., 5 SCRA 175 (1962).
3 Article 40 of the Labor Code.
219
1. availability of any person in the Philippines who is competent and willing to do
the job for which the services of the applicant are desired.
2. (c)His assessment as to whether or not the employment of the applicant will
redound to the national interest;
3. (d)Admissibility of the alien as certified by the Commission on Immigration
and Deportation;
4. (e)The recommendation of the Board of Investments or other appropriate
government agencies if the applicant will be employed in preferred areas of
investments or in accordance with the imperative of economic development;
x x x x x x x x”
(Italics supplied)
Article 40 of the Labor Code reads as follows:
“ART. 40. Employment permit of non-resident aliens.—Any alien seeking admission to
the Philippines for employment purposes and any domestic or foreign employer who
desires to engage an alien for employment in the Philippines shall obtain an
employment permit from the Department of Labor.
The employment permit may be issued to a non-resident alien or to the applicant
employer after a determination of the non-availability of a person in the Philippines
who is competent, able and willing at the time of application to perform the services for
which the alien is desired.
For an enterprise registered in preferred areas of investments, said employment
permit may be issued upon recommendation of the government agency charged with the
supervision of said registered enterprise.” (Italics supplied)
Petitioners apparently suggest that the Secretary of Labor is not authorized to take into
account the question of whether or not employment of an alien applicant would
“redound to the national interest” because Article 40 does not explicitly refer to such
assessment. This argument (which seems impliedly to concede that the relationship of
basketball coaching and the national interest is tenuous and unreal) is not persuasive.
In the first place, the second paragraph of Article 40 says: “[t]he employment
permit may be issued to a non-resident alien or to the applicant employer after a
determination of the non-availability of a person in the Philippines who is competent,
able and willing at the time of application to perform the services for
220
which the alien is desired.” The permissive language employed in the Labor Code
indicates that the authority granted involves the exercise of discretion on the part of the
issuing authority. In the second place, Article 12 of the Labor Code sets forth a
statement of objectives that the Secretary of Labor should, and indeed must, take into
account in exercising his authority and jurisdiction granted by the Labor Code:
“ART. 12. Statement of Objectives.—It is the policy of the State:
 1. a)To promote and maintain a state of full employment through improved
manpower training, allocation and utilization;x x x x x x x x x
2. c)To facilitate a free choice of available employment by persons seeking work in
conformity with the national interest;
3. d)To facilitate and regulate the movement of workers in conformity with the
national interest;
4. e)To regulate the employment of aliens, including the establishment of a
registration and/or work permit system;x x x x x x x x x”

Thus, we find petitioners’ arguments on the above points of constitutional law too
insubstantial to require further consideration.
Petitioners have very recently manifested to this Court that public respondent
Secretary of Labor has reversed his earlier decision and has issued an Employment
Permit to petitioner Cone. Petitioners seek to withdraw their Petition for Certiorari on
the ground that it has become moot and academic.
While ordinarily this Court would dismiss a petition that clearly appears to have
become moot and academic, the circumstances of this case and the nature of the
questions raised by petitioners are such that we do not feel justified in leaving those
questions unanswered.4 Moreover, assuming that an alien employment permit has in
fact been issued to petitioner Cone, the basis of the reversal by the Secretary of Labor of
his earlier decision does not appear in the record. If such reversal is based on some view
of constitutional law or labor law different from those here set out, then such
employment permit, if one has been issued, would appear open to serious legal
objections.
_______________

4 Cf. Javier v. Commission on Elections, 144 SCRA 194 (1986).

221
ACCORDINGLY, the Court Resolved to DISMISS the Petition for Certiorari for lack of
merit. Costs against petitioners.
Fernan (C.J., Chairman), Bidin and Davide, Jr., JJ., concur.
Gutierrez, Jr., J., In the result.

Petition dismissed.
Note.—The doctrine of sole and exclusive competence of the labor tribunal in cases
involving or originating from labor dispute has been constantly upheld by the Supreme
Court. (Filipinas Life Assurance Company, Inc. vs. Bleza, 139 SCRA 565.)

——o0o——
 G.R. No. 128845. June 1, 2000.*
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE),
petitioner, vs. HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of
Labor and Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the
Acting Secretary of Labor and Employment; DR. BRIAN MACCAULEY in his capacity
as the Superintendent of International School-Manila; and INTERNATIONAL
SCHOOL, INC., respondents.
Labor Law; Constitutional Law; That public policy abhors inequality and
discrimination is beyond contention.—That public policy abhors inequality and
discrimination is beyond contention. Our Constitution and laws reflect the policy
against these evils. The Constitution in the Article on Social Justice and Human Rights
exhorts Congress to “give highest priority to the enactment of measures that protect
and enhance the right of all people to human dignity, reduce social, economic, and
political inequalities.” The very broad Article 19 of the Civil Code requires every person,
“in the exercise of his rights and in the performance of his duties, [to] act with justice,
give everyone his due, and observe honesty and good faith.”
Same; Same; International law, which springs from general principles of law,
likewise proscribes discrimination.—International law, which springs from general
principles of law, likewise proscribes discrimination. General principles of law include
principles of equity, i.e., the general principles of fairness and justice, based on the test
of what is reasonable. The Universal Declaration of Human Rights, the International
Covenant on Economic, Social, and Cultural Rights, the International Convention on
the Elimination of All Forms of Racial Discrimination, the Convention against
Discrimination in Education, the Convention (No. 111) Concerning Discrimination in
Respect of Employment and Occupation—all embody the general principle against
discrimination, the very antithesis of fairness and justice. The Philippines, through its
Constitution, has incorporated this principle as part of its national laws.
_______________
* FIRST DIVISION.
14
Same; Same; State directed to promote “equality of employment opportunities for
all.”—The Constitution also directs the State to promote “equality of employment
opportunities for all.” Similarly, the Labor Code provides that the State shall “ensure
equal work opportunities regardless of sex, race or creed.” It would be an affront to both
the spirit and letter of these provisions if the State, in spite of its primordial obligation
to promote and ensure equal employment opportunities, closes its eyes to unequal and
discriminatory terms and conditions of employment.
Same; Same; Discrimination, particularly in terms of wages, is frowned upon by
the Labor Code.—Discrimination, particularly in terms of wages, is frowned upon by the
Labor Code. Article 135, for example, prohibits and penalizes the payment of lesser
compensation to a female employee as against a male employee for work of equal value.
Article 248 declares it an unfair labor practice for an employer to discriminate in regard
to wages in order to encourage or discourage membership in any labor organization.
Same; Same; If an employer accords employees the same position and rank, the
presumption is that these employees perform equal work.—The School contends that
petitioner has not adduced evidence that local-hires perform work equal to that of
foreign-hires. The Court finds this argument a little cavalier. If an employer accords
employees the same position and rank, the presumption is that these employees
perform equal work. This presumption is borne by logic and human experience. If the
employer pays one employee less than the rest, it is not for that employee to explain
why he receives less or why the others receive more. That would be adding insult to
injury. The employer has discriminated against that employee; it is for the employer to
explain why the employee is treated unfairly.
Same; Same; The State has the right and duty to regulate the relations between
labor and capital.—The Constitution enjoins the State to “protect the rights of workers
and promote their welfare,” “to afford labor full protection.” The State, therefore, has
the right and duty to regulate the relations between labor and capital. These relations
are not merely contractual but are so impressed with public interest that labor
contracts, collective bargaining agreements included, must yield to the common good.
Should such contracts contain stipulations that are contrary to public policy, courts will
not hesitate to strike down these stipulations.
15
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
Azcuna, Yorac, Sarmiento, Arroyo and Chua Law Offices for petitioner.
Bernas Law Offices for private respondents.
KAPUNAN, J.:
Receiving salaries less than their counterparts hired abroad, the local-hires of private
respondent School, mostly Filipinos, cry discrimination. We agree. That the local-hires
are paid more than their colleagues in other schools is, of course, beside the point. The
point is that employees should be given equal pay for work of equal value. That is a
principle long honored in this jurisdiction. That is a principle that rests on fundamental
notions of justice. That is the principle we uphold today.
Private respondent International School, Inc. (the School, for short), pursuant to
Presidential Decree 732, is a domestic educational institution established primarily for
dependents of foreign diplomatic personnel and other temporary residents.1 To enable
the School to continue carrying out its educational program and improve its standard of
instruction, Section 2(c) of the same decree authorizes the School to
employ its own teaching and management personnel selected by it either locally or
abroad, from Philippine or other nationalities, such personnel being exempt from
otherwise applicable laws and regulations attending their employment, except laws
that have been or will be enacted for the protection of employees.
Accordingly, the School hires both foreign and local teachers as members of its
faculty, classifying the same into two:
_______________
 1 Issued on June 19, 1975 (Authorizing International School, Inc. to Donate Its Real
Properties to the Government of the Republic of the Philippines and Granting It
Certain Rights).
16
(1) foreign-hires and (2) local-hires. The School employs four tests to determine whether
a faculty member should be classifled as a foreign-hire or a local hire:
1. a.What is one’s domicile?
2. b.Where is one’s home economy?
3. c.To which country does one owe economic allegiance?
4. d.Was the individual hired abroad specifically to work in the School and was
the School responsible for bringing that individual to the Philippines?2
Should the answer to any of these queries point to the Philippines, the faculty member
is classified as a local hire; otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local-hires. These
include housing, transportation, shipping costs, taxes, and home leave travel allowance.
Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-
hires. The School justifies the difference on two “significant economic disadvantages”
foreign-hires have to endure, namely: (a) the “dislocation factor” and (b) limited tenure.
The School explains:
A foreign-hire would necessarily have to uproot himself from his home country, leave
his family and friends, and take the risk of deviating from a promising career path—all
for the purpose of pursuing his profession as an educator, but this time in a foreign land
The new foreign hire is faced with economic realities: decent abode for oneself and/or for
one’s family, effective means of transportation allowance for the education of one’s
children, adequate insurance against illness and death, and of course the primary
benefit of a basic salary/retirement compensation.
Because of a limited tenure, the foreign hire is confronted again with the same
economic reality after his term: that he will eventually and inevitably return to his
home country where he will have to confront the uncertainty of obtaining suitable
employment after a long period in a foreign land.
_______________
2 Rollo, p. 328.
17
The compensation scheme is simply the School’s adaptive measure to remain
competitive on an international level in terms of attracting competent professionals in
the field of international education.3
When negotiations for a new collective bargaining agreement were held on June 1995,
petitioner International School Alliance of Educators, “a legitimate labor union and the
collective bargaining representative of all faculty members”4 of the School, contested the
difference in salary rates between foreign and local-hires. This issue, as well as the
question of whether foreign-hires should be included in the appropriate bargaining unit,
eventually caused a deadlock between the parties.
On September 7, 1995, petitioner filed a notice of strike. The failure of the National
Conciliation and Mediation Board to bring the parties to a compromise prompted the
Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute.
On June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an
Order resolving the parity and representation issues in favor of the School. Then DOLE
Secretary Leonardo A. Quisumbing subsequently denied petitioner’s motion for
reconsideration in an Order dated March 19, 1997. Petitioner now seeks relief in this
Court.
Petitioner claims that the point-of-hire classification employed by the School is
discriminatory to Filipinos and that the grant of higher salaries to foreign-hires
constitutes racial discrimination.
The School disputes these claims and gives a breakdown of its faculty members,
numbering 38 in all, with nationalities other than Filipino, who have been hired locally
and classified as local hires.5 The Acting Secretary of Labor found that these
_______________
3 Id., at. 324.
4 Id., at. 8.
5 Id., at. 325. The breakdown is as follows:
18
non-Filipino local-hires received the same benefits as the Filipino local-hires:
The compensation package given to local-hires has been shown to apply to all,
regardless of race. Truth to tell, there are foreigners who have been hired locally and
who are paid equally as Filipino local hires.6
The Acting Secretary upheld the point-of-hire classification for the distinction in
salary rates:
The principle “equal pay for equal work” does not find application in the present
case. The international character of the School requires the hiring of foreign personnel
to deal with different nationalities and different cultures, among the student
population.
We also take cognizance of the existence of a system of salaries and benefits
accorded to foreign hired personnel which system is universally recognized. We agree
that certain amenities have to be provided to these people in order to entice them to
render their services in the Philippines and in the process remain competitive in the
international market.
Furthermore, we took note of the fact that foreign hires have limited contract of
employment unlike the local hires who enjoy security of tenure. To apply parity
therefore, in wages and other
_______________
6 Id., at. 39.
19
benefits would also require parity in other terms and conditions of employment which
include the employment contract.
A perusal of the parties’ 1992-1995 CBA points us to the conditions and provisions for
salary and professional compensation wherein the parties agree as follows:
All members of the bargaining unit shall be compensated only in accordance with
Appendix C hereof provided that the Superintendent of the School has the discretion to
recruit and hire, expatriate teachers from abroad, under terms and conditions that are
consistent with accepted international practice. Appendix C of said CBA further
provides:
The new salary schedule is deemed at equity with the Overseas Recruited Staff
(OSRS) salary schedule. The 25% differential is reflective of the agreed value of system
displacement and contracted status of the OSRS as differentiated from the tenured
status of Locally Recruited Staff (LRS).
To our mind, these provisions demonstrate the parties’ recognition of the difference
in the status of two types of employees, hence, the difference in their salaries.
The Union cannot also invoke the equal protection clause to justify its claim of
parity. It is an established principle of constitutional law that the guarantee of equal
protection of the laws is not violated by legislation or private covenants based on
reasonable classification. A classification is reasonable if it is based on substantial
distinctions and apply to all members of the same class. Verily, there is a substantial
distinction between foreign hires and local hires, the former enjoying only a limited
tenure, having no amenities of their own in the Philippines and have to be given a good
compensation package in order to attract them to join the teaching faculty of the
School.7
We cannot agree.
That public policy abhors inequality and discrimination is beyond contention. Our
Constitution and laws reflect the policy against these evils. The Constitution 8 in the
Article on Social Justice and Human Rights exhorts Congress to “give
_______________
7 Id., at 38-39.
8 In Section 1, Article XIII thereof.
20
highest priority to the enactment of measures that protect and enhance the right of all
people to human dignity, reduce social, economic, and political inequalities.” The very
broad Article 19 of the Civil Code requires every person, “in the exercise of his rights
and in the performance of his duties, [to] act with justice, give everyone his due, and
observe honesty and good faith.”
International law, which springs from general principles of law, 9 likewise proscribes
discrimination. General principles of law include principles of equity, 10 i.e., the general
principles of fairness and justice, based on the test of what is reasonable. 11 The
Universal Declaration of Human Rights,12 the International Covenant on Economic,
Social, and Cultural Rights,13 the International Convention on the Elimination of All
Forms of Racial Discrimination,14 the Convention against Discrimi-
_______________
9 Statute of the International Court of Justice, Art. 38.
10 M. DEFENSOR-SANTIAGO, International Law 75 (1999), citing Judge Hudson
in River Meuse Case, (1937) Ser. A/B No. 70.
11 Ibid., citing Rann of Kutch Arbitration (India vs. Pakistan), 50 ILR 2 (1968).
12 Adopted by the General Assembly of the United Nations on December 10, 1948.
Article 1 thereof states: “All human beings are born free and equal in dignity and
rights.” Article 2 provides, “1. Everyone is entitled to all the rights and freedoms set
forth in this Declaration, without distinction of any kind, such as race, colour, sex,
language, religion, political or other opinion, national or social origin, property, birth or
other status.”
13 Adopted by the General of the United Nations in Resolution 2200 (XXI) of 16
December 1966. Article 2 provides: “2. The States Parties to the present Covenant
undertake to guarantee that the rights enunciated in the present Covenant will be
exercised without discrimination of any kind as to race, colour, sex, language, religion,
political or other opinion, national or social origin, property, birth or other status.”
14 Adopted by the General assembly of the United Nations in Resolution 2106 (XX)
21 December 1965. Article 2 of the Convention states: “States Parties condemn racial
discrimination and undertake to pursue by all appropriate means and without delay a
policy of
21
nation in Education,15 the Convention (No. 111) Concerning Discrimination in Respect
of Employment and Occupation16—all embody the general principle against
discrimination, the very antithesis of fairness and justice. The Philippines, through its
Constitution, has incorporated this principle as part of its national laws.
In the workplace, where the relations between capital and labor are often skewed in
favor of capital, inequality and discrimination by the employer are all the more
reprehensible.
The Constitution17 specifically provides that labor is entitled to “humane conditions
of work.” These conditions are not restricted to the physical workplace—the factory, the
office or the field—but include as well the manner by which employers treat their
employees.
The Constitution18 also directs the State to promote “equality of employment
opportunities for all.” Similarly, the Labor Code 19 provides that the State shall “ensure
equal work opportunities regardless of sex, race or creed.” It would be an
_______________
eliminating racial discrimination in all its forms and promoting understanding
among all races x x x.”
15 Adopted at Paris, December 14, 1960. Under Article 3, the States Parties
undertake, among others, “to abrogate any statutory provisions and any administrative
instructions and to discontinue any administrative practices which involve
discrimination in education.” Under Article 4, “The States Parties to this Convention
undertake further more to formulate, develop and apply a national policy which, by
methods appropriate to the circumstances and to national usage, will tend to promote
equality of opportunity and of treatment in the matter of education x x x.”
16 Adopted by the General Conference of the International Labor Organization at
Geneva, June 25, 1958. Article 2 provides that, “Each Member for which this
Convention is in force undertakes to declare and pursue a national policy designed to
promote, by methods appropriate to national condition and practice, equality of
opportunity and treatment in respect of employment and occupation, with a view to
eliminating any discrimination in respect thereof.”
17 In Article XIII, Section 3 thereof.
18 Id.
19 In Article 3 thereof.
22
State, in spite of its primordial obligation to promote and ensure equal employment
opportunities, closes its eyes to unequal and discriminatory terms and conditions of
employment.20
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code.
Article 135, for example, prohibits and penalizes21 the payment of lesser compensation
to a female employee as against a male employee for work of equal value. Article 248
declares it an unfair labor practice for an employer to discriminate in regard to wages
in order to encourage or discourage membership in any labor organization.
Notably, the International Covenant on Economic, Social, and Cultural
Rights, supra, in Article 7 thereof, provides:
The States Parties to the present Covenant recognize the right of everyone to the
enjoyment of just and favorable conditions of work, which ensure, in particular:
1. a.Remuneration which provides all workers, as a minimum, with:
1. i.Fair wages and equal remuneration for work of equal value without
distinction of any kind, in particular women being guaranteed conditions of
work not inferior to those enjoyed by men, with equal pay for equal work;
x x x.
The foregoing provisions impregnably institutionalize in this jurisdiction the long
honored legal truism of “equal pay for equal work.” Persons who work with
substantially equal qualifications, skill, effort and responsibility, under similar
_______________
20 E.g., Article 135 of the Labor Code declares it unlawful for the employer to
require, not only as a condition of employment, but also as a condition for
the continuation of employment, that a woman shall not get married.
21 In relation to Articles 288 and 289 of the same Code.
23
conditions, should be paid similar salaries.22 This rule applies to the School, its
“international character” notwithstanding.
The School contends that petitioner has not adduced evidence that local-hires
perform work equal to that of foreignhires.23 The Court finds this argument a little
cavalier. If an employer accords employees the same position and rank, the
presumption is that these employees perform equal work. This presumption is borne by
logic and human experience. If the employer pays one employee less than the rest, it is
not for that employee to explain why he receives less or why the others receive more.
That would be adding insult to injury.
The employer has discriminated against that employee; it is for the employer to
explain why the employee is treated unfairly.
The employer in this case has failed to discharge this burden. There is no evidence
here that foreign-hires perform 25% more efficiently or effectively than the local-hires.
Both groups have similar functions and responsibilities, which they perform under
similar working conditions.
The School cannot invoke the need to entice foreign-hires to leave their domicile to
rationalize the distinction in salary rates without violating the principle of equal work
for equal pay.
“Salary” is defined in Black’s Law Dictionary (5th ed.) as “a reward or recompense for
services performed.” Similarly, the Philippine Legal Encyclopedia states that “salary” is
the
_______________
22 Indeed, the government employs this rule in fixing the compensation of
government employees. Thus, Republic Act No. 6758 (An Act Prescribing a Revised
Compensation and Position Classification System in the Government and for Other
Purposes) declares it “the policy of the State to provide equal pay for substantially equal
work and to base differences in pay upon substantive differences in duties and
responsibilities, and qualification requirements of the positions. See also the Preamble
of Presidential Decree No. 985 (A Decree Revising the Position Classification and
Compensation Systems in the National Government, and Integrating the same).
23 Rollo, p. 491.
24
“[c]onsideration paid at regular intervals for the rendering of services.” In Songco v.
National Labor Relations Commission,24 we said that:
“salary” means a recompense or consideration made to a person for his pains or
industry in another man’s business. Whether it be derived from “salarium,” or more
fancifully from “sal,” the pay of the Roman soldier, it carries with it the fundamental
idea of compensation for services rendered. (Emphasis supplied.)
While we recognize the need of the School to attract foreign-hires, salaries should not be
used as an enticement to the prejudice of local-hires. The local-hires perform the same
services as foreign-hires and they ought to be paid the same salaries as the latter. For
the same reason, the “dislocation factor” and the foreign-hires’ limited tenure also
cannot serve as valid bases for the distinction in salary rates. The dislocation factor and
limited tenure affecting foreign-hires are adequately compensated by certain benefits
accorded them which are not enjoyed by local-hires, such as housing, transportation,
shipping costs, taxes and home leave travel allowances.
The Constitution enjoins the State to “protect the rights of workers and promote
their welfare,”25 “to afford labor full protection.”26 The State, therefore, has the right
and duty to regulate the relations between labor and capital. 27 These relations are not
merely contractual but are so impressed with public interest that labor contracts,
collective bargaining agreements included, must yield to the common good. 28 Should
such contracts contain stipulations that are contrary to public policy, courts will not latter. To include foreign-hires in a bargaining unit with local-hires would not assure
hesitate to strike down these stipulations. either group the exercise of their respective collective bargaining rights.
_______________ WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby
GRANTED IN PART. The Orders of the Secretary of Labor and Employment dated
24 183 SCRA 610 (1990). June 10, 1996 and March 19, 1997, are hereby REVERSED and SET ASIDE insofar as
25 In Section 18, Article II thereof. they uphold the practice of respondent School of according foreign-hires higher salaries
26 In Section 3, Article XIII thereof. See also Article 3 of the Labor Code. than local-hires.
27 See Sec. 3, Article XIII, Constitution. Article 3 of the Labor Code. SO ORDERED.
28 Article 1700, Civil Code. Puno (Actg. Chairman) and Pardo, JJ., concur.
Davide, Jr. (C.J., Chairman), On official leave.
25 Ynares-Santiago, J., On leave.
In this case, we find the point-of-hire classification employed by respondent School to
justify the distinction in the salary rates of foreign-hires and local hires to be an invalid Petition granted in part. Orders of June 10, 1996 and March 19, 1997 reversed and
classification. There is no reasonable distinction between the services rendered by set aside.
foreign-hires and local-hires. The practice of the School of according higher salaries to Note.—The constitutional policy of providing full protection to labor is not intended
foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of to oppress or destroy management. (Capili vs. National Labor Relations
this Court. Commission, 270 SCRA 488 [1997])
We agree, however, that foreign-hires do not belong to the same bargaining unit as
the local-hires. ——o0o——
A bargaining unit is “a group of employees of a given employer, comprised of all or
less than all of the entire body of employees, consistent with equity to the employer,
indicate to be the best suited to serve the reciprocal rights and duties of the parties
under the collective bargaining provisions of the law.” 29 The factors in determining the
appropriate collective bargaining unit are (1) the will of the employees (Globe Doctrine);
(2) affinity and unity of the employees’ interest, such as substantial similarity of work
and duties, or similarity of compensation and working conditions (Substantial Mutual
Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment
status.30 The basic test of an asserted bargaining unit’s acceptability is whether or not
it is fundamentally the combination which will best assure to all employees the exercise
of their collective bargaining rights.31
It does not appear that foreign-hires have indicated their intention to be grouped
together with local-hires for purposes of collective bargaining. The collective bargaining
history in the School also shows that these groups were always treated separately.
Foreign-hires have limited tenure; local-hires enjoy security of tenure. Although
foreign-hires perform
_______________

29 Toyota Motor Philippines Corporation vs. Toyota Motor Philippines Federation

Labor Union and the Secretary of Labor and Employment, 268 SCRA 573 (1997); San
Miguel Corporation vs. Laguesma, 236 SCRA 595 (1994).
30 San Miguel Corporation vs. Laguesma, supra.
31 Belyca Corporation vs. Ferrer-Calleja, 168 SCRA 184 (1988).

26
similar functions under the same working conditions as the local-hires, foreign-hires
are accorded certain benefits not granted to local-hires. These benefits, such as housing,
transportation, shipping costs, taxes, and home leave travel allowance, are reasonably
related to their status as foreign-hires, and justify the exclusion of the former from the
 G.R. No. 114337. September 29, 1995.*
NITTO ENTERPRISES, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, and ROBERTO CAPILI, respondents.
Labor Law; Apprenticeship Agreements; Prior approval by the Department of
Labor and Employment of the proposed apprenticeship program is a condition sine qua
non before an apprenticeship agreement can be validly entered into.—In the case at
bench, the apprenticeship agreement between petitioner and private respondent was
executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade
of “care maker/molder.” On the same date, an apprenticeship program was prepared by
petitioner and submitted to the Department of Labor and Employment. However, the
apprenticeship Agreement was filed only on June 7, 1990. Notwithstanding the absence
of ap-
_______________
* FIRST DIVISION.
655
proval by the Department of Labor and Employment, the apprenticeship
agreement was enforced the day it was signed. Based on the evidence before us,
petitioner did not comply with the requirements of the law. It is mandated that
apprenticeship agreements entered into by the employer and apprentice shall be
entered only in accordance with the apprenticeship program duly approved by the
Minister of Labor and Employment. Prior approval by the Department of Labor and
Employment of the proposed apprenticeship program is, therefore, a condition sine qua
non before an apprenticeship agreement can be validly entered into.
Same; Same; Where the apprenticeship agreement has no force and effect, the
worker hired as apprentice should be considered as a regular employee.—Hence, since
the apprenticeship agreement between petitioner and private respondent has no force
and effect in the absence of a valid apprenticeship program duly approved by the
DOLE, private respondent’s assertion that he was hired not as an apprentice but as a
delivery boy (“kargador” or “pahinante”) deserves credence. He should rightly be
considered as a regular employee of petitioner as defined by Article 280 of the Labor
Code.
Same; Dismissals; Due Process; The twin requirements of due process, substantive
and procedural, must be complied with before valid dismissal exists, otherwise the
dismissal becomes void.—There is an abundance of cases wherein the Court ruled that
the twin requirements of due process, substantive and procedural, must be complied
with, before valid dismissal exists. Without which, the dismissal becomes void. The twin
requirements of notice and hearing constitute the essential elements of due process.
This simply means that the employer shall afford the worker ample opportunity to be
heard and to defend himself with the assistance of his representative, if he so desires.
Ample opportunity connotes every kind of assistance that management must accord the
employee to enable him to prepare adequately for his defense including legal
representation.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
Sinforoso R. Pagunsan for petitioner.
Ma. Elena Enly B. Nazareta representative of private respondent.
656
KAPUNAN, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking to annul the
decision1 rendered by public respondent National Labor Relations Commission, which
reversed the decision of the Labor Arbiter.
Briefly, the facts of the case are as follows:
Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum
products, hired Roberto Capili sometime in May 1990 as an apprentice machinist,
molder and core maker as evidenced by an apprenticeship agreement 2 for a period of six
(6) months from May 28, 1990 to November 28, 1990 with a daily wage rate of P66.75
which was 75% of the applicable minimum wage.
At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of
glass which he was working on, accidentally hit and injured the leg of an office
secretary who was treated at a nearby hospital.
Later that same day, after office hours, private respondent entered a workshop
within the office premises which was not his work station. There, he operated one of the
power press machines without authority and in the process injured his left thumb.
Petitioner spent the amount of P1,023.04 to cover the medication of private respondent.
The following day, Roberto Capili was asked to resign in a letter3 which reads:
August 2, 1990
Wala siyang tanggap ng utos mula sa superbisor at wala siyang experiensa kung
papaano gamitin and “TOOL” sa pagbuhat ng salamin, sarili niyang desisyon ang
paggamit ng tool at may disgrasya at nadamay pa ang isang sekretarya ng kompanya.
Sa araw ding ito limang (5) minuto ang nakalipas mula alas-singko ng hapon siya
ay pumasok sa shop na hindi naman sakop ng kanyang trabaho. Pinakialaman at
kinalikot ang makina at nadisgrasya
_______________
1 Rollo, pp. 12-15.
2 Records, p. 12.
3 Id., at 13.
657
niya ang kanyang sariling kamay.
Nakagastos ang kompanya ng mga sumusunod:
Bibigyan siya ng kompanya ng Siyam na araw na libreng sahod hanggang
matanggal ang tahi ng kanyang kamay.
Tatanggapin niya ang sahod niyang anim na araw, mula ika-30 ng Hulyo at ika-4
ng Agosto, 1990.
Ang kompanya ang magbabayad ng lahat ng gastos pagtanggal ng tahi ng kanyang
kamay, pagkatapos ng siyam na araw mula ika-2 ng Agosto.
 Sa lahat ng nakasulat sa itaas, hinihingi ng kompanya ang kanyang resignasyon,
kasama ng kanyang confirmasyon at pag-ayon na ang lahat ng nakasulat sa itaas ay
totoo.
*****************
Naiintindihan ko ang lahat ng nakasulat sa itaas, at ang lahat ng ito ay aking
pagkakasala sa hindi pagsunod sa alintuntunin ng kompanya.
(Sgd.) Roberto Capili
Roberto Capili
On August 3, 1990 private respondent executed a Quitclaim and Release in favor of
petitioner for and in consideration of the sum of P1,912.79.4
Three days after, or on August 6, 1990, private respondent formally filed before the
NLRC Arbitration Branch, National Capital Region a complaint for illegal dismissal
and payment of other monetary benefits.
On October 9, 1991, the Labor Arbiter rendered his decision finding the termination
of private respondent as valid and dismissing the money claim for lack of merit. The
dispositive portion of the ruling reads:
WHEREFORE, premises considered, the termination is valid and for cause, and the
money claims dismissed for lack of merit.
_______________
4 Id., at 14.
658
The respondent however is ordered to pay the complainant the amount of P500.00 as
financial assistance.
SO ORDERED.5
Labor Arbiter Patricio P. Libo-on gave two reasons for ruling that the dismissal of
Roberto Capili was valid. First, private respondent who was hired as an apprentice
violated the terms of their agreement when he acted with gross negligence resulting in
the injury not only to himself but also to his fellow worker. Second, private respondent
had shown that “he does not have the proper attitude in employment particularly the
handling of machines without authority and proper training.”6
On July 26, 1993, the National Labor Relations Commission issued an order
reversing the decision of the Labor Arbiter, the dispositive portion of which reads:
WHEREFORE, the appealed decision is hereby set aside. The respondent is hereby
directed to reinstate complainant to his work last performed with backwages computed
from the time his wages were withheld up to the time he is actually reinstated. The
Arbiter of origin is hereby directed to further hear complainant’s money claims and to
dispose them on the basis of law and evidence obtaining.
SO ORDERED.7
The NLRC declared that private respondent was a regular employee of petitioner by
ruling thus:
As correctly pointed out by the complainant, we cannot understand how an
apprenticeship agreement filed with the Department of Labor only on June 7, 1990
could be validly used by the Labor Arbiter as basis to conclude that the complainant
was hired by respondent as a plain ‘apprentice’ on May 8, 1990. Clearly, therefore, the
complainant was respondent’s regular employee under Article 280 of the Labor Code, as
early as May 28, 1990, who thus enjoyed the security of tenure guaranteed in Section 3,
Article XIII of our 1987 Constitution.
The complaint being for illegal dismissal (among others) it then behooves upon
respondent, pursuant to Art. 277(b) and as ruled in
_______________
5 Id., at 47-48.
6 Id., p. 47.
7 Rollo, pp. 14-15.
659
Edwin Gesulgon vs. NLRC, et al. (G.R. No. 90349, March 5, 1993, 3rd Div.,
Feliciano, J.) to prove that the dismissal of complainant was for a valid cause. Absent
such proof, we cannot but rule that the complainant was illegally dismissed.8
On January 28, 1994, Labor Arbiter Libo-on called for a conference at which only
private respondent’s representative was present.
On April 22, 1994, a Writ of Execution was issued, which reads:
NOW, THEREFORE, finding merit in [private respondent’s] Motion for Issuance of the
Writ, you are hereby commanded to proceed to the premises of [petitioner] Nitto
Enterprises and Jovy Foster located at No. 1 74 Araneta Avenue, Potrero, Malabon,
Metro Manila or at any other places where their properties are located and effect the
reinstatement of herein [private respondent] to his work last performed or at the option
of the respondent by payroll reinstatement.
You are also to collect the amount of P122,690.85 representing his backwages as
called for in the dispositive portion, and turn over such amount to this Office for proper
disposition.
Petitioner filed a motion for reconsideration but the same was denied.
Hence, the instant petition for certiorari.
The issues raised before us are the following:
I
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE
OF DISCRETION IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN
APPRENTICE.
II
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE
ABUSE OF DISCRETION IN HOLDING THAT PETITIONER HAD NOT
ADEQUATELY PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING
THE SERVICE OF PRIVATE RESPONDENT.
_______________
8 Ibid.
660
We find no merit in the petition.
Petitioner assails the NLRC’s finding that private respondent Roberto Capili cannot
plainly be considered an apprentice since no apprenticeship program had yet been filed
and approved at the time the agreement was executed.
Petitioner further insists that the mere signing of the apprenticeship agreement
already established an employer-apprentice relationship.
Petitioner’s argument is erroneous.
The law is clear on this matter. Article 61 of the Labor Code provides:
Contents of apprenticeship agreement.—Apprenticeship agreements, including the
main rates of apprentices, shall conform to the rules issued by the Minister of Labor
and Employment. The period of apprenticeship shall not exceed six months.
Apprenticeship agreements providing for wage rates below the legal minimum wage,
which in no case shall start below 75% per cent of the applicable minimum wage, may
be entered into only in accordance with apprenticeship program duly approved by the
Minister of Labor and Employment . The Ministry shall develop standard model
programs of apprenticeship. (emphasis supplied)
In the case at bench, the apprenticeship agreement between petitioner and private
respondent was executed on May 28, 1990 allegedly employing the latter as an
apprentice in the trade of “care maker/molder.” On the same date, an apprenticeship
program was prepared by petitioner and submitted to the Department of Labor and
Employment. However, the apprenticeship Agreement was filed only on June 7, 1990.
Notwithstanding the absence of approval by the Department of Labor and Employment,
the apprenticeship agreement was enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with the requirements of
the law. It is mandated that apprenticeship agreements entered into by the employer
and apprentice shall be entered only in accordance with the apprenticeship program
duly approved by the Minister of Labor and Employment.
Prior approval by the Department of Labor and Employment of the proposed
apprenticeship program is, therefore, a condition
661
sine qua non before an apprenticeship agreement can be validly entered into.
The act of filing the proposed apprenticeship program with the Department of Labor
and Employment is a preliminary step towards its final approval and does not
instantaneously give rise to an employer-apprentice relationship.
Article 57 of the Labor Code provides that the State aims to “establish a national
apprenticeship program through the participation of employers, workers and
government and non-government agencies” and “to establish apprenticeship standards
for the protection of apprentices.” To translate such objectives into existence, prior
approval of the DOLE to any apprenticeship program has to be secured as a
condition sine qua non before any such apprenticeship agreement can be fully enforced.
The role of the DOLE in apprenticeship programs and agreements cannot be debased.
Hence, since the apprenticeship agreement between petitioner and private
respondent has no force and effect in the absence of a valid apprenticeship program
duly approved by the DOLE, private respondent’s assertion that he was hired not as an
apprentice but as a delivery boy (“kargador” or “pahinante”) deserves credence. He
should rightly be considered as a regular employee of petitioner as defined by Article
280 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 services to be performed in
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. (Emphasis supplied)
662
and pursuant to the constitutional mandate to “protect the rights of workers and
promote their welfare.”9
Petitioner further argues that, there is a valid cause for the dismissal of private
respondent.
There is an abundance of cases wherein the Court ruled that the twin requirements
of due process, substantive and procedural, must be complied with, before valid
dismissal exists.10 Without which, the dismissal becomes void.
The twin requirements of notice and hearing constitute the essential elements of
due process. This simply means that the employer shall afford the worker ample
opportunity to be heard and to defend himself with the assistance of his representative,
if he so desires.
Ample opportunity connotes every kind of assistance that management must accord
the employee to enable him to prepare adequately for his defense including legal
representation.11
As held in the case of Pepsi-Cola Bottling Co., Inc. v. NLRC:12
The law requires that the employer must furnish the worker sought to be dismissed
with two (2) written notices before termination of employee can be legally effected: (1)
notice which apprises the employee of the particular acts or omissions for which his
dismissal is sought; and (2) the subsequent notice which informs the employee of the
employer’s decision to dismiss him (Sec. 13, BP 130; Sec. 2-6 Rule XIV, Book V, Rules
and Regulations Implementing the Labor Code as amended). Failure to comply with the
requirements taints the dismissal with illegality. This procedure is mandatory; in the
absence of which, any judgment reached by management is void and inexistent
(Tingson, Jr. vs. NLRC, 185 SCRA 498 [1990]; National Service Corp. vs. NLRC, 168
SCRA 122; Ruffy vs. NLRC, 182 SCRA 365 [1990]).
_______________
 9 Sec. 18, Art. II, The 1987 Constitution of the Republic of the Philippines.
10 Century Textile Mills, Inc. v. NLRC, 161 SCRA 528 (1988); Gold City Integrated
Port Services, Inc. v. NLRC, 189 SCRA 811 (1990); Kwikway Engineering Works v.
NLRC, 195 SCRA 526 (1991).
11 Abiera v. National Labor Relations Commission, 215 SCRA 476 (1992).
12 210 SCRA 277 (1992).

663
The fact is private respondent filed a case of illegal dismissal with the Labor Arbiter
only three days after he was made to sign a Quitclaim, a clear indication that such
resignation was not voluntary and deliberate.
Private respondent averred that he was actually employed by petitioner as a
delivery boy (“kargador” or “pahinante”).
He further asserted that petitioner “strong-armed” him into signing the
aforementioned resignation letter and quitclaim without explaining to him the contents
thereof. Petitioner made it clear to him that anyway, he did not have a choice. 13
Petitioner cannot disguise the summary dismissal of private respondent by
orchestrating the latter’s alleged resignation and subsequent execution of a Quitclaim
and Release. A judicious examination of both events belies any spontaneity on private
respondent’s part.
WHEREFORE, finding no abuse of discretion committed by public respondent
National Labor Relations Commission, the appealed decision is hereby AFFIRMED.
SO ORDERED.
Padilla (Chairman), Davide, Jr., Bellosillo and Hermosisima, Jr., JJ., concur.

Judgment affirmed.
Notes.—An employee who is forced to resign is considered to have been illegally
dismissed. (Guatson International Travel and Tours, Inc. vs. National Labor Relations
Commission, 230 SCRA 815 [1994])
In job contracting, the principal is jointly and severally liable with the contractor
and insolvency or unwillingness to pay by the contractor or direct employer is not a
prerequisite for the joint and severally liability of the principal. (Development Bank of
the Philippines vs. National Labor Relations Commission, 233 SCRA 250 [1994])

——o0o——
 January 26, 2011. G.R. No. 187320.*
ATLANTA INDUSTRIES, INC. and/or ROBERT CHAN, petitioners, vs. APRILITO R.
SEBOLINO, KHIM V. COSTALES, ALVIN V. ALMOITE, and JOSEPH S. SAGUN,
respondents.
Labor Law; Illegal Dismissals; When they were dismissed without just or
authorized cause, without notice, and without the opportunity to be heard, their
dismissal was illegal under the law.—This reality is highlighted by the CA finding that
the respondents occupied positions such as machine operator, scaleman and extruder
operator—tasks that are usually necessary and desirable in Atlanta’s usual business or
trade as manufacturer of plastic building materials. These tasks and their nature
characterized the four as regular employees under Article 280 of the Labor Code. Thus,
when they were dismissed without just or authorized cause, without notice, and without
the opportunity to be heard, their dismissal was illegal under the law.
Same; Regular Employees; With the expiration of the first agreement and the
retention of the employees, Atlanta recognized the completion of their training and their
acquisition of a regular employee status.—Even if we recognize the company’s need to
train its employees through apprenticeship, we can only consider the first
apprenticeship agreement for the purpose. With the expiration of the
_______________
* THIRD DIVISION.
681
first agreement and the retention of the employees, Atlanta had, to all intents and
purposes, recognized the completion of their training and their acquisition of a regular
employee status. To foist upon them the second apprenticeship agreement for a second
skill which was not even mentioned in the agreement itself, is a violation of the Labor
Code’s implementing rules and is an act manifestly unfair to the employees, to say the
least.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
The facts are stated in the opinion of the Court.
Dela Rosa & Nograles for petitioners.
Sentro ng Alternatibong Lingap Panligal [Saligan] for respondents.
BRION,J.:
For resolution is the petition for review on certiorari1 assailing the decision2 and the
resolution3 of the Court of Appeals (CA) rendered on November 4, 2008 and March 25,
2009, respectively, in CA-G.R. SP. No. 99340.4
The Antecedents
The facts are summarized below.
In the months of February and March 2005, complainants Aprilito R. Sebolino,
Khim V. Costales, Alvin V. Almoite,
_______________
1 Rollo, pp. 12-34; filed pursuant to Rule 45 of the Rules of Court.
2 Id., at pp. 42-63; penned by Associate Justice Pampio A. Abarintos, and concurred
in by Associate Justice Edgardo F. Sundiam and Associate Justice Sesinando E. Villon.
3 Id., at pp. 65-66.
4 Aprilito R. Sebolino, Khim V. Costales, Alvin V. Almoite and Joseph S. Sagun v.
National Labor Relations Commission, Atlanta Industries, Inc. and/or Robert Chan.
682
Joseph S. Sagun, Agosto D. Zaño, Domingo S. Alegria, Jr., Ronie Ramos, Edgar
Villagomez, Melvin Pedregoza, Teofanes B. Chiong, Jr., Leonardo L. dela Cruz, Arnold
A. Magalang, and Saturnino M. Mabanag filed several complaints for illegal dismissal,
regularization, underpayment, nonpayment of wages and other money claims, as well
as claims for moral and exemplary damages and attorney’s fees against the petitioners
Atlanta Industries, Inc. (Atlanta) and its President and Chief Operating Officer Robert
Chan. Atlanta is a domestic corporation engaged in the manufacture of steel pipes.
The complaints were consolidated and were raffled to Labor Arbiter Daniel Cajilig,
but were later transferred to Labor Arbiter Dominador B. Medroso, Jr.
The complainants alleged that they had attained regular status as they were
allowed to work with Atlanta for more than six (6) months from the start of a purported
apprenticeship agreement between them and the company. They claimed that they
were illegally dismissed when the apprenticeship agreement expired.
In defense, Atlanta and Chan argued that the workers were not entitled to
regularization and to their money claims because they were engaged as apprentices
under a government-approved apprenticeship program. The company offered to hire
them as regular employees in the event vacancies for regular positions occur in the
section of the plant where they had trained. They also claimed that their names did not
appear in the list of employees (Master List)5 prior to their engagement as apprentices.
On May 24, 2005, dela Cruz, Magalang, Zaño and Chiong executed a Pagtalikod at
Pagwawalang Saysay before Labor Arbiter Cajilig.
_______________
5 Rollo, pp. 192-216.
683
The Compulsory Arbitration Rulings
On April 24, 2006, Labor Arbiter Medroso dismissed the complaint with respect to
dela Cruz, Magalang, Zaño and Chiong, but found the termination of service of the
remaining nine to be illegal.6 Consequently, the arbiter awarded the dismissed workers
backwages, wage differentials, holiday pay and service incentive leave pay amounting
to P1,389,044.57 in the aggregate.
Atlanta appealed to the National Labor Relations Commission (NLRC). In the
meantime, or on October 10, 2006, Ramos, Alegria, Villagomez, Costales and Almoite
allegedly entered into a compromise agreement with Atlanta. 7The agreement provided
that except for Ramos, Atlanta agreed to pay the workers a specified amount as
settlement, and to acknowledge them at the same time as regular employees.
 On December 29, 2006,8 the NLRC rendered a decision, on appeal, modifying the
ruling of the labor arbiter, as follows: (1) withdrawing the illegal dismissal finding with
respect to Sagun, Mabanag, Sebolino and Pedregoza; (2) affirming the dismissal of the
complaints of dela Cruz, Zaño, Magalang and Chiong; (3) approving the compromise
agreement entered into by Costales, Ramos, Villagomez, Almoite and Alegria, and (4)
denying all other claims.
Sebolino, Costales, Almoite and Sagun moved for the reconsideration of the decision,
but the NLRC denied the motion in its March 30, 2007 9 resolution. The four then
sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of
Court. They charged that the NLRC committed grave abuse of discretion in: (1) failing
to recognize their prior employment with Atlanta; (2) declaring the second
_______________
6 Id., at pp. 89-99; Petition, Annex “N.”
7 CA Rollo, pp. 286-287.
8 Rollo, pp. 100-110; Petition, Annex “O.”
9 Id., at pp. 115-118; Petition, Annex “P.”
684
apprenticeship agreement valid; (3) holding that the dismissal of Sagun, Mabanag,
Sebolino and Melvin Pedregoza is legal; and (4) upholding the compromise agreement
involving Costales, Ramos, Villagomez, Almoite and Alegria.
The CA Decision
The CA granted the petition based on the following findings:10
The respondents were already employees of the company before they entered into
the first and second apprenticeship agreements—Almoite and Costales were employed
as early as December 2003 and, subsequently, entered into a first apprenticeship
agreement from May 13, 2004 to October 12, 2004; before this first agreement expired,
a second apprenticeship agreement, from October 9, 2004 to March 8, 2005 was
executed. The same is true with Sebolino and Sagun, who were employed by Atlanta as
early as March 3, 2004. Sebolino entered into his first apprenticeship agreement with
the company from March 20, 2004 to August 19, 2004, and his second apprenticeship
agreement from August 20, 2004 to January 19, 2005. Sagun, on the other hand,
entered into his first agreement from May 28, 2004 to October 8, 2004, and the second
agreement from October 9, 2004 to March 8, 2005. 1.
The first and second apprenticeship agreements were defective as they were
executed in violation of the law and the rules. 2.11 The agreements did not indicate the
trade or occupation in which the apprentice would be trained; neither was the
apprenticeship program approved by the Technical Education and Skills Development
Authority (TESDA).
_______________
10 Supra note 2.
11 Article 61 of the Labor Code, and its Implementing Rules and Regulations, Book
II, Rule VI, Section 18.
685
The positions occupied by the respondents—machine operator, extruder operator
and scaleman—are usually necessary and desirable in the manufacture of plastic
building materials, the company’s main business. Costales, Almoite, Sebolino and
Sagun were, therefore, regular employees whose dismissals were illegal for lack of a
just or authorized cause and notice. 3.
The compromise agreement entered into by Costales and Almoite, together with
Ramos, Villagomez and Alegria, was not binding on Costales and Almoite because they
did not sign the agreement. 4.
The petitioners themselves admitted that Costales and Almoite were initially
planned to be a part of the compromise agreement, but their employment has been
regularized as early as January 11, 2006; hence, the company did not pursue their
inclusion in the compromise agreement.12
The CA faulted the NLRC for failing to appreciate the evidence regarding the
respondents’ prior employment with Atlanta. The NLRC recognized the prior
employment of Costales and Almoite on Atlanta’s monthly report for December 2003 for
the CPS Department/Section dated January 6, 2004.13 This record shows that Costales
and Almoite were assigned to the company’s first shift from 7:00 a.m. to 3:00 p.m. The
NLRC ignored Sebolino and Sagun’s prior employment under the company’s Production
and Work Schedule for March 7 to 12, 2005 dated March 3, 2004, 14 as they had been
Atlanta’s employees as early as March 3, 2004, with Sebolino scheduled to work on
March 7-12, 2005 at 7:00 a.m. to 7:00 p.m., while Sagun was scheduled to work for the
same period but from 7:00 p.m. to 7:00 a.m. The CA noted that Atlanta
_______________
12 CA Rollo, p. 323; petitioners’ Comment, p. 31, last paragraph.
13 CA Rollo, p. 78.
14 Id., at p. 92.
686
failed to challenge the authenticity of the two documents before it and the labor
authorities.
Atlanta and Chan moved for reconsideration, but the CA denied the motion in a
resolution rendered on March 25, 2009.15 Hence, the present petition.
The Petition
Atlanta seeks a reversal of the CA decision, contending that the appellate court
erred in (1) concluding that Costales, Almoite, Sebolino and Sagun were employed by
Atlanta before they were engaged as apprentices; (2) ruling that a second
apprenticeship agreement is invalid; (3) declaring that the respondents were illegally
dismissed; and (4) disregarding the compromise agreement executed by Costales and
Almoite. It submits the following arguments:
First. The CA’s conclusion that the respondent workers were company employees
before they were engaged as apprentices was primarily based on the Monthly
Report16 and the Production and Work Schedule for March 7-12, 2005,17 in total
disregard of the Master List18 prepared by the company accountant, Emelita M.
Bernardo. The names of Costales, Almoite, Sebolino and Sagun do not appear as
employees in the Master List which “contained the names of all the persons who were
employed by and at petitioner.”19
Atlanta faults the CA for relying on the Production and Work Schedule and the
Monthly Report which were not sworn to, and in disregarding the Master List whose
veracity was sworn to by Bernardo and by Alex Go who headed the company’s
accounting division. It maintains that the CA should have given more credence to the
Master List.
_______________
15 Supra note 3.
16 Supra note 13.
17 Supra note 14.
18 Supra note 5.
19 Rollo, p. 22; Petition, p. 11, par. 1.
687
Second. In declaring invalid the apprenticeship agreements it entered into with the
respondent workers, the CA failed to recognize the rationale behind the law on
apprenticeship. It submits that under the law,20 apprenticeship agreements are valid,
provided they do not exceed six (6) months and the apprentices are paid the appropriate
wages of at least 75% of the applicable minimum wage.
The respondents initially executed a five-month apprenticeship program with
Atlanta, at the end of which, they “voluntarily and willingly entered into another
apprenticeship agreement with the petitioner for the training of a second skill” 21 for five
months; thus, the petitioners committed no violation of the apprenticeship period laid
down by the law.
Further, the apprenticeship agreements, entered into by the parties, complied with
the requisites under Article 62 of the Labor Code; the company’s authorized
representative and the respondents signed the agreements and these were ratified by
the company’s apprenticeship committee. The apprenticeship program itself was
approved and certified by the TESDA.22 The CA, thus, erred in overturning the NLRC’s
finding that the apprenticeship agreements were valid.
Third. There was no illegal dismissal as the respondent workers’ tenure ended with
the expiration of the apprenticeship agreement they entered into. There was, therefore,
no regular employer-employee relationship between Atlanta and the respondent
workers.
The Case for Costales, Almoite, Sebolino and Sagun
In a Comment filed on August 6, 2009,23 Costales, Almoite, Sebolino and Sagun
pray for a denial of the petition for being procedurally defective and for lack of merit.
_______________
20 Article 61 of the Labor Code.
21 Rollo, pp. 27-28; Petition, pp. 16-17.
22 CA Rollo, p. 354; Annex “4” of Atlanta’s Comment.
23 Rollo, pp. 125-139.
688
The respondent workers contend that the petition failed to comply with Section 4,
Rule 45 of the Rules of Court which requires that the petition be accompanied by
supporting material portions of the records. The petitioners failed to attach to the
petition a copy of the Production and Work Schedule despite their submission that the
CA relied heavily on the document in finding the respondent workers’ prior employment
with Atlanta. They also did not attach a copy of the compromise agreement purportedly
executed by Costales and Almoite. For this reason, the respondent workers submit that
the petition should be dismissed.
The respondents posit that the CA committed no error in holding that they were
already Atlanta’s employees before they were engaged as apprentices, as confirmed by
the company’s Production and Work Schedule.24 They maintain that the Production and
Work Schedule meets the requirement of substantial evidence as the petitioners failed
to question its authenticity. They point out that the schedule was prepared by Rose A.
Quirit and approved by Adolfo R. Lope, head of the company’s PE/Spiral Section. They
argue that it was highly unlikely that the head of a production section of the company
would prepare and assign work to the complainants if the latter had not been company
employees.
The respondent workers reiterate their mistrust of the Master List25 as evidence
that they were not employees of the company at the time they became apprentices.
They label the Master List as “self-serving, dubious and even if considered as authentic,
its content contradicts a lot of petitioner’s claim and allegations,”26 thus—
Aside from the fact that the Master List is not legible, it contains only the names of
inactive employees. Even those found by the NLRC to have been employed in the
company 1.
_______________
24 Supra note 14.
25 Supra note 5.
26 Rollo, p. 127; respondents’ Comment, p. 3, par. 5.
689
(such as Almoite, Costales and Sagun) do not appear in the list. If Costales and Almoite
had been employed with Atlanta since January 11, 2006, as the company
claimed,27 their names would have been in the list, considering that the Master List
accounts for all employees “as of May 2006”—the notation carried on top of each page of
the document.
There were no entries of employees hired or resigned in the years 2005 and 2006
despite the “as of May 2006” notation; several pages making up the Master List contain
names of employees for the years 1999-2004. 2.
The fact that Atlanta presented the purported Master List instead of the payroll
raised serious doubts on the authenticity of the list. 3.
In sum, the respondent workers posit that the presentation of the Master List
revealed the “intention of the herein petitioner[s] to perpetually hide the fact of [their]
prior employment.”28
On the supposed apprenticeship agreements they entered into, Costales, Almoite,
Sebolino and Sagun refuse to accept the agreements’ validity, contending that the
company’s apprenticeship program is merely a ploy “to continually deprive [them] of
their rightful wages and benefits which are due them as regular employees.” 29 They
submit the following “indubitable facts and ratiocinations:”30
The apprenticeship agreements were submitted to TESDA only in 2005 (with dates
of receipt on “1/4/ 1.05” & “2/22/05”31), when the agreements were supposed to have
been executed in April or May 2004. Thus, the submission was made long after the
starting date of the workers’ apprenticeship or even beyond the agreement’s
completion/termination
_______________
27 Rollo, p. 189.
28 Id., at p. 151.
29 Id., at p. 130; Respondent’s Comment, p. 6, par. 12.
30 Ibid.
31 CA Rollo, pp. 129-148 and 152-153.
690
date, in violation of Section 23, Rule VI, Book II of the Labor Code.
The respondent workers were made to undergo apprenticeship for occupations
different from those allegedly approved by TESDA. TESDA approved Atlanta’s
apprenticeship program on “Plastic Molder” 2.32 and not for extrusion molding
process, engineering, pelletizing process and mixing process.
The respondents were already skilled workers prior to the apprenticeship program
as they had been employed and made to work in the different job positions where they
had undergone training. Sagun and Sebolino, together with Mabanag, Pedregoza, dela
Cruz, Chiong, Magalang and Alegria were even given production assignments and work
schedule at the PE/Spiral Section from May 11, 2004 to March 23, 2005, and some of
them were even assigned to the 3:00 p.m.-11:00 p.m. and graveyard shifts (11:00 p.m.-
7:00 a.m.) during the period. 3.33
The respondent workers were required to continue as apprentices beyond six
months. The TESDA certificate of completion indicates that the workers’ apprenticeship
had been completed after six months. Yet, they were suffered to work as apprentices
beyond that period. 4.
Costales, Almoite, Sebolino and Sagun resolutely maintain that they were illegally
dismissed, as the reason for the termination of their employment—notice of the
completion of the second apprenticeship agreement—did not constitute either a just or
authorized cause under Articles 282 and 283 of the Labor Code.
Finally, Costales and Almoite refuse to be bound by the compromise
agreement34 that Atlanta presented to defeat the
_______________
32 Id., at p. 162, Annex “H”.
33 Id., at pp. 85-92-A; Petition for Certiorari, Annexes “JJ” to “RR”.
34 Id., at p. 286, Annex “RRR”.
691
two workers’ cause of action. They claim that the supposed agreement is invalid as
against them, principally because they did not sign it.
The Court’s Ruling
The procedural issue
The respondent workers ask that the petition be dismissed outright for the
petitioners’ failure to attach to the petition a copy of the Production and Work Schedule
and a copy of the compromise agreement Costales and Almoite allegedly entered into—
material portions of the record that should accompany and support the petition,
pursuant to Section 4, Rule 45 of the Rules of Court.
In Mariners Polytechnic Colleges Foundation, Inc. v. Arturo J. Garchitorena35 where
the Court addressed essentially the same issue arising from Section 2(d), Rule 42 of the
Rules of Court,36 we held that the phrase “of the pleadings and other material portions
of the record x x x as would support the allegation of the petition clearly contemplates
the exercise of
_______________
35 G.R. No. 162253, August 13, 2008, 562 SCRA 80, citing Atillo v. Bombay, 404
Phil. 179; 351 SCRA 361(2001).
36 2. SEC.Form and contents.—The petition shall be filed in seven (7) legible
copies, with the original copy intended for the court being indicated as such by the
petitioner, and shall (a) state the full names of the parties to the case, without
impleading the lower courts or judges thereof either as petitioners or respondents; (b)
indicate the specific material dates showing that it was filed on time; (c) set forth
concisely a statement of the matters involved, the issues raised, the specification of
errors of fact or law, or both, allegedly committed by the Regional Trial Court, and the
reasons or arguments relied upon for the allowance of the appeal; (d) be accompanied by
clearly legible duplicate originals or true copies of the judgments or final orders of both
lower courts, certified correct by the clerk of court of the Regional Trial Court, the
requisite number of plain copies thereof and of the pleadings and other material
portions of the record as would support the allegations of the petition.
692
discretion on the part of the petitioner in the selection of documents that are deemed to
be relevant to the petition. The crucial issue to consider then is whether or not the
documents accompanying the petition sufficiently supported the allegations therein.” 37
As in Mariners, we find that the documents attached to the petition sufficiently
support the petitioners’ allegations. The accompanying CA decision 38 and
resolution,39 as well as those of the labor arbiter40 and the NLRC,41 referred to the
parties’ position papers and even to their replies and rejoinders. Significantly, the CA
decision narrates the factual antecedents, defines the complainants’ cause of action, and
cites the arguments, including the evidence the parties adduced. If any, the defect in
the petition lies in the petitioners’ failure to provide legible copies of some of the
material documents mentioned, especially several pages in the decisions of the labor
arbiter and of the NLRC. This defect, however, is not fatal as the challenged CA
decision clearly summarized the labor tribunal’s rulings. We, thus, find no procedural
obstacle in resolving the petition on the merits.
The merits of the case
We find no merit in the petition. The CA committed no reversible error in
nullifying the NLRC decision42 and in affirming the labor arbiter’s ruling,43 as it applies
to Costales, Almoite, Sebolino and Sagun. Specifically, the CA correctly ruled that the arbiter, the NLRC and the CA itself. The appellate court, thus, found the said
four were illegally dismissed because (1) they were already employees when they were documents sufficient to establish the employment of the respondents before their
required to undergo engagement as apprentices.
_______________ Second. The Master List54 (of employees) that the petitioners heavily rely upon as
proof of their position that the respondents were not Atlanta’s employees, at the time
37 Supra note 35, at 87. they were engaged as apprentices, is unreliable and does not inspire belief.
38 Supra note 2. The list, consisting of several pages, is hardly legible. It requires extreme effort to
39 Supra note 3. sort out the names of the employees listed, as well as the other data contained in the
40 Rollo, pp. 89-99; Petition, Annex “N.” list. For this reason alone, the list deserves little or no consideration. As the
41 Id., at pp. 100-110; Petition, Annex “O.” respondents also pointed out, the list itself contradicts a lot of Atlanta’s claims and
42 Ibid. allegations, thus: it lists only the names of inactive employees; even the names of those
43 Supra note 40. the NLRC found to have been employed by Atlanta, like Costales and Almoite, and
those who even Atlanta claims attained regular status on January 11, 2006,55 do not
693 appear in the list when it was supposed to account for all employees “as of May 6,
apprenticeship and (2) apprenticeship agreements were invalid. 2006.” Despite the “May 6, 2006” cut off date, the list contains no entries of employees
The following considerations support the CA ruling. who were hired or who resigned in 2005 and 2006. We note that the list contains the
First. Based on company operations at the time material to the case, Costales, names of employees from 1999 to 2004.
Almoite, Sebolino and Sagun were already rendering service to the company as We cannot fault the CA for ignoring the Master List even if Bernardo, its head office
employees before they were made to undergo apprenticeship. The company itself accountant, swore to its correctness and authenticity.56 Its substantive unreliability
recognized the respondents’ status through relevant operational records—in the case of gives it very minimal probative value. Atlanta would have been better served, in terms
Costales and Almoite, the CPS monthly report for December 2003 44 which the NLRC of reliable evidence, if true copies of the payroll (on which the list was based, among
relied upon and, for Sebolino and Sagun, the production and work schedule for March 7 others, as Bernardo claimed in her affidavit) were presented instead.
to 12, 200545 cited by the CA. _______________
Under the CPS monthly report, Atlanta assigned Costales and Almoite to the first
shift (7:00 a.m. to 3:00 p.m.) of the Section’s work. The Production and Work Schedules, 54 Supra note 5.
in addition to the one noted by the CA, showed that Sebolino and Sagun were scheduled 55 Supra note 5, caption of each page of the list’s last line.
on different shifts vis-à-vis the production and work of the company’s PE/Spiral Section 56 Rollo, p. 217; Bernardo’s Affidavit dated May 25, 2006.
for the periods July 5-10, 2004;46 October 25-31, 2004;47 November 8-14,
2004;48 November 16-22, 2004;49 January 3-9, 2005;50 January 10-15, 2005;51 March 7- 695
12, 200552 and March 17-23, 2005.53 Third. The fact that Costales, Almoite, Sebolino and Sagun were already rendering
We stress that the CA correctly recognized the authenticity of the operational service to the company when they were made to undergo apprenticeship (as established
documents, for the failure of Atlanta to raise a challenge against these documents by the evidence) renders the apprenticeship agreements irrelevant as far as the four are
before the labor concerned. This reality is highlighted by the CA finding that the respondents occupied
_______________ positions such as machine operator, scaleman and extruder operator—tasks that are
usually necessary and desirable in Atlanta’s usual business or trade as manufacturer of
44 Supra note 13. plastic building materials.57 These tasks and their nature characterized the four as
45 Supra note 14. regular employees under Article 280 of the Labor Code. Thus, when they were
46 CA Rollo, p. 86. dismissed without just or authorized cause, without notice, and without the opportunity
47 Id., at p. 87. to be heard, their dismissal was illegal under the law.58
48 Id., at p. 88. Even if we recognize the company’s need to train its employees through
49 Id., at p. 89. apprenticeship, we can only consider the first apprenticeship agreement for the
50 Id., at p. 90. purpose. With the expiration of the first agreement and the retention of the employees,
51 Id., at p. 91. Atlanta had, to all intents and purposes, recognized the completion of their training and
52 Id., at p. 92. their acquisition of a regular employee status. To foist upon them the second
53 Id., at p. 92-A. apprenticeship agreement for a second skill which was not even mentioned in the
agreement itself,59 is a violation of the Labor Code’s implementing rules 60 and is an act
694 manifestly unfair to the employees, to say the least. This we cannot allow.
 Fourth. The compromise agreement61 allegedly entered into by Costales and
Almoite, together with Ramos, Villagomez and Alegria, purportedly in settlement of the
case before
_______________

57 Id., at p. 60; CA Decision, p. 19, par. 1.

58 Articles 279 & 277 (b) of the Labor Code.
59 Rollo, pp. 67-82; copies of the second apprenticeship agreements.
60 Section 18, Rule VI, Book II of the Implementing Rules and Regulations of the
Labor Code.
61 CA Rollo, pp. 286-287.

696
the NLRC, is not binding on Costales and Almoite because they did not sign it. The
company itself admitted62 that while Costales and Almoite were initially intended to be
a part of the agreement, it did not pursue their inclusion “due to their regularization as
early as January 11, 2006.”63
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit.
The assailed decision and resolution of the Court of Appeals are AFFIRMED. Costs
against the petitioner Atlanta Industries, Inc.
SO ORDERED.
Carpio-Morales, Bersamin, Villarama, Jr. and Sereno, JJ., concur.

Petition denied, judgment and resolution affirmed.

Note.—Even if an employee is engaged to perform activities that are necessary or

desirable in the usual trade or business of the employer, it does not preclude the fixing
of employment for a definite period. (Caparoso vs. Court of Appeals, 516 SCRA 30
[2007])
——o0o——

G.R. No. 122917. July 12, 1999.*
MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P.
PASCUAL, RAQUEL ESTILLER, ALBERT HALLARE, EDMUND M. CORTEZ,
JOSELITO O. AGDON, GEORGE P. LIGUTAN, JR., CELSO M. YAZAR, ALEX G.
CORPUZ, RONALD M. DELFIN, ROWENA M. TABAQUERO, CORAZON C. DELOS
REYES, ROBERT G. NOORA, MILAGROS O. LEQUIGAN, ADRIANA F.
TATLONGHARI, IKE CABANDUCOS, COCOY NOBELLO, DORENDA
CANTIMBUHAN, ROBERT MARCELO, LILIBETH Q. MARMOLEJO, JOSE E.
SALES, ISABEL MAMAUAG, VIOLETA G. MONTES, ALBINO TECSON, MELODY
V. GRUELA, BERNADETH D. AGERO, CYNTHIA
_______________
* THIRD DIVISION.
187
DE VERA, LANI R. CORTEZ, MA. ISABEL B. CONCEPCION, DINDO VALERIO,
ZENAIDA MATA, ARIEL DEL PILAR, MARGARET CECILIA CANOZA, THELMA
SEBASTIAN, MA. JEANETTE CERVANTES, JEANNIE RAMIL, ROZAIDA
PASCUAL, PINKY BALOLOA, ELIZABETH VENTURA, GRACE S. PARDO and RICO
TIMOSA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and FAR
EAST BANK AND TRUST COMPANY, respondents.
Labor Law; Labor Code; The facts, viewed in light of the Labor Code and the
Magna Carta for Disabled Persons, indubitably show that the petitioners, except sixteen
of them, should be deemed regular employees.—At the outset, let it be known that this
Court appreciates the nobility of private respondent’s effort to provide employment to
physically impaired individuals and to make them more productive members of society.
However, we cannot allow it to elude the legal consequences of that effort, simply
because it now deems their employment irrelevant. The facts, viewed in light of the
Labor Code and the Magna Carta for Disabled Persons, indubitably show that the
petitioners, except sixteen of them, should be deemed regular employees. As such, they
have acquired legal rights that this Court is duty-bound to protect and uphold, not as a
matter of compassion but as a consequence of law and justice.
Same; Same; Since the Magna Carta accords them the rights of qualified able-
bodied persons, they are thus covered by Article 280 of the Labor Code.—The fact that
the employees were qualified disabled persons necessarily removes the employment
contracts from the ambit of Article 80. Since the Magna Carta accords them the rights
of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code.
Same; Same; The test of whether an employee is regular was laid down in De Leon
vs. National Labor Relations Commission.—The test of whether an employee is regular
was laid down in De Leon v. NLRC, in which this Court held: “The primary standard,
therefore, of determining regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual trade or business
of the employer. The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. The connection can be determined
188
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 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.”
Same; Same; When the bank renewed the contract after the lapse of the six-month
probationary period, the employees thereby became regular employees.—As held by the
Court, “Articles 280 and 281 of the Labor Code put an end to the pernicious practice of
making permanent casuals of our lowly employees by the simple expedient of extending
to them probationary appointments, ad infinitum.” The contract signed by petitioners is
akin to a probationary employment, during which the bank determined the employees’
fitness for the job. When the bank renewed the contract after the lapse of the six-month
probationary period, the employees thereby became regular employees. No employer is
allowed to determine indefinitely the fitness of its employees.
Same; Same; As regular employees, the twenty-seven petitioners are entitled to
security of tenure; that is, their services may be terminated only for a just or authorized
cause.—As regular employees, the twenty-seven petitioners are entitled to security of
tenure; that is, their services may be terminated only for a just or authorized cause.
Because respondent failed to show such cause, these twenty-seven petitioners are
deemed illegally dismissed and therefore entitled to back wages and reinstatement
without loss of seniority rights and other privileges. Considering the allegation of
respondent that the job of money sorting is no longer available because it has been
assigned back to the tellers to whom it originally belonged, petitioners are hereby
awarded separation pay in lieu of reinstatement.
Same; Same; An employee is regular because of the nature of work and the length
of service, not because of the mode or even the reason for hiring them.—Respondent
argues that petitioners were merely “accommodated” employees. This fact does not
change the nature of their employment. As earlier noted, an employee is regular
189
because of the nature of work and the length of service, not because of the mode or
even the reason for hiring them.
Same; Same; The determination of whether employment is casual or regular does
not depend on the will or word of the employer, and the procedure of hiring x x x but on
the nature of the activities performed by the employee, and to some extent, the length of
performance and its continued existence.—Equally unavailing are private respondent’s
arguments that it did not go out of its way to recruit petitioners, and that its plantilla
did not contain their positions. In L. T. Datu v. NLRC, the Court held that “the
determination of whether employment is casual or regular does not depend on the will
or word of the employer, and the procedure of hiring x x x but on the nature of the
activities performed by the employee, and to some extent, the length of performance
and its continued existence.”
Same; Same; The well-settled rule is that the character of employment is
determined not by stipulations in the contract, but by the nature of the work
performed.—Private respondent argues that the petitioners were informed from the
start that they could not become regular employees. In fact, the bank adds, they agreed
with the stipulation in the contract regarding this point. Still, we are not persuaded.
The well-settled rule is that the character of employment is determined not by
stipulations in the contract, but by the nature of the work performed. Otherwise, no
employee can become regular by the simple expedient of incorporating this condition in
the contract of employment.
Same; Same; The noble objectives of Magna Carta for Disabled Persons are not
based merely on charity or accommodation, but on justice and the equal treatment of
qualified persons, disabled or not.—In rendering this decision, the Court emphasizes
not only the constitutional bias in favor of the working class, but also the concern of the
State for the plight of the disabled. The noble objectives of Magna Carta for Disabled
Persons are not based merely on charity or accommodation, but on justice and the equal
treatment of qualified persons, disabled or not. In the present case, the handicap of
petitioners (deaf-mutes) is not a hindrance to their work. The eloquent proof of this
statement is the repeated renewal of their employment contracts. Why then should they
be dismissed, simply because they are physically impaired? The Court believes, that,
after showing their fitness for the work assigned to them, they should be
190
treated and granted the same rights like any other regular employees.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
Sentro ng Alternatibong Lingap Panlegal (SALIGAN) for petitioners.
Picazo, Buyco, Tan, Fider & Santos for private respondent.
PANGANIBAN, J.:
The Magna Carta for Disabled Persons mandates that qualified disabled persons be
granted the same terms and conditions of employment as qualified able-bodied
employees. Once they have attained the status of regular workers, they should be
accorded all the benefits granted by law, notwithstanding written or verbal contracts to
the contrary. This treatment is rooted not merely on charity or accommodation, but on
justice for all.
The Case
Challenged in the Petition for Certiorari1 before us is the June 20, 1995 Decision2 of
the National Labor Relations Commission (NLRC),3 which affirmed the August, 22 1994
ruling of Labor Arbiter Cornelio L. Linsangan. The labor arbiter’s Decision disposed as
follows:4
_______________
1 Rollo, pp. 3-39.
2 Rollo, pp. 46-65.
3 Penned by Presiding Comm. Lourdes C. Javier and concurred in by Comm.
Joaquin A. Tanodra. The other member, Comm. Ireneo B. Bernardo, dissented.
4 Rollo, p. 113.
191
“WHEREFORE, judgment is hereby rendered dismissing the above-mentioned
complaint for lack of merit.”
Also assailed is the August 4, 1995 Resolution5 of the NLRC, which denied the
Motion for Reconsideration.
The Facts
The facts were summarized by the NLRC in this wise:6
“Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired on
various periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as
Money Sorters and Counters through a uniformly worded agreement called
‘Employment Contract for Handicapped Workers.’ (pp. 68 & 69, Records) The full text of
said agreement is quoted below:
‘EMPLOYMENT CONTRACT FOR
HANDICAPPED WORKERS
This Contract, entered into by and between:
FAR EAST BANK AND TRUST COMPANY, a universal banking corporation duly
organized and existing under and by virtue of the laws of the Philippines, with business
address at FEBTC Building, Muralla, Intramuros, Manila, represented herein by its
Assistant Vice President, MR. FLORENDO G. MARANAN, (hereinafter referred to as
the ‘BANK’);
- and -
_________________, _________________ years old, of legal age,
_____________________, and residing at _________________
(hereinafter referred to as the (‘EMPLOYEE’).
WITNESSETH: That
WHEREAS, the BANK, cognizant of its social responsibility, realizes that there is a
need to provide disabled and handicapped persons gainful employment and
opportunities to realize their potentials, uplift their socio-economic well being and
welfare and make them productive, self-reliant and useful
_______________
5 Rollo, pp. 73-74.
 6 NLRC Decision, pp. 2-10; rollo, pp. 47-55.
192
citizens to enable them to fully integrate in the mainstream of society;
WHEREAS, there are certain positions in the BANK which may be filled-up by
disabled and handicapped persons, particularly deaf-mutes, and the BANK ha[s] been
approached by some civic-minded citizens and authorized government agencies
[regarding] the possibility of hiring handicapped workers for these positions;
WHEREAS, the EMPLOYEE is one of those handicapped workers who [were]
recommended for possible employment with the BANK;
NOW, THEREFORE, for and in consideration of the foregoing premises and in
compliance with Article 80 of the Labor Code of the Philippines as amended, the BANK
and the EMPLOYEE have entered into this Employment Contract as follows:
1. 1.The BANK agrees to employ and train the EMPLOYEE, and the
EMPLOYEE agrees to diligently and faithfully work with the BANK,
as Money Sorter and Counter.
2. 2.The EMPLOYEE shall perform among others, the following duties and
responsibilities:
1. i.Sort out bills according to color;
2. ii.Count each denomination per hundred, either manually or with the aid
of a counting machine;
3. iii.Wrap and label bills per hundred;
4. iv.Put the wrapped bills into bundles; and
5. v.Submit bundled bills to the bank teller for verification.
1. 3.The EMPLOYEE shall undergo a training period of one (1) month, after
which the BANK shall determine whether or not he/she should be allowed to
finish the remaining term of this Contract.
2. 4.The EMPLOYEE shall be entitled to an initial compensation of P118.00 per
day, subject to adjustment in the sole judgment of the BANK, payable every
15th and end of the month.
3. 5.The regular work schedule of the EMPLOYEE shall be five (5) days per week,
from Mondays thru Fridays, at eight
193
1. (8) hours a day. The EMPLOYEE may be required to perform overtime work as
circumstance may warrant, for which overtime work he/she [shall] be paid an
additional compensation of 125% of his daily rate if performed during
ordinary days and 130% if performed during Saturday or [a] rest day.
2. 6.The EMPLOYEE shall likewise be entitled to the following benefits:
1. i.Proportionate 13th month pay based on his basic daily wage.
2. ii.Five (5) days incentive leave.
3. iii.SSS premium payment.
1. 7.The EMPLOYEE binds himself/herself to abide [by] and comply with all the
BANK Rules and Regulations and Policies, and to conduct himself/herself in a
manner expected of all employees of the BANK.
2. 8.The EMPLOYEE acknowledges the fact that he/she had been employed
under a special employment program of the BANK, for which reason the
standard hiring requirements of the BANK were not applied in his/her case.
Consequently, the EMPLOYEE acknowledges and accepts the fact that the
terms and conditions of the employment generally observed by the BANK
with respect to the BANK’s regular employee are not applicable to the
EMPLOYEE, and that therefore, the terms and conditions of the
EMPLOYEE’s employment with the BANK shall be governed solely and
exclusively by this Contract and by the applicable rules and regulations that
the Department of Labor and Employment may issue in connection with the
employment of disabled and handicapped workers. More specifically, the
EMPLOYEE hereby acknowledges that the provisions of Book Six of the
Labor Code of the Philippines as amended, particularly on regulation of
employment and separation pay are not applicable to him/her.
3. 9.The Employment Contract shall be for a period of six (6) months or from ____
to ____ unless earlier terminated by the BANK for any just or reasonable
cause. Any continuation or extension of this Contract shall be in writing and
therefore this Contract will automatically expire at the end of its terms
unless renewed in writing by the BANK.
194
IN WITNESS WHEREOF, the parties, have hereunto affixed their signature[s] this
____ day of _________________,____________ at Intramuros, Manila, Philippines.’
“In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two
(2); in 1990, nineteen (19); in 1991 six (6); in 1992, six (6) and in 1993, twenty-one (21).
Their employment[s] were renewed every six months such that by the time this case
arose, there were fifty-six (56) deaf-mutes who were employed by respondent under the
said employment agreement. The last one was Thelma Malindoy who was employed in
1992 and whose contract expired on July 1993.
xxx xxx xxx
“Disclaiming that complainants were regular employees, respondent Far East Bank
and Trust Company maintained that complainants who are a special class of workers—
the hearing impaired employees were hired temporarily under [a] special employment
arrangement which was a result of overtures made by some civic and political
personalities to the respondent Bank; that complain-ant[s] were hired due to ‘pakiusap’
which must be considered in the light of the context of the respondent Bank’s corporate
philosophy as well as its career and working environment which is to maintain and
strengthen a corps of professionals trained and qualified officers and regular employees
who are baccalaureate degree holders from excellent schools which is an unbending
policy in the hiring of regular employees; that in addition to this, training continues so
that the regular employee grows in the corporate ladder; that the idea of hiring
handicapped workers was acceptable to them only on a special arrangement basis; that
it adopted the special program to help tide over a group of handicapped workers such as
deaf-mutes like the complainants who could do manual work for the respondent Bank;
that the task of counting and sorting of bills which was being performed by tellers could
be assigned to deaf-mutes; that the counting and sorting of money are tellering works
which were always logically and naturally part and parcel of the tellers’ normal
functions; that from the beginning there have been no separate items in the respondent
Bank plantilla for sorters or counters; that the tellers themselves already did the
sorting and counting chore as a regular feature and integral part of their duties (p. 97,
Records); that through the ‘pakiusap’ of Arturo Borjal, the tellers were relieved of this
task of counting and sorting bills in favor of deaf-mutes without creating new positions
as there is no position either in the
195
respondent or in any other bank in the Philippines which deals with purely counting
and sorting of bills in banking operations.”
Petitioners specified when each of them was hired and dismissed, viz.:7
_______________
7 Petition, p. 12; rollo, p. 14.
8 This is a typographical error on the part of the petitioner, for it is unlikely that the
Contract of Employment was terminated the day after it was executed. In fact, Annex
“C” of petitioners’ Position Paper, which was submitted before the labor arbiter, shows
that Petitioner Robert Marcelo was hired on July 31, 1992, not 1993 (Rollo, p. 100.).
196
As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein
petitioners. Hence, this recourse to this Court.9
The Ruling of the NLRC
In affirming the ruling of the labor arbiter that herein petitioners could not be
deemed regular employees under Article 280 of the Labor Code, as amended,
Respondent Commission ratiocinated as follows:
“We agree that Art. 280 is not controlling herein. We give due credence to the
conclusion that complainants were hired as an accommodation to [the] recommendation
of civic oriented personalities whose employment[s] were covered by x x x Employment
Contract[s] with special provisions on duration of contract as specified under Art. 80.
Hence, as correctly held by the Labor Arbiter a quo, the terms of the contract shall be
the law between the parties.”10
The NLRC also declared that the Magna Carta for Disabled Persons was not
applicable, “considering the prevailing circumstances/milieu of the case.”
_______________
9 The case was deemed submitted for resolution on December 1, 1998, when the
Memorandum of the private respondent was received by the Court. The case was given
due course on December 8, 1997.
10 NLRC Decision, p. 18; rollo, p. 63.
197
Issues
In their Memorandum, petitioners cite the following grounds in support of their
cause:
1. “I.The Honorable Commission committed grave abuse of discretion in holding
that the petitioners—money sorters and counters working in a bank—were
not regular employees.
2. “II.The Honorable Commission committed grave abuse of discretion in holding
that the employment contracts signed and renewed by the petitioners—which
provide for a period of six (6) months—were valid.
3. “III.The Honorable Commission committed grave abuse of discretion in not
applying the provisions of the Magna Carta for the Disabled (Republic Act
No. 7277), on proscription against discrimination against disabled persons.” 11
In the main, the Court will resolve whether petitioners have become regular
employees.
This Court’s Ruling
The petition is meritorious. However, only the employees, who worked for more
than six months and whose contracts were renewed are deemed regular. Hence, their
dismissal from employment was illegal.
Preliminary Matter:
Propriety of Certiorari
Respondent Far East Bank and Trust Company argues that a review of the findings
of facts of the NLRC is not allowed in a petition for certiorari. Specifically, it maintains
that the Court cannot pass upon the findings of public respondents that petitioners
were not regular employees.
_______________
11Petitioners’ Memorandum, p. 3; rollo, p. 474.
198
True, the Court, as a rule, does not review the factual findings of public respondents
in a certiorari proceeding. In resolving whether the petitioners have become regular
employees, we shall not change the facts found by the public respondent. Our task is
merely to determine whether the NLRC committed grave abuse of discretion in
applying the law to the established facts, as above-quoted from the assailed Decision.
Main Issue:
Are Petitioners Regular Employees?
 Petitioners maintain that they should be considered regular employees, because
their task as money sorters and counters was necessary and desirable to the business of
respondent bank. They further allege that their contracts served merely to preclude the
application of Article 280 and to bar them from becoming regular employees.
Private respondent, on the other hand, submits that petitioners were hired only as
“special workers and should not in any way be considered as part of the regular
complement of the Bank.”12 Rather, they were “special” workers under Article 80 of the
Labor Code. Private respondent contends that it never solicited the services of
petitioners, whose employment was merely an “accommodation” in response to the
requests of government officials and civic-minded citizens. They were told from the
start, “with the assistance of government representatives,” that they could not become
regular employees because there were no plantilla positions for “money sorters,” whose
task used to be performed by tellers. Their contracts were renewed several times, not
because of need “but merely for humanitarian reasons.” Respondent submits that “as of
the present, the ‘special position’ that was created for the petitioners no longer exist[s]
in private respondent [bank], after the latter had decided not to renew anymore their
special employment contracts.”
_______________
12Respondent’s Memorandum, p. 10; rollo, p. 523.
199
At the outset, let it be known that this Court appreciates the nobility of private
respondent’s effort to provide employment to physically impaired individuals and to
make them more productive members of society. However, we cannot allow it to elude
the legal consequences of that effort, simply because it now deems their employment
irrelevant. The facts, viewed in light of the Labor Code and the Magna Carta for
Disabled Persons, indubitably show that the petitioners, except sixteen of them, should
be deemed regular employees. As such, they have acquired legal rights that this Court
is duty-bound to protect and uphold, not as a matter of compassion but as a
consequence of law and justice.
The uniform employment contracts of the petitioners stipulated that they shall be
trained for a period of one month, after which the employer shall determine whether or
not they should be allowed to finish the 6-month term of the contract. Furthermore, the
employer may terminate the contract at any time for a just and reasonable cause.
Unless renewed in writing by the employer, the contract shall automatically expire at
the end of the term.
According to private respondent, the employment contracts were prepared in
accordance with Article 80 of the Labor Code, which provides:
“ART. 80. Employment agreement.—Any employer who employs handicapped
workers shall enter into an employment agreement with them, which agreement shall
include:
1. (a)The names and addresses of the handicapped workers to be employed;
2. (b)The rate to be paid the handicapped workers which shall be not less than
seventy five (75%) per cent of the applicable legal minimum wage;
3. (c)The duration of employment period; and
4. (d)The work to be performed by handicapped workers.
The employment agreement shall be subject to inspection by the Secretary of Labor
or his duly authorized representatives.”
200
The stipulations in the employment contracts indubitably conform with the
aforecited provision. Succeeding events and the enactment of RA No. 7277 (the Magna
Carta for Disabled Persons),13 however, justify the application of Article 280 of the
Labor Code.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped
workers and renewed the contracts of 37 of them. In fact, two of them worked from 1988
to 1993. Verily, the renewal of the contracts of the handicapped workers and the hiring
of others lead to the conclusion that their tasks were beneficial and necessary to the
bank. More important, these facts show that they were qualified to perform the
responsibilities of their positions. In other words, their disability did not render them
unqualified or unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that
a qualified disabled employee should be given the same terms and conditions of
employment as a qualified able-bodied person. Section 5 of the Magna Carta provides:
“Section 5. Equal Opportunity for Employment.—No disabled person shall be denied
access to opportunities for suitable employment. A qualified disabled employee shall be
subject to the same terms and conditions of employment and the same compensation,
privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied
person.”
The fact that the employees were qualified disabled persons necessarily removes the
employment contracts from the ambit of Article 80. Since the Magna Carta accords
them the rights of qualified able-bodied persons, they are thus covered by Article 280 of
the Labor Code, which 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
_______________
13 Approved on March 24, 1992.
201
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 as regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists.”
The test of whether an employee is regular was laid down in De Leon v. NLRC,14 in
which this Court held:
“The primary standard, therefore, of determining regular employment is the
reasonable connection between the particular activity performed by the employee in
relation to the usual trade or business of the employer. The test is whether the former
is usually necessary or desirable in the usual 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 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.”
Without a doubt, the task of counting and sorting bills is necessary and desirable to
the business of respondent bank. With the exception of sixteen of them, petitioners
performed these tasks for more than six months. Thus, the following twenty-seven
petitioners should be deemed regular employees: Marites Bernardo, Elvira Go
Diamante, Rebecca E.
_______________
14 176 SCRA 615, 621, August 21, 1989, per Fernan, CJ.
202
David, David P. Pascual, Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito
O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag,
Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de
Vera, Lani R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma
Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa,
Elizabeth Ventura and Grace S. Pardo.
As held by the Court, “Articles 280 and 281 of the Labor Code put an end to the
pernicious practice of making permanent casuals of our lowly employees by the simple
expedient of extending to them probationary appointments, ad infini-tum.”15 The
contract signed by petitioners is akin to a probationary employment, during which the
bank determined the employees’ fitness for the job. When the bank renewed the
contract after the lapse of the six-month probationary period, the employees thereby
became regular employees.16 No employer is allowed to determine indefinitely the
fitness of its
employees. As regular employees, the twenty-seven petitioners are entitled to
security of tenure; that is, their services may be terminated only for a just or authorized
cause. Because respondent failed to show such cause,17 these twenty-seven petitioners
are deemed illegally dismissed and therefore entitled to back wages and reinstatement
without loss of seniority rights and other privileges.18 Considering the allegation of
respondent that the job of money sorting is no longer available because it has been
assigned back to the tellers to whom it originally belonged, 19 petitioners are hereby
awarded separation pay in lieu of reinstatement.20
_______________
15 CENECO v. NLRC, 236 SCRA 108, September 1, 1994, per Puno, J.
16 Ibid.; Article 281, Labor Code.
17 Articles 282 to 284 of the Code.
18 Article 279 of the Labor Code as amended.
19 Respondent’s Memorandum, p. 16; rollo, p. 529.
20 Zarate v. Olegario, 263 SCRA 1, October 7, 1996.
203
Because the other sixteen worked only for six months, they are not deemed regular
employees and hence not entitled to the same benefits.
Applicability of the
Brent Ruling
Respondent bank, citing Brent School v. Zamora21 in which the Court upheld the
validity of an employment contract with a fixed term, argues that the parties entered
into the contract on equal footing. It adds that the petitioners had in fact an advantage,
because they were backed by then DSWD Secretary Mita Pardo de Tavera and
Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was premised on the fact that
the petitioners were disabled, and that the bank had to determine their fitness for the
position. Indeed, its validity is based on Article 80 of the Labor Code. But as noted
earlier, petitioners proved themselves to be qualified disabled persons who, under the
Magna Carta for Disabled Persons, are entitled to terms and conditions of employment
enjoyed by qualified able-bodied individuals; hence, Article 80 does not apply because
petitioners are qualified for their positions. The validation of the limit imposed on their
contracts, imposed by reason of their disability, was a glaring instance of the very
mischief sought to be addressed by the new law.
Moreover, it must be emphasized that a contract of employment is impressed with
public interest.22 Provisions of applicable statutes are deemed written into the contract,
and the “parties are not at liberty to insulate themselves and their relationships from
the impact of labor laws and regulations by
_______________
21 181 SCRA 802, February 6, 1990.
22 Article 1700 of the Civil Code provides: “The relations between capital and labor
are not merely contractual. They are so impressed with public interest that labor
contracts must yield to the common good. x x x.”
204
simply contracting with each other.”23 Clearly, the agreement of the parties regarding
the period of employment cannot prevail over the provisions of the Magna Carta for
Disabled Persons, which mandate that petitioners must be treated as qualified able-
bodied employees.
Respondent’s reason for terminating the employment of petitioners is instructive.
Because the Bangko Sentral ng Pilipinas (BSP) required that cash in the bank be
turned over to the BSP during business hours from 8:00 a.m. to 5:00 p.m., respondent
resorted to nighttime sorting and counting of money. Thus, it reasons that this task
“could not be done by deaf mutes because of their physical limitations as it is very risky
for them to travel at night.”24 We find no basis for this argument. Travelling at night
involves risks to handicapped and able-bodied persons alike. This excuse cannot justify
the termination of their employment.
Other Grounds Cited by Respondent
Respondent argues that petitioners were merely “accommodated” employees. This
fact does not change the nature of their employment. As earlier noted, an employee is
regular because of the nature of work and the length of service, not because of the mode
or even the reason for hiring them.
Equally unavailing are private respondent’s arguments that it did not go out of its
way to recruit petitioners, and that its plantilla did not contain their positions. In L. T.
Datu v. NLRC,25 the Court held that “the determination of whether employment is
casual or regular does not depend on the will or word of the employer, and the
procedure of hiring x x x but on the nature of the activities performed by the employee,
and
_______________
23 Pakistan Airlines Corporation v. Ople, 190 SCRA 90, September 28, 1990, per
Feliciano, J. See also Servidad v. NLRC, GR No. 128682, March 18, 1999, 305 SCRA
49; Villa v. NLRC, 284 SCRA 105, January 14, 1998.
24 Respondent’s Memorandum, p. 15; rollo, p. 528.
25 253 SCRA 440, 450, February 9, 1996, per Kapunan, J.
205
to some extent, the length of performance and its continued existence.”
Private respondent argues that the petitioners were informed from the start that
they could not become regular employees. In fact, the bank adds, they agreed with the
stipulation in the contract regarding this point. Still, we are not persuaded. The well-
settled rule is that the character of employment is determined not by stipulations in the
contract, but by the nature of the work performed.26 Otherwise, no employee can
become regular by the simple expedient of incorporating this condition in the contract of
employment.
In this light, we iterate our ruling in Romares v. NLRC:27
“Article 280 was emplaced in our statute books to prevent the circumvention of the
employee’s right to be secure in his tenure by indiscriminately and completely ruling
out all written and oral agreements inconsistent with the concept of regular
employment defined therein. Where an employee has been engaged to perform activities
which are usually necessary or desirable in the usual business of the employer, such
employee is deemed a regular employee and is entitled to security of tenure
notwithstanding the contrary provisions of his contract of employment.
“x x x xxx xxx
“At this juncture, the leading case of Brent School, Inc. v. Zamora proves
instructive. As reaffirmed in subsequent cases, 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 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.”
_______________
26A.M. Oreta & Co. v. NLRC, 176 SCRA 208, August 10, 1989.
27GR No. 122327, August 19, 1998, 294 SCRA 411, per Martinez, J.
206
In rendering this Decision, the Court emphasizes not only the constitutional bias in
favor of the working class, but also the concern of the State for the plight of the
disabled. The noble objectives of Magna Carta for Disabled Persons are not based
merely on charity or accommodation, but on justice and the equal treatment
of qualified persons, disabled or not. In the present case, the handicap of petitioners
(deaf-mutes) is not a hindrance to their work. The eloquent proof of this statement is
the repeated renewal of their employment contracts. Why then should they be
dismissed, simply because they are physically impaired? The Court believes, that, after
showing their fitness for the work assigned to them, they should be treated and granted
the same rights like any other regular employees.
In this light, we note the Office of the Solicitor General’s prayer joining the
petitioners’ cause.28
WHEREFORE, premises considered, the Petition is hereby GRANTED. The June
20, 1995 Decision and the August 4, 1995 Resolution of the NLRC are REVERSED and
SET ASIDE. Respondent Far East Bank and Trust Company is hereby ORDERED to
pay back wages and separation pay to each of the following twenty-seven (27)
petitioners, namely, Marites Bernardo, Elvira Go Diamante, Rebecca E. David, David P.
Pascual, Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George
P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G.
Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani
R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma.
Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura
and Grace S. Pardo. The NLRC is hereby directed to compute the exact amount due
each of said employees, pursuant to existing laws and regulations, within fifteen days
from the finality of this Decision. No costs.
_______________
28Manifestation of the Office of the Solicitor General; rollo, pp. 354-375.
207
 SO ORDERED.
Romero (Chairman), Vitug, Purisima and Gonzaga-Reyes, JJ., concur.
Petition granted; Appealed decision and resolution reversed and set aside.
Note.—Where workers were tasked to undertake activities usually desirable or
necessary in the usual business of their employer, and such service was rendered for
almost two years, they have attained the status of regular employees. (Guinnux
Interiors, Inc. vs. National Labor Relations Commission, 272 SCRA 689 [1997])

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