Case

LABOR HW, AUG 26 Topics: Kinds of employees/Employee Classification Codal Provisions (renumbered) Art. 295-300, Art. 61 Omnibus Rules counterpart of Labor Code provisions, Kinds of employees defined in the cases below Case Assignments: 1. Magsalin vs. National Organization 403 SCRA 199, GR 148492, May 9, 2003 2. Skippers United vs. NLRC 494 SCRA 66 GR 148893, July 12, 2006 3. Lopez vs. MWSS, 462 SCRA 428, GR 154472, June 30, 2005 4. Universal Robina vs. Catapang, 473 SCRA 189, GR 164736, Oct. 14, 2005 5. Abesco vs. Ramirez, 487 SCRA 9, GR 141168, Apr. 10, 2006 6. Chua vs. CA 440 SCRA 121 GR 150793, Nov. 19, 2004 7. Labayog vs. MY San Biscuits, 494 SCRA 286, GR 148102, July 11, 2006 8. Palomares vs. NLRC, 277 SCRA 439, GR 120064, Aug. 15, 1997 9. Integrated Contractor vs. CA, 466 SCRA 265, GR 152427, Aug. 9, 2005 10. Brent vs. Zamora 181 SCRA 702, GR L-48494, Feb. 5, 1990 11. Mitsubishi v. Chrysler Philippines, 433 SCRA 206, GR 148738 June 29, 2004 12. International Catholic Migration vs. NLRC, 169 SCRA 508 GR 72222, Jan. 30, 1989 13. Alcira vs. NLRC, 431 SCRA 508, GR 149859, June 9, 2004 14. Cebu Stevedoring vs. NLRC 15. Chiang Kai Shek vs. CA, 437 SCRA 171, GR 152988, Aug. 24, 2004



[G. R. No. 148492. May 9, 2003]

WHEREFORE, the assailed decision of the Voluntary Arbitrator is hereby REVERSED and SET ASIDE and anew one is entered:

BUENAVENTURA C. MAGSALIN & COCA-COLA BOTTLERS PHILS., INC., petitioners, vs. NATIONAL ORGANIZATION OF WORKING MEN (N.O.W.M.), ET AL

D E C I S I O N VITUG, J.: Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondent workers as sales route helpers for a limited period of five months. After five months, respondent workers were employed by petitioner company on a day-to-day basis. According to petitioner company, respondent workers were hired to substitute for regular sales route helpers whenever the latter would be unavailable or when there would be an unexpected shortage of manpower in any of its work places or an unusually high volume of work. The practice was for the workers to wait every morning outside the gates of the sales office of petitioner company. If thus hired, the workers would then be paid their wages at the end of the day. Ultimately, respondent workers asked petitioner company to extend to them regular appointments. Petitioner company refused. On 07 November 1997, twenty-three (23) of the temporary workers (herein respondents) filed with the National Labor Relations Commission (NLRC) a complaint for the regularization of their employment with petitioner company. The complaint was amended a number of times to include other complainants that ultimately totaled fifty-eight (58) workers. Claiming that petitioner company meanwhile terminated their services, respondent workers filed a notice of strike and a complaint for illegal dismissal and unfair labor practice with the NLRC. On 01 April 1998, the parties agreed to submit the controversy, including the issue raised in the complaint for regularization of employment, for voluntary arbitration. On 18 May 1998, the voluntary arbitrator rendered a decision dismissing the complaint on the thesis that respondents (then complainants) were not regular employees of petitioner company. Respondent workers filed with the Court of Appeals a petition for review under Rule 43 of the Rules of Civil Procedure assailing the decision of the voluntary arbitrator, therein contending that - 1. The Voluntary Arbitrator committed errors in finding that petitioners voluntarily and knowingly agreed to be employed on a day-to-day basis; and [1]

2. The Voluntary Arbitrator committed errors in finding that petitioners dismissal was valid. In its decision of 11 August 2000, the Court of Appeals reversed and set aside the ruling of the voluntary arbitrator, it concluded -



1. Declaring petitioners as regular employees of Coca-Cola Bottlers Phils., Inc. and their dismissal from employment as illegal; 2. Ordering respondent Coca-Cola Bottlers Phils., Inc. to reinstate petitioners to their former positions with full backwages, inclusive of allowances that petitioners had been receiving th during their employment and 13 month pay, computed from the date of their termination up to the time of their actual reinstatement (Paramount Vinyl Product Corp. vs. NLRC, 190 [2] SCRA 526). Petitioner companys motion for reconsideration was denied in a resolution, dated 21 May 2001, of the appellate court. The focal issues revolve around the matter of whether or not the nature of work of respondents in the company is of such nature as to be deemed necessary and desirable in the usual business or trade of petitioner that could qualify them to be regular employees. The basic law on the case is Article 280 of the Labor Code. Its pertinent provisions read: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. 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. Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinks in the country. Respondent workers have long been in the service of petitioner company. Respondent workers, when hired, would go with route salesmen on board delivery trucks and undertake the laborious task of loading and unloading softdrink products of petitioner company to its various delivery points. Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a regular workers security of tenure, however, can hardly be doubted. In determining whether an employment should be considered regular or nonregular, the applicable test is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The standard, supplied by the law itself, is whether the work undertaken is necessary or desirable

in the usual business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the particular business or trade. But, although the work to be performed is only for a specific project or seasonal, where a person thus engaged has been performing the job for at least one year, even if the performance is not continuous or is merely intermittent, the law deems the repeated and continuing need for its performance as being sufficient to indicate the necessity or desirability of that activity to the business or trade of the employer. The employment of such person is also then deemed to be regular with respect to such activity [3] and while such activity exists.

Ruben Navales, Rey Pangilinan, Christopher Peralta, Jimmy Reyes, Herminio Roflo, Michael Rubia, Noel Rubia, Roberto Tumomba, Oliver Villaflor, and Joselito Villanueva, this Court finds the execution of the same to be in order. During the pendency of the appeal with the Court of Appeals, these thirty-six (36) complainants individually executed voluntarily a release, waiver and quitclaim and received from petitioner company the amount of fifteen thousand (P15,000.00) pesos each. The amount accords with the disposition of the case by the voluntary arbitrator thusly:

The argument of petitioner that its usual business or trade is softdrink manufacturing and that the work assigned to respondent workers as sales route helpers so involves merely postproduction activities, one which is not indispensable in the manufacture of its products, scarcely can be persuasive. If, as so argued by petitioner company, only those whose work are directly involved in the production of softdrinks may be held performing functions necessary and desirable in its usual business or trade, there would have then been no need for it to even maintain regular truck sales route helpers. The nature of the work performed [4] must be viewed from a perspective of the business or trade in its entirety and not on a confined scope.

However, we cannot completely negate the fact that complainants did and do actually render services to the Company. It is with this in mind and considering the difficulty the complainants may face in looking for another job in case they are no longer re-engaged that we direct the company to pay complainants Fifteen Thousand Pesos each (P15,000.00) as financial assistance. It is however understood that the financial assistance previously extended by the Company to some of the complainants shall be deducted from the financial [7] assistance herein awarded.

The repeated rehiring of respondent workers and the continuing need for their services clearly attest to the necessity or desirability of their services in the regular conduct of the business or trade of petitioner company. The Court of Appeals has found each of respondents to have worked for at least one year with petitioner company. While this Court, [5] in Brent School, Inc. vs. Zamora, has upheld the legality of a fixed-term employment, it has done so, however, with a stern admonition that where from the circumstances it is apparent that the period has been imposed to preclude the acquisition of tenurial security by the employee, then it should be struck down as being contrary to law, morals, good customs, public order and public policy. The pernicious practice of having employees, workers and laborers, engaged for a fixed period of few months, short of the normal six-month probationary period of employment, and, thereafter, to be hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be countenanced. The fact that respondent workers have agreed to be employed on such basis and to forego the protection given to them on their security of tenure, demonstrate nothing more than the serious problem of impoverishment of so many of our people and the resulting unevenness between labor and capital. A contract of employment is impressed with public interest.The provisions of applicable statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations [6] by simply contracting with each other. With respect to the Release, Waiver and Quitclaim executed by thirty-six (36) of the original complainants, namely, Rommel Abad, Armando Amor, Bobby Austero, Felix Avenido, Amado Badasan, Edmundo Bayos, Eduardo Bella, Jr., Mariano Caete, Carmelo Cea, Ernie Chavez, Randy Dechaves, Frederick De Guzman, Renato De Ocampo, Ademar Estuita, Leonilo Galapin, Raymund Gaudicos, Retchel Hautea, Larry Javier, Nelson Logrinio, Alberto Magtibay, Frederick Magallano, Rogelio Malinis, Rodolfo Melgar, Silverio Mindajao, Leonardo Mondina,



WHEREFORE, above premises considered, the herein complaint is hereby DISMISSED for lack of merit.

The receipt of the amount awarded by the voluntary arbitrator, as well as the execution of a release, waiver and quitclaim, is, in effect, an acceptance of said decision. There is nothing on record which could indicate that the execution thereof by thirty-six (36) of the respondent workers has been attended by fraud or deceit. While quitclaims executed by employees are commonly frowned upon as being contrary to public policy and are ineffective to bar claims for the full measure of their legal rights, there are, however, legitimate waivers that represent a voluntary and reasonable settlement of laborers claims which should be so [8] respected by the Court as the law between the parties. Where the person making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as being a valid and binding undertaking. Dire necessity is not an acceptable ground for annulling the release, [9] when it is not shown that the employee has been forced to execute it. WHEREFORE, the questioned decision of the Court of Appeals, in CA-G.R. SP No. 47872 is hereby AFFIRMED with MODIFICATION in that the Release, Waiver and Quitclaim executed by the thirty-six (36) individual respondents are hereby declared VALID and LEGAL. SO ORDERED. Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur. FIRST DIVISION G.R. No. 148893 July 12, 2006 SKIPPERS UNITED PACIFIC, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, GERVACIO ROSAROSO, and COURT OF APPEALS,respondents. D E C I S I O N AUSTRIA-MARTINEZ, J.:

Respondent Gervacio Rosaroso* was signed up as a Third Engineer with Nicolakis Shipping, S.A., a foreign firm, through its recruitment and manning agency, herein petitioner Skippers United Pacific, Inc. The term of the contract was for one year, starting July 10, 1997 to July 8, 1998, and with a salary of US$800.00 and other benefits. Barely a month after boarding the vessel M/V Naval Gent on July 15, 1997, respondent was ordered to disembark in Varna, Bulgaria, on August 7, 1997, and repatriated to the Philippines. Immediately after arriving in the Philippines, respondent filed a complaint for illegal dismissal and monetary claims on 1 August 18, 1997. In a Decision dated August 11, 1998, the Labor Arbiter found that respondent was illegally dismissed: WHEREFORE, in the light of the foregoing, judgment is rendered finding the dismissal of complainant illegal. An order is issued directing the respondents to pay complainant the amount of US$2,400.00 or its Philippine peso equivalent of P100,000.00 as separation pay plus the amount of US$186.69 representing complainant’s unpaid salary for seven (7) days or in the Philippine peso equivalent of P7,840.98 or the total amount of P108,640.98. On top of said amount, attorney’s fees of P5,000.00 is also awarded. 2 SO ORDERED. On appeal, the National Labor Relations Commission (NLRC) affirmed the Labor Arbiter’s Decision and dismissed petitioner’s appeal per its Decision dated February 26, 3 1999. Petitioner sought reconsideration thereof but its motion was denied by the NLRC in its 4 Resolution dated May 27, 1999. Thus, petitioner filed with the Court of Appeals (CA) a special civil action for certiorari under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 53490. 5 On May 7, 2001, the CA dismissed the petition and affirmed in toto the NLRC Decision dated 6 February 26, 1999. Petitioner filed a motion for reconsideration which was denied by the CA 7 in its Resolution dated July 3, 2001. Hence, the present petition for review under Rule 45 of the Rules of Court with the following assignment of errors: FIRST ASSIGNMENT OF ERROR THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT PETITIONER ILLEGALLY DISMISSED THE PRIVATE RESPONDENT. SECOND ASSIGNMENT OF ERROR THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN AWARDING PRIVATE RESPONDENT 8 BACKWAGES EQUIVALENT TO HIS THREE (3) MONTHS SALARY. Petitioner’s main contention is that the CA, the NLRC and the Labor Arbiter erred in not giving "full evidentiary value" to the telexed Chief Engineer’s Report dated September 10, 1997, which specified the causes of respondent’s dismissal, quoted as follows: TO: SKIPPERS MNL CC: SKIPPERS PIRAEUS FM: MV NAVAL GENT DT: SEPT. 10, 1997 DURING SHIP REPAIR AT PERAMA DD. 18/07-31/07/97 OUR ATTENDING SUPT. ENGINEERS CONSTANTLY OBSERVING ALL PERSONNELS ABILITY AND ATTITUDE WITH REGARDS TO OUR TECHNICAL CAPABILITY AND BEHAVIOURS WITH EMPHASY [SIC] ON DISCIPLINE. IT IS ONLY UNFORTUNATE THAT THEY NOTICED 3/E G. ROSAROSO AS BEING SLACK AND NOT CARING OF HIS JOB AND DUTIES BEING HIRED AS THIRD ENGR OFFICER, TO THE FULLEST BEYOND THEIR EXPECTATION. AFTER TOO MUCH OF CONSIDERATION AND DELIBERATION HAVING



HIM CONSTANTLY ADVISED BY 2/E F. DIAMOS ASKING FOR HIS COOPERATION TO WORK AND HELP IN THE ONGOING ENORMOUS REPAIRS. BUT FAILED TO HEED AND REFUSED TO BE MOTIVATED. WE HAVE SEEKED [SIC] ADVISE FROM YOUR OFFICE VIA PHONE, SKIPPERS PIRAEUS THRU CAPT. KAMPANIS AND THE PORT CAPT OF NICOLAKIS SHIPPING CAPT. PAPASTILIANOS, OF WHAT TO BE DONE. THE OWNERS RECOMMENDATION WAS TO REPLACED [SIC] HIM ON THE FOLLOWING REASONS: 1) LACK OF DISCIPLINE – HE RESENTED DISCIPLINE. HE IS SEEN BY SUPT. ENGRS. ON SEVERAL OCCASION DURING WORKING HOURS STAYING ON PORTSIDE DECK SMOKING AND HAVING SNACKS. MANY TIMES HE IS INSIDE THE GALLEY CHATTING WITH CHIEF COOK DURING WORKING HOURS AND HAVING SNACKS. HE TENDS TO BE FREQUENTLY LATE FOR DUTY/WORK AND IS GENERALLY UNRELIABLE. 2) IRRESPONSIBLE - HE HAS NOT SHOWN A HIGH SENSE OF RESPONSIBILITY AS 3/ENGR. HE IS CAREFREE IN DISCHARGING HIS DUTIES IN MAINTAINING THE ASSIGNED MACHINERIES, SUCH AS BOILER, DIESEL GENERATORS, STARTING AIR COMPRESSORS AND VARIOUS PUMPS. HE CANNOT BE TRUSTED TO DO HIS JOB UNLESS SUPERVISED PERPETUALLY. 3) LACK OF DILIGENCE - HE REQUIRES CONSTANT PUSHING AND HAS TO BE WATCHED MOST OF THE TIME. LACK OF INITIATIVE REGARDLESS OF CONSTANT MOTIVATION. SGD. JEROME A. RETARDO 9 CHIEF ENGR According to petitioner, the foregoing Report established that respondent was dismissed for just cause. The CA, the NLRC, and the Labor Arbiter, however, refused to give credence to the Report. They are one in ruling that the Report cannot be given any probative value as it is uncorroborated by other evidence and that it is merely hearsay, having come from a source, the Chief Engineer, who did not have any personal knowledge of the events reported therein. The Labor Arbiter ruled that the charges against respondent are bare allegations, unsupported by corroborating evidence. The Labor Arbiter stated that if respondent indeed committed the alleged infractions, then these should have, at the very least, been entered into the seaman’s book, or that a copy of the vessel’s logbook presented to prove the 10 11 same. The Labor Arbiter’s findings were sustained by the NLRC. The CA upheld these findings, succinctly stating as follows: Verily, the report of Chief Engineer Retardo is utterly bereft of probative value. It is not verified by an oath and, therefore, lacks any guarantee of trustworthiness. It is furthermore – and this is crucial – not sourced from the personal knowledge of Chief Engineer Retardo. It is rather based on the perception of "ATTENDING SUPT. ENGINEERS CONSTANTLY OBSERVING ALL PERSONNELS ABILITY AND ATTITUDE WITH REGARDS TO OUR TECHNICAL CAPABILITY AND BEHAVIOURS WITH EMPHASY (sic) ON DISCIPLINE" who "NOTICED 3/E ROSAROSO AS BEING SLACK AND NOT CARING OF HIS JOB AND DUTIES X X X ." Accordingly, the report is plain hearsay. It is not backed up by the affidavit of any of the "Supt." Engineers who purportedly had first-hand knowledge of private respondent’s supposed "lack of discipline," 12 "irresponsibility" and "lack of diligence" which caused him to lose his job. x x x The Court finds no reason to reverse the foregoing findings. To begin with, the question of whether respondent was dismissed for just cause is a question of fact which is beyond the province of a petition for review on certiorari. It is fundamental that the scope of the Supreme Court’s judicial review under Rule 45 of the Rules of Court is confined only to errors of law. It does not extend to questions of fact. More so in labor cases 13 where the doctrine applies with greater force.

The Labor Arbiter and the NLRC have already determined the factual issues, and these were 14 affirmed by the CA. Thus, they are accorded not only great respect but also finality, and are 15 deemed binding upon this Court so long as they are supported by substantial evidence. A heavy burden rests upon petitioner to convince the Court that it should take exception from 16 such a settled rule. More importantly, the finding that respondent was illegally dismissed is supported, not only by the evidence on record, but by jurisprudence as well. The rule in labor cases is that the employer has the burden of proving that the dismissal was for a just cause; failure to show this would necessarily mean that the dismissal was 17 unjustified and, therefore, illegal. The two-fold requirements for a valid dismissal are as follows: (1) dismissal must be for a cause provided for in the Labor Code, which is substantive; and (2) the observance of notice and hearing prior to the employee’s dismissal, 18 which is procedural. The only evidence relied upon by petitioner in justifying respondent’s dismissal is the Chief Engineer’s Report dated September 10, 1997. The question that arises, therefore, is whether the Report constitutes substantial evidence proving that respondent’s dismissal was for cause. Substantial evidence is defined as that amount of relevant evidence which a reasonable mind 19 might accept as adequate to justify a conclusion. As all three tribunals found, the Report cannot be given any weight or credibility because it is uncorroborated, based purely on hearsay, and obviously merely an afterthought. While rules of evidence are not strictly 20 observed in proceedings before administrative bodies, petitioner should have offered additional proof to corroborate the statements described therein. Thus, in Ranises v. 21 National Labor Relations Commission, involving a seafarer who was repatriated to the Philippines for allegedly committing illegal acts amounting to a breach of trust, as based on a telex dispatch by the Master of the M/V Southern Laurel, the Court rejected the weight given by the NLRC on the telex, to wit: Unfortunately, the veracity of the allegations contained in the aforecited telex was never proven by respondent employer. Neither was it shown that respondent employer exerted any effort to even verify the truthfulness of Capt. Sonoda’s report and establish petitioner’s culpability for his alleged illegal acts. Worse, no other evidence was submitted to corroborate the charges against petitioner. Similarly in this case, petitioner should have presented other evidence to corroborate its claim that respondent’s acts or omissions aboard the vessel M/V Naval Gent warrant his immediate repatriation. Moreover, the fact that the Report was accomplished on September 10, 1999, or more than a month after respondent was repatriated, makes it all the more suspect, and was obviously made to make it appear that there were valid reasons for respondent’s dismissal. 22 Another analogous case worth citing is Pacific Maritime Services, Inc. v. Ranay. This case involved two seafarers repatriated to the Philippines for committing acts on board the vessel M/V Star Princess, which acts amounted to serious misconduct, insubordination, nonobservance of proper hours of work and damage to the laundry of the vessel’s crew and passengers. In support of its claim that the respondents were validly dismissed, the petitioners presented its lone evidence, a telefax transmission purportedly executed and signed by a certain Armando Villegas, detailing the incidents which prompted the termination of private respondents’ services. The Court, however, ruled that the telefax transmission is not sufficient evidence, viz.:



Petitioners’ reliance on the telefax transmission signed by Armando Villegas is woefully inadequate in meeting the required quantum of proof which is substantial evidence. For one thing, the same is uncorroborated. Although substantial evidence is not a function of quantity but rather of quality, the peculiar environmental circumstances of the instant case demand that something more should have been proffered. According to the account of Villegas, it appears that the incidents he was referring to transpired with the knowledge of some crew members. The alleged assault by Gerardo Ranay on Villegas, for instance, was supposedly witnessed by at least four other crew members. Surprisingly, none of them was called upon to testify, either in person or through sworn statements. Worse, Villegas himself who omitted some vital details in his report, such as the time and date of the incidents referred to, was not even presented as witness so that private respondents and the POEA hearing officer could have been given an opportunity to cross-examine and propound clarificatory questions regarding matters averred by him in the telefax transmission. Moreover, although signed, the same was not under oath and, therefore, of dubious veracity and reliability although admissible. Likewise, the motive is suspect and the account of the incidents dangerously susceptible to bias since it came from a person with whom private respondents were at odds. All told, petitioners failed to make up for the weakness of the evidence upon which they confidently anchored the merits of their case. Likewise, the belated submission of the report by Villegas, long after the incidents referred to had taken place and after the complaint had been lodged by private respondents, weighs heavily against its credibility. Petitioners did not show any convincing reason why said report was only accomplished on September 22, 1989. They merely argued that as in criminal cases, the witness is usually reluctant to report an incident. At any rate, with present technology, a ship out at sea is not so isolated that its captain cannot instantly communicate with its office. It would appear that the report, filed several months later, is but an afterthought. Therefore, the CA was correct in affirming the findings and conclusions of both the Labor Arbiter and the NLRC. Petitioner maintains that it complied with the requisites of procedural due process. According to petitioner, respondent was constantly reprimanded and rebuked for his acts. Petitioner also contends that the ship’s Master is allowed to dismiss an erring seafarer without hearing under Section 17, paragraph D of the Philippine Overseas Employment Administration (POEA) Standard Employment Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels. Paragraph D, Section 17, however, is not applicable in respondent’s case. Section 17 sets forth the disciplinary procedures against erring seafarers, to wit: Section 17. DISCIPLINARY PROCEDURES The Master shall comply with the following disciplinary procedures against an erring seafarer: A. The Master shall furnish the seafarer with a written notice containing the following: 1. Grounds for the charges as listed in Section 31 of this Contract. 2. Date, time and place for a formal investigation of the charges against the seafarer concerned. B. The Master or his authorized representative shall conduct the investigation or hearing, giving the seafarer the opportunity to explain or defend himself against the charges. An entry on the investigation shall be entered into the ship’s logbook.

C. If, after the investigation or hearing, the Master is convinced that imposition of a penalty is justified, the Master shall issue a written notice of penalty and the reasons for it to the seafarer, with copies furnished to the Philippine agent. D. Dismissal for just cause may be effected by the Master without furnishing the seafarer with a notice of dismissal if doing so will prejudice the safety of the crew or the vessel. This information shall be entered in the ship’s logbook. The Master shall send a complete report to the manning agency substantiated by witnesses, testimonies and any other documents in support thereof. 23 The foregoing provision was explained in Skippers Pacific, Inc. v. Mira, as follows: Note that under Section 17 of what is termed the Standard Format, the "two - notice rule" is indicated. An erring seaman is given a written notice of the charge against him and is afforded an opportunity to explain or defend himself. Should sanctions be imposed, then a written notice of penalty and the reasons for it shall be furnished the erring seafarer. It is only in the exceptional case of clear and existing danger to the safety of the crew or vessel that the required notices are dispensed with; but just the same, a complete report should be sent to the manning agency, supported by substantial evidence of the findings. (Emphasis supplied) There is nothing on record that shows that furnishing respondent with a notice of dismissal will pose a clear and present danger to the vessel and its crew. And even if the Master was justified in dispensing with the required notice, still, it was essential that a complete report, substantiated by witnesses, testimonies and any other documents in support thereof, was sent to the manning agency. The record of this case is bereft of any such report and supporting documents. Instead, respondent was verbally ordered to disembark the vessel 24 and repatriated to the Philippines without being told of the reasons why. Clearly, respondent was not accorded due process. Finally, petitioner laments the award of backwages equivalent to three months salary in favor of respondent. Petitioner argues that there is no basis for such award. The Court is not persuaded. A seafarer is not a regular employee as defined in Article 280 of the Labor Code. Hence, he is not entitled to full backwages and separation pay in lieu of reinstatement as provided in 25 Article 279 of the Labor Code. Seafarers are contractual employees whose rights and obligations are governed primarily by the POEA Standard Employment Contract for Filipino Seamen, the Rules and Regulations Governing Overseas Employment, and, more importantly, by Republic Act (R.A.) No. 8042, or the Migrant Workers and Overseas Filipinos Act of 26 1995. While the POEA Standard Employment Contract for Filipino Seamen and the Rules and Regulations Governing Overseas Employment do not provide for the award of separation 27 or termination pay, Section 10 of R.A. 8042 provides for the award of money claims in cases of illegal dismissals, thus: Section 10. Money Claims. – x x x x x x In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. x x x



The award of salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less, is not an award of backwages or separation pay, but a form of indemnity for the worker who was illegally dismissed. The Labor Arbiter may have mislabeled it as separation pay, nonetheless, the award was made in conformity with law. However, in the interest of substantial justice and to avoid further litigation on the 28 matter, it must be stressed that the peso amounts equivalent to the dollar awards of the Labor Arbiter can not be enforced for being contrary to law. The peso equivalent of the monetary award should be computed at the peso to dollar exchange rate prevailing at the 29 time of payment, as provided in Republic Act No. 8183, entitled "An Act Repealing Republic Act Numbered Five Hundred Twenty-Nine, As Amended, Entitled ‘An Act to Assure the Uniform Value of Philippine Coin and Currency’," which provides: SECTION 1. All monetary obligations shall be settled in the Philippine currency which is legal tender in the Philippines. However, the parties may agree that the obligation or transaction shall be settled in any other currency at the time of payment. Except for the foregoing clarification, the Court finds no cogent reason to grant this petition. WHEREFORE, the petition is DENIED. The Decision dated May 7, 2001 and Resolution dated July 3, 2001 rendered by the Court of Appeals in CA-G.R. SP No. 53490 are AFFIRMED with the MODIFICATION that the monetary awards of US$2,400.00 and US$186.69 made by the Labor Arbiter in its Decision dated August 11, 1998, should be payable in its equivalent in Philippine currency computed at the prevailing rate of exchange at the time of payment. Let the heirs of deceased respondent represented by his surviving wife, Carmen M. Rosaroso, residing at Hills View, Mohon II, Tisa, Cebu City, who are hereby deemed substituted as respondents, be sent a copy of herein Decision. SO ORDERED.

EN BANC [G.R. No. 154472. June 30, 2005] ALEXANDER R. LOPEZ, ET AL, petitioners, vs. METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, respondents. D E C I S I O N TINGA, J.: Take not from the mouth of labor the bread it has earned. Thomas Jefferson The constitutional protection to labor, a uniform feature of the last three Constitutions including the present one, is outstanding in its uniqueness and as a mandate for judicial activism. [1] This petition asks for the review of the Court of Appeals Decision in C.A.-G.R. SP NO. 55263 entitled Alexander R. Lopez, et al. v. Metropolitan Waterworks and Sewerage System,which [2] affirmed in toto the Civil Service Commissions Resolutions denying petitioners claim for severance, retirement and terminal leave pay. [3] By virtue of an Agreement, petitioners were engaged by the Metropolitan Waterworks and Sewerage System (MWSS) as collectors-contractors, wherein the former agreed to collect from the concessionaires of MWSS, charges, fees, assessments of rents for water, sewer [4] and/or plumbing services which the MWSS bills from time to time. In 1997, MWSS entered into a Concession Agreement with Manila Water Service, Inc. and Benpress-Lyonnaise, wherein the collection of bills was transferred to said private concessionaires, effectively terminating the contracts of service between petitioners and MWSS. Regular employees of the MWSS, except those who had retired or opted to remain with the latter, were absorbed by the concessionaires. Regular employees of the MWSS were paid their retirement benefits, but not petitioners. Instead, they were refused said benefits, [5] MWSS relying on a resolution of the Civil Service Commission (CSC) that contract-collectors of the MWSS are not its employees and therefore not entitled to the benefits due regular government employees. [6] Petitioners filed a complaint with the CSC. In its Resolution dated 1 July 1999, the CSC denied their claims, stating that petitioners were engaged by MWSS through a contract of service, which explicitly provides that a bill collector-contractor is not an MWSS [7] employee. Relying on Part V of CSC Memorandum Circular No. 38, Series of 1993, the CSC stated that contract services/job orders are not considered government services, which do not have to be submitted to the CSC for approval, unlike contractual [8] and plantilla appointments. Moreover, it found that petitioners were unable to show that [9] they have contractual appointments duly attested by the CSC. In addition, the CSC stated that petitioners, not being permanent employees of MWSS and not included in the list [10] .submitted to the concessionaire, are not entitled to severance pay. Petitioners claims for retirement benefits and terminal leave pay were likewise denied. Petitioners sought reconsideration of the CSC Resolution, which was however denied by the [11] CSC on 17 September 1999. According to the CSC, petitioners failed to present any proof that their appointments were contractual appointments submitted to the CSC for its [12] approval. The CSC held, thus: WHEREFORE, the motion for Reconsideration of Alexander Lopez, et al. is hereby denied. Accordingly, CSC Resolution No. 99-1384 dated July 1, 1999 stands. However, this is not without prejudice to whatever rights and benefits they may have under the New Labor Code [13] and other laws, if any.



Aggrieved, petitioners filed a petition for review under Rule 43 of the Rules of Court with the [14] Court of Appeals. In its Decision, the Court of Appeals narrowed down the issues presented by petitioners as follows: Whether or not the CSC erred in finding that petitioners are not contractual employees of the government and, hence, are not entitled to retirement [15] and separation benefits. Affirming and generally reiterating the ruling of the CSC, the Court of Appeals held that the Agreement entered into by petitioners and MWSS was clear and unambiguous, and [16] should be read and interpreted according to its literal sense. Hence, as per the terms of the agreement, petitioners were not MWSS employees. The Court of Appeals held that no other evidence was adduced by petitioners to substantiate their claim that their papers were [17] forwarded to the CSC for attestation and approval. It added that in any event, as early as 26 June 1996, the CSC specifically stated that contract collectors are not MWSS employees [18] and therefore not entitled to severance pay. The Court of Appeals held that petitioners are not similarly situated as the petitioner in the [19] case of Chua v. Civil Service Commission since the contractual appointment was submitted [20] to and approved by the CSC, while the former were not. Further, petitioners do not have creditable service for purposes of retirement, since their services were not supported by duly [21] approved appointments. Lastly, the Court of Appeals held that petitioners were exempt from compulsory membership in the GSIS. Having made no monthly contributions remitted to the said office, petitioners are not entitled to the separation and/or retirement benefits [22] that they are claiming. Petitioners now assert that the Court of Appeals rendered a decision not in accord with law and applicable jurisprudence, based on misapprehension of facts, and/or contrary to the [23] evidence on record. Petitioners allege that while their hiring was made to appear to be on contractual basis, the contracts evidencing such hiring were submitted to and approved by the CSC. Later contracts, however, do not appear to have been submitted to the CSC for approval. To [24] support its claim, petitioners presented two (2) sample agreements, both stamped approved and signed by CSC Regional Directors. While styled as individual contracts/agreements, petitioners insist that the same were actually treated by the MWSS as [25] appointment papers. Petitioners claim that they were employees of the MWSS, and that the latter exercised control over them. They cite as manifestations of control the training requirements, the mandated procedures to be followed in making collections, MWSS close monitoring of their performance, as well as the latters power to transfer collectors from one branch to [26] another. Moreover, they add that with the nature and extent of their work at the MWSS, they served [27] as collectors of MWSS only. They stress that they have never provided collection services to customers as an independent business. In fact, they applied individually and were hired by [28] MWSS one by one. They were provided with uniforms and identification cards, and received basic pay termed as commissions from which MWSS deducted withholding [29] tax. The commissions were determined or computed by MWSS and paid to the collectors th by payroll every fifteenth (15 ) and last day of every month. In addition to the commission, collectors were given, among others, performance, mid-year and anniversary bonuses, th hazard pay, thirteenth (13 ) month pay, traveling allowance, cash gift, meal allowance and [30] productivity pay.

Petitioners claim that bill collectors were historically regarded as employees of National [31] Waterworks and Sewerage Authority (NAWASA), the forerunner of MWSS. They cite the case of National Waterworks and Sewerage Authority v. NWSA Consolidated Labor Unions, et [32] al., wherein this Court supposedly declared the bill collectors of NAWASA as its employees [33] and the commissions received by said collectors as salary. Likewise, they claim that by MWSS own acts, petitioners were its employees. To support this contention, they point to the identification cards (I.D.s) and certifications of employment issued by MWSS in their [34] favor. There were also Records of Appointment, which referred to the contract-collectors [35] as employees with corresponding service records. In view of the cited documents, petitioners assert that MWSS is estopped from denying their [36] employment with the agency. Should there be doubt as to their status as employees, petitioners invoke the rule of liberal construction in favor of labor, and the constitutional [37] policy of protection to labor. To further strengthen their case, petitioners refer to CSC Resolution 92-2008 dated 8 December 1992, which states in part: . . . . The fact that they were being hired directly and paid on commission basis by MWSS itself is indicative that they are government employees and should be entitled to the incentive awards. WHEREFORE, foregoing premises considered, the Commission resolves to rule that the Contractual-Collectors of the Metropolitan Waterworks and Sewerage System (MWSS) are [38] entitled to loyalty awards. The same resolution was made the basis of the MWSS memorandum declaring contractcollectors government employees or personnel entitled to salary increases pursuant to the [39] Salary Standardization Law I & II. Thus, petitioners claim that by MWSS and CSCs own acts and declarations, they were made [40] to believe that they were employees of MWSS and as such were government employees. [41] Petitioners invoke the case of Chua v. Civil Service Commission, et al. wherein Chua, a coterminus employee of the National Irrigation Administration, sought to recover early retirement benefits but was denied the same. This Court, having observed that Chua was hired and re-hired in four (4) successive projects during a span of fifteen (15) years, was deemed a regular employee for purposes of retirement pay. Petitioners argue that in the same manner, in view of their considerable length of service to MWSS, they are entitled to [42] their claimed benefits. In addition to the retirement/separation/terminal leave pay prayed for, petitioners claim moral damages for the alleged serious disturbance they suffered as a result of the denial of [43] their claims. They also pray for the award of attorneys fees. For its part, the MWSS avers that the Court of Appeals did not err in sustaining the resolutions of the CSC denying petitioners claim for entitlement to severance, retirement and terminal leave pay. MWSS denies the existence of employer-employee relationship between itself and petitioners. Citing CSC Memorandum Circular No. 38 Series of 1993, MWSS avers that it has [44] the authority to contract the services of another who is considered not its employee. With respect to the matter of payment of wages, MWSS states that the commission given to petitioners does not fall within the definition of compensation as provided in Presidential [45] Degree No. 1146 (P.D. 1146), or in the definition of the term under the Revised [46] Administrative Code either.



It adds that the issuance of I.D.s., certificates of recognition and loyalty awards as well as the grounds for termination of the Agreement could hardly be considered as control as the same had no relation to the means and methods to be employed by petitioners in collecting [47] payments for MWSS. As for the training and orientation undergone by petitioners, MWSS claims that it is but logical for any entity which has contracted the services of another to orient the latter before actual performance of the service, more so if the entitys function is impressed with public service. The fact that collectors were given a regular time for remittance should likewise not be considered as a form of control. MWSS states that none of these requirements invades the collectors prerogative to adopt their own method/strategy in [48] the matter of collection. th On the grant of thirteenth (13 ) month pay and other benefits to petitioners, MWSS claims [49] that these were mere acts of benevolence and generosity. Pertinently, therefore, the issue to be resolved is whether or not petitioners were employees of the MWSS and, consequently, entitled to the benefits they claim. We find for the petitioners. The Court has invariably affirmed that it will not hesitate to tilt the scales of justice to the labor class for no less than the Constitution dictates that the State . . . shall protect the rights [50] of workers and promote their welfare. It is committed to this policy and has always been [51] quick to rise to defense in the rights of labor, as in this case. Protection to labor, it has been said, extends to all of laborlocal and overseas, organized and [52] unorganized, in the public and private sectors. Besides, there is no reason not to apply this principle in favor of workers in the government. The government, including governmentowned and controlled corporations, as employers, should set the example in upholding the rights and interests of the working class. The MWSS is a government owned and controlled corporation with its own charter, Republic [53] [54] Act No. 6234. As such, it is covered by the civil service and falls under the jurisdiction of [55] the Civil Service Commission. CSC Memorandum Circular No. 38, Series of 1993, categorically made the distinction between contract of services/job orders and contractual and plantilla appointment, declaring that services rendered under contracts of services and job orders are non-government services which do not have to be submitted to the CSC for approval. This was followed by CSC Memorandum Circular No. 4, Series of 1994, which allowed the crediting of services for purposes of retirement only for such services supported by duly approved appointments. Subsequently, the CSC issued other resolutions applying the above-mentioned circulars, stating that while some functions may have been contracted out by a government agency, the persons contracted are not entitled to the benefits due to regular government [56] employees. For purposes of determining the existence of employer-employee relationship, the Court has consistently adhered to the four-fold test, namely: (1) whether the alleged employer has the power of selection and engagement of an employee; (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished; (3) [57] whether he has the power to dismiss; and (4) whether the employee was paid wages. Of the four, the control test is the most important element. A review of the circumstances surrounding the case reveals that petitioners are employees of MWSS. Despite the obvious attempt of MWSS to categorize petitioners as mere service providers, not employees, by entering into contracts for services, its actuations show that they are its employees, pure and simple. MWSS wielded its power of selection when it

contracted with the individual petitioners, undertaking separate contracts or agreements. The same goes true for the power to dismiss. Although termed as causes for termination of the Agreement, a review of the same shows that the grounds indicated therein can similarly be grounds for termination of employment. Under the Agreement, MWSS may terminate it if the Collector-Contractor does or fails to do any of the following: Article VII Duration, Termination and Penal Clauses. . . . . (a) Fails to collect at least eighty percent (80%) of bills issued within three (3) months from commencement of this Agreement or ninety percent (90%) within six (6) months after effectivity of this Agreement; (b) Erases, alters, or changes any figure on the bills or remittance receipt for purposes of defrauding either the concessioner or the MWSS. In case of termination of his services for any irregularity, there shall be no prejudice against any criminal action for which he may be liable; (c) Is discourteous, dishonest, arrogant or his conduct is inimial [sic] to the good name or image of the MWSS; (d) Fails to remit collections daily or to return uncollected bills daily; and (e) Fails to comply with any of the undertakings as provided for in this Agreement, and the [58] Manual of Procedures mentioned in Article II hereof. (Emphasis Supplied) On the other hand, the Labor Code enumerates the just causes for termination of employment, thus: 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. Obviously, failure to collect the payments of customers or remit the collections constitutes neglect of duty. Making erasures, alterations or changing of figures in the fees or collection receipts amounts to fraud. Lack of courtesy, dishonesty and arrogance are practically the same as misconduct. On the issue of remuneration, MWSS claims that the compensation received by petitioners [59] does not fall under the definition of wages as provided in Section 2(i) of P.D. 1146, which is the basic pay or salary received by an employee, pursuant to his employment appointments, excluding per diems, bonuses, overtime pay and allowances; thus petitioners are not its employees. This assertion, however, simply begs the question. The provision is a simple statement of meaning, operating on the a priori premise or presumption that the recipient is already classified as an employee, and does not lay down any basis or standard for determining who are employees and who are not. On the other hand, relevant and appropriate is the definition of wages in the Labor Code, namely, that it is the remuneration, however designated, for work done or to be done, or for [60] services rendered or to be rendered. The commissions due petitioners were based on the



[61]

bills collected as per the schedule indicated in the Agreement. Significantly, MWSS granted petitioners benefits usually given to employees, to wit: COLA, meal, emergency, and traveling [62] allowances, hazard pay, cash gift, and other bonuses. In an unabashed bid to claim credit for itself, MWSS professes that these additional benefits were its acts of benevolence and [63] generosity. We are not impressed. Petitioners rendered services to MWSS for which they were paid and given similar benefits due the other employees of MWSS. It is hard to imagine that MWSS was simply moved by the spirit of benevolence and generosity when it granted liberal benefits to petitioners. More so since MWSS is a government owned and controlled corporation created for the proper operation and maintenance of waterworks system to insure an uninterrupted and adequate supply and distribution of potable water for domestic and other purposes and the proper [64] operation and maintenance of sewerage systems. Its main function is to provide basic services to the public. The disposition of MWSS income is limited to the payment of its contractual and statutory obligations, expansion and development, and for the enhancement [65] of its efficient operation. It was not in a position to distribute hard-earned income of the State merely to give expression to its supposed altruistic impulse, or to disburse funds not otherwise authorized by law or its charter. If MWSS was impelled by some force to give the benefits to petitioners, it must have been the force of good business sense. Obviously, the additional benefits were granted with the same motivation as good managers anywhere else haveto foster a good working relationship with the bill-collectors and incentivize them to raise the high level of their performance even higher. Now the aspect of control. MWSS makes an issue out of the proviso in the Agreement that specifically denies the existence of employer-employee relationship between it and petitioners. It is axiomatic that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in an agreement and providing therein that the [66] employee is not an MWSS employee when the terms of the agreement and the surrounding circumstances show otherwise. The employment status of a person is defined [67] and prescribed by law and not by what the parties say it should be. In addition, the control test merely calls for the existence of the right to control, and not the exercise thereof. It is not essential for the employer to actually supervise the performance of [68] duties of the employee, it is enough that the former has a right to wield the power. While petitioners were contract-collectors of MWSS, they were under the latters direction as to where and how to perform their collection and were even subject to disciplinary measures. Trainings were in fact conducted to ensure that petitioners are conversant of the procedures of the MWSS. Contrary to MWSS assertion that petitioners were free to adopt (their) own method/strategy [69] in the matter of collection, the Agreement clearly provided that the procedure and/or manner of the collection of bills to be followed shall be in accordance with the provisions of the Manual of Procedures. Art. VI of the Agreement states: Art. II - Procedure of Collection The procedure and/or manner of the collection of bills to be followed shall be in accordance with Provisions of the Manual of Procedures adopted on November 1, 1968, which is made [70] an integral part of this Agreement as Annex A. Other manifestations of control are evident from the records. The power to transfer or reassign employees is a management prerogative exclusively enjoyed by employers. In this case, MWSS had free reign over the transfer of bill collectors from one branch to

[71]

another. MWSS also monitored the performance of the petitioners and determined their [72] efficiency ratings. MWSS contends that petitioners were free to engage in other occupations and were not limited by the Agreement. Suffice it to say, however, that the control measures installed by MWSS were restrictive enough to limit or even render illusory the other employment options of petitioners as their tasks took up most of their time, they being required to report and remit to MWSS almost twice daily. Interestingly in that regard, under the Agreement petitioners were allowed to render overtime work, and were given additional [73] incentive commission for work so rendered as long as the same was authorized. Verily, the need to secure MWSS authorization before petitioners can render overtime work debunks its claim that they were allowed to work as and when they please. All these indicate that MWSS controlled the working hours of petitioners. Furthermore, petitioners did not have their own offices nor their own supplies and equipment. MWSS provides them with company stationeries, office space and [74] equipment. Likewise, MWSS comported itself as the employer of petitioners, providing [75] them with I.D.s. and certifications which declared them as employees of MWSS. It also [76] deducted and remitted petitioners withholding taxes and Medicare contributions. Presaging and lending precedental lift to the present adjudication is the recent ruling [77] in Manila Water Company, Inc. v. Pea. In that case, Manila Water Company (Manila Water), a concessionaire of MWSS, individually hired some of the former MWSS bill collectors to perform collection services for three (3) months. Subsequently, the bill collectors formed a corporation, Association Collectors Group, Inc. (ACGI) which was contracted by Manila Water to collect charges. Later, Manila Water asked the collectors to transfer to a newly formed corporation, First Classic Courier Services. Manila Water later terminated its contract with ACGI, as a result of which collectors who opted to remain with ACGI became unemployed. These bill collectors filed a complaint for illegal dismissal and money claims against Manila Water, claiming that they were its employees since all the methods and procedures of their collection were controlled by the latter. On the other hand, Manila Water contended that the bill collectors were employees of AGCI, an independent [78] contractor. The Court ruled that the bill collectors were regular employees of Manila Water, debunking the latters claim that they worked for an independent contractor corporation, thus: First, ACGI does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises, and other materials, to qualify as an independent contractor. While it has an authorized capital stock of P1,000,000.00, only P62,500.00 is actually paid-in, which cannot be considered substantial capitalization. The 121 collectors subscribed to four shares each and paid only the amount of P625.00 in order to comply with the incorporation requirements. Further, private respondents reported daily to the branch office of the petitioner because ACGI has no office or work premises. In fact, the corporate address of ACGI was the residence of its president, Mr. Herminio D. Pea. Moreover, in dealing with the consumers, private respondents used the receipts and identification cards issued by petitioner. Second, the work of the private respondents was directly related to the principal business or operation of the petitioner. Being in the business of providing water to the consumers in the East Zone, the collection of the charges therefor by private respondents for the petitioner can only be categorized as clearly related to, and in the pursuit of the latters business.



Lastly, ACGI did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, petitioner. Prior to private respondents alleged employment with ACGI, they were already working for petitioner, subject to its rules and regulations in regard to the manner and method of performing their tasks. This form of control and supervision never changed although they were already under the seeming employ of ACGI. Petitioner issued memoranda regarding the billing methods and distribution of books to the collectors; it required private respondents to report daily and to remit their collections on the same day to the branch office or to deposit them with Bank of the Philippine Islands; it monitored strictly their attendance as when a collector cannot perform his daily collection, he must notify petitioner or the branch office in the morning of the day that he will be absent; and although it was ACGI which ultimately disciplined private respondents, the penalty to be imposed was dictated by petitioner as shown in the letters it sent to ACGI specifying the penalties to be meted on the erring private respondents. These are indications that ACGI was not left alone in the supervision and control of its alleged employees. Consequently, it can be concluded that ACGI was not an independent contractor since it did not carry a distinct [79] business free from the control and supervision of petitioner. Even under the four-fold test, the bill collectors proved to be employees of Manila Water. Thus, the Court held that: Even the four-fold test will show that petitioner is the employer of private respondents. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. The most important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. We agree with the Labor Arbiter that in the three stages of private respondents services with the petitioner, i.e., (1) from August 1, 1997 to August 31, 1997; (2) from September 1, 1997 to November 30, 1997; and (3) from December 1, 1997 to February 8, 1999, the latter exercised control and supervision over the formers conduct. Petitioner contends that the employment of private respondents from August 1, 1997 to August 30, 1997 was only temporary and done to accommodate their request to be absorbed since petitioner was still undergoing a transition period. It was only when its business became settled that petitioner employed private respondents for a fixed term of three months. Although petitioner was not obliged to absorb the private respondents, by engaging their services, paying their wages in the form of commission, subjecting them to its rules and imposing punishment in case of breach thereof, and controlling not only the end result but the manner of achieving the same as well, an employment relationship existed between them. Notably, private respondents performed activities which were necessary or desirable to its principal trade or business. Thus, they were regular employees of petitioner, regardless of [80] whether the engagement was merely an accommodation of their request. (Emphasis Ours) In fine, the Court found that the so-called independent contractor did not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises and other material to qualify as an independent contractor. Moreover, respondents therein reported daily to the Manila Water branch office and dealt with the consumers through receipts and I.D.s. issued by the latter. Likewise, their work was directly related to and in the

pursuit of Manila Waters principal business. More importantly, the Court noted that ACGI did not carry a distinct business free from the control and supervision of Manila Water. The similarity between this case and the instant petition cannot be denied. For one, the [81] respondents in said case are petitioners in this case. Second, the work set-up was essentially the same. While the bill collectors were individually hired, or eventually engaged through ACGI, they were under the direct control and supervision of the concessionaire, much like the arrangement between herein petitioners and MWSS. Third, they performed the same vital function of collection in both cases. Fourth, they worked exclusively for their employers. Hence, the bill collectors in the Manila Water case were declared employees of Manila Water despite the existence of a sham labor contractor. In the present case, petitioners were directly and individually hired by MWSS, the latter not resoting to the intermediary labor contractor artifice, but a mere a scrap of paper impudently declaring the bill collectors to be not employees of MWSS. With greater reason, therefore, should the actuality of the employer-employee relationship between MWSS and petitioners be recognized. The CSC, as well as the Court of Appeals, makes much of CSC Memorandum Circular No. 38, Series of 1993, which distinguishes between contract of services/job services and contractual appointment. The Circular provides: Contract of Services and Job Orders are different from Contractual appointment and Plantilla appointment of casual employees, respectively, which are required to be submitted to CSC for approval. Contracts of Services and Job Orders refer to employment described as follows: 1. The contract covers lump sum work or services such as janitorial, security or consultancy services where no employer-employee relationship exist; 2. The job order covers piece of work or intermittent job of short duration not exceeding six months on a daily basis; 3. The contract of services and job orders are not covered by Civil Service Law, Rules and Regulations; [sic] but covered by COA rules; 4. The employees involved in the contracts or job orders do not enjoy the benefits enjoined by government employees, such as PERA, COLA and RATA. 5. As the services rendered under contracts of services and job orders are not considered government services, they do not have to be submitted to the Civil Service Commission for [82] approval. Clinging to its tenuous denial of petitioners employee status, the CSC avers that contractual employees are those with contractual appointment submitted to and attested by the CSC, unlike petitioners who failed to show that their appointments were duly attested by the CSC. The Court recognizes the authority of the CSC in promulgating circulars and memoranda concerning the civil service sector in line with its function as the central personnel agency of [83] the Government. Nevertheless, it cannot turn a blind eye to a rather haphazard application and interpretation by the CSC of its own issuance, such as in this case. A careful review of the above-quoted circular shows that the relationship defined by the Agreement cannot fall within the purview of contract of services or job orders. Payments made by MWSS subscribers are the lifeblood of the company. Viewed in that context the work rendered by the petitioners is essential to the companys survival and growth. Alongside its public service thrust, the MWSS is an income-generating entity for the Government. It relies for the most part on the bill collections in order to sustain its operations. The task of collecting payments for the water supplied by the MWSS to its consumers does not deserve



to be compared with mere janitorial, security or even consultancy work. It is not intermittent and seasonal, but rather continuous and increasing by reason of its indisputable essentiality. To lump petitioners with the run-of-the-mill service providers is to ignore the vital role they perform for the MWSS. Rightly so, as clearly indicated in the circular, employees involved in the contracts or job orders do not enjoy the benefits enjoyed by the petitioners which are the same benefits given to government employees. Petitioners are indeed regular employees of the MWSS. The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The 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. Likewise, the repeated and continuing need for the performance of the job has been deemed sufficient evidence of the [84] necessity, if not indispensability of the activity to the business. Some of the petitioners had rendered more than two decades of service to the MWSS. The continuous and repeated rehiring of these bill collectors indicate the necessity and desirability of their services, as well as the importance of the role of bill collectors in the MWSS. We agree with the CSC when it stated that the authority of government agencies to contract [85] services is an authority recognized under civil service rules. However, said authority cannot be used to circumvent the laws and deprive employees of such agencies from receiving what is due them. The CSC goes further to say that petitioners were unable to present proof that their appointments were contractual in nature and submitted to the CSC for its approval, and that submission to and approval of the CSC are important as these show that their services had [86] been credited as government service. The point is of no moment. Petitioners were able to attach only two of such Agreements which bore the stamp of approval by the CSC and these are simply inadequate to prove that the other agreements were similarly approved. Even petitioners admit that subsequently such Agreements were no longer submitted to the CSC for its approval. Still, the failure to submit the documents for approval of the CSC cannot militate against the existence of employer-employee relationship between petitioners and MWSS. MWSS cannot raise its own inaction to buttress its adverse position. MWSS committed itself to pay severance and terminal leave pay to its regular [87] [88] employees. The guidelines thereof states that regular employees who have rendered at least a year of service and not eligible for retirement are entitled to severance pay equivalent [89] to one (1) month basic pay for every full year of service. In view of the Courts finding that petitioners were employees of MWSS, the corresponding severance pay, in accordance with the guidelines, should be given to them. Terminal leave pay are likewise due petitioners, provided they meet the requirements therefor. However, petitioners in this case cannot avail of retirement benefits from the GSIS. When their services were engaged by MWSS, they were not reported as its employees and hence no deductions were made against them for purpose of the GSIS contributions. It would be unjust to grant petitioners retirement benefits when there was no remittance of the employees or the employers share of contributions. [90] The case of Chua v. Civil Service Commission relied upon by petitioners is not in point. There was no question that Chua was an employee, specifically a contractual/project employee of the National Irrigation Administration (NIA). The CSCs denial of her request for early retirement benefits was based on the CSCs conclusion that contractual employees are [91] not covered by the Early Retirement Law. This Court held that co-terminus employees who

have rendered years of continuous service such as Chua -who was continuously hired and rehired for four (4) successive times in a span of fifteen (15) years-should be included in the coverage of the Early Retirement Law as long as they comply with CSC regulations promulgated for such purpose. Underlying this grant of retirement benefits to Chua is the finding that her work with the NIA was recognized and accredited by the CSC as government service, that she paid her GSIS contributions throughout her service, and the fact that she [92] applied for the benefit within the prescribed period. The differences between Chua and petitioners are readily apparent. The ruling in Chua concerns claims based on the Early Retirement Law. On the other hand, this case involves bill collectors who were hired by virtue of individual agreements, and who are now claiming payment of retirement, separation and terminal leave benefits. Petitioners services, admittedly, were not credited/recognized by the CSC. Likewise, the parties still dispute the nature of their relationship when petitioners made the claim for the benefits, unlike in the case of Chua where there was no question as to her status as an employee of the NIA. Moreover, unlike Chua, petitioners in this case did not give any contribution for GSIS coverage, especially since retirement benefits come from the monthly contributions of GSIS members. Petitioners claim for damages and attorneys fees are similarly untenable. MWSS cannot be [93] made liable for moral damages for the serious moral disturbance petitioners allegedly suffered as a result of the denial of the requested benefits because it was merely following [94] the earlier resolution of the CSC. MWSS adherence to the position of the CSC is but logical. It is after all, the central personnel agency of the government, and its resolution at the time was valid and binding on MWSS. WHEREFORE, the petition is GRANTED IN PART. The Decision of the Court of Appeals in C.A.G.R. SP No. 55263, as well as the Civil Service Commissions Resolutions Nos. 991384 and 992074, are hereby REVERSED and SET ASIDE. MWSS is ordered to pay terminal leave pay and separation pay and/or severance pay to each of herein petitioners on the basis of remunerations/commissions, allowances and bonuses each were actually receiving at the time of termination of their employment as contract collectors of MWSS. Let the case be remanded to the Civil Service Commission for the computation of the above awards and the appropriate disposition in accordance with the pronouncements in this Decision. No pronouncement as to costs. SO ORDERED.



SECOND DIVISION UNIVERSAL ROBINA G.R. No. 164736 CORPORATION and/or RANDY GREGORIO, Petitioners, - versus - BENITO CATAPANG, CARLOS ARARAO, ALVIN ALCANTARA, Present: RESTY ALCORAN, REYNALDO ARARAO, JUAN ARISTADO, PUNO, J., Chairman, LITO CABRERA, ONOFRE AUSTRIA-MARTINEZ, CASANO, BEN CERVAS, CALLEJO, SR., JOSEPH CHUIDIAN, IRENEO TINGA, and

COMENDADOR, ANGELITO CHICO-NAZARIO, JJ. CONCHADA, RICHARD CORONADO, ELMER HILING, RAMON JOYOSA, JOSE LORIA, JR., VICTORIANO LORIA, RUEL MARIKIT, RODERICK PANG-AO, QUIRINO PLATERO, PABLITO REDONDO, RAMIL ROXAS, RESTY SALAZAR, NOEL TRINIDAD, FELICISIMO VARELA, BALTAZAR VILLANUEVA, ELPIDIO Promulgated: VILLANUEVA, JOEL VILLANUEVA, JONATHAN October 14, 2005 VILLANUEVA, and JAIME VILLEGAS, Respondents.

x-----------------------------------------------------------------------------------------x D E C I S I O N CALLEJO, SR., J. Petitioner Universal Robina Corporation is a corporation duly organized and existing under the Philippine laws, while petitioner Randy Gregorio is the manager of the petitioner [1] companys duck farm in Calauan, Laguna. The individual respondents were hired by the petitioner company on various dates from 1991 to 1993 to work at its duck farm in Barangay Sto. Tomas, Calauan, Laguna. The respondents were hired under an employment contract which provided for a five-month period. After the expiration of the said employment contracts, the petitioner company would renew them and re-employ the respondents. This practice continued until sometime in 1996, when the petitioners informed the respondents that they were no longer renewing their [2] employment contracts. In October 1996, the respondents filed separate complaints for illegal dismissal, reinstatement, backwages, damages and attorneys fees against the petitioners. The complaints were later consolidated. On March 30, 1999, after due proceedings, the Labor Arbiter rendered a decision in favor of the respondents: WHEREFORE, premises considered, judgment is hereby rendered declaring that complainants have indeed been illegally dismissed from their employment. Accordingly, respondents are hereby ordered to reinstate individual complainants to their former positions without loss of seniority rights and to pay them their backwages as follows: Complainants Amount 1. Reynaldo Ararao P113,703.20 2. Carlos Ararao P100,372.48 3. Resty Alcoran P100,372.48 4. Richard Coronado P113,703.20 5. Quirino Platero P113,703.20



6. Benito Catapang P113,703.20 7. Jose Loria, Jr. P100,372.48 8. Elpidio Villanueva P113,703.20 9. Jonathan Villanueva P113,703.20 10. Baltazar Villanueva P113,703.20 11. Victoriano Loria P144,881.10 12. Roderick Pangao P100,372.48 13. Lito Cabrera P113,703.20 14. Elmer Hiling P113,703.20 15. Jaime Villegas P113,703.20 16. Angelito Conchada P119,192.20 17. Juan Aristado P113,703.20 18. Joel Villanueva P113,703.20 19. Ben Cervas P113,703.20 20. Ruel Marikit P113,703.20 21. Ireneo Comendador P113,703.20 Total ------------------------ P2,339,933.44 Respondents are likewise ordered to pay fifteen percent (15%) of the total amount due, or P 350,990.01, as and by way of attorneys fees. [3] SO ORDERED. On May 17, 1999, the petitioners filed an Appeal Memorandum with the National Labor Relations Commission (NLRC) on the ground that the Labor Arbiter erred in ruling that the respondents are the petitioner companys regular employees. Meanwhile, on May 18, 1999, the respondents filed a Motion for Enforcement of Reinstatement Order with the Labor Arbiter. On June 3, 1999, the latter issued an Order, which reads in full: Finding the Motion for Enforcement of Reinstatement Order dated 18 May 1999, filed by the complainants to be in order, respondents are hereby directed to immediately comply in good faith to the reinstatement aspect of the Decision of this Office dated 30 March 1999. Furthermore, it appearing from the records that several individuals in this case were inadvertently omitted as party-complainants in the aforesaid Decision, clarification is hereby made that the complainants hereinbelow set forth are to be deemed included in the coverage of the said decision with the corresponding right(s) to their backwages, to wit: 1. Alvin Alcantara - P129,126.40 2. Onofre Casano - P106,917.20 3. Joseph Chuidian - P104,165.10 4. Ramon Joyosa - P128,029.20 5. Pablito Redondo - P105,409.20 6. Ramil Roxas - P109,330.00

7. Resty Salazar - P105,296.10 8. Noel Trinidad - P108,312.10 9. Felicisimo Varela - P119,358.20 TOTAL - P1,015,943.50 [4] SO ORDERED. On June 21, 1999, the Labor Arbiter issued a Writ of Execution enforcing the immediate reinstatement of the respondents as mandated in the March 30, 1999 Decision. On July 13, 1999, the petitioners manifested to the Labor Arbiter that they can reinstate only 17 of the 30 employees in view of the phase out of the petitioner companys Agricultural Section as early as 1996. They averred that there were no other available positions substantially similar to the positions previously occupied by the other 13 respondents, but that 10 of them could be accommodated at the farms Duck Dressing Section which operates [5] at an average of three days a week only. On August 2, 1999, the Sheriff filed a Report stating that the petitioners had not yet [6] reinstated the respondents. The respondents then urged the Labor Arbiter to order their physical or payroll reinstatement and to cite the petitioners in contempt. On November 26, [7] 1999, the Labor Arbiter issued an Order directing the petitioners, under pain of contempt, to comply with the March 30, 1999 Decision. On December 16, 1999, 17 employees were reinstated to their former positions. Thereafter, the respondents moved for the immediate reinstatement of the remaining 13 respondents. In the meantime, the petitioners manifested to the Labor Arbiter about the closure of the [8] duck farm effective March 15, 2000. [9] On February 9, 2000, the Labor Arbiter issued an Order directing the petitioners to immediately effect the actual or payroll reinstatement of the remaining 13 respondents. In the said Order, the petitioners were likewise directed to settle whatever financial accountabilities they may have with the said respondents due to the delay in complying with the reinstatement aspect of the March 30, 1999 Decision. On February 16, 2000, the respondents manifested that the petitioners still failed and refused to comply with the February 9, 2000 Order. That same day, the Labor Arbiter issued an Alias Writ of Execution commanding the Sheriff to cause the immediate reinstatement of [10] the 13 respondents and to collect their withheld salaries. On February 21, 2000, the respondents moved for the issuance of a notice of garnishment to collect the accumulated withheld wages of the 17 respondents who were reinstated on December 16, 1999 amounting to P649,400.00. The Labor Arbiter granted the motion and issued a Second Alias Writ of Execution directing the Sheriff to proceed to collect the said [11] amount plus execution fees. Thereafter, the petitioners filed an urgent motion to reconsider the February 9, 2000 Order and to quash the Alias Writ of Execution. They reiterated their previous contention that they are unable to comply with the order either because the section to which the 13 respondents



were previously assigned had been phased out or the positions previously held by them have [12] already been filled up. [13] On March 1, 2000, the Labor Arbiter issued an Order denying the petitioners motion to quash insofar as the reinstatement aspect is concerned as well as the motion to reconsider and set aside the February 9, 2000 Order. In case of failure to comply with the reinstatement of the 13 respondents, the Labor Arbiter directed the petitioner company to pay them [14] separation pay instead. On March 13, 2000, the petitioners filed a Memorandum and Notice of Appeal with Prayer [15] for the Issuance of a Temporary Restraining Order with the NLRC, assailing the February 9, 2000 and March 1, 2000 Orders and the two Alias Writs of Execution issued by the Labor Arbiter. On November 22, 2000, the NLRC affirmed the decision of the Labor Arbiter with the modification that the award of attorneys fees was reduced to 10% of the total monetary [16] award. Aggrieved, the petitioners filed a petition for certiorari with the Court of Appeals (CA). On [17] August 21, 2003, the CA denied the petition for lack of merit. The CA held that after rendering more than one year of continuous service, the respondents became regular employees of the petitioners by operation of law. Moreover, the petitioners used the fivemonth contract of employment as a convenient subterfuge to prevent the respondents from becoming regular employees and such contractual arrangement should be struck down or disregarded as contrary to public policy or morals. The petitioners act of repeatedly and continuously hiring the respondents in a span of three to five years to do the same kind of work negates their assertion that the respondents were hired for a specific project or undertaking only. As to the issue of the failure to reinstate the 13 respondents pending appeal, the CA opined that the petitioners should have at least reinstated them in the payroll if there were indeed no longer any available positions for which they could be [18] accommodated. Finally, the CA did not believe that the petitioners counsel was not furnished with copies of the assailed orders and the alias writs of execution considering that, after the issuance of the said orders, the petitioners were able to file several pleadings [19] questioning the same. On September 23, 2003, the petitioners filed a Manifestation and Motion for Additional Time [20] to File a Motion for Reconsideration of the CA Decision. They alleged therein that they received a copy of the decision on September 8, 2003 and had until September 23, 2003 to file a motion for reconsideration. They then prayed for an extension of 10 days, or until October 3, 2003, to submit a motion for reconsideration. Realizing their error, the petitioners filed their Motion for Reconsideration two days later. In [21] a Resolution dated September 30, 2003, the CA denied the petitioners earlier motion for extension of time for being a prohibited pleading. Subsequently, the petitioners filed their Urgent Motion to Admit Petitioners Motion for Reconsideration, but the CA merely noted the petitioners motion for reconsideration in its April 15, 2004 Resolution. This prompted the [22] petitioners to file a Motion to Resolve Petitioners Motion for Reconsideration. Finding no

cogent reason to depart from its previous resolution denying the motion for extension of time to file a motion for reconsideration, the CA denied the said motion for lack of merit on [23] July 19, 2004. Hence, this petition for review wherein the petitioners raise the following grounds: I. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT RULED THAT THE RESPONDENTS ATTAINED THE STATUS OF REGULAR EMPLOYMENT AFTER THE LAPSE OF ONE YEAR FROM THE DATE OF THEIR EMPLOYMENT. II. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT RULED THAT DESPITE THE UNAVAILABILITY OF POSITIONS WHERE THE THIRTEEN (13) RESPONDENTS ARETO BE REINSTATED THEY SHOULD STILL BE REINSTATED THROUGH PAYROLL. III. THE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO RESOLVE THE ISSUE OF WHETHER OR NOT THE PETITIONERS SHOULD BE HELD LIABLE FOR THE PAYMENT OF THE ALLEGED WITHHELD SALARIES OF THE RESPONDENTS FROM THE DATE OF ISSUANCE OF THE WRIT DESPITE THAT RESPONDENTS BELATED OR NON-REINSTATEMENT CANNOT BE ATTRIBUTED TO THE PETITIONERS. IV. THE COURT OF APPEALS SHOULD HAVE RESOLVED PETITIONERS MOTION FOR RECONSIDERATION CONSIDERING THAT THE DELAY WAS ONLY FOR TWO (2) DAYSAND WAS [24] THE RESULT OF AN HONEST MISTAKE. The petitioners submit that the respondents are not regular employees. They aver that it is of no moment that the respondents have rendered service for more than a year since they were covered by the five-month individual contracts to which they duly acquiesced. The petitioners contend that they were free to terminate the services of the respondents at the expiration of their individual contracts. The petitioners maintain that, in doing so, they merely [25] implemented the terms of the contracts. The petitioners assert that the respondents contracts of employment were not intended to circumvent security of tenure. They point out that the respondents knowingly and voluntarily agreed to sign the contracts without the petitioners having exercised any undue advantage over them. Moreover, there is no evidence showing that the petitioners exerted moral [26] dominance on the respondents. The petitioners further assert that they cannot be compelled to actually reinstate, or merely reinstate in the payroll the 13 respondents considering there are no longer any available



positions in the company. They submit that reinstatement presupposes that the previous positions from which the respondents had been removed still exist or that there are unfilled positions, more or less, of similar nature as the ones previously occupied by the said employees. Consequently, they cannot be made to pay the salaries of these employees from [27] the time the writ of execution was issued. Finally, the petitioners aver that their motion for reconsideration of the CA Decision should have been admitted by the CA considering that the delay was only for two days and such delay was due to an honest mistake. They maintain that the ends of substantial justice would have been better served if the motion for reconsideration was resolved since it raised critical [28] issues previously raised in the petition but not resolved by the CA. For their part, the respondents aver that the instant petition should be dismissed outright because the CA Decision has already become final since the petitioners filed their motion for reconsideration beyond the reglementary 15-day period. They also aver that the motion for extension of time to file a motion for reconsideration, a prohibited pleading, did not suspend the running of the period to file a motion for reconsideration, which is also the period for filing an appeal with this Court. Hence, at the time the present petition was filed with this [29] Court, the period for filing the appeal had already lapsed. The respondents further aver that the petition should likewise be dismissed for lack of a verified statement of material dates. They assert that the Rules of Court requires a separate verified statement of material dates and its incorporation in the body of the petition is not substantial compliance of such [30] requirement. The respondents aver that they acquired the status as regular employees after rendering one year of service to the petitioner company. They contend that the contracts providing for a fixed period of employment should be struck down as contrary to public policy, morals, good [31] customs or public order as it was designed to preclude the acquisition of tenurial security. The respondents contend that the order directing their payroll reinstatement was proper [32] considering that the petitioners have failed to actually reinstate them. They assert that the delay in the reinstatement of the 13 respondents could only be attributed to the petitioners; [33] hence, they are liable for withheld salaries to these employees. It appears that the present petition has, indeed, been filed beyond the reglementary period for filing a petition for review under Rule 45 of the Rules of Court. This period is set forth in Section 2, Rule 45, which provides as follows: SEC. 2. Time for filing; extension. The petition shall be filed within fifteen (15) days from notice of the judgment or final order or resolution appealed from, or of the denial of the petitioners motion for new trial or reconsideration filed in due time after notice of judgment. (Emphasis supplied.) In conjunction with the said provision, Section 1, Rule 52 of the same Rules provides: SEC. 1. Period for filing. A party may file a motion for reconsideration of a judgment or final resolution within fifteen (15) days from notice threof, with proof of service on the adverse party.

Clearly, the period for filing a motion for reconsideration and a petition for review with this Court are the same, that is, 15 days from notice of the judgment. When an aggrieved party files a motion for reconsideration within the said period, the period for filing an appeal is suspended. If the motion is denied, the aggrieved party is given another 15-day period from notice of such denial within which to file a petition for review under Rule 45. It must be stressed that the aggrieved party will be given a fresh 15-day period only when he has filed his motion for reconsideration in due time on or before the expiration of the original 15-day period. Otherwise, if the motion for reconsideration is filed out of time and no appeal has [34] been filed, the subject decision becomes final and executory. As such, it becomes immutable and can no longer be attacked by any of the parties or be modified, directly or [35] indirectly, even by the highest court of the land. The petitioners received the CA Decision on September 8, 2003; hence, they had until September 23, 2003 within which to file a motion for reconsideration, or an appeal, through a petition for review, with this Court. Instead, the petitioners filed a motion for extension of time to file a motion for reconsideration on September 23, 2003, which is a prohibited [36] pleading. Thus, it did not suspend the running of the period for filing an appeal. Consequently, the period to file a petition for review with this Court also expired on September 23, 2003. Instead of going straight to this Court to attempt to file a petition for review (which had already expired), the petitioners pursued recourse in the CA by filing their motion for reconsideration two days later, or on September 25, 2003. The CA merely noted the same. Dissatisfied, the petitioners subsequently filed a motion to resolve their motion for reconsideration. The CA acted on this motion only on July 19, 2004 and denied the same for lack of merit. In filing their petition for review with this Court, the petitioners counted the 15-day period from their receipt of the July 19, 2004 CA Resolution on August 4, 2004. Hence, according to their Motion for Extension of Time to File Petition for Review which they filed on August 19, 2004, they had until that day within which to file a petition for review. They then asked the Court that they be granted an extension of 30 days, or until September 21, 2004 within which to file their petition. The Court granted the motion on the belief that the petitioners motion for reconsideration before the CA was duly filed and that the assailed July 19, 2004 CA Resolution had denied the said motion. Thereafter, the petitioners filed their petition for review on September 20, 2004. It is, therefore, evident from the foregoing that the present petition was filed way beyond the reglementary period. Hence, its outright dismissal would be proper. The perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional, and failure to perfect an appeal has the effect of rendering the judgment final [37] and executory. Just as a losing party has the privilege to file an appeal within the prescribed period, so does the winner also have the correlative right to enjoy the finality of [38] the decision. Anyone seeking exemption from the application of the reglementary period for filing an appeal has the burden of proving the existence of exceptionally meritorious instances [39] warranting such deviation. In this case, the petitioners failed to prove the existence of any



fact which would warrant the relaxation of the rules. In fact, they have not even acknowledged that their petition was filed beyond the reglementary period. In any case, we find that the CA, the NLRC and the Labor Arbiter correctly categorized the respondents as regular employees of the petitioner company. In Abasolo v. National Labor [40] Relations Commission, the Court reiterated the test in determining whether one is a regular employee: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is [41] considered regular, but only with respect to such activity and while such activity exists. Thus, we quote with approval the following excerpt from the decision of the CA: It is obvious that the said five-month contract of employment was used by petitioners as a convenient subterfuge to prevent private respondents from becoming regular employees. Such contractual arrangement should be struck down or disregarded as contrary to public policy or morals. To uphold the same would, in effect, permit petitioners to avoid hiring permanent or regular employees by simply hiring them on a temporary or casual basis, thereby violating the employees security of tenure in their jobs. Petitioners act of repeatedly and continuously hiring private respondents in a span of 3 to 5 years to do the same kind of work negates their contention that private respondents were [42] hired for a specific project or undertaking only. Further, factual findings of labor officials who are deemed to have acquired expertise in matters within their respective jurisdiction are generally accorded not only respect but even [43] finality, and bind us when supported by substantial evidence. WHEREFORE, premises considered, the petition is DENIED DUE COURSE. The Decision of the Court of Appeals is AFFIRMED. SO ORDERED.

SECOND DIVISION ABESCO CONSTRUCTION AND G.R. No. 141168 DEVELOPMENT CORPORATION and MR. OSCAR BANZON, General Manager, Petitioners, Present: PUNO, J., Chairperson, SANDOVAL-GUTIERREZ, - v e r s u s - CORONA, AZCUNA and GARCIA, JJ. ALBERTO RAMIREZ, BERNARDO DIWA, MANUEL LOYOLA, REYNALDO P. ACODESIN, ALEXANDER BAUTISTA, EDGAR TAJONERA and * GARY DISON, Respondents. Present: April 10, 2006

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x R E S O L U T I O N CORONA, J.: Petitioner company was engaged in a construction business where respondents were hired on different dates from 1976 to 1992 either as laborers, road roller operators, painters or drivers. [1] In 1997, respondents filed two separate complaints for illegal dismissal against the company and its General Manager, Oscar Banzon, before the Labor Arbiter (LA). Petitioners allegedly dismissed them without a valid reason and without due process of law. The th complaints also included claims for non-payment of the 13 month pay, five days service incentive leave pay, premium pay for holidays and rest days, and moral and exemplary [2] damages. The LA later on ordered the consolidation of the two complaints. Petitioners denied liability to respondents and countered that respondents were project employees since their services were necessary only when the company had projects to be completed. Petitioners argued that, being project employees, respondents employment was coterminous with the project to which they were assigned. They were not regular employees who enjoyed security of tenure and entitlement to separation pay upon termination from work.



After trial, the LA declared respondents as regular employees because they belonged to a work pool from which the company drew workers for assignment to different projects, at its discretion. He ruled that respondents were hired and re-hired over a period of 18 years, hence, they were deemed to be regular employees. He likewise found that their employment was terminated without just cause. In a decision dated January 7, 1998, he stated: WHEREFORE, judgment is hereby rendered declaring respondents guilty of illegal dismissal and ordering the latter to reinstate complainants to their former positions with backwages and other benefits from the time their compensation was withheld from them up to the time their actual reinstatement which as of the date of this decision amounted to: NAME 1. Alberto Ramirez P49,764.00 2. Manuel B. Loyola 46,695.22 3. Hernando Diwa 49,764.00 4. Reynaldo Acodesin 46,695.22 5. Alexander Bautista 45,285.24 6. Edgar Tajonera 62,985.00 7. Gary Dison 53,911.00 TOTAL P 355,099.68 However, if reinstatement is no longer feasible, a one-month salary shall be awarded as a form of separation pay, in addition to the aforementioned award. Respondents are likewise ordered to pay complainants the following: TH NAME UNPAID SALARY 13 MONTH 5 DAYS SEPARATION SALARY DIFFERENTIAL PAY SERVICE PAY INCENTIVE LEAVE 1.Hernando Diwa P765.00 P1,274.00 P4,147.00 2.Alexander Bautista P23,088.00 11,141.00 P2,005.00 45,617.00 3.Alberto Ramirez 11,141.00 2,005.00 74,646.00 4.Manuel B. Loyola 11,141.00 2,020.00 41,170.00 5.Reynaldo Acodesin 11,141.00 2,020.00 20,735.00 6.Edgardo Tajonera 19,500.00 3,750.00 130,000.00 7.Gary Dison





11,141.00

2,020.00



P765.00 P23,088.00

P76,479.00

P13,820.00 P345,344.00

xxx [3] All other claims are hereby dismissed for lack of merit.

29,029.00

Petitioners appealed to the National Labor Relations Commission (NLRC) which affirmed the [4] LAs decision. Subsequently, petitioners filed a petition for review in the Court of Appeals (CA) arguing that they were not liable for illegal dismissal since respondents services were merely put on hold until the resumption of their business operations. They also averred that they had paid respondents their full wages and benefits as provided by law, hence, the latter had no more right to further benefits. The CA was not convinced and dismissed petitioners appeal. It held: We note that the petitioners are taking a new tack in arguing, for the first time, that the [respondents] were not dismissed but their employment was merely suspended. Previous to this, their defense was that the [respondents] were project employees who were not entitled to security of tenure. The petitioners are barred from raising a new defense at this stage of the case. xxx xxx xxx [5] WHEREFORE, the petition for certiorari is hereby DISMISSED, for lack of merit. [6] Petitioners filed a motion for reconsideration but it was dismissed by the CA. In this petition for review under Rule 45 of the Rules of Court, petitioners raise the following issues for resolution: (1) whether respondents were project employees or regular employees and (2) whether respondents were illegally dismissed. On the first issue, we rule that respondents were regular employees. However, we take exception to the reasons cited by the LA (which both the NLRC and the CA affirmed) in considering respondents as regular employees and not as project employees. Contrary to the disquisitions of the LA, employees (like respondents) who work under different project employment contracts for several years do not automatically become regular employees; they can remain as project employees regardless of the number of years [7] they work. Length of service is not a controlling factor in determining the nature of ones [8] employment. Moreover, employees who are members of a work pool from which a company (like petitioner corporation) draws workers for deployment to its different projects do not become regular employees by reason of that fact alone. The Court has enunciated in some [9] cases that members of a work pool can either be project employees or regular employees. The principal test for determining whether employees are project employees or regular employees is whether they are assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time they are engaged for that [10] project. Such duration, as well as the particular work/service to be performed, is defined in [11] an employment agreement and is made clear to the employees at the time of hiring.



In this case, petitioners did not have that kind of agreement with respondents. Neither did they inform respondents of the nature of the latters work at the time of hiring. Hence, for failure of petitioners to substantiate their claim that respondents were project employees, we are constrained to declare them as regular employees. Furthermore, petitioners cannot belatedly argue that respondents continue to be their employees (so as to escape liability for illegal dismissal). Before the LA, petitioners staunchly postured that respondents were only project employees whose employment tenure was coterminous with the projects they were assigned to. However, before the CA, they took a different stance by insisting that respondents continued to be their employees. Petitioners inconsistent and conflicting positions on their true relation with respondents make it all the more evident that the latter were indeed their regular employees. On the issue of illegal dismissal, we hold that petitioners failed to adhere to the two-notice rule which requires that workers to be dismissed must be furnished with: (1) a notice informing them of the particular acts for which they are being dismissed and (2) a notice [12] advising them of the decision to terminate the employment. Respondents were never given such notices. WHEREFORE, the petition is hereby DENIED. Costs against petitioners. SO ORDERED

FIRST DIVISION [G.R. No. 150793. November 19, 2004] FRANCIS CHUA, petitioner, vs. HON. COURT OF APPEALS and LYDIA C. HAO, respondents. D E C I S I O N QUISUMBING, J.: [1] Petitioner assails the Decision, dated June 14, 2001, of the Court of Appeals in CA-G.R. SP No. 57070, affirming the Order, dated October 5, 1999, of the Regional Trial Court (RTC) of Manila, Branch 19. The RTC reversed the Order, dated April 26, 1999, of the Metropolitan Trial Court (MeTC) of Manila, Branch 22. Also challenged by herein petitioner is the [2] CA Resolution, dated November 20, 2001, denying his Motion for Reconsideration. The facts, as culled from the records, are as follows: On February 28, 1996, private respondent Lydia Hao, treasurer of Siena Realty Corporation, filed a complaint-affidavit with the City Prosecutor of Manila charging Francis Chua and his wife, Elsa Chua, of four counts of falsification of public documents pursuant to Article [3] [4] 172 in relation to Article 171 of the Revised Penal Code. The charge reads: That on or about May 13, 1994, in the City of Manila, Philippines, the said accused, being then a private individual, did then and there willfully, unlawfully and feloniously commit acts of falsification upon a public document, to wit: the said accused prepared, certified, and falsified the Minutes of the Annual Stockholders meeting of the Board of Directors of the Siena Realty Corporation, duly notarized before a Notary Public, Atty. Juanito G. Garcia and entered in his Notarial Registry as Doc No. 109, Page 22, Book No. IV and Series of 1994, and therefore, a public document, by making or causing it to appear in said Minutes of the Annual Stockholders Meeting that one LYDIA HAO CHUA was present and has participated in said proceedings, when in truth and in fact, as the said accused fully well knew that said Lydia C. Hao was never present during the Annual Stockholders Meeting held on April 30, 1994 and neither has participated in the proceedings thereof to the prejudice of public interest and in violation of public faith and destruction of truth as therein proclaimed. [5] CONTRARY TO LAW. Thereafter, the City Prosecutor filed the Information docketed as Criminal Case No. [6] 285721 for falsification of public document, before the Metropolitan Trial Court (MeTC) of Manila, Branch 22, against Francis Chua but dismissed the accusation against Elsa Chua. Herein petitioner, Francis Chua, was arraigned and trial ensued thereafter. During the trial in the MeTC, private prosecutors Atty. Evelyn Sua-Kho and Atty. Ariel Bruno Rivera appeared as private prosecutors and presented Hao as their first witness. After Haos testimony, Chua moved to exclude complainants counsels as private prosecutors in the case on the ground that Hao failed to allege and prove any civil liability in the case. In an Order, dated April 26, 1999, the MeTC granted Chuas motion and ordered the complainants counsels to be excluded from actively prosecuting Criminal Case No. 285721. Hao moved for reconsideration but it was denied. [7] Hence, Hao filed a petition for certiorari docketed as SCA No. 99-94846, entitled Lydia C. Hao, in her own behalf and for the benefit of Siena Realty Corporation v. Francis Chua, and the Honorable Hipolito dela Vega, Presiding Judge, Branch 22, Metropolitan Trial Court of Manila, before the Regional Trial Court (RTC) of Manila, Branch 19. The RTC gave due course to the petition and on October 5, 1999, the RTC in an order reversed the MeTC Order. The dispositive portion reads: WHEREFORE, the petition is GRANTED. The respondent Court is ordered to allow the intervention of the private prosecutors in behalf of petitioner Lydia C. Hao in the prosecution



of the civil aspect of Crim. Case No. 285721, before Br. 22 [MeTC], Manila, allowing Attys. Evelyn Sua-Kho and Ariel Bruno Rivera to actively participate in the proceedings. [8] SO ORDERED. Chua moved for reconsideration which was denied. Dissatisfied, Chua filed before the Court of Appeals a petition for certiorari. The petition alleged that the lower court acted with grave abuse of discretion in: (1) refusing to consider material facts; (2) allowing Siena Realty Corporation to be impleaded as co-petitioner in SCA No. 99-94846 although it was not a party to the criminal complaint in Criminal Case No. 285721; and (3) effectively amending the information against the accused in violation of his constitutional rights. On June 14, 2001, the appellate court promulgated its assailed Decision denying the petition, thus: WHEREFORE, premises considered, the petition is hereby DENIED DUE COURSE and DISMISSED. The Order, dated October 5, 1999 as well as the Order, dated December 3, 1999, are hereby AFFIRMED in toto. [9] SO ORDERED. Petitioner had argued before the Court of Appeals that respondent had no authority whatsoever to bring a suit in behalf of the Corporation since there was no Board Resolution authorizing her to file the suit. For her part, respondent Hao claimed that the suit was brought under the concept of a derivative suit. Respondent maintained that when the directors or trustees refused to file a suit even when there was a demand from stockholders, a derivative suit was allowed. The Court of Appeals held that the action was indeed a derivative suit, for it alleged that petitioner falsified documents pertaining to projects of the corporation and made it appear that the petitioner was a stockholder and a director of the corporation. According to the appellate court, the corporation was a necessary party to the petition filed with the RTC and even if private respondent filed the criminal case, her act should not divest the Corporation of its right to be a party and present its own claim for damages. Petitioner moved for reconsideration but it was denied in a Resolution dated November 20, 2001. Hence, this petition alleging that the Court of Appeals committed reversible errors: I. IN RULING THAT LYDIA HAOS FILING OF CRIMINAL CASE NO. 285721 WAS IN THE NATURE OF A DERIVATIVE SUIT II. IN UPHOLDING THE RULING OF JUDGE DAGUNA THAT SIENA REALTY WAS A PROPER PETITIONER IN SCA NO. [99-94846] III. IN UPHOLDING JUDGE DAGUNAS DECISION ALLOWING LYDIA HAOS COUNSEL TO CONTINUE AS PRIVATE PROSECUTORS IN CRIMINAL CASE NO. 285721 IV. IN [OMITTING] TO CONSIDER AND RULE UPON THE ISSUE THAT JUDGE DAGUNA ACTED IN GRAVE ABUSE OF DISCRETION IN NOT DISMISSING THE PETITION IN SCA NO. [99-94846] FOR [10] BEING A SHAM PLEADING. The pertinent issues in this petition are the following: (1) Is the criminal complaint in the nature of a derivative suit? (2) Is Siena Realty Corporation a proper petitioner in SCA No. 9994846? and (3) Should private prosecutors be allowed to actively participate in the trial of Criminal Case No. 285721. On the first issue, petitioner claims that the Court of Appeals erred when (1) it sustained the lower court in giving due course to respondents petition in SCA No. 99-94846 despite the fact

that the Corporation was not the private complainant in Criminal Case No. 285721, and (2) when it ruled that Criminal Case No. 285721 was in the nature of a derivative suit. Petitioner avers that a derivative suit is by nature peculiar only to intra-corporate proceedings and cannot be made part of a criminal action. He cites the case of Western [11] Institute of Technology, Inc. v. Salas, where the court said that an appeal on the civil aspect of a criminal case cannot be treated as a derivative suit. Petitioner asserts that in this case, the civil aspect of a criminal case cannot be treated as a derivative suit, considering that Siena Realty Corporation was not the private complainant. Petitioner misapprehends our ruling in Western Institute. In that case, we said: Here, however, the case is not a derivative suit but is merely an appeal on the civil aspect of Criminal Cases Nos. 37097 and 37098 filed with the RTC of Iloilo for estafa and falsification of public document. Among the basic requirements for a derivative suit to prosper is that the minority shareholder who is suing for and on behalf of the corporation must allege in his complaint before the proper forum that he is suing on a derivative cause of action on behalf of the corporation and all other shareholders similarly situated who wish to join. . . .This was not complied with by the petitioners either in their complaint before the court a quo nor in the instant petition which, in part, merely states that this is a petition for review on certiorari on pure questions of law to set aside a portion of the RTC decision in Criminal Cases Nos. 37097 and 37098 since the trial courts judgment of acquittal failed to impose civil liability against the private respondents. By no amount of equity considerations, if at all deserved, can a mere appeal on the civil aspect of a criminal case be treated as a derivative [12] suit. Moreover, in Western Institute, we said that a mere appeal in the civil aspect cannot be treated as a derivative suit because the appeal lacked the basic requirement that it must be alleged in the complaint that the shareholder is suing on a derivative cause of action for and in behalf of the corporation and other shareholders who wish to join. [13] [14] Under Section 36 of the Corporation Code, read in relation to Section 23, where a corporation is an injured party, its power to sue is lodged with its board of directors or [15] trustees. An individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he holds stocks in order to protect or vindicate corporate rights, whenever the officials of the corporation refuse to sue, or are the ones to be sued, or hold the control of the corporation. In such actions, the suing stockholder is regarded as a nominal [16] party, with the corporation as the real party in interest. A derivative action is a suit by a shareholder to enforce a corporate cause of action. The corporation is a necessary party to the suit. And the relief which is granted is a judgment against a third person in favor of the corporation. Similarly, if a corporation has a defense to an action against it and is not asserting it, a stockholder may intervene and defend on behalf [17] of the corporation. Under the Revised Penal Code, every person criminally liable for a felony is also civilly [18] liable. When a criminal action is instituted, the civil action for the recovery of civil liability arising from the offense charged shall be deemed instituted with the criminal action, unless the offended party waives the civil action, reserves the right to institute it separately or [19] institutes the civil action prior to the criminal action. In Criminal Case No. 285721, the complaint was instituted by respondent against petitioner for falsifying corporate documents whose subject concerns corporate projects of Siena Realty Corporation. Clearly, Siena Realty Corporation is an offended party. Hence, Siena Realty



Corporation has a cause of action. And the civil case for the corporate cause of action is deemed instituted in the criminal action. However, the board of directors of the corporation in this case did not institute the action against petitioner. Private respondent was the one who instituted the action. Private respondent asserts that she filed a derivative suit in behalf of the corporation. This assertion is inaccurate. Not every suit filed in behalf of the corporation is a derivative suit. For a derivative suit to prosper, it is required that the minority stockholder suing for and on behalf of the corporation must allege in his complaint that he is suing on a derivative cause of action on behalf of the corporation and all other stockholders similarly situated who may wish to [20] join him in the suit. It is a condition sine qua non that the corporation be impleaded as a party because not only is the corporation an indispensable party, but it is also the present rule that it must be served with process. The judgment must be made binding upon the corporation in order that the corporation may get the benefit of the suit and may not bring subsequent suit against the same defendants for the same cause of action. In other words, the corporation must be joined as party because it is its cause of action that is being litigated [21] and because judgment must be a res adjudicata against it. In the criminal complaint filed by herein respondent, nowhere is it stated that she is filing the same in behalf and for the benefit of the corporation. Thus, the criminal complaint including the civil aspect thereof could not be deemed in the nature of a derivative suit. We turn now to the second issue, is the corporation a proper party in the petition for certiorari under Rule 65 before the RTC? Note that the case was titled Lydia C. Hao, in her own behalf and for the benefit of Siena Realty Corporation v. Francis Chua, and the Honorable Hipolito dela Vega, Presiding Judge, Branch 22, Metropolitan Trial Court of Manila. Petitioner before us now claims that the corporation is not a private complainant in Criminal Case No. 285721, and thus cannot be included as appellant in SCA No. 99-94846. Petitioner invokes the case of Ciudad Real & Devt. Corporation v. Court of [22] Appeals. In Ciudad Real, it was ruled that the Court of Appeals committed grave abuse of discretion when it upheld the standing of Magdiwang Realty Corporation as a party to the petition for certiorari, even though it was not a party-in-interest in the civil case before the lower court. In the present case, respondent claims that the complaint was filed by her not only in her personal capacity, but likewise for the benefit of the corporation. Additionally, she avers that she has exhausted all remedies available to her before she instituted the case, not only to claim damages for herself but also to recover the damages caused to the company. [23] Under Rule 65 of the Rules of Civil Procedure, when a trial court commits a grave abuse of discretion amounting to lack or excess of jurisdiction, the person aggrieved can file a special civil action for certiorari. The aggrieved parties in such a case are the State and the private [24] offended party or complainant. In a string of cases, we consistently ruled that only a party-in-interest or those aggrieved may file certiorari cases. It is settled that the offended parties in criminal cases have sufficient interest and personality as person(s) aggrieved to file special civil action of prohibition and [25] certiorari. In Ciudad Real, cited by petitioner, we held that the appellate court committed grave abuse of discretion when it sanctioned the standing of a corporation to join said petition for certiorari, despite the finality of the trial courts denial of its Motion for Intervention and the subsequent Motion to Substitute and/or Join as Party/Plaintiff.

[26]

Note, however, that in Pastor, Jr. v. Court of Appeals we held that if aggrieved, even a nonparty may institute a petition for certiorari. In that case, petitioner was the holder in her own right of three mining claims and could file a petition for certiorari, the fastest and most [27] feasible remedy since she could not intervene in the probate of her father-in-laws estate. In the instant case, we find that the recourse of the complainant to the respondent Court of Appeals was proper. The petition was brought in her own name and in behalf of the Corporation. Although, the corporation was not a complainant in the criminal action, the subject of the falsification was the corporations project and the falsified documents were corporate documents. Therefore, the corporation is a proper party in the petition for certiorari because the proceedings in the criminal case directly and adversely affected the corporation. We turn now to the third issue. Did the Court of Appeals and the lower court err in allowing private prosecutors to actively participate in the trial of Criminal Case No. 285721? [28] Petitioner cites the case of Tan, Jr. v. Gallardo, holding that where from the nature of the offense or where the law defining and punishing the offense charged does not provide for an indemnity, the offended party may not intervene in the prosecution of the offense. Petitioners contention lacks merit. Generally, the basis of civil liability arising from crime is the fundamental postulate that every man criminally liable is also civilly liable. When a person commits a crime he offends two entities namely (1) the society in which he lives in or the political entity called the State whose law he has violated; and (2) the individual member of the society whose person, right, honor, chastity or property has been actually or directly injured or damaged by the same punishable act or omission. An act or omission is felonious because it is punishable by law, it gives rise to civil liability not so much because it is a crime but because it caused damage to another. Additionally, what gives rise to the civil liability is really the obligation and the moral duty of everyone to repair or make whole the damage caused to another by reason of his own act or omission, whether done intentionally or negligently. The indemnity which a person is sentenced to pay forms an integral part of the [29] penalty imposed by law for the commission of the crime. The civil action involves the civil liability arising from the offense charged which includes restitution, reparation of the [30] damage caused, and indemnification for consequential damages. Under the Rules, where the civil action for recovery of civil liability is instituted in the criminal action pursuant to Rule 111, the offended party may intervene by counsel in the prosecution [31] of the offense. Rule 111(a) of the Rules of Criminal Procedure provides that, [w]hen a criminal action is instituted, the civil action arising from the offense charged shall be deemed instituted with the criminal action unless the offended party waives the civil action, reserves the right to institute it separately, or institutes the civil action prior to the criminal action. Private respondent did not waive the civil action, nor did she reserve the right to institute it separately, nor institute the civil action for damages arising from the offense charged. Thus, we find that the private prosecutors can intervene in the trial of the criminal action. Petitioner avers, however, that respondents testimony in the inferior court did not establish nor prove any damages personally sustained by her as a result of petitioners alleged acts of falsification. Petitioner adds that since no personal damages were proven therein, then the participation of her counsel as private prosecutors, who were supposed to pursue the civil aspect of a criminal case, is not necessary and is without basis. When the civil action is instituted with the criminal action, evidence should be taken of the damages claimed and the court should determine who are the persons entitled to such indemnity. The civil liability arising from the crime may be determined in the criminal



proceedings if the offended party does not waive to have it adjudged or does not reserve the right to institute a separate civil action against the defendant. Accordingly, if there is no waiver or reservation of civil liability, evidence should be allowed to establish the extent of [32] injuries suffered. In the case before us, there was neither a waiver nor a reservation made; nor did the offended party institute a separate civil action. It follows that evidence should be allowed in the criminal proceedings to establish the civil liability arising from the offense committed, and the private offended party has the right to intervene through the private prosecutors. WHEREFORE, the instant petition is DENIED. The Decision, dated June 14, 2001, and the Resolution, dated November 20, 2001, of the Court of Appeals in CA-G.R. SP No. 57070, affirming the Order, dated October 5, 1999, of the Regional Trial Court (RTC) of Manila, Branch 19, are AFFIRMED. Accordingly, the private prosecutors are hereby allowed to intervene in behalf of private respondent Lydia Hao in the prosecution of the civil aspect of Criminal Case No. 285721 before Branch 22, of Metropolitan Trial Court (MeTC) of Manila. Costs against petitioner. SO ORDERED. Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

SECOND DIVISION BERNARDINO LABAYOG, CRESENCIO GRANZORE, JEANETTE GONZALES, NOEME DADIZ, GEMMA PANGANIBAN, DALISAY BUENVIAJE, VICTORIANA RUEDAS, MA. VICTORIA CABALONG, AMALIA SALVARRI, ROWENA FERNANDEZ, DELIA LOZARES, LUNINGNING ANGELES, ROSEMARIE SALES, VIVIAN VERZOSA, MARILYN JOSE, ROSANNA ROLDAN, HERMINIO CARANTO, ANITA SALVADOR, JORGE SALAMAT, ROBERTO ODIAMAR, EFREN LACAMPUINGAN, NOEL TAGALOG, MARCOS DE LA CRUZ, ELIAS BELO, DARIUS EROLES, HELEN [1] BARAYUGA, CRISTOPHER HILARIO, JOEL ESGUERRA, BERNABE DUCUT, JOSEPH TANAUY, EDWIN CEA, NOEL VILLASCA, ERNESTO ALFONSO, [2] FERNANDO CEBU and REYNALDO SESBRENO, Petitioners,

G.R. No. 148102 Present: PANGANIBAN, J., Chairperson, SANDOVAL-GUTIERREZ, CORONA, AZCUNA and GARCIA, JJ.



- v e r s u s - M.Y. SAN BISCUITS, INC. and MEW WAH LIM, Respondents. Promulgated: July 11, 2006 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

CORONA, J.: [3] The subject of this petition for review on certiorari is the resolution of the Court of Appeals (CA) dated January 31, 2001 in CA-G.R. SP No. 51390, the dispositive portion of which read: WHEREFORE, private respondents motion for reconsideration is GRANTED. The decision of this court, promulgated [on] September 12, 2000, is REVERSED and SET ASIDE. The decision of the National Labor Relations Commission dated August 22, 1997 and its resolution dated November 24, 1997 are hereby AFFIRMED. No costs. At the outset, this petition should have been denied for lack of proper verification and certification of non-forum shopping. Of the 35 petitioners, only [4] Bernardino Labayog, Luningning Angeles and Rosanna Roldan signed. But even if, in the exercise of its discretion and in the interest of substantial justice, this Court grants a liberal interpretation of the rules on verification and certification of non-forum shopping, this petition should nonetheless fail for lack of merit. The facts follow. On various dates in 1992, petitioners entered into contracts of employment with respondent company as mixers, packers and machine operators for a fixed term. On the expiration of their contracts, their services were terminated. Forthwith, they each executed a quitclaim.



On April 15, 1993, petitioners filed complaints for illegal dismissal, underpayment of wages, th non-payment of overtime, night differential and 13 month pay, damages and attorneys fees. [5] The labor arbiter ruled their dismissal to be illegal on the ground that they had become regular employees who performed duties necessary and desirable in respondent companys business. The labor arbiter ordered the reinstatement of petitioners with award th of backwages, 13 month pay and service incentive leave pay. The claim for moral and exemplary damages was denied for failure to establish bad faith on the part of respondents. All other claims were likewise denied. On appeal to the National Labor Relations Commission (NLRC), the decision of the labor [6] arbiter was set aside. Having entered into their employment contracts freely and voluntarily, they knew that their employment was only for a fixed period and would end on [7] the prescribed expiration date. Petitioners motion for reconsideration was denied. In a petition for certiorari filed by petitioners, the CA set aside the NLRC decision and [8] reinstated the decision of the labor arbiter. However, on respondents motion for reconsideration, the CA reversed itself. The CA reasoned that, while petitioners performed tasks which were necessary and desirable in the usual business of respondent company, their employment contracts providing for a fixed term remained valid. No force, duress, intimidation or moral dominance was exerted on them. Respondents dealt with petitioners [9] in good faith and within the valid parameters of management prerogatives. Petitioners [10] motion for reconsideration was denied. Hence, this recourse. The petition is denied for lack of merit. The Labor Code states: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business 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. Where the duties of the employee consist of activities which are necessary or desirable in the usual business of the employer, the parties are not prohibited from agreeing on the duration of employment. Article 280 does not proscribe or prohibit an employment contract with a [11] fixed period provided it is not intended to circumvent the security of tenure. Two criteria validate a contract of employment with a fixed period: (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 on the employee and without any circumstances vitiating consent or, (2) it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance

[12]

whatever being exercised by the former on the latter. Against these criteria, petitioners contracts of employment with a fixed period were valid. Each contract provided for an expiration date. Petitioners knew from the beginning that the [13] employment offered to them was not permanent but only for a certain fixed period. They were free to accept or to refuse the offer. When they expressed their acceptance, they bound themselves to the contract. In this case, there was no allegation of vitiated consent. Respondents did not exercise moral dominance over petitioners. The contracts were mutually advantageous to the parties. While respondents were able to augment increased demand in production by hiring petitioners on an as-needed basis, petitioners found gainful employment if only for a few months. Simply put, petitioners were not regular employees. While their employment as mixers, packers and machine operators was necessary and desirable in the usual business of respondent company, they were employed temporarily only, during periods when there was heightened demand for production. Consequently, there could have been no illegal dismissal when their services were terminated on expiration of their contracts. There was even no need for notice of termination because they knew exactly when their contracts would end. Contracts of employment for a fixed period terminate on their own at the end of such [14] period. Contracts of employment for a fixed period are not unlawful. What is objectionable is the practice of some scrupulous employers who try to circumvent the law protecting workers from the capricious termination of employment. Employers have the right and prerogative to choose their workers. The law, while protecting the rights of the employees, authorizes neither the oppression nor destruction of the employer. When the law angles the scales of justice in favor of labor, the scale should never be so tilted if the result is an injustice to the [15] employer. WHEREFORE, the petition is hereby DENIED. The resolution of the Court of Appeals dated January 31, 2001 is AFFIRMED. No costs. SO ORDERED.



SECOND DIVISION [G.R. No. 120064. August 15, 1997] FERDINAND PALOMARES and TEODULO MUTIA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, (5TH DIVISION) and NATIONAL STEEL CORPORATION, respondents. D E C I S I O N ROMERO, J.: The issue presented before this Court is whether or not petitioners should be considered regular employees of respondent corporation. Petitioners Ferdinand Palomares and Teodulo Mutia were hired by respondent National Steel Corporation (NSC) by virtue of contracts of employment for its Five Year Expansion Program or FYEP, Phase I and II-A, for varying lengths of time, as follows: Mr. FERDINAND L. PALOMARES: DATES PROJECT NATURE OF POSITION / REMARKS ====== ====== WORK DEPARTMENT ========= ====== =========== 10-03-84 to Project Fixed- Clerk Typist Expiration of 03-03-85 Undertaking: Period Office Svcs. Contract Clerical jobs at Employment Mar 3, 1985 Office Svcs. 03-04-85 to Project Project- Control Expiration of 09-04-85 Undertaking: Based Clerk/Off. Contract Five-YearEmployment Services Sept 4, 1985 Expansion Projects 09-05-85 to Project - do - Control Termination of 01-15-87 Undertaking: Clerk/Admin.- Contract Clerical jobs Club House-Off. Jan 15, 1987 related to Services dispatching of service vehicles 09-11-87 to Project - do - Production Expiration of 02-10-88 Undertaking: Recorder/ Contract Temporary proAccounting Feb 10, 1988 duction recording jobs at 5-Stand Project 02-13-88 to Project - do - Accountant I - 07-13-88 Undertaking: Construction To handle cost Accounting monitoring, records keeping and reporting of FYEP II Proj. 07-14-88 to Project Project- Accountant I - 08-14-90 Undertaking: Based Project To handle cost Employment Accounting, FYEP



08-15-90 to 10-14-94

monitoring, records keeping and reporting of FYEP II Projects - do -

Mr. TEODULO A. MUTIA: DATES PROJECT ====== ======= 11-04-85 to 03-04-86

04-05-86 to 05-15-87

09-11-87 to 02-10-88

02-13-88 to 12-14-88

12-15-88 to 08-14-90

08-15-90 to

Project Undertaking: Attesting of shipment through National Marine Project Undertaking: Monitoring works for shipbreaking of MS. ASEAN KNOWLEDGE and MV ASEAN INDEPENDENCE Project Undertaking: Temporary job of Production Recording at 5 Stand TDM Project Project Undertaking: To handle Cost monitoring, records keeping and reporting of FYEP II Project - do -

Project

Controllership

- do -

Accountant II Project Accounting, FYEP Proj. Controllership

Currently Working

NATURE OF WORK ======== Project- Based Employment

POSITION/ DEPARTMENT ============ Audit Aide/ Internal Audit

REMARKS =========

- do -

Monitoring Aide/Shipbreaking Opns

Expiration of Contract May 15, 1987

- do -

Production Recorder/ Accounting

Expiration of Contract Feb 10, 1988

- do -

Accountant I / Acctg. & FinanceConstruction Accounting

Expiration of Contract Dec 14, 1988

- do -

Accountant & Project Accounting FYEP Controllership Accountant II,

Currently Working

Project- Based

Termination ofContract Mar 4, 1986

Currently

10-14-94

[1]

Undertaking: To Employment project Working handle cost Accounting/ FYEP monitoring, Proj. records keeping Controllership and reporting of FYEP II Projects Petitioners, along with other employees, filed a consolidated petition for regularization, [2] wage differential, CBA coverage and other benefits. In his decision dated April 29, 1992, Labor Arbiter Nicodemus G. Palangan ordered the dismissal of the complaint with respect to 26 complainants but ruled in favor of petitioners. Palomares, Mutia and four other complainants were adjudged as regular employees of respondent corporation. The dispositive portion of his decision reads: WHEREFORE, premises considered, the petition for regularization as well as the monetary benefits of the above-named complainants are hereby ordered DISMISSED for lack of merit except six complainants stated below. However, the respondent shall not terminate their services while the activities they performed still exist, and to give them preference provided they are qualified in cases of vacancies when the expansion program becomes operational. For the complainants who were terminated during the pendency of these cases the respondent is hereby ordered to pay them separation pay equivalent to one month salary for those who have rendered one or two years of service and three months salary for those who have served the company for at least 5 years. For complainants Edgardo Pongase, Aquiles Colita, Lolinio Solatorio, Ferdinand Palomares, Teodulo Mutia, and Rodolfo Leopoldo, this office consider (sic) them as regular employees for reason that the activities they performed are regular, and necessary in the usual trade or course of business of the company. Respondent is likewise ordered to pay these regular employees their salary differential to be computed three years back from the filing of these complaints. All other claims are hereby ordered dismissed. [3] SO ORDERED. (Emphasis added) On appeal, the NLRC reversed the findings of the Labor Arbiter in a decision dated November 23, 1994. Respondent Commission held that petitioners were project employees and that their assumption of regular jobs were mainly due to peakloads or the absence of regular [4] employees during the latters temporary leave. After their motion for reconsideration was [5] denied on March 30, 1995, petitioners filed this petition. The Court finds that petitioners failed to show any grave abuse of discretion on the part of the NLRC in rendering its questioned decision and resolutions of November 23, 1994 and March 30, 1995, respectively. Petitioners argue that as regards functions and duration of work, contracted employees should, by operation of law, be considered regular employees. Respondent NSC, on the other hand, maintains that petitioners are mere project employees, engaged to work on the latters Five-Year Expansion Projects (FYEP), Phases I and II-A, hence, dismissible upon the expiration of every particular project. Article 280 of the Labor Code, the law on the subject of regular employment, reads: The provisions of the 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. (Emphasis added). The principal test for determining whether an employee is a project employee and not a regular employee is whether he was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time he was engaged for that [6] project. It is quite evident that petitioners were employed for a specific project or projects undertaken by respondent corporation. The component projects of the latters Five Year Expansion Program include the setting up of a Cold Rolling Mill Expansion Project, establishing a Billet Steel-Making Plant, installation of a Five Stand TDM and Cold Mill Peripherals Project. In the case of ALU-TUCP v. NLRC, we held that the same Five Year Expansion Program (or more precisely, each of its component projects) constitutes a distinct undertaking identifiable from the ordinary business and activity of NSC, which is the [7] production and marketing of steel products. Further: Each component project, of course, begins and ends at specified times, which had already been determined by the time petitioners were engaged. We also note that NSC did the work here involved - the construction of buildings and civil and electrical works, installation of machinery and equipment and the commissioning of such machinery - only for itself. Private respondent NSC was not in the business of constructing buildings and installing plant machinery for the general business community, i.e., for unrelated, third party, corporations. NSC did not hold itself out to the public as a construction company or as an [8] engineering corporation.(Emphasis supplied.) Respondent corporations FYEP I was to cover years 1982 to 1988; the FYEP II to cover the years 1989 to 1994; and FYEP III to cover succeeding years. The NLRC added that FYEP III has [9] not yet materialized due to financial and political difficulties. Mutia was initially assigned in the shipbreaking operations of the NSC. This venture consists of land and sea operations - the latter consisting of breaking salvaged vessels into chunks, while the land-based operation consists of cutting these chunks into small and meltable sizes. The metal scraps are consequently utilized to produce billets at NSCs Billet SteelMaking Plant (BSP), a completely new installation, and one of the component projects in the FYEP. Unfortunately, the operation was found to be an unreliable source of scrap metals due to scarcity of vessels for salvaging, higher cost of operations and unsuitable raw material mix. It [10] was permanently phased out sometime in November 1986. Consequently, Mutia was transferred to other component projects of FYEP. Palomares assertion, on the other hand, that he was hired even before the FYEP began is misleading. He was actually employed on October 3, 1984, long after the FYEP began its preparatory stages in 1982. Two years from FYEPs inception, NSC found itself in need of more project workers. It was in this factual context that Palomares was engaged in 1984 as clerk typist detailed at the Office Services department of NSC.

The records show that petitioners were hired to work on projects for FYEP I and II-A. On account of the expiration of their contracts of employment and/or project completion, petitioners were terminated from their employment. They were, however, rehired for other component projects of the FYEP because they were qualified. Thus, the Court is convinced that petitioners were engaged only to augment the workforce of NSC for its aforesaid expansion program. In the case of Philippine National Oil Company - Energy Development Corporation v. NLRC, we set forth the criteria for fixed contracts of employment which do not circumvent security of tenure, to wit: (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 employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the [11] latter. Where, from the circumstances, it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary [12] to public policy, morals, good customs or public order. In the case at bar, however, there is nothing in the records which reveal an attempt to frustrate petitioners security of tenure. The fact that petitioners were required to render services necessary or desirable in the operation of NSCs business for a specified duration did not in any way impair the validity of their contracts of employment which stipulated a fixed duration therefor. [13] It should be noted that there were intervals in petitioners respective employment contracts with NSC, thus bolstering the latters position that, indeed, petitioners are project employees. Since its work depends on availability of such contracts or projects, necessarily the employment of its work force is not permanent but co-terminous with the projects to which they are assigned and from whose payrolls they are paid. It would be extremely burdensome for their employer to retain them as permanent employees and pay them [14] wages even if there are no projects to work on. The fact that petitioners worked for NSC under different project employment contracts for several years cannot be made a basis to consider them as regular employees, for they remain project employees regardless of the [15] number of projects in which they have worked. Even if, as admitted by the parties, petitioners were repeatedly and successively re-hired on the basis of a contract of employment for more than one year, they cannot be considered regularized. Length of service is not the controlling determinant of the employment tenure of [16] a project employee. As stated earlier, it is based on whether or not 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. Furthermore, the second paragraph of Article 280, providing that an employee who has rendered service for at least one (1) year, shall be considered a regular employee, pertains to casual employees and not [17] to project employees such as petitioners. Regulation of manpower by the company clearly falls within management [18] prerogative. Even as the law is solicitous of the welfare of employees, it must also protect [19] the right of an employer to exercise what are clearly management prerogatives, subject to the constitutional requirement for the protection of labor and the promotion of social justice [20] which tilts the scales of justice, whenever there is doubt, in favor of the worker. In the case at bar, we conclude that NSC acted within the parameters of a valid exercise of management prerogative.



WHEREFORE, the instant petition is DISMISSED. The decision and resolution of the National Labor Relations Commission dated November 23, 1994 and March 23, 1995, respectively, are AFFIRMED.SO ORDERED. FIRST DIVISION [G.R. No. 152427. August 9, 2005] INTEGRATED CONTRACTOR AND PLUMBING WORKS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and GLEN SOLON, respondents. D E C I S I O N QUISUMBING, J.: [1] This petition for review assails the Decision dated October 30, 2001 of the Court of Appeals [2] and its Resolution dated February 28, 2002 in CA-G.R. SP No. 60136, denying the

petitioners motion for reconsideration for lack of merit. The decision affirmed the National Labor Relations Commission (NLRC) which declared private respondent Glen Solon a regular th employee of the petitioner and awarded him 13 month pay, service incentive leave pay, reinstatement to his former position with full backwages from the time his salary was withheld until his reinstatement. Petitioner is a plumbing contractor. Its business depends on the number and frequency of [3] the projects it is able to contract with its clients. Private respondent Solon worked for petitioner. His employment records is as follows: December 14, 1994 up to January 14, 1995 St. Charbel Warehouse February 1, 1995 up to April 30, 1995 St. Charbel Warehouse May 23, 1995 up to June 23, 1995 St. Charbel Warehouse August 15, 1995 up to October 31, 1995 St. Charbel Warehouse November 2, 1995 up to January 31, 1996 St. Charbel Warehouse May 13, 1996 up to June 15, 1996 Ayala Triangle [4] August 27, 1996 up to November 30, 1996 St. Charbel Warehouse July 14, 1997 up to November 1997 ICPWI Warehouse November 1997 up to January 5, 1998 Cathedral Heights [5] January 6, 1998 Rockwell Center On February 23, 1998, while private respondent was about to log out from work, he was informed by the warehouseman that the main office had instructed them to tell him it was his last day of work as he had been terminated. When private respondent went to the petitioners office on February 24, 1998 to verify his status, he found out that indeed, he had been terminated. He went back to petitioners office on February 27, 1998 to sign a clearance th so he could claim his 13 month pay and tax refunds. However, he had second thoughts and refused to sign the clearance when he read the clearance indicating he had resigned. On March 6, 1998, he filed a complaint alleging that he was illegally dismissed without just cause [6] and without due process. In a Decision dated February 26, 1999, the Labor Arbiter ruled that private respondent was a regular employee and could only be removed for cause. Petitioner was ordered to reinstate private respondent to his former position with full backwages from the time his salary was withheld until his actual reinstatement, and pay him service incentive leave pay, and th 13 month pay for three years in the amount of P2,880 and P14,976, respectively. Petitioner appealed to the National Labor Relations Commission (NLRC), which ruled: WHEREFORE, prescinding from the foregoing and in the interest of justice, the decision of the th Labor Arbiter is hereby AFFIRMED with a MODIFICATION that the 13 month pay should be given only for the year 1997 and portion of 1998. Backwages shall be computed from the time he was illegally dismissed up to the time of his actual reinstatement. Likewise, service incentive leave pay for three (3) years is also awarded to appellee in the amount of P2,880.00. [7] SO ORDERED. [8] Petitioners Motion for Reconsideration was denied. Petitioner appealed to the Court of Appeals, alleging that the NLRC committed grave abuse of discretion in finding that the private respondent was a regular employee and in awarding th 13 month pay, service incentive leave pay, and holiday pay to the private respondent [9] despite evidence of payment. The said petition was dismissed for lack of merit. Before us now, petitioner raises the following issues: (1) Whether the respondent is a project employee of the petitioner or a regular employee; and (2) Whether the Court of Appeals



th

erred seriously in awarding 13 month pay for the entire year of 1997 and service incentive leave pay to the respondent and without taking cognizance of the evidence presented by [10] petitioner. The petitioner asserts that the private respondent was a project employee. Thus, when the project was completed and private respondent was not re-assigned to another project, petitioner did not violate any law since it was petitioners discretion to re-assign the private [11] respondent to other projects. Article 280 of the Labor Code states: The provisions of written agreement of 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 (Italics supplied.) [12] We held in Tomas Lao Construction v. NLRC that the principal test in determining whether an employee is a project employee or regular employee, is, whether he is assigned to carry out a specific project or undertaking, the duration (and scope) of which are specified at the [13] time the employee is engaged in the project. Project refers to a particular job or undertaking that is within the regular or usual business of the employer, but which is distinct and separate and identifiable from the undertakings of the company. Such job or undertaking [14] begins and ends at determined or determinable times. In our review of the employment contracts of private respondent, we are convinced he was initially a project employee. The services he rendered, the duration and scope of each project are clear indications that he was hired as a project employee. We concur with the NLRC that while there were several employment contracts between private respondent and petitioner, in all of them, private respondent performed tasks which were usually necessary or desirable in the usual business or trade of petitioner. A review of private respondents work assignments patently showed he belonged to a work pool tapped from where workers are and assigned whenever their services were needed. In a work pool, the workers do not receive salaries and are free to seek other employment during temporary breaks in the business. They are like regular seasonal workers insofar as the effect of temporary cessation of work is concerned. This arrangement is beneficial to both the employer and employee for it prevents the unjust situation of coddling labor at the expense of capital and at the same time enables the workers to attain the status of regular [15] employees. Nonetheless, the pattern of re-hiring and the recurring need for his services are sufficient evidence of the necessity and indispensability of such services to petitioners [16] business or trade. [17] In Maraguinot, Jr. v. NLRC we ruled that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee. In this case, did the private respondent become a regular employee then? The test to determine whether employment is regular or not is the reasonable connection between the particular activity performed by the employee in relation to the usual business

or trade of the employer. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if [18] not indispensability of that activity to the business. Thus, we held that where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and are [19] considered regular employees. While length of time may not be the controlling test for project employment, it is vital in determining if the employee was hired for a specific undertaking or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here, private respondent had been a project employee several times over. His employment ceased to be coterminous with specific projects when he was repeatedly re-hired due to the [20] demands of petitioners business. Where from the circumstances it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy, morals, good customs or public [21] order. Further, Policy Instructions No. 20 requires employers to submit a report of an employees termination to the nearest public employment office every time his employment was terminated due to a completion of a project. The failure of the employer to file termination [22] reports is an indication that the employee is not a project employee. Department Order No. 19 superseding Policy Instructions No. 20 also expressly provides that the report of [23] termination is one of the indications of project employment. In the case at bar, there was only one list of terminated workers submitted to the Department of Labor and [24] Employment. If private respondent was a project employee, petitioner should have submitted a termination report for every completion of a project to which the former was assigned. Juxtaposing private respondents employment history, vis the requirements in the test to determine if he is a regular worker, we are constrained to say he is. As a regular worker, private respondent is entitled to security of tenure under Article 279 of [25] the Labor Code and can only be removed for cause. We found no valid cause attending to private respondents dismissal and found also that his dismissal was without due process. Additionally, Article 277(b) of the Labor Code provides that ... Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment The failure of the petitioner to comply with these procedural guidelines renders its dismissal of private respondent, illegal. An illegally dismissed employee is entitled to reinstatement with full backwages, inclusive of allowances, and to his other benefits computed from the time his compensation was withheld from him up to the time of his actual reinstatement, pursuant to Article 279 of the Labor Code. th However, we note that the private respondent had been paid his 13 month pay for the year 1997. The Court of Appeals erred in granting the same to him.



Article 95(a) of the Labor Code governs the award of service incentive leave. It provides that every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay, and Section 3, Rule V, Book III of the Implementing Rules and Regulations, defines the term at least one year of service to mean service within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays, unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contract is less than 12 months, in which case said period shall be considered as one year. Accordingly, private respondents service incentive leave credits of five days for every year of service, based on the actual service rendered to the petitioner, in accordance with each contract of employment should be computed up to the date of [26] reinstatement pursuant to Article 279 of the Labor Code. WHEREFORE, the assailed Decision dated October 30, 2001 and the Resolution dated February 28, 2002 of the Court of Appeals in CA-G.R. SP No. 60136, are AFFIRMED with MODIFICATION. The petitioner is hereby ORDERED to (1) reinstate the respondent with no loss of seniority rights and other privileges; and (2) pay respondent his backwages, th 13 month pay for the year 1998 and Service Incentive Leave Pay computed from the date of his illegal dismissal up to the date of his actual reinstatement. Costs against petitioner. SO ORDERED. Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-48494 February 5, 1990 BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners, vs. RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President, and DOROTEO R. ALEGRE, respondents. Quasha, Asperilla, Ancheta, Peña & Nolasco for petitioners. Mauricio G. Domogon for respondent Alegre. NARVASA, J.: 1 The question presented by the proceedings at bar is whether or not the provisions of the 2 3 Labor Code, as amended, 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 4 P20,000.00. 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 5 contract of July 18, 1971. 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 6 could not be removed except for valid cause. The Regional Director considered Brent School's report as an application for clearance to terminate employment (not a report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent employee," to his former position without loss of seniority rights and with full back wages. The Director pronounced "the ground relied upon by the respondent (Brent) in terminating the services of the complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite 7 oddly, as prohibited by Circular No. 8, series of 1969, of the Bureau of Private Schools. Brent School filed a motion for reconsideration. The Regional Director denied the motion and 8 forwarded the case to the Secretary of Labor for review. The latter sustained the Regional 9 Director. 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 10 Code for termination of services. 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 11 12 Termination Pay Law, R.A. 1052, as amended by R.A. 1787. 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, 13 1977, and J. Walter Thompson Co. (Phil.) v. NLRC, promulgated on December 29, 14 1983. The Thompson case involved an executive who had been engaged for a fixed period of three (3) years. Biboso involved teachers in a private school as regards whom, the following pronouncement was made: What is decisive is that petitioners (teachers) were well aware an the time that their tenure was for a limited duration. Upon its termination, both parties to the employment relationship were free to renew it or to let it lapse. (p. 254) 15 Under American law the principle is the same. "Where a contract specifies the period of its 16 duration, it terminates on the expiration of such period." "A contract of employment for a 17 definite period terminates by its own terms at the end of such period." 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 18 manner: 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 19 known when." 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 20 another fixed date . . ." 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 21 its extinguishment." 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 22 (becoming Article 271). The article 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 23 article, renumbered 270, 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 24 Pambansa Bilang 130, 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 25 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 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 26 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 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, 27 Instructions No. 8 of the Minister of Labor 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 28 objecionable mischievous, undefensible, 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 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 29 rejecting it. . . ." . . . 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 30 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 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. 31 Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period of employment as still good rule—a rule reaffirmed in the recent case of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served by her school a notice of termination following the expiration of the last of three successive fixed-term employment contracts, the Court held: Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was probationary, contractual in nature, and one with a definitive period. At the expiration of the period stipulated in the contract, her appointment was deemed terminated and the letter informing her of the non-renewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes' contract of employment was due to expire and that the contract would no longer be renewed. It is not a letter of termination. The interpretation 32 that the notice is only a reminder is consistent with the court's finding in Labajo supra. ... 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.

SECOND DIVISION MITSUBISHI MOTORS PHILIPPINES CORPORATION, Petitioner, - versus - CHRYSLER PHILIPPINESLABOR UNION and NELSON PARAS, Respondents.



G.R. No. 148738



Present: PUNO, J., Chairman, QUISUMBING, MARTINEZ,* CALLEJO, SR., and TINGA, JJ.



Promulgated: June 29, 2004

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CALLEJO, SR., J.: [1] This is a petition for review on certiorari of the Decision of the Court of Appeals in CA-GR SP No. 46030 and the Resolution denying the motion for reconsideration filed by petitioner Mitsubishi Motors Philippines Corporation. The Antecedents Mitsubishi Motors Philippines Corporation (MMPC) is a domestic corporation engaged in the assembly and distribution of Mitsubishi motor vehicles. Chrysler Philippines Labor Union (CPLU) is a legitimate labor organization and the duly certified bargaining agent of the hourlypaid regular rank and file employees of MMPC. Nelson Paras was a member of CPLU. His wife, Cecille Paras, was the President of the Chrysler Philippines Salaried Employees Union (CPSU). Nelson Paras was first employed by MMPC as a shuttle bus driver on March 19, 1976. He resigned on June 16, 1982. He applied for and was hired as a diesel mechanic and heavy equipment operator in Saudi Arabia from 1982 to 1993. When he returned to the Philippines, he was re-hired as a welder-fabricator at the MMPC tooling shop from October 3, 1994 to [2] October 31, 1994. On October 29, 1994, his contract was renewed from November 1, 1994 [3] up to March 3, 1995.



Sometime in May of 1996, Paras was re-hired on a probationary basis as a manufacturing trainee at the Plant Engineering Maintenance Department. He and the new and re-hired [4] employees were given an orientation on May 15, 1996 by Emma P. Aninipot, respecting the companys history, corporate philosophy, organizational structure, and company rules and regulations, including the company standards for regularization, code of conduct and [5] company-provided benefits. Paras started reporting for work on May 27, 1996. He was assigned at the paint ovens, air make-up and conveyors. As part of the MMPCs policy, Paras was evaluated by his immediate [6] [7] supervisors Lito R. Lacambacal and Wilfredo J. Lopez after six (6) months, and received an average rating. Later, Lacambacal informed Paras that based on his performance rating, he [8] would be regularized. [9] However, the Department and Division Managers, A.C. Velando and H.T. Victoria, including [10] Mr. Dante Ong, reviewed the performance evaluation made on Paras. They unanimously agreed, along with Paras immediate supervisors, that the performance of Paras was [11] unsatisfactory. As a consequence, Paras was not considered for regularization. On November 26, 1996, he received a Notice of Termination dated November 25, 1996, informing him that his services were terminated effective the said date since he failed to [12] meet the required company standards for regularization. Utilizing the grievance machinery in the collective bargaining agreement, the CPLU [13] demanded the settlement of the dispute which arose from Paras termination. The dispute was thereafter submitted for voluntary arbitration, as the parties were unable to agree on a mutually acceptable solution. CPLU posited that Paras was dismissed on his one hundred rd eighty third (183 ) day of employment, or three (3) days after the expiration of the probationary period of six (6) months. It was contended that Paras was already a regular employee on the date of the termination of his probationary employment. According to CPLU and Paras, the latters dismissal was an offshoot of the heated argument during the CBA negotiations between MMPC Labor Relations Manager, Atty. Carlos S. Cao, on the one hand, and Cecille Paras, the President of the Chrysler Philippines Salaried Employees Union (CPSU) and Paras wife, on the other. On November 3, 1997, the Voluntary Arbitrator (VA) rendered a decision finding the dismissal of Paras valid for his failure to pass the probationary standards of MMPC.The dispositive portion of the decision reads: WHEREFORE, in view of all the foregoing, judgment is hereby rendered finding the [14] termination of Mr. Paras was valid for cause his failure to pass the probationary period. The VA declared that hiring an employee on a probationary basis to determine his or her fitness for regular employment was in accord with the MMPCs exercise of its management prerogative. The VA pointed out that MMPC had complied with the requirement of apprising

Paras of the standards of performance evaluation and regularization at the inception of his probationary employment. The VA agreed with the MMPC that the termination of Paras employment was effected prior to the expiration of the six-month probationary period. As to Paras contention that he was already a regular employee before he was dismissed in 1994 considering that he had an accumulated service of eleven (11) months, the VA ruled that Paras delay in filing a complaint for regularization only in 1996, for services rendered in October 1994 to March 1995, militated against him. The VA stated that Paras dismissal was based on the unsatisfactory performance rating given to him by his direct supervisors Lito Lacambacal and Wilfredo Lopez. The VA also found that the alleged heated argument between Atty. Carlos S. Cao, the Labor Relations Manager of MMPC, and Cecille Paras, the [15] President of CPSU, was irrelevant in the termination of Paras services. The Case Before the Court of Appeals Aggrieved, Paras and CPLU filed a petition for review under Rule 43 of the Rules of Court before the Court of Appeals, docketed as C.A.-G.R. SP No. 46030. They assigned the following errors: I THE VOLUNTARY ARBITRATOR COMMITTED A SERIOUS ERROR OF LAW IN FAILING TO HOLD THAT THE NOTICE OF TERMINATION WAS SERVED UPON PETITIONER NELSON PARAS AFTER HE HAS ALREADY BECOME A REGULAR EMPLOYEE, HIS PERIOD FOR PROBATION HAVING EXPIRED. II THE VOLUNTARY ARBITRATOR SERIOUSLY ERRED AND GRAVELY ABUSED HIS DISCRETION IN HOLDING THAT PETITIONER NELSON PARAS SUPPOSED DELAY IN FILING THE ILLEGAL DISMISSAL CASE WORKED AGAINST HIM. III THE VOLUNTARY ARBITRATOR ACTED WITH GRAVE ABUSE OF DISCRETION AND COMMITTED SERIOUS ERRORS OF FACT AND LAW IN NOT HOLDING THAT THE PERFORMANCE OF NELSON [16] PARAS WAS SATISFACTORY AND THAT HIS DISMISSAL WAS POLITICALLY MOTIVATED. Therein, Paras and CPLU asserted that pursuant to Article 13 of the New Civil Code, the period of May 27, 1996 to November 26, 1996 consisted of one hundred eighty-three (183) days. They asserted that the maximum of the probationary period is six (6) months, which is equivalent to 180 days; as such, Paras, who continued to be employed even after the th 180 day, had become a regular employee as provided for in Article 282 of the Labor Code. They averred that as a regular employee, Paras employment could be terminated only for just or authorized causes as provided for under the Labor Code, and after due notice. They posited that in the Letter of Termination dated November 25, 1996, the ground for Paras termination was not among those sanctioned by the Labor Code; hence, his dismissal was illegal.



Paras and CPLU also stressed that he had already been in the employ of MMPC from October 3, 1994 to March 3, 1995 as a welder-fabricator in the production of jigs and fixtures, a function necessary and desirable to the usual business of MMPC. Such period, in addition to the six-month probationary period, amounted to eleven (11) months of service, which is sufficient for him to be considered as a regular employee. Paras and CPLU averred that the filing of an illegal dismissal complaint only after his termination in 1996 did not make Paras claim for regularization specious, since an illegally [17] dismissed employee, like him, has four (4) years within which to file a complaint. They emphasized that Paras performance evaluation was changed to unsatisfactory as an offshoot of the arguments between the latters wife, the President of the CPSU, and Atty. Carlos [18] S. Cao, one of MMPCs negotiators, over the provisions in the CBA. The MMPC, for its part, averred that under Article 13 of the New Civil Code, Paras probationary employment which commenced on May 27, 1996 would expire on November 27, 1996. Since he received the notice of termination of his employment on November 25, 1996, the same should be considered to have been served within the six-month probationary period. The MMPC asserted that the VA acted correctly in not considering the five-month period of Paras contractual employment as a welder-fabricator to qualify him for regularization. It argued that his rating showed that his immediate supervisors, in tandem with his department head, found his performance unsatisfactory. Thus, his failure to meet a satisfactory performance rating justified the termination of his probationary employment. For its part, the Office of the Solicitor General (OSG), in representation of Voluntary Arbitrator Danilo Lorredo, agreed that Paras rd and CPLUs allegation, that the notice of termination was served on Paras 183 day, was erroneous. The OSG opined that the six-month probationary period was to expire on November 27, 1996 and since Paras was served such notice on November 25, 1996, his employment was deemed terminated within the six-month probationary period. It posited that the failure of Paras to get a satisfactory performance rating justified the termination of his probationary employment, and that the inclusion of his five-month contractual employment as welder-fabricator did not qualify him for regular employment. Finally, the OSG contended that the appointment of a probationary employee to a regular status is voluntary and discretionary on the part of the employer. In a Decision promulgated on September 13, 2000, the CA reversed the ruling of the Voluntary Arbitrator, the dispositive portion of which is herein quoted: WHEREFORE, the petition is GRANTED. The Decision of public respondent, dated November 3, 1997, is REVERSED and SET ASIDE. In lieu thereof, judgment is hereby entered declaring Mitsubishi Motors Phils. Corporations dismissal of Nelson Paras as ILLEGAL and ORDERING the former to reinstate Paras to his former position without loss of seniority rights and other privileges. Conformably with the latest pronouncement of the Supreme Court on backwages, supra, Mitsubishi Motors Phils. Corporation is further ORDERED to pay Paras full backwages (without qualifications or deductions), inclusive of allowances, and 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. Petitioners claims for attorneys fees, moral and exemplary damages are, nevertheless, DENIED for lack of sufficient basis. No [19] costs. The CA agreed with Paras and CPLUs interpretation that six (6) months is equivalent to one hundred eighty (180 days) and that computed from May 27, 1996, such period expired on November 23, 1996. Thus, when Paras received the letter of termination on November 26, rd 1996, the same was served on the 183 day or after the expiration of the six-month probationary period. The CA stated that since he was allowed to work beyond the probationary period, Paras became a regular employee. Hence, his dismissal must be based on the just and authorized causes under the Labor Code, and in accordance with the twonotice requirement provided for in the implementing rules. The appellate court concluded that for MMPCs failure to show that Paras was duly notified of the cause of his dismissal, the latter was illegally dismissed; hence, his actual reinstatement without loss of seniority rights and the payment of backwages up to the time of his reinstatement were in order. Dissatisfied, the MMPC filed a motion for reconsideration of the decision, alleging that the CA erred in holding that the six-month probationary period which commenced on May 27, 1996, expired on November 23, 1996. The MMPC contended that the reinstatement of Paras to his former position had become moot and academic because it had retrenched approximately seven hundred (700) employees as a result of its financial losses in 1997. It posited that the payment of full backwages should only be computed up to February 1998, the date when MMPC effected the first phase of its retrenchment program. [20] The CA denied the motion in a Resolution dated June 18, 2001. The Present Petition Undaunted, the MMPC, now the petitioner, filed this instant petition, alleging as follows: A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE 3 NOVEMBER 1997 DECISION OF THE HONORABLE VA DANILO LORREDO, AND IN FINDING THAT RESPONDENT PARAS (WAS) ILLEGALLY DISMISSED AND ORDERING HIS REINSTATEMENT. B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN ORDERING THE REINSTATEMENT OF PARAS WITH FULL BACKWAGES DESPITE THE CHANGE IN THE FINANCIAL CIRCUMSTANCES OF THE COMPANY. C.



THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE SIX-MONTH PROBATIONARY PERIOD OF PARAS WHICH STARTED ON 27 MAY 1996 HAD EXPIRED 23 [21] NOVEMBER 1996. The petitioner asserts that the CA erred in ruling that respondent Paras was already a regular employee when he was served the notice of termination. Citing Article 13 of the New Civil Code, the petitioner argued that the six-month probationary period should be computed as follows: May 27-31 = 4 days Jun(e) 1-30 = 1 month (30 days) July 1-31 = 1 month (30 days) Aug(.) 1-31 = 1 month (30 days) Sept(.) 1-30 = 1 month (30 days) Oct(.) 1-31 = 1 month (30 days) [22] Nov(.) 1-26 = 26 days Hence, according to the petitioner, when the termination letter was served on November 26, 1996, Paras was still a probationary employee. Considering that he did not qualify for regularization, his services were legally terminated. As such, the CA erred in ordering his reinstatement and the payment of his backwages. According to the petitioner, even assuming that respondent Paras was a regular employee when he was dismissed, his reinstatement had already become moot and academic because of the retrenchment program effected as a result of the business losses it had suffered in the year 1997. Respondent Paras, who was employed only in May 27, 1996, would have been included in the first batch of employees retrenched in February of 1998, in accordance with the last in first out policy embedded in the CBA. Thepetitioner further contends that Paras backwages should be computed only up to February of 1998. In their comment on the petition, the respondents argue that the CA was correct in concluding that the termination letter was served on respondent Paras one hundred eighty rd third (183 ) day of employment with the petitioner, asserting that six (6) months is equivalent to one hundred eighty (180) days. Since respondent Paras was employed on May th 27, 1996, the 180 day fell on November 23, 1996. Thus, respondent Paras was already a regular employee when the termination letter was served on him. Consequently, his dismissal should be based on the just or authorized causes provided for by the Labor Code, and after proper notice. The respondents, likewise, contend that the petitioner cannot raise new and unsubstantiated allegations in its petition at bar. The Issues

The issues for resolution are the following: (a) whether or not respondent Paras was already a regular employee on November 26, 1996; (b) whether or not he was legally dismissed; (c) if so, whether or not his reinstatement had been rendered moot and academic; and, (d) whether or not his backwages should be computed only up to February of 1998. The Courts Ruling The petition is partially granted. At the outset, we must stress that only errors of law are generally reviewed by this Court in [23] petitions for review on certiorari of CA decisions. Questions of fact are not [24] entertained. This Court is not a trier of facts and, in labor cases, this doctrine applies with [25] greater force. Factual questions are for labor tribunals to resolve. The findings of fact of quasi-judicial bodies like the National Labor Relations Commission (NLRC), are accorded with respect, even finality, if supported by substantial evidence. Particularly when passed upon and upheld by the Court of Appeals, such findings are binding [26] and conclusive upon the Supreme Court and will not normally be disturbed. However, when the findings of the NLRC and the Court of Appeals are inconsistent with each other, there is a need to review the records to determine which of them should be preferred [27] as more conformable to the evidentiary facts. Considering that the CAs findings of fact clash with those of the Voluntary Arbitrator, this Court is compelled to go over the records of [28] the case, as well as the submissions of the parties. Regularization of Employment Indeed, an employer, in the exercise of its management prerogative, may hire an employee [29] on a probationary basis in order to determine his fitness to perform work. Under Article 281 of the Labor Code, the employer must inform the employee of the standards for which his employment may be considered for regularization. Such probationary period, unless covered by an apprenticeship agreement, shall not exceed six (6) months from the date the employee started working. The employees services may be terminated for just cause or for his failure to qualify as a regular employee based on reasonable standards made known to [30] him. Respondent Paras was employed as a management trainee on a probationary basis. During the orientation conducted on May 15, 1996, he was apprised of the standards upon which his regularization would be based. He reported for work on May 27, 1996. As per the companys policy, the probationary period was from three (3) months to a maximum of six (6) months.



[31]

Applying Article 13 of the Civil Code, the probationary period of six (6) months consists of [32] one hundred eighty (180) days. This is in conformity with paragraph one, Article 13 of the Civil Code, which provides that the months which are not designated by their names shall be understood as consisting of thirty (30) days each. The number of months in the probationary period, six (6), should then be multiplied by the number of days within a month, thirty (30); hence, the period of one hundred eighty (180) days. As clearly provided for in the last paragraph of Article 13, in computing a period, the first day shall be excluded and the last day included. Thus, the one hundred eighty (180) days commenced on May 27, 1996, and ended on November 23, 1996. The termination letter dated November 25, 1996 was served on respondent Paras only at 3:00 a.m. of November 26, 1996. He was, by then, already a regular employee of the petitioner under Article 281 of the Labor Code. The Legality of The Dismissal An employee cannot be dismissed except for just or authorized cause as found in the Labor [33] Code and after due process. The following grounds would justify the dismissal of an employee: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of the 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 of any immediate member of his family or his duly authorized representative; and [34] (e) Other causes analogous to the foregoing. The basis for which respondent Paras services were terminated was his alleged unsatisfactory rating arising from poor performance. It is a settled doctrine that the employer has the burden of proving the lawfulness of his employees dismissal. The validity of [35] the charge must be clearly established in a manner consistent with due process. Under Article 282 of the Labor Code, an unsatisfactory rating can be a just cause for dismissal only if it amounts to gross and habitual neglect of duties. Gross negligence has been defined to be the want or absence of even slight care or diligence as to amount to a reckless disregard of the safety of person or property. It evinces a thoughtless disregard of [36] consequences without exerting any effort to avoid them. A careful perusal of the records

of this case does not show that respondent Paras was grossly negligent in the performance of his duties. The company policy provides the following rule in performance evaluation: The performance rating sheet must be accomplished by the immediate supervisor, then reviewed by the Department Head, and concurred by the Division Head. The Personnel Manager likewise must note all submitted performance sheets. Once the rating sheet has gone through this standard procedure, the immediate supervisor shall discuss the results of the performance rating with the employee. The discussion/conference may be done in the presence of the Department Head. This is to emphasize the point that the employee is given due importance especially in matters [37] pertaining to his development as a person and employee. In the present case, the immediate supervisor of respondent Paras gave him an average [38] performance rating and found him fit for regularization. Thereafter, his immediate supervisor and the department head reviewed the said rating, which was duly noted by the personnel manager. However, in a complete turn around, the petitioner made it appear that after the performance evaluation of respondent Paras was reviewed by the department and division heads, it was unanimously agreed that the respondents performance rating was unsatisfactory, making him unfit for regularization. There is no showing that respondent Paras was informed of the basis for the volte face of the management group tasked to review his performance rating. His immediate supervisor even told him that he had garnered a satisfactory rating and was qualified for regularization, only to later receive a letter notifying him that his employment was being terminated. Considering that respondent Paras was not dismissed for a just or authorized cause, his dismissal from employment was illegal. Furthermore, the petitioners failure to inform him of any charges against him deprived him of due process. Clearly, the termination of his employment based on his alleged unsatisfactory performance rating was effected merely to cover up and deodorize the illegality of his dismissal. Reinstatement and Backwages The normal consequences of illegal dismissal are reinstatement without loss of seniority rights and the payment of backwages computed from the time the employees compensation [39] was withheld from him. Since respondent Paras dismissal from employment is illegal, he is entitled to reinstatement and to be paid backwages from the time of his dismissal up to the time of his actual reinstatement.



The petitioner asserts that assuming respondent Paras was illegally dismissed, his reinstatement had become moot and academic because of its retrenchment program which was effected beginning February 1998. The petitioner posits that even if respondent Paras had become a regular employee by November 26, 1996, he would have been included in the first phase of its retrenchment program, pursuant to the last in first out policy embedded in the CBA. Hence, the petitioner concludes, the payment of backwages should be computed up to February of 1998. The respondents, for their part, aver that the petitioner is proscribed from alleging new circumstances and allegations of fact, particularly on financial reverses, before the Court of Appeals and the Voluntary Arbitrator. We do not agree with the respondents. A cursory examination of the records shows that the petitioner could not raise its retrenchment program as an issue before the VA, because it was implemented only in February 1998, when the case was already in the CA. However, we note that the petitioner did not raise the same in its comment to the petition. The petitioner asserted the matter only in its October 20, 2000 motion for reconsideration of the decision of the CA, where it alleged that the retrenchment program was effected to arrest the continuing business losses resulting from the financial reverses it experienced in 1997. Nevertheless, it is not denied that because of the petitioners losses, it retrenched seven hundred (700) employees. Business reverses or losses are recognized by law as an authorized cause for termination of employment. Still, it is an essential requirement that alleged losses in business operations must be proven convincingly. Otherwise, such ground for termination would be susceptible to abuse by scheming employers, who might be merely feigning business losses or reverses in their business ventures to ease out [40] employees. Retrenchment is an authorized cause for termination of employment which the law accords an employer who is not making good in its operations in order to cut back on expenses for salaries and wages by laying off some employees. The purpose of retrenchment [41] is to save a financially ailing business establishment from eventually collapsing. In this case, the petitioner submitted in the CA its financial statements for 1996, 1997 and [42] 1998 as well as its application for retrenchment. In its Statements of Income and Unappropriated Retained Earning, it was shown that in 1996, the parent company of the [43] petitioner had a net income of P467,744,285. In 1997, it had a net loss ofP29,253,511. In 1998, its net loss, after effecting retrenchment and closing several plants, was arrested and [44] dropped to P8,156,585. This shows that even after the retrenchment, the petitioner MMPC still suffered net losses. In 1996, the petitioners current assets amounted to P5,381,743,576; it increased [45] [46] to P8,033,932,745 in 1997, while in 1998, it was reduced to P5,053,874,359. This shows that the petitioners assets acquired in 1997 diminished in 1998. The figures for Current Liabilities are consistent with the movement of current assets for 1997 and 1998.

In 1996, the petitioner incurred current liabilities of P1,966,445,401 which increased [47] [48] to P5,088,990,117 in 1997 and decreased to P2,880,259,811 in 1998. To reduce its losses, the petitioner had to dispose of some of its current assets to cover the increased liability incurred in 1997, and had to resort to borrowings in 1998. The continuity of losses which started in 1997 is further illustrated in the figures on retained earnings for 1996, 1997 [49] and 1998. In 1996, retained earnings stood at P1,838,098,175, which decreased [50] [51] to P994,942,628 in 1997 and further decreased to P592,614,548 in 1998. The petitioners losses in 1997 and 1998 are not insignificant. It is beyond cavil then, that the serious and actual business reverses suffered by the petitioner justified its resort to retrenchment of seven hundred (700) of its employees. The records show that the petitioner informed the Department of Labor and Employment of [52] its plight and intention to retrench employees as a result of the shutdown of its plants. The termination of the five hundred thirty-one (531) affected employees were made effective a [53] month from receipt of the termination letter mailed on February 25, 1998. In accordance with the CBA between MMPC and CPLU, employees who were recently hired were the ones retrenched. Considering that respondent Paras had just been regularized on November 24, 1996, he would have been included among those who had been retrenched had he not been dismissed. The unfavorable financial conditions of the petitioner may not justify reinstatement. However, it is not a sufficient ground to deny backwages to respondent Paras [54] who was illegally dismissed. Considering that notices of retrenchment were mailed on February 25, 1998 and made effective one month therefrom, respondent Paras should be paid full backwages from the date of his illegal dismissal up to March 25, 1998. Pursuant to Article 283 of the Labor Code, he should be paid separation pay equivalent to one (1) month salary, or to at least one-half month pay for every year of service, whichever is higher, a [55] fraction of at least six months to be considered as one (1) year. IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The September 13, 2000 Decision of the Court of Appeals in CAGR SP No. 46030 is hereby AFFIRMED WITH MODIFICATIONS. The petitioner is ORDERED to pay respondent Nelson Paras separation pay equivalent to one (1) month, or to at least one-half (1/2) month pay for every year of service, whichever is higher, a fraction of at least six (6) months to be considered as one year; and to pay full backwages, computed from the time of his dismissal up to March 25, 1998. That portion of the decision of the Court of Appeals directing the reinstatement of the respondent Paras is DELETED. No costs. SO ORDERED.



Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 72222 January 30, 1989 INTERNATIONAL CATHOLIC MIGRATION COMMISSION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and BERNADETTE GALANG, respondents. FERNAN, C.J.: The issue to be resolved in the instant case is whether or not an employee who was terminated during the probationary period of her employment is entitled to her salary for the unexpired portion of her six-month probationary employment. The facts of the case are undisputed. Petitioner International Catholic Migration Commission (ICMC), a non-profit organization dedicated to refugee service at the Philippine Refugee Processing Center in Morong, Bataan engaged the services of private respondent Bernadette Galang on January 24, 1983 as a probationary cultural orientation teacher with a monthly salary of P2,000.00. Three (3) months thereafter, or on April 22, 1983, private respondent was informed, orally and in writing, that her services were being terminated for her failure to meet the prescribed standards of petitioner as reflected in the performance evaluation of her supervisors during the teacher evaluation program she underwent along with other newly-hired personnel. Despite her termination, records show that private respondent did not leave the ICMC refugee camp at Morong, Bataan, but instead stayed thereat for a few days before leaving for Manila, during which time, she was observed by petitioner to be allegedly acting strangely. On July 24, 1983, private respondent returned to Morong, Bataan on board the service bus of petitioner to accomplish the clearance requirements. In the evening of that same day, she was found at the Freedom Park of Morong wet and shivering from the rain and acting bizarrely. She was then taken to petitioner's hospital where she was given the necessary medical attention. Two (2) days later, or on July 26, 1983, she was taken to her residence in Manila aboard petitioner's service bus. Thru a letter, her father expressed appreciation to petitioner for taking care of her daughter. On that same day, her father received, on her behalf, the proportionate amount of her 13th month pay and the equivalent of her two week pay. 1 On August 22, 1983, private respondent filed a complaint for illegal dismissal, unfair labor practice and unpaid wages against petitioner with the then Ministry of Labor and Employment, praying for reinstatement with backwages, exemplary and moral damages. On October 8, 1983, after the parties submitted their respective position papers and other pleadings, Labor Arbiter Pelagio A. Carpio rendered his decision dismissing the complaint for illegal dismissal as well as the complaint for moral and exemplary damages but ordering the petitioner to pay private respondent the sum of P6,000.00 as payment for the last three (3) 2 months of the agreed employment period pursuant to her verbal contract of employment. Both parties appealed the decision to the National Labor Relations Commission. In her appeal, private respondent contended that her dismissal was illegal considering that it was effected without valid cause. On the other hand, petitioner countered that private respondent who was employed for a probationary period of three (3) months could not



rightfully be awarded P6,000.00 because her services were terminated for failure to qualify as a regular employee in accordance with the reasonable standards prescribed by her employer. On August 22, 1985, the NLRC, by a majority vote of Commissioners Guillermo C. Medina and Gabriel M. Gatchalian, sustained the decision of the Labor Arbiter and thus dismissed both appeals for lack of merit. Commissioner Miguel Varela, on the other hand, dissented and voted for the reversal of the Labor Arbiter's decision for lack of legal basis considering that the termination of services of complainant, now private respondent, was effected during her 3 probationary period on valid grounds made known to her. Dissatisfied, petitioner filed the instant petition. Petitioner maintains that private respondent is not entitled to the award of salary for the unexpired three-month portion of the probationary period since her services were terminated during such period when she failed to qualify as a regular employee in accordance with the reasonable standards prescribed by petitioner; that having been terminated on valid grounds during her probationary period, or specifically on April 24, 1983, petitioner is not liable to private respondent for services not rendered during the unexpired three-month period, otherwise, unjust enrichment of her part would result; that under Article 282 (now Article 281) of the Labor Code, if the employer finds that the probationary employees does not meet the standards of employment set for the position, the probationary employee may be terminated at any time within the six-month period, without 4 need of exhausting raid entire six-month term. The Solicitor General, on the other hand, contends that a probationary employment for six (6) months, as in the case of herein private respondent, is an employment for a definite period of time and, as such, the employer is duty-bound to allow the probationary employee to work until the termination of the probationary employment before her re- employment could be refused; that when petitioner disrupted the probationary employment of private respondent, without giving her the opportunity to improve her method of instruction within the said period, it held itself liable to pay her salary for the unexpired portion of such employment by way of damages pursuant to the general provisions of civil law that he who in any manner contravenes the terms of his obligation without any valid cause shall be liable 5 6 for damages; that, as held in Madrigal v. Ogilvie, et al, the damages so awarded are 7 equivalent to her salary for the unexpired portion of her employment for a fixed period. We find for petitioner. There is justifiable basis for the reversal of public respondent's award of salary for the unexpired three-month portion of private respondent's six-month probationary employment in the light of its express finding that there was no illegal dismissal. There is no dispute that private respondent was terminated during her probationary period of employment for failure to qualify as a regular member of petitioner's teaching staff in accordance with its reasonable standards. Records show that private respondent was found by petitioner to be deficient in 8 classroom management, teacher-student relationship and teaching techniques. Failure to qualify as a regular employee in accordance with the reasonable standards of the employer is a just cause for terminating a probationary employee specifically recognized under Article 282 (now Article 281) of the Labor Code which provides thus: ART. 281. 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 employer who has been engaged in a probationary basis may be terminated for a just cause or when he fails to

qualify as a regular employer in accordance with reasonable standard made known by the employer to the employer at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.(Emphasis supplied.) It must be noted that notwithstanding the finding of legality of the termination of private respondent, public respondent justified the award of salary for the unexpired portion of the probationary employment on the ground that a probationary employment for six (6) months is an employment for a "definite period" which requires the employer to exhaust the entire probationary period to give the employee the opportunity to meet the required standards. The legal basis of public respondent is erroneous. A probationary employee, as understood under Article 282 (now Article 281) of the Labor Code, is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. A probationary appointment is made to afford the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become 9 a proper and efficient employee. The word "probationary", as used to describe the period 10 of employment, implies the purpose of the term or period, but not its length. 11 Being in the nature of a "trial period" the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. The length of time is immaterial in determining the correlative rights of both in dealing with each other during said period. While the employer, as stated earlier, observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other, seeks to prove to the employer, that he has the qualifications to meet the reasonable standards for permanent employment. It is well settled that the employer has the right or is at liberty to choose who will be hired and who will be denied employment. In that sense, it is within the exercise of the right to select his employees that the employer may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently. The equality of right that exists between the employer and the employee as to the nature of the probationary employment was aptly emphasized by this Court in Grand Motor Parts Corporation v. Minister of Labor, et al., 130 SCRA 436 (1984), citing the 1939 case of Pampanga Bus. Co., Inc. v. Pambusco Employees Union, Inc. 68 Phil. 541, thus: The right of a laborer to sell his labor to such persons as he may choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The employer and the employee have thus an equality of right guaranteed by the Constitution. If the employer can compel the employee to work against the latter's will, this is servitude. If the employee can compel the employer to give him work against the employer's will, this is oppression. As the law now stands, Article 281 of the Labor Code gives ample authority to the employer to terminate a probationary employee 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. There is nothing under Article 281 of the Labor Code that would preclude the employer from extending a regular or a permanent appointment to an employee once the employer finds that the employee is qualified for regular employment even before the expiration of the probationary period. Conversely, if the purpose sought by the employer is neither attained nor attainable within the said period, Article 281 of the Labor Code does not likewise preclude the employer from terminating the probationary employment on justifiable causes as in the instant case.



We find unmeritorious, therefore, public respondents argument that the security of tenure of probationary employees within the period of their probation, as in the case of herein private respondent, justified the award of salary for the unexpired portion of her probationary employment. The termination of private respondent predicated on a just cause negates the application in this case of the pronouncement in the case of Biboso v. Victories 12 Milling Co., Inc., on the right of security of tenure of probationary employees. Upon inquiry by the then Ministry of Labor and Employment as a consequence of the illegal dismissal case filed by private respondent before it, docketed as Case No. NLRC NCR-8-378683, it was found that there was no illegal dismissal involved in the case, hence, the circumvention of the rights of the probationary employees sought to be regulated as pointed 13 out in Biboso v. Victorias Milling Co., Inc., is wanting. There was no showing, as borne out by the records, that there was circumvention of the rights of private respondent when she was informed of her termination. Her dismissal does not appear to us as arbitrary, fanciful or whimsical. Private respondent was duly notified, orally and in writing, that her services as cultural orientation teacher were terminated for failure to meet the prescribed standards of petitioner as reflected in the performance evaluation conducted by her supervisors during the teacher evaluating program. The dissatisfaction of petitioner over the performance of private respondent in this regard is a legitimate exercise of its prerogative to select whom to hire or refuse employment for the success of its program or undertaking. More importantly, private respondent failed to show that there was unlawful discrimination in the dismissal. It was thus a grave abuse of discretion on the part of public respondent to order petitioner to pay private respondent her salary for the unexpired three-month portion of her six-month probationary employment when she was validly terminated during her probationary employment. To sanction such action would not only be unjust, but oppressive on the part of 14 the employer as emphasized in Pampanga Bus Co., Inc., v. Pambusco Employer Union, Inc. WHEREFORE, in view of the foregoing, the petition is GRANTED. The Resolution of the National Labor Relations Commission dated August 22, 1985, is hereby REVERSED and SET ASIDE insofar as it ordered petitioner to pay private respondent her P6,000.00 salary for the unexpired portion of her six-month probationary employment. No cost. SO ORDERED

THIRD DIVISION [G.R. No. 149859. June 9, 2004] RADIN C. ALCIRA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, MIDDLEBY PHILIPPINES CORPORATION/FRANK THOMAS, XAVIER G. PEA and TRIFONA F. MAMARADLO, respondents. D E C I S I O N CORONA, J.: [1] [2] Before us on appeal is the decision of the Court of Appeals dated June 22, 2001 affirming [3] [4] the decision of the National Labor Relations Commission dated March 23, 1999 which, in [5] turn, affirmed the decision of labor arbiter Pedro Ramos dated May 19, 1998 dismissing petitioner Radin Alciras complaint for illegal dismissal with prayer for reinstatement, backwages, moral damages, exemplary damages and attorneys fees. The facts follow. Respondent Middleby Philippines Corporation (Middleby) hired petitioner as engineering support services supervisor on a probationary basis for six months. Apparently unhappy with petitioners performance, respondent Middleby terminated petitioners services. The bone of contention centered on whether the termination occurred before or after the six-month probationary period of employment. The parties, presenting their respective copies of Alciras appointment paper, claimed conflicting starting dates of employment: May 20, 1996 according to petitioner and May 27, 1996 according to respondent. Both documents indicated petitioners employment status as probationary (6 mos.) and a remark that after five months (petitioners) performance shall be [6] evaluated and any adjustment in salary shall depend on (his) work performance. Petitioner asserts that, on November 20, 1996, in the presence of his co-workers and subordinates, a senior officer of respondent Middleby in bad faith withheld his time card and did not allow him to work. Considering this as a dismissal after the lapse of his probationary employment, petitioner filed on November 21, 1996 a complaint in the National Labor Relations Commission (NLRC) against respondent Middleby contending that he had already become a regular employee as of the date he was illegally dismissed. Included as respondents in the complaint were the following officers of respondent Middleby: Frank Thomas (General Manager), Xavier Pea (Human Resources Manager) and Trifona Mamaradlo (Engineering Manager). In their defense, respondents claim that, during petitioners probationary employment, he showed poor performance in his assigned tasks, incurred ten absences, was late several times and violated company rules on the wearing of uniform. Since he failed to meet company standards, petitioners application to become a regular employee was disapproved and his employment was terminated. On May 19, 1998, the labor arbiter dismissed the complaint on the ground that: (1) respondents were able to prove that petitioner was apprised of the standards for becoming a regular employee; (2) respondent Mamaradlos affidavit showed that petitioner did not perform well in his assigned work and his attitude was below par compared to the companys standard required of him and (3) petitioners dismissal on November 20, 1996 was before his regularization, considering that, counting from May 20, 1996, the six-month probationary [7] period ended on November 20, 1996. On March 23, 1999, the NLRC affirmed the decision of the labor arbiter. On June 22, 2001, the Court of Appeals affirmed the judgment of the NLRC. According to the appellate court:



Even assuming, arguendo, that petitioner was not informed of the reasonable standards required of him by Middleby, the same is not crucial because there is no termination to speak of but rather expiration of contract. Petitioner loses sight of the fact that his employment was probationary, contractual in nature, and one with a definite period. At the expiration of the period stipulated in the contract, his appointment was deemed terminated and a notice or termination letter informing him of the non-renewal of his contract was not necessary. While probationary employees enjoy security of tenure such that they cannot be removed except for just cause as provided by law, such protection extends only during the period of probation. Once that period expired, the constitutional protection could no longer be invoked. Legally speaking, petitioner was not illegally dismissed. His contract merely [8] expired. Hence, this petition for review based on the following assignment of errors: I THE COURT OF APPEALS GRAVELY ERRED, BLATANTLY DISREGARDED THE LAW AND ESTABLISHED JURISPRUDENCE, IN UPHOLDING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION. II THE COURT OF APPEALS GRAVELY ERRED AND BLATANTLY DISREGARDED THE LAW IN HOLDING THAT PROBATIONARY EMPLOYMENT IS EMPLOYMENT FOR A DEFINITE PERIOD. III THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT AN EMPLOYER CAN BE PRESUMED TO HAVE COMPLIED WITH ITS DUTY TO INFORM THE PROBATIONARY EMPLOYEE OF THE STANDARDS TO MAKE HIM A REGULAR EMPLOYEE. IV THE COURT OF APPEALS GRAVELY ERRED AND FAILED TO AFFORD PROTECTION TO LABOR IN NOT APPLYING TO THE INSTANT CASE THE DOCTRINE LAID DOWN BY THIS HONORABLE [9] COURT IN SERRANO VS. NLRC, ET. AL., G.R. NO. 117040, JANUARY 27, 2000. Central to the matter at hand is Article 281 of the Labor Code which provides that: 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. The first issue we must resolve is whether petitioner was allowed to work beyond his probationary period and was therefore already a regular employee at the time of his alleged dismissal. We rule in the negative. Petitioner claims that under the terms of his contract, his probationary employment was only for five months as indicated by the remark Please be informed that after five months, your performance shall be evaluated and any adjustment in salary shall depend on your work performance. The argument lacks merit. As correctly held by the labor arbiter, the appointment contract also stated in another part thereof that petitioners employment status [10] was probationary (6 mos.). The five-month period referred to the evaluation of his work. Petitioner insists that he already attained the status of a regular employee when he was dismissed on November 20, 1996 because, having started work on May 20, 1996, the six-

month probationary period ended on November 16, 1996. According to petitioners computation, since Article 13 of the Civil Code provides that one month is composed of thirty days, six months total one hundred eighty days. As the appointment provided that petitioners status was probationary (6 mos.) without any specific date of termination, the th 180 day fell on November 16, 1996. Thus, when he was dismissed on November 20, 1996, he was already a regular employee. Petitioners contention is incorrect. In CALS Poultry Supply Corporation, et. al. vs. Roco, et. [11] al., this Court dealt with the same issue of whether an employment contract from May 16, 1995 to November 15, 1995 was within or outside the six-month probationary period. We ruled that November 15, 1995 was still within the six-month probationary period. We reiterate our ruling in CALS Poultry Supply: (O)ur computation of the 6-month probationary period is reckoned from the date of appointment up to the same calendar date of the 6th month following.(italics supplied) In short, since the number of days in each particular month was irrelevant, petitioner was still a probationary employee when respondent Middleby opted not to regularize him on November 20, 1996. The second issue is whether respondent Middleby informed petitioner of the standards for regularization at the start of his employment. Section 6 (d) of Rule 1 of the Implementing Rules of Book VI of the Labor Code (Department Order No. 10, Series of 1997) provides that: xxx xxx xxx (d) In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee. xxx xxx xxx We hold that respondent Middleby substantially notified petitioner of the standards to qualify as a regular employee when it apprised him, at the start of his employment, that it would evaluate his supervisory skills after five months. In Orient Express Placement [12] Philippines vs. National Labor Relations Commission, we ruled that an employer failed to inform an employee of the reasonable standards for becoming a regular employee: Neither private respondent's Agency-Worker Agreement with ORIENT EXPRESS nor his Employment Contract with NADRICO ever mentioned that he must first take and pass a Crane Operator's License Examination in Saudi Arabia before he would be allowed to even touch a crane. Neither did he know that he would be assigned as floorman pending release of the results of the examination or in the event that he failed; more importantly, that he would be subjected to a performance evaluation by his superior one (1) month after his hiring to determine whether the company was amenable to continuing with his employment. Hence, respondent Flores could not be faulted for precisely harboring the impression that he was hired as crane operator for a definite period of one (1) year to commence upon his arrival at the work-site and to terminate at the end of one (1) year. No other condition was laid out except that he was to be on probation for three (3) months.(emphasis supplied) Conversely, an employer is deemed to substantially comply with the rule on notification of standards if he apprises the employee that he will be subjected to a performance evaluation on a particular date after his hiring. We agree with the labor arbiter when he ruled that: In the instant case, petitioner cannot successfully say that he was never informed by private respondent of the standards that he must satisfy in order to be converted into regular status.



This rans (sic) counter to the agreement between the parties that after five months of service the petitioners performance would be evaluated. It is only but natural that the evaluation should be made vis--vis the performance standards for the job. Private respondent Trifona Mamaradlo speaks of such standard in her affidavit referring to the fact that petitioner did not perform well in his assigned work and his attitude was below par compared to the [13] companys standard required of him. The third issue for resolution is whether petitioner was illegally dismissed when respondent Middleby opted not to renew his contract on the last day of his probationary employment. It is settled that even if probationary employees do not enjoy permanent status, they are accorded the constitutional protection of security of tenure. This means they may only be terminated for just cause or when they otherwise fail to qualify as regular employees in accordance with reasonable standards made known to them by the employer at the time of [14] their engagement. [15] But we have also ruled in Manlimos, et. al. vs. National Labor Relations Commission that this constitutional protection ends on the expiration of the probationary period. On that date, the parties are free to either renew or terminate their contract of employment. Manlimos concluded that (t)his development has rendered moot the question [16] of whether there was a just cause for the dismissal of the petitioners xxx. In the case at bar, respondent Middleby exercised its option not to renew the contract when it informed petitioner on the last day of his probationary employment that it did not intend to grant him a regular status. Although we can regard petitioners severance from work as dismissal, the same cannot be deemed illegal. As found by the labor arbiter, the NLRC and the Court of Appeals, petitioner (1) incurred ten absences (2) was tardy several times (3) failed to wear the proper uniform many times and (4) showed inferior supervisory skills. Petitioner failed to satisfactorily refute these substantiated allegations. Taking all this in its entirety, respondent Middleby was clearly justified to end its employment relationship with petitioner. WHEREFORE, the petition is hereby DENIED. No costs. SO ORDERED.

G.R. No. L-54285 December 8, 1988 CEBU STEVEDORING CO., INC., petitioner, vs. THE HONORABLE REGIONAL DIRECTOR/MINISTER OF LABOR, ARSENIO GELIG and MARIA LUZ QUIJANO, respondents. Valentin A. Zozobrado for petitioner. Silvino G. Maceren, Jr. for private respondents. Office of the Solicitor General for public respondent.

It is to be noted that the complainants were employed by the Cebu Customs Arrastre Service long time ago whose functions were carried over when they were absorbed by the herein respondent. In other words, there is no need to employ them as probationary considering that they are already well trained in their respective functions. They were not absorbed for a definite period but instead for an indefinite period. A probationary period of employment means that an employee is hired for training for a certain period in order to determine whether they qualify (sic) for the position or not. In this case, the complainants cannot be mistakenly considered as probationary viewed on the theory that they have been holding the same positions for a quite a long time at the Cebu Customs Arrastre Service before they were absorbed by the Cebu 8 Stevedoring Co. Inc. with the same positions.

REGALADO, J.: This is a petition for review on certiorari of the order, dated May 2, 1978, of the Regional Director of Labor Regional Office No. 7 in Cebu City, in an action for reinstatement with 1 backwages, which order was affirmed on appeal by the then Ministry of Labor and, 2 subsequently, by the Office of the President, and the dispositive portion whereof reads as follows: WHEREFORE, the respondent, Cebu Stevedoring Co., Inc., is hereby ordered to reinstate Arsenio Gelig and Maria Luz Quijano to their former positions within ten days from receipt to (sic) this order without loss of seniority rights and with full backwages from October 18, 1977 3 until the actual date of reinstatement. Private respondents Arsenio Gelig and Maria Luz Quijano were former employees of the Cebu Customs Arrastre Service (hereinafter referred to as CCAS). On May 2, 1977, pursuant to Customs Administrative Order No. 21-77 of the Hon. Pio de Roda, Acting Commissioner of Customs and concurrently Acting Secretary of Finance, the CCAS was abolished "for the 4 reason that the objectives for which it was created had already been attained". As a consequence of such abolition, all the employees of CCAS, including herein respondents, were given their termination and/or separation pay by the Bureau of Customs, Cebu City, 5 computed up to April 30, 1977. Thereafter, on May 1, 1977, all the employees of CCAS including herein private respondents, were absorbed by petitioner Cebu Stevedoring Co. Inc. (CSCI for brevity), with the same positions that they held in the CCAS. Eventually, however, on October 17, 1977, private 6 respondents were dismissed by petitioner without prior clearance, allegedly for redundancy 7 and other alleged ground hereinafter discussed . A complaint for reinstatement with backwages was filed by private respondents before Regional Office No. 7 of the Ministry of Labor, which thereafter rendered the order containing the above-quoted portion under the following rationale:



On appeal, the Minister of Labor affirmed the decision of the Labor Regional Director, stating that: ... complainants who were employed by Cebu Arrastre Service upon being absorbed by respondent for the same function and work need not undergo another probationary test in the same line of work where they 9 have gained a latitude of expertise. Petitioner thereafter elevated the case to the Office of the President which, through Presidential Executive Assistant Jacobo C. Clave, issued a resolution dismissing the appeal for the reason that "there is no law expressly recognizing the parties' right to appeal to this Office in cases of this nature and considering that it does not show any exceptionally meritorious cause for the exercise in this case of the constitutional power of review (control) of the President/Prime Minister as implemented by Executive Order No. 19, series of 1966, as amended, Section 1 of which pertinently provides that 'an appeal to the Office of the President ... is not a matter of right in the absence of statutory provision to that effect '" and 10 further noting that the "case does not involve national interest." A motion for 11 reconsideration of the resolution was like-wise denied. Petitioner's submissions in the present recourse may be synthesized into the following propositions: (1) There is a brazen disregard of the constitutional precept of "due process of law" prejudicing petitioner's rights; (2) As casuals, respondents Gelig and Quijano can be terminated within the 6-month period without need of clearance from the Ministry of Labor and neither is the employer obligated to pay them termination pay; (3) Redundancy is one of the grounds under the Labor Code justifying termination of employees; and (4) Retrenchment is another justifying circumstance for terminating the services of an employee. 1. Petitioner contends that it was denied procedural due process because no hearing was conducted before the Labor Regional Director and neither did private respondents Gelig and Quijano file their position papers as provided in the Labor Code; that upon the abolition of the CCAS, all its employees were given separation pay, and thus, when the employees,

including herein private respondents, were absorbed by petitioner when it took over the arrastre operations on May 3, 1977, they were all employed as casuals; that when the company terminated the services of private respondents, together with 52 others, on October 18, 1977 they had served CSCI for barely 5-1/2 months and were still on probation, hence no clearance was required for their termination; that since the positions occupied by herein private respondents with the former CCAS are Identical with the positions already filled up and with the same functions being discharged in the main office of CSCI, private respondents may be terminated for redundancy; and that financial losses incurred by 12 petitioner likewise justify the retrenchment of its employees. 13

Public respondent, in its Comment, points out that although private respondents failed to submit their position paper, they substantiated their complaint in a hearing before the labor arbiter on April 5, 1978; that although petitioner, through an error in the subpoena but also with its contributory fault, was deprived of the opportunity to appear at the scheduled hearing of April 5, 1978, it does not mean an outright denial of due process considering that petitioner availed of the remedy of appeal to the Ministry of Labor and the Office of the President; that the dismissal of private respondents is without just cause; and that the present petition raises mainly questions of fact. We find this petition devoid of merit; the writ prayed for cannot be granted. Petitioner's proposition that the lack of hearing before the Labor Regional Director and private respondents' failure to file their respective position papers constitute a denial of due process, deserves meagre consideration. We agree that no rule is better established, under the due process clause of the Constitution, than that which requires notice and the opportunity to be heard before any person can be 14 lawfully deprived of his rights. The right to be heard, as a preliminary step essential to the rendition of an enforceable judgment, constitutes a basic element of the constitutional 15 requirement of due process of law. However, while in this case petitioner was not afforded an opportunity to be heard by oral argument on its position paper due to its absence at the scheduled hearing, as already explained, it is likewise true that it was required to, as in fact it actually did, submit a position paper which, together with the evidence presented during the hearing, became the basis of the questioned order of the Regional Director. From this order, to repeat, petitioner appealed to the Labor Minister, and then to the Office of the President. It is, therefore, apparent that petitioner was not denied adequate remedies from the alleged procedural infirmities imputed to the rendition of the Regional Director's order. The entire record of the case was reviewed and duly considered on appeal to the Labor Minister, which appellate proceeding remedied any inadequacy in the procedural due process with which the trial proceedings are being faulted. Thus, We have consistently adhered to the decisional rule that appellate review is curative in 16 character on the issue of an alleged denial of due process for lack of a hearing in the case.



This Court has never lost sight of the fact that one of the most important and significant State policies, enshrined in the present Constitution as it was in its two predecessors, is the promotion of social justice in all phases of national development, specifically the protection 17 of the rights of workers and the promotion of their welfare. It was in the light of this concern in the fundamental law and the jurisprudence thereon that the Labor Code was enacted, with a specific declaration of its basic policy that- The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, 18 security of tenure, and just and human conditions of work. 2. With these in mind, We approach the next issue for resolution, that is, whether herein private respondents were validly dismissed. Petitioner submits that private respondents were merely casuals and could, therefore, be terminated even without prior clearance from the then Ministry of Labor and without entitlement to separation pay. This contention is not well-taken. We agree with the Regional Director that private respondents could not be considered probationary employees because they were already well-trained in their respective functions. This conclusion is further bolstered by the factual findings of the Labor Minister that said order of the Director was supported by substantial evidence. As stressed by the Solicitor General, while private respondents were still with the CCAS they were already clerks. Respondent Gelig had been a clerk for CCAS for more than ten (10) years, while respondent Quijano had slightly less than ten (10) years of service. They were, therefore, not 19 novices in their jobs but experienced workers. On this particular issue, it is perhaps timely to consider well settled principles involving decisions of administrative agencies. Findings of quasi-judicial agencies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but, at times, even finality where such findings are supported by substantial 20 evidence, and judicial review by Us is limited to issues of jurisdiction or grave abuse of 21 discretion. As regular employees, therefore, private respondents may not be dismissed and petitioner cannot terminate their services except for a just or authorized cause provided by law and 22 with scrupulous observance of due process requirements. 3. It is true that Article 283 of the Labor Code provides that an "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." However, the records fail to establish clearly and convincingly that the

positions occupied by private respondents are Identical with those presently existing in petitioner's office. Furthermore, petitioner kept private respondents in its employ for almost six months without raising this issue. It does not mention which positions are allegedly duplicated by the positions held by private respondents. It does not even explain why the private respondents should be the ones to be terminated, without regard to the comparative lengths of service, qualifications and performance of all employees concerned. 4. Petitioner's submission that it is suffering financial losses is untenable since it appears that it absorbed and employed for almost six months, without any intimation of supposed financial distress, the majority of the former employees of CCAS. It never advised private respondents of a company retrenchment program; the first time this supposed program was mentioned was when petitioner was trying to justify the dismissal of the private respondents before the labor arbiter. In a futile attempt to extricate itself from liability, petitioner 23 presented a so-called Statement of Operations, which, however, remains an uncorroborated and self-serving piece of evidence. The constitutional duty of the State to protect the right of laborers to security of tenure demands that an employer may be permitted to terminate the services of an employee only under conditions allowed by and with due process of law. Under the circumstances obtaining in this case, the irresistible conclusion is that the termination of private respondents' services was unjust and illegal, as to justify their reinstatement and entitlement to backwages for three years. WHEREFORE, this petition is hereby DISMISSED and petitioner is ordered to reinstate private respondents to their former positions at the time of their dismissal, or if such reinstatement is not possible, to substantially equivalent positions, without loss of seniority rights and other privileges appertaining thereto; and to pay private respondents three (3) years backwards, from October 18, 1977 without qualification or deduction. In the event that reinstatement is not possible due to the supervenience of events which prevent the same, petitioner is ordered to further pay private respondents, more as a vindication of a right and less as indemnification of a loss, separation pay equivalent to one (1) month's salary based on their monthly salaries as of October 17, 1977. SO ORDERED. Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.





FIRST DIVISION [G.R. No. 152988. August 24, 2004] CHIANG KAI SHEK COLLEGE, and CHIEN YIN SHAO, petitioners, vs. HON. COURT OF APPEALS; HON. NATIONAL LABOR RELATIONS COMMISSION; HON. COMMISSIONER VICTORIANO R. CALAYLAY, HON. PRESIDING COMMISSIONER RAUL T. AQUINO, and HON. COMMISSIONER ANGELITA A. GACUTAN; and MS. DIANA P. BELO, respondents. D E C I S I O N DAVIDE, JR., C.J.: [1] [2] Assailed in this petition is the decision of 12 October 2001, as well as the resolution of 11 [3] April 2002, of the Court Appeals in CA-G.R. SP No. 59996, which affirmed the decision of 29 February 2000 of the National Labor Relations Commission (NLRC) declaring that Diana P. Belo was illegally dismissed as a teacher of petitioner Chiang Kai Shek College (CKSC). The controversy began on 8 June 1992, when Ms. Belo, a teacher of CKSC since 1977, applied for a leave of absence for the school year 1992-1993 because her children of tender age had no yaya to take care of them. The then principal, Mrs. Joan Sy Cotio, approved her application. However, on 15 June 1992, Ms. Belo received a letter dated 9 June 1992 of Mr. Chien Yin Shao, President of CKSC, informing her of the schools existing policy; thus: Regarding your letter of request for leave of absence dated June 8, 1992, we would like to inform you of the existing policy of our school: (1) We could not assure you of any teaching load should you decide to return in the future. (2) Only teachers in service may enjoy the privilege and benefits provided by our school. Hence, your children are no longer entitled to free tuition starting school year 1992[4] 1993. Ms. Belo, nonetheless, took her leave of absence. On 8 July 1992, she learned that Laurence, one of her three children studying at the CKSC, was sent out of the examination room because his tuition fees were not paid. This embarrassing incident impelled Ms. Belo to pay, [5] allegedly under protest, all the school fees of her children. In May 1993, after her one-year leave of absence, Ms. Belo presented herself to Ms. Cotio and signified her readiness to teach for the incoming school year 1993-1994. She was, however, denied and not accepted by Ms. Cotio. She then relayed the denial to Mr. Chien on 17 May 1993. On 21 July 1993, she received the reply of Mr. Chien dated 1 July 1993informing her that her confirmation to teach was filed late and that there was no available teaching load for her because as early as April 21 of that year, the school had [6] already hired non-permanent teachers. Adversely affected by the development, Ms. Belo filed with the Labor Arbitration Office a th complaint for illegal dismissal; non-payment of salaries, 13 month pay, living allowance, teacher's day pay; loss of income; and moral damages. [7] In his decision of 18 October 1995, Labor Arbiter Donato G. Quinto, Jr., dismissed the complaint, reasoning that Ms. Belo was not dismissed but that there was simply no available teaching load for her. When in May 1993 she signified her intention to teach, the school had already acted on the applications or re-applications to teach of probationary teachers. The schools policies, which were articulated in Mr. Chiens letter of 9 June 1992 to Ms. Belo, were management prerogatives which did not amount to her dismissal. Said policies were also the consequences of her leave of absence and were not even questioned by her. The Labor Arbiter thus offered a Solomonic solution by directing the petitioners to give her a teaching load in the ensuing year 1996-1997 and the succeeding years without loss of seniority [8] rights.



[9]

On appeal by the private respondent, the NLRC reversed the decision of the Labor Arbiter. It considered as misplaced the Labor Arbiters utter reliance on Mr. Chiens letter to Ms. Belo enunciating the questioned school policies. It reasoned that if the school policy was to extend free tuition fees to children of teachers in school, then the petitioners must have considered her already not in school or summarily dismissed or separated the very moment [she] applied for leave, for, otherwise, her children would have been granted that privilege. Thus, it directed the petitioners to immediately reinstate Ms. Belo to her former position with full back wages from the time of her dismissal up to her actual reinstatement. It, however, dismissed Ms. Belo's prayer for moral and exemplary damages and attorney's fees for lack of evidence that the petitioners acted in bad faith and malice. [10] Their motion for reconsideration having been denied, the petitioners filed a petition for certiorari with the Court of Appeals contending that the NLRC gravely abused its discretion amounting to lack of jurisdiction in (a) overturning the factual determination of the Labor Arbiter despite the fact that Ms. Belo stated in her Notice of Appeal that she was appealing only on a pure question of law; (b) holding that Ms. Belo was constructively dismissed by the petitioners despite the uncontroverted evidence that she was not illegally dismissed; and (c) granting Ms. Belo monetary awards. On 12 October 2001, the Court of Appeals found that far from abusing its discretion, the NLRC acted correctly when it ascertained that Ms. Belo was constructively dismissed. It declared as illegal, for being violative of Ms. Belos right to security of tenure, the school policy that a teacher who goes on leave cannot be assured of a teaching load. The school should have set aside a teaching load for her after the expiration of her leave of absence. It would have been a different story, one indeed ripe for termination of her employment, had Ms. Belo failed to report for work. As for the schools contention that the NLRC was barred from resolving factual issues because of Ms. Belo's statement that she was appealing the case on a pure question of law, the Court of Appeals declared that such statement was a simple mistake in terminology, which is insufficient to deny an employee of her rights under the law. In its resolution dated 11 April 2002, the Court of Appeals denied the motion for reconsideration for lack of merit. [11] Hence, on 11 June 2002, petitioner CKSC and its president Mr. Chien filed the present petition. They claim that the Court of Appeals erred in affirming the NLRC decision which reversed the factual findings of the Labor Arbiter even if the said findings were amply supported by clear and uncontroverted evidence and had already attained finality, as Ms. Belo had appealed merely on a question of law. The Court of Appeals also erred in upholding the NLRC decision which failed to point out specifically the alleged particular portions of the records of the case, parties respective position papers, and pleadings, much less particular testimonial and documentary evidence, that warrant the patently erroneous and baseless conclusion that there was a clear case of constructive dismissal. The NLRC decision is in complete violation of Section 14, Article VIII of the Constitution, which provides: No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the laws on which it is based. Likewise, the Court of Appeals has not only completely and arbitrarily ignored and disregarded the facts and issues raised as an issue before it, but also decided on the illegality of the schools policy, which was never raised before it or in any of the forums below. Anent the free tuition fee benefit extended to children of teachers in service in petitioner school, the same is a privilege granted not by law, but voluntarily by the

said school. Hence, the petitioner school could determine the conditions under which said privilege may be enjoyed, such as, that only teachers in actual service can enjoy the privilege. Amidst the convolution of issues proffered by the petitioners, the only issue that needs to be determined and on which hinges the resolution of the other issues is whether the Court of Appeals erred in affirming the NLRC decision that Ms. Belo was constructively, nay, illegally dismissed and is, therefore, entitled to reinstatement and back wages. It must be noted at the outset that Ms. Belo had been a full-time teacher in petitioner CKSC continuously for fifteen years or since 1977 until she took a leave of absence for the school year 1992-1993. Under the Manual of Regulations for Private Schools, for a private school teacher to acquire a permanent status of employment and, therefore, be entitled to a security of tenure, the following requisites must concur: (a) the teacher is a full-time teacher; (b) the teacher must have rendered three consecutive years of service; and (c) such service [12] must have been satisfactory. Since Ms. Belo has measured up to these standards, she therefore enjoys security of tenure. The fundamental guarantees of security of tenure and due process dictate that no worker shall be dismissed except for just and authorized cause provided by law and after due [13] notice and hearing. We agree with the Court of Appeals that the NLRC did not commit any grave abuse of discretion in finding that Ms. Belo was constructively dismissed when the petitioners, in implementing their policies, effectively barred her from teaching for the school year 19931994. The three policies are (1) the non-assurance of a teaching load to a teacher who took a leave of absence; (2) the hiring of non-permanent teachers in April to whom teaching loads were already assigned when Ms. Belo signified in May 1993 her intention to teach; and (3) the non-applicability to children of teachers on leave of the free tuition fee benefits extended to children of teachers in service. Case law defines constructive dismissal as a cessation from work because continued employment is rendered impossible, unreasonable, or unlikely; when there is a demotion in rank or a diminution in pay or both; or when a clear discrimination, insensibility, or disdain by [14] an employer becomes unbearable to the employee. When in the school year 1992-1993, the petitioners already applied to Ms. Belos children the policy of extending free tuition fee benefits only to children of teachers in service, Ms. Belo was clearly discriminated by them. True, the policy was made known to Ms. Belo in a letter dated 9 June 1992, but, this only additionally and succinctly reinforced the clear case of discrimination. Notably, petitioners statements of policies dated 13 March 1992 for the school year 1992-1993 did not include that policy; thus: To : All Teachers and Staff of Chiang Kai Shek College From : The President Pursuant to laws, rules and regulations promulgated by the proper government authorities of the Philippines, the following procedure are hereby issued for proper compliance of all concerned: 1. All teachers and staff who have rendered satisfactory service for a period of more than three (3) full consecutive years (e.g. those who started working in June, 1988 or before) are considered permanent employees and therefore need not re-apply for the forthcoming school year 1992-1993. 2. However, should any teacher or staff of permanent status wish to resign or to retire after this school year 1991-1992, he/she must file his/her written resignation or retirement application on or before March 28, 1992, so that the school will have sufficient time to make



the necessary adjustments. Failure to file formal application on the part of the permanent employee shall be construed as consent to work for another school year. 3. All probationary employees (e.g. those who started working after June, 1988) who wish to continue their services in our school shall re-apply. Reapplications must be submitted on or before March 28, 1992. Failure to submit reapplication shall be construed as not interested to work for Chiang Kai Shek College in the coming school year 1992-1993. 4. All reapplications shall be acted upon and the decision of the administration will be [15] conveyed to the employees concerned on or before April 21, 1992. It can be argued that the extension of free tuition fees to children of teachers in service was an informal policy or custom. If it were so, there would have been no need to include this policy in the schools written statement of policies dated 12 March 1993, which reads: To : All Teachers and Staff of Chiang Kai Shek College From : The Office of the President Pursuant to laws, rules and regulations promulgated by the proper government authorities of the Philippines, the following procedure are hereby issued for proper compliance of all concerned: 1. All teachers and staff who have rendered satisfactory service for a period of more than three (3) full consecutive years (e.g. those who started working in June, 1989 or before) are considered permanent employees and therefore need not re-apply for the forthcoming school year 1993-1994. 2. However, should any teacher or staff of permanent status wish to resign, to retire, or to take a leave of absence after this school year 1992-1993, he/she must file his/her written application on or before March 27, 1993, so that the school will have sufficient time to make the necessary adjustments. Failure to file formal application on the part of the permanent employee shall be construed as consent to work for another school year. In accordance with our school policy, employees not in service are not entitled to any benefit extended by our school. 3. All probationary employees (e.g. those who started working after June 1989) who wish to continue their services in our school shall re-apply. Reapplications must be submitted on or before March 27, 1993. Failure to submit reapplication shall be construed as not interested to work for Chiang Kai Shek College in the coming school year 1993-1994. 4. All reapplications shall be acted upon and the decision of the administration will be [16] conveyed to the employees concerned on or before April 21, 1993. A cursory analysis of the petitioners statements of policies dated 13 March 1992 and 12 March 1993 reveals that the lists of policies are essentially the same. Both are addressed to all teachers and staff of petitioner school. However, the policy that employees not in service are not entitled to any benefit extended by the school was not listed in the written statement of policies dated 13 March 1992. The policy made its maiden appearance in petitioners statement of policies one year after or on 12 March 1993. It was, therefore, the policy of extending free tuition fees to children of teachers of the school, whether on service or on leave, which existed as a matter of custom and practice. That is why the school modified the privilege in written form. Thus, when the petitioners retroactively applied the modified written policy to Ms. Belo, they considered her already a teacher not in service. The NLRC was correct when it reasoned as follows: [I]f the school policy is to extend free tuition fees to children of teachers in school, then respondents [petitioners herein] have considered [Ms. Belo] already not in school or summarily dismissed or separated the very moment the latter applied for leave. Otherwise,

[her] children should have been granted the on-going privileges and benefits on free tuition fees, among others. Ms. Belo was definitely singled out in the implementation of a future policy. This is grossly unfair and unjust. The petitioners did not take heed of the principle enshrined in our labor laws that policies should be adequately known to the employees and uniformly implemented to the body of employees as a whole and not in isolation. The continued employment of Ms. Belo was also rendered unlikely by the insistence of the petitioners in implementing the alleged policy that a teacher who goes on leave for one year is not assured of a teaching load. While this alleged policy was mentioned in Mr. Chiens letter of 9 June 1992, it was not included in the schools written statement of policies dated 13 March 1992. Hence, it was then a non-existent policy. When a non-existent policy is implemented and, in this case, only to Ms. Belo, it constitutes a clear case of discrimination. Even if the policy of non-assurance of a teaching load existed as a matter of practice and custom, it still glaringly contradicts petitioners written statement of policies dated 12 March 1993. Crystal clear therefrom is the fact that only permanent teachers who wished to resign, to retire, or to take a leave of absence after the school year 1992-1993 must file their written application in March 1993. Those who failed to file an application were expressly considered by the school as consenting to teach for the succeeding school year. Additionally, the petitioners did not require permanent teachers with satisfactory service to re-apply. It, therefore, blows our mind why the petitioners would require Ms. Belo, a permanent teacher since 1977 with a satisfactory service record, to signify her intention to teach in March 1993. Plainly, the petitioners violated their avowed policies. Since Ms. Belo was not retiring, resigning or filing another leave of absence after the school year 1992-1993, the petitioners should have considered her as consenting to teach for the incoming school year 1993-1994. In fact, they should not have required her to re-apply to teach. In accordance with the written statement of policies dated 12 March 1993, only probationary teachers are required by the petitioners to re-apply in March. Failure of probationary teachers to re-apply in March is an indication of their lack of interest to teach again at the school. Petitioners invocation of the third policy that of giving teaching assignments to probationary teachers in April to justify their refusal to provide Ms. Belo a teaching load is, therefore, a lame excuse that rings of untruth and dishonesty. Patently clear is the illegal manner by which the petitioners eased out Ms. Belo from the teaching corps. Thus, the Court of Appeals justification in upholding the NLRC ruling attains an added judicial and logical sting: When respondent Belo reported for work after the termination of her one-year leave of absence, it was obligatory for petitioner school to give her a teaching load. It was improper for petitioner school to farm out subjects of respondent Belo to provisionary [sic] teacher [sic]. The petitioner school should have assumed that respondent Belo was returning for work after the expiration of her leave. It would have been a different story, if after the start of classes, respondent Belo failed to report for work, then the school had a right to institute [17] the necessary proceeding for the termination of her employment. Likewise, we do not find merit in petitioners assertion that the Court of Appeals should not have passed upon the illegality of the school policy of non-assurance of a teaching load, since the alleged illegality was never raised as an issue before the respondent court or in the forums below. As pointed out by the private respondent, that policy was part of the defense invoked by the petitioners in the Arbiter level, in the NLRC, and in the respondent court to the charge of illegal dismissal; and, hence, it must necessarily be passed upon and



scrutinized. Besides, that policy is intimately intertwined with the main issue of whether Ms. Belo was illegally dismissed. We reject petitioners contention that the NLRC decision failed to point out specifically the alleged particular portions of the records of the case, parties respective position papers, and pleadings, much less particular testimonial and documentary evidence, that warrant the patently erroneous and baseless conclusion that there is a clear case of constructive dismissal. In fact, the NLRC considered the same policies that the petitioners insist as their bases for maintaining that Ms. Belo was not dismissed. It seems that the petitioners could only be persuaded if the reviewing bodies unearthed a document that explicitly states that Ms. Belo was being constructively dismissed. This phantom paper chase unveils the unsubstantiated and contrived claim of the petitioners. They need only to look, for example, at the letter dated 9 June 1992 to Ms. Belo. The policies therein stated are discernibly nonexistent, or if existing as a matter of custom they grossly transgressed petitioners formal written policies dated 13 March 1992 and 12 March 1993. Clear, therefore, is the fact that the written formal policies apply to all teachers and staff except Ms. Belo. Hence, there is no need to belabor the point that the NLRC decision clearly complied with the requirement expressed under Section 14, Article VIII of the Constitution. The decision speaks for itself. Suffice it is to say, this case is an exception to the general rule that the factual findings and conclusions of the Labor Arbiter are accorded weight and respect on appeal, and even finality. For one thing, the findings of the NLRC and the Labor Arbiter are contrary to each other; hence, the reviewing court may delve into the records and examine for itself the [18] questioned findings. Further, we do not find merit in petitioners claim that Ms. Belos judicial admission that she was appealing on a pure question of law precludes the review and reversal of the Labor Arbiters factual finding that she was not illegally dismissed. Such claim is belied by the Notice [19] of Appeal itself, wherein Ms. Belo declared that she was appealing the decision of the Labor Arbiter to the NLRC on a pure question of law and for being contrary to law and jurisprudence applicable [to] the case and the evidence on record, and rendered with grave [20] abuse of discretion. Oddly, even the petitioners themselves maintain that to prove grave abuse of discretion, it is necessary to bring out questions of fact. Thus, in their own justification in resorting to both Rules 45 and 65 of the Rules of Court for the review and the nullification of the decision of the Court of Appeals, they contend: Clearly, petitioners remedy is two-fold under Rule 45 and 65. Under Rule 45, only questions of law may be raised. Perhaps, respondents can now understand why petitioners have used both Rules 45 and 65.And this is simply because by invoking said two rules, they are not limited to raising questions of law, but they can raise both questions of fact and law. To show that grave abuse of discretion has been committed under Rule 65, it is necessary to bring out questions of fact, which was precisely done in the issues raised in page 2 of the [21] petition. Indeed, Ms. Belo questioned the legality of her dismissal and the denial of her monetary claims, as well as her claim for damages. Both are essentially factual issues, since their determination necessitates an evaluation of proof and not only a consideration of the applicable statutory and case laws. Basic is the distinction between legal and factual issues. A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set

of facts; or when the issue does not call for an examination of probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to [22] each other and to the whole, and the probability of the situation. More importantly, the Labor Arbiters conclusions are baseless, bereft of any rational basis, unsupported by evidence on record, and glaringly erroneous. The decisions of the NLRC and the Court of Appeals are the ones in harmony with the evidence on record. In sum, we are convinced that Ms. Belo was unceremoniously and constructively dismissed by the petitioners without just cause and without observing the twin requirements of due process, i.e., due notice and hearing, in violation of the tenets of equity and fair play. Ms. Belo is, therefore, entitled to reinstatement and back wages in accordance with the questioned Court of Appeals and NLRC decisions. WHEREFORE, the petition is DENIED. The decision of 12 October 2001 and resolution of 11 April 2002 of the Court of Appeals in CA-GR. SP No. 59996 are hereby AFFIRMED. Costs against the petitioners. SO ORDERED.