G.R. No.

L-48494 February 5, 1990

BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners,
vs.
RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of
the President, and DOROTEO R. ALEGRE, respondents.
Quasha, Asperilla, Ancheta, Pea & Nolasco for petitioners.
Mauricio G. Domogon for respondent Alegre.

NARVASA, J .:
The question presented by the proceedings at bar
1
is whether or not the
provisions of the Labor Code,
2
as amended,
3
have anathematized "fixed period
employment" or employment for a term.
The root of the controversy at bar is an employment contract in virtue of which
Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at a
yearly compensation of P20,000.00.
4
The contract fixed a specific term for its
existence, five (5) years, i.e., from July 18, 1971, the date of execution of the
agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15,
1973, August 28, 1973, and September 14, 1974 reiterated the same terms and
conditions, including the expiry date, as those contained in the original contract of
July 18, 1971.
5

Some three months before the expiration of the stipulated period, or more
precisely on April 20,1976, Alegre was given a copy of the report filed by Brent
School with the Department of Labor advising of the termination of his services
effective on July 16, 1976. The stated ground for the termination was "completion
of contract, expiration of the definite period of employment." And a month or so
later, on May 26, 1976, Alegre accepted the amount of P3,177.71, and signed a
receipt therefor containing the phrase, "in full payment of services for the period
May 16, to July 17, 1976 as full payment of contract."
However, at the investigation conducted by a Labor Conciliator of said report of
termination of his services, Alegre protested the announced termination of his
employment. He argued that although his contract did stipulate that the same
would terminate on July 17, 1976, since his services were necessary and desirable
in the usual business of his employer, and his employment had lasted for five
years, he had acquired the status of a regular employee and could not be removed
except for valid cause.
6
The Regional Director considered Brent School's report as
an applicationfor clearance to terminate employment (not a report of termination),
and accepting the recommendation of the Labor Conciliator, refused to give such
clearance and instead required the reinstatement of Alegre, as a "permanent
employee," to his former position without loss of seniority rights and with full back
wages. The Director pronounced "the ground relied upon by the respondent
(Brent) in terminating the services of the complainant (Alegre) . . . (as) not
sanctioned by P.D. 442," and, quite oddly, as prohibited by Circular No. 8, series of
1969, of the Bureau of Private Schools.
7

Brent School filed a motion for reconsideration. The Regional Director denied the
motion and forwarded the case to the Secretary of Labor for review.
8
The latter
sustained the Regional Director.
9
Brent appealed to the Office of the President.
Again it was rebuffed. That Office dismissed its appeal for lack of merit and
affirmed the Labor Secretary's decision, ruling that Alegre was a permanent
employee who could not be dismissed except for just cause, and expiration of the
employment contract was not one of the just causes provided in the Labor Code
for termination of services.
10

The School is now before this Court in a last attempt at vindication. That it will get
here.
The employment contract between Brent School and Alegre was executed on July
18, 1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet
been promulgated. Indeed, the Code did not come into effect until November 1,
1974, some three years after the perfection of the employment contract, and rights
and obligations thereunder had arisen and been mutually observed and enforced.
At that time, i.e., before the advent of the Labor Code, there was no doubt
whatever about the validity of term employment. It was impliedly but nonetheless
clearly recognized by the Termination Pay Law, R.A. 1052,
11
as amended by R.A.
1787.
12
Basically, this statute provided that
In cases of employment, without a definite period, in a
commercial, industrial, or agricultural establishment or enterprise,
the employer or the employee may terminate at any time the
employment with just cause; or without just cause in the case of
an employee by serving written notice on the employer at least
one month in advance, or in the case of an employer, by serving
such notice to the employee at least one month in advance or
one-half month for every year of service of the employee,
whichever is longer, a fraction of at least six months being
considered as one whole year.
The employer, upon whom no such notice was served in case of
termination of employment without just cause, may hold the
employee liable for damages.
The employee, upon whom no such notice was served in case of
termination of employment without just cause, shall be entitled to
compensation from the date of termination of his employment in
an amount equivalent to his salaries or wages corresponding to
the required period of notice.
There was, to repeat, clear albeit implied recognition of the licitness of term
employment. RA 1787 also enumerated what it considered to be just causes for
terminating an employment without a definite period, either by the employer or by
the employee without incurring any liability therefor.
Prior, thereto, it was the Code of Commerce which governed employment without
a fixed period, and also implicitly acknowledged the propriety of employment with a
fixed period. Its Article 302 provided that
In cases in which the contract of employment does not have a
fixed period, any of the parties may terminate it, notifying the other
thereof one month in advance.
The factor or shop clerk shall have a right, in this case, to the
salary corresponding to said month.
The salary for the month directed to be given by the said Article 302 of the
Code of Commerce to the factor or shop clerk, was known as
the mesada (from mes, Spanish for "month"). When Article 302 (together
with many other provisions of the Code of Commerce) was repealed by
the Civil Code of the Philippines, Republic Act No. 1052 was enacted
avowedly for the precise purpose of reinstating the mesada.
Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and
became effective on August 30,1950, itself deals with obligations with a period in
section 2, Chapter 3, Title I, Book IV; and with contracts of labor and for a piece of
work, in Sections 2 and 3, Chapter 3, Title VIII, respectively, of Book IV. No
prohibition against term-or fixed-period employment is contained in any of its
articles or is otherwise deducible therefrom.
It is plain then that when the employment contract was signed between Brent
School and Alegre on July 18, 1971, it was perfectly legitimate for them to include
in it a stipulation fixing the duration thereof Stipulations for a term were explicitly
recognized as valid by this Court, for instance, in Biboso v. Victorias Milling
Co., Inc., promulgated on March 31, 1977,
13
and J. Walter Thompson Co.
(Phil.) v. NLRC, promulgated on December 29, 1983.
14
The Thompsoncase
involved an executive who had been engaged for a fixed period of three (3)
years. Biboso involved teachers in a private school as regards whom, the following
pronouncement was made:
What is decisive is that petitioners (teachers) were well aware an
the time that their tenure was for a limited duration. Upon its
termination, both parties to the employment relationship were free
to renew it or to let it lapse. (p. 254)
Under American law
15
the principle is the same. "Where a contract specifies the
period of its duration, it terminates on the expiration of such period."
16
"A contract
of employment for a definite period terminates by its own terms at the end of such
period."
17

The status of legitimacy continued to be enjoyed by fixed-period employment
contracts under the Labor Code (Presidential Decree No. 442), which went into
effect on November 1, 1974. The Code contained explicit references to fixed
period employment, or employment with a fixed or definite period. Nevertheless,
obscuration of the principle of licitness of term employment began to take place at
about this time
Article 320, entitled "Probationary and fixed period employment," originally stated
that the "termination of employment of probationary employees and those
employed WITH A FIXED PERIOD shall be subject to such regulations as the
Secretary of Labor may prescribe." The asserted objective to was "prevent the
circumvention of the right of the employee to be secured in their employment as
provided . . . (in the Code)."
Article 321 prescribed the just causes for which an employer could terminate
"an employment without a definite period."
And Article 319 undertook to define "employment without a fixed period" in the
following manner:
18

An employment shall be deemed to be without a definite period for
purposes of this Chapter where the employee has been engaged
to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment
is for the duration of the season.
The question immediately provoked by a reading of Article 319 is whether or not a
voluntary agreement on a fixed term or period would be valid where the employee
"has been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer." The definition seems a non
sequitur. From the premise that the duties of an employee entail "activities
which are usually necessary or desirable in the usual business or trade of the
employer the" conclusion does not necessarily follow that the employer and
employee should be forbidden to stipulate any period of time for the performance
of those activities. There is nothing essentially contradictory between a definite
period of an employment contract and the nature of the employee's duties set
down in that contract as being "usually necessary or desirable in the usual
business or trade of the employer." The concept of the employee's duties as being
"usually necessary or desirable in the usual business or trade of the employer" is
not synonymous with or identical to employment with a fixed term. Logically, the
decisive determinant in term employment should not be the activities that the
employee is called upon to perform, but the day certain agreed upon by the parties
for the commencement and termination of their employment relationship, a day
certain being understood to be "that which must necessarily come, although it may
not be known when."
19
Seasonalemployment, and employment for a particular
project are merely instances employment in which a period, where not expressly
set down, necessarily implied.
Of course, the term period has a definite and settled signification. It means,
"Length of existence; duration. A point of time marking a termination as of a cause
or an activity; an end, a limit, a bound; conclusion; termination. A series of years,
months or days in which something is completed. A time of definite length. . . . the
period from one fixed date to another fixed date . . ."
20
It connotes a "space of time
which has an influence on an obligation as a result of a juridical act, and either
suspends its demandableness or produces its extinguishment."
21
It should be
apparent that this settled and familiar notion of a period, in the context of a contract
of employment, takes no account at all of the nature of the duties of the employee;
it has absolutely no relevance to the character of his duties as being "usually
necessary or desirable to the usual business of the employer," or not.
Subsequently, the foregoing articles regarding employment with "a definite period"
and "regular" employment were amended by Presidential Decree No. 850,
effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered
by eliminating the reference to persons "employed with a fixed period," and was
renumbered (becoming Article 271). The article
22
now reads:
. . . Probationary employment.Probationary employment shall
not exceed six months from the date the employee started
working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has
been engaged in a probationary basis may be terminated for a just
cause or when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall
be considered a regular employee.
Also amended by PD 850 was Article 319 (entitled "Employment with a fixed
period," supra) by (a) deleting mention of employment with a fixed or definite
period, (b) adding a general exclusion clause declaring irrelevant written or oral
agreements "to the contrary," and (c) making the provision treat exclusively of
"regular" and "casual" employment. As revised, said article, renumbered
270,
23
now reads:
. . . Regular and Casual Employment.The provisions of written
agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the employer except where the employment
has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be
employed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to he casual if it is not covered
by the preceding paragraph: provided,that, any employee who has
rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his
employment shall continue while such actually exists.
The first paragraph is identical to Article 319 except that, as just
mentioned, a clause has been added, to wit: "The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreements of the parties . . ." The clause would appear to be
addressed inter alia to agreements fixing a definite period for employment.
There is withal no clear indication of the intent to deny validity to
employment for a definite period. Indeed, not only is the concept of regular
employment not essentially inconsistent with employment for a fixed term,
as above pointed out, Article 272 of the Labor Code, as amended by said
PD 850, still impliedly acknowledged the propriety of term employment: it
listed the "just causes" for which "an employer may terminate employment
without a definite period," thus giving rise to the inference that if the
employment be with a definite period, there need be no just cause for
termination thereof if the ground be precisely the expiration of the term
agreed upon by the parties for the duration of such employment.
Still later, however, said Article 272 (formerly Article 321) was further amended
by Batas Pambansa Bilang 130,
24
to eliminate altogether reference to employment
without a definite period. As lastly amended, the opening lines of the article
(renumbered 283), now pertinently read: "An employer may terminate an
employment for any of the following just causes: . . . " BP 130 thus completed the
elimination of every reference in the Labor Code, express or implied, to
employment with a fixed or definite period or term.
It is in the light of the foregoing description of the development of the provisions of
the Labor Code bearing on term or fixed-period employment that the question
posed in the opening paragraph of this opinion should now be addressed. Is it then
the legislative intention to outlaw stipulations in employment contracts laying down
a definite period therefor? Are such stipulations in essence contrary to public policy
and should not on this account be accorded legitimacy?
On the one hand, there is the gradual and progressive elimination of references to
term or fixed-period employment in the Labor Code, and the specific statement of
the rule
25
that
. . . Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the employer except where the employment
has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be
employed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered
by the preceding paragraph: provided,that, any employee who has
rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his
employment shall continue while such actually exists.
There is, on the other hand, the Civil Code, which has always recognized, and
continues to recognize, the validity and propriety of contracts and obligations with
a fixed or definite period, and imposes no restraints on the freedom of the parties
to fix the duration of a contract, whatever its object, be it specie, goods or services,
except the general admonition against stipulations contrary to law, morals, good
customs, public order or public policy.
26
Under the Civil Code, therefore, and as a
general proposition, fixed-term employment contracts are not limited, as they are
under the present Labor Code, to those by nature seasonal or for specific projects
with pre-determined dates of completion; they also include those to which the
parties by free choice have assigned a specific date of termination.
Some familiar examples may be cited of employment contracts which may be
neither for seasonal work nor for specific projects, but to which a fixed term is an
essential and natural appurtenance: overseas employment contracts, for one, to
which, whatever the nature of the engagement, the concept of regular employment
will all that it implies does not appear ever to have been applied, Article 280 of the
Labor Code not withstanding; also appointments to the positions of dean, assistant
dean, college secretary, principal, and other administrative offices in educational
institutions, which are by practice or tradition rotated among the faculty members,
and where fixed terms are a necessity, without which no reasonable rotation would
be possible. Similarly, despite the provisions of Article 280, Policy, Instructions No.
8 of the Minister of Labor
27
implicitly recognize that certain company officials may
be elected for what would amount to fixed periods, at the expiration of which they
would have to stand down, in providing that these officials," . . . may lose their jobs
as president, executive vice-president or vice-president, etc. because the
stockholders or the board of directors for one reason or another did not re-elect
them."
There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck down or
disregarded as contrary to public policy, morals, etc. But where no such intent to
circumvent the law is shown, or stated otherwise, where the reason for the law
does not exist, e.g., where it is indeed the employee himself who insists upon a
period or where the nature of the engagement is such that, without being seasonal
or for a specific project, a definite date of termination is a sine qua non, would an
agreement fixing a period be essentially evil or illicit, therefore anathema? Would
such an agreement come within the scope of Article 280 which admittedly was
enacted "to prevent the circumvention of the right of the employee to be secured in
. . . (his) employment?"
As it is evident from even only the three examples already given that Article 280 of
the Labor Code, under a narrow and literal interpretation, not only fails to exhaust
the gamut of employment contracts to which the lack of a fixed period would be an
anomaly, but would also appear to restrict, without reasonable distinctions, the
right of an employee to freely stipulate with his employer the duration of his
engagement, it logically follows that such a literal interpretation should be
eschewed or avoided. The law must be given a reasonable interpretation, to
preclude absurdity in its application. Outlawing the whole concept of term
employment and subverting to boot the principle of freedom of contract to remedy
the evil of employer's using it as a means to prevent their employees from
obtaining security of tenure is like cutting off the nose to spite the face or, more
relevantly, curing a headache by lopping off the head.
It is a salutary principle in statutory construction that there exists a
valid presumption that undesirable consequences were never
intended by a legislative measure, and that a construction of which
the statute is fairly susceptible is favored, which will avoid all
objecionable mischievous, undefensible, wrongful, evil and
injurious consequences.
28

Nothing is better settled than that courts are not to give words a
meaning which would lead to absurd or unreasonable
consequences. That s a principle that does back to In re Allen
decided oil October 27, 1903, where it was held that a literal
interpretation is to be rejected if it would be unjust or lead to
absurd results. That is a strong argument against its adoption. The
words of Justice Laurel are particularly apt. Thus: "The fact that
the construction placed upon the statute by the appellants would
lead to an absurdity is another argument for rejecting it. . . ."
29

. . . We have, here, then a case where the true intent of the law is
clear that calls for the application of the cardinal rule of statutory
construction that such intent of spirit must prevail over the letter
thereof, for whatever is within the spirit of a statute is within the
statute, since adherence to the letter would result in absurdity,
injustice and contradictions and would defeat the plain and vital
purpose of the statute.
30

Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor Code clearly appears to have
been, as already observed, to prevent circumvention of the employee's right to be
secure in his tenure, the clause in said article indiscriminately and completely
ruling out all written or oral agreements conflicting with the concept of regular
employment as defined therein should be construed to refer to the substantive evil
that the Code itself has singled out: agreements entered into precisely to
circumvent security of tenure. It should have no application to instances where a
fixed period of employment was agreed upon knowingly and voluntarily by the
parties, without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent, or where it
satisfactorily appears that the employer and employee dealt with each other on
more or less equal terms with no moral dominance whatever being exercised by
the former over the latter. Unless thus limited in its purview, the law would be
made to apply to purposes other than those explicitly stated by its framers; it thus
becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences.
Such interpretation puts the seal on Bibiso
31
upon the effect of the expiry of an
agreed period of employment as still good rulea rule reaffirmed in the recent
case of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989)
where, in the fairly analogous case of a teacher being served by her school a
notice of termination following the expiration of the last of three successive fixed-
term employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of
the fact that her employment was probationary, contractual in
nature, and one with a definitive period. At the expiration of the
period stipulated in the contract, her appointment was deemed
terminated and the letter informing her of the non-renewal of her
contract is not a condition sine qua non before Reyes may be
deemed to have ceased in the employ of petitioner UST. The
notice is a mere reminder that Reyes' contract of employment was
due to expire and that the contract would no longer be renewed. It
is not a letter of termination. The interpretation that the notice is
only a reminder is consistent with the court's finding inLabajo
supra. ...
32

Paraphrasing Escudero, respondent Alegre's employment was terminated upon
the expiration of his last contract with Brent School on July 16, 1976 without the
necessity of any notice. The advance written advice given the Department of Labor
with copy to said petitioner was a mere reminder of the impending expiration of his
contract, not a letter of termination, nor an application for clearance to terminate
which needed the approval of the Department of Labor to make the termination of
his services effective. In any case, such clearance should properly have been
given, not denied.
WHEREFORE, the public respondent's Decision complained of is REVERSED and
SET ASIDE. Respondent Alegre's contract of employment with Brent School
having lawfully terminated with and by reason of the expiration of the agreed term
of period thereof, he is declared not entitled to reinstatement and the other relief
awarded and confirmed on appeal in the proceedings below. No pronouncement
as to costs.
SO ORDERED.

G.R. No. 78693 January 28, 1991
ZOSIMO CIELO, petitioner,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, HENRY
LEI and/or HENRY LEI TRUCKINGrespondents.
Francisco D. Alas for petitioner.
Mateo G. Delegencia for private respondent.

CRUZ, J .:p
The petitioner is a truck driver who claims he was illegally dismissed by the private
respondent, the Henry Lei Trucking Company. The Labor Arbiter found for him and
ordered his reinstatement with back wages.
1
On appeal, the decision was
reversed by the National Labor Relations Commission, which held that the
petitioner's employment had expired under a valid contract.
2
The petitioner then
came to us on certiorari under Rule 65 of the Rules of Court.
Required to submit a Comment (not to file a motion to dismiss), the private
respondent nevertheless moved to dismiss on the ground that the petition was filed
sixty-eight days after service of the challenged decision on the petitioner, hence
late. The motion was untenable, of course. Petitions for certiorari under Rule 65
may be instituted within a reasonable period, which the Court has consistently
reckoned at three months.**
In his own Comment, the Solicitor General defended the public respondent and
agreed that the contract between the petitioner and the private respondent was a
binding agreement not contrary to law, morals or public policy. The petitioner's
services could be legally terminated upon the expiration of the period agreed upon,
which was only six months. The petitioner could therefore not complain that he had
been illegally dismissed.
As an examination of the claimed agreement was necessary to the resolution of
this case, the Court required its production by the petitioner. But he could not
comply because he said he had not been given a copy by the private respondent.
A similar requirement proved fruitless when addressed to the private respondent,
which explained it could not locate the folder of the case despite diligent search. It
was only on October 15, 1990, that the records of the case, including the subject
agreement, were finally received by the Court from the NLRC, which had obtained
them from its Cagayan de Oro regional office.
3

The said agreement reads in full as follows:
A G R E E M E N T
KNOW ALL MEN BY THESE PRESENTS:
This Agreement made and executed by and between:
HENRY LEI, of legal age, Filipino citizen, married, and a resident
of Digos, Davao del Sur, now and hereinafter called the FIRST
PARTY,
a n d
ZOSIMO CIELO, of legal age, married, Filipino citizen, and a
resident of Agusan, Canyon, Camp Philipps, now and hereinafter
called the SECOND PARTY,
W I T N E S S E T H
That the FIRST PARTY is an owner of some cargo trucks.
WHEREAS, the SECOND PARTY desires to operate one of the
said cargo trucks which he himself shall drive for income;
NOW, THEREFORE, for the foregoing premises, the FIRST
PARTY does hereby assign one cargo truck of his fleet to the
SECOND PARTY under the following conditions and stipulations:
1. That the term of this Agreement is six (6) months from and after
the execution hereof, unless otherwise earlier terminated at the
option of either party;
2. That the net income of the said vehicle after fuel and oil shall be
divided by and between them on ninety/ten percent (90/10%)
basis in favor of the FIRST PARTY;
3. That there is no employer/employee relationship between the
parties, the nature of this Agreement being contractual;
4. In the event the SECOND PARTY needs a helper the personnel
so employed by him shall be to his personal account, who shall be
considered his own employee;
5. That the loss of or damage to the said vehicle shall be to
account of the SECOND PARTY; he shall return the unit upon the
expiration or termination of this contract in the condition the same
was received by him, fair wear and tear excepted.
IN WITNESS WHEREOF, the parties hereunto affixed their
signature on this 30th day of June, 1984, at Digos, Davao del Sur,
Philippines.
(Sgd.) HENRY LEI (Sgd.) ZOSIMO CIELO
First Party Second Party
SIGNED IN THE PRESENCE OF:
(Sgd.) VICTOR CHAN (Sgd.) AMALFE M. NG
The agreement was supposed to have commenced on June 30, 1984, and to end
on December 31, 1984. On December 22, 1984, however, the petitioner was
formally notified by the private respondent of the termination of his services on the
ground of expiration of their contract. Soon thereafter, on January 22, 1985, the
petitioner filed his complaint with the Ministry of Labor and Employment.
In his position paper, the petitioner claimed he started working for the private
respondent on June 16, 1984, and having done so for more than six months had
acquired the status of a regular employee. As such, he could no longer be
dismissed except for lawful cause. He also contended that he had been removed
because of his refusal to sign, as required by the private respondent, an affidavit
reading as follows:
A F F I D A V I T
That I, ZOSIMO CIELO, Filipino, of legal age, married/single and a
resident of Agusan Canyon, Camp Philipps, after having been duly
sworn to in accordance with law, hereby depose and say:
That I am one of the drivers of the trucks of Mr. HENRY LEI
whose hauling trucks are under contract with the Philippine
Packing Corporation;
That I have received my salary and allowances from Mr. HENRY
LEI the sum of P1,421.10 for the month of October 1984. That I
have no more claim against the said Mr. Henry Lei.
IN WITNESS WHEREOF, I have hereunto affixed my signature
this 15th day of November 1984.
_
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D
r
i
v
e
r
The private respondent rests its case on the agreement and maintains that the
labor laws are not applicable because the relations of the parties are governed by
their voluntary stipulations. The contract having expired, it was the prerogative of
the trucking company to renew it or not as it saw fit.
The writ will issue.
While insisting that it is the agreement that regulates its relations with the
petitioner, the private respondent is ensnared by its own words. The agreement
specifically declared that there was no employer-employee relationship between
the parties. Yet the affidavit the private respondent prepared required the petitioner
to acknowledge that "I have received my salary and allowances from Mr. Henry
Lei," suggesting an employment relationship. According to its position paper, the
petitioner's refusal to sign the affidavit constituted disrespect or insubordination,
which had "some bearing on the renewal of his contract of employment with the
respondent." Of this affidavit, the private respondent had this to say:
. . . Since October 1984, respondent adopted a new policy to
require all their employees to sign an affidavit to the effect that
they received their salaries. Copy of which is hereto attached as
Annex "C," covering the months of October and November 1984.
All other employees of the respondent signed the said affidavit,
only herein complainant refused to do so for reasons known only
to him. . . .
It appears from the records that all the drivers of the private respondent have been
hired on a fixed contract basis, as evidenced by the mimeographed form of the
agreement and of the affidavit. The private respondent merely filled in the blanks
with the corresponding data, such as the driver's name and address, the amount
received by him, and the date of the document. Each driver was paid through
individual vouchers
4
rather than a common payroll, as is usual in companies with
numerous employees.
The private respondent's intention is obvious. It is remarkable that neither the
NLRC nor the Solicitor General recognized it. There is no question that the
purpose behind these individual contracts was to evade the application of the labor
laws by making it appear that the drivers of the trucking company were not its
regular employees.
Under these arrangements, the private respondent hoped to be able to terminate
the services of the drivers without the inhibitions of the Labor Code. All it had to do
was refuse to renew the agreements, which, significantly, were uniformly limited to
a six-month period. No cause had to be established because such renewal was
subject to the discretion of the parties. In fact, the private respondent did not even
have to wait for the expiration of the contract as it was there provided that it could
be "earlier terminated at the option of either party."
By this clever scheme, the private respondent could also prevent the drivers from
becoming regular employees and thus be entitled to security of tenure and other
benefits, such as a minimum wage, cost-of-living allowances, vacation and sick
leaves, holiday pay, and other statutory requirements. The private respondent
argues that there was nothing wrong with the affidavit because all the affiant
acknowledged therein was full payment of the amount due him under the
agreement. Viewed in this light, such acknowledgment was indeed not necessary
at all because this was already embodied in the vouchers signed by the payee-
driver. But the affidavit, for all its seeming innocuousness, imported more than that.
What was insidious about the document was the waiver the affiant was unwarily
making of the statutory rights due him as an employee of the trucking company.
And employee he was despite the innocent protestations of the private respondent.
We accept the factual finding of the Labor Arbiter that the petitioner was a regular
employee of the private respondent. The private respondent is engaged in the
trucking business as a hauler of cattle, crops and other cargo for the Philippine
Packing Corporation. This business requires the services of drivers, and
continuously because the work is not seasonal, nor is it limited to a single
undertaking or operation. Even if ostensibly hired for a fixed period, the petitioner
should be considered a regular employee of the private respondent, conformably
to Article 280 of the Labor Code providing as follows:
Art. 280. Regular and Casual Employment. The provisions of
written agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to
perform activities which are usually necessarily or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered
by the preceding paragraph; Provided, that, any employee who
has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his
employment shall continue while such actually exists. (Emphasis
supplied)
In Brent School, Inc. vs. Zamora, the Court affirmed the general principle that
"where from the circumstances it is apparent that periods have been imposed to
preclude acquisition of tenurial security by the employee, they should be struck
down or disregarded as contrary to public policy, morals, etc." Such circumstances
have been sufficiently established in the case at bar and justify application of the
following conclusions:
Accordingly, and since the entire purpose behind the development
of legislation culminating in the present Article 280 of the Labor
Code clearly appears to have been, as already observed, to
prevent circumvention of the employee's right to be secure in his
tenure, the clause in said article indiscriminately and completely
ruling out all written or oral agreements conflicting with the
concept of regular employment as defined therein should be
construed to refer to the substantive evil that the Code itself has
singled out: agreements entered into precisely to circumvent
security of tenure.
The agreement in question had such a purpose and so was null and void ab initio.
The private respondent's argument that the petitioner could at least be considered
on probation basis only and therefore separable at will is self-defeating. The Labor
Code clearly provides as follows:
Art. 281. Probationary employment. Probationary employment
shall not exceed six (6) months from the date the employee
started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an
employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known
by the employer to the employee at the time of his engagement.
An employee who is allowed to work after a probationary period
shall be considered a regular employee.
There is no question that the petitioner was not engaged as an apprentice, being
already an experienced truck driver when he began working for the private
respondent. Neither has it been shown that he was informed at the time of his
employment of the reasonable standards under which he could qualify as a regular
employee. It is plain that the petitioner was hired at the outset as a regular
employee. At any rate, even assuming that the original employment was
probationary, the Labor Arbiter found that the petitioner had completed more than
six month's service with the trucking company and so had acquired the status of a
regular employee at the time of his dismissal.
Even if it be assumed that the six-month period had not yet been completed, it is
settled that the probationary employee cannot be removed except also for cause
as provided by law. It is not alleged that the petitioner was separated for poor
performance; in fact, it is suggested by the private respondent that he was
dismissed for disrespect and insubordination, more specifically his refusal to sign
the affidavit as required by company policy. Hence, even as a probationer, or more
so as a regular employee, the petitioner could not be validly removed under Article
282 of the Labor Code, providing as follows:
Art. 282. Termination by employer. An employer may terminate
an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of
the lawful orders of his employer or representative in connection
with his work
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or
his duly authorized representative; and
(e) Other causes analogous to the foregoing.
In refusing to sign the affidavit as required by the private respondent, the petitioner
was merely protecting his interests against an unguarded waiver of the benefits
due him under the Labor Code. Such willful disobedience should commend rather
than prejudice him for standing up to his rights, at great risk to his material
security, against the very source of his livelihood.
The Court looks with stern disapproval at the contract entered into by the private
respondent with the petitioner (and who knows with how many other drivers). The
agreement was a clear attempt to exploit the unwitting employee and deprive him
of the protection of the Labor Code by making it appear that the stipulations of the
parties were governed by the Civil Code as in ordinary private transactions. They
were not, to be sure. The agreement was in reality a contract of employment into
which were read the provisions of the Labor Code and the social justice policy
mandated by the Constitution. It was a deceitful agreement cloaked in the
habiliments of legality to conceal the selfish desire of the employer to reap
undeserved profits at the expense of its employees. The fact that the drivers are
on the whole practically unlettered only makes the imposition more censurable and
the avarice more execrable.
WHEREFORE, the petition is GRANTED. The decision of the National Labor
Relations Commission is SET ASIDE and that of the Labor Arbiter REINSTATED,
with costs against the private respondents.
SO ORDERED.

[G.R. No. 110524. July 29, 2002]
DOUGLAS MILLARES and ROGELIO LAGDA, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION, TRANS-GLOBAL MARITIME
AGENCY, INC. and ESSO INTERNATIONAL SHIPPING CO.,
LTD. respondents.
R E S O L U T I O N
KAPUNAN, J .:
On March 14, 2000, the Court promulgated its decision in the above-entitled
case, ruling in favor of the petitioners. The dispositive portion reads, as follows:
WHEREFORE, premises considered, the assailed Decision, dated June 1, 1993, of the
National Labor Relations Commission is hereby REVERSED and SET ASIDE and a new
judgment is hereby rendered ordering the private respondents to:
(1) Reinstate petitioners Millares and Lagda to their former positions without loss of
seniority rights, and to pay full backwages computed from the time of illegal dismissal to
the time of actual reinstatement;
(2) Alternatively, if reinstatement is not possible, pay petitioners Millares and Lagda
separation pay equivalent to one months salary for every year of service; and,
(3) Jointly and severally pay petitioners One Hundred Percent (100%) of their total
credited contributions as provided under the Consecutive Enlistment Incentive Plan.
SO ORDERED.
[1]

A motion for reconsideration was consequently filed
[2]
by the private
respondents to which petitioners filed an Opposition thereto.
[3]

In a Minute Resolution dated June 28, 2000, the Court resolved to deny the
motion for reconsideration with finality.
[4]

Subsequently, the Filipino Association for Mariners Employment, Inc. (FAME)
filed a Motion for Leave to Intervene and to Admit a Motion for Reconsideration in
Intervention.
Private respondents, meanwhile, also filed a Motion for Leave to File a
Second Motion for Reconsideration of our decision.
In both motions, the private respondents and FAME respectively pray in the
main that the Court reconsider its ruling that Filipino seafarers are considered
regular employees within the context of Article 280 of the Labor Code. They claim
that the decision may establish a precedent that will adversely affect the maritime
industry.
The Court resolved to set the case for oral arguments to enable the parties to
present their sides.
To recall, the facts of the case are, as follows:
Petitioner Douglas Millares was employed by private respondent ESSO International
Shipping Company LTD. (Esso International, for brevity) through its local manning
agency, private respondent Trans-Global Maritime Agency, Inc. (Trans-Global, for brevity)
on November 16, 1968 as a machinist. In 1975, he was promoted as Chief Engineer which
position he occupied until he opted to retire in 1989. He was then receiving a monthly
salary of US $1,939.00.
On June 13, 1989, petitioner Millares applied for a leave of absence for the period July 9 to
August 7, 1989. In a letter dated June 14, 1989, Michael J. Estaniel, President of private
respondent Trans-Global, approved the request for leave of absence. On June 21, 1989,
petitioner Millares wrote G.S. Hanly, Operations Manager of Exxon International Co.,
(now Esso International) through Michael J. Estaniel, informing him of his intention to
avail of the optional retirement plan under the Consecutive Enlistment Incentive Plan
(CEIP) considering that he had already rendered more than twenty (20) years of continuous
service. On July 13, 1989 respondent Esso International, through W.J. Vrints, Employee
Relations Manager, denied petitioner Millares request for optional retirement on the
following grounds, to wit: (1) he was employed on a contractual basis; (2) his contract of
enlistment (COE) did not provide for retirement before the age of sixty (60) years; and (3)
he did not comply with the requirement for claiming benefits under the CEIP, i.e., to
submit a written advice to the company of his intention to terminate his employment within
thirty (30) days from his last disembarkation date.
On August 9, 1989, petitioner Millares requested for an extension of his leave of absence
from August 9 to 24, 1989. On August 19, 1989, Roy C. Palomar, Crewing Manager, Ship
Group A, Trans-global, wrote petitioner Millares advising him that respondent Esso
International has corrected the deficiency in its manpower requirement specifically in the
Chief Engineer rank by promoting a First Assistant Engineer to this position as a result of
(his) previous leave of absence which expired last August 8, 1989. The adjustment in said
rank was required in order to meet manpower schedules as a result of (his) inability.
On September 26, 1989, respondent Esso International, through H. Regenboog, Personnel
Administrator, advised petitioner Millares that in view of his absence without leave, which
is equivalent to abandonment of his position, he had been dropped from the roster of crew
members effective September 1, 1989.
On the other hand, petitioner Lagda was employed by private respondent Esso International
as wiper/oiler in June 1969. He was promoted as Chief Engineer in 1980, a position he
continued to occupy until his last COE expired on April 10, 1989. He was then receiving a
monthly salary of US$1,939.00.
On May 16, 1989, petitioner Lagda applied for a leave of absence from June 19, 1989 up to
the whole month of August 1989. On June 14, 1989, respondent Trans-Globals President,
Michael J. Estaniel, approved petitioner Lagdas leave of absence from June 22, 1989 to
July 20, 1989 and advised him to report for re-assignment on July 21, 1989.
On June 26, 1989, petitioner Lagda wrote a letter to G.S. Stanley, Operations Manager of
respondent Esso International, through respondent Trans-Globals President Michael J.
Estaniel, informing him of his intention to avail of the optional early retirement plan in
view of his twenty (20) years continuous service in the complaint.
On July 13, 1989, respondent Trans-global denied petitioner Lagdas request for availment
of the optional early retirement scheme on the same grounds upon which petitioner
Millares request was denied.
On August 3, 1989, he requested for an extension of his leave of absence up to August 26,
1989 and the same was approved. However, on September 27, 1989, respondent Esso
International, through H. Regenboog, Personnel Administrator, advised petitioner Lagda
that in view of his unavailability for contractual sea service, he had been dropped from
the roster of crew members effective September 1, 1989.
On October 5, 1989, petitioners Millares and Lagda filed a complaint-affidavit, docketed as
POEA (M) 89-10-9671, for illegal dismissal and non-payment of employee benefits against
private respondents Esso International and Trans-Global, before the POEA.
[5]

On July 17, 1991, the POEA rendered a decision dismissing the complaint for
lack of merit.
On appeal to the NLRC, the decision of the POEA was affirmed on June 1,
1993 with the following disquisition:
The first issue must be decided in the negative. Complainants-appellants, as seamen and
overseas contract workers are not covered by the term regular employment as defined
under Article 280 of the Labor Code. The POEA, which is tasked with protecting the
rights of the Filipino workers for overseas employment to fair and equitable recruitment
and employment practices and to ensure their welfare, prescribes a standard employment
contract for seamen on board ocean-going vessels for a fixed period but in no case to
exceed twelve (12) months (Part 1, Sec. C). This POEA policy appears to be in
consonance with the international maritime practice. Moreover, the Supreme Court
in Brent School, Inc. vs. Zamora, 181 SCRA 702, had held that a fixed term is essential
and natural appurtenance of overseas employment contracts to which the concept of regular
employment with all that it implies is not applicable, Article 280 of the Labor Code
notwithstanding. There is, therefore, no reason to disturb the POEA Administrators
finding that complainants-appellants were hired on a contractual basis and for a definite
period. Their employment is thus governed by the contracts they sign each time they are
re-hired and is terminated at the expiration of the contract period.
[6]

Undaunted, the petitioners elevated their case to this Court
[7]
and successfully
obtained the favorable action, which is now vehemently being assailed.
At the hearing on November 15, 2000, the Court defined the issues for
resolution in this case, namely:
I. ARE PETITIONERS REGULAR OR CONTRACTUAL EMPLOYEES WHOSE
EMPLOYMENTS ARE TERMINATED EVERYTIME THEIR CONTRACTS OF
EMPLOYMENT EXPIRE?
II. ASSUMING THAT PETITIONERS ARE REGULAR EMPLOYEES, WERE
THEY DISMISSED WITHOUT JUST CAUSE SO AS TO BE ENTITLED TO
REINSTATEMENT AND BACKWAGES, INCLUDING PAYMENT OF 100% OF
THEIR TOTAL CREDITED CONTRIBUTIONS TO THE CONSECUTIVE
ENLISTMENT INCENTIVE PLAN (CEIP)?
III. DOES THE PROVISION OF THE POEA STANDARD CONTRACT FOR
SEAFARERS ON BOARD FOREIGN VESSELS (SEC. C., DURATION OF
CONTRACT) PRECLUDE THE ATTAINMENT BY SEAMEN OF THE STATUS OF
REGULAR EMPLOYEES?
IV. DOES THE DECISION OF THE COURT IN G.R. NO. 110524 CONTRAVENE
INTERNATIONAL MARITIME LAW, ALLEGEDLY PART OF THE LAW OF THE
LAND UNDER SECTION 2, ARTICLE II OF THE CONSTITUTION?
V. DOES THE SAME DECISION OF THE COURT CONSTITUTE A DEPARTURE
FROM ITS RULING IN COYOCA VS. NLRC (G.R. NO. 113658, March 31, 1995)?
[8]

In answer to the private respondents Second Motion for Reconsideration and
to FAMEs Motion for Reconsideration in Intervention, petitioners maintain that
they are regular employees as found by the Court in the March 14, 2000
Decision. Considering that petitioners performed activities which are usually
necessary or desirable in the usual business or trade of private respondents, they
should be considered as regular employees pursuant to Article 280, Par. 1 of the
Labor Code.
[9]
Other justifications for this ruling include the fact that petitioners
have rendered over twenty (20) years of service, as admitted by the private
respondents;
[10]
that they were recipients of Merit Pay which is an express
acknowledgment by the private respondents that petitioners are regular and not
just contractual employees;
[11]
that petitioners were registered under the Social
Security System (SSS).
The petitioners further state that the case of Coyoca v. NLRC
[12]
which the
private respondents invoke is not applicable to the case at bar as the factual milieu
in that case is not the same. Furthermore, private respondents fear that our
judicial pronouncement will spell the death of the manning industry is far from
real. Instead, with the valuable contribution of the manning industry to our
economy, these seafarers are supposed to be considered as Heroes of the
Republic whose rights must be protected.
[13]
Finally, the first motion for
reconsideration has already been denied with finality by this Court and it is about
time that the Court should write finis to this case.
The private respondents, on the other hand, contend that: (a) the ruling
holding petitioners as regular employees was not in accord with the decision
in Coyoca v. NLRC,243 SCRA 190; (b) Art. 280 is not applicable as what applies is
the POEA Rules and Regulations Governing Overseas Employment; (c) seafarers
are not regular employees based on international maritime practice; (d) grave
consequences would result on the future of seafarers and manning agencies if the
ruling is not reconsidered; (e) there was no dismissal committed; (f) a dismissed
seafarer is not entitled to back wages and reinstatement, that being not allowed
under the POEA rules and the Migrant Workers Act; and, (g) petitioners are not
entitled to claim the total amount credited to their account under the CEIP.
[14]

Meanwhile, Intervenor Filipino Association of Mariners Employment (FAME)
avers that our decision, if not reconsidered, will have negative consequences in
the employment of Filipino Seafarers overseas which, in turn, might lead to the
demise of the manning industry in the Philippines. As intervenor FAME puts it:
xxx
7.1 Foreign principals will start looking for alternative sources for seafarers to man their
ships. AS reported by the BIMCO/ISF study, there is an expectancy that there will be an
increasing demand for (and supply of) Chinese seafarers, with some commentators
suggesting that this may be a long-term alternative to the Philippines. Moreover, the
political changes within the former Eastern Bloc have made new sources of supply
available to the international market. Intervenors recent survey among its members
shows that 50 Philippine manning companies had already lost some 6,300 slots to other
Asian, East Europe and Chinese competition for the last two years;
7.2 The Philippine stands to lose an annual foreign income estimated at U.S. DOLLARS
TWO HUNDRED SEVENTY FOUR MILLION FIVE HUNDRED FORTY NINE
THOUSAND (US$ 274,549,000.00) from the manning industry and another US
DOLLARS FOUR BILLION SIX HUNDRED FIFTY MILLION SEVEN HUNDRED
SIX THOUSAND (US$ 4,650,760,000.00) from the land-based sector if seafarers and
equally situated land-based contract workers will be declared regular employees;
7.3 Some 195,917 (as of 1998) deployed overseas Filipino seafarers will be rendered
jobless should we lose the market;
7.4 Some 360 manning agencies (as of 30 June 2000) whose principals may no longer be
doing business with them will close their shops;
7.5 The contribution to the Overseas Workers Welfare Administration by the sector,
which is USD 25.00 per contract and translates to US DOLLARS FOUR MILLION (US$
4,000,000.00)annually, will be drastically reduced. This is not to mention the processing
fees paid to POEA, Philippine Regulatory Commission (PRC), Department of Foreign
Affairs (DFA) and Maritime Industry Authority (MARINA) for the documentation of these
seafarers;
7.6 Worst, some 195,917 (as of 1998) families will suffer socially and economically, as
their breadwinners will be rendered jobless; and
7.7 It will considerably slow down the governments program of employment generation,
considering that, as expected foreign employers will now avoid hiring Filipino overseas
contract workers as they will become regular employees with all its concomitant effects.
[15]

Significantly, the Office of the Solicitor General, in a departure from its original
position in this case, has now taken the opposite view. It has expressed its
apprehension in sustaining our decision and has called for a re-examination of our
ruling.
[16]

Considering all the arguments presented by the private respondents, the
Intervenor FAME and the OSG, we agree that there is a need to reconsider our
position with respect to the status of seafarers which we considered as regular
employees under Article 280 of the Labor Code. We, therefore, partially grant the
second motion for reconsideration.
In Brent School Inc. v. Zamora,
[17]
the Supreme Court stated that Article 280
of the Labor Code does not apply to overseas employment.
In the light of the foregoing description of the development of the provisions of the Labor
Code bearing on term or fixed-period employment that the question posed in the opening
paragraph of this opinion should now be addressed. Is it then the legislative intention to
outlaw stipulations in employment contracts laying down a definite period therefor? Are
such stipulations in essence contrary to public policy and should not on this account be
accorded legitimacy?
On the other hand, there is the gradual and progressive elimination of references to term or
fixed-period employment in the Labor Code, and the specific statement of the rule that:
Regular and Casual Employment The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall
be deemed to be regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer except
where the employment has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the engagement of the
employee or where the work or service to be employee is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph; provided that, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while
such actually exists.
There is, on the other hand, the Civil Code, which has always recognized, and continues to
recognize, the validity and propriety of contracts and obligations with a fixed or definite
period, and imposes no restraints on the freedom of the parties to fix the duration of a
contract, whatever its object, be it specific, goods or services, except the general
admonition against stipulations contrary to law, morals, good customs, public order or
public policy. Under the Civil code, therefore, and as a general proposition, fixed-term
employment contracts are not limited, as they are under the present Labor Code, to those
by natural seasonal or for specific projects with predetermined dates of completion; they
also include those to which the parties by free choice have assigned a specific date of
termination.
Some familiar examples may be cited of employment contract which may be neither
for seasonal work nor for specific projects, but to which a fixed term is an essential
and natural appurtenance: overseas employment contracts, for one, to which,
whatever the nature of the engagement, the concept of regular employment with all
that it implies does not appear ever to have been applied. Article 280 of the Labor
Code notwithstanding also appointments to the positions of dean, assistant dean, college
secretary, principal, and other administrative offices in educational institutions, which are
by practice or tradition rotated among the faculty members, and where fixed terms are a
necessity without which no reasonable rotation would be possible. Similarly, despite the
provisions of Article 280, Policy Instructions. No. 8 of the Minister of Labor implicitly
recognize that certain company officials may be elected for what would amount to fix
periods, at the expiration of which they would have to stand down, in providing that these
officials, xxx may lose their jobs as president, executive vice-president or vice-president,
etc. because the stockholders or the board of directors for one reason or another did not
reelect them.
There can of course be no quarrel with the proposition that where from the circumstances it
is apparent that periods have been imposed to preclude acquisition of tenurial security by
the employee, they should be struck down or disregard as contrary to public policy, morals,
etc. But where no such intent to circumvent the law is shown, or stated otherwise, where
the reason for the law does not exists, e.g., where it is indeed the employee himself who
insists upon a period or where the nature of the engagement is such that, without being
seasonal or for a specific project, a definite date of termination is a sine qua non, would an
agreement fixing a period be essentially evil or illicit, therefore anathema? Would such an
agreement come within the scope of Article 280 which admittedly was enacted to prevent
the circumvention of the right of the employee to be secured in xxx his employment
As it is evident from even only the three examples already given that Article 280 of the
Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of
employment contracts to which the lack of a fixed period would be an anomaly, but would
also appear to restrict, without reasonable distinctions, the right of an employee to freely
stipulate within his employer the duration of his engagement, it logically follows that such
a literal interpretation should be eschewed or avoided. The law must be given a reasonable
interpretation, to preclude absurdity in its application. Outlawing the whole concept of
term employment and subverting to boot the principle of freedom of contract to remedy the
evil of employers using it as a means to prevent their employees from obtaining security
of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache
by lopping of the head.
It is a salutary principle in statutory construction that there exists a valid presumption that
undesirable consequences were never intended by a legislative measure, and that a
construction of which the statute is fairly susceptible is favored, which will avoid all
objectionable, mischievous, indefensible, wrongful, evil, and injurious consequences.
Nothing is better settled than that courts are not to give words a meaning which would lead
to absurd or unreasonable consequences. That is a principle that goes back to In re Allen
decided on October 27, 1902, where it was held that a literal interpretation is to be rejected
if it would be unjust or lead to absurd results. That is a strong argument against its
adoption. The words of Justice Laurel are particularly apt. Thus: the appellants would
lead to an absurdity is another argument for rejecting it.
Xxx We have, here, then a case where the true intent of the law is clear that calls for the
application of the cardinal rule of statutory construction that such intent of spirit must
prevail over the letter thereof, for whatever is within the spirit of a statute is within the
statute, since adherence to the letter would result in absurdity, injustice and contradictions
and would defeat the plain and vital purpose of the statute.
Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor code clearly appears to have been,
as already observed, to prevent circumvention of the employees right to be secure in
his tenure, the clause in said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of regular employment as
defined therein should be construed to refer to the substantive evil that the Code itself
has singled out; agreements entered into precisely to circumvent security of tenure. It
should have no application to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the
employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter. Unless thus
limited in its purview, the law would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects
and apt to lead to absurd and unintended consequences.
Again, in Pablo Coyoca v. NLRC,
[18]
the Court also held that a seafarer is not
a regular employee and is not entitled to separation pay. His employment is
governed by the POEA Standard Employment Contract for Filipino Seamen.
XXX. In this connection, it is important to note that neither does the POEA standard
employment contract for Filipino seamen provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing
Overseas Employment and the said Rules do not provide for separation or
termination pay. What is embodied in petitioners contract is the payment of
compensation arising from permanent partial disability during the period of
employment. We find that private respondent complied with the terms of contract when it
paid petitioner P42,315.00 which, in our opinion, is a reasonable amount, as compensation
for his illness.
Lastly, petitioner claims that he eventually became a regular employee of private
respondent and thus falls within the purview of Articles 284 and 95 of the Labor Code. In
support of this contention, petitioner cites the case of Worth Shipping Service, Inc., et al. v.
NLRC, et al., wherein we held that the crew members of the shipping company had
attained regular status and thus, were entitled to separation pay. However, the facts of said
case differ from the present. In Worth, we held that the principal and agent had
operational control and management over the MV Orient Carrier and thus, were the
actual employers of their crew members.
From the foregoing cases, it is clear that seafarers are considered contractual
employees. They can not be considered as regular employees under Article 280
of the Labor Code. Their employment is governed by the contracts they sign
everytime they are rehired and their employment is terminated when the contract
expires. Their employment is contractually fixed for a certain period of time. They
fall under the exception of Article 280 whose employment has been fixed for a
specific project or undertaking the completion or termination of which has been
determined at the time of engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the
duration of the season.
[19]
We need not depart from the rulings of the Court in the
two aforementioned cases which indeed constitute stare decisis with respect to the
employment status of seafarers.
Petitioners insist that they should be considered regular employees, since
they have rendered services which are usually necessary and desirable to the
business of their employer, and that they have rendered more than twenty(20)
years of service. While this may be true, the Brent case has, however, held that
there are certain forms of employment which also require the performance of usual
and desirable functions and which exceed one year but do not necessarily attain
regular employment status under Article 280.
[20]
Overseas workers including
seafarers fall under this type of employment which are governed by the mutual
agreements of the parties.
In this jurisdiction and as clearly stated in the Coyoca case, Filipino seamen
are governed by the Rules and Regulations of the POEA. The Standard
Employment Contract governing the employment of All Filipino seamen on Board
Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C specifically
provides that the contract of seamen shall be for a fixed period. And in no case
should the contract of seamen be longer than 12 months. It reads:
Section C. Duration of Contract
The period of employment shall be for a fixed period but in no case to exceed 12
months and shall be stated in the Crew Contract. Any extension of the Contract period
shall be subject to the mutual consent of the parties.
Moreover, it is an accepted maritime industry practice that employment of
seafarers are for a fixed period only. Constrained by the nature of their
employment which is quite peculiar and unique in itself, it is for the mutual interest
of both the seafarer and the employer why the employment status must be
contractual only or for a certain period of time. Seafarers spend most of their time
at sea and understandably, they can not stay for a long and an indefinite period of
time at sea.
[21]
Limited access to shore society during the employment will have an
adverse impact on the seafarer. The national, cultural and lingual diversity among
the crew during the COE is a reality that necessitates the limitation of its period.
[22]

Petitioners make much of the fact that they have been continually re-hired or
their contracts renewed before the contracts expired (which has admittedly been
going on for twenty (20) years). By such circumstance they claim to have acquired
regular status with all the rights and benefits appurtenant to it.
Such contention is untenable. Undeniably, this circumstance of continuous
re-hiring was dictated by practical considerations that experienced crew members
are more preferred. Petitioners were only given priority or preference because of
their experience and qualifications but this does not detract the fact that herein
petitioners are contractual employees. They can not be considered regular
employees. We quote with favor the explanation of the NLRC in this wise:
Xxx The reference to permanent and probationary masters and employees in these
papers is a misnomer and does not alter the fact that the contracts for enlistment between
complainants-appellants and respondent-appellee Esso International were for a definite
periods of time, ranging from 8 to 12 months. Although the use of the terms permanent
and probationary is unfortunate, what is really meant is eligible for-re-hire. This is the
only logical conclusion possible because the parties cannot and should not violate POEAs
requirement that a contract of enlistment shall be for a limited period only; not exceeding
twelve (12)months.
[23]

From all the foregoing, we hereby state that petitioners are not considered
regular or permanent employees under Article 280 of the Labor Code. Petitioners
employment have automatically ceased upon the expiration of their contracts of
enlistment (COE). Since there was no dismissal to speak of, it follows that
petitioners are not entitled to reinstatement or payment of separation pay or
backwages, as provided by law.
With respect to the benefits under the Consecutive Enlistment Incentive Plan
(CEIP), we hold that the petitioners are still entitled to receive 100% of the total
amount credited to him under the CEIP. Considering that we have declared that
petitioners are contractual employees, their compensation and benefits are
covered by the contracts they signed and the CEIP is part and parcel of the
contract.
The CEIP was formulated to entice seamen to stay long in the company. As
the name implies, the program serves as an incentive for the employees to renew
their contracts with the same company for as long as their services were
needed. For those who remained loyal to them, they were duly rewarded with this
additional remuneration under the CEIP, if eligible. While this is an act of
benevolence on the part of the employer, it can not, however, be denied that this is
part of the benefits accorded to the employees for services rendered. Such right to
the benefits is vested upon them upon their eligibility to the program.
The CEIP provides that an employee becomes covered under the Plan when
he completes thirty-six (36) months or an equivalent of three (3) years of credited
service with respect to employment after June 30, 1973.
[24]
Upon eligibility, an
amount shall be credited to his account as it provides, among others:
III. Distribution of Benefits
A. Retirement, Death and Disability
When the employment of an employee terminates because of his
retirement, death or permanent and total disability, a percentage of the
total amount credited to his account will be distributed to him (or his
eligible survivor(s) in accordance with the following:
Reason for Termination Percentage
a) Attainment of mandatory retire- 100%
ment age of 60.
b) Permanent and total disability, 100%
while under contract, that is
not due to accident or misconduct.
c) Permanent and total disability, 100%
while under contract, that is
due to accident, and not due to
misconduct.
xxx
B. Voluntary Termination
When an employee voluntary terminates his employment with at least 36 months of
credited service without any misconduct on his part, 18 percent of the total amount credited
to his account, plus an additional of one percent for each month (up to a maximum of
164 months of credited service in excess of 36, will be distributed to him provided (1) the
employee has completed his last Contract of Enlistment and (2) employee advises the
company in writing, within 30 days, from his last disembarkation date, of his intention to
terminate his employment. (To advise the Company in writing means that the original
letter must be sent to the Companys agent in the Philippines, a copy sent to the Company
in New York).
xxx
C. Other Terminations
When the employment of an employee is terminated by the Company for a
reason other than one in A and B above, without any misconduct on his
part, a percentage of the total amount credited to his account will be
distributed to him in accordance with the following.
Credited Service Percentage
36 months 50%
48 75%
60 100%
When the employment of an employee is terminated due to his poor-
performance, misconduct, unavailability, etc., or if employee is not offered
re-engagement for similar reasons, no distribution of any portion of
employees account will ever be made to him (or his eligible survivor[s]).
It must be recalled that on June 21, 1989, Millares wrote a letter to his
employer informing his intention to avail of the optional retirement plan under the
CEIP considering that he has rendered more than twenty (20) years of continuous
service. Lagda, likewise, manifested the same intention in a letter dated June 26,
1989. Private respondent, however, denied their requests for benefits under the
CEIP since: (1) the contract of enlistment (COE) did not provide for retirement
before 60 years of age; and that (2) petitioners failed to submit a written notice of
their intention to terminate their employment within thirty (30) days from the last
disembarkation date pursuant to the provision on Voluntary Termination of the
CEIP. Petitioners were eventually dropped from the roster of crew members and
on grounds of abandonment and unavailability for contractual sea service,
respectively, they were disqualified from receiving any benefits under the CEIP.
[25]

In our March 14, 2000 Decision, we, however, found that petitioners Millares
and Lagda were not guilty of abandonment or unavailability for contractual sea
service, as we have stated:
The absence of petitioners was justified by the fact that they secured the approval of private
respondents to take a leave of absence after the termination of their last contracts of
enlistment. Subsequently, petitioners sought for extensions of their respective leaves of
absence. Granting arguendo that their subsequent requests for extensions were not
approved, it cannot be said that petitioners were unavailable or had abandoned their work
when they failed to report back for assignment as they were still questioning the denial of
private respondents of their desire to avail of the optional early retirement policy, which
they believed in good faith to exist.
[26]

Neither can we consider petitioners guilty of poor performance or misconduct
since they were recipients of Merit Pay Awards for their exemplary performances
in the company.
Anent the letters dated June 21, 1989 (for Millares) and June 26, 1989 (for
Lagda) which private respondent considered as belated written notices of
termination, we find such assertion specious. Notwithstanding, we could
conveniently consider the petitioners eligible under Section III-B of the CEIP
(Voluntary Termination), but this would, however, award them only a measly
amount of benefits which to our mind, the petitioners do not rightfully deserve
under the facts and circumstances of the case. As the CEIP provides:
III. Distribution of Benefits
xxx
E. Distribution of Accounts
When an employee terminates under conditions that would qualify for a distribution of
more than one specified in A, B or C above, the largest single amount, only, will be
distributed.
Since petitioners termination of employment under the CEIP do not fall under
Section III-A (Retirement, Death and Disability) or Section III-B (Voluntary
Termination), nor could they be considered under the second paragraph of Section
III-C, as earlier discussed; it follows that their termination falls under the first
paragraph of Section III-C for which they are entitled to 100% of the total amount
credited to their accounts. The private respondents can not now renege on their
commitment under the CEIP to reward deserving and loyal employees as the
petitioners in this case.
In taking cognizance of private respondents Second Motion for
Reconsideration, the Court hereby suspends the rules to make them conformable
to law and justice and to subserve an overriding public interest.
IN VIEW OF THE FOREGOING, THE COURT Resolved to Partially
GRANT Private Respondents Second Motion for Reconsideration and Intervenor
FAMES Motion for Reconsideration in Intervention. The Decision of the National
Labor Relations Commission dated June 1, 1993 is hereby REINSTATED with
MODIFICATION. The Private Respondents, Trans-Global Maritime Agency, Inc.
and Esso International Shipping Co.,Ltd. are hereby jointly and severally
ORDERED to pay petitioners One Hundred Percent (100%) of their total credited
contributions as provided under the Consecutive Enlistment Incentive Plan(CEIP).
SO ORDERED.

[G.R. No. 108405. April 4, 2003]
JAIME D. VIERNES, CARLOS R. GARCIA, BERNARD BUSTILLO, DANILO C.
BALANAG, FERDINAND DELLA, EDWARD A. ABELLERA,
ALEXANDER ABANAG, DOMINGO ASIA, FRANCISCO BAYUGA,
ARTHUR M. ORIBELLO, BUENAVENTURA DE GUZMAN, JR.,
ROBERT A. ORDOO, BERNARD V. JULARBAL, IGNACIO C.
ALINGBAS and LEODEL N. SORIANO, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION (THIRD DIVISION), and BENGUET
ELECTRIC COOPERATIVE, INC. (BENECO) respondents.
D E C I S I O N
AUSTRIA-MARTINEZ, J .:
Before us is a petition for certiorari seeking to annul the decision promulgated
by the National Labor Relations Commission (NLRC) on July 2, 1992 in NLRC CA
No. L-000384-92,
[1]
and its resolution dated September 24, 1992 denying
petitioners motion for reconsideration.
The factual background of this case, as summarized by the Labor Arbiter, is
as follows:
Fifteen (15) in all, these are consolidated cases for illegal dismissal, underpayment of
wages and claim for indemnity pay against a common respondent, the Benguet Electric
Cooperative, Inc., (BENECO for short) represented by its Acting General Manager,
Gerardo P. Versoza.
Complainants services as meter readers were contracted for hardly a months duration, or
from October 8 to 31, 1990. Their employment contracts, couched in identical terms, read:
You are hereby appointed as METER READER (APPRENTICE) under BENECO-NEA
Management with compensation at the rate of SIXTY-SIX PESOS AND SEVENTY-FIVE
CENTAVOS (P66.75) per day from October 08 to 31, 1990.
x x x. (Annex B, Complainants Joint Position Paper)
The said term notwithstanding, the complainants were allowed to work beyond October 31,
1990, or until January 2, 1991. On January 3, 1991, they were each served their identical
notices of termination dated December 29, 1990. The same read:
Please be informed that effective at the close of office hours of December 31, 1990, your
services with the BENECO will be terminated. Your termination has nothing to do with
your performance. Rather, it is because we have to retrench on personnel as we are already
overstaffed.
x x x. (Annex C, CJPP)
On the same date, the complainants filed separate complaints for illegal dismissal. And
following the amendment of said complaints, they submitted their joint position paper on
April 4, 1991. Respondent filed its position paper on April 2, 1991.
It is the contention of the complainants that they were not apprentices but regular
employees whose services were illegally and unjustly terminated in a manner that was
whimsical and capricious. On the other hand, the respondent invokes Article 283 of the
Labor Code in defense of the questioned dismissal.
[2]

On October 18, 1991, the Labor Arbiter rendered a decision, the dispositive
portion of which reads as follows:
WHEREFORE, judgment is hereby rendered:
1. Dismissing the complaints for illegal dismissal filed by the complainants for lack of
merit. However in view of the offer of the respondent to enter into another temporary
employment contract with the complainants, the respondent is directed to so extend such
contract to each complainant, with the exception of Jaime Viernes, and to pay each the
amount of P2,590.50, which represents a months salary, as indemnity for its failure to give
complainants the 30-day notice mandated under Article 283 of the Labor Code; or, at the
option of the complainants, to pay each financial assistance in the amount of P5,000.00 and
the P2,590.50 above-mentioned.
2. Respondent is also ordered:
A. To pay complainants the amount representing underpayment of their wages:
a) Jaime Viernes, Carlos Garcia, Danilo Balanag, Edward Abellera, Francisco Bayuga,
Arthur Oribello, Buenaventura de Guzman, Jr., Robert Ordoo, Bernard Jularbal and
Leodel Soriano,P1,994.25 each;
b) Bernard Bustillo and Domingo Asia, P1,838.50 each; and
c) Ferdinand Della, Alexander Abanag and Ignacio Alingbas, P1,816.25 each.
B. To extend to complainant Jaime Viernes an appointment as regular employee for
the position of meter reader, the job he held prior to his termination, and to pay
him P2,590.50 as indemnity, plus the underpayment of his wages as above stated.
C. To pay P7,000.00 as and for attorneys fees.
No damages.
SO ORDERED.
[3]

Aggrieved by the Labor Arbiters decision, the complainants and the
respondent filed their respective appeals to the NLRC.
On July 2, 1992, the NLRC modified its judgment, to wit:
WHEREFORE, premises considered, judgment is hereby rendered modifying the appealed
decision by declaring complainants dismissal illegal, thus ordering their reinstatement to
their former position as meter readers or to any equivalent position with payment of
backwages limited to one year and deleting the award of indemnity and attorneys
fees. The award of underpayment of wages is hereby AFFIRMED.
SO ORDERED.
[4]

On August 27, 1992, complainants filed a Motion for Clarification and Partial
Reconsideration.
[5]
On September 24, 1992, the NLRC issued a resolution denying
the complainants motion for reconsideration.
[6]

Hence, complainants filed herein petition.
Private respondent BENECO filed its Comment; the Office of the Solicitor
General (OSG) filed a Manifestation and Motion in Lieu of Comment; public
respondent NLRC filed its own Comment; and petitioners filed their Manifestation
and Motion In Lieu of Consolidated Reply. Public respondent NLRC, herein
petitioners, and private respondent filed their respective memoranda, and the
OSG, its Manifestation in 1994.
Pursuant to our ruling in Rural Bank of Alaminos Employees Union vs.
NLRC,
[7]
to wit:
in the decision in the case of St. Martin Funeral Homes vs. National Labor Relations
Commission, G.R. No. 130866, promulgated on September 16, 1998, this Court
pronounced that petitions for certiorari relating to NLRC decisions must be filed directly
with the Court of Appeals, and labor cases pending before this Court should be referred to
the appellate court for proper disposition. However, in cases where the Memoranda of
both parties have been filed with this Court prior to the promulgation of the St. Martin
decision, the Court generally opts to take the case itself for its final disposition.
[8]

and considering that the parties have filed their respective memoranda as of 1994,
we opt to resolve the issues raised in the present petition.
The parties raised the following issues:
1. Whether the respondent NLRC committed grave abuse of discretion in ordering the
reinstatement of petitioners to their former position as meter readers on probationary status
in spite of its finding that they are regular employees under Article 280 of the Labor Code.
2. Whether the respondent NLRC committed grave abuse of discretion in limiting the
backwages of petitioners to one year only in spite of its finding that they were illegally
dismissed, which is contrary to the mandate of full backwages until actual reinstatement
but not to exceed three years.
3. Whether the respondent NLRC committed grave abuse of discretion in deleting the
award of indemnity pay which had become final because it was not appealed and in
deleting the award of attorneys fees because of the absence of a trial-type hearing.
4. Whether the mandate of immediately executory on the reinstatement aspect even
pending appeal as provided in the decision of Labor Arbiters equally applies in the decision
of the National Labor Relations Commission even pending appeal, by means of a motion
for reconsideration of the order reinstating a dismissed employee or pending appeal
because the case is elevated on certiorari before the Supreme Court.
[9]

We find the petition partly meritorious.
As to the first issue: We sustain petitioners claim that they should be
reinstated to their former position as meter readers, not on a probationary status,
but as regular employees.
Reinstatement means restoration to a state or condition from which one had
been removed or separated.
[10]
In case of probationary employment, Article 281 of
the Labor Code requires the employer to make known to his employee at the time
of the latters engagement of the reasonable standards under which he may qualify
as a regular employee.
A review of the records shows that petitioners have never been probationary
employees. There is nothing in the letter of appointment, to indicate that their
employment as meter readers was on a probationary basis. It was not shown that
petitioners were informed by the private respondent, at the time of the latters
employment, of the reasonable standards under which they could qualify as
regular employees. Instead, petitioners were initially engaged to perform their job
for a limited duration, their employment being fixed for a definite period, from
October 8 to 31, 1990.
Private respondents reliance on the case of Brent School, Inc. vs.
Zamora,
[11]
wherein we held as follows:
Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor Code clearly appears to have been, as
already observed, to prevent circumvention of the employees right to be secure in his
tenure, the clause in said article indiscriminately and completely ruling out all written or
oral agreements conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has singled out:
agreements entered into precisely to circumvent security of tenure. It should have no
application to instances where a fixed period of employment was agreed upon knowingly
and voluntarily by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his
consent, or where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being exercised by
the former over the latter.
[12]

is misplaced.
The principle we have enunciated in Brent applies only with respect to fixed
term employments. While it is true that petitioners were initially employed on a
fixed term basis as their employment contracts were only for October 8 to 31,
1990, after October 31, 1990, they were allowed to continue working in the same
capacity as meter readers without the benefit of a new contract or agreement or
without the term of their employment being fixed anew. After October 31, 1990,
the employment of petitioners is no longer on a fixed term basis. The complexion
of the employment relationship of petitioners and private respondent is thereby
totally changed. Petitioners have attained the status of regular employees.
Under Article 280 of the Labor Code, a regular employee is one who is
engaged to perform activities which are necessary or desirable in the usual
business or trade of the employer, or a casual employee who has rendered at least
one year of service, whether continuous or broken, with respect to the activity in
which he is employed.
In De Leon vs. NLRC,
[13]
and Abasolo vs. NLRC,
[14]
we laid down the test in
determining regular employment, to wit:
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 a year, even if the performance is not continuous and merely
intermittent, the law deems repeated and continuing need for its performance as sufficient
evidence of the necessity if not indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to such activity and while such
activity exists.
[15]

Clearly therefrom, there are two separate instances whereby it can be
determined that an employment is regular: (1) The particular activity performed by
the employee is necessary or desirable in the usual business or trade of the
employer; or (2) if the employee has been performing the job for at least a year.
Herein petitioners fall under the first category. They were engaged to perform
activities that are necessary to the usual business of private respondent. We
agree with the labor arbiters pronouncement that the job of a meter reader is
necessary to the business of private respondent because unless a meter reader
records the electric consumption of the subscribing public, there could not be a
valid basis for billing the customers of private respondent. The fact that the
petitioners were allowed to continue working after the expiration of their
employment contract is evidence of the necessity and desirability of their service to
private respondents business. In addition, during the preliminary hearing of the
case on February 4, 1991, private respondent even offered to enter into another
temporary employment contract with petitioners. This only proves private
respondents need for the services of herein petitioners. With the continuation of
their employment beyond the original term, petitioners have become full-fledged
regular employees. The fact alone that petitioners have rendered service for a
period of less than six months does not make their employment status as
probationary.
Since petitioners are already regular employees at the time of their illegal
dismissal from employment, they are entitled to be reinstated to their former
position as regular employees, not merely probationary.
As to the second issue, Article 279 of the Labor Code, as amended by R.A.
No. 6715, which took effect on March 21, 1989, provides that an illegally dismissed
employee is entitled to full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement. Since petitioners
were employed on October 8, 1990, the amended provisions of Article 279 of the
Labor Code shall apply to the present case. Hence, it was patently erroneous,
tantamount to grave abuse of discretion on the part of the public respondent in
limiting to one year the backwages awarded to petitioners.
With respect to the third issue, an employer becomes liable to pay indemnity
to an employee who has been dismissed if, in effecting such dismissal, the
employer fails to comply with the requirements of due process.
[16]
The indemnity is
in the form of nominal damages intended not to penalize the employer but to
vindicate or recognize the employees right to procedural due process which was
violated by the employer.
[17]
Under Article 2221 of the Civil Code, nominal
damages are adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for
the purpose of indemnifying the plaintiff for any loss suffered by him.
We do not agree with the ruling of the NLRC that indemnity is incompatible
with the award of backwages. These two awards are based on different
considerations. Backwages are granted on grounds of equity to workers for
earnings lost due to their illegal dismissal from work.
[18]
On the other hand, the
award of indemnity, as we have earlier held, is meant to vindicate or recognize the
right of an employee to due process which has been violated by the employer.
In the present case, the private respondent, in effecting the dismissal of
petitioners from their employment, failed to comply with the provisions of Article
283 of the Labor Code which requires an employer to serve a notice of dismissal
upon the employees sought to be terminated and to the Department of Labor, at
least one month before the intended date of termination. Petitioners were served
notice on January 3, 1991 terminating their services, effective December 29, 1990,
or retroactively, in contravention of Article 283. This renders the private
respondent liable to pay indemnity to petitioners.
Thus, we find that the NLRC committed grave abuse of discretion in deleting
the award of indemnity. In Del Val vs. NLRC,
[19]
we held that the award of
indemnity ranges from P1,000.00 to P10,000.00 depending on the particular
circumstances of each case. In the present case, the amount of indemnity
awarded by the labor arbiter is P2,590.50, which is equivalent to petitioners one-
month salary. We find no cogent reason to modify said award, for being just and
reasonable.
As to the award of attorneys fees, the same is justified by the provisions of
Article 111 of the Labor Code, to wit:
Art. 111. Attorneys fees (a) In cases of unlawful withholding of wages the culpable
party may be assessed attorneys fees equivalent to ten percent of the amount of wages
recovered.
(b) It shall be unlawful for any person to demand or accept, in any judicial or
administrative proceedings for the recovery of the wages, attorneys fees which exceed ten
percent of the amount of wages recovered.
As to the last issue, Article 223 of the Labor Code is plain and clear that the
decision of the NLRC shall be final and executory after ten (10) calendar days from
receipt thereof by the parties. In addition, Section 2(b), Rule VIII of the New Rules
of Procedure of the NLRC provides that should there be a motion for
reconsideration entertained pursuant to Section 14, Rule VII of these Rules, the
decision shall be executory after ten calendar days from receipt of the resolution
on such motion.
We find nothing inconsistent or contradictory between Article 223 of the Labor
Code and Section 2(b), Rule VIII, of the NLRC Rules of Procedure. The aforecited
provision of the NLRC Rules of Procedure merely provides for situations where a
motion for reconsideration is filed. Since the Rules allow the filing of a motion for
reconsideration of a decision of the NLRC, it simply follows that the ten-day period
provided under Article 223 of the Labor Code should be reckoned from the date of
receipt by the parties of the resolution on such motion. In the case at bar,
petitioners received the resolution of the NLRC denying their motion for
reconsideration on October 22, 1992. Hence, it is on November 2, 1992 that the
questioned decision became executory.
WHEREFORE, the petition is partially GRANTED. The decision of the
National Labor Relations Commission dated July 2, 1992 is MODIFIED. Private
respondent Benguet Electric Cooperative, Inc. (BENECO) is hereby ordered to
reinstate petitioners to their former or substantially equivalent position as regular
employees, without loss of seniority rights and other privileges appurtenant
thereto, with full backwages from the time of their dismissal until they are actually
reinstated. The amount of P2,590.50 awarded by the labor arbiter as indemnity to
petitioners is REINSTATED. Private respondent is also ordered to pay attorneys
fees in the amount of ten percent (10%) of the total monetary award due to the
petitioners. In all other respects the assailed decision and resolution are
AFFIRMED.
Costs against private respondent BENECO.

[G.R. No. 141717. April 14, 2004]
PHILIPS SEMICONDUCTORS (PHILS.), INC., petitioner, vs. ELOISA
FADRIQUELA, respondent.
D E C I S I O N
CALLEJO, SR., J .:
Before us is a petition for review of the Decision
[1]
of the Court of Appeals
(CA) in CA-G.R. SP No. 52149 and its Resolution dated January 26, 2000 denying
the motion for reconsideration therefrom.
The Case for the Petitioner
The petitioner Philips Semiconductors (Phils.), Inc. is a domestic corporation
engaged in the production and assembly of semiconductors such as power
devices, RF modules, CATV modules, RF and metal transistors and glass diods. It
caters to domestic and foreign corporations that manufacture computers,
telecommunications equipment and cars.
Aside from contractual employees, the petitioner employed 1,029 regular
workers. The employees were subjected to periodic performance appraisal based
on output, quality, attendance and work attitude.
[2]
One was required to obtain a
performance rating of at least 3.0 for the period covered by the performance
appraisal to maintain good standing as an employee.
On May 8, 1992, respondent Eloisa Fadriquela executed a Contract of
Employment with the petitioner in which she was hired as a production operator
with a daily salary ofP118. Her initial contract was for a period of three months up
to August 8, 1992,
[3]
but was extended for two months when she garnered a
performance rating of 3.15.
[4]
Her contract was again renewed for two months or
up to December 16, 1992,
[5]
when she received a performance rating of 3.8.
[6]
After
the expiration of her third contract, it was extended anew, for three months,
[7]
that
is, from January 4, 1993 to April 4, 1993.
After garnering a performance rating of 3.4,
[8]
the respondents contract was
extended for another three months, that is, from April 5, 1993 to June 4,
1993.
[9]
She, however, incurred five absences in the month of April, three
absences in the month of May and four absences in the month of June.
[10]
Line
supervisor Shirley F. Velayo asked the respondent why she incurred the said
absences, but the latter failed to explain her side. The respondent was warned
that if she offered no valid justification for her absences, Velayo would have no
other recourse but to recommend the non-renewal of her contract. The
respondent still failed to respond, as a consequence of which her performance
rating declined to 2.8. Velayo recommended to the petitioner that the respondents
employment be terminated due to habitual absenteeism,
[11]
in accordance with the
Company Rules and Regulations.
[12]
Thus, the respondents contract of
employment was no longer renewed.
The Complaint of the Respondent
The respondent filed a complaint before the National Capital Region
Arbitration Branch of the National Labor Relations Commission (NLRC) for illegal
dismissal against the petitioner, docketed as NLRC Case No. NCR-07-04263-
93. She alleged, inter alia, that she was illegally dismissed, as there was no valid
cause for the termination of her employment. She was not notified of any
infractions she allegedly committed; neither was she accorded a chance to be
heard. According to the respondent, the petitioner did not conduct any formal
investigation before her employment was terminated. Furthermore, considering
that she had rendered more than six months of service to the petitioner, she was
already a regular employee and could not be terminated without any justifiable
cause. Moreover, her absences were covered by the proper authorizations.
[13]

On the other hand, the petitioner contended that the respondent had not been
dismissed, but that her contract of employment for the period of April 4,
1993 to June 4, 1993merely expired and was no longer renewed because of her
low performance rating. Hence, there was no need for a notice or
investigation. Furthermore, the respondent had already accumulated five
unauthorized absences which led to the deterioration of her performance, and
ultimately caused the non-renewal of her contract.
[14]

The Ruling of the Labor Arbiter and the NLRC
On June 26, 1997, the Labor Arbiter rendered a decision dismissing the
complaint for lack of merit, thus:
IN THE LIGHT OF ALL THE FOREGOING, the complaint is hereby dismissed for lack
of merit. The respondent is, however, ordered to extend to the complainant a send off
award or financial assistance in the amount equivalent to one-month salary on ground of
equity.
[15]

The Labor Arbiter declared that the respondent, who had rendered less than
seventeen months of service to the petitioner, cannot be said to have acquired
regular status. The petitioner and the Philips Semiconductor Phils., Inc., Workers
Union had agreed in their Collective Bargaining Agreement (CBA) that a
contractual employee would acquire a regular employment status only upon
completion of seventeen months of service. This was also reflected in the minutes
of the meeting of April 6, 1993 between the petitioner and the union. Further, a
contractual employee was required to receive a performance rating of at least 3.0,
based on output, quality of work, attendance and work attitude, to qualify for
contract renewal. In the respondents case, she had worked for the petitioner for
only twelve months. In the last extension of her employment contract, she
garnered only 2.8 points, below the 3.0 required average, which disqualified her for
contract renewal, and regularization of employment. The Labor Arbiter also ruled
that the respondent cannot justifiably complain that she was deprived of her right
to notice and hearing because her line supervisor had asked her to explain her
unauthorized absences. Accordingly, these dialogues between the respondent and
her line supervisor can be deemed as substantial compliance of the required
notice and investigation.
The Labor Arbiter declared, however, that the respondent had rendered
satisfactory service for a period of one year, and since her infraction did not involve
moral turpitude, she was entitled to one months salary.
Aggrieved, the respondent appealed to the NLRC, which, on September 16,
1998, issued a Resolution affirming the decision of the Labor Arbiter and
dismissing the appeal. The NLRC explained that the respondent was a contractual
employee whose period of employment was fixed in the successive contracts of
employment she had executed with the petitioner. Thus, upon the expiration of her
contract, the respondents employment automatically ceased. The respondents
employment was not terminated; neither was she dismissed.
The NLRC further ruled that as a contractual employee, the respondent was
bound by the stipulations in her contract of employment which, among others, was
to maintain a performance rating of at least 3.0 as a condition for her continued
employment. Since she failed to meet the said requirement, the petitioner was
justified in not renewing her contract.
The respondent filed a motion for reconsideration of the resolution, but
on January 12, 1999, the NLRC resolved to deny the same.
The Case Before the Court of Appeals
Dissatisfied, the respondent filed a petition for certiorari under Rule 65 before
the Court of Appeals, docketed as CA-G.R. SP No. 52149, for the reversal of the
resolutions of the NLRC.
On October 11, 1999, the appellate court rendered a decision reversing the
decisions of the NLRC and the Labor Arbiter and granting the respondents
petition. The CA ratiocinated that the bases upon which the NLRC and the Labor
Arbiter founded their decisions were inappropriate because the CBA and the
Minutes of the Meeting between the union and the management showed that the
CBA did not cover contractual employees like the respondent. Thus, the
seventeenth-month probationary period under the CBA did not apply to her. The
CA ruled that under Article 280 of the Labor Code, regardless of the written and
oral agreements between an employee and her employer, an employee shall be
deemed to have attained regular status when engaged to perform activities which
are necessary and desirable in the usual trade or business of the employer. Even
casual employees shall be deemed regular employees if they had rendered at
least one year of service to the employer, whether broken or continuous.
The CA noted that the respondent had been performing activities that were
usually necessary and desirable to the petitioners business, and that she had
rendered thirteen months of service. It concluded that the respondent had attained
regular status and cannot, thus, be dismissed except for just cause and only after
due hearing. The appellate court further declared that the task of the respondent
was hardly specific or seasonal. The periods fixed in the contracts of employment
executed by the respondent were designed by the petitioner to preclude the
respondent from acquiring regular employment status. The strict application of the
contract of employment against the respondent placed her at the mercy of the
petitioner, whose employees crafted the said contract.
According to the appellate court, the petitioners contention that the
respondents employment on as the need arises basis was illogical. If such
stance were sustained, the court ruled, then no employee would attain regular
status even if employed by the petitioner for seventeen months or more. The CA
held that the respondents sporadic absences upon which her dismissal was
premised did not constitute valid justifiable grounds for the termination of her
employment. The tribunal also ruled that a less punitive penalty would suffice for
missteps such as absenteeism, especially considering that the respondent had
performed satisfactorily for the past twelve months.
The CA further held that, contrary to the ruling of the Labor Arbiter, the
dialogues between the respondent and the line supervisor cannot be considered
substantial compliance with the requirement of notice and investigation. Thus, the
respondent was not only dismissed without justifiable cause; she was also
deprived of her right to due process.
The petitioner filed a motion for reconsideration of the decision but on January
26, 2000, the CA issued a resolution denying the same.
The Case Before the Court
The petitioner filed the instant petition and raised the following issues for the
courts resolution: (a) whether or not the respondent was still a contractual
employee of the petitioner as of June 4, 1993; (b) whether or not the petitioner
dismissed the respondent from her employment; (c) if so, whether or not she was
accorded the requisite notice and investigation prior to her dismissal; and, (d)
whether or not the respondent is entitled to reinstatement and full payment of
backwages as well as attorneys fees.
On the first issue, the petitioner contends that the policy of hiring workers for a
specific and limited period on an as needed basis, as adopted by the petitioner, is
not new; neither is it prohibited. In fact, according to the petitioner, the hiring of
workers for a specific and limited period is a valid exercise of management
prerogative. It does not necessarily follow that where the duties of the employee
consist of activities usually necessary or desirable in the usual course of business
of the employer, the parties are forbidden from agreeing on a period of time for the
performance of such activities. Hence, there is nothing essentially contradictory
between a definite period of employment and the nature of the employees duties.
According to the petitioner, it had to resort to hiring contractual employees for
definite periods because it is a semiconductor company and its business is cyclical
in nature. Its operation, production rate and manpower requirements are dictated
by the volume of business from its clients and the availability of the basic
materials. It produces the products upon order of its clients and does not allow
such products to be stockpiled. Peak loads due to cyclical demands increase the
need for additional manpower for short duration. Thus, the petitioner often
experiences short-term surges in labor requirements. The hiring of workers for a
definite period to supplement the regular work force during the unpredictable peak
loads was the most efficient, just and practical solution to the petitioners operating
needs.
The petitioner contends that the CA misapplied the law when it insisted that
the respondent should be deemed a regular employee for having been employed
for more than one year. The CA ignored the exception to this rule, that the parties
to an employment contract may agree otherwise, particularly when the same is
established by company policy or required by the nature of work to be
performed. The employer has the prerogative to set reasonable standards to
qualify for regular employment, as well as to set a reasonable period within which
to determine such fitness for the job.
According to the petitioner, the conclusion of the CA that the policy adopted
by it was intended to circumvent the respondents security of tenure is without
basis. The petitioner merely exercised a right granted to it by law and, in the
absence of any evidence of a wrongful act or omission, no wrongful intent may be
attributed to it. Neither may the petitioner be penalized for agreeing to consider
workers who have rendered more than seventeen months of service as regular
employees, notwithstanding the fact that by the nature of its business, the
petitioner may enter into specific limited contracts only for the duration of its clients
peak demands. After all, the petitioner asserts, the union recognized the need to
establish such training and probationary period for at least six months for a worker
to qualify as a regular employee. Thus, under their CBA, the petitioner and the
union agreed that contractual workers be hired as of December 31, 1992.
The petitioner stresses that the operation of its business as a semiconductor
company requires the use of highly technical equipment which, in turn, calls for
certain special skills for their use. Consequently, the petitioner, in the exercise of
its best technical and business judgment, has set a standard of performance for
workers as well as the level of skill, efficiency, competence and production which
the workers must pass to qualify as a regular employee. In rating the performance
of the worker, the following appraisal factors are considered by the respondent
company as essential: (1) output (40%), (2) quality (30%), (3) attendance (15%),
and (4) work attitude (15%). The rate of 3.0 was set as the passing grade. As
testified to by the petitioners Head of Personnel Services, Ms. Cecilia C. Mallari:
A workers efficiency and productivity can be established only after he has rendered
service using Philips equipment over a period of time. A worker has to undergo training,
during which time the worker is taught the manufacturing process and quality
control. After instructions, the worker is subjected to written and oral examinations to
determine his fitness to continue with the training. The orientation and initial training lasts
from three to four weeks before the worker is assigned to a specific work
station. Thereafter, the workers efficiency and skill are monitored.

Among the factors considered (before a contractual employee becomes a regular employee)
are output, quality, attendance, and work attitude, which includes cooperation, discipline,
housekeeping and inter-office employee relationship. These factors determine the workers
efficiency and productivity.
[16]

The Courts Ruling
In ruling for the respondent, the appellate court applied Article 280 of the
Labor Code of the Philippines, as amended, which reads:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral argument of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of
the employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph; Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while
such activity exists.
The appellate court held that, in light of the factual milieu, the respondent was
already a regular employee on June 4, 1993. Thus:
It is apparent from the factual circumstances of this case that the period of employment has
been imposed to preclude acquisition of tenurial security by petitioner. It bears stressing
that petitioners original contract of employment, dated May 8, 1992 to August 8, 1992,
had been extended through several contracts one from October 13, 1992 to December 16,
1992, another from January 7, 1993 to April 4, 1993, and, lastly, from April 5, 1993 to
June 4, 1993.
The fact that the petitioner had rendered more than one year of service at the time of his
(sic) dismissal only shows that she is performing an activity which is usually necessary and
desirable in private respondents business or trade. The work of petitioner is hardly
specific or seasonal. The petitioner is, therefore, a regular employee of private
respondent, the provisions of their contract of employment notwithstanding. The private
respondents prepared employment contracts placed petitioner at the mercy of those who
crafted the said contract.
[17]

We agree with the appellate court.
Article 280 of the Labor Code of the Philippines was emplaced in our statute
books to prevent the circumvention by unscrupulous employers of the employees
right to be secure in his tenure by indiscriminately and completely ruling out all
written and oral agreements inconsistent with the concept of regular employment
defined therein. The language of the law manifests the intent to protect the
tenurial interest of the worker who may be denied the rights and benefits due a
regular employee because of lopsided agreements with the economically powerful
employer who can maneuver to keep an employee on a casual or temporary status
for as long as it is convenient to it.
[18]
In tandem with Article 281 of the Labor Code,
Article 280 was designed to put an end to the pernicious practice of making
permanent casuals of our lowly employees by the simple expedient of extending to
them temporary or probationary appointments, ad infinitum.
[19]

The two kinds of regular employees under the law are (1) those engaged to
perform activities which are necessary or desirable in the usual business or trade
of the employer; and (2) those casual employees who have rendered at least one
year of service, whether continuous or broken, with respect to the activities in
which they are employed.
[20]
The primary standard to determine a regular
employment is the reasonable connection between the particular activity
performed by the employee in relation to the business or trade of the
employer. The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer.
[21]
If the employee has been performing
the job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance
as sufficient evidence of the necessity, if not indispensability of that activity to the
business of the employer. Hence, the employment is also considered regular, but
only with respect to such activity and while such activity exists.
[22]
The law does not
provide the qualification that the employee must first be issued a regular
appointment or must be declared as such before he can acquire a regular
employee status.
[23]

In this case, the respondent was employed by the petitioner on May 8,
1992 as production operator. She was assigned to wirebuilding at the transistor
division. There is no dispute that the work of the respondent was necessary or
desirable in the business or trade of the petitioner.
[24]
She remained under the
employ of the petitioner without any interruption since May 8, 1992 to June 4,
1993 or for one (1) year and twenty-eight (28) days. The original contract of
employment had been extended or renewed for four times, to the same position,
with the same chores. Such a continuing need for the services of the respondent
is sufficient evidence of the necessity and indispensability of her services to the
petitioners business.
[25]
By operation of law, then, the respondent had attained the
regular status of her employment with the petitioner, and is thus entitled to security
of tenure as provided for in Article 279 of the Labor Code which reads:
Art. 279. Security of Tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement.
The respondents re-employment under contracts ranging from two to three
months over a period of one year and twenty-eight days, with an express
statement that she may be reassigned at the discretion of the petitioner and that
her employment may be terminated at any time upon notice, was but a catch-all
excuse to prevent her regularization. Such statement is contrary to the letter and
spirit of Articles 279 and 280 of the Labor Code. We reiterate our ruling
in Romares v. NLRC:
[26]

Succinctly put, in rehiring petitioner, employment contracts ranging from two (2) to three
(3) months with an express statement that his temporary job/service as mason shall be
terminated at the end of the said period or upon completion of the project was obtrusively a
convenient subterfuge utilized to prevent his regularization. It was a clear circumvention of
the employees right to security of tenure and to other benefits. It, likewise, evidenced bad
faith on the part of PILMICO.
The limited period specified in petitioners employment contract having been imposed
precisely to circumvent the constitutional guarantee on security of tenure should, therefore,
be struck down or disregarded as contrary to public policy or morals. To uphold the
contractual arrangement between PILMICO and petitioner would, in effect, permit the
former to avoid hiring permanent or regular employees by simply hiring them on a
temporary or casual basis, thereby violating the employees security of tenure in their
jobs.
[27]

Under Section 3, Article XVI of the Constitution, it is the policy of the State to
assure the workers of security of tenure and free them from the bondage of
uncertainty of tenure woven by some employers into their contracts of
employment. The guarantee is an act of social justice. When a person has no
property, his job may possibly be his only possession or means of livelihood and
those of his dependents. When a person loses his job, his dependents suffer as
well. The worker should therefor be protected and insulated against any arbitrary
deprivation of his job.
[28]

We reject the petitioners general and catch-all submission that its policy for a
specific and limited period on an as the need arises basis is not prohibited by law
or abhorred by the Constitution; and that there is nothing essentially contradictory
between a definite period of employment and the nature of the employees duties.
The petitioners reliance on our ruling in Brent School, Inc. v. Zamora
[29]
and
reaffirmed in subsequent rulings is misplaced, precisely in light of the factual milieu
of this case. In the Brent School, Inc. case, we ruled that the Labor Code does not
outlaw employment contracts on fixed terms or for specific period. We also ruled
that the decisive determinant in term employment should not be the activity that
the employee is called upon to perform but the day certain agreed upon by the
parties for the commencement and termination of their employment
relationship. However, we also emphasized in the same case 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. In the Romares v.
NLRC case, we cited the criteria under which term employment cannot be said to
be in circumvention of the law on security of tenure, namely:
1) The fixed period of employment was knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other on
more or less equal terms with no moral dominance exercised by the former or the latter.
[30]

None of these criteria has been met in this case. Indeed, in Pure Foods
Corporation v. NLRC,
[31]
we sustained the private respondents averments therein,
thus:
[I]t could not be supposed that private respondents and all other so-called casual workers
of [the petitioner] KNOWINGLY and VOLUNTARILY agreed to the 5-month
employment contract. Cannery workers are never on equal terms with their
employers. Almost always, they agree to any terms of an employment contract just to get
employed considering that it is difficult to find work given their ordinary
qualifications. Their freedom to contract is empty and hollow because theirs is the freedom
to starve if they refuse to work as casual or contractual workers. Indeed, to the
unemployed, security of tenure has no value. It could not then be said that petitioner and
private respondents dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter.
[32]

We reject the petitioners submission that it resorted to hiring employees for
fixed terms to augment or supplement its regular employment for the duration of
peak loads during short-term surges to respond to cyclical demands; hence, it
may hire and retire workers on fixed terms, ad infinitum, depending upon the
needs of its customers, domestic and international. Under the petitioners
submission, any worker hired by it for fixed terms of months or years can never
attain regular employment status. However, the petitioner, through Ms. Cecilia C.
Mallari, the Head of Personnel Services of the petitioner, deposed that as agreed
upon by the Philips Semiconductor (Phils.), Inc. Workers Union and the petitioner
in their CBA, contractual employees hired before December 12, 1993 shall acquire
regular employment status after seventeen (17) months of satisfactory service,
continuous or broken:
5. Q: What was the response of Philips regular employees to your hiring of contractual
workers in the event of peak loads?
A: Philips regular rank-and-file employees, through their exclusive bargaining agent,
the Philips Semiconductors (Phils.), Inc. Workers Union (Union), duly recognized the
right of Philips, in its best business judgment, to hire contractual workers, and excluded
these workers from the bargaining unit of regular rank-and-file employees.
Thus, it is provided under the Collective Bargaining Agreement, dated May 16, 1993,
between Philips and the Union that:
ARTICLE I
UNION RECOGNITION
Section 1. Employees Covered: The Company hereby recognizes the Union as the
exclusive bargaining representative of the following regular employees in the Factory at
Las Pias, Metro Manila: Janitors, Material Handlers, Store helpers, Packers, Operators,
QA Inspectors, Technicians, Storekeepers, Production Controllers, Inventory Controllers,
Draftsmen, Machinists, Sr. Technician, Sr. QA Inspectors, Controllers, Sr. Draftsmen, and
Servicemen, except probationary and Casual/Contractual Employees, all of whom do not
belong to the bargaining unit.
A copy of the CBA, dated May 16, 1993, was attached as Annex 1 to Philips Position
Paper, dated August 30, 1993.
6. Q: May a contractual employee become a regular employee of the Philips?
A: Yes. Under the agreement, dated April 6, 1993, between the Union and Philips,
contractual workers hired before 12 December 1993, who have rendered seventeen months
of satisfactory service, whether continuous or broken, shall be given regular status. The
service rendered by a contractual employee may be broken depending on production needs
of Philips as explained earlier.
A copy of the Minutes of the Meeting (Minutes, for brevity), dated April 6, 1993,
evidencing the agreement between Philips and the Union has been submitted as Annex 2
of Philips Position Paper.
[33]

In fine, under the CBA, the regularization of a contractual or even a casual
employee is based solely on a satisfactory service of the employee/worker for
seventeen (17) months and not on an as needed basis on the fluctuation of the
customers demands for its products. The illogic of the petitioners incongruent
submissions was exposed by the appellate court in its assailed decision, thus:
The contention of private respondent that petitioner was employed on as needed basis
because its operations and manpower requirements are dictated by the volume of business
from its client and the availability of the basic materials, such that when the need ceases,
private respondent, at its option, may terminate the contract, is certainly untenable. If such
is the case, then we see no reason for private respondent to allow the contractual employees
to attain their regular status after they rendered service for seventeen months. Indubitably,
even after the lapse of seventeen months, the operation of private respondent would still be
dependent on the volume of business from its client and the availability of basic
materials. The point is, the operation of every business establishment naturally depends on
the law of supply and demand. It cannot be invoked as a reason why a person performing
an activity, which is usually desirable and necessary in the usual business, should be placed
in a wobbly status. In reiteration, the relation between capital and labor is not merely
contractual. It is so impressed with public interest that labor contracts must yield to the
common good.
While at the start, petitioner was just a mere contractual employee, she became a regular
employee as soon as she had completed one year of service. It is not difficult to see that to
uphold the contractual arrangement between private respondent and petitioner would, in
effect, be to permit employers to avoid the necessity of hiring regular or permanent
employees. By hiring employees indefinitely on a temporary or casual status, employers
deny their right to security of tenure. This is not sanctioned by law.
[34]

Even then, the petitioners reliance on the CBA is misplaced. For, as
ratiocinated by the appellate court in its assailed decision:
Obviously, it is the express mandate of the CBA not to include contractual employees
within its coverage. Such being the case, we see no reason why an agreement between the
representative union and private respondent, delaying the regularization of contractual
employees, should bind petitioner as well as other contractual employees. Indeed, nothing
could be more unjust than to exclude contractual employees from the benefits of the CBA
on the premise that the same contains an exclusionary clause while at the same time invoke
a collateral agreement entered into between the parties to the CBA to prevent a contractual
employee from attaining the status of a regular employee.
This cannot be allowed.
The CBA, during its lifetime, constitutes the law between the parties. Such being the rule,
the aforementioned CBA should be binding only upon private respondent and its regular e
mployeeswho were duly represented by the bargaining union. The agreement embodied in
the Minutes of Meeting between the representative union and private respondent,
providing that contractual employees shall become regular employees only after seventeen
months of employment, cannot bind petitioner. Such a provision runs contrary to law not
only because contractual employees do not form part of the collective bargaining unit
which entered into the CBA with private respondent but also because of the Labor Code
provision on regularization. The law explicitly states that an employee who had rendered
at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee. The period set by law is one year. The seventeen months
provided by the Minutes of Meeting is obviously much
longer. The principle is well settled that the law forms part of and is read into every contra
ct without the need for theparties expressly making reference to it.
[35]

On the second and third issues, we agree with the appellate court that the
respondent was dismissed by the petitioner without the requisite notice and without
any formal investigation. Given the factual milieu in this case, the respondents
dismissal from employment for incurring five (5) absences in April 1993, three (3)
absences in May 1993 and four (4) absences in June 1993, even if true, is too
harsh a penalty. We do agree that an employee may be dismissed for violation of
reasonable regulations/rules promulgated by the employer. However, we
emphasized in PLDT v. NLRC
[36]
that:
Dismissal is the ultimate penalty that can be meted to an employee. Where a penalty less
punitive would suffice, whatever missteps may have been committed by the worker ought
not to be visited with a consequence so severe such as dismissal from employment. For,
the Constitution guarantees the right of workers to security of tenure. The misery and
pain attendant to the loss of jobs then could be avoided if there be acceptance of the view
that under certain circumstances of the case the workers should not be deprived of their
means of livelihood.
[37]

Neither can the conferences purportedly held between the respondent and
the line supervisor be deemed substantial compliance with the requirements of
notice and investigation. We are in full accord with the following ratiocinations of
the appellate court in its assailed decision:
As to the alleged absences, we are convinced that the same do not constitute sufficient
ground for dismissal. Dismissal is just too stern a penalty. No less than the Supreme Court
mandates that where a penalty less punitive would suffice, whatever missteps may be
committed by labor ought not to be visited with a consequence so severe. (Meracap v.
International Ceramics Manufacturing Co., Inc., 92 SCRA 412 [1979]). Besides, the fact
that petitioner was repeatedly given a contract shows that she was an efficient worker and,
therefore, should be retained despite occasional lapses in attendance. Perfection cannot,
after all, be demanded. (Azucena, The Labor Code, Vol. II, 1996 ed., [p.] 680)
Finally, we are convinced that it is erroneous for the Commission to uphold the following
findings of the Labor Arbiter, thus:
Those dialogues of the complainant with the Line Supervisor, substantially, stand for the
notice and investigation required to comply with due process. The complainant did not
avail of the opportunity to explain her side to justify her shortcomings, especially, on
absences. She cannot now complain about deprivation of due process.
Of course, the power to dismiss is a formal prerogative of the employer. However, this is
not without limitations. The employer is bound to exercise caution in terminating the
services of his employees. Dismissals must not be arbitrary and capricious. Due process
must be observed in dismissing an employee because it affects not only his position but
also his means of livelihood. Employers should respect and protect the rights of their
employees which include the right to labor. (Liberty Cotton Mills Workers Union v.
Liberty Cotton Mills, Inc., 90 SCRA 391 [1979])
To rule that the mere dialogue between private respondent and petitioner sufficiently
complied with the demands of due process is to disregard the strict mandate of the law. A
conference is not a substitute for the actual observance of notice and hearing. (Pepsi Cola
Bottling Co., Inc. v. National Labor Relations Commission, 210 SCRA 277 [1992]) The
failure of private respondent to give petitioner the benefit of a hearing before she was
dismissed constitutes an infringement on her constitutional right to due process of law and
not to be denied the equal protection of the laws. The right of a person to his labor is
deemed to be his property within the meaning of the constitutional guarantee. This is his
means of livelihood. He cannot be deprived of his labor or work without due process of
law. (Batangas Laguna Tayabas Bus Co. v. Court of Appeals, 71 SCRA 470 [1976])
All told, the court concludes that petitioners dismissal is illegal because, first, she was
dismissed in the absence of a just cause, and second, she was not afforded procedural due
process. In pursuance of Article 279 of the Labor Code, we deem it proper to order the
reinstatement of petitioner to her former job and the payment of her full backwages. Also,
having been compelled to come to court to protect her rights, we grant petitioners prayer
for attorneys fees.
[38]

IN LIGHT OF ALL THE FOREGOING, the assailed decision of the appellate
court in CA-G.R. SP No. 52149 is AFFIRMED. The petition at bar is
DENIED. Costs against the petitioner.

D E C I S I O N


CALLEJO, SR., J .:


Before this Court is a petition for review on certiorari of the Decision
[1]
of the Court
of Appeals in CA-G.R. SP No. 51678 and its Resolution denying the motion for
reconsideration thereon.

The Antecedents


The respondent General Milling Corporation is a domestic corporation engaged in
the production and sale of livestock and poultry.
[2]
It is, likewise, the distributor of dressed
chicken to various restaurants and establishments nationwide.
[3]
As such, it employs
hundreds of employees, some on a regular basis and others on a casual basis, as
emergency workers.

The petitioners
[4]
were employed by the respondent on different dates as emergency
workers at its poultry plant in Cainta, Rizal, under separate temporary/casual contracts of
employment for a period of five months.
[5]
Most of them worked as chicken dressers,
while the others served as packers or helpers.
[6]
Upon the expiration of their respective
contracts, their services were terminated. They later filed separate complaints for illegal
dismissal and non-payment of holiday pay, 13
th
month pay, night-shift differential and
service incentive leave pay against the respondent before the Arbitration Branch of the
National Labor Relations Commission, docketed as NLRC Case No. RAB-IV-9-4519-92-
RI; NLRC Case No. RAB-IV-9-4520-92-RI; NLRC Case No. RAB-IV-9-4521-92-RI;
NLRC Case No. RAB-IV-9-4541-92-RI; NLRC Case No. RAB-IV-10-4552-92-RI; NLRC
Case No. RAB-IV-10-4595-92-RI and NLRC Case No. RAB-IV-11-4599-92-RI.
[7]


The petitioners alleged that their work as chicken dressers was necessary and
desirable in the usual business of the respondent, and added that although they worked
from 10:00 p.m. to 6:00 a.m., they were not paid night-shift differential.
[8]
They stressed
that based on the nature of their work, they were regular employees of the respondent;
hence, could not be dismissed from their employment unless for just cause and after due
notice. In support thereof, the petitioners cited the decision of the Honorable Labor Arbiter
Perlita B. Velasco in NLRC Case No. NCR-6-2168-86, entitled Estelita Jayme, et al. vs.
General Milling Corporation; and NLRC Case No. NCR-9-3726-86, entitled Marilou
Carino, et al. vs. General Milling Corporation.
[9]
They asserted that the respondent GMC
terminated their contract of employment without just cause and due notice. They
further argued that the respondent could not rely on the nomenclature of their
employment as temporary or casual.

On August 18, 1997, Labor Arbiter (LA) Voltaire A. Balitaan rendered a decision in
favor of the petitioners declaring that they were regular employees. Finding that the
termination of their employment was not based on any of the just causes provided for in the
Labor Code, the LA declared that they were allegedly illegally dismissed. The decretal
portion of the decision reads:

WHEREFORE, judgment is hereby rendered in these cases, as
follows:

1. Declaring respondent corporation guilty of illegally
dismissing complainants, except Rosalina Basan and
Filomena Lanting whose complaints are hereby
dismissed on ground of prescription, and as a
consequence therefor ordering the said respondent
corporation to reinstate them to their former positions
without loss of seniority rights and other privileges and
with full backwages from the time they were illegally
dismissed in the aggregate amount of P15,328,594.04;

2. Ordering respondent corporation to pay the said
complainants their 13th month pay, holiday pay and
service incentive leave pay in the aggregate amount
ofP1,979,148.23;


3. Ordering respondent corporation to pay said
complainants the amount of P1,730,744.22 by way of
attorneys fees, representing ten (10%) percentum of the
total judgment awards.

The case against individual respondent Medardo Quiambao is
hereby dismissed.
[10]



A copy of the decision was sent by registered mail to the respondent on October 23,
1997 under Registered Mail No. 004567 addressed to Atty. Emmanuel O. Pacsi, counsel
for GMC, 6
th
Floor, Corinthian Plaza Bldg., 121 Paseo de Roxas, Makati
City.
[11]
However, Beth Cacal, a clerk of the respondent GMC received the said decision
on October 28, 1997.
[12]
Contending that a copy thereof was received only on November 3,
1997, the respondent filed an appeal on November 12, 1997, before the National Labor
Relations Commission (NLRC), docketed as NLRC NCR CA No. 014462-98. The
petitioners filed a Motion to Dismiss Respondents Notice of Appeal/Appeal Memorandum
on the ground that the appeal was filed five days late, considering that the August 18, 1997
Decision was received by the respondent through its employee, Beth Cacal, on October 28,
1997.
[13]


The respondent opposed the motion, contending that Cacal was a mere clerk, and
was not a member of the staff of its Legal Department. It further contended that the Legal
Department was located at the sixth (6
th
) floor of Corinthian Plaza and had its own staff,
including the legal secretary who served as the Legal Departments receiving
clerk.
[14]
Invoking Section 10, Rule 13 of the Rules of Court, in relation to Section 2
thereof, the respondent alleged that Cacals receipt of the mail and/or decision was not
equivalent to receipt by its counsel. In support thereof, the respondent cited the cases
of Adamson University v. Adamson University Faculty and Employees
Association,
[15]
and PLDT vs. NLRC.
[16]


On May 25, 1998, the NLRC rendered a decision reversing that of the Labor Arbiter,
the dispositive portion of which is herein quoted:

WHEREFORE, except for its award of 13
th
month pay, holiday
pay and service incentive leave pay in the aggregate amount
of P1,979,148.23 which is hereby affirmed, the appealed decision is
set aside for being contrary to settled jurisprudence.
[17]




The NLRC ruled that the respondent GMC filed its appeal within the reglementary
period. Citing the case of Caete v. NLRC
[18]
which, in turn, cited Adamson v.
Adamson
[19]
and United Placement International v. NLRC,
[20]
the NLRC held that service
by registered mail is completed only upon actual receipt thereof by the addressee. Since
the addressee of the mail is the respondents counsel and the person who received it was a
non-member of the Legal Staff, the decision cannot be said to have been validly served on
the respondents counsel on October 28, 1997.

The NLRC also held that the petitioners, who were temporary or contractual
employees of the respondent, were legally terminated upon the expiration of their
respective contracts. Citing the case of Brent School, Inc. vs. Zamora,
[21]
the NLRC
explained that while the petitioners work was necessary and desirable in the usual business
of GMC, they cannot be considered as regular employees since they agreed to a fixed
term.

The petitioners motion for reconsideration of the decision having been denied by
the NLRC on October 12, 1998,
[22]
they filed a petition for certiorari before the Court of
Appeals and assigned the following errors:

I
THE RESPONDENT COMMISSION SERIOUSLY ERRED AND
ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK AND/OR IN EXCESS OF ITS JURISDICTION IN
ENTERTAINING AND GIVING DUE COURSE TO RESPONDENT
COMPANYS APPEAL WHICH WAS UNDENIABLY FILED OUT
OF TIME AND CONSEQUENTLY SETTING ASIDE THE FINAL
DECISION OF THE LABOR ARBITER.

II
THE RESPONDENT COMMISSION SERIOUSLY ERRED AND
ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING
THAT PETITIONERS DISMISSAL WAS LEGAL ON THE
GROUND OF EXPIRATION OF EMPLOYMENT CONTRACT
WHICH IS NOT A STATUTORY CAUSE UNDER THE LABOR
CODE.

III
THE RESPONDENT COMMISSION [S]ERIOUSLY ERRED AND
ACTED WITH GRAVE ABUSE OF DISCRETION IN NOT FINDING
THAT PETITIONERS, AS REGULAR EMPLOYEES, CANNOT BE
DISMISSED WITHOUT JUST CAUSE AND THE REQUIRED DUE
PROCESS.
[23]



On September 29, 2000, the CA rendered a decision affirming with modification
the decision of the NLRC, the decretal portion of which reads:

WHEREFORE, the appealed decision of the NLRC is hereby
AFFIRMED, with the MODIFICATION that the award of 13
th
month
pay, holiday pay, and service incentive leave pay shall cover only the
year or years when petitioners were actually employed with herein
respondent General Milling Corporation.
[24]


The CA ruled that no grave abuse of discretion could be imputed to the NLRC,
considering that the ten-day period to appeal began to run only from the date the decision
of the LA was validly served on the respondents counsel. The appellate court also ruled
that even assuming arguendo that the respondent GMCs appeal was filed late, in view of
the substantial amount involved, giving due course to the appeal did not amount to grave
abuse of discretion.

On the merits of the petition, the CA ruled that where the duties of the employee
consist of activities usually necessary or desirable in the usual business of the employer, it
does not necessarily follow that the parties are forbidden from agreeing on a period of time
for the performance of such activities, and cited the case of St. Theresas School of
Novaliches Foundation v. NLRC.
[25]
The CA affirmed the entitlement of the petitioners to
a proportionate thirteenth (13
th
) month pay for the particular year/s the petitioners were
employed. As to the awards of holiday pay and service incentive leave pay, the CA ruled
that they should be limited to the year/s of actual service.
[26]


The petitioners filed a motion for reconsideration of the said decision, which was
denied on July 24, 2001.
[27]


The Present Petition

The petitioners filed the instant petition, ascribing the following errors to the
appellate court:

I
THE HONORABLE COURT OF APPEALS GRAVELY ERRED AND
ACTED WITHOUT JURISDICTION WHEN IT MODIFIED THE
LABOR ARBITERS JUDGMENT THAT HAS BECOME FINAL
AND EXECUTORY FOR FAILURE OF THE RESPONDENT TO
APPEAL WITHIN THE REGLEMENTARY PERIOD.


II
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT THE DECISION OF THE LABOR ARBITER WAS
DEEMED SERVED NOT ON THE DATE WHEN THE DECISION
WAS DELIVERED BY THE POSTMASTER TO THE OFFICE OF
THE RESPONDENTS LAWYER, BUT ON THE DATE WHEN THE
RECEIVING CLERK GAVE THE DECISION TO THE LAWYER.

III
THE RESPONDENTS PRACTICE OF HIRING CHICKEN
DRESSERS ON A 5-MONTH CONTRACT AND REPLACING THEM
WITH ANOTHER SET OF 5-MONTH CONTRACT WORKERS,
OBVIOUSLY TO PREVENT THEM FROM ATTAINING REGULAR
STATUS, IS VIOLATIVE OF THE CONSTITUTION AND
ARTICLES 279 AND 280 OF THE LABOR CODE.
[28]



The issues for resolution are (a) whether or not the respondents appeal from the
Labor Arbiters decision was filed within the reglementary period therefor; and, (b)
whether or not the petitioners were regular employees of the respondent GMC when their
employment was terminated.

In petitions for review on certiorari of the decision of the CA, only errors of law are
generally reviewed.
[29]
Normally, the Supreme Court is not a trier of facts.
[30]
In the absence
of any showing that the NLRC committed grave abuse of discretion, or otherwise acted
without or in excess of jurisdiction, the Court is bound by its findings.
[31]
Such findings are
not infallible, however, particularly when there is a showing that they were arrived at
arbitrarily or in disregard of the evidence on record. In such case, they may be re-examined
by the Court.
Hence, when the factual findings of the NLRC are contrary to those of the Labor Arbiter,
the evidentiary facts may be reviewed by the appellate court.
[32]
Considering that the
NLRCs findings clash with those of the Labor Arbiters, this Court is compelled to go
over the records of the case as well as the submissions of the parties.
[33]


The Ruling of the Court

The petition is bereft of merit.

Anent the first issue, we agree with the CA that the NLRC did not act with grave
abuse of discretion when it gave due course to the appeal of the respondent. Decisions of
the Labor Arbiter are final and executory, unless appealed to the Commission, within ten
(10) calendar days from receipt thereof.
[34]
Copies of decisions or final awards are served
on both parties and their counsel by registered mail,
[35]
and such service by registered mail
is completed upon actual receipt by the addressee or five (5) days from receipt of the first
notice of the postmaster, whichever is earlier.
[36]


The records show that the August 18, 1997 Decision of the Labor Arbiter was
served via registered mail, addressed to the respondent GMCs counsel, Atty. Emmanuel
O. Pacsi, at the sixth (6
th
) Floor, Corinthian Plaza Bldg., 121 Paseo de Roxas, Makati
City.
[37]
It was received by Beth Cacal, a clerk of the respondent, on October 28,
1997. The petitioners insist that Cacal is a person with authority to receive legal and
judicial correspondence for the respondents Legal Department. They point out that such
authority to receive mail for and in behalf of the respondents Legal Department is
bolstered by the certification from the Makati Post Office that she received the copy of
their motion to dismiss the appeal, addressed to the said department.

The respondent GMC counters that the service of the LAs decision to a person
not connected to its Legal Department is not a valid service, and that it is only when a copy
of such decision is actually given to such department that a valid service of the decision is
deemed to have been made. Stressing that factual issues are not proper in a petition for
certiorari under Rule 45, the respondent no longer discussed Cacals authority to receive
legal and judicial communications for the respondent.

A review of the records reveal that Cacal was a clerk at the respondents office
and was assigned at the sixth floor of the Corinthian Plaza Bldg. She was not assigned at
the respondents Legal Department, which has its own office staff, including a secretary
who serves as the departments receiving clerk.
[38]
The Court has ruled that a service of a
copy of a decision on a person who is neither a clerk nor one in charge of the attorneys
office is invalid.
[39]
Thus, there was no grave abuse of discretion on the part of the NLRC
in giving due course to the respondents appeal.
On the second issue, we agree that the petitioners were employees with a fixed
period, and, as such, were not regular employees.

Article 280 of the Labor Code comprehends three kinds of employees: (a) regular
employees or those whose work is necessary or desirable to the usual business of the
employer; (b) project employees or those whose employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season; and, (c) casual
employees or those who are neither regular nor project employees.
[40]


A regular employee is one who is engaged to perform activities which are
necessary and desirable in the usual business or trade of the employer as against those
which are undertaken for a specific project or are seasonal.
[41]
There are two separate
instances whereby it can be determined that an employment is regular: (1) if the particular
activity performed by the employee is necessary or desirable in the usual business or trade
of the employer; and, (2) if the employee has been performing the job for at least a year.
[42]


In the case of St. Theresas School of Novaliches Foundation vs. NLRC,
[43]
we
held that Article 280 of the Labor Code does not proscribe or prohibit an employment
contract with a fixed period. We furthered that it does not necessarily follow that where
the duties of the employee consist of activities usually necessary or desirable in the usual
business of the employer, the parties are forbidden from agreeing on a period of time for
the performance of such activities. There is thus nothing essentially contradictory between
a definite period of employment and the nature of the employees duties.

Indeed, in the leading case of Brent School Inc. v. Zamora,
[44]
we laid down the
guideline before a contract of employment may be held as valid, to wit:

[S]tipulations in employment contracts providing for term
employment or fixed period employment are valid when the period
were agreed upon knowingly and voluntarily by the parties without
force, duress or improper pressure, being brought to bear upon the
employee and absent any other circumstances vitiating his consent,
or where it satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter.
[45]



An examination of the contracts entered into by the petitioners showed that their
employment was limited to a fixed period, usually five or six months, and did not go
beyond such period.

TEMPORARY/CASUAL CONTRACT OF EMPLOYMENT

KNOW ALL MEN BY THESE PRESENTS:

That the GENERAL MILLING CORPORATION, hereby
temporarily hires ________________ as Emergency worker for a
period beginning from ____________ to _____________, inclusive, at
the rate of _____________ per day, payable every 15th [day] and end
of each month.

________________ hereby binds and obligates himself/herself
to perform his/her assigned work diligently and to the best of his/her
ability, and promise to obey all lawful orders of his/ her superior
and/or representatives made in connection with the work for which
he/she is employed.

IT IS CLEARLY STIPULATED THAT THE CONDITION
OF THIS EMPLOYMENT SHALL BE AS FOLLOWS:

1. This employment contract shall be on a DAY-
TO-DAY BASIS and shall not extend beyond the period specified
above;

2. The employee aforementioned may be laid off or
separated from the Firm, EVEN BEFORE THE EXPIRY DATE OF
THIS CONTRACT, if his/her services are no longer needed, or if
such services are found to be unsatisfactory, or if she/he has violated
any of the established rules and regulations of the Company;

3. In any case, the period of employment shall not
go beyond the duration of the work or purpose for which the
aforementioned employee has been engaged;

4. That the employee hereby agrees to work in any
work shift schedule that may be assigned to him by the Firm during the
period of this contract; and

This Temporary/Casual Employment contract, unless sooner
terminated for any of the causes above-cited, shall then automatically
cease on its expiry date, without the necessity of any prior notice to the
employee concerned.
[46]



The records reveal that the stipulations in the employment contracts were
knowingly and voluntarily agreed to by the petitioners without force, duress or improper
pressure, or any circumstances that vitiated their consent. Similarly, nothing therein shows
that these contracts were used as a subterfuge by the respondent GMC to evade the
provisions of Articles 279 and 280 of the Labor Code.

The petitioners were hired as emergency workers and assigned as chicken
dressers, packers and helpers at the Cainta Processing Plant. The respondent GMC is a
domestic corporation engaged in the production and sale of livestock and poultry, and is a
distributor of dressed chicken. While the petitioners employment as chicken dressers is
necessary and desirable in the usual business of the respondent, they were employed on a
mere temporary
basis, since their employment was limited to a fixed period. As such, they cannot be said to
be regular employees, but are merely contractual employees. Consequently, there was no
illegal dismissal when the petitioners services were terminated by reason of the expiration
of their contracts.
[47]
Lack of notice of termination is of no consequence, because when the
contract specifies the period of its duration, it terminates on the expiration of such
period. A contract for employment for a definite period terminates by its own term at the
end of such period.
[48]


In sum, we rule that the appeal was filed within the ten (10)-day reglementary
period. Although the petitioners who mainly worked as chicken dressers performed work
necessary and desirable in the usual business of the respondent, they were not regular
employees therein. Consequently, the termination of their employment upon the expiry of
their respective contracts was valid.

IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED DUE
COURSE. The Decision of the Court of Appeals in CA-G.R. SP No. 51678
is AFFIRMED. No costs.

[G.R. No. 100333. March 13, 1997]
HILARIO MAGCALAS, PROSPERO MARINDA, CELSO GAMALO, EPIFANIO
OMEGA, VIRGILIO CAMPOS, ANTONIO LLAGAS, BERNARD
BENDANILLO, SHALDY AUTENCIO, CIRIACO REYES, JUANITO DE
LEON, EDMUNDO GUZMAN, ALFREDO SANTOS, BENEDICTO
DAGCUTAN, NORBIE LOPENA, ISMAEL ALONZO, ELMER BALETA,
GENITO DALMERO, and CESAR LEDESMA, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION and KOPPEL,
INC., respondents.
D E C I S I O N
PANGANIBAN, J .:
May regular employment be restricted to a definite or fixed term? Upon the
expiration of such term, may the employment be deemed terminated upon
payment of separation pay? The respondent NLRC answered these questions in
the affirmative but the labor arbiter held otherwise -- that such termination
constituted illegal dismissal, thereby entitling the petitioners to reinstatement,
backwages and attorney's fees.
This divergence of position between the NLRC and the labor arbiter will now
be ruled upon by this Court as it resolves this petition for certiorari challenging the
Decision
[1]
and Resolution
[2]
of public respondent
[3]
promulgated on April 5, 1991,
and May 13, 1991, respectively. The Decision of public respondent reversed that
of the labor arbiter while the Resolution denied the motion for reconsideration. The
dispositive portion of the impugned Decision reads:
[4]

"WHEREFORE, premises considered, the appealed decision is hereby set aside,
and a new judgment is entered, ordering the respondent to pay separation pay to
herein complainants, as explained above."
On the other hand, the dispositive portion of the reversed decision of the labor
arbiter
[5]
reads:
[6]

"WHEREFORE, in view of all the foregoing considerations, judgment is hereby
rendered, ordering the respondent to reinstate all the individual complainants
named in the above entitled case to their former positions without loss of
seniority rights and privileges, and to pay them backwages from the time of their
dismissal/termination to their actual reinstatement, plus attorney's fee equivalent
to Ten Percent (10%) of the total monetary award; the claim for legal interest is
dismissed for lack of merit."
The Facts
The facts are set out in the decision of the labor arbiter, as follows:
[7]

"In their basic complaint and counter position paper, the complainants alleged
(inter alia) that they were all regular employees of the respondent company,
having rendered continuous services in various capacities, ranging from
leadman, tinsmith, tradeshelper to general clerk; that the respondent has been
engaged in the business of installing air conditioning (should be air-
conditioning) and refrigeration equipment in its different projects and jobsites
where the complainants have been assigned; that the complainants have worked
for a number of years, the minimum of which was one and a half years and the
maximum (was) eight years under several supervisors; that on August 30, 1988,
they were dismissed (en masse) without prior notice and investigation, and that
their dismissals were effected for no other cause than their persistent demands
for payment of money claims (as) mandated by law.
On the other hand, the respondents interposed the defense of contract/project
employment and averred the following statement of facts in support thereof:
'The respondent company is engaged in the business of manufacturing
and installation of air(-) conditioning and refrigeration equipments (sic).
The manufacturing aspect of its operation is handled by its regular
employees, while the installation aspect, by reason of its intermittence,
is carried out by its project or contract employees.
The installation of the air(-)conditioning equipment at the Asian
Development Bank Building and (the) Interbank building was awarded
to the respondent herein. The complainants herein were among the
contract employees hired by the respondent to install the air(-)
conditioning equipment at the Asian Development Bank and Interbank
projects. Their specific assignments were as follows:
Name Position Project
1. HILARIO
MAGCALAS Leadman Asian Dev. Bank
2. PROSPERO
MARINDA Tinsmith Asian Dev. Bank
3. VIRGILIO
CAMPOS Tradeshelper "
4. ANTONIO
LLAGAS " "
5. BERNARD
BENDANILLO " "
6. ISMAEL
ALONZO " "
7. SHALDY
AUTENCIO " "
8. CIRIACO
REYES " Interbank
9. CELSO
GAMALO " "
10. EPIFANIO
OMEGA " "
11. EDMUNDO
GUZMAN " "
12. ALFREDO
SANTOS " "
13. JUANITO DE
LEON " "
14. BENEDICTO
DAGCUTAN " "
15. ELMER
BALETA " "
16. GENITO
DALMERO " "
17. CESAR
LEDESMA Tinsmith "
18. NOR(B)IE LOPENA General
Clerk "
The aforesaid employees were engaged to work on (sic) the
installation projects until August 31, 1988, when their task was
expected to be completed. This is evidenced by their respective
employment contracts, copies of which are hereto attached as
ANNEXES 1 to 18.
With the completion of their task on August 31, 1988 in their
respective installation projects, the employment of the complainants
(ipso facto) expired as they had no more work to do. They now
claim that they were illegally dismissed.'
Reply by the respondent and rejoinder by the complainants were subsequently
filed, after which the case was considered as submitted for decision based on the
pleadings and evidences (sic) on record."
As earlier stated, public respondent reversed the decision of the labor arbiter
favorable to herein petitioners. Hence, this petition for certiorari.
The Issues
Petitioners raise and argue the following issues in their Memorandum:
[8]

"(a) whether (p)etitioners (were) regular workers under the contemplation of
Art. 280 of the Labor Code; and,
(b) whether (p)etitioners' termination and/or cessation of their employments on
August 30th, (sic) 1988 were justified under the contemplation of Art. 279 of the
Labor Code as amended."
Petitioners contend that they were regular employees because "(t)he job of
installing an(d)/or repairing its manufactured units and equipments (sic) to its
different customers are not merely adjunct but are necessary activities of (p)rivate
(r)espondent's daily business operations."
[9]
They maintain that their employment is
regular because of "the nature of the activities (they) performed,"
[10]
regardless of
the stipulation in their job contracts. Petitioners argue that the phrase "specific
project or undertaking" in Article 280 of the Labor Code means "special type of
venture or undertaking" that is not "usually necessary or desirable in the
employer's business operation and activities."
[11]
Petitioners add that doubts as to
their employment status must be resolved in their favor.
[12]

The Solicitor General ("Sol. Gen."), invoking the case of Orbos vs. Civil
Service Commission,
[13]
sided with petitioners. He argues that "(t)o say that
petitioners (were) regular employees and yet subject to a definite or fixed term is
incongruous, inconsistent, or illogical. x x x Indeed, a worker is either regular or
casual; (i)f he is employed only for a specific project or undertaking, then he is
considered a casual employee and may be dismissed at the time of the completion
of the project."
[14]
Besides, the "(r)ecords cannot deny that petitioners worked
continuously, without a single day of interruption, in not just one, but on the various
jobsites assigned to them. Some of them have even worked continuously for eight
(8) years, without any stoppage."
[15]
Even admitting that petitioners were project
employees, the Sol. Gen. states that "no iota of proof was ever presented by
private respondent to refute petitioners' claim that the ADB and Interbank projects
were still in operation when they were terminated or, vice-versa, to support its
claim that these projects were already terminated."
[16]

On the other hand, private respondent contends that certiorari is not proper in
this case. "The findings and conclusions of fact and law of the respondent NLRC
are supported by substantial evidence and were not arrived at arbitrarily."
[17]
It
adds that "petitioners were project or contract workers who were hired whenever
private respondent was able to obtain sub-contracts for the installation of air(-)
conditioning and ventilation system or refrigeration equipment in construction or
building projects x x x. They were last hired in the Asian Development Bank and
Interbank air(-)conditioning and ventilation system projects which were completely
turned over in August 1989 and (on) November 13, 1989, respectively. (Please
see Annexes '2' and '3' hereof).
[18]

Because of the position taken by the Sol. Gen., public respondent filed its own
Comment. It argues that "the factual findings of respondent Commission (were)
based on substantial evidence and supported by the clear letter of the law as well
as pertinent jurisprudence on the matter."
[19]
Thus, public respondent contends that
the petition should be dismissed and the challenged judgment should be upheld as
a proper exercise of the powers conferred upon it by law.
[20]

Public respondent ruled against petitioners thus:
[21]

"A cursory reading of the Collective Bargaining Agreement between the
respondent company and the Koppel Employees Association shows that it
recognized Contract Employees as one of the three categories of employees in
the Company. Article IV, Section 1, of the said Collective Bargaining
Agreement defines a 'Contract Employee' as 'one hired on individual
employment contract basis to perform work on specific projects or as indicated
in his contract of employment. The duration of such employment is determined
by and indicated in his contract of employment.' (Record, page 49)
Article 280 of the Labor Code provides:
'Art. 280. Regular and Casual Employment. - The provisions of
written agreement to the contrary notwithstanding and regardless of the
oral agreements of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade
of the employer except where the employment has been fixed for a
specific project or undertaking the completion 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.' (Underscoring supplied)
The above provision is intended for all industries except the construction
industry. Policy Instruction No. 20 was precisely promulgated for the reason
that the problems of regularity of employment in the construction industry has
continued to plague it. The policy implements the exception to Article 280 of
the Labor Code. (Magante v. NLRC, 185 SCRA 21 )
Complainant herein were engaged by the respondent to handle the installation of
air(-)conditioning and refrigeration equipments (sic) in the construction projects
at the Asian Development Bank and Interbank buildings. As the nature and
character of their work is necessary or desirable of (sic) the usual business of the
respondent, which is to manufacture and install air(-)conditioning and
refrigeration equipments (sic) in buildings, complainants' jobs can be categorized
as regular workers (should be work) but subject to a definite or fixed term. But
their services were not terminated at the end of the project or contract. As the
ADB and Interbank projects have been completed, their lay-off has resulted in
the termination of their employment for lack of work; hence, they are entitled to
separation pay equivalent to one month pay or one-half month pay for every year
of service, whichever is greater, and a fraction of six months or more to be
considered as one year.
The Court's Ruling
We find for petitioners.
First Issue: Are Petitioners Regular Workers?
In certiorari proceedings under Rule 65, this Court does not, as a rule,
evaluate the sufficiency of evidence upon which the labor arbiter and public
respondent based their determinations. The inquiry is limited essentially to
whether or not said public respondent acted without or in excess of its jurisdiction
or with grave abuse of discretion.
[22]
However, where the findings of the NLRC are
contrary to those of the tribunal below, the Court -- in the exercise of its equity
jurisdiction -- may wade into and reevaluate such findings,
[23]
as in the present
instance.
In this case, Public Respondent NLRC did not sufficiently indicate the
evidentiary basis for its reversal of the labor arbiter's decision. After citing
provisions in the collective bargaining agreement (CBA) concerning contract
workers and Policy Instruction No. 20, public respondent correctly stated that
petitioners were performing work necessary or desirable in the usual business of
private respondent. From this undisputed fact, the NLRC jumped to strange and
strained inferences. First, it held that the employment of the petitioners was
subject to fixed terms. It then leapt to the non-sequitur conclusion that petitioners
were project employees. Going further, it held that they were entitled to separation
pay, overlooking that under the very law it invoked, "project employees are not
entitled to termination pay."
[24]
This convolution of facts and law cannot reverse the
decision of the labor arbiter which is grounded on documentary evidence
submitted by the parties.
Indeed, an examination of the assailed Decision reveals that public
respondent failed to back up its conclusions with substantial evidence, or that
which a reasonable mind may accept as adequate to justify a conclusion. This
quantum of evidence is required to establish a fact in cases before administrative
and quasi-judicial bodies.
[25]

Thus, a mere provision in the CBA recognizing contract employment does not
sufficiently establish that petitioners were ipso facto contractual or project
employees. In the same vein, the invocation of Policy No. 20 governing the
employment of project employees in the construction industry does not, by itself,
automatically classify private respondent as part of the construction industry and
entitle it to dismiss petitioners at the end of each project. These facts cannot be
presumed; they must be supported by substantial evidence.
On the other hand, private respondent did not even allege, much less did it
seek to prove, that petitioners had been hired on a project-to-project basis during
the entire length of their employment. Rather, it merely sought to establish that
petitioners had been hired to install the air-conditioning equipment at Asian
Development Bank and Interbank and that they were legally dismissed upon the
conclusion of these projects.
Private respondent did not even traverse, and public respondent did not
controvert, the labor arbiter's finding that petitioners were continuously employed
without interruption, from the date of their hiring up to the date of their dismissal, in
spite of the alleged completion of the so-called projects in which they had been
hired.
[26]
The undisputed finding of the labor arbiter on this continuous employment
of petitioners is worth quoting:
[27]

"(T)he record discloses that the complainants worked not only in one special
project, either at the Asian Development Bank or the Interbank building, as the
evidence of the respondent tends to prove, but also variably in other
projects/jobsites contracted by Koppel Incorporated: such as the PNB on Roxas
Boulevard, Manila; MIA now NAIA; PICC; and San Miguel Complex on
Ortigas Avenue, Pasig, Metro Manila. Some of them, after their tour of duty on
these different job-sites, were reassigned to the respondent's plant at Koppel
Compound, Para()aque, Metro Manila, as shown by the individual
complainants(') affidavits attached to their position paper. A close examination
of the record further reveals that the 'special projects' at the Asian Development
Bank and Interbank to which the complainants were last assigned by the
respondent were still in operation before their alleged termination from
employment. Under these factual milieu, we believe that they had been engaged
to work and perform activities which were necessary and desirable in the air(-
)conditioning and refrigeration installation/repair business of the respondent
employer, especially where, as in this case, the very nature of such trade
indicates that it can hardly fall under the exception of Policy Instruction No. 20
which applies only to the construction industry. For this reason, and considering
that the facts narrated in the complainants(') sworn statements were neither
disputed nor refuted by contrary evidence by the respondent, it becomes apparent
and increasing(ly) clear that indeed they would and ought to be classified as
regular employees. x x x" (Underscoring supplied.)
Petitioners were hired on different dates. Some of them worked for eight (8)
years, while others for only one and a half (1) years. Private respondent, on the
other hand, insisted that petitioners were hired on per project basis. Private
respondent, however, did not present any evidence to show the termination of the
employment contracts at the end of each project. Only before public respondent
and in this petition did private respondent allege, through a photocopy of an
affidavit
[28]
of Mr. Jose Lecaros, the General Manager of Koppel, Inc., that the
Asian Development Bank and the Interbank projects had been completed. This
affidavit as well as the other annexes
[29]
cannot be given weight in this petition
because this Court is not a trier of facts. In any case, private respondent had not
proved, by the said affidavit, that the termination of each project had invariably
resulted in the dismissal of its alleged project employees.
Regular employees cannot at the same time be project employees. Article
280 of the Labor Code states that regular employees are those whose work is
necessary or desirable to the usual business of the employer. The two exceptions
following the general description of regular employees refer to either project or
seasonal employees. It has been ruled in the case of ALU-TUCP vs. National
Labor Relations Commission that:
[30]

"In the realm of business and industry, we note, that 'project' could refer to one
or the other of at least two (2) distinguishable types of activities. Firstly, a
project could refer to particular job or undertaking that is within the regular or
usual business of the employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times. The typical
example of this first type of project is a particular construction job or project of a
construction company. A construction company ordinarily carries out two or
more discrete (should be distinct) identifiable construction projects: e.g., a
twenty-five-storey hotel in Makati; a residential condominium building in
Baguio City; and a domestic air terminal in Iloilo City. Employees who are
hired for the carrying out of one of these separate projects, the scope and
duration of which has been determined and made known to the employees at the
time of employment, are properly treated as 'project employees,' and their
services may be lawfully terminated at completion of the
project." (Underscoring supplied).
The employment of seasonal employees, on the other hand, legally ends
upon completion of the project or the season, thus:
[31]

"Clearly, therefore, petitioners being project employees, or to use the correct
term, seasonal employees, their employment legally ends upon completion of the
project or the season. The termination of their employment cannot and should
not constitute an illegal dismissal."
In terms of terminating employment, this Court has already distinguished
project from regular employees, to wit:
[32]

"The basic issue is thus whether or not petitioners are properly characterized as
'project employees' rather than 'regular employees' of NSC. This issue relates, of
course, to an important consequence: the services of project employees are co-
terminous with the project and may be terminated upon the end or completion of
the project for which they were hired.
[33]
Regular employees, in contrast, are
legally entitled to remain in the service of their employer until that service is
terminated by one or another of the recognized modes of termination of service
under the Labor Code."
[34]

The overwhelming fact of petitioners' continuous employment as found by the
labor arbiter ineludibly shows that the petitioners were regular employees. On the
other hand, we find that substantial evidence, applicable laws and jurisprudence
do not support the ruling in the assailed Decision that petitioners were project
employees. The Court here reiterates the rule that all doubts, uncertainties,
ambiguities and insufficiencies should be resolved in favor of labor. It is a well-
entrenched doctrine that in illegal dismissal cases, the employer has the burden of
proof. This burden was not discharged in the present case.
Second Issue: Is Ground for Dismissal Valid?
As regular employees, petitioners' employment cannot be terminated at the
whim of the employer. For a dismissal of an employee to be valid, two requisites
must be met: (1) the employee is afforded due process, meaning, he is given
notice of the cause of his dismissal and an adequate opportunity to be heard and
to defend himself; and (2) the dismissal is for a valid cause as indicated in Article
282
[35]
of the Labor Code.
[36]
The services of petitioners
were purportedly terminated at the end of the ADB and Interbank projects, but this
could not have been a valid cause for, as discussed above, they were regular and
not project employees. Thus, the Court does not hesitate to conclude that
petitioners were illegally dismissed.
As a consequence of their illegal termination, petitioners are entitled to
reinstatement and backwages in accordance with the Labor Code. The
backwages however are to be computed only for three years from August 30,
1988, the date of their dismissal, without deduction or qualification. Where the
illegal dismissal transpired before the effectivity of RA 6715,
[37]
or before March 21,
1989, the award of backwages in favor of the dismissed employees is limited to
three (3) years without deduction or qualification.
[38]

WHEREFORE, premises considered, the petition is GRANTED. The assailed
Decision and Resolution are REVERSED and SET ASIDE and the decision of the
labor arbiter is REINSTATED, with backwages to be computed as above
discussed. No costs.
SO ORDERED.

Philippine tobacco vs nlrc
This case involves two groups of seasonal workers who claimed separation benefits
after the closure of petitioners tobacco processing plant in Balintawak, Metro Manila and
the transfer of its tobacco operations to Candon, Ilocos Sur. Petitioner refuses to grant
separation pay to the workers belonging to the first batch (referred to as the Lubat group),
because they had not been given work during the preceding year and, hence, were no
longer in its employ at the time it closed its Balintawak plant. Likewise, it claims
exemption from awarding separation pay to the second batch (the Luris group), because the
closure of its plant was due to serious business losses, as defined in Article 283 of the
Labor Code.
In resolving this controversy, this Court issues the following rulings: (1) the
aforecited Article 283 applies to both complete and partial cessation of operations; (2)
serious business losses that would have exempted petitioner from paying separation
benefits were not proven by its recasted financial statements; (3) the employers refusal
to rehire the first batch of employees had no legal justification and was thus an illegal
dimissal; and (4) the second batch of employees are entitled to the separation pay provided
by the Labor Code in cases of closure x x x not due to serious business losses.
The Case
The foregoing points encapsulate our ruling on the present Petition for Certiorari,
assailing the August 30, 1996 Decision of the National Labor Relations Commission
(NLRC)
[1]
in NLRC NCR Case No. 00-08-06061-94 and NLRC Case No. 08-06082-94, the
dispositive portion of which reads:
WHEREFORE, the instant appeals are hereby dismissed for lack of merit.
[2]

The NLRC upheld the November 27, 1995 Decision of the labor arbiter
[3]
which
disposed:
WHEREFORE, premises considered, respondent PHILIPPINE TOBACCO FLUE-
CURING and REDYING CORPORATION is hereby ordered to pay within ten (10) days
from receipt hereof herein complainants (Lubat group) their respective separation pay,
equivalent to one-half month pay for every year of service considering the above stated
conditions, as follows
XXX
As xxx data o[n] their salary rates were not indicated on record, the claims of
complainants Milagros Calubayan, Carmencita Cruz, Armando Goyena, Erlinda Nakpil,
Pacita Narca, Virgilio Punzalan, Roberto Reduta, Maritess Medina, Nestor Medina, and
Dominga Siababa can not be ascertained, and therefore, the same should be dismissed but
without prejudice.
With respect to the other claims of the above Luris group including their charge of illegal
dismissal, they are hereby dismissed for lack of merit.
[4]

The Facts
The facts are summarized in the challenged NLRC Decision as follows:
These refer to the consolidated cases for payment of separation pay lodged by [the] Lubat
Group, and for illegal dismissal and underpayment of separation pay by [the] Luris group,
with prayers for damages and attorneys fees against the above respondents.
The record reveals that all complainants in both cases were former workers of respondent
with their respective periods of employment and latest wages stated in the parties
pleadings/[a]nnexes.
On August 1, 1994, due to supposed serious financial reverses and losses suffered by
respondent and its desire to prevent further losses, a notice of permanent closure of its
red[r]ying operations at Balintawak, Quezon City and transfer [of] the same to Candon,
Ilocos Sur was served to the DOLE.
On August 3, 1994, complainants were also notified of the said decision to close and
transfer.
On August 16, 1994, their separation benefits were given to them but allegedly [based on]
wrong computation when management did not consider 3/4 of their length of service as
claimed by complainants (Luris group).
While the Lubat group were not granted xxx separation pay as their previous seasonal
service [was] not continuous, and as of August, 1994, they were not employed ther[e]with
as declared by respondent.
Based on the complaint and from the above facts, the issues are as follows:
1) Whether or not the Lubat Group are entitled to the payment of separation pay[;]
2) Whether or not the Luris Group can be legally awarded separation pay
differentials[,] or whether or not the computation adopted by respondent in granting
complainants separation pay is erroneous[;] and
3) Whether or not the Luris group can be properly allowed backwages and damages by
reason of their alleged illegal dismissal, and for both groups, attorneys fees[.]
In [its] position paper respondent maintains that [the] Lubat group are not entitled to
separation pay for the reason that they were not among those separated or could not have
been separated from employment on August 3, 1994 due to such closure and transfer as
they were not employed or did not report for work at the plant for the 1994 tobacco season
as shown by [the] companys records.
As to the Luris group, although being questioned by this group, respondent considers the
following formula in determining the length of service in years as basis for computing the
separation pay of this group to be fair and reasonable and xxx supported by Article 283 of
the Labor Code, as amended, such as the total number of working days actually worked
over total number of working days in a year (303 days), multipl[ied] by the daily rate and
further multipl[ied] by 15 days.
Respondent explains that this is so because complainants nature of work is seasonal as
they are employed every year only during the tobacco season which may fall within the
months of February to November but actually work for a period of less [than] six (6)
months for each season. The law qualifies tenure for purposes of separation benefits as
based on service and not employment.
With these considerations, respondent claims that complainants relief for separation pay
differentials must fail.
On the charge of illegal dismissal by the Luris group, respondent asserts that complainants
were separated from employment for [a] just cause that is the closure of its REDRYING
operations at the Balintawak plant and the transfer of the same to Candon, Ilocos Sur which
was authorized by the law and the parties CBA.
The decision of management to close and transfer its tobacco processing and REDRYING
operations was based on the fact that it had consistently incurred a net loss from these
operations, its principal line of business, although its audited financial statement showed a
net profit after tax from 1990 to 1993 based on over-all operations.
Moreover, respondent points out that as the Luris group and the DOLE were served a
written notice at least one (1) month before the intended date of closure effective on Sept.
15, 1994, the due process requirement was met.
Viewed from the above, respondent cannot prosper.
On the other hand, the Lubat group declare that originally there were seven complainants
but eight were added.
Being seasonal workers, they were hired by respondent to operate the Balintawak factory
from January to September, averaging 6 to 8 months annually.
As alleged by them, when they reported for their annual shift, respondent refused to
extend them assignment for no apparent reason up to the end of the season in August,
1994. When they ask[ed] for separation pay, respondent told them that because they were
not in the payroll for 1994, no such benefit would be paid to them.
It is their contention that complainants are entitled to separation pay [of] at least one-half
month pay for every year of service[,] as they were illegally dismissed[,] to be computed
each season ranging from 6 to 8 months [which] should be considered as one year, contrary
to the respondents basis which is the total no. of days they actually rendered service.
To back up the above, complainants cite a case wherein the Supreme Court held that
seasonal employees are not strictly speaking, separated from the service but merely
considered on leave of absence without pay until reemployed. Their employment
relationship is never severed but only suspended.
For the prosecution of this case, complainants were forced to hire the services of counsel
for which they claim xxx attorneys fees.
As far as the Luris group are concerned, they state that they were factory workers of
respondents numbering one hundred (100) whose names, periods of employment and
latest salaries are contained in the lists attached to their position paper.
As claimed by this group, on August 3, 1994, respondents told them that their services
were already terminated and all of them dismissed as the factory would be transferred to
Candon, Ilocos Sur.
Letter-notices dated August 3, 1994, (Annexes F, F-1 and F-2 to their position paper)
showing that the date when they were notified of the closure was the same date they were
instantly dismissed although it is admitted in the notice that their decision to transfer was
made as early as March 5, 1994.
Furthermore, complainants question the basis of the computations of their separation
benefits which should include the period when there [was] no work to be done in a year.
[B]ecause of necessity, they received the short amount as their separation pay by way of
voucher but under protest as shown in Annexes C-C-1 to C-5 to their pleading.
With the sudden transfer of the machiner[y] of respondents without giving them advance
notice leaving them with insufficient separation pay, complainants experienced serious
anxiety and wounded feelings for which they p[r]ay for damages including attorneys fees.
Consequently, complainants also pray for backwages, allowance and other benefits from
the date of their illegal dismissal up to the final disposition of the case.
Furthermore, complainants maintain that since the company is being transferred to the
province, the formers separation may be considered compulsory retirement under R.A.
7641, providing for one-half month pay benefit for every year of service, and under Section
3, Rule V, Book III of the Labor Code, as amended for which they also demand payment
thereof.
Complainants also submitted the computation of their differential in separation pay
(addendum and supplemental addendum to their position paper) Annex G, G-1 to G-
4.
To state the facts simply, there are two groups of employees, namely, the Lubat
group and the Luris group. The Lubat group is composed of petitioners seasonal
employees who were not rehired for the 1994 tobacco season. At the start of that season,
they were merely informed that their employment had been terminated at the end of the
1993 season. They claimed that petitioners refusal to allow them to report for work
without mention of any just or authorized cause constituted illegal dismissal. In their
Complaint, they prayed for separation pay, back wages, attorneys fees and moral damages.
On the other hand, the Luris group is made up of seasonal employees who worked
during the 1994 season. On August 3, 1994, they received a notice informing them that,
due to serious business losses, petitioner planned to close its Balintawak plant and transfer
its tobacco processing and redrying operations to Ilocos Sur. Although the closure was to
be effective September 15, 1994, they were no longer allowed to work starting August 4,
1994. Instead, petitioner awarded them separation pay computed according to the
following formula:
total no. of days actually worked
----------------------------------------------------- x daily rate x 15 days
total no. of working days in one year
In their Complaint, they claimed that the computation should be based not on the above
mathematical equation, but on the actual number of years served. In addition, they
contended that they were illegally dismissed, and thus they prayed for back wages.
Against these factual antecedents, the labor arbiter ordered the petitioner to
pay complainants separation pay differential plus attorneys fees in the total amount of
P3,092,896.76. Dissatisfied with said Decision, Philippine Tobacco and the complainants
filed their respective appeals before the NLRC.
[5]

As noted earlier, the NLRC affirmed the labor arbiters Decision. Before this Court,
only Philippine Tobacco filed the present recourse, as the complainants did not question
the NLRC Decision.
[6]

Ruling of the NLRC
The NLRC agreed with the labor arbiter that the closure by petitioner herein of its
operations at Balintawak and its transfer thereof to Ilocos Sur were due to serious financial
losses. Nonetheless, both labor agencies held that the Luris and Lubat groups were entitled
to separation pay equivalent to one-half (1/2) month salary for every year of service,
provided that the employee worked at least one month in a given year.
The NLRC further ruled that private respondents were not entitled to back wages and
damages, since the closure of the factory and the termination of their employment were due
to a legally recognized cause.
Issues
Petitioner raises the following issues:
A
SUBSTANTIAL AND UNDISPUTED EVIDENCE ON RECORD PROVES THAT
THE CLOSURE OF PETITIONERS OPERATION WAS DUE TO SERIOUS
BUSINESS LOSSES AND FINANCIAL REVERSES. PRIVATE RESPONDENTS
ARE NOT LEGALLY ENTITLED TO SEPARATION PAY. THE PAYMENT OF
SEPARATION PAY TO THE LURIS GROUP IS BASED ONLY ON
PETITIONERS LIBERALITY.
B.
EVEN ASSUMING THAT PETITIONERS CLOSURE WAS NOT DUE TO
SERIOUS BUSINESS LOSSES AND FINANCIAL REVERSES, THE
LUBAT GROUP WORKERS ARE STILL NOT ENTITLED [TO]
SEPARATION PAY. THE LUBAT GROUP WERE NOT EMPLOYED
WITH PETITIONER AT THE TIME OF PETITIONERS CLOSURE.
C
EVEN ASSUMING THAT THE LURIS GROUP IS ENTITLED TO
SEPARATION PAY, PETITIONER MUST NOT AND CANNOT BE
LEGALLY COMPELLED TO PAY MORE THAN THE AMOUNTS
ALREADY GIVEN TO THE [SAID] LURIS GROUP.
[7]

In the Courts view, three issues must be tackled: First, did petitioner prove serious
business losses, its justification for the nonpayment of separation pay? Second, was the
dismissal of the employees valid? Third, how should the separation pay of illegally
dismissed seasonal employees be computed?
The Courts Ruling
The petition is not meritorious.
First Issue: Serious Business Losses Not Proven
Petitioner asserts that it submitted before the labor arbiter a Statement of Income and
Expenses, as well as a recasted version thereof, showing that it had suffered serious
business losses in its tobacco processing and redrying operations. Citing Article 283 of the
Labor Code, it concludes that it is not obligated to award separation pay to its dismissed
workers (whether belonging to the Lubat or the Luris group), because the closure of its
tobacco business was due to an authorized cause.
Petitioner further claims that it complied with the procedural requirements in closing
the aforementioned aspect of its business. It filed at the DOLE on August 2, 1994, a
Petition for Closure. On August 3, 1994, it also sent to its employees letters informing
them of its desire to close its tobacco operations in Balintawak effective September 15,
1994. The fact that it did award separation pay to private respondents was solely out of
generosity, and not out of legal duty.
Article 283 of the Labor Code, which we quote below, prescribes the requisites and
the procedure for an employees dismissal arising from the closure or cessation of
operation of the establishment.
ART. 283. Closure of establishment and reduction of personnel.-- The employer may also
terminate the employment of any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month
pay or to at least one (1) month pay for every year of service, whichever is higher. In case
of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay
for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
It must be noted that the present case involves the closure of merely a unit or division,
not the whole business of an otherwise viable enterprise. Although Article 283 uses the
phrase closure or cessation of operation of an establishment or undertaking, this Court
previously ruled in Coca-Cola Bottlers (Phils.), Inc. v. NLRC that said statutory provision
applies in cases of both complete and partial cessation of the business operation:
x x x Ordinarily, the closing of a warehouse facility and the termination of the services of
employees there assigned is a matter that is left to the determination of the employer in the
good faith exercise of its management prerogatives. The applicable law in such a case is
Article 283 of the Labor Code which permits closure or cessation of operation of an
establishment or undertaking not due to serious business losses or financial reverses,
which, in our reading, includes both the complete cessation of operations and the cessation
of only part of a companys business.
[8]

In Somerville Stainless Steel Corporation v. NLRC,
[9]
the Court held that [t]he loss
referred to in Article 283 cannot be just any kind or amount of loss; otherwise, a company
could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted
employees. To guard against this possibility of abuse, the Court laid down the following
standard which a company must meet to justify retrenchment:
x x x Firstly, the losses expected should be substantial and not merely de minimis in
extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to
be insubstantial and inconsequential in character, the bonafide nature of the retrenchment
would appear to be seriously in question. Secondly, the substantial loss apprehended must
be reasonably imminent, as such imminence can be perceived objectively and in good faith
by the employer. There should, in other words, be a certain degree of urgency for the
retrenchment, which is after all a drastic recourse with serious consequences for the
livelihood of the employees retired or otherwise laid off. Because of the consequential
nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively
prevent the expected losses. The employer should have taken other measures prior or
parallel to retrenchment to forestall losses, i.e., cut other costs other than labor costs. An
employer who, for instance, lays off substantial numbers of workers while continuing to
dispense fat executive bonuses and perquisites or so-called golden parachutes, can
scarcely claim to be retrenching in good faith to avoid losses. To impart operational
meaning to the constitutional policy of providing full protection to labor, the employers
prerogative to bring down labor costs by retrenching must be exercised essentially as a
measure of last resort, after less drastic means -- e.g., reduction of both management and
rank-and-file- bonuses and salaries, going on reduced time, improving manufacturing
efficiencies, trimming of marketing and advertising costs, etc. -- have been tried and found
wanting.
Lastly, but certainly not the least important, alleged losses if already realized, and the
expected imminent losses sought to be forestalled, must be proved by sufficient and
convincing evidence. The reason for requiring this quantum of proof is readily apparent:
any less exacting standard of proof would render too easy the abuse of this ground for
termination of services of employees. x x x
To repeat, petitioner did not actually close its entire business. It merely transferred or
relocated its tobacco processing and redrying operations. Moreover, it was also engaged
in, among others, corn and rental operations, which were unaffected by the closure of its
Balintawak plant.
Tested against the aforecited standards, we hold that herein petitioner was not able to
prove serious financial losses arising from its tobacco operations. A close examination of
its Statement of Income and Expenses and its recasted version thereof, which were
presented in support of its contention, suggests its failure to show business losses.
In the recasted Statement, petitioner tried to prove that there was a net loss from its
tobacco processing and redrying operations. It did so by subtracting all of its selling,
administrative and interest expenses for a given year from the earnings in its tobacco sales
for the corresponding year. This formula, however, is at best illogical and
misleading. Petitioner would have us believe that all of its expenses -- selling,
administrative and interest expenses -- resulted only from its tobacco processing and
redrying operations, and that it incurred no expense in its other profit centers.
On the contrary, the Statement of Income and Expenses shows that the selling and
administrative expenses pertain not only to the tobacco business of petitioner, but also to its
corn and rental operations, and that the interest expenses pertain to all of its business
operations. In fact, the aforementioned Statement shows that there was a net gain from
operations in each year covered by the report. In other words, the recasted financial
statement effectively modified the Statement of Income and Expenses by deducting from
the tobacco operations alone the operating costs pertaining to all businesses of petitioner.
The contention of petitioner that tobacco was its main business does not justify the
devious contents of the recasted financial statement. It is difficult to accept that it could
not have incurred any expense in its other operations. Common sense revolts against such
proposition.
Misleading is petitioners argument that public respondent cannot recognize
petitioners aforesaid Statement as the normal and reliable method of proof of the profit
and loss, and at the same time inconsistently assert that the same does not show that the
losses were serious or incurred solely by petitioners tobacco operations.
[10]
An audited
financial statement is indeed the normal method of proof. But this norm does not compel
this Court to accept the contents of the said documents blindly and without thinking. As
stated already, the above documents failed to show that petitioner had incurred from its
tobacco operations serious losses sufficient to justify the termination of the employment of
its workers sans separation pay.
DefectiveNotice
Article 283 of the Labor Code also requires the employer to furnish
both the employee and the Department of Labor and Employment a written Notice of
Closure at least one month prior to closure. True, in the present case the Notices of
Termination were given to the employees on August 3, 1994, and the intended date of
closure was September 15, 1994. However, the employees were in fact not allowed to
work after August 3, 1994. Therefore, the termination notices to the employees were given
in violation of the requisite one-month prior notice under Article 283 of the Labor Code.
Petitioners contention that the tobacco season was about to end anyway is without
merit, because the law clearly provides, without any qualification, that the employees must
be given one-month notice prior to closure. At the very least, respondent members of the
Luris group were deprived of work for the remaining days of the 1994 tobacco
season. Petitioner could have easily complied with the aforesaid requirement by sending
the notices earlier. In fact, according to petitioner, the decision to cease its tobacco
operations was made as early as March 5, 1994; hence, petitioner had plenty of time within
which to send the notices.
Given the illogical and misleading entries in the Statement of Income and Expenses,
as well as the recasted version thereof, and the defective Notice of Closure, this Court
holds that petitioner was not able to establish that the closure of its business operations in
its Balintawak plant was in fact due to serious financial losses. Therefore, under the last
two sentences of Article 283 of the Labor Code, the dismissed employees belonging to the
Luris group are entitled to separation pay equivalent to one (1) month pay or at least one
half (1/2) month pay for every year of service, whichever is higher. A fraction of at least
six (6) months shall be considered one (1) whole year.
Second Issue: Lubat Group Illegally Dismissed
Petitioner relies upon our ruling in Mercado v. NLRC
[11]
hat the employment [of
seasonal employees] legally ends upon completion of the x x x season, a statement which
was subsequently reiterated in Magcalas v. NLRC.
[12]
Thus, petitioner argues that it was not
obliged to rehire the members of the Lubat group for the 1994 season, because their
employment had been terminated at the end of the 1993 season. Since they were not
employed for the 1994 season when the Balintawak plant was closed, it follows that
petitioner has no obligation to award them separation pay due to the said closure.
We are not persuaded. From the facts, we are convinced that petitioner illegally
dismissed the members of the Lubat group when it refused to allow them to work during
the 1994 season.
This Court has previously ruled in Manila Hotel Company v. CIR
[13]
that seasonal
workers who are called to work from time to time and are temporarily laid off during off-
season are not separated from service in said period, but are merely considered on leave
until reemployed, viz.:
The nature of their relationship x x x is such that during off season they are temporarily
laid off but during summer season they are re-employed, or when their services may be
needed. They are not strictly speaking separated from the service but are merely considered
as on leave of absence without pay until they are re-employed.
The above doctrine was echoed by this Court in Industrial-Commercial-Agricultural
Workers Organization (ICAWO) v. CIR
[14]
and Visayan Stevedore Transportation
Company v. CIR.
[15]

Petitioner claims that the aforecited ruling has been superseded by Article 280 of the
Labor Code, which took effect on November 1, 1974. We disagree. There is no clear
conflict between the above doctrine and Article 280 of the Labor Code. In fact, the same
doctrine was reiterated by this Court in Tacloban Sagkahan Rice and Corn Mills Co. v.
NLRC
[16]
in 1990, which was promulgated after the Labor Code took effect. Furthermore,
in Bacolod-Murcia Milling Co, Inc. v. NLRC,
[17]
this Court considered a seasonal worker
in regular employment in cases involving the determination of an employer-employee
relationship and security of tenure. The Court ruled:
While under prevailing jurisprudence, Canete may be considered as in regular
employment even during those years when she was merely a seasonal worker, that legal
conclusion will hold true only in cases involving the determination of an employer-
employee relationship or security of tenure.
Again in Gaco v. NLRC, petitioner therein was a seasonal worker employed and
repeatedly rehired in a business enterprise similar to that of petitioner herein. Finding that
he was in regular employment and thus entitled to separation pay for having been
constructively dismissed, the Court stated:
It may appear that the work in private respondent Orient Leaf Tobacco Corporation is
seasonal, however, the records reveal that petitioner Zenaida Gaco was repeatedly re-hired,
sufficiently evidencing the necessity and indispensability of her services to the formers
business or trade. Furthermore, she has been employed since 1974 up to the end of the
season in 1989. Owing to her length of service, she became a regular employee, by
operation of law, one year after she was employed.
[18]

From the foregoing, it follows that the employer-employee relationship between
herein petitioner and members of the Lubat group was not terminated at the end of the
1993 season. From the end of the 1993 season until the beginning of the 1994 season, they
were considered only on leave but nevertheless still in the employ of petitioner.
The facts in the above-mentioned cases are different from those in Mercado v.
NLRC
[19]
and in Magcalas v. NLRC.
[20]
In Mercado, although respondent constantly availed
herself of petitioners services from year to year, it was clear from the facts therein that
they were not in her regular employ. Petitioners therein performed different phases of
agricultural work in a given year. However, during that period, they were free to work for
other farm owners, and in fact they did. In other words, they worked for respondent, but
were nevertheless free to contract their services with other farm owners. The Court was
thus emphatic when it ruled that petitioners were mere project employees, who could be
hired by other farm owners. As such, their employment would naturally end upon the
completion of each project or each phase of farm work which has been
contracted. In Magcalas v. NLRC, the Court merely cited the aforequoted ruling to explain
the difference among regular, project and seasonal employees. In fact, it concluded that the
employees therein were regular and not project employees.
From the peculiar facts of Mercado and Magcalas, it is clear that the ruling therein
is not inconsistent with Manila Hotel, Gaco and other cases. It is noteworthy that
the ponente inMercado concurred in the Courts ruling in Gaco awarding to the seasonal
employee separation pay for every year of service.
Prescinding from the above, we hold that petitioner is liable for illegal dismissal and
should be responsible for the reinstatement of the Lubat group and the payment of their
back wages. However, since reinstatement is no longer possible as petitioner has already
closed its Balintawak plant, respondent members of the said group should instead be
awarded normal separation pay (in lieu of reinstatement) equivalent to at least one month
pay, or one month pay for every year of service, whichever is higher. It must be stressed
that the separation pay being awarded to the Lubat group is due to illegal dismissal; hence,
it is different from the amount of separation pay provided for in Article 283 in case of
retrenchment to prevent losses or in case of closure or cessation of the employers business,
in either of which the separation pay is equivalent to at least one (1) month or one-half
(1/2) month pay for every year of service, whichever is higher.
However, despite the fact that the respondent members of the Lubat group were
entitled to separation pay equivalent to at least one (1) month pay, or one (1) month pay for
every year of service, whichever is higher, they cannot receive more than the amount
awarded to them in the NLRC Decision -- at least one (1) month or one-half (1/2) month
pay for every year of service, whichever is higher -- because they did not appeal from the
said Decision.
[21]
Therefore, no affirmative award can be given to them. In the same
manner, although respondents should have been entitled to back wages because petitioner
illegally deprived them of work during the 1994 season, no such award can be given to
them, since they did not appeal the NLRC Decision. The elementary norms of due process
prevent the grant of such awards, as the employer was not given notice that its filing of its
own Petition for Certiorari would put it in jeopardy of such relief.
Third Issue: Amount of Separation Pay
Petitioner posits that the separation pay of a seasonal worker, who works for only a
fraction of a year, should not be equated with that of a regular worker. Positing that the
total number of working days in one year is 303 days, petitioner submits the following
formula for the computation of a seasonal workers separation pay:
Total No. of Days Actually Worked
X Daily Rate X 15 days
[22]

Total No. Of Working Days In One Year
Agreeing with the labor arbiter and the NLRC, private respondents, on the other hand,
claim that their separation pay should be based on the actual number of years they have
been in petitioners service. They cite the law on service incentive leave,
[23]
the
implementing rules regarding the 13th month pay,
[24]
Manila Hotel v.
CIR,
[25]
and Chartered Bank v. Ople
[26]
which allegedly stated that each season in a year
should be construed as one year of service.
[27]

The amount of separation pay is based on two factors: the amount of monthly salary
and the number of years of service. Although the Labor Code provides different
definitions as to what constitutes one year of service, Book Six
[28]
does not specifically
define one year of service for purposes of computing separation pay. However, Articles
283 and 284 both state in connection with separation pay that a fraction of at least six
months shall be considered one whole year. Applying this to the case at bar, we hold that
the amount of separation pay which respondent members of the Lubat and Luris groups
should receive is one-half (1/2) their respective average monthly pay during the last season
they worked multiplied by the number of years they actually rendered service, provided
that they worked for at least six months during a given year.
[29]

The formula that petitioner proposes, wherein a year of work is equivalent to actual
work rendered for 303 days, is both unfair and inapplicable, considering that Articles 283
and 284 provide that in connection with separation pay, a fraction of at least six months
shall be considered one whole year. Under these provisions, an employee who worked for
only six months in a given year -- which is certainly less than 303 days -- is considered to
have worked for one whole year.
In the same manner, Chartered Bank v. Ople,
[30]
which private respondents cite, does
not support their cause. The said case ruled that regular workers and those who are paid by
the month are both entitled to holiday pay. On the other hand, the law on service incentive
leave pay
[31]
does not necessarily apply to retirement benefits or separation pay. Likewise,
the provision regarding the 13th month pay
[32]
is not applicable to separation pay. In fact,
an employee who worked for a single month in a year is entitled to a 13th month pay
equivalent to only 1/12 of his or her monthly salary. Finally, Manila Hotel Company
v. CIR
[33]
did not rule that seasonal workers are considered at work during off-season with
regard to the computation of separation pay. Said case merely held that, in regard to
seasonal workers, the employer-employee relationship is not severed during off-season but
merely suspended.
WHEREFORE, the assailed Decision of Respondent NLRC is hereby AFFIRMED
WITH THE MODIFICATION that private respondents are hereby awarded separation pay
equivalent to one (1) month, or to one-half (1/2) month pay
[34]
for each year that they
rendered service, whichever is higher, provided that they rendered service for at least six
(6) months in a given year. The separation pay to be awarded to members of the Luris
group shall be taken from the amount which petitioner has already awarded to them, and
any excess need not be refunded by the workers. The ten percent (10%) attorneys fees
given by the NLRC and the labor arbiter shall be based on the award modified herein.
SO ORDERED.

[G.R. No. 107693. July 23, 1998]
SAN MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, EDMUNDO Y. TORRES, JR. and MANUEL C.
CASTELLANO, respondents.
D E C I S I O N
PURISIMA, J .:
Before the court is a petition for Certiorari under Rule 65 of the Revised Rules
of Court, assailing the Decision
[1]
of the National Labor Relations
Commission
[2]
promulgated on August 21, 1992, and the Resolution
[3]
dated
October 19, 1992 denying petitioners motion for reconsideration in RAB-VI-Case
No. 0372-84.
The antecedent facts which gave rise to private respondents complaints are
summarized in the Decision
[4]
of the Labor Arbiter,
[5]
as follows:
... [C]omplainant Edmundo Torres, Jr. alleges that he was formerly the regional
sales manager of the Bacolod Beer Region, San Miguel Corporation, Sum-ag,
Bacolod City; that complainant Manuel G. Chu was the head of the warehouse
operations of the respondent corporation at its Bacolod Beer Region, Sum-ag,
Bacolod City; that complainant Gabriel I. Adad was formerly the trade and
customers relation employee (sic) for the area of Negros and Panay Island; that
complainants George D. Teddy, Jr. and Manuel Castellano were the district
sales supervisors in their respective area of the respondent company.
Complainants allege that on March 14, 1984 the respondent company notified
them that effective at the close of the business hours on April 15, 1984, it will
exercise its option to retire them from the service; that complainants would not
anymore be allowed to work from March 14, 1984 but that they would continue to
receive their compensation up to April 15, 1984; that at the time the respondent
corporation exercised the said option, all the complainants have not yet reached
the compulsory retirable age of sixty (60) years old; that complainant Edmundo Y.
Torres, Jr. had served the respondent corporation for more than fifteen (15) years
of loyal and dedicated service and that he was only forty-one (41) years old when
he was retired from the service; that complainant Manuel G. Chu had served the
company for 22 years and that he was only forty-eight (48) years old when retired;
that complainant Gabriel Adad served the company for twenty-six (26) and that he
was fifty-nine (59) years old when retired; that complainant George D. Teddy, Jr.
had served the company for twenty (20) years and that he was forty-five (45)
years when retired and that a complainant Manuel Castellano had rendered
service for fourteen (14) years and that he was only thirty-nine (39) years old when
he was retired by the company. The complainants allege that they had no bad
record with the respondent corporation as they were never admonished,
reprimanded or suspended during the term of their employment; that their
retirement from work effected at the option of the respondent corporation violated
their tenurial security of employment, as provided for in Article 280 of the
Labor Code of the Philippines; that in the notice dated March 13, 1984 informing
them of respondents option to retire them from the service, the latters prerogative
was solely premised on the companys retirement and death benefit plan; that the
said plan or company policy violated the security of tenure of the complainants as
it is not one of the grounds enumerated in Art. 183 of the Labor Code for
terminating the services of an employee; that the respondent companys
retirement plan is in contravention of the provisions of Art. 288 of the Labor Code
of the Philippines on retirement.
Complainants further allege that the respondent corporation had involuntarily
secured their signature in conformity with their retirement from the service; that this
involuntariness could be gleaned from the fact that when complainant George D.
Teddy, Jr. was about to go out of the door of his office when he refused to affix his
conformity with the option of the respondent to retire him from the service, one Mr.
Antonio Labirua, Personnel Director of the Beer and Packaging Division of the
respondent corporation blocked the door of the office; that complainant (sic) were
threatened by this Mr. Labirua that whether they like it or not, the respondent
company had decided to retire them from work; that in fact complainant Manuel G.
Chu who did not sign any documents tendered to him by Mr. Labirua was likewise
retired by the respondent corporation.
Complainants also allege that they were discriminated upon by the respondent
corporation in the payment of their separation pay; that while they were paid
separation pay equivalent to one month basic salary for every year of service, the
respondent corporation had, at its option also retired other employees and were
paid separation pay equivalent to 150% of their basic monthly salary; that
the receipt of payment of their separation pay does not bar complainants from
contesting the illegality of their dismissal or separation from the
service. Complainants further allege that when the supervisory employees of the
respondent corporation were granted wage increases effective January 1, 1984,
complainants were not granted this benefit, to their discrimination.
Complainants claim that their unceremonious and unlawful retirement amount to
constructive dismissal; that they, together with their families suffered financial
difficulties; that they found hard time to secure for a substitute employment; that
they suffered social humiliation, wounded feelings, serious anxiety, sleepless
nights, thus, entitling them to moral damages and attorneys fees.
x x x x x x x x x
On the other hand, in their position paper, respondents aver that complainants
Gabriel Adad, Manuel Castellano, George Teddy, Jr. and Edmundo Torres, Jr., in
separate letters dated March 13, 1984, applied for voluntary retrenchment under
the respondent companys retrenchment program ...; that each application was
subsequently favorably acted upon by the respondents; that on the same day,
respondent corporation informed complainant Manuel Chu in a letter ... that it is
exercising its option to retire him from the service effective the close of business
hours on April 15, 1984 pursuant to the companys retirement and death benefit
plan; that on March 17, 1984, the complainants sent a single telegram addressed
to Mr. S. A. Abaya of the respondent corporation ... requesting for cash
conversion of their respective unused sick leave and a 20% increase of basic pay
for the purpose of inclusion in the computation of their separation pay and other
benefits; that in response thereto, out of benevolence and for humanitarian
reasons respondent corporation approved a financial assistance of P400.00 per
year of service for each complainant; that accordingly, respondent Antonio Labirua
directed respondent companys Bacolod office in a telegram ... to inform the
complainants of the approval; that thereafter, all the complainants were paid
termination pay and other benefits including financial assistance in the following
aggregate amount to wit: M. Castellano received P47, 954.16 as retirement
pay, P5,635.00 as financial assistance, P15,507.18 as unused vacation and sick
leaves and P987.28 as 13
th
month pay; Complainant G. Z.
Adad received P93,450.01 as retirement pay, P10,465.00 as financial
assistance, P21, 166.69 as unused vacation and sick leaves and P1,038.31 as
13
th
month pay; complainant G. A. Teddy, Jr. received P68,828.32 as retirement
pay, P8,100.00 as financial assistance, P18,036.74 as unused vacation and leaves
and P987.68 as 13
th
month pay; Complainant E.Y. Torres, Jr. received P75,225.00
as retirement pay, P5,935.00 as financial assistance, P29,817.56 as unused
vacation and sick leaves and P1,462.68 as 13
th
month pay; Complainant Manuel
G. Chu received P93,353.32 as retirement pay,P8,900.00 as
financial assistance, P24,853.23 as unused vacation and sick leaves
and P1,219.15 as 13
th
month pay; that on April 16, 1984, each complainant
voluntarily executed a Release and Receipt ... acknowledging receipt of the
aforestated amounts and irrevocably and unconditionally released respondent San
Miguel Corporation from any claim or demand whatsoever in law and equity which
each complainant may have in connection with their employment; that on July 25,
1984, complainants wrote the respondent corporations chairman of the board
pleading for additional separation benefits ... contending that supervisors were
awarded pay increases retroactive January 1, 1984; that on August 29, 1984, the
company thru its Vice-President and Division Manager, Jose B. Lugay clarified in a
letter ... that the pay increases were granted on selective basis with merit and
performance as the criteria and that all the complainants were already extended
financial assistance; that subsequently, all the complainants filed the instant
complaint for illegal dismissal; that the dismissal was not involuntary much less
illegal; respondents vehemently deny that they used force and intimidation in
dismissing the complainants; that in the series of communication with the
respondents, it is evidenced (sic) that their collective and paramount concern was
to seek further termination benefits after they had applied to be retrenched,
received corresponding benefits and executed their respective release and receipt
of payment; that with respect to complainant Chu, he is bound by reasonable rules
and regulations relative to the terms and conditions of his employment; that one
such rule is respondent corporations 1978 Retirement and Death Benefit plan and
which was later amended reducing the period of service to 15 years; that it was
pursuant to this plan that the respondent corporation exercised its option to
terminate complainant Chu who had rendered work with the company for 22 years
and 4 months/per his record of employment....
Respondents further aver that complainants were correctly and completely paid
their separation benefits; that complainants received twice than what is provided
for by the Labor Code of the Philippines, Article 284 thereof; that complainant
Manuel Chu was retired under the optional retirement clause of the plan and for
which he was paid one (1) months salary for every year of service; that in the
case of the four (4) other complainants, they applied under the retrenchment
program of the company and they were also paid one (1) months pay for every
year of service; that per copies (sic) of the summary of the computation of the
termination pay and other benefits of each complaint ..., all the complainants were
paid and received retirement/termination pay and other benefits from the
respondent corporation, including unused vacation and sick leave benefits and
pro-rata 13
th
month pay, per respondents cash vouchers for Bacolod Region ....
In his Decision rendered on September 16, 1988, Labor Arbiter Oscar S. Uy
found that the complainants were not illegally dismissed; ratiocinating, thus:
Based on the foregoing, we find that complainants were not illegally terminated
but had voluntarily retired from the service. We likewise find that they were duly
paid of their retirement benefits. Evidently, their claim for illegal dismissal together
with the relief of reinstatement with backwages has no basis and perforce must be
denied.
With respect to complainants claims for moral and exemplary damages, the same
is likewise denied. We find that the respondent company did not act in bad faith
when it approved and granted the retirement of the complainants.
WHEREFORE, premises considered, judgment is hereby rendered DISMISSING
all the claims of the complainants against the respondents for lack of merit.
SO ORDERED.
On October 21, 1988, complainants appealed the aforesaid Decision against
them to the Fourth Division of public respondent NLRC, in Cebu City, which
handed down its August 21, 1992 Decision, reversing in part the Labor Arbiters
disposition and disposing, as follows:
WHEREFORE, in view of all the foregoing, the appealed decision is hereby SET
ASIDE, and another one entered declaring the complainants Gabriel Z. Adad,
George A. Teddy, Jr. and Manuel J. Chu to have been validly retired. Respondent
San Miguel Corporation is hereby ordered to immediately reinstate complainants
Manuel C. Castillano (sic) and Edmundo Y. Torres, Jr. to have their former or
equivalent positions without loss of seniority rights and to pay complainants
Manuel C. Castillano (sic) the amount ofP73,905.84, and Edmundo Y. Torres, Jr.
the amount of P108,915.00, representing their back salaries for three (3) years
after deducting the sum of P47,954.16 and P75,255.00 they received as retirement
pay.
SO ORDERED.
With the denial of its motion for reconsideration by Resolution of NLRC dated
October 19, 1992, petitioner found its way to this court via the present petition
for Certiorariagainst NLRC, Messrs. Edmundo Y. Torres, Jr. and Manuel C.
Castellano; assigning as errors, that :
I.
PRIVATE RESPONDENTS WERE GIVEN CHOICES TO CHOOSE FROM
WHICH CONSISTED OF RETRENCHMENT, RETIREMENT OR
DISMISSAL BEFORE THEY SEVERED THEIR EMPLOYMENT
RELATIONSHIP WITH PETITIONER. HENCE, UNDER THE DOCTRINE
ENUNCIATED IN SAMANIEGO V. NLRC, 198 SCRA 111 (1991), THE
PRIVATE RESPONDENTS WERE NOT ILLEGALLY DISMISSED BUT
RATHER, THEY OPTED TO BE VOLUNTARILY RETRENCHED
PURSUANT TO THE COMPANYS RETRENCHMENT PROGRAM;
II.
RECEIPT AND RELEASE EXECUTED BY THE PRIVATE RESPONDENTS
AMOUNTED TO VALID AND BINDING COMPROMISE AGREEMENT AS
HELD IN PERIQUET V. NLRC, 186 SCRA 724 (1990), SAMANIEGO V.
NLRC, SUPRA AND VELOSO V. DEPARTMENT OF LABOR AND
EMPLOYMENT, 200 SCRA 201 (1991);
III.
SECTION 2, ARTICLE XV OF THE 1981 COLLECTIVE BARGAINING
AGREEMENT WHICH REDUCED THE RETIRABLE PERIOD OF SERVICE
FROM 20 TO 15 YEARS IS APPLICABLE TO THE PRIVATE
RESPONDENTS HEREIN.
The pivotal issue for resolution here is whether or not grave abuse of
discretion tainted the challenged Decision and Resolution of public respondent
NLRC ?
Anent its first assigned error, petitioner contends that private respondents
voluntarily severed their employment with petitioner, that they were given the
choice of being retrenched, retired or dismissed and they opted to retire so as to
avail of more financial benefits; that private respondents voluntarily applied for
retirement and even negotiated for a better financial package which they, in fact,
obtained and their application for retirement, coupled with their signing the
requisite release and quitclaim, signified that private respondents separation from
petitioners employment was voluntary and never vitiated by force or coercion.
We are not persuaded by petitioners theory.
Even if private respondents were given the option to retire, be retrenched or
dismissed, they were made to understand that they had no choice but to leave the
company. More bluntly stated, they were forced to swallow the bitter pill of
dismissal but afforded a chance to sweeten their separation from
employment. They either had to voluntarily retire, be retrenched with benefits, or
be dismissed without receiving any benefit at all.
What was the true nature of petitioners offer to private respondents? It was in
reality a Hobsons choice.
[6]
All that the private respondents were offered was a
choice on themeans or method of terminating their services but never as to
the status of their employment. In short, they were never asked if they still wanted
to work for petitioner.
The mere absence of actual physical force to compel private respondents to
ink an application for retirement did not make their retirement
voluntary. Confronted with the danger of being jobless, unable to provide their
families even with the basic needs or necessities of life, the private respondents
had no choice but to sign the documents proffered to them. But neither their
receipt of separation pay nor their negotiating for more monetary benefits,
estopped private respondents from questioning and challenging the legality of the
nature or cause of their separation from the service.
In the landmark case of Mercury Drug vs. Court of Industrial Relations,
[7]
this
Court held:
Acceptance of those benefits would not amount to estoppel. The reason is
plain. Employer and employee, obviously, do not stand on the same footing. The
employer drove the employee to the wall. The latter must have to get hold of
money. Because, out of job, he had to face the harsh necessities of life. He thus
found himself in no position to resist money preferred (sic) him. His, then, in a case
of adherence, not of choice.
What is more, there is ample showing that the private respondents were
morally and psychologically hoodwinked to sign the said documents for their
termination of employment with petitioner. This irresistible conclusion can be
drawn unerringly from the fact that four of the five employees were asked to give
their conformity to leave the service of petitioner before four high-ranking officials
of petitioner, namely: Messrs. Antonio Labirua, Personnel Director of the Beer and
Packaging Division, Pedro Celdran and Arturo Trinidad, Assistant Vice Presidents,
and Atty. Gabriel de Jesus, petitioners counsel.
The pivot of inquiry here is whether or not the retirement of private
respondents was really voluntary. In De Leon vs. NLRC,
[8]
the Court succinctly
ruled that: ... [I]f theintention to retire is not clearly established or if the retirement
is involuntary, it is to be treated as a discharge. Consequently, even
assuming arguendo that respondent NLRC erred in adjudging the retirement of
private respondents as involuntary, the attendant circumstances under scrutiny
indicate that their (private respondents) intention to retire was not clearly
established. Petitioner claims that the private respondents voluntarily applied for
optional retirement; yet, when their application papers for retirement were
supposedly approved, the same four (4) high-ranking officials of petitioner, who
met the complainants at the office of Mr. Edmundo Torres, Jr., decided to talk to
the complainants individually and requested all of them, except Mr. George D.
Teddy, Jr., to go out while they (petitioners officials) would discuss important
matters with them, one by one, starting with Mr. Teddy. And when the
complainants signed retirement papers, petitioner admitted in its petition
[9]
that they
(complainants) were reluctant to sign the same. These actuations and pretensions
of petitioners top officials are repugnant to human behavior and experience. If
complainants did freely apply for optional retirement, announcing the approval
thereof would have been a welcome news for complainants, so that there would
have been no need for petitioner to inform the complainants individually and
privately, a time consuming approach.
Indeed, it is too evident to be overlooked that the reason why petitioner
resorted to such trick was the anticipated resistance on the part of the
complainants to the scheme of retirement imposed against their will.
Then too, petitioner averred that the private respondents signed their
applications for voluntary retirement on March 14, 1984, the day after the
documents were sent to them, indicating thereby that their application to retire was
voluntary as private respondents had the opportunity to reflect on the matter. But
records show that it was on the same day the documents for voluntary retirement
were given to private respondents, when they signed the same in the presence of
petitioners four (4) high-ranking officials. What was sent on March 13, 1984 to
private respondents was a telex informing them that Mr. Antonio Labirua and
company were to arrive on the following day to confer with them. The one-on-one
conversation actually took place on March 14, 1994, when the applications for
retirement were forced on the private respondents.
Furthermore, the case of complainant Manuel J. Chu, who refused to sign the
application for voluntary retirement but was nevertheless discharged from the
service pursuant to the Retirement and Death Benefit Plan of the company,
illustrated beyond cavil petitioners determination to separate complainants from
the service.
[10]
We are thus of the ineluctable finding that Mr. Labirua threatened
complainants that if they did not sign the letters of application for optional
retirement, they would be terminated just the same, without receiving a single
centavo.
Neither do we discern any tenability in petitioners contention that the private
respondents only complained that they were illegally dismissed when they were
not able to get a positive response to their request for additional benefits,
computed on the basis of the pay increases granted to supervisors retroactively to
January 1, 1984. The petition itself states that it was only on August 29, 1984 that
petitioner, through its Vice President and Division Manager Jose B. Lugay, made it
clear to the private respondents that pay increases were only being granted on a
selective basis, depending on merit and performance. But private respondents
Complaint for illegal dismissal was lodged as early as August 23, 1984.
To buttress its theory that resignations voluntarily tendered and accepted by
the company are binding on the resignees, petitioner cited the cases of Soberano
vs. Clave,
[11]
Enriquez vs. Zamora,
[12]
and Dizon vs. NLRC.
[13]
But the rulings in the
said cases are inapplicable here. In those cases, the resignations involved were
voluntarily and deliberately tendered by the employees concerned without any
prompting or coercion on the part of the employer. In Enriquez, as a sign of
protest, the pilots involved offered their resignations with full awareness of the
consequences of such action. In Dizon, the petitioner there was induced to resign
by the entitlements and privileges promised by the President of the employer and
he (petitioner) himself drafted his letter of resignation. While in
the Soberano case, the retirement in question was voluntarily agreed upon by the
employer and the employee in their collective bargaining agreement.
All things studiedly considered, we are therefore of the opinion, and so find,
that the dismissal of the herein private respondents was involuntary and therefore
illegal.
As regards the second assigned error, petitioner theorizes that the receipts
and release papers executed by the private respondents were indicative of a
voluntary retirement. But private respondents could not receive the amounts to
which they were entitled if they did not execute such documents.
Continuing accretion of case law upholds the nullity of quitclaims especially if
undertaken under questionable or doubtful circumstances. It bears stressing that,
the private respondents had no choice but to sign subject quitclaims without which
they could not receive the benefits due them, amounts they badly needed while out
of work.
[14]

Verily, considering their individual circumstances, it is hard to believe that the
private respondents would voluntarily retire. It should be borne in mind that the
original complainants, Messrs. Chu, Teddy Jr. and Adad, were all in their
advanced years and could not expect to get a similar employment. In the case of
private respondent Torres, he was 41 years old when he was forced to retire. At
that age, it would not be easy for him to land a job with the same high benefits. In
the case of Mr. Castellano, he was only 36 years old when forced to resign. It was
inconceivable for him to resign from a secure position considering the minimal
financial benefits accruing from voluntary retirement at age 36, and the scarcity of
employment opportunities.
Under its last assigned error, petitioner maintains that the provision in the
Collective Bargaining Agreement (CBA) reducing the retirable period of service
from 20 to 15 years is applicable to private respondents.
Section 2, Article XV of the 1981 CBA reducing optional retirement to fifteen
(15) years of service,
[15]
invoked by petitioner to compulsorily retire private
respondents, at its option, is not applicable to them , it appearing that the CBA
referred to was inked by petitioner and the union of regular daily personnel in the
Bacolod Beer Region, the Congress of Independent Organizations (CIO-ALU), San
Miguel Chapter, Unit II, and Daily Paid Personnel, Bacolod Beer Region. The
private respondents who occupiedsupervisory positions, were expressly excluded
from the coverage of said CBA pursuant to its Article I, which reads:
Section 1 - Appropriate Bargaining Unit - The appropriate bargaining covered by
this agreement consists of all regular non-selling daily paid workers ....
Consequently,supervisory personnel, security guards, monthly paid employees,
confidential employees, salesmen, route helpers, route driver helpers, warehouse
personnel, probationary, temporary, casual and contractual employees
are excluded from the bargaining unit, and, therefore, outside the scope of this
agreement.
As can be gleaned from the petition itself, not only were private respondents
supervisory employees, they were also with the sales force. Mr. Edmundo Torres,
Jr. was a Regional Sales Manager while Mr. Castellano was a District Sales
Supervisor of petitioner.
WHEREFORE, for lack of merit, the petition is hereby DISMISSED, and the
assailed Decision of NLRC dated August 21, 1992 is AFFIRMED in its entirety. No
pronouncement as to costs.
SO ORDERED.

G.R. No. L-18873
MANILA HOTEL COMPANY, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ET AL., respondents.
Government Corporate Counsel Simeon M. Gopengco and Trial Attorney Jose S. Gomez
for petitioner.
Gregorio E. Fajardo and Jesus Jaramillo for respondent Union.
Mariano B. Tuason for respondent Court.
BAUTISTA ANGELO, J .:
The Pines Hotel Employees Association filed on February 24, 1960 before the Court of
Industrial Relations a petition praying, among other things, that its employees who were
working at the Pines Hotel be paid additional compensation for overtime service rendered
due to the exigencies of the business, as well as additional compensation for Sunday, legal
holiday and nighttime work.
The Manila Hotel filed its answer denying the material averments of the petition and
alleging, among others, that if overtime service was rendered the same was not authorized
but was rendered voluntarily, for the employees were interested in the "tips" offered by the
patrons of the hotel.
Presiding Judge Jose S. Bautista, to whom the petition was assigned, after trial, rendered
judgment stating that the employees were entitled to the additional compensation
demanded, including that for overtime work, because an employee who renders overtime
service is entitled to compensation even if he rendered it without prior authority. A motion
for reconsideration was filed on the ground that the order was contrary to law and the
evidence, but the same was denied by the industrial courten banc.
In compliance with the order of the court, the Examining Division of the Court of
Industrial Relations submitted a report in which it stated that the amount due the employees
as additional compensation for overtime and night services rendered from January to
December 31, 1958 was P32,950.69. The management filed its objection to the report on
the ground that it included 22 names of employees who were not employees of the Pines
Hotel at the time the petition was filed so that insofar as said employees are concerned the
petition merely involves a money claim which comes under the jurisdiction of the regular
courts. The trial judge, however, overruled this objection holding that, while the 22
employees were actually not in the service at the time of the filing of the petition, they
were however subsequently employed even during the pendency of the incident, and so
their claim comes within the jurisdiction of the Court of Industrial Relations. Hence, the
present petition for review.
There is no merit in this appeal it appearing that while it is true that the 22 employees
whose claim is objected to were not actually in the service at the time the instant petition
was filed, they were however, subsequently reemployed even while the present incident
was pending consideration by the trial court. Moreover, it appears that the questioned
employees were never separated from the service. Their status is that of regular seasonal
employees who are called to work from time to time, mostly during summer season. The
nature of their relationship with the hotel is such that during off season they are temporarily
laid off but during summer season they are re-employed, or when their services may be
needed. They are not strictly speaking separated from the service but are merely considered
as on leave of absence without pay until they are re-employed. Their employment
relationship is never severed but only suspended. As such, these employees can be
considered as in the regular employment of the hotel.
WHEREFORE, the order appealed from is affirmed. No costs.

[G.R. No. 150478. April 15, 2005]
Hacienda bino vs Cuenca
Before us is a petition for review of the Decision
[1]
of the Court of Appeals
(CA), dated July 31, 2001, and the Resolution dated September 24, 2001 denying
the petitioners motion for reconsideration. The assailed decision modified the
decision of the National Labor Relations Commission (NLRC) in NLRC Case No.
V-000099-98.
Hacienda Bino is a 236-hectare sugar plantation located at Barangay Orong,
Kabankalan City, Negros Occidental, and represented in this case by Hortencia L.
Starke, owner and operator of the said hacienda.
The 76 individual respondents were part of the workforce of Hacienda Bino
consisting of 220 workers, performing various works, such as cultivation, planting
of cane points, fertilization, watering, weeding, harvesting, and loading of
harvested sugarcanes to cargo trucks.
[2]

On July 18, 1996, during the off-milling season, petitioner Starke issued an
Order or Notice which stated, thus:
To all Hacienda Employees:
Please bear in mind that all those who signed in favor of CARP are expressing their desire
to get out of employment on their own volition.
Wherefore, beginning today, July 18, only those who did not sign for CARP will be given
employment by Hda. Bino.
(
Sgd.) Hortencia Starke
[3]

The respondents regarded such notice as a termination of their employment.
As a consequence, they filed a complaint for illegal dismissal, wage differentials,
13
th
month pay, holiday pay and premium pay for holiday, service incentive leave
pay, and moral and exemplary damages with the NLRC, Regional Arbitration
Branch No. VI, Bacolod City, on September 17, 1996.
[4]

In their Joint Sworn Statement, the respondents as complainants alleged inter
alia that they are regular and permanent workers of the hacienda and that they
were dismissed without just and lawful cause. They further alleged that they were
dismissed because they applied as beneficiaries under the Comprehensive
Agrarian Reform Program (CARP) over the land owned by petitioner Starke.
[5]

For her part, petitioner Starke recounted that the companys Board of
Directors petitioned the Sangguniang Bayan of Kabankalan for authority to re-
classify, from agricultural to industrial, commercial and residential, the whole of
Hacienda Bino, except the portion earmarked for the CARP. She asserted that half
of the workers supported the re-classification but the others, which included the
herein respondents, opted to become beneficiaries of the land under the
CARP. Petitioner Starke alleged that in July 1996, there was little work in the
plantation as it was off-season; and so, on account of the seasonal nature of the
work, she issued the order giving preference to those who supported the re-
classification. She pointed out that when the milling season began in October
1996, the work was plentiful again and she issued notices to all workers, including
the respondents, informing them of the availability of work. However, the
respondents refused to report back to work. With respect to the respondents
money claims, petitioner Starke submitted payrolls evidencing payment thereof.
On October 6, 1997, Labor Arbiter Ray Allan T. Drilon rendered a
Decision,
[6]
finding that petitioner Starkes notice dated July 18, 1996 was
tantamount to a termination of the respondents services, and holding that the
petitioner company was guilty of illegal dismissal. The dispositive portion of the
decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal
of the complainants illegal and ordering respondent Hortencia L. Starke, Inc. represented
by Hortencia L. Starke, as President, to:
1. Reinstate the complainants to their former position without loss of
seniority rights immediately upon receipt of this decision;
2. PAY the backwages and wage differentials of the complainants, to wit:

in the total amount of Four Hundred Ninety-Five Thousand Eight
Hundred Fifty-Two and 72/100 (P495,852.72) Pesos; and
3. TO PAY the complainants attorney's fee in the amount of Forty-Nine
Thousand Five Hundred Eighty-Five and 27/100 (P49,585.27) Pesos.
Respondents are further directed to deposit to this Office the total judgment award of FIVE
HUNDRED FORTY-FIVE THOUSAND AND FOUR HUNDRED THIRTY-SEVEN
AND 99/100 (P545,437.99) PESOS within ten (10) days from receipt of this decision.
All other claims are hereby DISMISSED for lack of merit.
SO ORDERED.
[7]

Both the petitioners and the respondents appealed the case to the NLRC. On
July 24, 1998, the NLRC affirmed with modification the decision of the Labor
Arbiter. The dispositive part of its decision reads:
WHEREFORE, premises considered, the Decision of the Labor Arbiter is AFFIRMED
WITH MODIFICATIONS. Respondent is further ordered to pay the complainants listed
in the Holiday Pay Payroll the amounts due them.
SO ORDERED.
[8]

A motion for reconsideration of the said decision was denied by the
NLRC.
[9]
Dissatisfied, the respondents appealed the case to the CA where the
following issues were raised:
A. THE HONORABLE COMMISSION GRAVELY ABUSED ITS
DISCRETION AND POWER BY VIOLATING THE DOCTRINE
OF STARE DECISIS LAID DOWN BY THE SUPREME COURT
AND THE APPLICABLE LAWS AS TO THE STATUS OF THE
SUGAR WORKERS.
B. THE HONORABLE COMMISSION COMMITTED SERIOUS ERRORS
BY ADMITTING THE MOTION TO DISMISS AND/OR ANSWER TO
PETITIONERS APPEAL MEMORANDUM DATED MARCH 26, 1998
FILED BY COUNSEL FOR THE HEREIN RESPONDENTS INSPITE
OF THE FACT THAT IT WAS FILED WAY BEYOND THE
REGLEMENTARY PERIOD.
C. THE HONORABLE COMMISSION COMMITTED GRAVE ERROR IN
GIVING CREDENCE TO THE SWEEPING ALLEGATIONS OF THE
COMPLAINANTS AS TO THE AWARD OF BACKWAGES AND
HOLIDAY PAY WITHOUT ANY BASIS.
[10]

On July 31, 2001, the CA rendered a Decision,
[11]
the dispositive portion of
which reads:
WHEREFORE, the decision of the National Labor Relations Commission is
hereby MODIFIED by deleting the award for holiday pay and premium pay for holidays.
The rest of the Decision is hereby AFFIRMED.
SO ORDERED.
[12]

The CA ruled that the concept of stare decisis is not relevant to the present
case. It held that the ruling in Mercado, Sr. v. NLRC
[13]
does not operate to
abandon the settled doctrine that sugar workers are considered regular and
permanent farm workers of a sugar plantation owner, considering that there are
facts peculiar in that case which are not present in the case at bar. In
the Mercado case, the farm laborers worked only for a definite period for a farm
owner since the area of the land was comparatively small, after which they offer
their services to other farm owners. In this case, the area of the hacienda, which is
236 hectares, simply does not allow for the respondents to work for a definite
period only.
The CA also held that the petitioners reliance on Bacolod-Murcia Milling Co.
Inc. v. NLRC
[14]
was misplaced, as it in fact, bolstered the respondents' posture
that they are regular employees. In that case, the Court held that a sugar worker
may be considered as in regular employment even during those years when he is
merely a seasonal worker where the issues concern the determination of an
employer-employee relationship and security of tenure.
Further, the CA held that the respondents appeal to the NLRC was not
perfected since they failed to accompany their notice of appeal with a
memorandum of appeal, or to timely file a memorandum of appeal. Thus, as to
them, the decision of the Labor Arbiter became final and executory. The NLRC,
therefore, gravely abused its discretion when it modified the decision of the Labor
Arbiter and awarded to the respondents holiday pay and premium for holiday pay.
Finally, the CA affirmed the award of backwages, finding no circumstance that
would warrant a reversal of the findings of the Labor Arbiter and NLRC on this
point.
[15]

On September 24, 2001, the CA denied the motion for reconsideration filed by
the petitioners due to their failure to indicate the date of the receipt of the decision
to determine the timeliness of the motion.
[16]

Hence, this petition for review.
The petitioners submit the following issues:
A. WHETHER OR NOT THE HONORABLE COURT OF APPEALS
GRAVELY ABUSED ITS DISCRETION AND POWER BY
VIOLATING THE DOCTRINE OF "STARE DECISIS" LAID DOWN
BY THE SUPREME COURT AND THE APPLICABLE LAWS AS TO
THE STATUS OF THE SUGAR WORKERS.
B. WHETHER OR NOT THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN DISMISSING THE MOTION FOR
RECONSIDERATION FOR FAILURE TO STATE THE DATE OF
THE RECEIPT OF THE DECISION IN THE MOTION FOR
RECONSIDERATION.
[17]

Petitioner Starke contends that the established doctrine that seasonal
employees are regular employees had been overturned and abandoned
by Mercado, Sr. v. NLRC.
[18]
She stresses that in that case, the Court held that
petitioners therein who were sugar workers, are seasonal employees and their
employment legally ends upon completion of the project or the season. Petitioner
Starke argues that the CA violated the doctrine of stare decisis in not applying the
said ruling. She asserts that the respondents, who are also sugar workers, are
seasonal employees; hence, their employment can be terminated at the end of the
season and such termination cannot be considered an illegal dismissal. Petitioner
Starke maintains that the determination of whether the workers are regular or
seasonal employees is not dependent on the number of hectares operated upon
by them, or the number of workers, or the capitalization involved, but rather, in the
nature of the work. She asserts that the respondents also made their services
available to the neighboring haciendas. To buttress her contention that the
respondents are seasonal employees, petitioner Starke cites Rep. Act 6982, An
Act Strengthening the Social Amelioration Program in the Sugar Industry,
Providing the Mechanics for its Implementation, and for other Purposes, which
recognizes the seasonal nature of the work in the sugar industry.
[19]

Petitioner Starke also takes exception to the denial of her motion for
reconsideration due to failure to state the date of the receipt of the decision. She
asserts that a denial of a motion for reconsideration due to such cause is merely
directory and not mandatory on the part of the CA. Considering that the amount
involved in this case and the fact that the motion was filed within the reglementary
period, the CA should have considered the motion for reconsideration despite such
procedural lapse.
[20]

On the other hand, the respondents aver that the petitioners erroneously
invoke the doctrine of stare decisis since the factual backdrop of this case and
the Mercado case is not similar. The respondents posit that the Mercado case
ruled on the status of employment of farm laborers who work only for a definite
period of time for a farm owner, after which they offer their services to other farm
owners. Contrarily, the respondents contend that they do not work for a definite
period but throughout the whole year, and do not make their services available to
other farm owners. Moreover, the land involved in the Mercado case is
comparatively smaller than the sugar land involved in this case. The respondents
insist that the vastness of the land involved in this case requires the workers to
work on a year-round basis, and not on an on-and-off basis like the farm workers
in the Mercado case.
Finally, the respondents maintain that the requirement that the date of receipt
of the decision should be indicated in the motion for reconsideration is mandatory
and jurisdictional and, if not complied with, the court must deny the motion
outright.
[21]

The petition is without merit.
On the substantial issue of whether the respondents are regular or seasonal
employees, the petitioners contend that the CA violated the doctrine of stare
decisis by not applying the ruling in the Mercado case that sugar workers are
seasonal employees. We hold otherwise. Under the doctrine of stare decisis,
when a court has laid down a principle of law as applicable to a certain state of
facts, it will adhere to that principle and apply it to all future cases in which the
facts are substantially the same.
[22]
Where the facts are essentially different,
however, stare decisis does not apply, for a perfectly sound principle as applied to
one set of facts might be entirely inappropriate when a factual variance is
introduced.
[23]

The CA correctly found that the facts involved in this case are different from
the Mercado case; therefore, the ruling in that case cannot be applied to the case
at bar, thus:
We do not find the concept of stare decisis relevant in the case at bench. For although in
the Mercado case, the Supreme Court held the petitioners who were sugar workers not to
be regular but seasonal workers, nevertheless, the same does not operate to abandon the
settled doctrine of the High Court that sugar workers are considered regular and permanent
farm workers of a sugar plantation owner, the reason being that there are facts present that
are peculiar to the Mercado case. The disparity in facts between the Mercado case and the
instant case is best exemplified by the fact that the former decision ruled on the status of
employment of farm laborers, who, as found by the labor arbiter, work only for a definite
period for a farm worker, after which they offer their services to other farm owners,
considering the area in question being comparatively small, comprising of seventeen and a
half (17) hectares of land, such that the planting of rice and sugar cane thereon could not
possibly entail a whole year operation. The herein case presents a different factual
condition as the enormity of the size of the sugar hacienda of petitioner, with an area of
two hundred thirty-six (236) hectares, simply do not allow for private respondents to render
work only for a definite period.
Indeed, in a number of cases, the Court has recognized the peculiar facts
attendant in the Mercado case. In Abasolo v. NLRC,
[24]
and earlier, in Philippine
Tobacco Flue-Curing & Redrying Corporation v. NLRC,
[25]
the Court made the
following observations:
In Mercado, although respondent constantly availed herself of the petitioners services
from year to year, it was clear from the facts therein that they were not in her regular
employ. Petitioners therein performed different phases of agricultural work in a given
year. However, during that period, they were free to work for other farm owners, and in
fact they did. In other words, they worked for respondent, but were nevertheless free to
contract their services with other farm owners. The Court was thus emphatic when it ruled
that petitioners were mere project employees, who could be hired by other farm
owners.
[26]

Recently, the Court reiterated the same observations in Hacienda Fatima v.
National Federation of Sugarcane Workers-Food and General Trade
[27]
and added
that the petitioners in the Mercado case were not hired regularly and repeatedly
for the same phase/s of agricultural work, but on and off for any single phase
thereof.
In this case, there is no evidence on record that the same particulars are
present. The petitioners did not present any evidence that the respondents were
required to perform certain phases of agricultural work for a definite period of time.
Although the petitioners assert that the respondents made their services available
to the neighboringhaciendas, the records do not, however, support such assertion.
The primary standard for determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to
the usual trade or business of the employer.
[28]
There is no doubt that the
respondents were performing work necessary and desirable in the usual trade or
business of an employer. Hence, they can properly be classified as regular
employees.
For respondents to be excluded from those classified as regular employees, it
is not enough that they perform work or services that are seasonal in nature. They
must have been employed only for the duration of one season.
[29]
While the
records sufficiently show that the respondents work in the hacienda was seasonal
in nature, there was, however, no proof that they were hired for the duration of one
season only. In fact, the payrolls,
[30]
submitted in evidence by the petitioners, show
that they availed the services of the respondents since 1991. Absent any proof to
the contrary, the general rule of regular employment should, therefore, stand. It
bears stressing that the employer has the burden of proving the lawfulness of his
employees dismissal.
[31]

On the procedural issue, petitioner Starke avers that the CA should not have
denied outright her motion for reconsideration, considering its timely filing and the
huge amount involved. This contention is already moot. Petitioner Starke has
already aired in this petition the arguments in her motion for reconsideration of the
CA decision, which have been adequately addressed by this Court.
Assuming arguendo that the CA indeed failed to consider the motion for
reconsideration, petitioner Starke was not left without any other recourse.
[32]

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision
of the Court of Appeals, dated July 31, 2001, and its Resolution dated September
24, 2001 are hereby AFFIRMED.