48 SUPREME COURT REPORTS ANNOTATED

Aurora Land Projects Corp. vs. NLRC

*

G.R. No. 114733. January 2, 1997.

AURORA LAND PROJECTS CORP. doing business under the

name “AURORA PLAZA” and TERESITA T. QUAZON,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION
and HONORIO DAGUI, respondents.

Labor Law; Job-Contracting; Requisites.—Section 8, Rule VIII, Book

III of the Implementing Rules and Regulations of the Labor Code provides
in part: “There is job contracting permissible under the Code if the
following conditions are met: x x x x x x x x x (2) The contractor has
substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the
conduct of his business.” Honorio Dagui earns a measly sum of P180.00 a
day (latest salary). Ostensibly, and by no stretch of the imagination can
Dagui qualify as a job contractor. No proof was adduced by the petitioners
to show that Dagui was merely a job contractor, and it is absurd to expect
that private respondent, with such humble resources, would have substantial
capital or investment in the form of tools, equipment, and machineries, with
which to conduct the business of supplying Aurora Plaza with manpower
and services for the exclusive purpose of maintaining the apartment houses
owned by the petitioners herein.
Same; National Labor Relations Commission; Finality of Findings of
Facts; The Supreme Court does not review supposed errors in the decision
of the NLRC which raise factual issues, because findings of agencies
exercising quasi-judicial functions (like public respondent NLRC) are
accorded not only respect but even finality, aside from the

_______________

* FIRST DIVISION.

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VOL. 266, JANUARY 2, 1997 49

Aurora Land Projects Corp. vs. NLRC

consideration that this Court is essentially not a trier of facts.—The bare

allegation of petitioners, without more, that private respondent Dagui is a
job contractor has been disbelieved by the Labor Arbiter and the public
respondent NLRC. Dagui, by the findings of both tribunals, was an
employee of the petitioners. We are not inclined to set aside these findings.
The issue whether or not an employeremployee relationship exists in a given
case is essentially a question of fact. As a rule, repetitious though it has
become to state, this Court does not review supposed errors in the decision
of the NLRC which raise factual issues, because factual findings of agencies
exercising quasi-judicial functions [like public respondent NLRC] are
accorded not only respect but even finality, aside from the consideration that
this Court is essentially not a trier of facts.
 Same; Employer-Employee Relationship; Elements.—Jurisprudence is
firmly settled that whenever the existence of an employment relationship is
in dispute, four elements constitute the reliable yardstick: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employer’s power to control the employee’s
conduct. It is the so-called “control test,” and that is, whether the employer
controls or has reserved the right to control the employee not only as to the
result of the work to be done but also as to the means and methods by which
the same is to be accomplished, which constitute the most important index
of the existence of the employer-employee relationship. Stated otherwise, an
employer-employee relationship exists where the person for whom the
services are performed reserves the right to control not only the end to be
achieved but also the means to be used in reaching such end.
Same; Same; Regular Employees; Two Kinds.—As can be gleaned
from this provision, there are two kinds of regular employees, namely: (1)
those who are engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer; and (2) those who
have rendered at least one year of service, whether continuous or broken,
with respect to the activity in which they are employed.
Same; Same; Same; Such a continuing need for the services of private
respondent is sufficient evidence of the necessity and indispensability of his
services to petitioner’s business or trade.—The jobs assigned to private
respondent as maintenance man, carpenter,

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50 SUPREME COURT REPORTS ANNOTATED

Aurora Land Projects Corp. vs. NLRC

plumber, electrician and mason were directly related to the business of

petitioners as lessors of residential and apartment buildings. Moreover, such
a continuing need for his services by herein petitioners is sufficient evidence
of the necessity and indispensability of his services to petitioner’s business
or trade.
Same; Same; Same; The law does not provide the qualification that the
employee must first be issued a regular appointment or must first be
formally declared as such before he can acquire a regular status.—Private
respondent Dagui should likewise be considered a regular employee by the
mere fact that he rendered service for the Tanjangcos for more than one
year, that is, beginning 1953 until 1982, under Doña Aurora; and then from
1982 up to June 8, 1991 under the petitioners, for a total of twenty-nine (29)
and nine (9) years respectively. Owing to private respondent’s length of
service, he became a regular employee, by operation of law, one year after
he was employed in 1953 and subsequently in 1982. In Baguio Country
Club Corp. v. NLRC, we decided that it is more in consonance with the
intent and spirit of the law to rule that the status of regular employment
attaches to the casual employee on the day immediately after the end of his
first year of service. To rule otherwise is to impose a burden on the
employee which is not sanctioned by law. Thus, the law does not provide
the qualification that the employee must first be issued a regular
appointment or must first be formally declared as such before he can acquire
a regular status.
Same; Same; Project Employees; If private respondent was employed
as “project employee,” petitioners should have submitted a report of
termination to the nearest public employment office everytime his
employment is terminated due to completion of each project.—The
circumstances of this case in light of settled case law do not, at all, support
this averment. Consonant with a string of cases beginning with Ochoco v.
NLRC, followed by Philippine National Construction Corporation v. NLRC,
Magante v. NLRC, and Capitol Industrial Construction Corporation v.
NLRC, if truly, private respondent was employed as a “project employee,”
petitioners should have submitted a report of termination to the nearest
public employment office everytime his employment is terminated due to
completion of each project, as required by Policy Instruction No. 20, which
provides: “Project employees are not entitled to termination pay if they are
terminated as a result of the completion of the project or any phase thereof
in which they are employed,

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Aurora Land Projects Corp. vs. NLRC

regardless of the number of project in which they have been employed by a

particular construction company. Moreover, the company is not required to
obtain a clearance from the Secretary of Labor in connection with such
termination. What is required of the company is a report to the nearest
Public Employment Office for statistical purposes.” Throughout the duration
of private respondent’s employment as maintenance man, there should have
been filed as many reports of termination as there were projects actually
finished, if it were true that private respondent was only a project worker.
Failure of the petitioners to comply with this simple, but nonetheless
compulsory, requirement is proof that Dagui is not a project employee.
Same; Termination; Due Process; Twin requirements of notice and
hearing constitute the essential elements of due process.—Jurisprudence
abound as to the rule that the twin requirements of due process, substantive
and procedural, must be complied with, before a valid dismissal exists
without which the dismissal becomes void. The twin requirements of notice
and hearing constitute the essential elements of due process. This simply
means that the employer shall afford the worker ample opportunity to be
heard and to defend himself with the assistance of his representative, if he
so desires. As held in the case of Pepsi Cola Bottling Co. v. NLRC: “The law
requires that the employer must furnish the worker sought to be dismissed
with two written notices before termination of employee can be legally
effected: (1) notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the subsequent notice
which informs the employee of the employer’s decision to dismiss him
(Section 13, BP 130; Sections 2-6, Rule XIV, Book V, Rules and
Regulations Implementing the Labor Code as amended). Failure to comply
with the requirements taints the dismissal with illegality. This procedure is
mandatory; in the absence of which, any judgment reached by management
is void and inexistent. (Tingson, Jr. v. NLRC, 185 SCRA 498 [1990];
National Service Corporation v. NLRC, 168 SCRA 122 [1988]; Ruffy v.
NLRC, 182 SCRA 365 [1990].”
Same; Same; Same; The undignified manner by which private
respondent’s services were terminated smacks of absolute denial of the
employee’s right to due process.—These mandatory requirements were
undeniably absent in the case at bar. Petitioner Quazon dismissed private
respondent on June 8, 1991, without giving him

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52 SUPREME COURT REPORTS ANNOTATED

Aurora Land Projects Corp. vs. NLRC

any written notice informing the worker herein of the cause for his
termination. Neither was there any hearing conducted in order to give Dagui
the opportunity to be heard and defend himself. He was simply told: “Wala
ka nang trabaho mula ngayon,” allegedly because of poor workmanship on a
previous job. The undignified manner by which private respondent’s
services were terminated smacks of absolute denial of the employee’s right
to due process and betrays petitioner Quazon’s utter lack of respect for
labor. Such an attitude indeed deserves condemnation.
Same; Same; Same; An illegally dismissed employee is entitled to: (1)
either reinstatement, if viable, or separation pay if reinstatement is no
longer viable, and (2) backwages.—The Court, however, is bewildered why
only an award for separation pay in lieu of reinstatement was made by both
the Labor Arbiter and the NLRC. No backwages were awarded. It must be
remembered that backwages and reinstatement are two reliefs that should be
given to an illegally dismissed employee. They are separate and distinct
from each other. In the event that reinstatement is no longer possible, as in
this case, separation pay is awarded to the employee. The award of
separation pay is in lieu of reinstatement and not of backwages. In other
words, an illegally dismissed employee is entitled to: (1) either
reinstatement, if viable, or separation pay if reinstatement is no longer
viable, and (2) backwages. Payment of backwages is specifically designed
to restore an employee’s income that was lost because of his unjust
dismissal. On the other hand, payment of separation pay is intended to
provide the employee money during the period in which he will be looking
for another employment.
Same; Same; Same; Failure of the Labor Arbiter and the public
respondent National Labor Relations Commission to award backwages to
the private respondent, who is legally entitled thereto having been illegally
dismissed, amounts to a “plain error” which the Court may rectify in this
petition, though private respondent did not bring any appeal regarding the
matter, in the interest of substantial justice.—It is true that private
respondent did not appeal the award of the Labor Arbiter awarding
separation pay sans backwages. While as a general rule, a party who has not
appealed is not entitled to affirmative relief other than the ones granted in
the decision of the court below, law and jurisprudence authorize a tribunal to
consider errors, although unassigned, if they involve (1) errors affecting the
lower court’s jurisdiction over the subject matter, (2) plain errors

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Aurora Land Projects Corp. vs. NLRC

not specified, and (3) clerical errors. In this case, the failure of the Labor
Arbiter and the public respondent NLRC to award backwages to the private
respondent, who is legally entitled thereto having been illegally dismissed,
amounts to a “plain error” which we may rectify in this petition, although
private respondent Dagui did not bring any appeal regarding the matter, in
the interest of substantial justice. The Supreme Court is clothed with ample
authority to review matters, even if they are not assigned as errors on
appeal, if it finds that their consideration is necessary in arriving at a just
decision of the case. Rules of procedure are mere tools designed to facilitate
the attainment of justice. Their strict and rigid application, which would
result in technicalities that tend to frustrate rather than promote substantial
justice, must always be avoided. Thus, substantive rights like the award of
backwages resulting from illegal dismissal must not be prejudiced by a rigid
and technical application of the rules.
Same; Same; Same; Money Claims; The highest and most ranking
officer of the corporation can be held jointly and severally liable with the
corporation for the payment of the unpaid money claims of its employees
who were illegally dismissed.—In the cases of Maglutac v. National Labor
Relations Commission, Chua v. National Labor Relations Commission, and
A.C. Ransom Labor Union-CCLU v. National Labor Relations Commission
we were consistent in holding that the highest and most ranking officer of
the corporation, which in this case is petitioner Teresita Quazon as manager
of Aurora Land Projects Corporation, can be held jointly and severally liable
with the corporation for the payment of the unpaid money claims of its
employees who were illegally dismissed. In this case, not only was Teresita
Quazon the most ranking officer of Aurora Plaza at the time of the
termination of the private respondent, but worse, she had a direct hand in the
private respondent’s illegal dismissal. A corporate officer is not personally
liable for the money claims of discharged corporate employees unless he
acted with evident malice and bad faith in terminating their employment.
Here, the failure of petitioner Quazon to observe the mandatory
requirements of due process in terminating the services of Dagui evinced
malice and bad faith on her part, thus making her liable.
Same; Money Claims; Remedial Law; Section 5, Rule 86 of the Revised
Rules of Court; Demand for separation pay covered by the years 1953-1982
is actually a money claim against the estate of Doña

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54 SUPREME COURT REPORTS ANNOTATED

Aurora Land Projects Corp. vs. NLRC

Aurora, which claim did not survive the death of the old woman.—
Petitioners’ liability for separation pay ought to be reckoned from 1982
when petitioner Teresita Quazon, as manager of Aurora Plaza, continued to
employ private respondent. From 1953 up to the death of Doña Aurora
sometime in 1982, private respondent’s claim for separation pay should
have been filed in the testate or intestate proceedings of Doña Aurora. This
is because the demand for separation pay covered by the years 1953-1982 is
actually a money claim against the estate of Doña Aurora, which claim did
not survive the death of the old woman. Thus, it must be filed against her
estate in accordance with Section 5, Rule 86 of the Revised Rules of Court,
to wit: “SEC. 5. Claims which must be filed under the notice. If not filed,
barred; exceptions.—All claims for money against the decedent, arising
from contract, express or implied, whether the same be due, not due, or
contingent, all claims for funeral expenses for the last sickness of the
decedent, and judgment for money against the decedent, must be filed
within the time limited in the notice; otherwise they are barred forever,
except that they may be set forth as counterclaims in any action that the
executor or administrator may bring against the claimants. x x x x x x.”

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the opinion of the Court.

   Felino M. Ganal for petitioners.
   Cabio, Rabanes and de Leon for private respondent.

HERMOSISIMA, JR., J.:

 
The question as to whether an employer-employee relationship
exists in a certain situation continues to bedevil the courts. Some
businessmen try to avoid the bringing about of an employer-
employee relationship in their enterprises because that judicial
relation spawns obligations connected with workmen’s
compensation, social security, 1 medicare, minimum wage,
termination pay, and unionism. In light of

_______________

1 Brotherhood Labor Unity Movement of the Philippines v. Zamora, 147 SCRA

49, 54 [1987], citing Mafinco Trading Corporation v. Ople, 70 SCRA 139 [1976].

55
 VOL. 266, JANUARY 2, 1997 55
Aurora Land Projects Corp. vs. NLRC

this observation, it behooves this Court to be ever vigilant in

checking the unscrupulous efforts of some of our entrepreneurs,
primarily aimed at maximizing their return on investments at the
expense of the lowly workingman. 2

This petition for certiorari seeks the reversal of the Resolution of

public respondent National Labor Relations Commission dated
March 16, 1994 affirming with modification the decision of the
Labor Arbiter, dated May 25, 1992, finding petitioners liable to pay
private respondent the total amount of P195,624.00 as separation
pay and attorney’s fees.
The relevant antecedents:
Private respondent Honorio Dagui was hired by Doña Aurora
Suntay Tanjangco in 1953 to take charge of the maintenance and
repair of the Tanjangco apartments and residential buildings. He was
to perform carpentry, plumbing, electrical and masonry work. Upon
the death of Doña Aurora Tanjangco in 1982, her daughter,
petitioner Teresita Tanjangco Quazon, took over the administration
of all the Tanjangco properties. On June 8, 1991, private respondent
Dagui received the shock of his life when Mrs. Quazon 3 suddenly
told him: “Wala ka nang trabaho mula ngayon,” on the alleged
ground that his work was unsatisfactory. On August 19, 1991,
private respondent, who was then already sixty-two (62) years old,
filed a complaint for illegal dismissal with the Labor Arbiter.
On May 25, 1992, Labor Arbiter Ricardo C. Nora rendered
judgment, the decretal portion of which reads:

“IN VIEW OF ALL THE FOREGOING, respondents Aurora Plaza

and/or Teresita Tanjangco Quazon are hereby ordered to pay the
complainant the total amount of ONE HUNDRED NINETY FIVE
THOUSAND SIX HUNDRED TWENTY FOUR PESOS (P195,624.00)
representing complainant’s separation pay and the

_______________

2 Docketed as NLRC NCR CA 00344-92 and NLRC NCR 00-0805033-91.

3 Rollo, 202.

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Aurora Land Projects Corp. vs. NLRC

ten (10%) percent attorney’s fees within ten (10) days from receipt of this
Decision. 4

All other issues are dismissed for lack of merit.”

 
Aggrieved, petitioners Aurora Land Projects Corporation and
Teresita T. Quazon appealed to the National Labor Relations
Commission. The Commission affirmed, with modification, the
Labor Arbiter’s decision in a Resolution promulgated on March 16,
1994, in the following manner:

“WHEREFORE, in view of the above considerations, let the appealed

decision be as it is hereby AFFIRMED with (the) MODIFICATION that
complainant must be paid separation pay in the amount of P88,920.00 5

instead of P177,840.00. The award of attorney’s fees is hereby deleted.”

 
  As a last recourse, petitioners filed the instant petition based on
grounds not otherwise succinctly and distinctly ascribed, viz:

“RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN AFFIRMING THE LABOR ARBITER’S DECISION
SOLELY ON THE BASIS OF ITS STATEMENT THAT ‘WE FAIL TO
FIND ANY REASON OR JUSTIFICATION TO DISAGREE WITH THE
LABOR ARBITER IN HIS FINDING THAT HONORIO DAGUI WAS
DISMISSED BY THE RESPONDENT’ (p. 7, RESOLUTION), DESPITE
—AND WITHOUT EVEN BOTHERING TO CONSIDER—THE
GROUNDS STATED IN PETITIONERS’ APPEAL MEMORANDUM
WHICH ARE PLAINLY MERITORIOUS.

II

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURIS-

_______________

4 Rollo, p. 70-71.
5 Rollo, p. 78.

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VOL. 266, JANUARY 2, 1997 57

Aurora Land Projects Corp. vs. NLRC

DICTION IN FINDING THAT COMPLAINANT WAS EMPLOYED BY

THE RESPONDENTS MORE SO ‘FROM 1953 TO 1991’ (p. 3,
RESOLUTION).

III

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN AWARDING SEPARATION PAY IN FAVOR OF
PRIVATE RESPONDENT MORE SO FOR THE EQUIVALENT OF 38
YEARS OF ALLEGED SERVICE.

IV

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN 6 HOLDING BOTH PETITIONERS LIABLE FOR
SEPARATION PAY.”

 
It is our impression that the crux of this petition rests on two
elemental issues: (1) Whether or not private respondent Honorio
Dagui was an employee of petitioners; and (2) if he were, whether or
not he was illegally dismissed.
Petitioners insist that private respondent had never been their
employee. Since the establishment of Aurora Plaza, Dagui served
therein only as a job contractor. Dagui had control and supervision
of whoever he would take to perform a contracted job. On occasion,
Dagui was hired only as a “tubero” or plumber as the need arises in
order to unclog sewerage pipes. Every time his services were
needed, he was paid accordingly. It was understood that his job was
limited to the specific undertaking of unclogging the pipes. In effect,
petitioners would like us to believe that private respondent Dagui
was an independent contractor, particularly a job contractor, and not
an employee of Aurora Plaza.
We are not persuaded.
Section 8, Rule VIII, Book III of the Implementing Rules and
Regulations of the Labor Code provides in part:

_______________

6 Petition, p. 17; Rollo, p. 22.

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Aurora Land Projects Corp. vs. NLRC

“There is job contracting permissible under the Code if the following

conditions are met:
x x x     x x x     x x x
(2) The contractor has substantial capital or investment in the form of
tools, equipment, machineries, work premises, and other materials which are
necessary in the conduct of his business.”

 
Honorio
7 Dagui earns a measly sum of P180.00 a day (latest
salary). Ostensibly, and by no stretch of the imagination can Dagui
qualify as a job contractor. No proof was adduced by the petitioners
to show that Dagui was merely a job contractor, and it is absurd to
expect that private respondent, with such humble resources, would
have substantial capital or investment in the form of tools,
equipment, and machineries, with which to conduct the business of
supplying Aurora Plaza with manpower and services for the
exclusive purpose of maintaining the apartment houses owned by
the petitioners herein.
The bare allegation of petitioners, without more, that private
respondent Dagui is a job contractor has been disbelieved by the
Labor Arbiter and the public respondent NLRC. Dagui, by the
findings of both tribunals, was an employee of the petitioners. We
are not inclined to set aside these findings. The issue whether or not
an employer-employee relationship
8 exists in a given case is
essentially a question of fact. As a rule, repetitious though it has
become to state, this Court does not review supposed errors in the
decision of the NLRC which raise factual issues, because factual
findings of agencies exercising quasi-judicial functions [like public
respondent NLRC] are accorded not only respect but even finality,
aside

_______________

7 Rollo, p. 73.
8 Cathedral School of Technology v. National Labor Relations Commission, 214
SCRA 551, 558 [1992] citing RJL Martinez Fishing Corporation v. National Labor
Relations Commission, 127 SCRA 454 [1984]; Murillo v. Sun Valley Realty, Inc., 163
SCRA 271 [1988].

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from 9the consideration that this Court is essentially not a trier of

facts.
 However, we deem it wise to discuss this issue full-length if only
to bolster the conclusions reached by the labor tribunals, to which
we fully concur.
Jurisprudence is firmly settled that whenever the existence of an
employment relationship is in dispute, four elements constitute the
reliable yardstick: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; 10 and (d) the

employer’s power to control the employee’s conduct. It is the so-

called “control test,” and that is, whether the employer controls or
has reserved the right to control the employee not only as to the
result of the work to be done but also as11to the means and methods
by which the same is to be accomplished, which constitute the most
important index of the existence of the employer-employee
relationship. Stated otherwise, an employer-employee relationship
exists where the person for whom the services are performed
reserves the right to control not only the end
12 to be achieved but also
the means to be used in reaching such end.
All these elements are present in the case at bar. Private
respondent was hired in 1953 by Doña Aurora Suntay Tanjangco
(mother of Teresita Tanjangco-Quazon), who was then the one in
charge of the administration of the Tanjangco’s various apartments
and other properties. He was employed as

_______________

9 Bernardo Jimenez and Jose Jimenez v. National Labor Relations Commission,

G.R. No. 116960, April 2, 1996.
10 Ibid, citing Canlubang Security Agency v. National Labor Relations
Commission, 216 SCRA 280 [1992]; Ruga v. National Labor Relations Commission,
181 SCRA 266 [1990]; Makati Haberdashery, Inc. vs. National Labor Relations
Commission, 179 SCRA 448 ]1989].
11 Investment Planning Corporation of the Phils. v. Social Security System, 21
SCRA 924, 929 [1967].
12 Dy Keh Beng v. International Labor and Marine Union of the Philippines, 90
SCRA 161, 167 [1979].

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Aurora Land Projects Corp. vs. NLRC

a stay-in worker performing carpentry, plumbing, electrical and

necessary 13work (sic) needed in the repairs of Tanjangco’s
properties. Upon the demise of Doña Aurora in 1982, petitioner
Teresita Tanjangco-Quazon took over the administration of these
properties and continued to employ the private
14 respondent, until his
unceremonious dismissal on June 8, 1991.
Dagui was not compensated in terms of profits for his labor or
services like an independent contractor.15 Rather, he was paid on a
daily wage basis at the rate of P180.00. Employees are those who
are compensated
16 for their labor or services by wages rather than by
profits. Clearly, Dagui fits under this classification.
Doña Aurora and later her daughter petitioner Teresita Quazon
evidently had
17 the power of dismissal for cause over the private
respondent.
Finally, the records unmistakably show that the most important
requisite of control is likewise extant in this case. It should be borne
in mind that the power of control refers merely to the existence of
the power and not to the actual exercise thereof. It is not essential for
the employer to actually supervise the performance of duties of the
employee; it is enough that the former has a right to wield the
power. The establishment of petitioners is engaged in the leasing of
residential and apartment buildings. Naturally, private

_______________

13 Rollo, pp. 67-68.

14 Ibid.
15 Supra.
16 People v. Distributors Division, Smoked Fish Workers Union, Local No. 20377,
Sup. 7 N.Y. 2d 185, 187 in “Words and Phrases,” loc. cit.
17 Supra.
18 MAM Realty Development Corporation v. National Labor Relations
Commission, 244 SCRA 797, 800-801 [1995], citing Zanotte Shoes/Leonardo
Lorenzo v. National Labor Relations Commission, 241 SCRA 261 [1995]; Dy Keh
Beng v. International Labor and Marine Union of the Philippines, 90 SCRA 161
[1979].

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respondent’s work therein as a maintenance man had to be

performed within the premises of herein petitioners. In fact,
petitioners do not dispute the fact that Dagui reports for work from
7:00 o’clock in the morning until 4:00 o’clock in the afternoon. It is
not far-fetched to expect, therefore, that Dagui had to observe the
instructions and specifications given by then Doña Aurora and later
by Mrs. Teresita Quazon as to how his work had to be performed.
Parenthetically, since the job of a maintenance crew is necessarily
done within company premises, it can be inferred that both Doña
Aurora and Mrs. Quazon could easily exercise control on private
respondent whenever they please.
The employment relationship established, the next question
would have to be: What kind of an employee is the private
respondent—regular, casual or probationary?
We find private respondent to be a regular employee, for Article
280 of the Labor Code provides:

“Regular and Casual employment.—The provisions of written agreement

to the contrary notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular where the employee
has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be performed
is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such actually
exists.”

 
As can be gleaned from this provision, there are two kinds of
regular employees, namely: (1) those who are engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the employer; and (2) those who

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Aurora Land Projects Corp. vs. NLRC

have rendered at least one year of service, whether continuous 19 or

broken, with respect to the activity in which they are employed.
Whichever standard is applied, private respondent qualifies as a
regular employee. As aptly ruled by the Labor Arbiter:

“x x x As owner of many residential and apartment buildings in Metro

Manila, the necessity of maintaining and employing a permanent stay-in
worker to perform carpentry, plumbing, electrical and necessary work
needed in the repairs of Tanjangco’s properties is readily apparent and is in
fact needed. So much so that upon the demise of Doña Aurora Tanjangco,
respondent’s daughter Teresita Tanjangco-Quazon apparently took over the
administration of the properties and continued to20employ complainant until
his outright dismissal on June 8, 1991 x x x x x x.

 
The jobs assigned to private respondent as maintenance man,
carpenter, plumber, electrician and mason were directly related to
the business of petitioners as lessors of residential and apartment
buildings. Moreover, such a continuing need for his services by
herein petitioners is sufficient evidence of the necessity and
indispensability of his services to petitioner’s business or trade.
Private respondent Dagui should likewise be considered a regular
employee by the mere fact that he rendered service for the
Tanjangcos for more than one year, that is, beginning 1953 until
1982, under Doña Aurora; and then from 1982 up to June 8, 1991
under the petitioners, for a total of twentynine (29) and nine (9)
years respectively. Owing to private respondent’s length of service,
he became a regular employee, by operation of law, one year after he
was employed in 1953 and subsequently in 1982. In Baguio Country
Club Corp. v.

_______________

19 Philippine Geothermal, Inc. v. National Labor Relations Commission, 189

SCRA 211, 215 [1990] citing Kimberly Independent Labor Union for Solidarity,
Activism, and Nationalism-Olalia v. Drilon, 185 SCRA 190 [1990].
20 Rollo, pp. 67-68.

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Aurora Land Projects Corp. vs. NLRC
21

NLRC, we decided that it is more in consonance with the intent and

spirit of the law to rule that the status of regular employment
attaches to the casual employee on the day immediately after the end
of his first year of service. To rule otherwise is to impose a burden
on the employee which is not sanctioned by law. Thus, the law does
not provide the qualification that the employee must first be issued a
regular appointment or must first be formally declared as such
before he can acquire a regular status.
Petitioners argue, however, that even assuming arguendo that
private respondent can be considered an employee, he cannot be
classified as a regular employee. He was merely a project employee
whose services were hired only 22 with respect to a specific job and
only while the same exists, thus falling under the exception of
Article 280, paragraph 1 of the Labor Code. Hence, it is claimed that
he is not entitled to the benefits prayed for and subsequently
awarded by the Labor Arbiter as modified by public respondent
NLRC.
The circumstances of this case in light of settled case law do not,
at all, support this averment. Consonant
23 with a string of cases
beginning with Ochoco v. NLRC, followed24 by Philippine National
25

Construction Corporation v. NLRC, Magante v. NLRC, 26 and

Capitol Industrial Construction Corporation v. NLRC, if truly,
private respondent was employed as a “project employee,”
petitioners should have submitted a report of termination to the
nearest public employment office everytime his employment is
terminated due to completion of each project, as required by Policy
Instruction No. 20, which provides:

_______________

21 206 SCRA 643, 650 [1992].

22 Rollo, p. 34.
23 120 SCRA 774 [1983].
24 174 SCRA 191 [1989].
25 185 SCRA 21 [1990].
26 221 SCRA 469 [1993].

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64 SUPREME COURT REPORTS ANNOTATED

Aurora Land Projects Corp. vs. NLRC

“Project employees are not entitled to termination pay if they are

terminated as a result of the completion of the project or any phase thereof
in which they are employed, regardless of the number of project in which
they have been employed by a particular construction company. Moreover,
the company is not required to obtain a clearance from the Secretary of
Labor in connection with such termination. What is required of the company
is a report to the nearest Public Employment Office for statistical
purposes.”

 
Throughout the duration of private respondent’s employment as
maintenance man, there should have been filed as many reports of
termination as there were projects actually finished, if it were true
that private respondent was only a project worker. Failure of the
petitioners to comply with this simple, but nonetheless compulsory,
27

requirement is proof that Dagui is not a project employee.

Coming now to the second issue as to whether or not private
respondent Dagui was illegally dismissed, we rule in the affirmative.
Jurisprudence abound as to the rule that the twin requirements of
due process, substantive and procedural,
28 must be complied with,
before a valid 29 dismissal exists. Without which the dismissal
becomes void.
The twin requirements of notice and hearing constitute the
essential elements of due process. This simply means that the
employer shall afford the worker ample opportunity to be heard and
to defend himself with the assistance of his repre-

_______________

27 See Supra., Note 24 at 194.

28 Nitto Enterprises v. National Labor Relations Commission, 248 SCRA 654, 662
[1995] citing Century Textile Mills, Inc. v. National Labor Relations Commission,
161 SCRA 528 [1988]; Gold City Integ. Port Services, Inc. v. National Labor
Relations Commission, 189 SCRA 811 [1990]; Kwikway Eng. Works v. NLRC, 195
SCRA 526 [1991].
29 Ibid.
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VOL. 266, JANUARY 2, 1997 65

Aurora Land Projects Corp. vs. NLRC
30

sentative, if he so desires.
31 As held in the case of Pepsi Cola
Bottling Co. v. NLRC:

“The law requires that the employer must furnish the worker sought to be
dismissed with two written notices before termination of employee can be
legally effected: (1) notice which apprises the employee of the particular
acts or omissions for which his dismissal is sought; and (2) the subsequent
notice which informs the employee of the employer’s decision to dismiss
him (Section 13, BP 130; Sections 2-6, Rule XIV, Book V, Rules and
Regulations Implementing the Labor Code as amended). Failure to comply
with the requirements taints the dismissal with illegality. This procedure is
mandatory; in the absence of which, any judgment reached by management
is void and inexistent. (Tingson, Jr. v. NLRC, 185 SCRA 498 [1990];
National Service Corporation v. NLRC, 168 SCRA 122 [1988]; Ruffy v.
NLRC, 182 SCRA 365 [1990].”

 
These mandatory requirements were undeniably absent in the
case at bar. Petitioner Quazon dismissed private respondent on June
8, 1991, without giving him any written notice informing the worker
herein of the cause for his termination. Neither was there any
hearing conducted in order to give Dagui the opportunity to be heard
and defend himself. He was simply told: “Wala ka nang trabaho
mula ngayon,”32 allegedly because of poor workmanship on a
previous job. The undignified manner by which private
respondent’s services were terminated smacks of absolute denial of
the employee’s right to due process and betrays petitioner Quazon’s
utter lack of respect for labor. Such an attitude indeed deserves
condemnation.
The Court, however, is bewildered why only an award for
separation pay in lieu of reinstatement was made by both the Labor
Arbiter and the NLRC. No backwages were awarded. It must be
remembered that backwages and reinstatement are two reliefs that
should be given to an illegally dismissed

_______________

30 Ibid.
31 210 SCRA 277, 286 [1992].
32 Supra.

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66 SUPREME COURT REPORTS ANNOTATED

Aurora Land Projects Corp. vs. NLRC

employee. They are separate and distinct from each other. In the33
event that reinstatement is no longer possible, as in this case,
separation pay is awarded to the employee. The award of separation
pay is in lieu of reinstatement and not of backwages. In other words,
an illegally dismissed employee is entitled to: (1) either
reinstatement, if viable, or separation34 pay if reinstatement is no
longer viable, and (2) backwages. Payment of backwages is
specifically designed to restore an
35 employee’s income that was lost

because of his unjust dismissal. On the other hand, payment of

separation pay is intended to provide the employee money during 36

the period in which he will be looking for another employment.

 Considering, however, that the termination of private respondent
Dagui was made on June 8, 1991 or after the effectivity of the
amendatory provision of Republic Act No. 6715 on March 21, 1989,
private respondent’s backwages should be computed on the basis of
said law.
It is true that private respondent did not appeal the award of the
Labor Arbiter awarding separation pay sans backwages. While as a
general rule, a party who has not appealed is not entitled to
affirmative relief
37 other than the ones granted in the decision of the
court below, law and jurisprudence authorize a tribunal to consider
errors, although unassigned, if they involve (1) errors affecting the
lower court’s jurisdiction over the subject matter, (2) plain errors not

_______________

33 Rollo, p. 70.
34 Torillo v. Leogardo, Jr., 197 SCRA 471, 477 [1991].
35 Lopez, Jr. v. National Labor Relations Commission, 245 SCRA 644, 650 [1995]
citing General Textile, Inc. v. National Labor Relations Commission, 243 SCRA 232
[1995].
36 Ibid., Citing A’ Prime Security Services, Inc. v. National Labor Relations
Commission, 220 SCRA 142 [1993].
37 Philippine Airlines, Inc. v. Court of Appeals, 185 SCRA 110, 123 [1990], citing
Aparri v. CA, 13 SCRA 611; Dy v. Kuizon, 113 Phil. 592; Borromeo v. Zaballero, 109
Phil. 332.

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Aurora Land Projects Corp. vs. NLRC
38

specified, and (3) clerical errors. In this case, the failure of the
Labor Arbiter and the public respondent NLRC to award backwages
to the private respondent, who is legally entitled thereto having been
illegally dismissed, amounts to a “plain error” which we may rectify
in this petition, although private respondent Dagui did not bring any
appeal regarding the matter, in the interest of substantial justice. The
Supreme Court is clothed with ample authority to review matters,
even if they are not assigned as errors on appeal, if it finds that their39
consideration is necessary in arriving at a just decision of the case.
Rules of procedure are mere tools designed to facilitate the
attainment of justice. Their strict and rigid application, which would
result in technicalities that tend to frustrate 40rather than promote
substantial justice, must always be avoided. Thus, substantive
rights like the award of backwages resulting from illegal dismissal
must 41not be prejudiced by a rigid and technical application of the
rules.
Petitioner Quazon argues that, granting the petitioner corporation
should be held liable for the claims of private respondent, she cannot
be made jointly and severally liable with the corporation,
notwithstanding the fact that she is the highest ranking officer of the
company, since Aurora Plaza has a separate juridical personality.
We disagree.

_______________

38 Santos vs. Court of Appeals, 221 SCRA 42, 46 [1993], citing Section 7, Rule 51
of the Revised Rules of Court, which can be applied by analogy in this case.
39 Regalado, Florenz D., Remedial Law Compendium, Vol. I, 5th Revised Edition,
p. 378, citing Ortigas, Jr. v. Lufthansa German Airlines, L-28773, June 30, 1975; Soco
v. Militante, L-58961, June 28, 1983.
 40 Radio Communications of the Philippines, Inc. v. NLRC, 210 SCRA 222, 227
[1992], citing Piczon v. Court of Appeals, 190 SCRA 31 [1990].
41 Ibid.

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68 SUPREME COURT REPORTS ANNOTATED

Aurora Land Projects Corp. vs. NLRC

 
In the cases
42 of Maglutac v. National Labor Relations 43

Commission, Chua v. National Labor Relations Commission, and

A.C. Ransom 44 Labor Union-CCLU v. National Labor Relations
Commission we were consistent in holding that the highest and
most ranking officer of the corporation, which in this case is
petitioner Teresita Quazon as manager of Aurora Land Projects
Corporation, can be held jointly and severally liable with the
corporation for the payment of the unpaid money claims of its
employees who were illegally dismissed. In this case, not only was
Teresita Quazon the most ranking officer of Aurora Plaza at the time
of the termination of the private respondent, but worse, she had a
direct hand in the private respondent’s illegal dismissal. A corporate
officer is not personally liable for the money claims of discharged
corporate employees unless he acted with45 evident malice and bad
faith in terminating their employment. Here, the failure of
petitioner Quazon to observe the mandatory requirements of due
process in terminating the services of Dagui evinced malice and bad
faith on her part, thus making her liable.
Finally, we must address one last point. Petitioners aver that,
assuming that private respondent can be considered an employee of
Aurora Plaza, petitioners cannot be held liable for separation pay for
the duration of his employment with Doña Aurora Tanjangco from
1953 up to 1982. If petitioners should be held liable as employers,
their liability for separation pay should only be counted from the
time Dagui was rehired by the petitioners in 1982 as a maintenance
man.
We agree.
Petitioners’ liability for separation pay ought to be reckoned from
1982 when petitioner Teresita Quazon, as manager of Aurora Plaza,
continued to employ private respondent. From 1953 up to the death
of Doña Aurora sometime in 1982,

_______________

42 189 SCRA 767 [1990].

43 182 SCRA 353 [1990].
44 142 SCRA 269 [1986].
45 Businessday Information Systems and Services, Inc. v. NLRC, 221 SCRA 9, 14
[1993].

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Aurora Land Projects Corp. vs. NLRC

private respondent’s claim for separation pay should have been filed
in the testate or intestate proceedings of Doña Aurora. This is
because the demand for separation pay covered by the years 1953-
1982 is actually a money claim against the estate of Doña Aurora,
which claim did not survive the death of the old woman. Thus, it
must be filed against her estate in accordance with Section 5, Rule
86 of the Revised Rules of Court, to wit:
 “SEC. 5. Claims which must be filed under the notice. If not filed,
barred; exceptions.—All claims for money against the decedent, arising
from contract, express or implied, whether the same be due, not due, or
contingent, all claims for funeral expenses for the last sickness of the
decedent, and judgment for money against the decedent, must be filed
within the time limited in the notice; otherwise they are barred forever,
except that they may be set forth as counterclaims in any action that the
executor or administrator may bring against the claimants. x x x x x x.”

 
WHEREFORE, the instant petition is partly GRANTED and the
Resolution of the public respondent National Labor Relations
Commission dated March 16, 1994 is hereby MODIFIED in that the
award of separation pay against the petitioners shall be reckoned
from the date private respondent was re-employed by the petitioners
in 1982, until June 8, 1991. In addition to separation pay, full
backwages are likewise awarded to private respondent, inclusive of
allowances, and
46 other benefits or their monetary equivalent pursuant

to Article 279 of the Labor Code, as amended by Section 34 of

Republic Act No. 6715, computed from the time he was

_______________

46 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.

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70 SUPREME COURT REPORTS ANNOTATED

Aurora Land Projects Corp. vs. NLRC

dismissed on June 8, 1991 up to the finality of this decision, without

deducting therefrom the earnings derived by private respondent
elsewhere during the period of his illegal dismissal, pursuant to our
ruling in Osmalik
47 Bustamante, et al. v. National Labor Relations
Commission.
No costs.
SO ORDERED.

Padilla (Chairman), Bellosillo, Vitug and Kapunan, JJ., concur.

Petition granted, resolution modified.

Notes.—Notice and hearing must be accorded by an employer

even though the employee does not affirmatively demand it.
(Segismundo vs. National Labor Relations Commission, 239 SCRA
167 [1994])
Money claims against an estate must be filed in accordance with
Section 5 of Rule 86 of the Revised Rules of Court. (Robledo vs.
National Labor Relations Commission, 238 SCRA 52 [1994])

——o0o——

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 47 G.R. No. 111651, November 28, 1996.

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