Labor2 Assignment 3

G.R. No.
123769 December 22, 1999
E. GANZON, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Third Division), RENE PERMARAN, NERIO VALENZUELA,
RODRIGO PRADO, MARIO PLAQUIA, ERNESTO MATEO, ROMMEL NAADAT, ARTEMIO AGOSTO,
SALVADOR URBANOZO, CESAR CASTILLO and PONCIANO DEL ROSARIO, respondents.*
BELLOSILLO, J.:
TWENTY-TWO (22) EMPLOYEES of petitioner E. Ganzon, Inc. — Rolando Reyes, Rene Permaran,
Jonathan Sayco, Ernesto Guerra, Nerio Valenzuela, Henry Sayco, Emiliano Telacas, Rodrigo Prado, Mario
Plaquia, Gildardo Migabon, Ernesto Mateo, Felix Nicolasora, Joven Jordan, Alberto Bellingan, Rommel
Naadat, Vidal Gumanad, Jimmy Cañete, Carlito Moril, Artemio Agosto, Salvador Urbanozo, Cesar Castillo
and Ponciano del Rosario filed on 9 January 1991 a complaint against the company for illegal deduction,
non-payment of overtime pay, legal holiday pay, premium pay for holiday and rest day, service incentive
leave pay, vacation/sick leave pay and 13th month pay. On 25 January 1991 all the complainants, many
of whom are private respondents herein, were dismissed from employment thus prompting them to
amend their complaint to include the charge of illegal dismissal.
Subsequently however, eight (8) of the complainants, namely, Rolando Reyes, Jonathan Sayco, Joven
Jordan, Carlito Moril, Vidal Gumandad, Alberto Bellingan, Henry Sayco and Felix Nicolasora signed
a Release and Quitclaim; consequently, they moved for the dismissal of the complaint insofar as they
were concerned. Their motion was granted.
Petitioner E. Ganzon, Inc., is engaged in the construction business. It manufactures its own building
materials, e.g., slab runners, acropos, jack bases, window grills, pulleys, sliding doors and all kinds of
aluminum products, hollow blocks and all kinds of concrete products. It has its own machine shop, five
(5) mixer trucks, tower cranes, alimak, elevator shaft, and others.
The remaining fourteen (14) complainants who did not sign the Release and Quitclaim were hired on
various dates for different positions and salaries thus —
Complainant Date Hired Position Latest Salary
Rene Permaran 04-14-'89 Machinist P18.75/hr.
Ernesto Guerra 11-00-'87 Elec. Engr. P18.25/hr.
Nerio Valenzuela 05-09 -'89 Welder/ 13.75/hr.
Fabricator/
Installer
Emiliano Telacas 10-18-'89 Aluminum 12.50/hr.
Fabricator/
Installer
Rodrigo Prado 06-00-'87 Aluminum 89.00/day/
Installer/ 10 hrs work
Fabricator /day
Mario Plaquia 10-03-'89 Laborer/Trainer 100.00/day
Gildardo Migabon 09-10-'87 Aluminum 15.00/hr.
Installer/
Fabricator
Ernesto Mateo 03-09-'87 Laborer 13.75/hr./
10 hrs work
/day
Rommel Naadat 05-16-'87 Aluminum 13.75/hr.
Installer/
Helper
Jimmy Cañete 07-20-'84 Laborer then 16.25/hr.
Marble Setter
in Jan. '85
Artemio Agosto 05-11-'88 Helper-Welder 125.00/day
then Warehouse- 10 hrs/day
man, 17 July '88
Salvador Urbanozo 01-18-'90 Laborer then 76.00/day
Machinist-
Operator,
Oct. '90
Cesar Castillo 10-19-'89 Laborer- 125.00/day
Trainee 10 hrs/day
Ponciano del 01-19-'89 Laborer then 12.50/hr.
Rosario Machine
Operator,
July '89
Complainants claimed that during the period of their employment, insurance premiums were deducted
from their salaries without their consent, and they were not given overtime pay for work performed ten
(10) hours a day, legal holiday pay, premium pay for holiday and rest day, five (5) days incentive leave
pay despite having rendered services for more than a year, vacation/sick leave pay and 13th month pay.
They claimed further that when they reported for work on 25 January 1991 the security guards of
petitioner informed them: "Hindi na kayo puedeng pumasok/magtrabaho dito, 'yan order galing sa
itaas."
Petitioner countered that the complainants were all contractual, project, temporary or casual
employees as evidenced by their employment contracts expressly providing that the acceptance of their
services was based on the need for their skill such that upon completion of the project and/or when
reduction of the workforce was necessary, their services would be terminated. Their employment
contracts were renewed every three (3) months. Petitioner denied having dismissed the complainants
from employment but that their employment contracts expired on 25 January 1991. Petitioner then
disputed their money claims as exaggerated, baseless and/or that they had already prescribed.
On 24 June 1994 the Labor Arbiter ruled as follows: (a) the remaining complainants were declaring
complainants regular employees of petitioner; (b) petitioner was declared guilty of illegal dismissal; (c)
petitioner was ordered to reinstate the remaining complainants to their former or equivalent positions
without loss of seniority rights and privileges, either physically or in the payroll, at the option of
petitioner under the same terms and conditions obtaining at the time of their illegal dismissal; (d)
petitioner was ordered to pay the remaining complainants back wages and benefits, overtime pay, legal
holiday pay, service incentive leave pay and 13th month pay partially computed as amounting to
P1,902,681.90; and, (e) the claims for illegal deduction, premium pay for holiday and rest day and
vacation/sick leave benefits were dismissed for lack of merit.1
On appeal, Emiliano Telacas, Gildardo Migabon and Jimmy Cañete 3 of the complainants moved for the
dismissal of their complaint on account of their having subsequently executed a Release and Quitclaim.
Public respondent National Labor Relations Commission granted the motion; consequently, the number
of complainants was further reduced to eleven (11).
On 24 October 1995 the decision of the Labor Arbiter was affirmed subject to the modification that the
awards of overtime pay to Ernesto Mateo, Artemio Agosto and Cesar Castillo were deleted
unsubstantiated.2 On 21 December 1995 reconsideration to was denied.3
Petitioner insists that private respondents were contractual and/or project employees, as borne by their
respective employment contracts, the durations of their employments being coterminous with the
projects to which they were assigned.
Petitioner likewise insists that illegal dismissal is no longer an issue because what obtains herein is the
expiration of their contracts on 25 January 1991. But assuming that petitioner is liable to private
respondents for their monetary claims, it assails the computation thereof as contrary to law which
provides that money claims prescribe in three (3) years, i.e., the Labor Arbiter awarded forty (40)-day
holiday pay to Ernesto Mateo and Rommel Naadat, thirty-six (36) to Rodrigo Prado and thirty-four (34)
to Ernesto Guerra although they were entitled to only thirty (30)-day holiday pay for three (3) years
there being ten (10) legal holidays per year. Moreover the Labor Arbiter granted 19.48 days of service
incentive leave pay to Ernesto Mateo, 19.42 to Rommel Naadat and 18.34 to Rodrigo Prado
notwithstanding that they were only entitled to a maximum of fifteen (15)-day service incentive leave
pay for three (3) years at five (5)-day service incentive leave per year.
ISSUE:
W/N the NLRC committed grave abuse of discretion in affirming the LA’s decision that complainants
were regular employees.
HELD:
No, the NLRC did not commit grave abuse of discretion.
We conclude that the NLRC did not commit grave abuse of discretion. Article 280 of the Labor Code
provides —
Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed
for a specific project or undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.
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.
This provision classifies regular employees into two (2) kinds: (a) regular employees by nature of work,
and (b) regular employees by years of service. Expounding thereon the Court said in De Leon
v. NLRC 4 —
The primary standard, therefore, of determining a regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or trade of
the employer. The test is whether the former is usually necessary or desirable in the usual business or
trade of the employer. The connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least one year, even if the performance is not continuous
or merely intermittent, the law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the
employment is also considered regular, but only with respect to such activity and while such activity
exists.
Petitioner is engaged, as heretofore mentioned, in the construction business and manufactures its own
building materials. It has its own machine shop and construction equipment. In this kind of integrated
business respondents were hired, some as early as 1987, as Machinist, Machinist-Operator, Electrical
Engineer, Aluminum Installer/Fabricator, Aluminum Installer/Helper, Welder, Warehouseman, Marble
Setter, Fabricator/Welder or Laborer/Helper until their dismissal on 25 January 1991. Private
respondents were made to sign employment contracts purportedly as project employees but which
were renewed every three (3) months. With this backdrop, the Court agree with the finding of the Labor
Arbiter that —
. . . . with the successive contracts of employment where the complainants continued to perform the
same kind of work throughout the entire period of their employment, which was for more than one
year, it is clear that complainants' tasks were usually necessary or desirable in the usual business or
trade of the respondent company. There can be no escape from the conclusion that the complainants
were regular employees of the respondent as provided by Article 280 of the Labor Code . . . .5
We likewise agree with the Labor Arbiter, citing Magante v. NLRC,6 that if petitioner's submission that
respondents were hired as project employees were to be taken as true, then it should have submitted a
report of termination to the nearest Public Employment Office every time their employment was
terminated due to completion of each construction project as required by Policy Instruction No. 20 of
the Department of Labor and Employment Stabilizing Employer-Employee Relations in the Construction
Industry —
. . . . the company is not required to obtain a clearance from the Secretary of Labor in connection with
such termination. What is required of the company is a report to the nearest Public Employment Office
for statistical purposes.
Moreover, the Labor Arbiter correctly ruled that the supposed fixed periods of employment of private
respondents as stated in their employment contracts precluded their acquisition of tenurial
security. Caramol v. NLRC 7 is
authoritative —
There is no question that a stipulation on an employment contract providing for a fixed period of
employment such as "project-to-project" contract is valid provided the period 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. However,
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 custom or public order.
As in Caramol, sufficiently established in the present case are circumstances showing that the alleged
fixed periods of employment by way of project-to-project contracts were imposed to preclude
acquisition of tenurial security by private respondents. We reiterate that private respondents performed
activities necessary or desirable in the usual business or trade of petitioner and that they rendered
services for more than a year. Accordingly, the arrangement on fixed periods of employment must be
struck down as contrary to public policy.
Petitioner submitted the employment contracts of some of the private respondents to show, inter alia,
the duration thereof and in the process prove that their services were terminated due to expiration of
their respective contracts: Rene Permaran, 6 November 1990; Ernesto Guerra, 29 September 1990;
Ernesto Mateo, 26 October 1990; Artemio Agosto, 20 July 1990 and Rommel Naadat, 3 March 1991.
Considering our finding however that private respondents are regular employees of petitioner, the
expiry dates of their employment as shown in their respective contracts are rendered meaningless. We
also note that the employment contract of private respondent Naadat was yet to expire on 3 March
1991 so that particular circumstance cannot, by any stretch of the imagination, justify his termination on
25 January 1991 based on the expiration of his contract. Clearly, there was no legal cause for private
respondents' termination from employment. Neither were they accorded due process since petitioner's
security guards simply prevented them from reporting for work as it appears their termination was
triggered off by their having sought relief from the labor tribunal on 9 January 1999 regarding money
claims. Petitioner received the notification and summons on 18 January 1991. It must have resented
their move such that after only a week they were eased out from its employ under the pretext of
expiration of their employment contracts.
All money claims arising from employer-employee relationship shall be filed within three (3) years from
the time the cause of action accrued, otherwise, they shall be forever barred.8 And so petitioner assails
the award of holiday pay for more that thirty (30) days to Ernesto Mateo, Rommel Naadat, Rodrigo
Prado and Ernesto Guerra, and more than fifteen (15) days of service incentive leave pay to the same
employees except Ernesto Guerra. We agree with petitioner in this regard that the Labor Arbiter should
not have awarded such money claims that went beyond three (3) years. There are ten (10) regular
holidays9 and five (5) days of service incentive leave in a year. At most, private respondents can only
claim thirty (30)-day holiday pay and fifteen (15)-day service incentive leave pay with respect to their
amended complaint of 25 January 1991. Any other claim is now barred by prescription.
WHEREFORE, the petition is PARTIALLY GRANTED. The questioned Decision of respondent National
Labor Relations Commission of 24 October 1995, which sustained with modification the decision of the
Labor Arbiter, and its Resolution of 21 December 1995 denying reconsideration are AFFIRMED with
MODIFICATION.
Private respondents Rene Permaran, Ernesto Guerra, Nerio Valenzuela, Rodrigo Prado, Mario Plaquia,
Ernesto Mateo, Rommel Naadat, Artemio Agosto, Salvador Urbanozo, Cesar Castillo and Ponciano del
Rosario are declared regular employees of petitioner E. Ganzon, Inc. They are likewise declared to have
been illegally dismissed by petitioner E. Ganzon, Inc.; consequently, petitioner is ordered to reinstate
them without loss of seniority rights and other privileges and to grant them full back wages, inclusive of
allowances, and other benefits or their monetary equivalent computed from the time compensation was
withheld from them up to actual reinstatement. 10 In addition, petitioner is ordered to pay private
respondents their overtime pay, except as to Ernesto Mateo, Cesar Castillo and Artemio Agosto who, as
found by public respondent NLRC, were not entitled thereto, as well as legal holiday pay, service
incentive leave pay and 13th month pay.
The assailed Decision of the NLRC is MODIFIED in that with respect to the amended complaint of 25
January 1991 the entitlement to legal holiday pay of private respondents Ernesto Mateo, Rommel
Naadat, Rodrigo Prado and Ernesto Guerra and to service incentive leave pay of the same private
respondents, except Ernesto Guerra, is limited to three (3) years from the date of the amended
complaint.
SO ORDERED.
G.R. No. L-77629 May 9, 1990
KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVISM AND NATIONALISM-ORGANIZED

LABOR ASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE (KILUSAN-OLALIA), ROQUE JIMENEZ,
MARIO C. RONGALEROS and OTHERS, petitioners,
vs.
HON. FRANKLIN M. DRILON, KIMBERLY-CLARK PHILIPPINES, INC., RODOLFO POLOTAN, doing business
under the firm name "Rank Manpower Co." and UNITED KIMBERLY-CLARK EMPLOYEES UNION-
PHILLIPPINE TRANSPORT AND GENERAL WORKERS ORGANIZATION (UKCEU-PTGWO), respondents.
KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVITISM AND NATIONALISM-OLALIA

(KILUSAN-OLALIA), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MANUEL AGUILAR, MA. ESTRELLA ALDA, CAPT. REY L.
LANADA, COL. VIVENCIO MANAIG and KIMBERLY-CLARK PHILIPPINES, INC., respondents.
REGALADO, J.:
Before us are two consolidated petitions for certiorari filed by the above-named petitioner union
(hereinafter referred to as KILUSAN-OLALIA, for conciseness) and individual complainants therein, to wit
(a) G.R. 77629, which seeks to reverse and set aside the decision, dated November 13, 1986, 1 and the
resolution, dated January 9, 1987, 2 respectively handed down by the two former Ministers of Labor,
both rendered in BLR Case No. NS-5-164-86; and (b) G.R. No. 78791, which prays for the reversal of the
resolutions of the National Labor Relations Commission, dated May 25, 1987 3 and June 19,1987 4 issued
in Injunction Case No. 1442 thereof.
Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed a three-year collective bargaining
agreement (CBA) with United Kimberly-Clark Employees Union-Philippine Transport and General
Workers' Organization (UKCEU-PTGWO) which expired on June 30, 1986.
Within the 60-day freedom period prior to the expiration of and during the negotiations for the renewal
of the aforementioned CBA, some members of the bargaining unit formed another union called
"Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor
Association in Line Industries and Agriculture (KILUSAN-OLALIA)."
On April 21, 1986, KILUSAN-OLALIA filed a petition for certification election in Regional Office No. IV,
Ministry of Labor and Employment (MOLE), docketed as Case No. RO4-OD-M-415-86. 5 KIMBERLY and
(UKCEU-PTGWO) did not object to the holding of a certification election but objected to the inclusion of
the so-called contractual workers whose employment with KIMBERLY was coursed through an
independent contractor, Rank Manpower Company (RANK for short), as among the qualified voters.
Pending resolution of the petition for certification election by the med-arbiter, KILUSAN-OLALIA filed a
notice of strike on May 7, 1986 with the Bureau of Labor Relations, docketed as BLR Case No. NS-5-164-
86, 6 charging KIMBERLY with unfair labor practices based on the following alleged acts: (1) dismissal of
union members (KILUSAN-OLALIA); (2) non-regularization of casuals/contractuals with over six months
service; (3) non-implementation of appreciation bonus for 1982 and 1983; (4) non-payment of minimum
wages; (5) coercion of employees; and (6) engaging in CBA negotiations despite the pendency of a
petition for certification election. This was later amended to withdraw the charge of coercion but to add,
as new charges, the dismissal of Roque Jimenez and the non-payment of backwages of the reinstated
Emerito Fuentes .7
Conciliation proceedings conducted by the bureau proved futile, and KILUSAN-OLALIA declared a strike
at KIMBERLY's premises in San Pedro, Laguna on May 23, 1986.
On May 26, 1986, KIMBERLY petitioned MOLE to assume jurisdiction over the labor dispute. On May 30,
1986, finding that the labor dispute would adversely affect national interest, then Minister Augusto S.
Sanchez issued an assumption order, stating that the dispositive portion whereof reads:
Wherefore, premises considered, immediately upon receipt of this order, the striking union and its
members are hereby enjoined to lift the picket and remove all obstacles to the free ingress to and egress
from the company premises and to return to work, including the 28 contractual workers who were
dismissed; likewise, the company is directed to resume its operations immediately thereafter and to
accept all the employees back under the same terms and conditions of employment prevailing prior to
the industrial action. Further, all issues in the notice of strike, as amended, are hereby assumed in this
assumption order, except for the representation issue pending in Region IV in which the Med-Arbiter is
also enjoined to decide the same the soonest possible time. 8
In obedience to said assumption order, KILUSAN-OLALIA terminated its strike and picketing activities
effective June 1, 1986 after a compliance agreement was entered into by it with KIMBERLY. 9
On June 2, 1986, Med-Arbiter Bonifacio 1. Marasigan, who was handling the certification election case
(RO4-OD-M-4-1586), issued an order 10 declaring the following as eligible to vote in the certification
election, thus:
1. The regular rank-and-file laborers/employees of the respondent company consisting of 537 as of May
14, 1986 should be considered qualified to vote;
2. Those casuals who have worked at least six (6) months as appearing in the payroll months prior to the
filing of the instant petition on April 21, 1986; and
3. Those contractual employees who are allegedly in the employ of an independent contractor and who
have also worked for at least six (6) months as appearing in the payroll month prior to the filing of the
instant petition on April 21, 1986.
During the pre-election conference, 64 casual workers were challenged by KIMBERLY and (UKCEU-
PTGWO) on the ground that they are not employees, of KIMBERLY but of RANK. It was agreed by all the
parties that the 64 voters shall be allowed to cast their votes but that their ballots shall be segregated
and subject to challenge proceedings. The certification election was conducted on July I., 1986, with the
following results: 11
1. KILUSAN-OLALIA = 246 votes
2. (UKCEU-PTGWO) = 266 votes
3. NO UNION = 1 vote
4. SPOILED BALLOTS = 4 votes
5. CHALLENGED BALLOTS = 64 votes
————
TOTAL 581 votes
On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a "Protest and Motion to Open and Count
Challenged Votes" 12 on the ground that the 64 workers are employees of KIMBERLY within the meaning
of Article 212(e) of the Labor Code. On July 7, 1986, KIMBERLY filed an opposition to the protest and
motion, asserting that there is no employer-employee relationship between the casual workers and the
company, and that the med-arbiter has no jurisdiction to rule on the issue of the status of the
challenged workers which is one of the issues covered by the assumption order. The med-arbiter opted
not to rule on the protest until the issue of regularization has been resolved by
MOLE. 13
On November 13, 1986, then Minister Sanchez rendered a decision in BLR Case No. NS-5-164-86, 14 the
disposition wherein is summarized as follows:
1. The service contract for janitorial and yard maintenance service between KIMBERLY and RANK was
declared legal;
2. The other casual employees not performing janitorial and yard maintenance services were deemed
labor-only contractual and since labor-only contracting is prohibited, such employees were held to have
attained the status of regular employees, the regularization being effective as of the date of the
decision;
3. UKCEU-PTGWO having garnered more votes than KILUSAN-OLALIA was certified as the exclusive
bargaining representative of KIMBERLY's employees;
4. The reinstatement of 28 dismissed KILUSAN-OLALIA members was ordered;
5. Roque Jimenez was ordered reinstated without backwages, the period when he was out of work
being considered as penalty for his misdemeanor;
6. The decision of the voluntary arbitrator ordering the reinstatement of Ermilo Fuentes with backwages
was declared as already final and unappealable; and
7. KIMBERLY was ordered to pay appreciation bonus for 1982 and 1983.
On November 25, 1986, KIMBERLY flied a motion for reconsideration with respect to the regularization
of contractual workers, the appreciation bonus and the reinstatement of Roque Jimenez. 15 In a letter
dated November 24, 1986, counsel for KILUSAN-OLALIA demanded from KIMBERLY the implementation
of the November 13, 1986 decision but only with respect to the regularization of the casual workers. 16
On December 11, 1986, KILUSAN-OLALIA filed a motion for reconsideration questioning the authority of
the Minister of Labor to assume jurisdiction over the representation issue. In the meantime, KIMBERLY
and UKCEU-PTGWO continued with the negotiations on the new collective bargaining agreement (CBA),
no restraining order or junctive writ having been issued, and on December 18, 1986, a new CBA was
concluded and ratified by 440 out of 517 members of the bargaining unit. 17
In an order dated January 9, 1987, former Labor Minister Franklin Drilon denied both motions for
reconsideration filed by KIMBERLY and KILUSAN-OLALIA. 18 On March 10, 1987, the new CBA executed
between KIMBERLY and UKCEU-PTGWO was signed.
On March 16, 1987, KILUSAN-OLALIA filed a petition for certiorari in the SC in this Court docketed as G.R.
No. 77629, seeking to set aside the aforesaid decision, dated November 13, 1986, and the order, dated
January 9, 1987, rendered by the aforesaid labor ministers.
On March 25, 1987, the SC Court issued in G.R. No. 77629 a temporary restraining order, enjoining
respondents from enforcing and/or carrying out the decision and order above stated, particularly that
portion (1) recognizing respondent UKCEU-PTGWO as the exclusive bargaining representative of all
regular rank-and-file employees in the establishment of respondent company, (2) enforcing and/or
implementing the alleged CBA which is detrimental to the interests of the members of the petitioner
union, and (3) stopping respondent company from deducting monthly dues and other union
assessments from the wages of all regular rank-and-file employees of respondent company and from
remitting the said collection to respondent UKCEU-PTGWO issued in BLR Case No. NS-5-164-86, entitled,
"In Re: Labor Dispute at Kimberly-Clark Philippines, Inc.," of the Department of Labor and Employment,
Manila, 19
In its comment, 20 respondent company pointed out certain events which took place prior to the filing of
the petition in G.R. No. 77629, to wit:
1. The company and UKCEU-PTGWO have concluded a new collective bargaining agreement which had
been ratified by 440 out of 517 members of the bargaining unit;
2. The company has already granted the new benefits under the new CBA to all its regular employees,
including members of petitioner union who, while refusing to ratify the CBA nevertheless readily
accepted the benefits arising therefrom;
3. The company has been complying with the check-off provision of the CBA and has been remitting the
union dues to UKCEU-PTGWO
4. The company has already implement the decision of November 13, 1986 insofar as the regularization
of contractual employees who have rendered more than one (1) year of service as of the filing of the
Notice of Strike on May 7, 1986 and are not engaged in janitorial and yard maintenance work, are
concerned
5. Rank Manpower Company had already pulled out, reassigned or replaced the contractual employees
engaged in janitorial and yard maintenance work, as well as those with less than one year service; and
6. The company has reinstated Roque Jimenez as of January 11, 1987.
In G.R. No. 78791, the records 21 disclose that on May 4, 1987, KILUSAN-OLALIA filed another notice of
strike with the Bureau of Labor Relations charging respondent company with unfair labor practices. On
May 8, 1987, the bureau dismissed and considered the said notice as not filed by reason of the
pendency of the representation issue before this Court in G.R. No. 77629. KILUSAN-OLALIA moved to
reconsider said order, but before the bureau could act on said motion, KILUSAN-OLALIA declared a strike
and established a picket on respondent company's premises in San Pedro, Laguna on May 17, 1987.
On May 18, 1987, KIMBERLY filed a petition for injunction with the National Labor Relations Commission
(NLRC), docketed as Injunction Case No. 1442. A supplement to said petition was filed on May 19, 1987.
On May 26, 1987, the commission en banc issued a temporary restraining order (TRO) on the basis of
the ocular inspection report submitted by the commission's agent, the testimonies of KIMBERLY's
witnesses, and pictures of the barricade. KILUSAN-OLALIA moved to dissolve the TRO on the ground of
lack of jurisdiction.
Immediately after the expiration of the first TRO on June 9, 1987, the striking employees returned to
their picket lines and reestablished their barricades at the gate. On June 19, 1987, the commission en
banc issued a second TRO.
On June 25, 1987, KILUSAN-OLALIA filed another petition for certiorari and prohibition with this Court,
docketed as G.R. No. 78791, questioning the validity of the temporary restraining orders issued by the
NLRC on May 26, 1987 and June 19, 1987. On June 29, 1987, KILUSAN-OLALIA filed in said case an urgent
motion for a TRO to restrain NLRC from implementing the questioned orders. An opposition, as well as a
reply thereto, were filed by the parties.
Meanwhile, on July 3, 1987, KIMBERLY filed in the NLRC an urgent motion for the issuance of a writ of
preliminary injunction when the strikers returned to the strike area after the second TRO expired. After
due hearing, the commission issued a writ of preliminary injunction on July 14, 1987, after requiring
KIMBERLY to post a bond in the amount of P20,000.00.
Consequently, on July 17, 1987, KILUSAN-OLALIA filed in G.R. No. 78791 a second urgent motion for the
issuance of a TRO by reason of the issuance of said writ of preliminary injunction, which motion was
opposed by KIMBERLY.
Thereafter, in its memorandum 22 filed on December 28, 1989 and in its motion for early
resolution 23 filed on February 28, 1990, both in G.R. No. 78791, KILUSAN-OLALIA alleged that it had
terminated its strike and picketing activities and that the striking employees had unconditionally offered
to return to work, although they were refused admission by KIMBERLY. By reason of this supervening
development, the petition in G.R. No. 78791, questioning the propriety of the issuance of the two
temporary restraining orders and the writ of injunction therein, has been rendered moot and academic.
In G.R. No. 77629, the petition of KILUSAN-OLALIA avers that the respondent Secretary of Labor and/or
the former Minister of Labor have acted with grave abuse of discretion and/or without jurisdiction in (1)
ruling on the issue of bargaining representation and declaring respondent UKCEU-PTGWO as the
collective bargaining representative of all regular rank-and-file employees of the respondent company;
(2) holding that petitioners are not entitled to vote in the certification election; (3) considering the
regularization of petitioners (who are not janitors and maintenance employees) to be effective only on
the date of the disputed decision; (4) declaring petitioners who are assigned janitorial and yard
maintenance work to be employees of respondent RANK and not entitled to be regularized; (5) not
awarding to petitioners differential pay arising out of such illegal work scheme; and (6) ordering the
mere reinstatement of petitioner Jimenez.
The issue of jurisdiction actually involves a question of whether or not former Minister Sanchez
committed a grave abuse of discretion amounting to lack of jurisdiction in declaring respondent UKCEU-
PTGWO as the certified bargaining representative of the regular employees of KIMBERLY, after ruling
that the 64 casual workers, whose votes are being challenged, were not entitled to vote in the
certification election.
KILUSAN-OLALIA contends that after finding that the 64 workers are regular employees of KIMBERLY,
Minister Sanchez should have remanded the representation case to the med-arbiter instead of declaring
UKCEU-PTGWO as the winner in the certification election and setting aside the med-arbiter's order
which allowed the 64 casual workers to cast their votes.
Respondents argue that since the issues of regularization and representation are closely interrelated
and that a resolution of the former inevitably affects the latter, it was necessary for the former labor
minister to take cognizance of the representation issue; that no timely motion for reconsideration or
appeal was made from his decision of November 13, 1986 which has become final and executory; and
that the aforesaid decision was impliedly accepted by KILUSAN-OLALIA when it demanded from
KIMBERLY the issuance of regular appointments to its affected members in compliance with said
decision, hence petitioner employees are now stopped from questioning the legality thereof.
We uphold the authority of former Minister Sanchez to assume jurisdiction over the issue of the
regularization of the 64 casual workers, which fact is not even disputed by KILUSAN-OLALIA as may be
gleaned from its request for an interim order in the notice of strike case (BLR-NS-5-164-86), asking that
the regularization issue be immediately resolved. Furthermore, even the med-arbiter who ordered the
holding of the certification election refused to resolve the protest on the ground that the issue raised
therein correctly pertains to the jurisdiction of the then labor minister. No opposition was offered by
KILUSAN-OLALIA. We hold that the issue of regularization was properly addressed to the discretion of
said former minister.
However, the matter of the controverted pronouncement by former Minister Sanchez, as reaffirmed by
respondent secretary, regarding the winner in the certification election presents a different situation.
It will be recalled that in the certification election, UKCEU-PTGWO came out as the winner, by garnering
a majority of the votes cast therein with the exception of 64 ballots which were subject to challenge. In
the protest filed for the opening and counting of the challenged ballots, KILUSAN-OLALIA raised the
main and sole question of regularization of the 64 casual workers. The med-arbiter refused to act on the
protest on the ground that the issue involved is within the jurisdiction of the then Minister of Labor.
KILUSAN-OLALIA then sought an interim order for an early resolution on the employment status of the
casual workers, which was one of the issues included in the notice of strike filed by KILUSAN-OLALIA in
BLR Case No. NS-5-164-86. Consequently, Minister Sanchez rendered the questioned decision finding
that the workers not engaged in janitorial and yard maintenance service are regular employees but that
they became regular only on the date of his decision, that is, on November 13, 1986, and, therefore,
they were not entitled to vote in the certification election. On the basis of the results obtained in the
certification election, Minister Sanchez declared UKCEU-PTGWO as the winner.
The pivotal issue, therefore, is when said workers, not performing janitorial or yard maintenance
service, became regular employees of KIMBERLY.
We find and so hold that the former labor minister gravely abused his discretion in holding that those
workers not engaged in janitorial or yard maintenance service attained the status of regular employees
only on November 13, 1986, which thus deprived them of their constitutionally protected right to vote
in the certification election and choose their rightful bargaining representative.
The Labor Code defines who are regular employees, as follows:
Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary not
withstanding and regardless of the oral agreements of the parties, an employment shall be deemed to
for a specific project or under 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.

That any employee who has rendered at least one year of service, whether such service is continuous or
The law thus provides for two. kinds of regular employees, namely: (1) those who are engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of service, whether continuous or broken,
with respect to the activity in which they are employed. The individual petitioners herein who have been
adjudged to be regular employees fall under the second category. These are the mechanics, electricians,
machinists machine shop helpers, warehouse helpers, painters, carpenters, pipefitters and masons It is
not disputed that these workers have been in the employ of KIMBERLY for more than one year at the
time of the filing of the Petition for certification election by KILUSAN-OLALIA.
Owing to their length of service with the company, these workers became regular employees, by
operation of law, one year after they were employed by KIMBERLY through RANK. While the actual
regularization of these employees entails the mechanical act of issuing regular appointment papers and
compliance with such other operating procedures as may be adopted by the employer, it is more in
keeping with the intent and spirit of the law to rule that the status of regular employment attaches to
the casual worker on the day immediately after the end of his first year of service. To rule otherwise,
and to instead make their regularization dependent on the happening of some contingency or the
fulfillment of certain requirements, is to impose a burden on the employee which is not sanctioned by
law.
That the first stated position is the situation contemplated and sanctioned by law is further enhanced by
the absence of a statutory limitation before regular status can be acquired by a casual employee. The
law is explicit. As long as the employee has rendered at least one year of service, he becomes a regular
employee with respect to the activity in which he is employed. The law does not provide the
qualification that the employee must first be issued a regular appointment or must first be formally
declared as such before he can acquire a regular status. Obviously, where the law does not distinguish,
no distinction should be drawn.
The submission that the decision of November 13, 1986 has become final and executory, on the grounds
that no timely appeal has been made therefrom and that KILUSAN-OLALIA has impliedly acceded
thereto, is untenable.
Rule 65 of the Rules of Court allows original petitions for certiorari from decisions or orders of public
respondents provided they are filed within a reasonable time. We believe that the period from January
9, 1987, when the motions for reconsideration separately filed by KILUSAN-OLALIA and KIMBERLY were
denied, to March 16, 1987, when the petition in G.R. No. 77629 was filed, constitutes a reasonable time
for availing of such recourse.
We likewise do not subscribe to the claim of respondents that KILUSAN-OLALIA has impliedly accepted
the questioned decision by demanding compliance therewith. In the letter of KILUSAN-OLALIA dated
November 24, 1986 24 addressed to the legal counsel of KIMBERLY, it is there expressly and specifically
pointed out that KILUSAN-OLALIA intends to file a motion for reconsideration of the questioned decision
but that, in the meantime, it was demanding the issuance of regular appointments to the casual workers
who had been declared to be regular employees. The filing of said motion for reconsideration of the
questioned decision by KILUSAN-OLALIA, which was later denied, sustains our position on this issue and
denies the theory of estoppel postulated by respondents.
On the basis of the foregoing circumstances, and as a consequence of their status as regular employees,
those workers not perforce janitorial and yard maintenance service were performance entitled to the
payment of salary differential, cost of living allowance, 13th month pay, and such other benefits
extended to regular employees under the CBA, from the day immediately following their first year of
service in the company. These regular employees are likewise entitled to vote in the certification
election held in July 1, 1986. Consequently, the votes cast by those employees not performing janitorial
and yard maintenance service, which form part of the 64 challenged votes, should be opened, counted
and considered for the purpose of determining the certified bargaining representative.
We do not find it necessary to disturb the finding of then Minister Sanchez holding as legal the service
contract executed between KIMBERLY and RANK, with respect to the workers performing janitorial and
yard maintenance service, which is supported by substantial and convincing evidence. Besides, we take
judicial notice of the general practice adopted in several government and private institutions and
industries of hiring a janitorial service on an independent contractor basis. Furthermore, the occasional
directives and suggestions of KIMBERLY are insufficient to erode primary and continuous control over
the employees of the independent contractor. 25 Lastly, the duties performed by these workers are not
independent and integral steps in or aspects of the essential operations of KIMBERLY which is engaged
in the manufacture of consumer paper products and cigarette paper, hence said workers cannot be
considered regular employees.
The reinstatement of Roque Jimenez without backwages involves a question of fact best addressed to
the discretion of respondent secretary whose finding thereon is binding and conclusive upon this Court,
absent a showing that he committed a grave abuse in the exercise thereof.
WHEREFORE, judgment is hereby rendered in G.R. No. 77629:
1. Ordering the med-arbiter in Case No. R04-OD-M-4-15-86 to open and count the 64 challenged votes,
and that the union with the highest number of votes be thereafter declared as the duly elected certified
bargaining representative of the regular employees of KIMBERLY;
2. Ordering KIMBERLY to pay the workers who have been regularized their differential pay with respect
to minimum wage, cost of living allowance, 13th month pay, and benefits provided for under the
applicable collective bargaining agreement from the time they became regular employees.
All other aspects of the decision appealed from, which are not so modified or affected thereby, are
hereby AFFIRMED. The temporary restraining order issued in G.R. No. 77629 is hereby made permanent.
The petition filed in G.R. No. 78791 is hereby DISMISSED.
SO ORDERED.
G.R. No. 87210 July 16, 1990
FILOMENA BARCENAS, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), Rev. SIM DEE the present Head Monk of the
Manila Buddha Temple, MANUEL CHUA, in his capacity as the President and Chairman of the Board of
Directors of the Poh Toh Buddhist Association of the Philippines, Inc., and in his private
capacity, respondents.
L.B. Camins for petitioner.
Lino M. Patajo and Jose J. Torrefranca for private respondents.
MEDIALDEA, J.:
This petition for review on certiorari (which We treat as a special civil action for certiorari) seeks to annul
the decision of the National Labor Relations Commission dated November 29, 1988, which reversed the
decision of the Labor Arbiter dated February 10, 1988 in NLRC NCR Case No. 12-4861-86 (Filomena
Barcenas v. Rev. Sim See, etc., et al.) on the ground that no employer-employee relationship exists
between the parties.
Petitioner alleged in her position paper the following facts:
In 1978, Chua Se Su (Su for short) in his capacity as the Head Monk of the Buddhist Temple of Manila
and Baguio City and as President and Chairman of the Board of Directors of the Poh Toh Buddhist
Association of the Phils. Inc. hired the petitioner who speaks the Chinese language as secretary and
interpreter. Petitioner's position required her to receive and assist Chinese visitors to the temple, act as
tourist guide for foreign Chinese visitors, attend to the callers of the Head Monk as well as to the food
for the temple visitors, run errands for the Head Monk such as paying the Meralco, PLDT, MWSS bills
and act as liaison in some government offices. Aside from her pay and allowances under the law, she
received an amount of P500.00 per month plus free board and lodging in the temple. In December,
1979, Su assumed the responsibility of paying for the education of petitioner's nephew. In 1981, Su and
petitioner had amorous relations. In May, 1982, of five months before giving birth to the alleged son of
Su on October 12, 1982, petitioner was sent home to Bicol. Upon the death of Su in July, 1983,
complainant remained and continued in her job. In 1985, respondent Manuel Chua (Chua, for short) was
elected President and Chairman of the Board of the Poh Toh Buddhist Association of the Philippines, Inc.
and Rev. Sim Dee for short) was elected Head Buddhist Priest. Thereafter, Chua and Dee discontinued
payment of her monthly allowance and the additional P500.00 effective 1983. In addition, petitioner and
her son were evicted forcibly from their quarters in the temple by six police officers. She was brought
first to the Police precinct in Tondo and then brought to Aloha Hotel where she was compelled to sign a
written undertaking not to return to the Buddhist temple in consideration of the sum of P10,000.00.
Petitioner refused and Chua shouted threats against her and her son. Her personal belongings including
assorted jewelries were never returned by respondent Chua.
Chua and DEE on the other hand, claimed that petitioner was never an employee of the Poh Toh Temple
but a servant who confined herself to the temple and to the personal needs of the late Chua Se Su and
thus, her position is coterminous with that of her master.
On February 10, 1988, the Labor Arbiter rendered a decision, the dispositive portion of which states:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant Filomena
Barcenas, and the respondent corporation is hereby ordered to pay her the following:
1. P26,575.00 backwages from August 9, 1986 up to date hereof.,
2. P14,650.00 as separation pay;
3. P18,000.00 as unpaid wages from August, 1983 up to August 8, 1986; and
4. P10,000.00 moral damages.
Complainant's charge of unfair labor practice is hereby dismissed for lack of merit.
SO ORDERED. 1
Respondents appealed to the National Labor Relations Commission which, as earlier stated, reversed the
above decision of the Labor Arbiter. Hence, this instant petition.
ISSUE:
W/N there is an employer-employee relationship between the petitioner and private respondents.
HELD:
No, there was no employer employee relationship.
A painstaking review of the records compels Us to dismiss the petition.
At the outset, however, The Court agree with the petitioner's claim that she was a regular employee of
the Manila Buddhist Temple as secretary and interpreter of its Head Monk, Su As Head Monk, President
and Chairman of the Board of Directors of the Poh Toh Buddhist Association of the Philippines, Su who
was empowered to hire the petitioner under Article V of the By-laws of the Association which states:
. . . (T)he President or in his absence, the Vice President shall represent the Association in all its dealings
with the public, subject to the Board, shall have the power to enter into any contract or agreement in
the name of the Association, shall manage the active business operation of the Association, shall deal
with the bank or banks . . . 2
Respondent NLRC represented by its Legal Offices 3 argues that since petitioner was hired without the
approval of the Board of Directors of the Poh Toh Buddhist Association of the Philippines, Inc., she was
not an employee of respondents. This argument is specious. The required Board approval would appear
to relate to the acts of the President in representing the association "in all its dealings with the public."
And, even granting that prior Board approval is required to confirm the hiring of the petitioner, the same
was already granted, albeit, tacitly. It must be noted that petitioner was hired in 1978 and no whimper
of protest was raised until this present controversy.
Moreover, the work that petitioner performed in the temple could not be categorized as mere domestic
work. Thus, We find that petitioner, being proficient in the Chinese language, attended to the visitors,
mostly Chinese, who came to pray or seek advice before Buddha for personal or business problems;
arranged meetings between these visitors and Su and supervised the preparation of the food for the
temple visitors; acted as tourist guide of foreign visitors; acted as liaison with some goverment offices;
and made the payment for the temple's Meralco, MWSS and PLDT bills. Indeed, these tasks may not be
deemed activities of a household helper. They were essential and important to the operation and
religious functions of the temple.
In spite of this finding, her status as a regular employee ended upon her return to Bicol in May, 1982 to
await the birth of her love-child allegedly by Su. The records do not show that petitioner filed any leave
from work or that a leave was granted her. Neither did she return to work after the birth of her child on
October 12, 1982, whom she named Robert Chua alias Chua Sim Tiong. The NLRC found that it was only
in July, 1983 after Su died that she went back to the Manila Buddhist Temple. Petitioner's pleadings
failed to rebut this finding. Clearly, her return could not be deemed as a resumption of her old position
which she had already abandoned. Petitioner herself supplied the reason for her return. She stated:
. . . (I)t was the death-bed instruction to her by Chua Se Su to stay at the temple and to take care of the
two boys and to see to it that they finish their studies to become monks and when they are monks to
eventually take over the two temples as their inheritance from their father Chua Se Su. 4
Thus, her return to the temple was no longer as an employee but rather as Su's mistress who is bent on
protecting the proprietary and hereditary rights of her son and nephew. In her pleadings, the petitioner
claims that they were forcefully evicted from the temple, harassed and threatened by respondents and
that the Poh Toh Buddhist Association is a trustee corporation with the children as cestui que trust.
These claims are not proper in this labor case. They should be appropriately threshed out in the
complaints already filed by the petitioner before the civil courts. Due to these claims, We view the
respondents' offer of P10,000.00 as indicative more of their desire to evict the petitioner and her son
from the temple rather than an admission of an employer-employee relations.
Anent the petitioner's claim for unpaid wages since May, 1982 which she filed only in 1986, the Court
hold that the same has already prescribed. Under Article 292 of the Labor Code, all money claims arising
from employer-employee relations must be filed within three years from the time the cause of action
accrued, otherwise they shall forever be barred.
Finally, while petitioner contends that she continued to work in the temple after Su died, there is,
however, no proof that she was re-hired by the new Head Monk. In fact, she herself manifested that
respondents made it clear to her in no uncertain terms that her services as well as her presence and that
of her son were no longer needed. 5 However, she persisted and continued to work in the temple
without receiving her salary because she expected Chua and Dee to relent and permit the studies of the
two boys. 6 Consequently, under these circumstances, no employer-employee relationship could have
arisen.
ACCORDINGLY, the decision of the National Labor Relations Commission dated November 29, 1988 is
hereby AFFIRMED for the reasons aforestated. No costs.
SO ORDERED.
G.R. No. L-54136 December 21, 1983
PHILIPPINE JAI-ALAI & AMUSEMENT CORPORATION, petitioner,

vs.
HON. JACOBO C. CLAVE, in his capacity as Presidential Executive Assistant, HON. AMADO G. INCIONG,
in his capacity as Deputy Minister of Labor, HON. VICENTE LEOGARDO, JR., in his capacity as Assistant
Minister of Labor, RUFINO CADATAL, JR. and ANTONIO DELGRA, respondents.
Abad, Bonifacio, Legayada & Associates for petitioner.
The Solicitor General for public respondents.
Dante P. Mercado for private respondents.
MELENCIO-HERRERA, J.:
This is a Petition for certiorari with Preliminary Injunction seeking to annul: 1) the Order of public
respondent Vicente Leogardo, Jr., then Assistant Secretary of Labor, dated December 24, 1976, in Case
No. R-04-12-11832-76-LS entitled "Rufino Cadatal, Jr. and Antonio Delgra, Complainants, vs. Philippine
Jai-Alai and Amusement Corporation, Respondent," directing the reinstatement of said complainants
with full backwages from the time of their dismissal up to their actual reinstatement and without loss of
seniority rights; 2) the Order of public respondent Amado G. Inciong, then Deputy Minister of Labor,
dated July 13, 1977, affirming the said Decision; 3) the Decision of respondent Jacobo C. Clave as
Presidential Executive Assistant, dated January 25, 1979, also affirming the appealed Order; and 4) the
denials on March 19, 1979 and June 5, 1980 by said Office of petitioner's Motions for Reconsideration.
From the record, the facts relative to this case may be stated as follows: Petitioner is a corporation
operating a jai-alai front on for sport and amusement. It has its own maintenance group for the upkeep
of its premises. For the renovation of its main building, which work is not included in maintenance, it
hired private respondents, Cadatal, Jr., a plumber, and Delgra, a mason, together with 30 other workers
on February 2, 1976 for a period of one month, to continue even after that period should their services
be needed further in the renovation work. This renovation was completed by the end of October 1976.
However, management decided to construct an Annex to the Building, and private respondents were
assigned to work on a fire escape. On November 17, 1976, private respondents received notice of
termination effective November 29, 1976, but since minor repairs were still needed, they worked up to
December 11, 1976 and were fully paid for their labor up to that date.
On December 13, 1976, petitioner filed with the former Department of Labor a report of termination of
the services of private respondents and 30 others, due to completion of the project. The report listed
them as "casual emergency workers."
A letter-complaint, dated December 13, 1976, was filed by private respondents with Regional Office No.
4 of the then Department of Labor, alleging termination without cause. On December 21, 1976,
petitioner was summoned to appear before the Hearing Officer without being informed of the subject
matter of the investigation. At the next hearing on December 23, 1976, petitioner was formally
furnished copy of the letter complaint. Petitioner was given tune to file an Answer on or before
December 27, 1976, which it did. But before the Answer could be filed, a summary Order was issued by
respondent Leogardo. Jr., dated December 24, 1976 for reinstatement with full backwages. stating that
the nature of the jobs performed by private respondents was necessary and desirable in the usual
business or trade of petitioner; that they are regular employees pursuant to Article 170 (now Article
281) of the Labor Code; and that their termination was without just cause.
The Order of December 24, 1976 was, on appeal, affirmed by respondent Inciong in an Order dated July
13, 1977. This Order was in turn appealed to the Office of the President. The appeal was dismissed for
lack of merit by respondent Clave on January 25, 1979, reiterating that the nature of private
respondents' employment as maintenance helpers was necessary and/or desirable to petitioner's
business and that the dismissal was in violation of Article 281 of the Labor Code. Petitioner's Motion for
Reconsideration was denied on March 19, 1979. On April 26, 1980, an Alias Writ of Execution was issued
to collect from petitioner corporation the total amount of P26,260.00, representing private respondents'
full backwages. And, on June 5, 1980, a second Motion for Reconsideration dated April 24, 1980, was
denied by respondent Clave, since only one such Motion is allowed and the grounds invoked were
substantially the same as those previously raised.
This Petition for certiorari with Preliminary Injunction was filed on June 27, 1980. A temporary
restraining order was issued By this Court on July 7, 1980, enjoining the respondents from implementing
the Order, dated December 24, 1976, as well as subsequent Orders. On November 12, 1980, we gave
due Course to the Petition and required the submittal of simultaneous memoranda, which has been
complied with by petitioner but not by private respondents.
Pivotal to the resolution of toes controversy is the issue of whether or not private respondents are
regular employees entitled to security of tenure. They maintain that they are, while petitioner contends
that they are merely casual emergency workers employed for a particular job.
NO, the private respondents are not regular employees of the petitioner.
The pertinent proposition of the Labor Code, as amended, reads:
notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed
to be regular where the employee has been engaged to perform activities which are usually necessary or
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.
his employment shall continue while such actually exists.
Private respondents were hired for a specific project to renovate the main building, where major repairs
such as painting the main building, repair of the roof, cleaning of clogged water pipes and drains, and
other necessary repairs were required. 1 It was made known, and so understood at the start of the
hiring, that their services would last until the completion of the renovation. 2 They rendered service from
February 2 to December 11, 1976, almost 11 months, but less than a year. In its Report to the
Department of Labor, petitioner gave the reason for termination as "due to termination of project. 3 It
was only private respondents Cadatal, Jr. and Delgra, out of the 32 hired for the renovation, who
questioned their termination, the 30 other workers having acquiesced to their termination. Private
respondents merely alleged in their letter-complaint that "kami'y inalis sa trabaho ng walang
dahilan." 4 There could be no other reason, however, than that the termination of private respondents
was because their services were no longer needed and they had nothing more to do since the project for
which they were hired had been completed. The fact was not that private respondents were hired as
maintenance helpers, because petitioner corporation had a regular maintenance force. 5 Private
respondents, as well as the other 30 workers, were needed as additional hands for the other small jobs
after the renovation cannot be deemed maintenance but more of casual work.
The casual or limited character of private respondents' employment, therefore, is evident. They were
engaged for a specific project or undertaking and fall within the exception provided for in Article 281 of
the Labor Code, supra. Not being regular employees, it cannot be justifiably said that petitioner had
dismissed them without just cause. They are not entitled to reinstatement with full backwages.
Lastly, although no longer necessary to the resolution of the petition, it is claimed by petitioner that it
was denied due process of law, since the case below could not be the subject of a summary judgment as
questions of fact and law are involved, and that even before the petitioner could file its Answer, a
summary judgment was rendered by respondent Leogardo.
The comment of the Solicitor General on this point is hereunder quoted.
Besides, even granting arguendo that there was no hearing before respondent Leogardo, it cannot be
denied that petitioner had lie opportunity to present its own case and submit evidence in support
thereof. From the decision of respondent Leogardo, petitioner filed a 10-page appeal to the Secretary of
Labor, attaching thereto as Annex 'B' its Reply/Opposition to the complaint. From respondent Inciong's
decision, petitioner filed a 7-page appeal with the Office of the President, Thus, on two occasions,
petitioner was allowed to present and intelligibly argue the merits of its case. As held in Maglasang v.
Ople ( 63 SCRA 508):
It is thus apparent that even granting the absence of any hearing at the stage of mediation and fact-
finding, petitioner was afforded the occasion to explain matters fully and present its side of the
controversy twice, the first time in his appeal with respondent Commission and thereafter in the review
conducted by respondent Secretary of Labor. It would follow that the objections premised on lack of
respect for the due process guarantee lack support in the record (citing Demaronsing vs. Tandayag, 58
SCRA 484; De Borj a vs. Flores, 62 Phil. 106; Batangas Laguna Tayabas Co. vs. Cadiao, 22 SCRA 987)'." 6
But here, the judgment below is being reversed because public respondents had overlooked certain
facts of significance, notably, private respondents' employment for a specific project and other small
jobs fake the erection of the fire escape which cannot be deemed as maintenance, the existence of a
regular maintenance force in petitioner corporation, their services for less than one year, and the
circumstance that their thirty other co-workers accepted their termination without question, all of
which are sufficient to alter the questioned Order.
WHEREFORE, the Order of public respondent Vicente Leogardo, Jr., dated December 24, 1976, and the
Orders of the other public respondents dated July 13, 1977, January 25, 1979, March 19, 1979, and June
5, 1980, are hereby reversed and set aside. The Complaint for illegal dismissal against petitioner in Case
No. R-04-12-11832-76 LS (Regional Office No. IV, Department of Labor) is dismissed, and the Temporary
Restraining Order heretofore issued is hereby made permanent.
No costs.
SO ORDERED.
G.R. No. 109114 September 14, 1993
HOLIDAY INN MANILA and/or HUBERT LINER and BABY DISQUITADO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and ELENA HONASAN, respondents.
Inocentes, De Leon, Leogardo, Atienza, Manaye & Azucena Law Office for petitioners.
Florante M. Yambot for private respondent.
CRUZ, J.:
The employer has absolute discretion in hiring his employees in accordance with his standards of
competence and probity. This is his prerogative. Once hired, however, the employees are entitled to the
protection of the law even during the probation period and more so after they have become members
of the regular force. The employer does not have the same freedom in the hiring of his employees as in
their dismissal.
Elena Honasan applied for employment with the Holiday Inn and was on April 15, 1991, accepted for
"on-the-job training" as a telephone operator for a period of three weeks.1 For her services, she received
food and transportation allowance.2 On May 13, 1992, after completing her training, she was employed
on a "probationary basis" for a period of six months ending November 12,
1991.3
Her employment contract stipulated that the Hotel could terminate her probationary employment at
any time prior to the expiration of the six-month period in the event of her failure (a) to learn or
progress in her job; (b) to faithfully observe and comply with the hotel rules and the instructions and
orders of her superiors; or (c) to perform her duties according to hotel standards.
On November 8, 1991, four days before the expiration of the stipulated deadline, Holiday Inn notified
her of her dismissal, on the ground that her performance had not come up to the standards of the
Hotel.4
Through counsel, Honasan filed a complaint for illegal dismissal, claiming that she was already a regular
employee at the time of her separation and so was entitled to full security of tenure.5 The complaint was
dismissed on April 22, 1992 by the Labor Arbiter, 6 who held that her separation was justified under
Article 281 of the Labor Code providing as follows:
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.
On appeal, this decision was reversed by the NLRC, which held that Honasan had become a regular
employee and so could not be dismissed as a probationer.7 In its own decision dated November 27,
1992, the NLRC ordered the petitioners to reinstate Honasan "to her former position without loss of
seniority rights and other privileges with backwages without deduction and qualification."
Reconsideration was denied in a resolution dated January 26, 1993.8
ISSUES:
1. W/ N the NLRC erred for entertaining Honasan's appeal although it was filed out of time.
2. W/N Honasan was already a regular employee at the time of her dismissal, which was made 4
days before the expiration of the probation period.
The petitioners now fault the NLRC for having entertained Honasan's appeal although it was filed out of
time and for holding that Honasan was already a regular employee at the time of her dismissal, which
was made 4 days days before the expiration of the probation period.
The petition has no merit.
1. NLRC did not err in entertaining Honasan’s appeal.
On the timeliness of the appeal, it is well-settled that all notices which a party is entitled to receive must
be coursed through his counsel of record. Consequently, the running of the reglementary period is
reckoned from the date of receipt of the judgment by the counsel of the appellant.9 Notice to the
appellant himself is not sufficient notice. 10 Honasan's counsel received the decision of the Labor Arbiter
on May 18, 1992. 11 Before that, however, the appeal had already been filed by Honasan herself, on May
8, 1992. 12 The petitioners claim that she filed it on the thirteenth but this is irrelevant. Even if the latter
date was accepted, the appeal was nevertheless still filed on time, in fact even before the start of the
reglementary period.
2. Yes, Honasan was already a regular employee.
On the issue of illegal dismissal, the Court find that Honasan was placed by the petitioner on probation
twice, first during her on-the-job training for three weeks, and next during another period of six months,
ostensibly in accordance with Article 281. Her probation clearly exceeded the period of six months
prescribed by this article.
Probation is the period during which the employer may determine if the employee is qualified for
possible inclusion in the regular force. In the case at bar, the period was for three weeks, during
Honasan's on-the-job training. When her services were continued after this training, the petitioners in
effect recognized that she had passed probation and was qualified to be a regular employee.
Honasan was certainly under observation during her three-week on-the-job training. If her services
proved unsatisfactory then, she could have been dropped as early as during that period. But she was
not. On the contrary, her services were continued, presumably because they were acceptable, although
she was formally placed this time on probation.
Even if it be supposed that the probation did not end with the three-week period of on-the-job training,
there is still no reason why that period should not be included in the stipulated six-month period of
probation. Honasan was accepted for on-the-job training on April 15, 1991. Assuming that her probation
could be extended beyond that date, it nevertheless could continue only up to October 15, 1991, after
the end of six months from the earlier date. Under this more lenient approach, she had become a
regular employee of Holiday Inn and acquired full security of tenure as of October 15, 1991.
The consequence is that she could no longer be summarily separated on the ground invoked by the
petitioners. As a regular employee, she had acquired the protection of Article 279 of the Labor Code
stating as follows:
Art. 279. Security of Tenure — In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.
The grounds for the removal of a regular employee are enumerated in Articles 282, 283 and 284 of the
Labor Code. The procedure for such removal is prescribed in Rule XIV, Book V of the Omnibus Rules
Implementing the Labor Code. These rules were not observed in the case at bar as Honasan was simply
told that her services were being terminated because they were found to be unsatisfactory. No
administrative investigation of any kind was undertaken to justify this ground. She was not even
accorded prior notice, let alone a chance to be heard.
We find in the Hotel's system of double probation a transparent scheme to circumvent the plain
mandate of the law and make it easier for it to dismiss its employees even after they shall have already
passed probation. The petitioners had ample time to summarily terminate Honasan's services during her
period of probation if they were deemed unsatisfactory. Not having done so, they may dismiss her now
only upon proof of any of the legal grounds for the separation of regular employees, to be established
according to the prescribed procedure.
The policy of the Constitution is to give the utmost protection to the working class when subjected to
such maneuvers as the one attempted by the petitioners. This Court is fully committed to that policy and
has always been quick to rise in defense of the rights of labor, as in this case.
WHEREFORE, the petition is DISMISSED, with costs against petitioners. It is so ordered.

G.R. Nos. L-63550-51 January 31, 1984
RJL MARTINEZ FISHING CORPORATION and/or PENINSULA FISHING CORPORATION, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and ANTONIO BOTICARIO, ISIDRO FARIOLAN, FERNANDO
SEVILLA, TOTONG ROLDAN, ROGER ESQUILLA, MARIO MIRANDA, EDUARDO ESPINOSA, ALBERTO
NOVERA, ANTONIO PATERNO, MARCIANO PIADORA, MARIO ROMERO, CLINITO ESQUILLA, ALEJO
BATOY, BOBBY QUITREZA, ROLANDO DELA TORRE, HERNANI REVATEZ, RODOLFO SEVILLA, ROLANDO
ANG, JUANITO PONPON, HOSPINIANO CALINDEZ, JOSE MABULA, DEONG DE LEON, MELENCIO CONEL
and ALFREDO BULAONG, respondents.
Martinez, Bermudez & Associates for petitioners.
The Solicitor General for respondent NLRC.
MELENCIO-HERRERA, J.:
Petition for Certiorari, Prohibition and mandamus assailing the Decision of respondent National Labor
Relations Commission (NLRC) in Cases Nos. AB-4-11054-81 and AB-8-12354-81 entitled Antonio
Boticario, et al. vs. RJL Fishing Corporation and/or Peninsula Fishing Corporation, dated November 26,
1982, as well as the Order, dated February 14, denying petitioners' Manifestation and Omnibus Motion
to dismiss private respondents' appeal. The dispositive portion of the challenged resolution reads:
WHEREFORE, in view of the foregoing considerations, the Decision appealed from is hereby set aside
and another one entered, directing respondents-appellees: (1) to reinstate complainants-appellants to
their former work, without loss of seniority rights and other privileges appertaining thereto; (2) to pay
complainants-appellants full backwages computed from the date they were dismissed up to the date
they are actually reinstated; (3) to pay complainants-appellants legal holiday pay, emergency living
allowance and 13th month pay in accordance with law; and (4) to pay complainants-appellants who are
entitled to incentive leave pay, as herein above determined, according to law.
The claims for overtime pay and premium pay for holiday and rest day are dismissed.
SO ORDERED. 1
This case was originally assigned to the Second Division but because of the pendency of a lower-
numbered case, G.R. No. 63474, entitled RJL Martinez Fishing Corporation vs. National Labor Relations
Commission, et als. before the First Division, involving the same petitioners and their workers (albeit a
different group and not exactly Identical issues), this case was transferred to the latter, Division for
proper action and determination. G.R. No. 63474 was dismissed by the First Division on August 17, 1983
for lack of merit.
Petitioner corporations are principally engaged in the deep-sea fishing business. Since 1978, private
respondents were employed by them as stevedores at Navotas Fish Port for the unloading of tuna fish
catch from petitioners' vessels and then loading them on refrigerated vans for shipment abroad.
On March 27, 1981, private respondents Antonio Boticario, and thirty (30) others, upon the premise that
they are petitioners' regular employees, filed a complaint against petitioners for non-payment of
overtime pay, premium pay, legal holiday pay, emergency allowance under P.D. Nos. 525, 1123, 1614,
1634, 1678, 1713, 1751, 13th month pay (P.D. 851), service incentive leave pay and night shift
differential. 2
Claiming that they were dismissed from employment on March 29, 1981 as a retaliatory measure for
their having failed the said complaint private respondents filed on the said complaint, private
respondents filed on April 21, 1981 another complaint against petitioners for Illegal Dismissal and for
Violation of Article 118 of the Labor Code, as amended. 3 Upon petitioners' motion, these two cases
were consolidated and tried jointly.
In disputing any employer-employee relationship between them, petitioners contend that private
respondents are contract laborers whose work terminated upon completion of each unloading, and that
in the absence of any boat arrivals, private respondents did not work for petitioners but were free to
work or seek employment with other fishing boat operators.
On February 25, 1982, the Labor Arbiter upheld petitioners' position ruling that the latter are extra
workers, who were hired to perform specific tasks on contractual basis; that their work is intermittent
depending on the arrival of fishing vessels; that if there are no fish to unload and load, they work for
some other fishing boat operators; that private respondent Antonio Boticario had executed an
employment contract under which he agreed to act as a labor contractor and that the other private
respondents are his men; that even assuming that private respondents are employees of petitioners,
their employer-employee relation is co-terminous with each unloading and loading job; that in the same
manner, petitioners are not under any obligation to hire petitioners exclusively, hence, when they were
not given any job on March 29, 1981, no dismissal was effected but that they were merely not rehired. 4
On April 1, 1982, private respondents received the Decision of the Labor Arbiter dismissing their
complaints. On April 19, 1982, they filed an appeal before respondent NLRC, which took cognizance
thereof.
In its Decision of November 26, 1982, the NLRC reversed the findings of the Labor Arbiter, and resolved,
as previously stated, to uphold the existence of employer-employee relationship between the parties.
Petitioners resorted to a "Manifestation and Omnibus Motion to Dismiss Appeal and to Vacate and/or to
Declare Null and Void the Decision of this Honorable Commission Promulgated on November 25 (should
be 26), 1982" but the same was denied, hence, the instant recourse.
As prayed for, a Temporary Restraining Order to enjoin the enforcement of the questioned decision of
respondent NLRC was issued on April 20, 1983, and on August 15, 1983, the Petition was given due
course by the Second Division.
Petitioners submit the following issues for resolution:
I. Whether or not the appeal from the decision of Labor Arbiter filed by private respondents is within the
l0-day reglementary period;
II. Whether or not respondent NLRC erred in reversing the decision of the Labor Arbiter despite the
failure to furnish petitioners with a copy of the appeal;
III. Whether or not there is an employer-employee relationship between the parties;

IV. Whether or not private respondents are entitled to legal holiday pay, emergency living allowance,
thirteenth month pay and incentive leave pay.
1. Petitioners, joined by the Solicitor General, contend that the appeal filed by private respondents from
the Decision of the Labor Arbiter was filed out of time considering that they received copy of the same
on April 1, 1982 but that they filed their appeal only on April 19, 1982, or 18 days later. If we were to
reckon the 10-day reglementary period to appeal as calendar days, as held in the case of Vir-Jen
Shipping and Marine Services, Inc. vs. NLRC, et al. 5 , private respondents' appeal was, indeed, out of
time. However, it was clear from Vir-Jen that the calendar day basis of computation would apply only
"henceforth" or to future cases. That ruling was not affected by this Court's Resolution of November 18,
1983 reconsidering its Decision of July 20, 1982. When the appeal herein was filed on April 19, 1982, the
governing proviso was found in Section 7, Rule XIII of the Rules and Regulations implementing the Labor
Code along with NLRC Resolution No. 1, Series of 1977, which based the computation on "working
days". They very face of the Notice of Decision itself 6 indicated aggrieved party could appeal within 10
"working days" from receipt of copy of the resolution appealed from. From April 1 to April 19, 1982 is
exactly ten (10) working days considering the Holy Week and the two Saturdays and Sundays that
supervened in between that period. In other words, private respondents' appeal, having been filed
during the time that the prevailing period of appeal was ten (10) working days and prior to the Vir-Jen
case promulgated on July 20, 1982, it must be held to have been timely filed.
2. Anent the failure of private respondents to furnish petitioners with a copy of their memorandum on
appeal, suffice it to state that the same is not fatal to the appeal. 7
3. The issue of the existence of an employer-employee relationship between the parties is actually a
question of fact, and the finding of the NLRC on this point is bonding upon the Court, the exceptions to
the general rule being absent in the case at bar. Besides the continuity of employment is not the
determining factor, but rather whether the work of the laborer is part of the regular business or
occupation of the employer. 8 The Court are thus in accord with the findings of respondent NLRC in this
regard.
Although it may be that private respondents alternated their employment on different vessels when
they were not assigned to petitioners' boats, that did not affect their employee status. The evidence also
establishes that petitioners had a fleet of fishing vessels with about 65 ship captains, and as private
respondents contended, when they finished with one vessel, they were instructed to wait for the next.
As respondent NLRC had found:
We further find that the employer-employee relationship between the parties herein is not co-
terminous with each loading and unloading job. As earlier shown, respondents are engaged in the
business of fishing. For this purpose, they have a fleet of fishing vessels. Under this situation,
respondents' activity of catching fish is a continuous process and could hardly be considered as seasonal
in nature. So that the activities performed by herein complainants, i.e. unloading the catch of tuna fish
from respondents' vessel and then loading the same to refrigerated vans, are necessary or desirable in
the business of respondents. This circumstances makes the employment of complainants a regular one,
in the sense that it does not depend on any specific project or seasonal activity. 9
The employment contract signed by Antonio Boticario, 10 which described him as "labor contractor", is
not really so inasmuch as wages continued to be paid by petitioners and he and the other workers were
uniformly paid. He was merely asked the petitioners to recruit other workers. Besides, labor-contracting
is prohibited under Sec. 9(b), Rule VIII, Book III — Rules and Regulations Implementing the Labor Code as
amended. 11 Directly in point and controlling is the ruling in an analogous case, Philippine Fishing Boat
Officers and Engineers Union vs. CIR, 12 reading:
The Court holds, therefore, that the employer-employee relationship existed between the parties
notwithstanding evidence to the fact that petitioners Visayas and Bergado, even during the time that
they worked with respondent company alternated their employment on different vessels when they
were not assigned on the company's vessels. For, as was stressed in the above-quoted case
of Industrial-Commercial-Agricultural Workers Organization vs. CIR, 16 SCRA 562 [1966], "that during the
temporary layoff the laborers are considered free to seek other employment is natural, since the
laborers are not being paid, yet must find means of support" and such temporary cessation of
operations "should not mean starvation for employees and their families."
4. Indeed, considering the length of time that private respondents have worked for petitioner — since
1978 — there is justification to conclude that they were engaged to perform activities usually necessary
or desirable in the usual business or trade of petitioners and are, therefore, regular employees. 13 As
such, they are entitled to the benefits awarded them by respondent NLRC.
WHEREFORE, the instant Petition for Certiorari, Prohibition and Mandamus is hereby dismissed and the
Temporary Restraining Order heretofore issued is hereby dissolved.
Costs against petitioners.
SO ORDERED.
G.R. No. 70705 August 21, 1989
MOISES DE LEON, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and LA TONDEÑ;A INC., respondents.
Amorito V. Canete for petitioner.
Pablo R. Cruz for private respondent.
FERNAN, C.J.:
This petition for certiorari seeks to annul and set aside: (1) the majority decision dated January 28, 1985
of the National Labor Relations Commission First Division in Case No. NCR- 83566-83, which reversed the
Order dated April 6,1984 of Labor Arbiter Bienvenido S. Hernandez directing the reinstatement of
petitioner Moises de Leon by private respondent La Tondeñ;a Inc. with payment of backwages and other
benefits due a regular employee; and, (2) the Resolution dated March 21, 1985 denying petitioner's
motion for reconsideration.
It appears that petitioner was employed by private respondent La Tondeñ;a Inc. on December 11, 1981,
at the Maintenance Section of its Engineering Department in Tondo, Manila. 1 His work consisted mainly
of painting company building and equipment, and other odd jobs relating to maintenance. He was paid
on a daily basis through petty cash vouchers.
In the early part of January, 1983, after a service of more than one (1) year, petitioner requested from
respondent company that he be included in the payroll of regular workers, instead of being paid through
petty cash vouchers. Private respondent's response to this request was to dismiss petitioner from his
employment on January 16, 1983. Having been refused reinstatement despite repeated demands,
petitioner filed a complaint for illegal dismissal, reinstatement and payment of backwages before the
Office of the Labor Arbiter of the then Ministry now Department of Labor and Employment.
Petitioner alleged that he was dismissed following his request to be treated as a regular employee; that
his work consisted of painting company buildings and maintenance chores like cleaning and operating
company equipment, assisting Emiliano Tanque Jr., a regular maintenance man; and that weeks after his
dismissal, he was re-hired by the respondent company indirectly through the Vitas-Magsaysay Village
Livelihood Council, a labor agency of respondent company, and was made to perform the tasks which he
used to do. Emiliano Tanque Jr. corroborated these averments of petitioner in his affidavit. 2
On the other hand, private respondent claimed that petitioner was not a regular employee but only a
casual worker hired allegedly only to paint a certain building in the company premises, and that his work
as a painter terminated upon the completion of the painting job.
On April 6, 1984, Labor Arbiter Bienvenido S. Hernandez rendered a decision 3 finding the complaint
meritorious and the dismissal illegal; and ordering the respondent company to reinstate petitioner with
full backwages and other benefits. Labor Arbiter Hernandez ruled that petitioner was not a mere casual
employee as asserted by private respondent but a regular employee. He concluded that the dismissal of
petitioner from the service was prompted by his request to be included in the list of regular employees
and to be paid through the payroll and is, therefore, an attempt to circumvent the legal obligations of an
employer towards a regular employee.
Labor Arbiter Hernandez found as follows:
After a thorough examination of the records of the case and evaluation of the evidence and versions of
the parties, this Office finds and so holds that the dismissal of complainant is illegal. Despite the
impressive attempt of respondents to show that the complainant was hired as casual and for the work
on particular project, that is the repainting of Mama Rosa Building, which particular work of painting and
repainting is not pursuant to the regular business of the company, according to its theory, we find
differently. Complainant's being hired on casual basis did not dissuade from the cold fact that such
painting of the building and the painting and repainting of the equipment and tools and other things
belonging to the company and the odd jobs assigned to him to be performed when he had no painting
and repainting works related to maintenance as a maintenance man are necessary and desirable to the
better operation of the business company. Respondent did not even attempt to deny and refute the
corroborating statements of Emiliano Tanque Jr., who was regularly employed by it as a maintenance
man doing same jobs not only of painting and repainting of building, equipment and tools and
machineries or machines if the company but also other odd jobs in the Engineering and Maintenance
Department that complainant Moises de Leon did perform the same odd jobs and assignments as were
assigned to him during the period de Leon was employed for more than one year continuously by Id
respondent company. We find no reason not to give credit and weight to the affidavit and statement
made therein by Emiliano Tanque Jr. This strongly confirms that complainant did the work pertaining to
the regular business in which the company had been organized. Respondent cannot be permitted to
circumvent the law on security of tenure by considering complainant as a casual worker on daily rate
basis and after working for a period that has entitled him to be regularized that he would be
automatically terminated. ... . 4
On appeal, however, the above decision of the Labor Arbiter was reversed by the First Division of the
National Labor Relations Commission by virtue of the votes of two members 5 which constituted a
majority. Commissioner Geronimo Q. Quadra dissented, voting "for the affirmation of the well-reasoned
decision of the Labor Arbiter below." 6 The motion for reconsideration was denied. Hence, this recourse.
Petitioner asserts that the respondent Commission erred and gravely abuse its discretion in reversing
the Order of the Labor Arbiter in view of the uncontroverted fact that the tasks he performed included
not only painting but also other maintenance work which are usually necessary or desirable in the usual
business of private respondent: hence, the reversal violates the Constitutional and statutory provisions
for the protection of labor.
The private respondent, as expected, maintains the opposite view and argues that petitioner was hired
only as a painter to repaint specifically the Mama Rosa building at its Tondo compound, which painting
work is not part of their main business; that at the time of his engagement, it was made clear to him
that he would be so engaged on a casual basis, so much so that he was not required to accomplish an
application form or to comply with the usual requisites for employment; and that, in fact, petitioner was
never paid his salary through the regular payroll but always through petty cash vouchers. 7
The Solicitor General, in his Comment, recommends that the petition be given due course in view of the
evidence on record supporting petitioner's contention that his work was regular in nature. In his view,
the dismissal of petitioner after he demanded to be regularized was a subterfuge to circumvent the law
on regular employment. He further recommends that the questioned decision and resolution of
respondent Commission be annulled and the Order of the Labor Arbiter directing the reinstatement of
petitioner with payment of backwages and other benefits be upheld. 8
ISSUE:
W/N the petitioner can be considered as a regular employee.
After a careful review of the records of this case, the Court finds merit in the petition as We and sustain
the position of the Solicitor General that the reversal of the decision of the Labor Arbiter by the
respondent Commission was erroneous.
The law on the matter is Article 281 of the Labor Code which defines regular and casual employment as
follows:
Art. 281. Regular and casual employment. The provisions of a written agreement to the contrary
That any employee who has rendered at least one year of service, whether such service is continuous or
This provision reinforces the Constitutional mandate to protect the interest of labor. Its language
evidently manifests the intent to safeguard the tenurial interest of the worker who may be denied the
rights and benefits due a regular employee by virtue of lopsided agreements with the economically
powerful employer who can maneuver to keep an employee on a casual status for as long as
convenient. Thus, contrary agreements notwithstanding, an employment is deemed regular when the
activities performed by the employee are usually necessary or desirable in the usual business or trade of
the employer. Not considered regular are the so-called "project employment" the completion or
termination of which is more or less determinable at the time of employment, such as those employed
in connection with a particular construction project 9 and seasonal employment which by its nature is
only desirable for a limited period of time. However, any employee who has rendered at least one year
of service, whether continuous or intermittent, is deemed regular with respect to the activity he
performed and while such activity actually exists.
The primary standard, therefore, of determining a regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or trade of
the employer. The test is whether the former is usually necessary or desirable in the usual business or
trade of the employer. The connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least one year, even if the performance is not continuous
or merely intermittent, the law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the
employment is also considered regular, but only with respect to such activity and while such activity
exists.
In the case at bar, the respondent company, which is engaged in the business of manufacture and
distillery of wines and liquors, claims that petitioner was contracted on a casual basis specifically to paint
a certain company building and that its completion rendered petitioner's employment terminated. This
may have been true at the beginning, and had it been shown that petitioner's activity was exclusively
limited to painting that certain building, respondent company's theory of casual employment would
have been worthy of consideration.
However, during petitioner's period of employment, the records reveal that the tasks assigned to him
included not only painting of company buildings, equipment and tools but also cleaning and oiling
machines, even operating a drilling machine, and other odd jobs assigned to him when he had no
painting job. A regular employee of respondent company, Emiliano Tanque Jr., attested in his affidavit
that petitioner worked with him as a maintenance man when there was no painting job.
It is noteworthy that, as wisely observed by the Labor Arbiter, the respondent company did not even
attempt to negate the above averments of petitioner and his co- employee. Indeed, the respondent
company did not only fail to dispute this vital point, it even went further and confirmed its veracity
when it expressly admitted in its comment that, "The main bulk of work and/or activities assigned to
petitioner was painting and other related activities. Occasionally, he was instructed to do other odd
things in connection with maintenance while he was waiting for materials he would need in his job or
when he had finished early one assigned to him. 10
The respondent Commission, in reversing the findings of the Labor Arbiter reasoned that petitioner's job
cannot be considered as necessary or desirable in the usual business or trade of the employer because,
"Painting the business or factory building is not a part of the respondent's manufacturing or distilling
process of wines and liquors. 11
The fallacy of the reasoning is readily apparent in view of the admitted fact that petitioner's activities
included not only painting but other maintenance work as well, a fact which even the respondent
Commission, like the private respondent, also expressly recognized when it stated in its decision that,
'Although complainant's (petitioner) work was mainly painting, he was occasionally asked to do other
odd jobs in connection with maintenance work. 12 It misleadingly assumed that all the petitioner did
during his more than one year of employment was to paint a certain building of the respondent
company, whereas it is admitted that he was given other assignments relating to maintenance work
besides painting company building and equipment.
It is self-serving, to say the least, to isolate petitioner's painting job to justify the proposition of casual
employment and conveniently disregard the other maintenance activities of petitioner which were
assigned by the respondent company when he was not painting. The law demands that the nature and
entirety of the activities performed by the employee be considered. In the case of petitioner, the
painting and maintenance work given him manifest a treatment consistent with a maintenance man and
not just a painter, for if his job was truly only to paint a building there would have been no basis for
giving him other work assignments In between painting activities.
It is not tenable to argue that the painting and maintenance work of petitioner are not necessary in
respondent's business of manufacturing liquors and wines, just as it cannot be said that only those who
are directly involved in the process of producing wines and liquors may be considered as necessary
employees. Otherwise, there would have been no need for the regular Maintenance Section of
respondent company's Engineering Department, manned by regular employees like Emiliano Tanque Jr.,
whom petitioner often worked with.
Furthermore, the petitioner performed his work of painting and maintenance activities during his
employment in respondent's business which lasted for more than one year, until early January, 1983
when he demanded to be regularized and was subsequently dismissed. Certainly, by this fact alone he is
entitled by law to be considered a regular employee. And considering further that weeks after his
dismissal, petitioner was rehired by the company through a labor agency and was returned to his post in
the Maintenance Section and made to perform the same activities that he used to do, it cannot be
denied that as activities as a regular painter and maintenance man still exist.
It is of no moment that petitioner was told when he was hired that his employment would only be
casual, that he was paid through cash vouchers, and that he did not comply with regular employment
procedure. Precisely, the law overrides such conditions which are prejudicial to the interest of the
worker whose weak bargaining position needs the support of the State. That determines whether a
certain employment is regular or casual is not the will and word of the employer, to which the desperate
worker often accedes, much less the procedure of hiring the employee or the manner of paying his
salary. It is the nature of the activities performed in relation to the particular business or trade
considering all circumstances, and in some cases the length of time of its performance and its continued
existence.
Finally, considering its task to give life and spirit to the Constitutional mandate for the protection of
labor, to enforce and uphold our labor laws which must be interpreted liberally in favor of the worker in
case of doubt, the Court cannot understand the failure of the respondent Commission to perceive the
obvious attempt on the part of the respondent company to evade its obligations to petitioner by
dismissing the latter days after he asked to be treated as a regular worker on the flimsy pretext that his
painting work was suddenly finished only to rehire him indirectly weeks after his dismissal and assign
him to perform the same tasks he used to perform. The devious dismissal is too obvious to escape
notice. The inexplicable disregard of established and decisive facts which the Commission itself admitted
to be so, in justifying a conclusion adverse to the aggrieved laborer clearly spells a grave abuse of
discretion amounting to lack of jurisdiction.
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the National Labor
Relations Commission are hereby annulled and set aside. The Order of Labor arbiter Bienvenido S.
Hernandez dated April 6, 1984 is reinstated. Private respondent is ordered to reinstate petitioner as a
regular maintenance man and to pay petitioner 1) backwages equivalent to three years from January
16,1983, in accordance with the Aluminum Wage Orders in effect for the period covered, 2) ECOLA 3)
13th Month Pay, 4) and other benefits under pertinent Collective Bargaining Agreements, if any.
SO ORDERED.
G.R. Nos. 96608-09 May 20, 1991
TUCOR INDUSTRIES, INC. and PATRICK BOLL, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, FLORENCIO BASCO, REGINO DAYRIT, FLORANIO GARCIA,
JESUS CANLAS, ABEL DAVID, REYNALDO INFANTE, EDISON TAPANG, LARRY ENRIQUEZ, REY SALALILA
and PACIFICO C. DIZON, respondents.
Abad, Leano & Associates for petitioners.

Herminio Z. Canlas for private respondents.
GANCAYCO, J.:
The issue of whether private respondents are regular or casual employees is the center of this
controversy.
Petitioner is a corporation principally engaged in the moving and storage of various goods owned by
military personnel residing within the United States military facilities in the Philippines. On various dates
herein private respondents were hired as packers, drivers and utilitymen/carpenters. They signed
uniform company-prepared master employment contracts, the terms and conditions states that of
which are as follows:
a. You they agree to be employed on "As Needed" basis and to the principle of "no work, no pay." This is
so because of the very nature of the business of Tucor Moving and Storage wherein the volume of work
handled by the Company varies from day to day and from project to project.
b. Other than salaries actually earned, they as a daily-hired worker, shall not be entitled to any of the
benefits enjoyed by the permanent employees of the Company.
x x x x x x x x x
e. Due to the nature of business, they agree to undergo periodic security screening, which can include
the polygraph examination, the result of which shall be used as basis for, among others, the issuance or
renewal of Base Pass, Company ID and/or handling of confidential documents or high-value items
whenever necessary or applicable.
f. They agree to undergo investigation, to include the polygraph at the discretion of the Company, when
they are implicated in any irregularity involving classified information, supplies, materials and
equipment of the Company or its clients.1
In a memorandum-letter dated July 17, 1989, the Chief of Traffic Management of Clark Air Base
reminded all agents, including petitioner of the base policy that "(E)mployees who already have passes
in their possession and who fail the polygraph . . ." administered by an acknowledged security company
will be required to return their passes. On the same day petitioner terminated the employment of
private respondents by sending them separate identical notices of termination, as follows:
You are well aware that your employment with Tucor Industries, Inc. is on "as needed basis" per your
Master Employment Contract. You are also well-aware that your work assignment is within Clark Air
Base and for this purpose, you should be equipped with a Base Pass duly issued by the American
authorities. We are sorry to inform you that after an intensive and extensive investigation conducted as
a result of numerous reports of missing items from shipments, your Base Pass was not cleared by the
American authorities. For this reason, the Company could not avail of your services.
In view of the foregoing, we regret to inform you that the Company could no longer retain you under its
employ as a consequence of the denial of the Base authorities to clear and grant you the Base Pass.2
All of private respondents had continuously been employed by petitioner for more than a year before
the services were terminated.
On August 2, 1989, private respondents, except Pacifico Dizon, filed a complaint for illegal dismissal
against petitioner with the Regional Arbitration Branch No. 5 of the National Labor Relations
Commission (NLRC) in San Fernando, Pampanga, Private respondent Dizon filed a complaint later. The
case was heard and the parties submitted their respective position papers On August 7, 1989, the
Executive Labor Arbiter rendered a decision, the dispositive part of which reads as follows:
WHEREFORE, judgment is hereby rendered against respondent Tucor Industries, Inc., directing Tucor it:
1. To pay the backwages of the complainants in the total amount of P205,457.56;
2. To reinstate complainants without loss of seniority rights and other privileges upon receipt of this
Decision or reinstate them in payroll, in both instance at least at par with the minimum wage.3
Petitioners appealed therefrom to public respondent NLRC. On September 14, 1990, the appeal was
dismissed for lark of merit and the challenged decision of the Executive Labor Arbiter was affirmed in
toto. A motion for reconsideration thereof filed by petitioner was denied in a resolution dated
November 20, 1990.
Hence, this petition for certiorari and prohibition with prayer for the issuance of a writ of preliminary
injunction and restraining order. The petition raises the following assigned errors:
THAT THE PUBLIC RESPONDENT A QUO GRAVELY ABUSED ITS DISCRETION, IN A MANNER AMOUNTING
TO EXCESS OF JURISDICTION, IN ERRONEOUSLY CONCLUDING THAT HEREIN PRIVATE RESPONDENTS
CAN BE CONSIDERED AS REGULAR EMPLOYEES OF PETITIONER COMPANY.
II
THAT THE PUBLIC RESPONDENT GRAVELY ABUSE ITS DISCRETION WHEN IT AFFIRMED THE HONORABLE
LABOR ARBITER'S FINDING THAT THE TERMINATION OF THE PRIVATE RESPONDENTS FROM THEIR
EMPLOYMENT BY HEREIN PETITIONER COMPANY CONSTITUTES ILLEGAL DISMISSAL.
III
THAT THE PUBLIC RESPONDENT FAILED TO CONSIDER THE PECULIARITY OF THE FACTS AND SITUATION
IN THE CASE AT HAND IN A MANNER AMOUNTING TO GRAVE ABUSE OF DISCRETION, WHEN IT
REVIEWED THAT LABOR ARBITER'S RULING.4
Acting on the petition, the Court, on January 21, 1991, without giving due course to the same, required
the respondents to comment thereon within ten (10) days from notice thereof and issued a temporary
restraining order enjoining the respondent Commission from enforcing its resolutions until further
orders. Petitioners filed a bond in the amount of P100,000.00 as required.
No, the NLRC did not err pursuant to article 280 of the labor code which defines regular and casual
employees.
The petition is devoid of merit.
Petitioners contend that private respondents cannot be considered as its regular employees inasmuch
as the employment of the latter was contractual in nature; that they were deemed hired for a specific or
a fixed undertaking on an "as needed basis," the efficacy of said contract being coterminous with or
dependent upon the company and its clients.
Article 280 of the Labor Code, as amended, provides as follows:
Art. 280. Regular and casual employment.—The provisions of a written agreement to the contrary
desirable in the usual business or trade of the employer except where the employment has been fixed
the time of the engagement of the employee or where the work or service to be performed is seasonal

that any employee who has rendered at least one year of service, whether such service is continuous or
his employment shall continue while such activity exists.(Emphasis supplied.)
Policy Instructions No. 12 of the Ministry of Labor and Employment provides that —
PD 850 has refined the concept of regular and casual employment. What determines regularity or
casualness is not the employment contract, written or otherwise, but the nature of the job. If the job is
usually necessary or desirable to the main business of the employer, then the employment is regular; if
not, then the employment is casual. . . (Emphasis supplied.)
An examination of the contract of employment does not show that private respondents were hired for a
"specific project or undertaking" nor was the completion or termination of the alleged project for which
private respondents were hired determined at the start of the employment.
The term "specific project or undertaking" under Article 280 of the Labor Code contemplates an activity
which was commonly or habitually performed or such type of work which is not done on a daily basis
but only for a specific duration of time or until the completion of the project. The services employed are
thus necessary or desirable in the employer's usual business only for the period of time it takes to
complete the project. Without the performance of such services on a regular basis, the employer's main
business is not expected to grind to a halt.
In the case at bar, private respondents were assigned to do carpentry work, packing and driving,
activities which are usually necessary and desirable in petitioners' usual business and which thus had to
be done on a regular basis.
The fact that private respondents had rendered more than one year of service at the time of their
dismissal overturns the petitioner's allegation that private respondents were hired for a specific or a
fixed undertaking for a limited period of time. The company-prepared master employment contracts
placed the private respondents at the mercy of those who crafted the said contract. The work of the
private respondents is hardly "specific" or "seasonal." Such is one instance under the Code "where the
employee has been engaged to perform activities which are usually necessary or desirable in the usual
business."5
Private respondents are therefore regular employees of petitioner the provisions of their contract of
employment notwithstanding. They are entitled to security of tenure. The contention of the petitioners
that private respondents were employed on "as needed basis" and under the principle of "no work, no
pay" and that when such needs cease, petitioners, at their option may terminate their contract, is
certainly untenable.
Verily, the relation between capital and labor is not merely contractual.1âwphi1 They are so impressed
with public interest that labor contracts must yield to the common good.6
The alleged non-renewal of the base passes of private respondents by the Clark Air Base authorities
seems to be a mere ploy to dismiss private respondents from employment. No evidence was adduced as
to the alleged investigation conducted by petitioner. There is no indication whether or not private
respondents were subjected to polygraph tests for the possible renewal of their passes.
At any rate, inasmuch as private respondents were engaged in the activities which are usual and
necessary in usual business or trade of petitioner company, they are regular employees entitled to
security of tenure, the provision of the written agreement to the contrary notwithstanding. Their
dismissal without just cause in this case and without appropriate investigation is certainly illegal.
WHEREFORE, the petition is DISMISSED for lack of merit. The temporary restraining order issued by this
Court on January 21, 1991 is hereby lifted, with costs against petitioners.
SO ORDERED
G.R. No. 101268 March 30, 1993
MEHITABEL FURNITURE COMPANY, INC. AND JOSEFINA A. BOOTH, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (4TH Division), MINERVA BALADJAY, JOSE
AMAMANGPANG, DEMETRIO LENESO, VICTOR MARIBAO AND FABIAN FAUSTO, respondents.
E.B. Ramos & Associates for petitioner.
Pedro A. Rosito for private respondents.
CRUZ, J.:
The challenged decision of the NLRC held the petitioner liable for the unjust dismissal of the private
respondents and ordered it to reinstate them with payment of three years back wages and incentive
leave pay or, in case reinstatement is no longer feasible, separation pay equivalent to one month pay for
every year of service in addition to the back wages.1
The petitioner is engaged in the manufacture of furniture for export. It claims it has regular customers
abroad but occasionally receives special orders it is unable to decline, requiring it to hire additional
workers to fill such orders. However, they are engaged for specified periods only. The private
respondents fall in this category of workers and so it was contend that they cannot invoke security of
tenure and the other privileges to which only its permanent employees are entitled. Their services could
be, and were, lawfully terminated upon the expiration of their respective temporary employment
contracts.
The private respondents disagree, maintaining that they belong to the regular work force of the
petitioner and are therefore entitled to all the rights and privileges enjoyed by their fellow employees.
They claim that they were made to sign temporary employment contracts to prevent them from
acquiring permanent status and that when they asked to be included in the regular force, they were
summarily dismissed, made to return their ID cards and told not to come back.
Their complaint was originally rejected by the Labor Arbiter, who held that they were employed only for
fixed periods to perform special projects and so never acquired permanent or regular status.2 On appeal,
however, the NLRC reversed, holding that the nature of their work and the length of their services
qualified them as permanent members of the petitioner's work force.
W/N petitioner is liable for illegal dismissal of the private respondents.
Yes, petitioner shall be made liable for illegally dismissing private respondents who are considered
regular employees under article 280 of the labor code.
We shall sustain the public respondent.
Article 280 of the Labor Code provides:

Art. 280 — Regular and Casual Employment — The provisions of written agreement to the contrary
An employment shall be deemed to be casual if it is not covered by the proceeding paragraph: Provided,
that, any employee who has rendered at least one year of service, whether such service is continuous or
Under this provision, an employment shall be deemed regular where the employee: a) has been
engaged to perform activities which are usually necessary or desirable in the usual business or trade of
the employer; or b) has rendered at least one year of service, whether such service is continuous or
broken, with respect to the activity in which he is employed.
By the petitioner's own admission, the private respondents have been hired to work on certain special
orders that as a matter of business policy it cannot decline. These projects are necessary or desirable in
its usual business or trade, otherwise they could not have been accepted by the petitioner. Significantly,
such special orders are not really seasonal but more or less regular, requiring the virtually continuous
services of the "temporary workers."
The NLRC also correctly observed that "if they were to accept respondent's theory, it would have no
regular workers because all of its orders would be special undertakings or projects." The petitioner could
then hire all its workers on a contract basis only and prevent them from attaining permanent status
regardless of the length of their service.
Furthermore, the NLRC has determined that the private respondents have worked for more than one
year in the so-called "special projects" of the petitioner and so also fall under the second condition
specified in the above-quoted provision. The public respondent did not err in giving little probative value
to the temporary employment contracts submitted by the petitioner because they did not accurately
reflect the length of time the employees actually worked for the petitioner. This is a factual finding of
the administrative agency that, in line with a long-standing policy, this Court will not disturb.
We are satisfied that the NLRC committed no grave abuse of discretion in holding that the private
respondents were really regular employees of the petitioner notwithstanding the temporary
employment contracts they signed. Hence, they are entitled to the relief they seek.
ACCORDINGLY, the petition is DISMISSED for lack of merit. The challenged decision of the NLRC is
AFFIRMED, with costs against the petitioner. It is so ordered.
G.R. No. 111651 March 15, 1996
OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN, FERNANDO L. BUSTAMANTE, MARIO D.

SUMONOD, and SABU J. LAMARAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION and EVERGREEN FARMS,
INC., respondents.
PADILLA, J.:p
This petition for certiorari seeks to reverse the 3 May 1993 resolution of the National Labor Relations
Commission (NLRC) which set aside its earlier resolution dated 8 March 1993 and deleted the award of
backwages in favor of petitioners.
The focal issue therefore in this case is whether or not petitioners are entitled to backwages after a
finding by the NLRC itself that they had become regular employees after serving for more than one (1)
year of broken or non-continuous service as probationary employees.
The facts are not in dispute. Respondent company is engaged in the business of producing high grade
bananas in its plantation in Davao del Norte. Petitioners Paulino Bantayan, Fernando Bustamante, Mario
Sumonod and Osmalik Bustamante were employed as laborers and harvesters while petitioner Sabu
Lamaran was employed as a laborer and sprayer in respondent company's plantation. All the petitioners
signed contracts of employment for a period of six (6) months from 2 January 1990 to 2 July 1990, but
they had started working sometime in September 1989. Previously, they were hired to do the same
work for periods lasting a month or more, from 1985 to 1989. Before the contracts of employment
expired on 2 July 1990, petitioners' employments were terminated on 25 June 1990 on the ground of
poor performance on account of age, as not one of them was allegedly below forty (40) years old.
Petitioners filed a complaint for illegal dismissal before the Regional Arbitration Branch, Branch XI of the
NLRC in Davao City. On 26 April 1991, the labor arbiter rendered judgment in favor of petitioners, thus
—
WHEREFORE, judgment is hereby rendered:
1. Declaring the dismissal of the complainants as illegal;
2. Ordering respondent Evergreen Farms, Inc. to immediately reinstate complainants to their former
position with six (6) months backwages computed as follows (26.17 x P79.00 per day equals P2,067.43 x
6 months equals P12,404.58 times 5 complainants equals Sixty Two Thousand Four Hundred Four &
58/100 (P62,404.58) PESOS. However, if reinstatement is no longer feasible an additional one (1) month
salary shall be awarded as a form of separation pay;
3. The claims for underpayment of wages is hereby dismissed for lack of merit.
SO ORDERED.1
On 8 March 1993, public respondent dismissed the appeal of private respondent company for lack of
merit. Private respondent filed a motion for reconsideration dated 1 April 1993. Acting on said motion,
public respondent issued a second resolution on 3 May 1993 affirming its earlier resolution on illegal
dismissal but deleting the award of backwages on the ground that the termination of petitioners'
employments "was the result of the latter's (private respondent) mistaken interpretation of the law and
that the same was therefore not necessarily attended by bad faith, nor arbitrariness, . . .".2
In their present petition, petitioners argue that the public respondent gravely abused its discretion in
rendering the second resolution which removed the award of backwages in their favor.
We rule in favor of petitioners.
It is undisputed that petitioners were illegally dismissed from employmen pursuant to article 280 of the
labor code. Article 280 of the Labor Code states:
desirable in the usual business or trade of the employer, except where the employment has been fired

This provision draws a line between regular and casual employment, a distinction however often abused
by employers. The provision enumerates two (2) kinds of employees, the regular employees and the
casual employees. The regular employees consist of the following:
1) those engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer; and
2) those who have rendered at least one year of service whether such service is continuous or broken.
The law distinguishes between the two (2) kinds of employees to protect the interests of labor. Thus, in
the case of Baguio Country Club Corporation vs. NLRC,3 the Court declared: "Its language evidently
manifests the intent to safeguard the tenurial interest of the worker who may be denied the rights and
benefits due a regular employee by virtue of lopsided agreements with the economically powerful
employer who can maneuver to keep an employee on a casual status for as long as convenient . . . ".
In the case at bar, petitioners were employed at various periods from 1985 to 1989 for the same kind of
work they were hired to perform in September 1989. Both the labor arbiter and the respondent NLRC
agree that petitioners were employees engaged to perform activities necessary in the usual business of
the employer. As laborers, harvesters or sprayers in an agricultural establishment which produces high
grade bananas, petitioners' tasks are indispensable to the year-round operations of respondent
company. This belies the theory of respondent company that the employment of petitioners was
terminated due to the expiration of their probationary period in June 1990. If at all significant, the
contract for probationary employment was utilized by respondent company as a chicanery to deny
petitioners their status as regular employees and to evade paying them the benefits attached to such
status. Some of the petitioners were hired as far back as 1985, although the hiring was not continuous.
They were hired and re-hired in a span of from two to four years to do the same type of work which
conclusively shows the necessity of petitioners' service to the respondent company's business.
Petitioners have, therefore, become regular employees after performing activities which are necessary
in the usual business of their employer. But, even assuming that the activities of petitioners in
respondent company's plantation were not necessary or desirable to its business, we affirm the public
respondent's finding that all of the complainants (petitioners) have rendered non-continuous or broken
service for more than one (1) year and are consequently considered regular employees.4
The Court do not sustain public respondent's theory that private respondent should not be made to
compensate petitioners for backwages because its termination of their employment was not made in
bad faith. The act of hiring and re-hiring the petitioners over a period of time without considering them
as regular employees evidences bad faith on the part of private respondent. The public respondent
made a finding to this effect when it stated that the subsequent rehiring of petitioners on a probationary
status "clearly appears to be a convenient subterfuge on the part of management to prevent
complainants (petitioners) from becoming regular employees."5
Reliance by public respondent on the case of Manila Electric Company vs. NLRC6 is misplaced. In that
case, the Court ordered the reinstatement of an employee, without backwages because, although there
was a valid cause for dismissal, the penalty was too severe for an employee who had rendered service
for an uninterrupted period of twenty (20) years with two commendations for honesty. In the case at
bar, there is no valid cause for dismissal. The employees (petitioners) have not performed any act to
warrant termination of their employment. Consequently, petitioners are entitled to their full backwages
and other benefits from the time their compensation was withheld from them up to the time of their
WHEREFORE, the Resolution of the National Labor Relations Commission dated 3 May 1993 is modified
in that its deletion of the award for backwages in favor of petitioners, is SET ASIDE. The decision of the
Labor Arbiter dated 26 April 1991 is AFFIRMED with the modification that backwages shall be paid to
petitioners from the time of their illegal dismissal on 25 June 1990 up to the date of their reinstatement.
If reinstatement is no longer feasible, a one-month salary shall be paid the petitioners as ordered in the
labor arbiter's decision; in addition to the adjudged backwages.
SO ORDERED.
G.R. No. 122122 July 20, 1999
PHILIPPINE FRUIT & VEGETABLE INDUSTRIES, INC. and its President and General Manager, MR. PEDRO
CASTILLO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, and Philippine Fruit and Vegetable Workers Union-Tupas
Local Chapter, respondents.
KAPUNAN, J.:
In this special civil action for certiorari, petitioners assail the Decision dated May 31, 1995 of public
respondent National Labor Relations Commission (NLRC) which upheld with modification the decision of
Labor Arbiter Quintin C. Mendoza finding that the members of respondent union were illegally
dismissed and granting them, among others, their backwages and separation pay if their reinstatement
is no longer feasible; and the Resolution dated August 22, 1995 of the same public respondent, which
denied petitioners' motion for reconsideration of the above decision.1âwphi1.nêt
Petitioner Philippine Fruit and Vegetable Industries, Inc. (PFVII, for brevity) is a government-owned and
controlled corporation engaged in the manufacture and processing of fruit and vegetable purees for
export. Petitioner Pedro Castillo is the former President and General Manager of petitioner PFVII.
On September 5, 1988 herein private respondent Philippine Fruit and Vegetable Workers Union-Tupas
Local Chapter, for and in behalf of 127 of its members, filed a complaint for unfair labor practice and/or
illegal dismissal with damages against petitioner corporation. Private respondent alleged that many of
its complaining members started working for San Carlos Fruits Corporation which later incorporated into
PFVII in January or February 1983 until their dismissal on different dates in 1985, 1986, 1987 and 1988.
They further alleged that the dismissals were due to complainants' involvement in union activities and
were without just cause.
On September 23, 1988, herein petitioners filed a motion to dismiss.
On October 13, 1988, respondent union filed its position paper wherein it added as complainants 33
more of its members, raising the number of complainants to 160.
On November 21, 1988, respondent union filed a supplemental position paper alleging that there were
actually 194 complainants. Respondent union attached thereto a list of their names and the amounts of
their claims.
On December 26, 1988, Labor Arbiter Ricardo Olairez rendered a decision holding petitioners liable for
illegal dismissal.
On appeal, the third division of the NLRC, in its Resolution dated May 31, 1990, set aside the appealed
decision and remanded the case to the Arbitration Branch for further proceedings.
In the Arbitration Branch, Labor Arbiter Melquiades Sol D. del Rosario, and subsequently, Labor Arbiter
Quintin C. Mendoza, received the evidence presented by both parties.
On July 28, 1992, Labor Arbiter Mendoza rendered a decision finding petitioners liable for, among
others, illegal dismissal. The dispositive portion of the decision reads:
WHEREFORE, decision is hereby issued ordering the respondent Philippine Fruits and Vegetable,
Industries Corporation and or its President/General Manager Pedro Castillo to pay the aforementioned
190 complainants their full backwages and 13th month pay in the aforestated amounts, aggregating six
million one hundred forty two thousand fifty-one pesos and 37/100 centavos, (P6,142,051.37), plus
separation pay of one-half month pay for every year of service including 1991, at the option of
respondent, if reinstatement is no longer feasible.
Likewise, attorney's fee representing ten percent (10%) of the total award is hereby granted, the same
to be shared proportionately between complainants former counsel ALAR, COMIA, MANALO and
ASSOCIATES LAW OFFICES, c/o Atty. Benjamin Alar, and counsel of record Atty. Alejandro Villamil, the
former having established its right and lien over the award.
SO ORDERED. 1
On appeal, respondent NLRC affirmed the decision of the Labor Arbiter "with modification that the
award of attorneys fees shall be based only on the amounts corresponding to 13th month pay." 2
Petitioners filed a motion for reconsideration which was denied by respondent NLRC in a Resolution
dated August 22, 1995. 3
Hence, this petition wherein petitioners raise the following issues:
THE QUESTIONED DECISION IS NOT SUPPORTED BY EVIDENCE, APPLICABLE LAWS AND JURISPRUDENCE.
II
PRIVATE RESPONDENTS ARE SEASONAL EMPLOYEES WHOSE EMPLOYMENTS CEASED DURING THE OFF-
SEASON DUE TO NO WORK AND NOT DUE TO ILLEGAL DISMISSAL.
III
THE LABOR ARBITER AND THE NLRC COMMITTED MANIFEST ERROR IN ORDERING PETITIONER TO PAY
194 INDIVIDUALS BACKWAGES, 13TH MONTH PAY AND SEPARATION PAY BENEFITS. 4
Petitioners contend that the NLRC's findings of fact are incorrect and unsubstantiated. They allege that
the aforementioned San Carlos Fruits Corporation is separate and distinct from herein petitioner PFVII;
hence, it was arbitrary on the part of public respondent to hold petitioners liable to the employees of
San Carlos Fruits Corporation.
Petitioners further argue that PFVII operates on a seasonal basis and the complainants who are
members of respondent union are seasonal workers because they work only during the period that the
company is in operation. According to petitioners, its operation starts only in February with the
processing of tomatoes into tomato paste and ceases by the end of the same month when the supply is
consumed. It then resumes operations at the end of April or early May, depending on the availability of
supply with the processing of mangoes into purees and ceases operation in June. 5 The severance of
complainants' employment from petitioner corporation was a necessary consequence of the nature of
seasonal employment; and since complainants are seasonal workers as defined by the Labor Code, they
cannot invoke any tenurial benefit. 6
Petitioners further claim that many of the complainants failed or refused to undergo the medical
examination required by petitioners as a prerequisite to employment. They have legal, right, petitioners
argue, to prescribe their own rules and regulations; and, their right to require their employees to under
a medical examination is clearly legal.
Finally, petitioners allege that the Labor Arbiter and respondent NLRC erred in ordering them to pay
backwages, 13th month pay and separation pay benefits to the 194 respondents (union members) when
only 78 of them were able to testify and substantiate their claims. This is contrary to the agreement of
both parties that those who will not be able to testify and substantiate their respective claims for actual
damages will be considered to have abandoned their complaints. 7 In fact, according to petitioners, it
was by virtue of this agreement that petitioners limited the rebuttal evidence (only to refute whatever
may have been adduced by the said 78 union members). 8
The above arguments boil down to the issue of whether or not complaining members of respondent
union are regular employees of PFVII or are seasonal workers whose employment ceased during the off-
season due to the non-availability of work.
Yes, they are regular employees
Well-settled is the rule that findings of fact of the National Labor Relations Commission, affirming those
of the Labor Arbiter are entitled to great weight and will not be disturbed if they are supported by
substantial evidence. 9
The questioned decision of the Labor Arbiter reads in part:
. . . (T)he employment of most started in January (sic) or February 1983 with the processing of the
fruits, i.e. mangoes and calamansi from January to July, tomatoes from January to April, then mangoes
up to August and guyabano and others like papayas and pineapples until November or end of the year,
and that respondent corporation operates for the whole year. (TNS [sic], of April 11, 1991 hearing, pp.
10-11). . . . Their employments on the other hand are spelled-out in complainants' Annexes "A" to "A-
194" and in their individual affidavits and detailed at times for those who were called to testify in their
direct testimony; and these positive testimonies are bolstered by their common but separate individual
evidence, like the pay slips, apprentice agreements before their appointments, identification cards,
saving accounts and pass books . . . .
Thus, we cannot give credence to the "Factory Workers Attendance Report" of respondent (Annex "2"
marked as Exhibit "B") where it is represented in summary form or indicated that some of the
complainants worked for one or several weeks or months only during some years they claimed to be
employed, or did not at all worked (sic) for respondents. This exhibit is visibly (sic) self-serving and not
the best evidence to prove the insistence of respondents. Rather, the best evidence should be some
kind directly prepared or signed documents in the course of their normal relation indicating with clarity
the days, hours and months actually worked and signed by the workers to rebut the positive assertion in
their affidavits, testimonies and the messages of the Annexes. . . . 10
On the other hand, the NLRC's findings of fact are as follows:

As culled from the records, it appears that herein 194 individual complainants are members of
complainant union in respondent company which is engaged in the manufacture and processing of fruit .
. . and vegetable purees for export. They were employed as seeders, operators, sorters, slicers, janitors,
drivers, truck helpers, mechanics and office personnel.
xxx xxx xxx
By the very nature of things in a business enterprise like respondent company's, to our mind, the
services of herein complainants are, indeed, more than six (6) months a year. We take note of the
undisputed fact that the company did not confine itself just to the processing of tomatoes and mangoes.
It also processed guyabano, calamansi, papaya, pineapple, etc. Besides, there is the office administrative
functions, cleaning and upkeeping of machines and other duties and tasks to keep up (sic) a big food
processing corporation.
Considering, therefore, that under of (sic) Article 280 of the Labor Code "the provisions of written
agreement to the contrary notwithstanding and considering further that the tasks which complainants
performed were usually necessary and desirable in the employer's usual business or trade, we hold that
complainants are regular seasonal employees, thus, entitled to security of tenure. 11
The findings of both the Labor Arbiter and the NLRC are supported by substantial evidence and pursuant
to article 280 of the labor code. There is, therefore, no circumstance that would warrant a reversal of
their decisions.
Art. 280 of the Labor Code provides:
Regular and Casual Employment. — The provisions of written agreement to the contrary
desirable in the usual business or trade of the employers, except where the employment has been fixed
for a specific project. . . .
An employment shall be deemed to be casual if it is not covered by the preceeding paragraph; provided,
that, any employee who has rendered at least one year of service whether such service is continuous or
Under the above provision, an employment shall be deemed regular where the employee: a) has been
the employer; or b) has rendered at least one year of service, whether such service is continuous or
broken, with respect to the activity in which he is employed. 12
In the case at bar, the work of complainants as seeders, operators, sorters, slicers, janitors, drivers, truck
helpers, mechanics and office personnel is without doubt necessary in the usual business of a food
processing company like petitioner PFVII.
It should be noted that complainants' employment has not been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of their
appointment or hiring. 13 Neither is their employment seasonal in nature. While it may be true that some
phases of petitioner company's processing operations is dependent on the supply of fruits for a
particular season, the other equally important aspects of its business, such as manufacturing and
marketing are not seasonal. The fact is that large-scale food processing companies such as petitioner
company continue to operate and do business throughout the year even if the availability of fruits and
vegetables is seasonal.
Having determined that private respondents are regular employees under the first paragraph, we need
not dwell on the question of whether or not they had rendered one year of service. This Court has
clearly stated in Mercado, Sr. vs. NLRC, 14 that:
The second paragraph of Article 280 demarcates as "casual" employees, all other employees who do not
fall under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as
regular employees those "casual" employees who have rendered at least one year of service regardless
of the fact that such service may be continuous or broken.1âwphi1.nêt
. . . Hence, the proviso is applicable only to the employees who are deemed "casuals" but not to the
"project" employees nor the regular employees treated in paragraph one of Art. 280.
As correctly noted by the Office of the Solicitor General; private respondents in this case are deemed
regular employees by virtue of the fact that they performed functions which are necessary and desirable
in the usual business of PFVII as provided under the first paragraph of Art. 280 of the Labor Code.
Finally, on the issue of whether or not the NLRC committed manifest error in ordering petitioners to pay
backwages, 13th month pay and separation pay benefits to 194 members of respondent union, we have
to rule in the affirmative.
A careful examination of the records shows that only 80 of the 194 union members presented evidence
to support and prove their claims in the form of affidavits and/or testimonies, pay slips, passbooks,
identification cards and other relevant documents. The other 114 members did not present any kind of
evidence whatsoever.
It is a basic rule in evidence that each party must prove his affirmative allegation — the plaintiff or
complainant has to prove his affirmative allegations in the complaints and the defendant or respondent
has to prove the affirmative allegations in his affirmative defenses and counterclaims. 15
Hence, as correctly noted by the Solicitor General, the Labor Arbiter erred in appreciating the evidence
presented by the complaining union members in favor of the other 114 because the evidence is
personal to each of them. Whatever testimony or other proof of employment submitted by any of them
proves only the status of his own employment and not that of any other complainant. Thus, only those
members of respondent union who were able to prove their claims are entitled to awards of backwages,
13th month pay and separation pay. They are as follows:
1. Antonio Cayabyab
2. Ricardo Malicdem
3. Raymundo De Guzman
4. Virgilio M. Sison
5. Marilou R. Sabangan
6. Antonio Calixto
7. Marietta A. Sabangan
8. Divina S. Mandapat
9. Silverio G. Tamondong
10. Pepito P. Bulatao
11. Orlando Salangad
12. Servillano Reyes
13. Corazon Leocadio
14. Myrna R. Vistro
15. Nicanor R. Turingan
16. Gerondio M. Magat
17. Jose Sabangan, Jr.
18. Francisca Bautista
19. Loreta Pidlaoan
20. Francisco Cuison
21. Ramil de Guzman
22. Roberto Lomibao
23. Rolando Aquino
24. Adoracion de Guzman
25. Violeta Antonio
26. Elena N. Diaz
27. Priscilla Vinoya
28. Julita Macaraeg
29. Fe Vilma S. Mandapat
30. Fidel B. Tamondong
31. Julita V. Gamboa
32. Leonora Castro
33. Roberto C. Angeles
34. Corazon Munoz

35. Brigida de Guzman
36. Isabelita S. Mandapat
37. Emma Macam
38. Reynaldo C. de Guzman
39. Jimmy D. Montilla
40. Romeo Macam
41. Eligida D. Montilla
42. Rodolfo Rosario
43. Alex Bautista
44. Remegio Alcantara
45. Domingo Bautista
46. Romulo G. Gural
47. Romulo Bautista
48. Lolita A. Malicdem
49. Jose D. Diaz
50. Eleno Bulatao
51. Juliana M. Saplan
52. Felicidad A. Rosario
53. Eugenio A. Macaraeg
54. Helen A. Diaz
55. Betty Grace V. Lolarga
56. Rebecca C. Fernandez
57. Narcisa M. Malicdem
58. Manuel Velasco
59. Jose S. Untalan
60. Rodolfo Soriano
61. Dionisio Gutie
62. Natividad P. Velasquez
63. Lourdes Arenas

64. Lydia Clemente
65. Alfonso Manzon
66. Francisco Bautista
67. Adelaida Ramirez
68. Bienvenido Resuello
69. Melanda Albarida
70. Marino Cayabyab
71. Cecilia Bautista
72. Herminia Arizabal
73. Gaudencio Castro
74. Elizabeth Valdez
75. Douglas Dalisay
76. Teresita Velasco
77. Jaime T. Aquino
78. Virginia Cayabyab
79. Romeo Macam
80. Romeo D. de Vera 16
ACCORDINGLY, the questioned decision of the NLRC is hereby AFFIRMED insofar as the 80 union
members who were able to prove their respective claims are concerned, but REVERSED with respect to
the other 114 union members, who did not adduce evidence in support of their claims.
SO ORDERED.1âwphi1.nêt
G.R. No. 121948 October 8, 2001
PERPETUAL HELP CREDIT COOPERATIVE, INC., petitioner,

vs.
BENEDICTO FABURADA, SISINITA VILLAR, IMELDA TAMAYO, HAROLD CATIPAY, and the NATIONAL
LABOR RELATIONS COMMISSION, Fourth Division, Cebu City, respondents.
SANDOVAL-GUTIERREZ, J.:
On January 3, 1990, Benedicto Faburada, Sisinita Vilar, Imelda Tamayo and Harold Catipay, private
respondents, filed a complaint against the Perpetual Help Credit Cooperative, Inc. (PHCCI), petitioner,
with the Arbitration Branch, Department of Labor and Employment (DOLE), Dumaguete City, for illegal
dismissal, premium pay on holidays and rest days, separation pay, wage differential, moral damages,
and attorney's fees.
Forthwith, petitioner PHCCI filed a motion to dismiss the complaint on the ground that there is no
employer-employee relationship between them as private respondents are all members and co-owners
of the cooperative. Furthermore, private respondents have not exhausted the remedies provided in the
cooperative by-laws.
On September 3, 1990, petitioner filed a supplemental motion to dismiss alleging that Article 121 of R.A.
No. 6939, otherwise known as the Cooperative Development Authority Law which took effect on March
26, 1990, requires conciliation or mediation within the cooperative before a resort to judicial
proceeding.
On the same date, the Labor Arbiter denied petitioner's motion to dismiss, holding that the case is
impressed with employer-employee relationship and that the law on cooperatives is subservient to the
Labor Code.
On November 23, 1993, the Labor Arbiter rendered a decision, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring complainants illegally

dismissed, thus respondent is directed to pay Complainants backwages computed from the time they
were illegally dismissed up to the actual reinstatement but subject to the three year backwages rule,
separation pay for one month for every year of service since reinstatement is evidently not feasible
anymore, to pay complainants 13th month pay, wage differentials and Ten Percent (10%) attorney's fees
from the aggregate monetary award. However, complainant Benedicto Faburada shall only be awarded
what are due him in proportion to the nine and a half months that he had served the respondent, he
being a part-time employee. All other claims are hereby dismissed for lack of merit.
The computation of the foregoing awards is hereto attached and forms an integral part of this decision."
On appeal,1 the NLRC affirmed the Labor Arbiter's decision.
Hence, this petition by the PHCCI.

The issue for our resolution is whether or not respondent judge committed grave abuse of discretion in
ruling that there is an employer-employee relationship between the parties and that private
respondents were illegally dismissed.
No, respondent judge did not commit grave abuse of discretion in ruling that there is an employer-
employee relationship between the parties and that private respondents were illegally dismissed.
Petitioner PHCCI contends that private respondents are its members and are working for it as
volunteers. Not being regular employees, they cannot sue petitioner.
In determining the existence of an employer-employee relationship, the following elements are

considered: (1 ) the selection and engagement of the worker or the power to hire; (2) the power to
dismiss; (3) the payment of wages by whatever means; and (4) the power to control the worker's
conduct, with the latter assuming primacy in the overall consideration. No particular form of proof is
required to prove the existence of an employer-employee relationship. Any competent and relevant
evidence may show the relationship.2
The above elements are present in the case at bar here. Petitioner PHCCI, through Mr. Edilberto
Lantaca, Jr., its Manager, hired private respondents to work for it. They worked regularly on regular
working hours, were assigned specific duties, were paid regular wages and made to accomplish daily
time records just like any other regular employee. They worked under the supervision of the
cooperative manager. But unfortunately, they were dismissed.
That an employer-employee exists between the parties is shown by the averments of private
respondents in their respective affidavits, carefully considered by respondent NLRC in affirming the
Labor Arbiter's decision, thus:
Benedicto Faburada —Regular part-time Computer programmer/ operator. Worked with the

Cooperative since June 1, 1988 up to December 29, 1989. Work schedule: Tuesdays and Thursdays, from
1:00 p.m. to 5:30 p.m. and every Saturday from 8:00 to 11:30 a.m. and 1:00 to 4:00 p.m. and for at least
three (3) hours during Sundays. Monthly salary: P1,000.00 — from June to December 1988; P1,350.00 -
from January to June 1989; and P1,500.00 from July to December 1989. Duties: Among others, — Enter
data into the computer; compute interests on savings deposits, effect mortuary deductions and
dividends on fixed deposits; maintain the masterlist of the cooperative members; perform various forms
for mimeographing; and perform such other duties as may be assigned from time to time.
Sisinita Vilar — Clerk. Worked with the Cooperative since December 1, 1987 up to December 29,
1989. Work schedule: Regular working hours. Monthly salary: P500.00 — from December 1, 1987 to
December 31, 1988; P1,000.00 — from January 1, 1989 to June 30, 1989; and P1,150.00 — from July 1,
1989 to December 31, 1989. Duties: Among others, Prepare summary of salary advances, journal
vouchers, daily summary of disbursements to respective classifications; schedule loans; prepare checks
and cash vouchers for regular and emergency loans; reconcile bank statements to the daily summary of
disbursements; post the monthly balance of fixed and savings deposits in preparation for the
computation of interests, dividends, mortuary and patronage funds; disburse checks during regular and
emergency loans; and perform such other bookkeeping and accounting duties as may be assigned to her
from time to time.
Imelda C. Tamayo — Clerk. Worked with the Cooperative since October 19, 1987 up to December 29,
1989. Work schedule: Monday to Friday - 8:00 to 11:30 a.m and 2:00 to 5:30 p.m.; every Saturday —
8:00 to 11:30 a.m and 1:00 to 4:00 p.m; and for one Sunday each month - for at least three (3)
hours. Monthly salary: P60.00 — from October to November 1987; P250.00 for December 1987;
P500.00 — from January to December 1988; P950 — from January to June 1989; and P1,000.00 from
July to December 1989. Duties: Among others, pick up balances for the computation of interests on
savings deposit, mortuary, dividends and patronage funds; prepare cash vouchers; check petty cash
vouchers; take charge of the preparation of new passbooks and ledgers for new applicants; fill up
members logbook of regular depositors, junior depositors and special accounts; take charge of loan
releases every Monday morning; assist in the posting and preparation of deposit slips; receive deposits
from members; and perform such other bookkeeping and accounting duties as may be assigned her
from time to time.
Harold D. Catipay — Clerk. Worked with the Cooperative since March 3 to December 29, 1989. Work
schedule: — Monday to Friday — 8:00 to 11:30 a.m. and 2:00 to 5:30 p.m.; Saturday — 8:00 to 11:30
a.m. and 1:00 to 4:00 p.m.; and one Sunday each month — for at least three (3) hours. Monthly salary:
P900.00 — from March to June 1989; P1,050.00 - from July to December 1989. Duties: Among others,
Bookkeeping, accounting and collecting duties, such as, post daily collections from the two (2) collectors
in the market; reconcile passbooks and ledgers of members in the market; and assist the other clerks in
their duties.
All of them were given a memorandum of termination on January 2, 1990, effective December 29, 1989.
We are not prepared to disregard the findings of both the Labor Arbiter and respondent NLRC, the same
being supported by substantial evidence, that quantum of evidence required in quasi judicial
proceedings, like this one.
Necessarily, this leads us to the issue of whether or not private respondents are regular employees.
Article 280 of the Labor Code provides for three kinds of employees: (1) regular employees or those who
have been engaged to perform activities which are usually necessary or desirable in the usual business
or trade of the employer; (2) project employees or those whose employment has been fixed for a
specific project or undertaking, the completion or termination of which has been determined at the time
of 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; and (3) casual employees or those who are
neither regular nor project employees.3 The employees who are deemed regular are: (a) those who have
been engaged to perform activities which are usually necessary or desirable in the usual trade or
business of the employer; and (b) those casual employees who have rendered at least one (1 ) year of
service, whether such service is continuous or broken, with respect to the activity in which they are
employed.4 Undeniably, private respondents were rendering services necessary to the day-to-day
operations of petitioner PHCCI. This fact alone qualified them as regular employees.
All of them, except Harold D. Catipay, worked with petitioner for more than one (1) year: Benedicto
Faburada, for one and a half (1 1/2) years; Sisinita Vilar, for two (2) years; and Imelda C. Tamayo, for two
(2) years and two (2) months. That Benedicto Faburada worked only on a part-time basis, does not mean
that he is not a regular employee. One's regularity of employment is not determined by the number of
hours one works but by the nature and by the length of time one has been in that particular
job.5 Petitioner's contention that private respondents are mere volunteer workers, not regular
employees, must necessarily fail. Its invocation of San Jose City Electric Cooperative vs. Ministry of Labor
and Employment (173 SCRA 697, 703 (1989) is misplaced. The issue in this case is whether or not the
employees-members of a cooperative can organize themselves for purposes of collective bargaining, not
whether or not the members can be employees. Petitioner missed the point
As regular employees or workers, private respondents are entitled to security of tenure. Thus, their
services may be terminated only for a valid cause, with observance of due process.
The valid causes are categorized into two groups: the just causes under Articles 282 of the Labor Code
and the authorized causes under Articles 283 and 284 of the same Code. The just causes are: (1) serious
misconduct or willful disobedience of lawful orders in connection with the employee's work; (2) gross or
habitual neglect of duties; (3) fraud or willful breach of trust; (4) commission of a crime or an offense
against the person of the employer or his immediate family member or representative; and, analogous
cases. The authorized causes are: (1) the installation of labor-saving devices; (2) redundancy; (3)
retrenchment to prevent losses; and (4) closing or cessation of operations of the establishment or
undertaking, unless the closing is for the purpose of circumventing the provisions of law. Article 284
provides that an employer would be authorized to terminate the services of an employee found to be
suffering from any disease if the employee's continued employment is prohibited by law or is prejudicial
to his health or to the health of his fellow employees6
Private respondents were dismissed not for any of the valid grounds the above causes. They were
dismissed because petitioner considered them to be mere voluntary workers, being its members, and as
such work at its pleasure. Petitioner thus vehemently insists that their dismissal is not against the law.
Procedural due process requires that the employer serve the employees to be dismissed two (2) written
notices before the termination of their employment is effected: (a) the first, to apprise them of the
particular acts or omissions for which their dismissal is sought and (b) the second, to inform them of the
decision of the employer that they are being dismissed.7 In this case, only one notice was served upon
private respondents by petitioner. It was in the form of a Memorandum signed by the Manager of the
Cooperative dated January 2, 1990 terminating their services effective December 29, 1989. Clearly,
petitioner failed to comply with the twin requisites of a valid notice.
We hold that private respondents have been illegally dismissed.
Petitioner contends that the labor arbiter has no jurisdiction to take cognizance of the complaint of
private respondents considering that they failed to submit their dispute to the grievance machinery as
required by P.D. 175 (strengthening the Cooperative Movement) 8 and its implementing rules and
regulations under LOI 23. Likewise, the Cooperative Development Authority did not issue a Certificate of
Non-Resolution pursuant to Section 8 of R.A. 6939 or the Cooperative Development Authority Law.
As aptly stated by the Solicitor General in his comment, P.D. 175 does not provide for a grievance
machinery where a dispute or claim may first be submitted. LOI 23 refers to instructions to the Secretary
of Public Works and Communications to implement immediately the recommendation of the Postmaster
General for the dismissal of some employees of the Bureau of Post. Obviously, this LOI has no relevance
to the instant case.
Article 121 of Republic Act No. 6938 (Cooperative Code of the Philippines) provides the procedure how
cooperative disputes are to be resolved, thus:
ART. 121. Settlement of Disputes. — Disputes among members, officers, directors, and committee
members, and intra-cooperative disputes shall, as far as practicable, be settled amicably in accordance
with the conciliation or mediation mechanisms embodied in the by-laws of the cooperative, and in
applicable laws.
Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of competent
jurisdiction."
Complementing this Article is Section8 of R.A. No. 6939 (Cooperative Development Authority Law) which
reads:
SEC. 8 Mediation and Conciliation. — Upon request of either or both parties, the Authority shall mediate
and conciliate disputes within a cooperative or between cooperatives: Provided, That if no mediation or
conciliation succeeds within three (3) months from request thereof, a certificate of non-resolution shall
be issued by the Commission prior to the filing of appropriate action before the proper courts.
The above provisions apply to members, officers and directors of the cooperative involved in disputes
within a cooperative or between cooperatives.
There is no evidence that private respondents are members of petitioner PHCCI and even if they are, the
dispute is about payment of wages, overtime pay, rest day and termination of employment. Under Art.
217 of the Labor Code, these disputes are within the original and exclusive jurisdiction of the Labor
Arbiter.
As illegally dismissed employees, private respondents are therefore entitled to reinstatement without
loss of seniority rights and other privileges and to full backwages, inclusive of allowances, plus other
benefits or their monetary equivalent computed from the time their compensation was withheld from
them up to the time of their actual reinstatement.9 Since they were dismissed after March 21, 1989, the
effectivity date of R.A. 671510 they are granted full backwages, meaning, without deducting from their
backwages the earnings derived by them elsewhere during the period of their illegal dismissal.11 If
reinstatement is no longer feasible, as when the relationship between petitioner and private
respondents has become strained, payment of their separation pay in lieu of reinstatement is in order.12
WHEREFORE, the petition is hereby DENIED. The decision of respondent NLRC is AFFIRMED, with
modification in the sense that the backwages due private respondents shall be paid in full, computed
from the time they were illegally dismissed up to the time of the finality of this Decision.13
SO ORDERED.
G.R. No. 128682 March 18, 1999
JOAQUIN T. SERVIDAD, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, INNODATA PHILIPPINES, INC./ INNODATA
CORPORATION, TODD SOLOMON, respondents.
PURISIMA, J.:
Commodum ex injuria sua nemo habere debet. No one should obtain an advantage from his wrong.
Schemes which preclude acquisition of tenurial security should be condemned as contrary to public
policy. No member of the work force of this country should be allowed to be taken advantages of by the
employer. 1
In this special civil action the Certiorari petitioner seeks to annul the decision 2 of the National Labor
Relations Commission (NLRC) reversing the Labor Arbiter's disposition 3 that he was illegally dismissed.
The facts of the case are as follows:
Petitioner Joaquin T. Servidad was employed on May 9, 1994 by respondent INNODATA as a "Data
Control Clerk", under a contract of employment Section 2 of which, reads:
Sec. 2. This Contract shall be effective for a period of 1 years commencing on May 10, 1994, until May
10, 1995 unless sooner terminated pursuant to the provisions hereof.
From May 10, 1994 to November 10, 1994, or for a period of six (6) months, the EMPLOYEE shall be
contractual during which the EMPLOYER can terminate the EMPLOYEE's services by serving written
notice to that effect. Such termination shall be immediate, or at whatever date within the six-month
period, as the EMPLOYER may determine. Should the EMPLOYEE continue his employment
beyond November 10, 1994, he shall become a regular employee upon demonstration of sufficient skill
in the terms of his ability to meet the standards set by the EMPLOYER. If the EMPLOYEE fails to
demonstrate the ability to master his task during the first six months he can be placed on probation for
another six (6) months after which he will be evaluated for promotion as a regular employee. 4
On November 9, 1995, or after working for six (6) months, he was made to sign a three-month
probationary employment and later, an extended three-month probationary employment good until
May 9, 1995. 5
On July 7, 1994, the petitioner was given an overall rating of 100% and 98% in the work evaluations
conducted by the company. In another evaluation, petitioner received a rating of 98.5% given by the
private respondent. 6
On May 9, 1995, petitioner was dismissed from the service on the ground of alleged termination of
contract of employment.
Such happening prompted petitioner to institute a case for illegal dismissal against the private
respondent. In ruling for petitioner, the Labor Arbiter disposed as follows:
WHEREFORE, premises considered judgment is hereby rendered found Respondent guilty of illegal
dismissal and concomitantly, Respondent is ordered to pay complainant full backwages from the time of
his dismissal till actual or payroll reinstatement, in the amount of P53,826.50 (computed till
promulgation only).
Respondent is hereby further ordered to reinstate complainant to his former position or equivalent
position without loss of seniority rights, privileges and benefits as a regular employee immediately upon
receipt of this decision.
SO ORDERED. 7
On appeal thereto by INNODATA, the NLRC reversed the aforesaid judgment of the Labor Arbiter. It
declared that the contract between petitioner and private respondent was for a fixed term and
therefore, the dismissal of petitioner Joaquin T. Servidad, at the end of his one year term agreed upon,
was valid. The decretal portion of the decision of NLRC is to the following effect:
All said the judgment dated August 20, 1996 is hereby, REVERSED.
WHEREFORE, premises considered, the instant case is hereby DISMISSED for lack of merit.
SO ORDERED. 8
Undaunted, petitioner found his way to this Court via the present petition faulting NLRC for acting with
grave abuse of discretion in adjudging subject contract of employment of petitioner to be for a definite
or fixed period.
W/N the NLRC acted with grave abuse of discretion in adjudging subject contract of employment of
petitioner to be for a definite or fixed period.
Yes, the NLRC acted with grave abuse of discetion.
The petition is impressed with merit.
At bar is just another scheme to defeat the constitutionally guaranteed right of employees to security of
tenure. The issue posited centers on the validity and enforceability of the contract of employment
entered into by the parties.
The NLRC found that the contract in question is for a fixed term. It is worthy to note, however, that the
said contract provides for two periods. The first period was for six months terminable at the option of
private respondent, while the second period was also for six months but probationary in character. In
both cases, the private respondent did not specify the criteria for the termination or retention of the
services of petitioner. Such a wide leeway for the determination of the tenure of an employee during a
one year period of employment is violation of the right of the employee against unwarranted dismissal.
Decisively in point is Article 1377 of the Civil Code, which provides:
Art. 1377. The interpretation of obscure words or stipulations in a contract shall not favor the party who
caused the obscurity.
Certainly, favorable interpretation of the contract in the case under scrutiny should be for petitioner and
not for the private respondent which caused the preparation of said contract.
If the contract was really for a fixed term, the private respondent should not have been given the
discretion to dismiss the petitioner during the one year period of employment for reasons other than
the just and authorized causes under the Labor Code. Settled is the rule that an employer can terminate
the services of an employee only for valid and just causes which must be shown by clear and convincing
evidence. 9
According to the private respondent, the one-year period stipulated in subject contract was to enable
petitioner to acquire the skill necessary for the job. In effect, what respondent employer theorized upon
is that the one-year term of employment is probationary. If the nature of the job did actually necessitate
at least one year for the employee to acquire the requisite training and experience, still, the same could
not be a valid probationary employment as it falls short of the requirement of Article 281 10 of the Labor
Code. It was not brought to light that the petitioner was duly informed at the start of his employment,
of the reasonable standards under which he could qualify as a regular employee. The rudiments of due
process demand that an employee should be apprised before hand of the conditions of his employment
and the basis for his advancement. 11
The language of the contract in dispute is truly a double-bladed scheme to block the acquisition of the
employee of tenurial security. Thereunder, private respondent has two options. It can terminate the
employee by reason of expiration of contract, or it may use "failure to meet work standards" as the
ground for the employee's dismissal. In either case, the tenor of the contract jeopardizes the right of the
worker to security of tenure guaranteed by the Constitution. 12
In the case of Brent School, Inc. vs. Zamora, et al. 13, the Court upheld the principle that where from the
circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security
by the employee, they should be disregarded for being contrary to public policy.
Such circumstance has been indubitably shown here to justify the application of the following
conclusion:
Accordingly, and since the entire purpose behind the development of the 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. . . . 14
The agreement in the case under consideration has such an objective and consequently, is a complete
nullity. 15
It is abundantly clear that the petitioner was hired as a regular employee, at the outset. He worked as a
"Data Control Clerk". His job was directly related to the data processing and data encoding business of
Innodata. His work was therefore necessary and important to the business of his employer. Such being
the scenario involved, under Article 280 16 of the Labor Code petitioner is considered a regular employee
of private respondent. At any rate, even assuming that his original employment was probationary,
petitioner was anyway permitted to work beyond the first six-month period and under Article 281 17 an
employee allowed to work beyond the probationary period is deemed a regular employee.
Reliance by NLRC on the ruling in Mariwasa Manufacturing, Inc., et al. vs. Hen. Leogardo Jr., et al, 18 is
misplaced. Pertinent portion of the disquisition therein was as follows:
By voluntary agreeing to an extension of the probationary period, Dequila in effect waived any benefit
attaching to the completion of said period if he still failed to make the grade during the period of
extension. The Court finds nothing in the law which by any fair interpretation prohibits such waiver. And
no public policy protecting the employee and the security of tenure is served by proscribing voluntary
agreements which, by reasonably extending the period of probation, actually improve and further a
probationary employee's prospects of demonstrating his fitness for regular employment. 19
The above-described situation, however, is not the same as what obtained in this case. In the Mariwasa
case, the employment was expressly agreed upon as probationary. Here, no such specific designation is
stipulated in the contract. The private respondent sought to alternatively avail of probationary
employment and employment for a fixed term so as to preclude the regularization of the status of
petitioner. The utter disregard of public policy by the contract in question negates the ruling of NLRC
that said contract is the law between the parties. The private agreement of the parties cannot prevail
over Article 1700 of the Civil Code, which provides:
Art. 1700. The relation between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good. Therefore, such contracts are
subject to special laws on labor unions, collective bargaining, strikes and lockouts, closed shops, wages,
working conditions, hours of labor and similar subjects.
Similarly telling is the case of Pakistan Airlines Corporation vs. Pole, et al. 20 There, it was said:
. . . provisions of applicable law, especially provisions relating to matters affected with public policy, are
deemed written into the contract. Put a little differently, the governing principle is that the parties may
not contract away applicable provisions of law especially peremptory provisions dealing with matters
heavily impressed with public interest. The law relating to labor and employment is clearly such an area
and parties are not at liberty to insulate themselves and their relationships from the impact of labor
laws and regulations by simply contracting with each other. . . . 21
On the averment that NLRC gravely abused its discretion in finding that petitioner failed to meet the
standards of the company, we find for petitioner. The decision at NLRC on the matter simply stated that
the petitioner fell short of the expectations of the company without specifying factual basis
therefor. 22 The public respondent overlooked the undisputed satisfactory ratings of the performance of
petitioner in the two job evaluations conducted by the respondent company. Even granting, therefore,
that the contract litigated upon is valid; still, the petitioner, who was permitted to work beyond six
months could not be dismissed on the ground of failure to meet the standards of Innodata. By the
provisions of the very contract itself, petitioner has become a regular employee of private respondent.
Therein, it is stipulated that: ". . . Should the EMPLOYEE continue employment beyond November 10,
1994, he shall become a regular employee upon demonstration of sufficient skill in the terms of his
ability to meet the standards set by the EMPLOYER. . . ." 23
Then too, the case at bar is on all fours with the recent case of Villanueva vs. NLRC, et al. 24 where the
same standard form of employment contract prepared by INNODATA was at issue. In deciding that the
said contract violated the employee's right to security of tenure, the court ratiocinated:
The termination of petitioner's employment contract on 21 February 1995, as well as the subsequent
issuance on 13 March 1995 of a "new" contract for five months as "data encoder," was a devious, but
crude, attempt to circumvent petitioner's right to security of tenure as a regular employee guaranteed
by Article 279 of the Labor Code. 25 Hence, the so called "end of contract" on 21 February 1995
amounted to a dismissal without any valid cause.
Indeed, the NLRC gravely abused its discretion in construing the contract sued upon as one with a fixed
term. To uphold such a finding would be to concede to the private respondent an advantage arising
from its own mistake.
On the matter of moral damages, however, we rule for the private respondent. Mere allegations of
besmirched reputation, embarrassment and sleepless nights are insufficient to warrant an award for
moral damages. It must be shown that the proximate cause thereof was the unlawful act or omission of
the private respondent. 26 However, the petitioner herein predicated his claim for such damages on
mere allegations of sleepless nights, embarrassment, etc., without detailing out what was responsible
therefor or the cause thereof.
As regards the backwages to be granted to petitioner, the amount thereof should be computed from the
time he was illegally dismissed to the time of his actual or payroll reinstatement, without any
deduction. 27
WHEREFORE, the petition is GRANTED, the questioned decision of NLRC is SET ASIDE, and the decision of
the Labor Arbiter, dated August 20, 1996, in NLRC-NCR-00-055-03471-95 REINSTATED, with the
modification that the award of backwages be computed from the time of the dismissal of petitioner to
his actual or payroll reinstatement. Costs against the private respondent.
SO ORDERED.
G.R. No. 81077 June 6, 1990
LUIS DE OCAMPO, JR., JOSE RODRIGO, EUGENIO ESQUEJO, VICTORINO TABERNERO, RIZALO DALIVA,
FRANCISCO ACOSTA and 87 others listed in Annex 'A' hereof, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MAKATI DEVELOPMENT
CORPORATION, respondents.
Alfra Beta A. Serquina for petitioners.
Maximo P. Amurao, Jr. for private respondent.
CRUZ, J.:
The petition seeks a reversal of the decision of the respondent NLRC dated June 8, 1984, the dispositive
portion of which reads as follows:
WHEREFORE, the Decision appealed from is hereby MODIFIED as hereinabove indicated. Consequently,
the application for clearance to dismiss the union officers is granted; the employment status of the
individual complainants who were project employees is also considered severed, not on account of
illegality of the strike but due to the expiration of their employment contracts; and the respondent is
ordered to reinstate, without back wages, the individual complainants who were regular employees
except those who were officers of the union among them or paid separation pay at their option,
equivalent to one month's pay or one-half month's pay for every year of service, whichever is greater.
It appears that on September 30, 1980, the services of 65 employees of private respondent Makati
Development Corporation were terminated on the ground of the expiration of their contracts; that the
said employees filed a complaint for illegal dismissal against the MDC on October 1, 1980; * that on
October 8, 1980, as a result of the aforementioned termination, the Philippine Transport and General
Workers Association, of which the complainants were members, filed a notice of strike on the grounds
of union-busting, subcontracting of projects which could have been assigned to the dismissed
employees, and unfair labor practice; that on October 14, 1980, the PTGWA declared a strike and
established picket lines in the perimeter of the MDC premises; that on November 4, 1980, the MDC filed
with the Bureau of Labor Relations a motion to declare the strike illegal and restrain the workers from
continuing the strike; that on that same day and several days thereafter the MDC filed applications for
clearance to terminate the employment of 90 of the striking workers, whom it had meanwhile
preventively suspended; that of the said workers, 74 were project employees under contract with the
MDC with fixed terms of employment; and that on August 31, 1982, Labor Arbiter Apolinar L. Sevilla
rendered a decision 1 denying the applications for clearance filed by the MDC and directing it to
reinstate the individual complainants with two months back wages each.
This is the decision modified by the NLRC 2 which is now faulted by the petitioners for grave abuse of
discretion. The contention is that the public respondent acted arbitrarily and erroneously in ruling that:
a) the motion for reconsideration was filed out of time; b) the strike was illegal; and c) the separation of
the project employees was justified.
a) W/N the motion for reconsideration was filed out of time;
b) W/N the strike was illegal; and
c) W/N the project employees were illegally separated and therefore entitled to a proper separation
pay.
Having considered the issues and the arguments of the parties in their respective pleadings, including
the petitioners' ex parte motion for early resolution of this case, the Court makes the findings that
follow.
On the first issue, we note that the rule on motions for reconsideration of the decision of the NLRC is
now found in No, it was not filed out of time.Section 9, Rule X of the Revised Rules of the NLRC,
providing thus:
Section 9. Motions for reconsideration — Motions for reconsideration of any order, resolution or
decision of the Commission shall not be entertained except when based on palpable or patent errors,
provided that the motion is under oath and filed within ten (I 0) calendar days from receipt of the order,
resolution or decision, with proof of service that a copy of the same has been furnished, within the
aforesaid reglementary period, the adverse party and provided further, that only one such motion shall
be entertained.
Subject to the provisions of Section 3, Rule IX of these Rules, motions for reconsideration of an order,
resolution or decision of a Division shall be resolved by the Division of origin.
However, this section was promulgated only on November 5, 1986, and became effective only on
November 29, 1986, after the required publication. 3 It was therefore not yet in force when the required
resolution in the present case was rendered in 1984.
Apparently agreeing that the reglementary period then was fifteen days, the Solicitor General argues
that the petitioner's motion for reconsideration was nevertheless filed late on June 26, 1984, the
decision of the NLRC having been rendered on June 7, 1984, or 19 days earlier. 4 This is not exactly
accurate. The fact is Annex "C" of the petition shows that a copy of the decision was received by the
petitioner only on June 13, 1984, and it was from that date that the reglementary period commenced to
run. This means that the motion for reconsideration was filed on time, only 13 days having elapsed
before the deadline.
Yes, there was an illegal strike. But this notwithstanding, we must hold that under the law then in force,
to wit, PD No. 823 as amended by PD No. 849, the strike was indeed illegal. In the first place, it was
based not on the ground of unresolved economic issues, which was the only ground allowed at that
time, when the policy was indeed to limit and discourage strikes. Secondly, the strike was declared only
after 6 days from the notice of strike and before the lapse of the 30-day period prescribed in the said
law for a cooling-off of the differences between the workers and management and a possible avoidance
of the intended strike. That law clearly provided:
Sec. 1. It is the policy of the state to encourage free trade unionism and free collective bargaining within
the framework of compulsory and voluntary arbitration. Therefore all forms of strikes, picketing and
lockout are hereby strictly prohibited in vital industries such as in public utilities, including
transportation and communication, companies engaged in the manufacturer processing as well as in the
distribution of fuel gas, gasoline and fuel or lubricating oil, in companies engaged in the production or
processing of essential commodities or products for export, and in companies engaged in banking of any
kind, as well as in hospitals and in schools and colleges.
However, any legitimate labor union may strike and any employer may lockout in establishments not
covered by General Order No. 5 only on grounds of unresolved economic issues in collective bargaining,
in which case the union or the employer shall file a notice with the Bureau of Labor Relations at least 30
days before the intended strike or lockout. (Emphasis supplied)
It is our ruling that the leaders of the illegal strike were correctly punished with dismissal, but their
followers (other than the contract workers) were properly ordered reinstated, considering their lesser
degree of responsibility. The penalty imposed upon the leaders was only proper because it was they
who instigated the strike even if they knew, or should have known, that it was illegal. It was also fair to
rule that the reinstated strikers were not entitled to backpay as they certainly should not be
compensated for services not rendered during the illegal strike. In our view, this is a reasonable
compromise between the demands of the workers and the rights of the employer.
Yes, the project employees were illegally separated and thus entitled to a proper separation pay.
Coming now to the last question, we stress the rule in Cartagenas v. Romago Electric Co., 5 that contract
workers are not considered regular employees, their services being needed only when there are projects
to be undertaken. 'The rationale of this rule is that if a project has already been completed, it would be
unjust to require the employer to maintain them in the payroll while they are doing absolutely nothing
except waiting until another project is begun, if at all. In effect, these stand-by workers would be
enjoying the status of privileged retainers, collecting payment for work not done, to be disbursed by the
employer from profits not earned. This is not fair by any standard and can only lead to a coddling of
labor at the expense of management.
We believe, however, that this rule is not applicable in the case at bar, and for - good reason. The record
shows that although the contracts of the project workers had indeed expired, the project itself was still
on-going and so continued to require the workers' services for its completion. 6 There is no showing that
such services were unsatisfactory to justify their termination. This is not even alleged by the private
respondent. One can therefore only wonder why, in view of these circumstances, the contract workers
were not retained to finish the project they had begun and were still working on. This had been done in
past projects. This arrangement had consistently been followed before, which accounts for the long
years of service many of the workers had with the MDC.
It is obvious that the real reason for the termination of their services-which, to repeat, were still
needed-was the complaint the project workers had filed and their participation in the strike against the
private respondent. These were the acts that rendered them persona non grata to the management.
Their services were discontinued by the MDC not because of the expiration of their contracts, which had
not prevented their retention or rehiring before as long as the project they were working on had not yet
been completed. The real purpose of the MDC was to retaliate against the workers, to punish them for
their defiance by replacing them with more tractable employees.
Also noteworthy in this connection is Policy Instruction No. 20 of the Department of Labor, provides that
"project employees are not entitled to separation pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the projects in
which they had been employed by a particular construction company." 7 Affirmatively put, and
interpreting it in the most liberal way to favor the working class, the rule would entitle project
employees to separation pay if the projects they are working on have not yet been completed when
their services are terminated. And this should be true even if their contracts have expired, on the theory
that such contracts would have been renewed anyway because their services were still needed.
Applying this rule, we hold that the project workers in the case at bar, who were separated even before
the completion of the project at the New Alabang Village and not really for the reason that their
contracts had expired, are entitled to separation pay. We make this disposition instead of ordering their
reinstatement as it may be assumed that the said project has been completed by this time. Considering
the workers to have been separated without valid cause, the Court shall compute their separation pay at
the rate of one month for every year of service of each dismissed employee, up to the time of the
completion of the project. 8 We feel this is the most equitable way to treat their claim in light of their
cavalier dismissal by the private respondent despite their long period of satisfactory service with it.
It is the policy of the Constitution to afford protection to labor in recognition of its role in the
improvement of our welfare and the strengthening of our democracy. An exploited working class is a
discontented working class. It is a treadmill to progress and a threat to freedom. Knowing this, we must
exert all effort to dignify the lot of the employee, elevating him to the same plane as his employer, that
they may better work together as equal partners in the quest for a better life. This is a symbiotic
relationship we must maintain if such a quest is to succeed.
WHEREFORE, the appealed decision of the NLRC is AFFIRMED but with the modification that the
contract workers are hereby declared to have been illegally separated before the expiration of the
project they were working on and so are entitled to separation pay equivalent to one month salary for
every year of service. No costs.
SO ORDERED.
G.R. No. 125792 November 9, 1998
PHILIPPINE AIRLINES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER MANUEL ASUNCION; MANUEL
PARENAS, DANIEL GACO, RODOLFO SIARON, ALFREDO C. MONTILLA, ROMULO S. CASTRO, ELSA
CASTRO, MARCELO PARAGAS, ROMULO PARANE, RAFAEL SANCHEZ, INOCENCIO ALCANTARA,
REYNALDO PARAISO, ROBERTO GERONIMO, NOMER E. PESCANTE, BENEDICTO SANTOS, ALBERTO
TOMAS, BONIFACIO BAYETA JR., DANILO RODRIGUEZ, CARLETO DE LA CRUZ, RAFAEL BEQUIO,
EDUARDO SITJAR, RUBEN TANSECO, TODORO K. DISCAYA, ERNESTO EVARDONE, ARNULFO LAVILLA,
GLECERIO ELABARIN, MARCELINO CANEDA, EPIFANIO GALIBO, BENJAMIN GANDELARIA, LINO B.
DAHOHOY, AVELINO MULLET, JIMMY M. CORDERO, IVANHOE MAGINO, FELIX V. CATINDOY, RUBEN
DALUZ, ABENIR YARA, SANTIAGO CORTEZ JR., ARMANDO P. LUCIDO, ALBERTO MONTILLA, RENERIO
CAPON, LEONARDO BARROZO, IRENEO FRONDOZO, DIONESIO BANARES, MARCELO MANZON,
ALFREDO STA. MARIA, BERNARDO MAMARIL, CARLOS DELLORO, ALCON DE LA TORRE, FLORENTINO
PESTIDO and STELLAR INDUSTRIAL SERVICES, INC., respondents.
PANGANIBAN, J.:
In legitimate job contracting, an independent contractor undertakes to perform work on its own
account, under its own responsibility and according to its own manner and method, free from the
control and direction of the principal. No employment relationship arises between its employees and
the principal. Consequently, the said employees can claim separation pay only from the independent
contractor, and not from the principal.
The Case
These principles are used by the Court in granting this special civil action for certiorari, seeking to nullify
the July 13, 1994 Decision and the June 27, 1996 Resolution of the National Labor Relations Commission,
which held Philippines Airlines, Inc. liable for separation pay.
In five separate complaints for separation pay1 filed by the individual private respondents against
Philippine Airlines (PAL), Inc. (herein petitioner) and Stellar Industrial Services, Inc. (STELLAR, for
brevity), Labor Arbiter Manuel P. Asuncion rendered on October 29, 1993 a Decision which held: 2
WHEREFORE, premises considered, . . . PAL is hereby ordered to pay the following complainants
separation pay at the rate of one month salary for every year of service, thus:
1.) Manuel F. Parenas — P17,264.75
2.) Daniel Gaco — 37,982.45
3.) Rodolfo Siaron — 31,076.55
4.) Alfredo C. Montilla — 31,076.55
5.) Romulo S. Castro — 27,623.60
6.) Elsa C. Castro — 31,076.55

7.) Marcelo Paragas — 44,888.35
8.) Romulo Parane — 13,411.80
9.) Rafael Sanchez — 31,076.55
10.) Inocencio Alcantara — 51,794.25
11.) Reynaldo Paraiso — 17,264.75
12.) Roberto Geronimo — 58,700.15
13.) Nomer E. Pescante — 24,170.65
14.) Benedicto Santos — 55,247.20
15.) Alberto Tomas — 20,717.70
16.) Bonifacio Bayeta, Jr.— 27,623.60
17.) Danilo Rodriguez — 27,623.60
18.) Carleto de la Cruz — 44,888.35
19.) Rafael Bequio — 20,717.70
20.) Eduardo Sitjar — 20,717.70
21.) Ruben M. Tanseco — 20,717.70
22.) Teodoro K. Discaya — 44,888.35
23.) Ernesto Evardone — 48,341.30
24.) Arnulfo Lavilla — 10,358.85
25.) Glecerio Elabarin — 27,623.60
26.) Marcelino Caneda — 27,623.60
27.) Epifanio Galibo — 20,717.70
28.) Benjamin Gandalera — 58,700.15
29.) Lino B. Dagohoy — 27,623.60
30.) Avelino Mullet — 27,623.60
31.) Jimmy M. Cordero — 20,717.70
32.) Ivanhoe Magno — 41,435.40
33.) Felix V. Catindoy — 24,170.65
34.) Ruben Daluz — 37,982.45
35.) Abenir R. Yarra — 41,435.40

36.) Santiago Cortes Jr. — 24,170.65
37.) Armando P. Lucido — 24,170.65
38.) Alberto Montilla — 34,529.50
39.) Renerio Capon — 17,264.75
40.) Leonardo Barroso — 6,905.90
41.) Ireneo Frondozo — 62,153.10
42.) Dionesio Banares — 24,170.65
43.) Marcelo Marzan — 20,717.70
44.) Alfredo Sta. Maria — 55,247.20
45.) Bernardo Mamaril — 13,811.80
46.) Carlos Delloro — 44,888.35
47.) Alcon de la Torre — 24,170.65
48.) Florentino Pestijo — 24,170.65
The complaints of Edwin Pilapil, Pedro Bermas, and Orlando Orpiada against Stellar Industrial
Services, Inc., are dismissed for lack of merit.
On appeal, the National Labor Relations Commission (NLRC)3 affirmed the labor arbiter's Decision in
this wise:4
WHEREFORE, except insofar as Stellar Industrial Services, Inc. is held jointly and severally liable with
Philippine Airlines for the payment of complainants' separation benefits, the Decision appealed from
is hereby AFFIRMED.
However, acting on the Motions for Reconsideration separately filed by petitioner and STELLAR, the
NLRC modified its earlier Decision and ruled: 5
WHEREFORE, our July 13, 1994 decision is hereby modified in that the separation pay adjudged in this
case is hereby declared to be the sole liability of [Petitioner] Philippine Airlines, Inc.
The Facts
The undisputed facts of this case, as summarized by the solicitor general, are as follows: 6
Sometime in 1977, PAL, a local air carrier, entered into a service agreement with STELLAR, a domestic
corporation engaged, among others, in the business of job contracting janitorial services (PAL and
STELLAR's Agreement, Annex "1" of PAL's Position Paper, Annex "F", id.).
Pursuant to their service agreement, which was impliedly renewed year after year, STELLAR hired
workers to perform janitorial and maintenance services for PAL. Among those employed were
[Complainants] Manuel Parenas, Daniel Gaco, Rodolfo Siaron, Alfredo C. Montilla, Romulo S. Castro,
Elsa C. Castro, Marcelo Paragas, Romulo Parane, Rafael Sanchez, Inocencio [Alcantara], Reynaldo
Paraiso, Roberto Geronimo, Nomer E. Pescante, Benedicto Santos, Alberto Tomas, Bonifacio Bayeta,
Jr., Danilo Rodriguez, Carleto dela Cruz, Rafael Bequio, Eduardo Sitjar, Ruben Tanseco, Teodoro K.
Discaya, Ernesto Evardone, Arnulfo Lavilla, Glecerio Elabarin, Marcelino Caneda, Epifanio Galibo,
Benjamin Gandelaria, Lino B. Dahohoy, Avelino Mullet, Jimmy M. Cordero, Ivanhoe Magino, Felix B.
Catindoy, Ruben Daluz, Abenir Yara, Santiago Co[r]tez, Jr., Armando P. Lucido, Alberto Montilla,
Renerio Capon, Leonardo Barrozo, Ireneo Frondozo, Dionesio Banares, Marcelo Marzon, Alfredo Sta.
Maria, Bernardo Mamaril, Carlos Delloro, Aldon dela Torre and Florentino Pestido, who were assigned
at PAL's various premises under the supervision of STELLAR's supervisors/foremen and timekeepers.
The workers were also furnished by STELLAR with janitorial supplies, such as vacuum cleaner and
polisher (Please see Manuel Parenas' Contract of Employment with STELLAR, Annex "1" of Annex
"E", id.; STELLAR's Position Paper, pp. 2-5, supra; TSN, May 20, 1993, pp. 15-16 and 19-20).
On December 31, 1990, the service agreement between PAL and STELLAR expired. PAL then called for
[the] bidding of its janitorial requirements. This notwithstanding, STELLAR exerted efforts to maintain
its janitorial contract with PAL which, in the meantime, allowed Manuel Parenas and others to work
at the PAL's premises (STELLAR's Position Paper, pp. 2-5, supra, and Memorandum of Appeal, Annex
"H", pp. 3-4, id.; Carlos Callanga's Affidavit, p. 2, pp. 156-160 Records; Annex "2" of STELLAR's Position
Paper, supra; PAL's Memorandum of Appeal, p. 2, Annex "G", Petition).
Subsequently, in a letter dated October 31, 1990, PAL formally informed STELLAR that the service
agreement would no longer be renewed effective November 16, 1991, since PAL's janitorial
requirements were bidded to three other job contractors (Annex "2" of STELLAR's Position
Paper, supra; PAL's Memorandum of Appeal, p. 2, supra).
Alleging that they were illegally dismissed, the aforenamed individual private respondents filed, from
January to June 1992, five complaints against PAL and STELLAR for illegal dismissal and for payment of
separation pay (Annexes "C", "C-1" to "C-19", id.).
The Ruling of Respondent Commission
In its Decision affirming the ruling of the labor arbiter, Respondent Commission held petitioner, as an
indirect employer, jointly and severally liable with STELLAR for separation pay. First, the individual
private respondent's work, although not directly related to the business of petitioner, was necessary
and desirable for the maintenance of the petitioner's premises and airplanes. Second, the individual
private respondents were retained for thirteen long years, despite the fact that the contract, which
petitioner had entered into STELLAR in 1977, was only for one year.
On reconsideration, the NLRC modified its earlier Decision by absolving STELLAR of liability, thereby
making PAL solely responsible for the award decreed by the labor arbiter. It held that, first, petitioner
was the employer of the individual private respondents, for it engaged in labor-only contracting with
STELLAR. This was shown by the failure of petitioner to refute the factual finding that it continued to
employ the individual private respondents after the expiration of the service contract on December
31, 1990. Second, the individual private respondents' admission in their Complaint that they were
employees of STELLAR was not conclusive, as the existence of an employer-employee relation was a
question of law that could not be the subject of stipulation. Respondent Commission concluded that
their dismissal was without just and valid cause. Because they were no longer seeking reinstatement,
petitioner was liable for separation pay.
Hence, this petition. 7 When required by the Court to comment on behalf of Respondent Commission,
the solicitor general manifested his disagreement with the assailed Decision and Resolution. Thus,
Respondent Commission, in compliance with the February 5, 1997 Resolution of this Court, 8 filed its
own Comment.
The Issues
In its Memorandum,9 petitioner imputes grave abuse of discretion to Respondent Commission in this

wise: 10
(a) [I]n holding that the janitorial service agreement with STELLAR was a labor-only arrangement;
(b) [I]n holding that PAL continued with the services of the individual respondents after November 16,
1991, when the janitorial agreement with STELLAR expired; and
(c) [I]n holding PAL liable for payment of separation pay to the individual respondents.
The petition raises two main issues. First, whether the individual private respondents are regular
employees of PAL. Second, whether petitioner is liable to them for separation pay. The resolution of
the first issue involves a determination of (1) whether petitioner was a labor-only contractor; and (2)
whether the individual private respondents became regular employees of PAL because they were
allowed to continue working for petitioner after the expiration of the service contract.
The Court's Ruling
The petition is meritorious.
First Issue: No Employer-Employee Relation

Between Complainants and Petitioner
Janitorial Service Agreement Is

Not Labor-Only Contacting
Prohibited labor-only contracting is defined in Article 106 of the Labor Code as follows:
Art. 106. Contractor or subcontractor. — . . .
x x x x x x x x x
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such persons are performing activities which are
directly related to the principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him.
This definition covers any person who undertakes to supply workers to an employer, where such
person:
(1) Does not have substantial capital or investment in the form of tools, equipment, [machinery],
work premises and other materials; and
(2) The workers recruited and placed by such person are performing activities which are directly
related to the principal business or operations of the employer in which workers are habitually
employed. 11
On the other hand, permissible job contracting requires the following conditions:
(1) The contractor carries on an independent business and undertakes the contract work on his own
account under his own responsibility according to his own manner and method, free from the control
and direction of his employer or principal in all matters connected with the performance of the work
except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment, [machinery],
work premises, and other materials which are necessary in the conduct of his business. 12
Applying the foregoing provisions to the present case, the Court finds no basis for holding that PAL
engaged in labor-only contracting. The true nature of the individual private respondents' employment
is evident from the service agreement between petitioner and STELLAR which states, which we
reproduce hereunder:
1. The CONTRACTOR [STELLAR] undertakes to provide the following cleaning and janitorial
maintenance services.
Daily Routine:
(a) Dusting and/or damp-wiping of other vertical and horizontal surfaces that require daily attention;
(b) Sweeping and mopping of floors;
(c) Polishing and spot-scrubbing of [illegible];
(d) Dusting, damp-wiping and polishing of [furniture], counters, . . . and other office fixtures;
(e) Emptying and cleaning of ash trays;
(f) Cleaning and disinfecting of toilets and washrooms;
(g) Cleaning of inside windows, glasses, surfaces, [partitions], etc.;
(h) On-the-job supervision.
2. The CONTRACTOR shall provide sufficient personnel, equipments [sic], supplies, and materials to
carry out the undertakings; specified in the preceding paragraph, except that water and electricity
consumption shall be for the account of the OWNER. The CONTRACTOR expressly represents that to
adequately and suitably comply with the undertakings under paragraph 1 of this Agreement, the
CONTRACTOR shall assign at least eight (8) employees, six (6) days a week except Legal Holidays, to
the OWNER's premises to perform the work undertaken by the CONTRACTOR under this Agreement.
To comply with such minimum requirements, the CONTRACTOR shall at all times be ready with
relievers and/or replacements to ensure continuous and uninterrupted work in case of absences of
each assigned employee.
(3) The equipment, materials and supplies to be used by the CONTRACTOR in connection with its
aforesaid undertakings shall be of high quality and shall not cause any damage to OWNER's premises
and properties or cause any injury or annoyance to the persons working or present in the premises.
The OWNER shall place at the disposal of the CONTRACTOR a suitable storage space with lock and key
for the safe-keeping of the cleaning equipment and materials which the . . . CONTRACTOR shall use in
connection with its undertakings in . . . Agreement.
4. The CONTRACTOR warrants that the persons it shall employ to perform the work subject to this
Agreement shall be honest, reliable, carefully screened, trained, cooperative, and in possession of
health certificates and police clearances; they will be neat, presentable in appearance, attired in
identifying uniforms and provided with identification cards. The uniforms and identification cards
shall be at the expense of the CONTRACTOR.
5. In consideration of the services to be rendered by the CONTRACTOR, the OWNER shall pay to the
CONTRACTOR the sum of PESOS: THREE THOUSAND EIGHT HUNDRED FORTY (P3,840.00) per month in
Philippine Currency, payable in two equal payments on the 15th and end of each month without
necessity of demand. In the event that the minimum wage rate shall be increased by the operation of
law, there shall be a corresponding automatic increase in the consideration of the contract price to be
paid by the OWNER to the CONTRACTOR in consideration of the latter's services.
6. In case the OWNER shall require the CONTRACTOR to perform the work provided under paragraph
1 hereof in excess of eight hours on: (1) any regular working day, the OWNER shall pay the
CONTRACTOR an additional amount to be computed in the following manner:
x x x x x x x x x
7. It is agreed that no authority has been conferred upon the CONTRACTOR by the OWNER to hire any
person on behalf of the latter and that each person employed or hired by the CONTRACTOR in
carrying out its part of this Agreement shall be paid by the CONTRACTOR, and that no such person
employed or hired shall be deemed [an] employee or agent of the OWNER.
8. It is furthermore agreed that the CONTRACTOR shall select, engage and discharge its employees and
shall have direct . . . control [of their] services. The CONTRACTOR shall likewise have absolute
prerogative to determine the rate of wages or salaries of the employees.
9. It is further agreed that the CONTRACTOR shall comply with all the requirements of laws, decrees,
municipal ordinances, and regulations including but not limited to payment of State Insurance Fund,
Medicare contributions, SSS contributions, and the Withholding Taxes of its employees.
10. This agreement shall be for a period of one (1) year from May 1, 1977 to April 30, 1978 and
[illegible].
The foregoing agreement clearly indicates that an employee-employer relation existed between the
individual private respondents and STELLAR, not PAL. The provisions of the agreement demonstrate
that STELLAR possessed these earmarks of an employer: (1) the power of selection and engagement of
employees (Stipulation Nos. 1, 4, 7 and 8), (2) the payment of wages (Stipulation Nos. 5, 6, 7 and 8),
(3) the power of dismissal, and (4) the power to control the employee's conduct (Stipulation No. 8). 13
Aside from these stipulations in the service agreement, other pieces of evidence support the
conclusion that STELLAR, not PAL, was the employer of the individual private respondents. A contract
of employment 14 existed between STELLAR and the individual private respondents, proving that it
was said corporation which hired them. It was also STELLAR which dismissed them, as evidenced by
Complainant Parenas' termination letter, which was signed by Carlos P. Callanga, vice president for
operations and comptroller of
STELLAR. 15 Likewise, they worked under STELLAR's own supervisors, Rodel Pagsulingan, Napoleon
Parungao and Renato Topacio. 16 STELLAR even had its own collective bargaining agreement with its
employees, including the individual private respondents. 17 Moreover, PAL had no power of control
and dismissal over them.
In fact, STELLAR claims that it falls under the definition of an independent job contractor. Thus, it
alleges that it has sufficient capital in the form of tools and equipment, like vacuum cleaners and
polishers, and substantial capitalization as proven by its financial statements. 18 Further, STELLAR has
clients other than petitioner, like San Miguel Corporation, Hongkong and Shanghai Bank, Eveready,
Benguet Management Corporation and Japan Airlines. 19
All these circumstances establish that STELLAR undertook said contract on its account, under its own
responsibility, according to its own manner and method, and free from the control and direction of
the petitioner. Where the control of the principal is limited only to the result of the work,
independent job contracting exists. 20 The janitorial service agreement between petitioner and
STELLAR is definitely a case of permissible job contracting.
Extension of Service Contract is

Not a Source of Employer-Employee
Relation
Respondent NLRC found that petitioner was the individual private respondents' employer, based
primarily on the continued engagement of the employees after the expiration of the service contract.
It ruled: 21
Our taking cognizance of the fact that PAL, despite the expiration of its contract with Stellar on
December 31, 1990 continued with the service of some of the complainants "as late as 1991", should
have been enough notice for them to refute this fact come [the] . . . motion for reconsideration.
But again, perusing PAL's motion for reconsideration, we note that . . . it never refuted the finding
below that it continued employing the complainants after its service contract with Stellar expired. We
thus cannot but hold on to our view that PAL should be answerable to the separation pay awarded
below not only for its engaging in a labor-only contract with Stellar but more importantly for its
continued employment of complainants after its service contract with Stellar (the argued employer of
complainants) expired.
In its Comment, 22 NLRC, citing Loadstar Shipping Co, Inc. v. Gallo, 23 defended its position on the
ground that judicial review by this Court does not include appreciation of the evidence, but is confined
only to issues of jurisdiction or grave abuse of discretion.
In trying to support this finding, the individual respondents presented, on the other hand, an entirely
different theory — that petitioner, by allowing them to continue working after the expiration of the
service agreement, because their successor — employer. In their Memorandum, 24 they argue:
. . . [T]he records and evidence show that the janitorial service contract between PAL and Stellar
expired on December 31, 1990, and not on November 16, 1991 [as stated in the October 31, 1990
letter of the petitioner].
x x x x x x x x x
As a consequence of petitioner's letter and upon knowledge of the termination of [the] janitorial
service contract, respondent Stellar formally notified each of the [complainants] that their individual
employment contract likewise be terminated effective November 16, 1991. Furthermore, it has been
expressly and uniformly stated in each of [complainants'] employment contract that their services
would last upon the termination of the janitorial service contract between PAL and Stellar which was
of course supposedly on December 31, 1990. By working up to the time of the final termination which
is November 16, 1991, from December 31, 1990, private respondents became direct employees of
PAL.
x x x x x x x x x
Petitioner's continued employment of [complainants] inspite of the expiration of the janitorial

contract is an implied absorption to the point of making them its regular employees and making illegal
their subsequent termination from service. . . . As held by the Supreme Court, employees absorbed by
[a] successor employer enjoy the continuity of their employment status and their rights and privileges
(International Container Terminal Services, Inc. vs. NLRC, G.R. N[o]. 982950-99, April 10, 1996, citing
the case of Sumandi vs. Leogardo, et al., G.R. N[o]. 67635, January 17, 1985). . . . . 25
Both contentions are untenable. First, while the issue of labor-only contracting may involve some
factual considerations, the existence of an employer-employee relation is nonetheless a question of
law. 26 Thus, it falls squarely within the ambit of this Court's judicial review. Second, individual private
respondents' invocation of the successor-employer doctrine is not warranted. This doctrine involves a
transfer of ownership of the business to a new employer. Where the change of ownership is in bad
faith or is used to defeat the rights of labor, the successor-employer is deemed to have absorbed the
employees and is held liable for the transgressions of his or her
predecessor. 27 Petitioner, however did not become the successor-employer of the individual private
respondents when the service contract expired. There was no transfer of the business of STELLAR in
this particular case. The separate undertakings of petitioner and STELLAR continued even after the
expiration of the service contract and the dismissal of individual private respondents.
Indeed, we agree with the solicitor general's explanation of this matter: 28
. . . What actually happened was that PAL and STELLAR impliedly renewed, as they had previously
done before, their service agreement until PAL's janitorial requirements were bidded to other job
contractors. This explains why the individual private respondents remained working at PAL's premises
even after December 31, 1990.
From the foregoing disquisition, it is evident that petitioner was engaged in permissible job
contracting and that the individual private respondents, for the entire duration of their employ, were
employees not of petitioner but of STELLAR. In legitimate job contracting, no employer-employee
relation exists between the principal and the job contractor's employees. The principal is responsible
to the job contractor's employees only for the proper payment of wages. 29 But in labor-only
contracting, an employer-employee relation is created by law between the principal and the labor-
only contractor's employees, such that the former is responsible to such employees, as if he or she
had directly employed them. 30 Besides, the Court has already taken judicial notice of the general
practice adopted in several government and private institutions of securing janitorial services on an
independent contractor basis. 31
Second Issue:
STELLAR Is Liable for Separation Pay
Short of expressly admitting to be the employer of the individual private respondents, STELLAR avers
that the former were project employees, whose employment was coterminous with the service
agreement, 32 as evidenced by the following stipulations in their contract: 33
1. The EMPLOYER hereby contracts the services of the EMPLOYEE to work as Janitor-CPD at the
project of the EMPLOYER with PAL.
2. It is expressly agreed and understood that the work of the EMPLOYEE shall last only during and
shall in no case extend beyond the period fixed for the duration of the contract between the
EMPLOYER and PAL covering the project to which the EMPLOYEE is assigned as specified in the second
"WHEREAS" hereof. Upon the expiration of said contract the employment of the said employee is
deemed automatically terminated without further notice.
In order to avoid liability for separation pay, STELLAR argues that it terminated the services of the
individual private respondents for a just and valid cause: the completion of a specific project. Thus,
they are not entitled to separation pay.
The Court is not convinced. The position of STELLAR that individual private respondents were its
project employees is totally unfounded. A regular employee is distinguished from a project employee
by the fact that the latter is employed to carry out a specific project or undertaking, the duration or
scope of which was specified at the time the employees were engaged. 34 A "project" has reference to
a particular job or undertaking that may or may not be within the regular or usual business of the
employer. 35 In either case, the project must be distinct, separate and identifiable from the main
business of the employer, and its duration must be determined or determinable.
In the case at bar, despite the protestations of STELLAR, the service agreement was not a project
because its duration was not determined or determinable. While the service agreement may have had
a specific term, STELLAR disregarded it, repeatedly renewed the service agreement, and continued
hiring the individual private respondents for thirteen consecutive years. Had STELLAR won the
bidding, the alleged "project" would have never ended. In any event, the aforesaid stipulations in the
employment contract are not included in Articles 282 and 283 of the Labor Code as valid causes for
the dismissal of employees.
Again, we must emphasize that the main business of STELLAR is the supply of manpower to perform
janitorial services for its clients, and the individual private respondents were janitors engaged to
perform activities that were necessary and desirable to STELLAR's enterprise. 36 In this case, we hold
that the individual private respondents were STELLAR's regular employees, and there was no valid
cause for their dismissal.
WHEREFORE, the petition is hereby GRANTED. The assailed Decision and Resolution are SET ASIDE
insofar as they held PAL liable for separation pay. The July 13, 1994 Decision is however reinstated
insofar as it ORDERED STELLAR liable for such award.
SO ORDERED.
G.R. No. 97747 March 31, 1993
PHILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT CORPORATION/FRANCIS

PALAFOX, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FRANCISCO MATA, respondents.
NOCON, J.:
Texans used to complain that when they tried to dig for water, all they struck was oil. On the other
hand, Filipinos have been heard to complain that every time they tried to dig for oil, all they got was
water — and steam, to boot. In the 1970's, with the energy crisis having become unmanageable, the
government decided to harness steam to drive turbine engines to generate electricity. When petitioner
Philippine National Oil Company-Energy Development Corporation started to develop the Bacon-Manito
Geothermal Project in Bonga, Sorsogon, one question which arose is whether or not an employee
contracted to drive for petitioner during the construction of the steam wells is considered a project
employee or a regular employee.
As summarized by the Solicitor General, the facts leading to the filing of the instant petition, are as
follows:
On November 11, 1980, petitioners hired private respondent Francisco Mata as Service Driver on a daily
wage of P39.74. Assigned to the PNOC-EDA Bacon-Manito Geothermal Project in Bonga, Sorsogon,
Sorsogon, he worked there until September 1, 1985. On this day, his employment was terminated
through a letter advice dated September 1, 1985, signed by his supervisor, B.B. Balista, allegedly for
"contract expiration" (Exh "A", p. 10, Records), even when the project was still a continuing one.
On November 8, 1985, private respondent complained of illegal dismissal, and accused petitioners of
withholding his backwages, overtime pay, and separation pay (p. 1, Records). A dismissal of the
complaint was sought on jurisdictional ground, petitioner company asserting that it is a government-
owned and controlled corporation, hence, its employees must be governed by the Civil Service Law and
not by the Labor Code, and citing National Housing Corporation v. Benjamin Juco and the NLRC (134
SCRA 176).
On February 26, 1987, Labor Arbiter Voltaire A. Balitaan dismissed the complaint for lack of jurisdiction
(pp. 116-118, Records). On appeal to public respondent, however, the First Division, on September 16,
1988, set aside the Labor Arbiter's decision, assumed jurisdiction over the case, and directed the
Arbitration Branch to conduct further proceedings (pp. 127-131, Records).
Petitioners maintained that private respondent was a project employee whose employment was for a
definite period and coterminous with the project for which he was hired. It was for this reason that his
employment was terminated.
Finding for private respondent, Executive Labor Arbiter Vito C. Bose's Decision of August 23, 1990, held:
There is no dispute that complainant was hired as service driver assigned in the Administrative
Department of respondent since November 11, 1980 at its Bacon-Manito Geothermal Project working
regularly from 6:00 A.M. to 6:00 P.M. Monday thru Saturday until he was dismissed on September 15,
1985 for alleged contract expiration. As driver assigned in the Administrative Department servicing or
performing activities which are usually necessary or at least desirable in the business of the company.
He was actually a company driver and not a contractual project employee as what respondent perceived
him to be.
Hence, contrary to the provisions of the Employment Contract, complainant is a regular and permanent
employee of respondent entitled to the protective mantle of the security of tenure provisions of the
Labor Code, . . . .
. . . We entertain no doubt that respondent is guilty of illegal dismissal for having terminated the
services of complainant without just or authorized cause. The alleged contract expiration is not one of
the valid or authorized causes for dismissal . . . (pp. 6-7, Decision, pp. 175-176, Records).
and concluded:
WHEREFORE, judgment is hereby rendered finding respondent company guilty of illegal dismissal and
ordering the same to pay complainant thru this Branch within ten (10) days from receipt of this order,
the following:
1. Backwages P51,408.00
2. Overtime pay 2,100.00
3. Separation pay 3,570.00
4. Moral damages 20,000.00
5. Exemplary damages 20,000.00
6. Attorney's fee (10% of the award) 5,350.00
—————
P102,428.80
=========
SO ORDERED (p. 8, Decision, p. 177, Records).
Dissatisfied, petitioners appealed to public respondent, on the following grounds:
A. THAT THE EXECUTIVE LABOR ARBITER ERRED WHEN IT RULED THAT FRANCISCO MATA WAS A
REGULAR EMPLOYEE;
B. WHEN IT RULED THAT FRANCISCO MATA WAS TERMINATED ILLEGALLY; and
C. WHEN IT AWARDED BACKWAGES, OVERTIME PAY, MORAL DAMAGES, EXEMPLARY DAMAGES, AND
ATTORNEY'S FEES' (P. 178, Records).
Public respondent, through its Third Division, modified the appealed decision in its Resolution of
November 29, 1990, (as
follows) . . . . . .
x x x x x x x x x
WHEREFORE, premises considered, except to the awards of backwages and separation pay which are
hereby AFFIRMED, all other claims are DISMISSED for lack of merit (pp. 4-7, Resolution, annex "H",
Petition).
On January 15, 1991, petitioners filed a Motion for Reconsideration based on practically the same
grounds (Annex "I", Petition). This was denied for lack of merit by public respondent in the second
question Resolution issued on February 15, 1991 (Annex "J", Petition). 1
Thus, petitioners filed this petition for certiorari.
The three (3) issues presented to this Court are whether or not public respondent National Labor
Relations Commission committed grave abuse of discretion amounting to lack of jurisdiction when it
ruled that Francisco Mata was (a) a regular employee and (b) that he was illegally terminated; and (c)
when it awarded Francisco Mata backwages and separation pay.2
Petitioners claim that the fixed contract of employment which private respondent entered into was
read, translated to, comprehended and voluntarily accepted by him. No evidence was presented to
prove improper pressure or undue influence when he entered, perfected and consummated said
contract. And even if private respondent's services were necessary and desirable in petitioner's
business, nevertheless private respondent's term was limited, citing as authority Brent School v.
Zamora. 3
Private respondent, while admitting such fixed term contract of employment, counters that the same
was used as a vehicle to circumvent the law on security of tenure, as provided not only by the Labor
Code but likewise guaranteed by the Constitution.
Much can be learned from the leading case of Brent School v. Zamora, supra. In this case, the Court
analyzed the development of Article 280 from its first version as Article 319 and its amendments under
PD 850 and BP 130 and made the following observation:
Accordingly, and since the entire purpose behind the development of legislation culminating in 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.4 (Emphasis supplied)
As can be gleaned from the said case, the two guidelines, by which fixed contracts of employments can
be said NOT to circumvent security of tenure, are either:
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 latter.
Does petitioner's fixed contract of employment with private respondent satisfy any of the guidelines
above stated?
Yes, it does.
A careful examination of the last Employment Contract signed by respondent Mata shows that he
indeed signed the same.5 In fact petitioners claim that all the previous employment contracts were also
translated for the benefit of private respondent, and it was only when he understood the same that he
signed said contracts. As per Guideline No. 1, given the circumstances behind private respondent Mata's
employment, private respondent is a project employee.
As explained by petitioners in their memorandum:
[I]t must be clarified that the Bacon-Manito Geothermal Project is one big "project consisting of several
phases, namely the exploration, development and operation stages. Mata was employed in connection
with the well-completion project which was part of the exploration stage. Said well-completion which
follows a drilling operation is now finished and completed. The other projects in the development stage
are still on-going but the project for which Mata's services were required is now complete and
terminated. . . .6 (Emphasis in petitioner's memorandum)
Paraphrasing Rada v. NLRC,7 it is clear that private respondent Mata is a project employee considering
that he does not belong to a "work pool" from which petitioner PNOC would draw workers for
assignment to other projects at its discretion. It is likewise apparent from the facts of the case that
private respondent Mata was utilized only for one particular project, the well-completion project which
was part of the exploration stage of the PNOC
Bacon-Manito Geothermal Project. Hence, private respondent Mata can be dismissed upon the
termination of the projects as there would be no need for his services. We should not expect petitioner
to continue on hiring private respondent in the other phases of the project when his services will no
longer be needed.8
II
As a project employee, was he legally terminated?
Paragraph No. 5, Policy Instruction No. 20,9 reads, as follows:
If a construction project or any phase thereof has a duration of more than one year and a Project
employee is allowed to be employed therein for at least one year, such employee may not be
terminated until the completion of the project or of any phase thereof in which he is employed without
a previous written clearance from the Secretary of Labor. If such an employee is terminated without a
clearance from the Secretary of Labor, he shall be entitled to reinstatement with backwages.
As to the manner private respondent was terminated, public respondent NLRC found it to be as follows:
[I]n the case of Ochoco vs. NLRC, 120 SCRA 774, the Supreme Court ruled that "if petitioner was
employed as a project employee, private respondent should have submitted a report of termination to
the nearest public employment office every time his employment is terminated due to the completion
of each project as required by Policy Instruction No. 20.
Applying the (Ochoco) doctrine to the instant case, respondent corporation should have filed as many
reports of termination as there were construction projects actually finished, considering that petitioner
had been hired since 1980 up to 1985. Not a single report was submitted by the respondent company.
This failure to submit reports of termination convinced Us more that petitioner was indeed a regular
employee. 10
The records do not show that petitioners obtained the necessary written clearance to terminate the
contract of employment of private respondent Mata. The latter is. therefore, entitled to reinstatement
with backwages.
Considering, however, that the Bacon-Manito project has already been completed and is, presumably,
now operating, 11 reinstatement of private respondent is impossible. He is, however, entitled to
backwages and separation pay. For this purpose, We adopt the Executive Labor Arbiter's computation as
to how much backwages and separation pay private respondent will get, as follows:
[S]ince at the time of his dismissal complainant was receiving P56.00 dally wage then his backwages for
three (3) years amounted to P51,408.00 computed as follows: P56.00 daily wage x 25.5 normal days
work in a month x 12 mos. x 3 years.
xxx xxx xxx
[W]e feel that reinstatement is no longer feasible or advisable hence, separation pay equivalent to one-
half month pay for every year of service should take its place. Since, complainant started working with
respondent on November 11, 1980 and stopped on September 18, 1985 or five (5) years. the
complainant's separation pay should be P3,570.00 (P1,428.00 monthly rate x 5 years + 2). 12
Note, that while We have reversed the decision of the public respondent, We still affirm the granting of
backwages and separation pay due to the fact that petitioners did not secure the necessary written
clearance from the Secretary of Labor in terminating private respondent Mata. The dispositive portions
of the public respondent's resolutions — which. actually constitute the resolutions of public respondent
NLRC have to — be affirmed.
WHEREFORE, the petition is DISMISSED. It is hereby ORDERED that petitioners pay private respondent
Mata P51,408.00 as backwages and P3,570.00 as separation pay.
SO ORDERED.
G.R. No. 106090 February 28, 1994
RICARDO FERNANDEZ, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and D. M. CONSUNJI, INC., respondents.
Gaston V. Taquio for petitioner.
Marcos S. Pagaspas for private respondent.
NOCON, J.:
Forming the crux of the matter in this petition for certiorari is the question of whether or not the
National Labor Relations Commission acted with grave abuse of discretion in reversing the Labor
Arbiter's decision by dismissing the complaints for illegal dismissal, one of which is petitioner's, on the
finding that they were project employees.
Petitioner was hired as a laborer at the D.M. Consunji, Inc., a construction firm, on November 5, 1974.
He became a skilled welder and worked for private respondent until March 23, 1986 when his
employment was terminated on the ground that the project petitioner had been assigned to was
already completed and there was no more work for him to do.
Skeptic of private respondent's reason, petitioner brought his plight before the Labor Arbiter who
consolidated the same with three (3) other separate complaints for illegal dismissal and various money
claims against private respondent. After filing their respective position papers and other documents
pertinent to their causes/defenses, the parties agreed to submit the case for decision based on record.
On May 12, 1988, Labor Arbiter Fernando V. Cinco rendered a decision, finding that complainants
worked continuously in various projects ranging from five (5) to twenty (20) years and belonged to a
work pool, the dispositive portion of which states as follows:
WHEREFORE, premises considered, the terminations by respondent of herein complainants are hereby
declared illegal. Consequently, respondent is ordered to reinstate the complainants, who have not yet
reached the retirement age, to their former positions plus backwages of one (1) year.
Anent complainants who have already reach the retirement age of sixty (60) years as of the date of this
decision, respondent is thereby ordered to pay said complainants their retirement/separation benefits
equivalent to one half (1/2) month salary for every year of service, a fraction of at least six (6) months
being considered as one (1) whole year.
Moreover, respondent is ordered to pay all complainants their service incentive leave for the past three
(3) years; and to pay complainants Ricardo Fernandez, Gaudencio Merhan and Rolando Serona their
13th month pay likewise for the past three (3) years.
The complaints of Amador Borromeo, Jesus Espiritu and Ramon Celestial are hereby dismissed in view of
their receipt of Separation pay and their execution of quitclaims in favor of herein respondent.
The other claims are likewise dismissed for lack of merit.

SO ORDERED.
Metro Manila, Philippines. 12 May 1988.1
Private respondent questioned on appeal the aforesaid decision of the Labor Arbiter on the ground that
the complainants were all project employees who were hired on a project-to-project basis, depending
on the availability of projects that the former was able to close with its clients. Respondent pointed to
the gaps in complainants' respective employment histories to show that they were indeed hired on an
"off-and-on" basis.
In view of the lack of evidence on record to prove the continuous employment of complainants-
appellees, and that on the contrary, what was proven was the intermittent nature of their work as
shown by the different project contracts, the respondent Commission concluded that complainants-
appellees were project employees. The dispositive portion of the decision dated September 29, 1989 of
respondent Commission reads:
WHEREFORE, the decision of the Labor Arbiter is hereby set aside and a new one entered dismissing the
complaints filed by complainants-appellees for lack of merit.2
From said decision, the complainants-appellees interposed a motion for reconsideration which was
denied for lack of merit on July 19, 1991. Respondent Commission affirmed its finding that
complainants-appellees were project employees. As such, the nature of their employment did not
change by the number of projects in which they have rendered service. Respondent Commission also
noted that the motion for reconsideration was filed only on January 29, 1990 which was beyond the ten-
day reglementary period from date of receipt of the decision on November 13, 1989.
Without any mention of the denial of said motion for reconsideration, petitioner alone comes before
this Court on a petition filed on July 21, 1992 and assails the decision dated September 29, 1989 of
respondent Commission contending that it is more in keeping with the intent and spirit of the law to
consider him and the thirteen (13) other complainants in the consolidated cases as regular employees.
At the outset, it is obvious that the petition was not filed within a reasonable time from receipt of the
questioned decision on November 13, 1989 as the petition was filed only on July 21, 1992. Neither does
the filing of the petition appear to be reasonable from the date of receipt of the denial of the motion for
reconsideration on August 2, 1991. Reckoned from this later date, petitioner waited for almost one year
before he availed of this extraordinary remedy of certiorari. We have consistently stated that "the
yardstick to measure the timeliness of a petition for certiorari is the reasonableness of the duration of
time that had expired from the commission of the acts complained of up to the institution of the
proceedings to annul the same."3 Without doubt, petitioner's negligence or indifference for such a long
period of time has in the meantime rendered the questioned decision final and no longer assailable.
Even if we were to dispense with the requirement that the petition should be filed within a reasonable
time, the petition would still have to be dismissed on the merits. Private respondent presented material
documents showing that petitioner was hired as a project employee with the specific dates of hiring, the
duration of hiring, the dates of his lay-offs, including the lay-off reports and the termination reports
submitted to the then Ministry of Labor and Employment. Such data covered the period from November
5, 1974 to March 23, 1986.
Inasmuch as the documentary evidence clearly showed gaps of a month or months between the hiring
of petitioner in the numerous projects wherein he was assigned, the ineluctable conclusion is that
petitioner has not continuously worked with private respondent but only intermittently as he was hired
solely for specific projects. As such, he is governed by Policy Instruction No. 20, the pertinent portions of
which read as follows:
Generally, there are two types of employees in the construction industry, namely 1) Project Employees
and 2) Non-project Employees.
Project employees are those employed in connection with a particular construction project. Non-project
employees are those employed by a construction company without reference to a particular project.
Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the number of
projects in which they have been employed by a particular construction company.
Petitioner cites Article 280 of the Labor Code as legal basis for the decision of the Labor Arbiter in his
favor. The text of Article 280 states as follows:

That, any employee who has rendered at least one year of service whether such service is continuous or
Petitioner claims that the above-quoted proviso in Article 280 of the Labor Code supports his claim that
he should be regarded as a regular employee.
We disagree. The proviso in the second paragraph of Article 280 of the Labor Code has recently been
explained in Mercado v. NLRC,4 where it was held that said proviso deems as regular employees only
those "casual" employees who have rendered at least one year of service regardless of the fact that such
service may be continuous or broken. It is not applicable to "project" employees, who are specifically
excepted therefrom. Thus, the Court therein said:
The general rule is that the office of a proviso is to qualify or modify only the phrase immediately
preceding it or restrain or limit the generality of the clause that it immediately follows. (Statutory
Construction by Ruben Agpalo, 1986 ed., p. 173). Thus, it has been held that a proviso is to be construed
with reference to the immediately preceding part of the provision to which it is attached, and not to the
statute itself or to other sections thereof. (Chinese Flour Importers Association v. Price Stabilization
Board, 89 Phil. 469 (1951); Arenas v. City of San Carlos, G.R. No. 24024, April 5, 1978, 82 SCRA 318
(1978). The only exception to the rule is where the clear legislative intent is to restrain or qualify not
only the phrase immediately preceding it (the proviso) but also earlier provisions of the statute or even
the statute itself as a whole. (Commissioner of Internal Revenue v. Filipinas Compania de Seguros, 107
Phil. 1055 (1960)
Indeed, a careful reading of the proviso readily discloses that the same relates to employment where
the employee is engaged to perform activities that are usually necessary or desirable in the usual
business or trade of the employer but hastens to qualify that project employment is specifically
exempted therefrom.
Finally, petitioner relies on Policy Instruction No. 20 which was issued by then Secretary Blas F. Ople to
stabilize employer-employee relations in the construction industry to support his contention that
workers in the construction industry may now be considered regular employees after their long years of
service with private respondent. The pertinent provision of Policy Instruction No. 20 reads:
Members of a work pool from which a construction company draws its project employees, if considered
employees of the construction company while in the work pool, are non-project employees or
employees for an indefinite period. If they are employed in a particular project, the completion of the
project or of any phase thereof will not mean severance of employer-employee relationship.
Respondent Commission correctly observed in its decision that complainants, one of whom petitioner,
failed to consider the requirement in Policy Instruction No. 20 that to qualify as member of a work pool,
the worker must still be considered an employee of the construction company while in the work pool. In
other words, there must be proof to the effect that petitioner was under an obligation to be always
available on call of private respondent and that he was not free to offer his services to other employees.
Unfortunately, petitioner miserably failed to introduce any evidence of such nature during the times
when there were no project.
Noteworthy in this case is the fact that herein private respondent's lay-off reports and the termination
reports were duly submitted to the then Ministry of Labor and Employment everytime a project was
completed in accordance with Policy Instruction No. 20, which provides:
projects in which they have been employed by a particular construction company. Moreover, the
company is not required to obtain a clearance from the Secretary of Labor in connection with such
termination. What is required of the company is a report to the nearest Public Employment Office for
statistical purposes.
The presence of this factor makes this case different from the cases decided by the Court where the
employees were deemed regular employees. The cases of Ochoco v. National Labor Relations
Commission,5 Philippine National Construction Corporation v. National Labor Relations
Commission,6 Magante v. National Labor Relations Commission,7 and Philippine National Construction
Corporation v. National Labor Relations, et al.,8 uniformly held that the failure of the employer to report
to the nearest employment office the termination of workers everytime a project is completed proves
that the employees are not project employees. Contrariwise, the faithful and regular effort of private
respondent in reporting every completion of its project and submitting the lay-off list of its employees
proves the nature of employment of the workers involved therein as project employees. Given this
added circumstance behind petitioner's employment, it is clear that he does not belong to the work pool
from which the private respondent would draw workers for assignment to other projects at its
discretion.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED in view of the foregoing reasons.
SO ORDERED.
G.R. No. 74969 May 7, 1990
TELESFORO MAGANTE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and CONSTRESS PHILIPPINES, INC., respondents.
Jose V. Juan, Mercedes M. Respicio and Roberto C. Omandam for petitioner.
Topacio/Tagoc & Associates for private respondent.
FERNAN, C.J.:
The issue in this petition for certiorari is whether public respondent National Labor Relations
Commission committed grave abuse of discretion in reversing and setting aside the decision of Labor
Arbiter Domingo V. del Rosario dated June 22, 1983 directing private respondent in Case No. NLRC-NCR-
8-5215-82 entitled "Telesforo Magante, complainant, vs. Constress Philippines, Inc., respondent" to
reinstate petitioner to his position with full backwages with all the rights and benefits granted by law. In
lieu of the aforesaid decision, public respondent commission entered a new judgment dismissing
petitioner's complaint for illegal dismissal on the ground that said petitioner is a project employee
whose employment terminated upon the completion of the project to which he was assigned. 1
The undisputed facts of the case as culled from the records of the case are:
Private respondent Constress Philippines Inc. is engaged in the concrete structural business with address
at Ortigas Avenue, Pasig, Metro Manila. Petitioner Telesforo Magante, on the other hand, was employed
by the former as a carpenter from April 17, 1980 until his dismissal on March 6, 1982 earning three
hundred pesos (P300.00), more or less, a week excluding allowance and rendering about fourteen (14)
hours of work daily from 7:00 in the morning to 10:00 in the evening. His work involved the making of
molds (forma or siding of cement post) for bridges, buildings, charcoal builder sea file, and others.
Apparently. petitioner was never assigned to work outside the plant of private respondent.
Every three (3) months, petitioner was made to fill up and sign an employment contract relating to a
particular phase of work in a specific project. Allegedly, the terms of the contract written in English were
not understood by petitioner nor was the same explained to him. The last hiring agreement entered into
between petitioner and private respondent was on December 7, 1981 which was to take effect on even
date with an agreed compensation of P21.36 a day.
On March 6, 1982, private respondent posted a notice of termination on its bulletin board to take effect
the following day, March 7, 1989, which included petitioner and other employees as among those
whose services were being terminated by private respondent. Petitioner was told that he cannot work
anymore because he is already old, that his contract had already expired and was not renewed being a
project employee. The termination of petitioner and his fellow workers was reported to the Ministry of
Labor.
Consequently, petitioner filed a complaint with the then Ministry (now Department) of Labor and
Employment for illegal dismissal. After the filing of the respective position papers by the parties, Labor
Arbiter Domingo del Rosario rendered a decision 2 on June 22, 1983 with the following pronouncement:
The terms of the contract that complainant is a project worker is not the determining factor of the
status of complainant or any worker but the work performed by him and the place where he performed
his assignment. The contract entered into by respondent and complainant is more of a scheme to evade
its liability or obligation under the law.
WHEREFORE, respondent is directed to reinstate complainant to his position with full backwages with all
the rights and benefits granted by law and by respondent Company. 3
From the foregoing decision of the labor arbiter, private respondent filed an appeal before the National
Labor Relations Commission premised on the ground that the termination of petitioner's employment
was occasioned by the completion of the phase of work in the project for which he was specifically hired
and that he was duly notified thereof in compliance with the requirements of law.
Finding merit in the appeal, public respondent held that petitioners employment falls squarely within
the purview of Policy Instructions No. 20, a regulation intended for stabilizing employer-employee
relations in the construction industry which has aptly taken into consideration the unique characteristics
of respondent's business herein, quoting the pertinent provisions as follows:
Generally, there are two types of employees in the construction industry namely:
1) Project employees, and
2) Non-project employees
Project employees are those employed in connection with a particular construction project. . . .
projects in which they have been employed by a particular construction company. 4
Public respondent further found that upon completion of a particular phase of work in the project for
which petitioner's services have been hired, his termination was indubitably for cause. With these
justifications, public respondent set aside the appealed decision of the labor arbiter and entered a new
judgment dismissing the complaint for lack of merit. Petitioner filed a motion for reconsideration of the
aforesaid decision but the same was denied.
Petitioner now comes before Us by way of certiorari to set aside the aforesaid decision of public
respondent promulgated on August 1, 1984 for having been issued with grave abuse of discretion. It is
asserted in the instant petition that private respondent's argument that petitioner was only hired for a
fixed period of time cannot escape the factual finding of the Labor Arbiter's decision that the contract
entered into by private respondent with the petitioner is more of a scheme to evade its liability or
obligation under the law by making it appear that said petitioner is a project to project employee.
The Solicitor-General, when required to file a Comment to the instant petition, took the same stand as
petitioner citing the case Fequirin et al. vs. National Labor Relations Commission, et al. 5 as the basis for
considering petitioner as a regular and permanent employee, who should therefore be reinstated to his
position with backwages. 6
In view of the Solicitor-General's contrary stand to the decision of public respondent National Labor
Relations Commission, the latter was given an opportunity to file its own comment to the petition. In the
aforesaid comment, public respondent defends its decision in line with Article 281 of the Labor Code
which provides the exception to regular and casual employment, that is, when 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 employment. Public respondent contends that petitioner's
case falls within the exception and the Fegurin case relied upon by petitioner does not stand on all fours
with the present case because the complainants in said case had lengths of service for nine (9), eight (8)
and six (6) years, the shortest being three (3) years. In the instant case, petitioner worked only for over a
year, his last contract lasting only a span of four (4) months. Furthermore, Article 281 of this Labor Code
is intended for all industries except the construction industry. Precisely, Policy Instruction No. 20 was
promulgated for the reason that problems of regularity of employment in the construction industry has
continued to plague it. This policy merely implements the exception to Article 281 of the Labor Code. 7
We find merit in the petition as We sustain the position of the Solicitor-General that petitioner Telesforo
Magante was a regular employee of private respondent.
Article 281 of the Labor Code provides:
the time of the engagement of the employee or where the work or service to be performed is seasonal

broken shall be considered a regular employee with respect to the activity in which he is employed and
As aptly observed by the Solicitor-General, petitioner has established that since the very inception of his
employment in 1980, he was never deployed from project to project of private respondent but had been
regularly assigned to perform carpentry work under the supervision of a certain Bernardo Padaon who,
since 1964 until his resignation on January 2, 1982 worked for private respondent as the supervisor of its
Carpentry Department. This goes to show two things: that petitioner was assigned to perform tasks
which are usually necessary or desirable in the usual business or trade of private respondent; and that
said assignments did not end on a project to project basis, although the contrary was made to appear by
private respondent through the signing of separate employment contracts allegedly for different
projects because it is indeed obvious that petitioner continued to perform the same kind of work
throughout his period of employment allegedly considered to have been done on a project to project
basis.
Although petitioner had only rendered almost two years of service, nevertheless this should not detract
from his status of being a regular employee because as correctly stated by the labor arbiter, the
determining factor of the status of complainant-petitioner or any worker is the nature of the work
performed by the latter and the place where he performed his assignment.
We have re-examined the case of Fegurin vs. National Labor Relations Commission 8 and found that
although the facts of the said case are not on all fours with the instant petition there being a work pool
to which the complaining employees therein belonged, nonetheless, the doctrine therein may be
similarly applied in the case at bar considering that the nature of the work of petitioner herein and in
said case also involved carpentry work and there was a continuous assignment of similar workload from
project to project.
We held therein that the employment of petitioners with the company for several years [four (4) of
whom for nine (9) years, one (1) for eight (8) years, another for six (6) years, the shortest term being
three (3) years] despite the shorter employment periods specified in their notices of employment,
performing activities usually necessary or desirable in the usual business of the company, shows that
they are regular employees.
Moreover, if petitioner were employed as a "project employee" private respondent should have
submitted a report of termination to the nearest public employment office every time his employment is
terminated due to completion of each construction project, as required by Policy Instruction No.
20, 9 which provides:
projects in which they have been employed by a particular construction company. Moreover, the
company is not required to obtain a clearance from the Secretary of Labor in connection with such
termination. What is required of the company is a report to the nearest Public Employment Office for
statistical purposes. (Emphasis Supplied)
Throughout the duration of petitioner's employment, there should have been filed as many reports of
termination as there were construction projects actually finished if it were true that petitioner Telesforo
Magante was only a project worker.
The foregoing considered, public respondent National Labor Relations Commission gravely abused its
discretion in closing its eyes to the evidence on record and the factual findings of the labor arbiter in
setting aside the decision of the latter. Construing the employment contract signed by petitioner with
private respondent solely on its face without considering the surrounding circumstances in this case
serves to defeat the purpose for which the Labor Code and its implementing rules were enacted.
WHEREFORE, the petition for certiorari is granted, and the decision of the National Labor Relations
Commission, dated August 1, 1984 is hereby REVERSED and SET ASIDE and the decision of the Labor
Arbiter dated June 22, 1983 is hereby AFFIRMED and REINSTATED.
SO ORDERED.
G.R. No. L-48494 February 5, 1990
BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners,

vs.
RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President, and DOROTEO
R. ALEGRE, respondents.
Quasha, Asperilla, Ancheta, Peña & Nolasco for petitioners.
Mauricio G. Domogon for respondent Alegre.
NARVASA, J.:
The question presented by the proceedings at bar 1 is whether or not the provisions of the Labor
Code, 2 as amended,3 have anathematized "fixed period employment" or employment for a term.
The root of the controversy at bar is an employment contract in virtue of which Doroteo R. Alegre was
engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. 4 The contract
fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the
agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973,
and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those
contained in the original contract of July 18, 1971. 5
Some three months before the expiration of the stipulated period, or more precisely on April 20,1976,
Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the
termination of his services effective on July 16, 1976. The stated ground for the termination was
"completion of contract, expiration of the definite period of employment." And a month or so later, on
May 26, 1976, Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the
phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of contract."
However, at the investigation conducted by a Labor Conciliator of said report of termination of his
services, Alegre protested the announced termination of his employment. He argued that although his
contract did stipulate that the same would terminate on July 17, 1976, since his services were necessary
and desirable in the usual business of his employer, and his employment had lasted for five years, he had
acquired the status of a regular employee and could not be removed except for valid cause. 6 The
Regional Director considered Brent School's report as an application for clearance to terminate
employment (not a report of termination), and accepting the recommendation of the Labor Conciliator,
refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent
employee," to his former position without loss of seniority rights and with full back wages. The Director
pronounced "the ground relied upon by the respondent (Brent) in terminating the services of the
complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite oddly, as prohibited by Circular No.
8, series of 1969, of the Bureau of Private Schools. 7
Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded
the case to the Secretary of Labor for review. 8 The latter sustained the Regional Director. 9 Brent
appealed to the Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack of
merit and affirmed the Labor Secretary's decision, ruling that Alegre was a permanent employee who
could not be dismissed except for just cause, and expiration of the employment contract was not one of
the just causes provided in the Labor Code for termination of services. 10
The School is now before this Court in a last attempt at vindication. That it will get here.
The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time
when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. Indeed, the Code did
not come into effect until November 1, 1974, some three years after the perfection of the employment
contract, and rights and obligations thereunder had arisen and been mutually observed and enforced.
At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity
of term employment. It was impliedly but nonetheless clearly recognized by the Termination Pay Law,
R.A. 1052, 11 as amended by R.A. 1787. 12 Basically, this statute provided that—
In cases of employment, without a definite period, in a commercial, industrial, or agricultural

establishment or enterprise, the employer or the employee may terminate at any time the employment
with just cause; or without just cause in the case of an employee by serving written notice on the
employer at least one month in advance, or in the case of an employer, by serving such notice to the
employee at least one month in advance or one-half month for every year of service of the employee,
whichever is longer, a fraction of at least six months being considered as one whole year.
The employer, upon whom no such notice was served in case of termination of employment without
just cause, may hold the employee liable for damages.
The employee, upon whom no such notice was served in case of termination of employment without
just cause, shall be entitled to compensation from the date of termination of his employment in an
amount equivalent to his salaries or wages corresponding to the required period of notice.
There was, to repeat, clear albeit implied recognition of the licitness of term employment. RA 1787 also
enumerated what it considered to be just causes for terminating an employment without a definite
period, either by the employer or by the employee without incurring any liability therefor.
Prior, thereto, it was the Code of Commerce which governed employment without a fixed period, and
also implicitly acknowledged the propriety of employment with a fixed period. Its Article 302 provided
that —
In cases in which the contract of employment does not have a fixed period, any of the parties may
terminate it, notifying the other thereof one month in advance.
The factor or shop clerk shall have a right, in this case, to the salary corresponding to said month.
The salary for the month directed to be given by the said Article 302 of the Code of Commerce to the
factor or shop clerk, was known as the mesada (from mes, Spanish for "month"). When Article 302
(together with many other provisions of the Code of Commerce) was repealed by the Civil Code of the
Philippines, Republic Act No. 1052 was enacted avowedly for the precise purpose of reinstating
the mesada.
Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on
August 30,1950, itself deals with obligations with a period in section 2, Chapter 3, Title I, Book IV; and
with contracts of labor and for a piece of work, in Sections 2 and 3, Chapter 3, Title VIII, respectively, of
Book IV. No prohibition against term-or fixed-period employment is contained in any of its articles or is
otherwise deducible therefrom.
It is plain then that when the employment contract was signed between Brent School and Alegre on July
18, 1971, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof
Stipulations for a term were explicitly recognized as valid by this Court, for instance, in Biboso
v. Victorias Milling Co., Inc., promulgated on March 31, 1977, 13 and J. Walter Thompson Co.
(Phil.) v. NLRC, promulgated on December 29, 1983. 14 The Thompson case involved an executive who
had been engaged for a fixed period of three (3) years. Biboso involved teachers in a private school as
regards whom, the following pronouncement was made:
What is decisive is that petitioners (teachers) were well aware an the time that their tenure was for a
limited duration. Upon its termination, both parties to the employment relationship were free to renew
it or to let it lapse. (p. 254)
Under American law 15 the principle is the same. "Where a contract specifies the period of its duration, it
terminates on the expiration of such period." 16 "A contract of employment for a definite period
terminates by its own terms at the end of such period." 17
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor
Code (Presidential Decree No. 442), which went into effect on November 1, 1974. The Code contained
explicit references to fixed period employment, or employment with a fixed or definite period.
Nevertheless, obscuration of the principle of licitness of term employment began to take place at about
this time
Article 320, entitled "Probationary and fixed period employment," originally stated that the "termination
of employment of probationary employees and those employed WITH A FIXED PERIOD shall be subject
to such regulations as the Secretary of Labor may prescribe." The asserted objective to was "prevent the
circumvention of the right of the employee to be secured in their employment as provided . . . (in the
Code)."
Article 321 prescribed the just causes for which an employer could terminate "an employment without a
definite period."
And Article 319 undertook to define "employment without a fixed period" in the following manner: 18
An employment shall be deemed to be without a definite period for purposes of this Chapter where the
employee has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is seasonal in nature and
the employment is for the duration of the season.
The question immediately provoked by a reading of Article 319 is whether or not a voluntary agreement
on a fixed term or period would be valid where the employee "has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer." The definition
seems a non sequitur. From the premise — that the duties of an employee entail "activities which are
usually necessary or desirable in the usual business or trade of the employer the" — conclusion does not
necessarily follow that the employer and employee should be forbidden to stipulate any period of time
for the performance of those activities. There is nothing essentially contradictory between a definite
period of an employment contract and the nature of the employee's duties set down in that contract as
being "usually necessary or desirable in the usual business or trade of the employer." The concept of the
employee's duties as being "usually necessary or desirable in the usual business or trade of the
employer" is not synonymous with or identical to employment with a fixed term. Logically, the decisive
determinant in term employment should not be the activities that the employee is called upon to
perform, but the day certain agreed upon by the parties for the commencement and termination of
their employment relationship, a day certain being understood to be "that which must necessarily come,
although it may not be known when." 19 Seasonal employment, and employment for a particular
project are merely instances employment in which a period, where not expressly set down, necessarily
implied.
Of course, the term — period has a definite and settled signification. It means, "Length of existence;
duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a bound;
conclusion; termination. A series of years, months or days in which something is completed. A time of
definite length. . . . the period from one fixed date to another fixed date . . ." 20 It connotes a "space of
time which has an influence on an obligation as a result of a juridical act, and either suspends its
demandableness or produces its extinguishment." 21 It should be apparent that this settled and familiar
notion of a period, in the context of a contract of employment, takes no account at all of the nature of
the duties of the employee; it has absolutely no relevance to the character of his duties as being "usually
necessary or desirable to the usual business of the employer," or not.
Subsequently, the foregoing articles regarding employment with "a definite period" and "regular"
employment were amended by Presidential Decree No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the
reference to persons "employed with a fixed period," and was renumbered (becoming Article 271). The
article 22 now reads:
. . . Probationary employment.—Probationary employment shall not exceed six months from the date
the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer
period. The services of an employee who has been engaged in a probationary basis may be terminated
for a just cause or when he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his engagement. An employee
who is allowed to work after a probationary period shall be considered a regular employee.
Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra) by
(a) deleting mention of employment with a fixed or definite period, (b) adding a general exclusion clause
declaring irrelevant written or oral agreements "to the contrary," and (c) making the provision treat
exclusively of "regular" and "casual" employment. As revised, said article, renumbered 270, 23 now
reads:
. . . Regular and Casual Employment.—The provisions of written agreement to the contrary

time of the engagement of the employee or where the work or service to be employed is seasonal in
An employment shall be deemed to he casual if it is not covered by the preceding

paragraph: provided, that, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such actually exists.
The first paragraph is identical to Article 319 except that, as just mentioned, a clause has been added, to
wit: "The provisions of written agreement to the contrary notwithstanding and regardless of the oral
agreements of the parties . . ." The clause would appear to be addressed inter alia to agreements fixing a
definite period for employment. There is withal no clear indication of the intent to deny validity to
employment for a definite period. Indeed, not only is the concept of regular employment not essentially
inconsistent with employment for a fixed term, as above pointed out, Article 272 of the Labor Code, as
amended by said PD 850, still impliedly acknowledged the propriety of term employment: it listed the
"just causes" for which "an employer may terminate employment without a definite period," thus giving
rise to the inference that if the employment be with a definite period, there need be no just cause for
termination thereof if the ground be precisely the expiration of the term agreed upon by the parties for
the duration of such employment.
Still later, however, said Article 272 (formerly Article 321) was further amended by Batas Pambansa
Bilang 130, 24 to eliminate altogether reference to employment without a definite period. As lastly
amended, the opening lines of the article (renumbered 283), now pertinently read: "An employer may
terminate an employment for any of the following just causes: . . . " BP 130 thus completed the
elimination of every reference in the Labor Code, express or implied, to employment with a fixed or
definite period or term.
It is in the light of the foregoing description of the development of the provisions of the Labor Code
bearing on term or fixed-period employment that the question posed in the opening paragraph of this
opinion should now be addressed. Is it then the legislative intention to outlaw stipulations in
employment contracts laying down a definite period therefor? Are such stipulations in essence contrary
to public policy and should not on this account be accorded legitimacy?
On the one hand, there is the gradual and progressive elimination of references to term or fixed-period
employment in the Labor Code, and the specific statement of the rule 25 that—
. . . Regular and Casual Employment.— The provisions of written agreement to the contrary

time of the engagement of the employee or where the work or service to be employed is seasonal in
An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: provided, that, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such actually exists.
There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the
validity and propriety of contracts and obligations with a fixed or definite period, and imposes no
restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it
specie, goods or services, except the general admonition against stipulations contrary to law, morals,
good customs, public order or public policy. 26 Under the Civil Code, therefore, and as a general
proposition, fixed-term employment contracts are not limited, as they are under the present Labor
Code, to those by nature seasonal or for specific projects with pre-determined dates of completion; they
also include those to which the parties by free choice have assigned a specific date of termination.
Some familiar examples may be cited of employment contracts which may be neither for seasonal work
nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas
employment contracts, for one, to which, whatever the nature of the engagement, the concept of
regular employment will all that it implies does not appear ever to have been applied, Article 280 of the
Labor Code not withstanding; also appointments to the positions of dean, assistant dean, college
secretary, principal, and other administrative offices in educational institutions, which are by practice or
tradition rotated among the faculty members, and where fixed terms are a necessity, without which no
reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy,
Instructions No. 8 of the Minister of Labor 27 implicitly recognize that certain company officials may be
elected for what would amount to fixed periods, at the expiration of which they would have to stand
down, in providing that these officials," . . . may lose their jobs as president, executive vice-president or
vice-president, etc. because the stockholders or the board of directors for one reason or another did not
re-elect them."
There can of course be no quarrel with the proposition that where from the circumstances it is apparent
that periods have been imposed to preclude acquisition of tenurial security by the employee, they
should be struck down or disregarded as contrary to public policy, morals, etc. But where no such intent
to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist, e.g.,
where it is indeed the employee himself who insists upon a period or where the nature of the
engagement is such that, without being seasonal or for a specific project, a definite date of termination
is a sine qua non, would an agreement fixing a period be essentially evil or illicit, therefore anathema?
Would such an agreement come within the scope of Article 280 which admittedly was enacted "to
prevent the circumvention of the right of the employee to be secured in . . . (his) employment?"
As it is evident from even only the three examples already given that Article 280 of the Labor Code,
under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts
to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without
reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his
engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The
law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the
whole concept of term employment and subverting to boot the principle of freedom of contract to
remedy the evil of employer's using it as a means to prevent their employees from obtaining security of
tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off
the head.
It is a salutary principle in statutory construction that there exists a valid presumption that undesirable
consequences were never intended by a legislative measure, and that a construction of which the
statute is fairly susceptible is favored, which will avoid all objecionable mischievous, undefensible,
wrongful, evil and injurious consequences. 28
Nothing is better settled than that courts are not to give words a meaning which would lead to absurd or
unreasonable consequences. That s a principle that does back to In re Allen decided oil October 27,
1903, where it was held that a literal interpretation is to be rejected if it would be unjust or lead to
absurd results. That is a strong argument against its adoption. The words of Justice Laurel are
particularly apt. Thus: "The fact that the construction placed upon the statute by the appellants would
lead to an absurdity is another argument for rejecting it. . . ." 29
. . . We have, here, then a case where the true intent of the law is clear that calls for the application of
the cardinal rule of statutory construction that such intent of spirit must prevail over the letter thereof,
for whatever is within the spirit of a statute is within the statute, since adherence to the letter would
result in absurdity, injustice and contradictions and would defeat the plain and vital purpose of the
statute. 30
purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it
consequences.
Such interpretation puts the seal on Bibiso 31 upon the effect of the expiry of an agreed period of
employment as still good rule—a rule reaffirmed in the recent case of Escudero vs. Office of the
President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served
by her school a notice of termination following the expiration of the last of three successive fixed-term
employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was
probationary, contractual in nature, and one with a definitive period. At the expiration of the period
stipulated in the contract, her appointment was deemed terminated and the letter informing her of the
non-renewal of her contract is not a condition sine qua non before Reyes may be deemed to have
ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes' contract of
employment was due to expire and that the contract would no longer be renewed. It is not a letter of
termination. The interpretation that the notice is only a reminder is consistent with the court's finding
in Labajo supra. ...32
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last
contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written
advice given the Department of Labor with copy to said petitioner was a mere reminder of the
impending expiration of his contract, not a letter of termination, nor an application for clearance to
terminate which needed the approval of the Department of Labor to make the termination of his
services effective. In any case, such clearance should properly have been given, not denied.
WHEREFORE, the public respondent's Decision complained of is REVERSED and SET ASIDE. Respondent
Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the
expiration of the agreed term of period thereof, he is declared not entitled to reinstatement and the
other relief awarded and confirmed on appeal in the proceedings below. No pronouncement as to costs.
SO ORDERED.
G.R. No. 61594 September 28, 1990
PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner,

vs
HON. BLAS F. OPLE, in his capacity as Minister of Labor; HON. VICENTE LEOGARDO, JR., in his capacity
as Deputy Minister; ETHELYNNE B. FARRALES and MARIA MOONYEEN MAMASIG, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.
Ledesma, Saludo & Associates for private respondents.
FELICIANO, J.:
On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a foreign

corporation licensed to do business in the Philippines, executed in Manila two (2) separate contracts of
employment, one with private respondent Ethelynne B. Farrales and the other with private respondent
Ma. M.C. Mamasig. 1 The contracts, which became effective on 9 January 1979, provided in pertinent
portion as follows:
5. DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of three (3) years, but can be extended by the mutual consent of the
parties.
xxx xxx xxx
6. TERMINATION
xxx xxx xxx
Notwithstanding anything to contrary as herein provided, PIA reserves the right to terminate this
agreement at any time by giving the EMPLOYEE notice in writing in advance one month before the
intended termination or in lieu thereof, by paying the EMPLOYEE wages equivalent to one month's
salary.
xxx xxx xxx
10. APPLICABLE LAW:
This agreement shall be construed and governed under and by the laws of Pakistan, and only the Courts
of Karachi, Pakistan shall have the jurisdiction to consider any matter arising out of or under this
agreement.
Respondents then commenced training in Pakistan. After their training period, they began discharging
their job functions as flight attendants, with base station in Manila and flying assignments to different
parts of the Middle East and Europe.
On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of the contracts of
employment, PIA through Mr. Oscar Benares, counsel for and official of the local branch of PIA, sent
separate letters both dated 1 August 1980 to private respondents Farrales and Mamasig advising both
that their services as flight stewardesses would be terminated "effective 1 September 1980,
conformably to clause 6 (b) of the employment agreement [they had) executed with [PIA]."2
On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a complaint,
docketed as NCR-STF-95151-80, for illegal dismissal and non-payment of company benefits and bonuses,
against PIA with the then Ministry of Labor and Employment ("MOLE"). After several unfruitful attempts
at conciliation, the MOLE hearing officer Atty. Jose M. Pascual ordered the parties to submit their
position papers and evidence supporting their respective positions. The PIA submitted its position
paper, 3 but no evidence, and there claimed that both private respondents were habitual absentees;
that both were in the habit of bringing in from abroad sizeable quantities of "personal effects"; and that
PIA personnel at the Manila International Airport had been discreetly warned by customs officials to
advise private respondents to discontinue that practice. PIA further claimed that the services of both
private respondents were terminated pursuant to the provisions of the employment contract.
In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered the reinstatement of
private respondents with full backwages or, in the alternative, the payment to them of the amounts
equivalent to their salaries for the remainder of the fixed three-year period of their employment
contracts; the payment to private respondent Mamasig of an amount equivalent to the value of a round
trip ticket Manila-USA Manila; and payment of a bonus to each of the private respondents equivalent to
their one-month salary. 4 The Order stated that private respondents had attained the status of regular
employees after they had rendered more than a year of continued service; that the stipulation limiting
the period of the employment contract to three (3) years was null and void as violative of the provisions
of the Labor Code and its implementing rules and regulations on regular and casual employment; and
that the dismissal, having been carried out without the requisite clearance from the MOLE, was illegal
and entitled private respondents to reinstatement with full backwages.
On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy Minister, MOLE,
adopted the findings of fact and conclusions of the Regional Director and affirmed the latter's award
save for the portion thereof giving PIA the option, in lieu of reinstatement, "to pay each of the
complainants [private respondents] their salaries corresponding to the unexpired portion of the
contract[s] [of employment] . . .". 5
In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional Director and the
Order of the Deputy Minister as having been rendered without jurisdiction; for having been rendered
without support in the evidence of record since, allegedly, no hearing was conducted by the hearing
officer, Atty. Jose M. Pascual; and for having been issued in disregard and in violation of petitioner's
rights under the employment contracts with private respondents.
1. Petitioner's first contention is that the Regional Director, MOLE, had no jurisdiction over the subject
matter of the complaint initiated by private respondents for illegal dismissal, jurisdiction over the same
being lodged in the Arbitration Branch of the National Labor Relations Commission ("NLRC") It appears
to us beyond dispute, however, that both at the time the complaint was initiated in September 1980
and at the time the Orders assailed were rendered on January 1981 (by Regional Director Francisco L.
Estrella) and August 1982 (by Deputy Minister Vicente Leogardo, Jr.), the Regional Director had
jurisdiction over termination cases.
Art. 278 of the Labor Code, as it then existed, forbade the termination of the services of employees with
at least one (1) year of service without prior clearance from the Department of Labor and Employment:
Art. 278. Miscellaneous Provisions — . . .
(b) With or without a collective agreement, no employer may shut down his establishment or dismiss or
terminate the employment of employees with at least one year of service during the last two (2) years,
whether such service is continuous or broken, without prior written authority issued in accordance with
such rules and regulations as the Secretary may promulgate . . . (emphasis supplied)
Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code, made clear that in case
of a termination without the necessary clearance, the Regional Director was authorized to order the
reinstatement of the employee concerned and the payment of backwages; necessarily, therefore, the
Regional Director must have been given jurisdiction over such termination cases:
Sec. 2. Shutdown or dismissal without clearance. — Any shutdown or dismissal without prior clearance
shall be conclusively presumed to be termination of employment without a just cause. The Regional
Director shall, in such case order the immediate reinstatement of the employee and the payment of his
wages from the time of the shutdown or dismissal until the time of reinstatement. (emphasis supplied)
Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April 1976, was similarly very explicit
about the jurisdiction of the Regional Director over termination of employment cases:
Under PD 850, termination cases — with or without CBA — are now placed under the original
jurisdiction of the Regional Director. Preventive suspension cases, now made cognizable for the first
time, are also placed under the Regional Director. Before PD 850, termination cases where there was a
CBA were under the jurisdiction of the grievance machinery and voluntary arbitration, while termination
cases where there was no CBA were under the jurisdiction of the Conciliation Section.
In more details, the major innovations introduced by PD 850 and its implementing rules and regulations
with respect to termination and preventive suspension cases are:
1. The Regional Director is now required to rule on every application for clearance, whether there is
opposition or not, within ten days from receipt thereof.
xxx xxx xxx
(Emphasis supplied)
2. The second contention of petitioner PIA is that, even if the Regional Director had jurisdiction, still his
order was null and void because it had been issued in violation of petitioner's right to procedural due
process .6 This claim, however, cannot be given serious consideration. Petitioner was ordered by the
Regional Director to submit not only its position paper but also such evidence in its favor as it might
have. Petitioner opted to rely solely upon its position paper; we must assume it had no evidence to
sustain its assertions. Thus, even if no formal or oral hearing was conducted, petitioner had ample
opportunity to explain its side. Moreover, petitioner PIA was able to appeal his case to the Ministry of
Labor and Employment. 7
There is another reason why petitioner's claim of denial of due process must be rejected. At the time the
complaint was filed by private respondents on 21 September 1980 and at the time the Regional Director
issued his questioned order on 22 January 1981, applicable regulation, as noted above, specified that a
"dismissal without prior clearance shall be conclusively presumed to be termination of
employment without a cause", and the Regional Director was required in such case to" order the
immediate reinstatement of the employee and the payment of his wages from the time of the shutdown
or dismiss until . . . reinstatement." In other words, under the then applicable rule, the Regional Director
did not even have to require submission of position papers by the parties in view of the conclusive (juris
et de jure) character of the presumption created by such applicable law and regulation. In Cebu Institute
of Technology v. Minister of Labor and Employment, 8 the Court pointed out that "under Rule 14, Section
2, of the Implementing Rules and Regulations, the termination of [an employee] which was without
previous clearance from the Ministry of Labor is conclusively presumed to be without [just] cause . . . [a
presumption which] cannot be overturned by any contrary proof however strong."
3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract of employment with
private respondents Farrales and Mamasig, arguing that its relationship with them was governed by the
provisions of its contract rather than by the general provisions of the Labor Code. 9
Paragraph 5 of that contract set a term of three (3) years for that relationship, extendible by agreement
between the parties; while paragraph 6 provided that, notwithstanding any other provision in the
Contract, PIA had the right to terminate the employment agreement at any time by giving one-month's
notice to the employee or, in lieu of such notice, one-months salary.
A contract freely entered into should, of course, be respected, as PIA argues, since a contract is the law
between the parties. 10 The principle of party autonomy in contracts is not, however, an absolute
principle. The rule in Article 1306, of our Civil Code is that the contracting parties may establish such
stipulations as they may deem convenient, "provided they are not contrary to law, morals, good
customs, public order or public policy." Thus, counter-balancing the principle of autonomy of
contracting parties is the equally general rule that provisions of applicable law, especially provisions
relating to matters affected with public policy, are deemed written into the contract. 11 Put a little
differently, the governing principle is that parties may not contract away applicable provisions of law
especially peremptory provisions dealing with matters heavily impressed with public interest. The law
relating to labor and employment is clearly such an area and parties are not at liberty to insulate
themselves and their relationships from the impact of labor laws and regulations by simply contracting
with each other. It is thus necessary to appraise the contractual provisions invoked by petitioner PIA in
terms of their consistency with applicable Philippine law and regulations.
As noted earlier, both the Labor Arbiter and the Deputy Minister, MOLE, in effect held that paragraph 5
of that employment contract was inconsistent with Articles 280 and 281 of the Labor Code as they
existed at the time the contract of employment was entered into, and hence refused to give effect to
said paragraph 5. These Articles read as follows:
Art. 280. Security of Tenure. — In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to his
backwages computed from the time his compensation was withheld from him up to the time his
reinstatement.
Art. 281. Regular and Casual Employment. The provisions of written agreement to the contrary
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: provided,
broken, shall be considered as regular employee with respect to the activity in which he is employed and
his employment shall continue while such actually exists. (Emphasis supplied)
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., 12 the Court had occasion to examine in detail
the question of whether employment for a fixed term has been outlawed under the above quoted
provisions of the Labor Code. After an extensive examination of the history and development of Articles
280 and 281, the Court reached the conclusion that a contract providing for employment with a fixed
period was not necessarily unlawful:
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 reasonable interpretation, to preclude absurdity in its application. Outlawing the whole
concept of term employment and subverting to boot the principle of freedom of contract to remedy the
evil of employers" using it as a means to prevent their employees from obtaining security of tenure is
like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head.
xxx xxx xxx
purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it
consequences. (emphasis supplied)
It is apparent from Brent School that the critical consideration is the presence or absence of a substantial
indication that the period specified in an employment agreement was designed to circumvent the
security of tenure of regular employees which is provided for in Articles 280 and 281 of the Labor Code.
This indication must ordinarily rest upon some aspect of the agreement other than the mere
specification of a fixed term of the ernployment agreement, or upon evidence aliunde of the intent to
evade.
Examining the provisions of paragraphs 5 and 6 of the employment agreement between petitioner PIA
and private respondents, we consider that those provisions must be read together and when so read,
the fixed period of three (3) years specified in paragraph 5 will be seen to have been effectively
neutralized by the provisions of paragraph 6 of that agreement. Paragraph 6 in effect took back from the
employee the fixed three (3)-year period ostensibly granted by paragraph 5 by rendering such period in
effect a facultative one at the option of the employer PIA. For petitioner PIA claims to be authorized to
shorten that term, at any time and for any cause satisfactory to itself, to a one-month period, or even
less by simply paying the employee a month's salary. Because the net effect of paragraphs 5 and 6 of the
agreement here involved is to render the employment of private respondents Farrales and Mamasig
basically employment at the pleasure of petitioner PIA, the Court considers that paragraphs 5 and 6
were intended to prevent any security of tenure from accruing in favor of private respondents even
during the limited period of three (3) years,13 and thus to escape completely the thrust of Articles 280
and 281 of the Labor Code.
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly,
the law of Pakistan as the applicable law of the agreement and, secondly, lays the venue for settlement
of any dispute arising out of or in connection with the agreement "only [in] courts of Karachi Pakistan".
The first clause of paragraph 10 cannot be invoked to prevent the application of Philippine labor laws
and regulations to the subject matter of this case, i.e., the employer-employee relationship between
petitioner PIA and private respondents. We have already pointed out that the relationship is much
affected with public interest and that the otherwise applicable Philippine laws and regulations cannot be
rendered illusory by the parties agreeing upon some other law to govern their relationship. Neither may
petitioner invoke the second clause of paragraph 10, specifying the Karachi courts as the sole venue for
the settlement of dispute; between the contracting parties. Even a cursory scrutiny of the relevant
circumstances of this case will show the multiple and substantive contacts between Philippine law and
Philippine courts, on the one hand, and the relationship between the parties, upon the other: the
contract was not only executed in the Philippines, it was also performed here, at least partially; private
respondents are Philippine citizens and respondents, while petitioner, although a foreign corporation, is
licensed to do business (and actually doing business) and hence resident in the Philippines; lastly, private
respondents were based in the Philippines in between their assigned flights to the Middle East and
Europe. All the above contacts point to the Philippine courts and administrative agencies as a proper
forum for the resolution of contractual disputes between the parties. Under these circumstances,
paragraph 10 of the employment agreement cannot be given effect so as to oust Philippine agencies and
courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event, the petitioner
PIA did not undertake to plead and prove the contents of Pakistan law on the matter; it must therefore
be presumed that the applicable provisions of the law of Pakistan are the same as the applicable
provisions of Philippine law.14
We conclude that private respondents Farrales and Mamasig were illegally dismissed and that public
respondent Deputy Minister, MOLE, had not committed any grave abuse of discretion nor any act
without or in excess of jurisdiction in ordering their reinstatement with backwages. Private respondents
are entitled to three (3) years backwages without qualification or deduction. Should their reinstatement
to their former or other substantially equivalent positions not be feasible in view of the length of time
which has gone by since their services were unlawfully terminated, petitioner should be required to pay
separation pay to private respondents amounting to one (1) month's salary for every year of service
rendered by them, including the three (3) years service putatively rendered.
ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for lack of merit, and the Order dated 12
August 1982 of public respondent is hereby AFFIRMED, except that (1) private respondents are entitled
to three (3) years backwages, without deduction or qualification; and (2) should reinstatement of private
respondents to their former positions or to substantially equivalent positions not be feasible, then
petitioner shall, in lieu thereof, pay to private respondents separation pay amounting to one (1)-month's
salary for every year of service actually rendered by them and for the three (3) years putative service by
private respondents. The Temporary Restraining Order issued on 13 September 1982 is hereby LIFTED.
Costs against petitioner.
SO ORDERED.
G.R. No. 78693 January 28, 1991
ZOSIMO CIELO, petitioner,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, HENRY LEI and/or HENRY LEI
TRUCKING respondents.
Francisco D. Alas for petitioner.

Mateo G. Delegencia for private respondent.
CRUZ, J.:
The petitioner is a truck driver who claims he was illegally dismissed by the private respondent, the
Henry Lei Trucking Company. The Labor Arbiter found for him and ordered his reinstatement with back
wages.1 On appeal, the decision was reversed by the National Labor Relations Commission, which held
that the petitioner's employment had expired under a valid contract.2 The petitioner then came to us
on certiorari under Rule 65 of the Rules of Court.
Required to submit a Comment (not to file a motion to dismiss), the private respondent nevertheless
moved to dismiss on the ground that the petition was filed sixty-eight days after service of the
challenged decision on the petitioner, hence late. The motion was untenable, of course. Petitions
for certiorari under Rule 65 may be instituted within a reasonable period, which the Court has
consistently reckoned at three months.**
In his own Comment, the Solicitor General defended the public respondent and agreed that the contract
between the petitioner and the private respondent was a binding agreement not contrary to law, morals
or public policy. The petitioner's services could be legally terminated upon the expiration of the period
agreed upon, which was only six months. The petitioner could therefore not complain that he had been
illegally dismissed.
As an examination of the claimed agreement was necessary to the resolution of this case, the Court
required its production by the petitioner. But he could not comply because he said he had not been
given a copy by the private respondent. A similar requirement proved fruitless when addressed to the
private respondent, which explained it could not locate the folder of the case despite diligent search. It
was only on October 15, 1990, that the records of the case, including the subject agreement, were
finally received by the Court from the NLRC, which had obtained them from its Cagayan de Oro regional
office.3
The said agreement reads in full as follows:
AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Agreement made and executed by and between:
HENRY LEI, of legal age, Filipino citizen, married, and a resident of Digos, Davao del Sur, now and
hereinafter called the FIRST PARTY,
—a n d —
ZOSIMO CIELO, of legal age, married, Filipino citizen, and a resident of Agusan, Canyon, Camp Philipps,
now and hereinafter called the SECOND PARTY,
WITNESSETH
That the FIRST PARTY is an owner of some cargo trucks.
WHEREAS, the SECOND PARTY desires to operate one of the said cargo trucks which he himself shall
drive for income;
NOW, THEREFORE, for the foregoing premises, the FIRST PARTY does hereby assign one cargo truck of
his fleet to the SECOND PARTY under the following conditions and stipulations:
1. That the term of this Agreement is six (6) months from and after the execution hereof, unless
otherwise earlier terminated at the option of either party;
2. That the net income of the said vehicle after fuel and oil shall be divided by and between them on
ninety/ten percent (90/10%) basis in favor of the FIRST PARTY;
3. That there is no employer/employee relationship between the parties, the nature of this Agreement
being contractual;
4. In the event the SECOND PARTY needs a helper the personnel so employed by him shall be to his
personal account, who shall be considered his own employee;
5. That the loss of or damage to the said vehicle shall be to account of the SECOND PARTY; he shall
return the unit upon the expiration or termination of this contract in the condition the same was
received by him, fair wear and tear excepted.
IN WITNESS WHEREOF, the parties hereunto affixed their signature on this 30th day of June, 1984, at
Digos, Davao del Sur, Philippines.
(Sgd.) (Sgd.)
HENRY LEI ZOSIMO CIELO
First Party Second Party
SIGNED IN THE PRESENCE OF:
(Sgd.) (Sgd.)
VICTOR CHAN AMALFE M. NG
The agreement was supposed to have commenced on June 30, 1984, and to end on December 31, 1984.
On December 22, 1984, however, the petitioner was formally notified by the private respondent of the
termination of his services on the ground of expiration of their contract. Soon thereafter, on January 22,
1985, the petitioner filed his complaint with the Ministry of Labor and Employment.
In his position paper, the petitioner claimed he started working for the private respondent on June 16,
1984, and having done so for more than six months had acquired the status of a regular employee. As
such, he could no longer be dismissed except for lawful cause. He also contended that he had been
removed because of his refusal to sign, as required by the private respondent, an affidavit reading as
follows:
AFFIDAVIT
That I, ZOSIMO CIELO, Filipino, of legal age, married/single and a resident of Agusan Canyon, Camp
Philipps, after having been duly sworn to in accordance with law, hereby depose and say:
That I am one of the drivers of the trucks of Mr. HENRY LEI whose hauling trucks are under contract with
the Philippine Packing Corporation;
That I have received my salary and allowances from Mr. HENRY LEI the sum of P1,421.10 for the month
of October 1984. That I have no more claim against the said Mr. Henry Lei.
IN WITNESS WHEREOF, I have hereunto affixed my signature this 15th day of November 1984.
Driver
The private respondent rests its case on the agreement and maintains that the labor laws are not
applicable because the relations of the parties are governed by their voluntary stipulations. The contract
having expired, it was the prerogative of the trucking company to renew it or not as it saw fit.
The writ will issue.
While insisting that it is the agreement that regulates its relations with the petitioner, the private
respondent is ensnared by its own words. The agreement specifically declared that there was no
employer-employee relationship between the parties. Yet the affidavit the private respondent prepared
required the petitioner to acknowledge that "I have received my salary and allowances from Mr. Henry
Lei," suggesting an employment relationship. According to its position paper, the petitioner's refusal to
sign the affidavit constituted disrespect or insubordination, which had "some bearing on the renewal of
his contract of employment with the respondent." Of this affidavit, the private respondent had this to
say:
. . . Since October 1984, respondent adopted a new policy to require all their employees to sign an
affidavit to the effect that they received their salaries. Copy of which is hereto attached as Annex "C,"
covering the months of October and November 1984. All other employees of the respondent signed the
said affidavit, only herein complainant refused to do so for reasons known only to him. . . .
It appears from the records that all the drivers of the private respondent have been hired on a fixed
contract basis, as evidenced by the mimeographed form of the agreement and of the affidavit. The
private respondent merely filled in the blanks with the corresponding data, such as the driver's name
and address, the amount received by him, and the date of the document. Each driver was paid through
individual vouchers4 rather than a common payroll, as is usual in companies with numerous employees.
The private respondent's intention is obvious. It is remarkable that neither the NLRC nor the Solicitor
General recognized it. There is no question that the purpose behind these individual contracts was to
evade the application of the labor laws by making it appear that the drivers of the trucking company
were not its regular employees.
Under these arrangements, the private respondent hoped to be able to terminate the services of the
drivers without the inhibitions of the Labor Code. All it had to do was refuse to renew the agreements,
which, significantly, were uniformly limited to a six-month period. No cause had to be established
because such renewal was subject to the discretion of the parties. In fact, the private respondent did not
even have to wait for the expiration of the contract as it was there provided that it could be "earlier
terminated at the option of either party."
By this clever scheme, the private respondent could also prevent the drivers from becoming regular
employees and thus be entitled to security of tenure and other benefits, such as a minimum wage, cost-
of-living allowances, vacation and sick leaves, holiday pay, and other statutory requirements. The private
respondent argues that there was nothing wrong with the affidavit because all the affiant acknowledged
therein was full payment of the amount due him under the agreement. Viewed in this light, such
acknowledgment was indeed not necessary at all because this was already embodied in the vouchers
signed by the payee-driver.1âwphi1 But the affidavit, for all its seeming innocuousness, imported more
than that. What was insidious about the document was the waiver the affiant was unwarily making of
the statutory rights due him as an employee of the trucking company.
And employee he was despite the innocent protestations of the private respondent. We accept the
factual finding of the Labor Arbiter that the petitioner was a regular employee of the private
respondent. The private respondent is engaged in the trucking business as a hauler of cattle, crops and
other cargo for the Philippine Packing Corporation. This business requires the services of drivers, and
continuously because the work is not seasonal, nor is it limited to a single undertaking or operation.
Even if ostensibly hired for a fixed period, the petitioner should be considered a regular employee of the
private respondent, conformably to Article 280 of the Labor Code providing as follows:
be regular where the employee has been engaged to perform activities which are usually necessarily or
An employment shall be deemed to be casual if it is not covered by the preceding paragraph; Provided,

his employment shall continue while such actually exists. (Emphasis supplied)
In Brent School, Inc. vs. Zamora, the Court affirmed the general principle that "where from the
circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security
by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc."
Such circumstances have been sufficiently established in the case at bar and justify application of the
following conclusions:
Code itself has singled out: agreements entered into precisely to circumvent security of tenure.
The agreement in question had such a purpose and so was null and void ab initio.
The private respondent's argument that the petitioner could at least be considered on probation basis
only and therefore separable at will is self-defeating. The Labor Code clearly provides as follows:
Art. 281. Probationary employment. — Probationary employment shall not exceed six (6) months from
the date the employee started working, unless it is covered by an apprenticeship agreement stipulating
a longer period. The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be considered a regular employee.
There is no question that the petitioner was not engaged as an apprentice, being already an experienced
truck driver when he began working for the private respondent. Neither has it been shown that he was
informed at the time of his employment of the reasonable standards under which he could qualify as a
regular employee. It is plain that the petitioner was hired at the outset as a regular employee. At any
rate, even assuming that the original employment was probationary, the Labor Arbiter found that the
petitioner had completed more than six month's service with the trucking company and so had acquired
the status of a regular employee at the time of his dismissal.
Even if it be assumed that the six-month period had not yet been completed, it is settled that the
probationary employee cannot be removed except also for cause as provided by law. It is not alleged
that the petitioner was separated for poor performance; in fact, it is suggested by the private
respondent that he was dismissed for disrespect and insubordination, more specifically his refusal to
sign the affidavit as required by company policy. Hence, even as a probationer, or more so as a regular
employee, the petitioner could not be validly removed under Article 282 of the Labor Code, providing as
follows:
Art. 282. Termination by employer. — An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
In refusing to sign the affidavit as required by the private respondent, the petitioner was merely
protecting his interests against an unguarded waiver of the benefits due him under the Labor Code. Such
willful disobedience should commend rather than prejudice him for standing up to his rights, at great
risk to his material security, against the very source of his livelihood.
The Court looks with stern disapproval at the contract entered into by the private respondent with the
petitioner (and who knows with how many other drivers). The agreement was a clear attempt to exploit
the unwitting employee and deprive him of the protection of the Labor Code by making it appear that
the stipulations of the parties were governed by the Civil Code as in ordinary private transactions. They
were not, to be sure. The agreement was in reality a contract of employment into which were read the
provisions of the Labor Code and the social justice policy mandated by the Constitution. It was a
deceitful agreement cloaked in the habiliments of legality to conceal the selfish desire of the employer
to reap undeserved profits at the expense of its employees. The fact that the drivers are on the whole
practically unlettered only makes the imposition more censurable and the avarice more execrable.
WHEREFORE, the petition is GRANTED. The decision of the National Labor Relations Commission is SET
ASIDE and that of the Labor Arbiter REINSTATED, with costs against the private respondents.
SO ORDERED.
G.R. No. 106654 December 16, 1994
PANTRANCO NORTH EXPRESS, INC., and/or ABELARDO DE LEON, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, Second Division, and RODOLFO PERONILA, respondents.
The Government Corporate Counsel for petitioner.
Alfonso A. Osia for private respondent.
REGALADO, J.:
This special civil action for certiorari assails and seeks the nullification of two resolutions of the National
Labor Relations Commission (NLRC) of the National Capital Region (NCR), dated July 2, 1992 and August
11, 1992,1 holding that private respondent Rodolfo Peronila was illegally dismissed by petitioner
corporation and imposing sanctions therefore.
It appears on the record that sometime in 1971, private respondent Peronila was employed as a driver
of Pantranco North Express, Inc., a domestic corporation engaged in the public transportation business
as a common carrier, and of which its co-petitioner Abelardo de Leon is a manager.
In 1973, Peronila was administratively investigated by the corporation for his absence from work of
more than two and one-half months without leave. According to an investigation report of petitioners'
area manager, dated March 10, 1973, Peronila claimed that he went on absence without leave from his
work from November 1, 1972 up to February 16, 1973 which was date of the investigation, or one
hundred seven calendar days continuously, because "he went to Cotabato, Mindanao to visit his dead
grandfather during the period of his unofficial absence."2
Finding the belated explanation of Peronila insufficient, the petitioner declared that private respondent
had "grossly violated the provisions of (its) existing company policies, CVT Policy No. 71-102" and it
consequently "dismissed the respondent from service upon receipt of the approved clearance from the
NLRC."3
In an order4 dated March 20, 1973, Mediator-Factfinder Loreto V. Poblete of the National Relations
Commission, Regional Office No. II in Tuguegarao, Cagayan, affirmed the dismissal made by petitioner
for being duly supported by the evidence and made in accordance with law.
Fifteen years after such termination of his employment, Peronila reappeared in 1988 and implored
petitioner to reconsider his dismissal, which plea was initially denied by petitioner. However, due to
insistent appeals by Peronila, petitioner eventually acceded and hired him as a driver, but on a
contractual basis for a fixed period of one month.5
The terms and conditions of that new employment on a contractual basis are contained in a letter, dated
April 5, 1988, signed by the general manager of the company and voluntarily conformed to by Peronila,
thus:
This will confirm your assignment as Driver-Baler Line on a contractual basis under the following terms
and conditions:
1. EFFECTIVITY
This assignment shall take effect on April 5, 1988 and shall be for a period of one month.
2. FEE
You shall receive a compensation of P64.00/day.
3. HOURS OF WORK
You shall work in accordance with the schedule given by your immediate supervisor.
4. TERMINATION
This contract is automatically terminated after one (1) month or at the close of office hours on May 5,
1988.
5. MISCELLANEOUS
There is no employer-employee relationship between us hence you are not entitled to any privilege of
an employee viz: sick leave, vacation leave, holiday pay, overtime pay and others.6
Barely fifteen days from such employment as a contractual driver, or on April 20, 1988, private
respondent was involved in a vehicular mishap in Nueva Vizcaya wherein the bus he was driving hit
another vehicle.7 After an administrative investigation conducted by petitioner corporation, Peronila was
found guilty thereof, hence his employment contract was terminated and was no longer renewed
thereafter.
On January 18, 1989, private respondent filed a case for illegal dismissal against petitioner in the
Arbitration Branch of the NLRC-NCR wherein he argued that he was refused assignment after May 5,
1988, which refusal was tantamount to constructive dismissal. Accordingly, he sought his reinstatement
and the payment of his back wages.8
Labor Arbiter Patricio P. Libo-on dismissed the case on February 12, 1991, ruling that "(a)lthough as a
driver, his services (are) usual and necessary to the business of the respondent, yet it is also true that
complainant's case falls within one of the exceptions. When he was rehired, it was clear to him that he
would be working only for one (1) month. . . . Apparently, the reason for this is to fill or to stop-gap the
requirements of the employe(r)/respondent during the period (when) he was rehired, and which it
foresees to ease up in May 1988." The labor arbiter also upheld the aforestated contract signed by
Peronila.9
On appeal, public respondent NLRC set aside the decision of the labor arbiter declaring that the
dismissal was illegal since there was no just cause, with the decretal portion of its resolution on appeal
disposing as follows:
WHEREFORE, premises considered, the decision appealed from is hereby set aside and a new Order
promulgated ordering the reinstatement of complainant with one (1) year backwages. 10
The finding of the labor arbiter regarding the dismissal of Peronila was reversed by public respondent on
these considerations:
However, we do not agree with the finding of the Labor Arbiter that complainant's re-employment was
an exception to Article 280 of the Labor Code.
xxx xxx xxx
Suffice it to state that the Constitution recognizes the need to afford protection to labor and assures
security of tenure to workers. In consonance thereto, the Labor Code was enacted to give special
attention to the relationship between labor and management. Indeed, the Labor Code is a special law,
and well settled in this jurisdiction is the rule that as between a special law and a general law, the
former prevails. Without further belaboring their distinction, to equate and apply the present case to an
ordinary contract with a fixed term and period destroys the spirit and intention of the labor laws to give
special treatment to labor and management relationship. To uphold the findings a quo of the Labor
Arbiter would put to naught the benefits that the State has intended for labor, since by the mere
expedience of defining the terms and conditions of employment in a well prepared contract, no
employee shall ever attain a regular employment. 11
However, respondent commission rejected the argument of Peronila that he was not afforded the
opportunity to adduce evidence before the labor arbiter. The NLRC maintained that there was no error
in the procedure conducted by the labor arbiter because he is given ample discretion to determine
whether there is a need to conduct further hearings after the parties have submitted their position
papers and supporting proofs. 12
On August 11, 1992, 13 petitioner's motion for reconsideration was denied for lack of merit, hence this
petition alleging grave abuse of discretion on the part of the NLRC in ordering the reinstatement of
private respondent and the payment to him of one year back wages.
We find adequate and compelling merit in the petition.
The determinative issue in this case is whether or not the employment contract which stipulates that
there is no employer-employee relationship between petitioner and Peronila is valid. Relevant to this
issue, we are persuaded to hold that the re-employment of Peronila as a contractual bus driver was
merely an act of generosity on the part of petitioner.
Although we have ruled in a number of cases applying Article 280 of the Labor Code 14 that when the
activities performed by the employee are usually necessary or desirable in the usual trade of the
employer, the employment is deemed regular notwithstanding a contrary agreement, 15 there are
exceptions to this rule especially if circumstances peculiar to the case warrant a departure therefrom.
What said Article 280 seeks to prevent is the practice of some unscrupulous and covetous employers
who wish to circumvent the law that protects lowly workers from capricious dismissal from their
employment. The aforesaid provision, however, should not be interpreted in such a way as to deprive
employers of the right and prerogative to choose their own workers if they have sufficient basis to
refuse an employee a regular status. Management has rights which should also be protected.
The petitioner had validly dismissed Peronila long before he entered into the contested employment
contract. It was Peronila who earnestly pleaded with petitioner to give him a second chance. The re-
hiring of private respondent was out of compassion and not because the petitioner was impressed with
the credentials of Peronila. Peronila's previous violations of company rules explains the reluctant
attitude to the petitioner in re-hiring him. When the bus driven by Peronila figured in a road mishap,
that incident finally prompted petitioner to sever any further relationship with said private respondent.
We have recently held in Philippine Village Hotel vs. National Labor Relations Commission, et al. 16 that
the fact that the private respondents therein were required to render services necessary or desirable in
the operation of the petitioner's business for a duration of the one month dry-run operation period did
not in any way impair the validity of the contractual nature of private respondents' contracts of
employment which specifically stipulated that their employment was only for one month.
In upholding the validity of a contract of employment with fixed or specific period in a number of cases,
we explained therein that "the decisive determinant in term employment should not be the activities
that the employee is called upon to perform, but the day certain agreed upon the parties for the
commencement and termination of their employment relationship, a day certain being understood to
be that which must necessarily come, although it may not be known when. . . . This ruling is only in
consonance with Article 280 of the Labor Code."
As to whether or not the principle of security of tenure provided in Article 280 of the Labor Code has
been violated, we have made the following pronouncements by way of guidelines:
In Brent School, Inc., et al. vs. Ronaldo Zamora, etc., et al., the Court had occasion to examine in detail
the question of whether employment for a fixed term has been outlawed under the above quoted
provisions of the Labor Code. After an extensive examination of the history and development of Articles
280 and 281, the Court reached the conclusion that the contract providing for employment with a fixed
period was not necessarily unlawful: "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 reasonable interpretation, to preclude absurdity in its
application. Outlawing the whole concept of term employment and subverting to boot the principle of
freedom of contract to remedy the evil of employers' using it as a means to prevent their employees
from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing
a headache by lopping off the head. 17
In the case of Philippine National Oil Company-Energy Development Corporation vs. National Labor
Relations Commission, et al.,18 this Court set down two criteria under which fixed contracts of
employments cannot be said to be in circumvention of security of tenure, to wit:
1. The Fixed period of employment was knowingly and voluntarily agreed upon by the parties, without
circumstances vitiating his consent; or
terms with no moral dominance whatever being exercised by the former on the latter.
In the present dispute, the services of respondent Peronila had been validly terminated by petitioner,
when the latter absented himself without official leave, fifteen years before he was re-hired as a
contractual driver for just one month. Definitely, his re-hiring cannot be construed to mean that Peronila
reacquired his former permanent status.
Furthermore, as correctly pointed out by the Solicitor General, "there is no evidence on record that
private respondent in fact held the position of a bus driver for nearly seventeen years, except his bare
and unsupported allegations to that effect in his Position Paper. . . . There is ample and unrebutted
evidence that private respondent's employment by PNEI in 1971 was illegally terminated on March 20,
1973. The Order issued by the Mediator-Factfinder Loreto V. Poblete of the Regional Office No. II,
National Labor Relations Commission, Tuguegarao, Cagayan in the case entitled, 'Pantranco vs. Rodolfo
Peronila' docketed as NLRC Case No. 85, attests to this fact. 19
We once again reiterate that the findings of an administrative agency, to be conclusive and binding,
must be supported by substantial evidence. 20 A conflict between the factual findings of the NLRC and
the labor arbiter will necessitate a review of such factual findings. The impugned decision of respondent
commission appears to have laid too much stress on the conceptual principles of social justice in labor
cases without the corresponding specifics to support its conclusions.
It must not be overlooked that along with the inspirational passages on social justice in Calalang vs.
Williams, et., al., 21 there is this sobering caveat: "The promotion of social justice, however, it is to be
achieved not through a mistaken sympathy towards any given group" since it "means the promotion of
the welfare of all the people . . . through the maintenance of a proper economic and social equilibrium
in the interrelations of the members of the community," and "must be founded on the recognition . . . of
the protection that should be equally and evenly extended to all groups as a combined force in our
social and economic life, . . . ."
WHEREFORE, the instant petition is GRANTED, the challenged decision of respondent National Labor
Relations Commission is hereby SET ASIDE, and the complaint against petitioners is DISMISSED.
SO ORDERED.
G.R. No. 105033 February 28, 1994
PHILIPPINE VILLAGE HOTEL, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) AND TUPAS LOCAL CHAPTER NO.
1362, JUANITO ACUIN, MAMERTA MANGUBAT, RAUL SONON, ELGAR PEMIS, ORLANDO PARAGUISON,
FERDINAND VELASCO, MIKE ASTULERO, MAGNO DECALSO, NENITA OROSEA, JOSE TIMING, ANTONIO
MANALILI, RODELIO QUERIA and REYNALDO SANTOS, respondents.
Ponce Enrile, Cayetano, Reyes Manalastas for petitioner.
Tupaz & Associates and Alfredo L. Bentulan for private respondents.
NOCON, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court with a prayer for the issuance of a
temporary restraining order to annul and set aside the decision1 promulgated November 7, 1991 by the
National Labor Relations Commission (NLRC) of Manila reversing the decision dated December 19, 1989
of the Labor Arbiter Cornelio L. Linsangan.
It appears on record that private respondents Juanito Acuin, Mamerta Mangubat, Raul Sonon, Elgar
Pemis, Orlando Paraguison, Ferdinand Velasco, Mike Astulero, Magno Decalso, Nenita Orosea, Jose
Timing, Antonio Manalili, Rodelio Queria and Reynaldo Santos were employees of petitioner Philippine
Village Hotel. However, on May 19, 1986, petitioner had to close and totally discontinue its operations
due to serious financial and business reverses resulting in the termination of the services of its
employees.
Thereafter, the Philippine Village Hotel Employees and Workers Union filed against petitioner a
complaint for separation pay, unfair labor practice and illegal lock-out.
On May 27, 1987, the Labor Arbiter issued and Order finding the losses suffered by petitioner to be
actual, genuine and of such magnitude as to validly terminate the services of private respondents but
directed petitioner "to give priority to the complainants (herein private respondents) in [the] hiring of
personnel should they resume their business operations in the future."2
On appeal, the NLRC affirmed the validity of the closure of petitioner but ordered petitioner to pay
private respondent separation pay at the rate of 1/2 month pay every year of service. However, there is
nothing in the records to show that private respondents received their separation pay as the decision of
the NLRC remained unenforced as of this date.
On February 1, 1989, petitioner decided to have a one (1) month dry-run operation to ascertain the
feasibility of resuming its business operations. In order to carry out its dry-run operation, petitioner
hired casual workers, including private respondents, for a one (1) month period, or from February 1,
1989 to March 1, 1989, as evidenced by the latter's Contract of Employment.3
After evaluating the individual performance of all the employees and upon the lapse of the contractual
one-month period or on March 2, 1989, petitioner terminated the services of private respondents.
On April 6, 1989, private respondents and Tupas Local Chapter No. 1362 filed a complaint against
petitioner for illegal dismissal and unfair labor practice with the NLRC-NCR Arbitration Branch in NLRC
Case No.
00-04-01665-89.
On December 19, 1989, the Labor Arbiter rendered a decision, the dispositive portion of which reads, as
follows:
WHEREFORE, finding the above-entitled complaint to be without factual and legal basis, judgment is
hereby rendered dismissing the same.4
Thereafter, private respondents appealed to the public respondent NLRC.
On November 7, 1991, public NLRC reversed the decision of the Labor Arbiter, the dispositive portion of
which reads as follows:
WHEREFORE, under the premises, let the decision appealed from be, as it is hereby reversed, and a new
judgment rendered, hereby ordering the respondent Philippine Village Hotel to reinstate the above-
named complainants to their former or substantially equivalent positions without loss of seniority rights
plus full backwages from the time they were actually dismissed on 02 March 1989 up to the time of their
actual reinstatement, but which period of time should not exceed three (3) years.
The complaint for unfair labor practice is hereby dismissed for lack of adequate factual basis.5
On March 5, 1992, petitioners Motion for Reconsideration was denied for lack of merit.
Hence, this petition alleging grave abuse of discretion on the part of the public respondent NLRC in
finding that private respondents are regular employees of petitioner considering that the latter's
services were already previously terminated in 1986 and that their employment contracts specifically
provided only for a temporary one-month period of employment.
The petition is impressed with merit.
An examination of the contents of the private respondents' contracts of employment shows that indeed
private respondents voluntarily and knowingly agreed to be employed only for a period of one (1)
month or from February 1, 1989 to March 1, 1989.
The fact that private respondents were required to render services usually necessary or desirable in the
operation of petitioner's business for the duration of the one (1) month dry-run operation period does
not in any way impair the validity of the contractual nature of private respondents' contracts of
employment which specifically stipulated that the employment of the private respondents was only for
one (1) month.
In upholding the validity of a contract of employment with a fixed or specific period, we have held that
the decisive determinant in term employment should not be the activities that the employee is called
upon to perform, but the day certain agreed upon by the parties for the commencement and
termination of their employment relationship, a day certain being understood to be that which must
necessarily come, although it may not be known when. The term period was further defined to be the
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 or the period from one fixed date to another fixed date.6 This ruling
is only in consonance with Article 280 of the Labor Code which provides:

Inasmuch as private respondents' contracts of employment categorically provided a fixed period and
their termination had already been agreed upon at the time of their engagement, private respondents'
employment was one with a specific period or day certain agreed upon by the parties. In Philippine
National Oil Company-Energy Development Corporation vs. NLRC,7 we held that:
As can be gleaned from the said case (Brent School, Inc. vs. Zamora, 181 SCRA 702), the two guidelines
by which fixed contracts of employments can be said NOT to circumvent security of tenure, are either:
1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without
circumstances vitiating his consent; or
terms with no moral dominance whatever being exercised by the former on the latter."
In the instant case, private respondents were validly terminated by the petitioner when the latter had to
close its business due to financial losses. Following the directives of the NLRC to give priority in hiring
private respondents should it resume its business, petitioner hired private respondents during their one
(1) month dry-run operation. However, this does not mean that private respondents were deemed to
have continued their regular employment status, which they had enjoyed before their aforementioned
termination due to petitioner's financial losses. As stated by the Labor Arbiter in his decision:
It should be borne in mind that when complainants were first terminated as a result of the company's
cessation from operation in May, 1986 the employer-employee relationship between the parties herein
was totally and completely severed. Such being the case, respondent acted well within its discretion
when in rehiring the complainants (herein private respondents) it made them casual and for a specific
period. The complainants are no better than the new employees of respondent (petitioner) for the
matter of what status or designation to be given them exclusively rests in the discretion of
management.8
Besides, the previous decision of the public respondent NLRC in Case No. 8-3277-86 finding the
termination of private respondents' employment to be valid has long become final and executory. Public
respondent NLRC cannot anymore argue that the temporary cessation of the petitioner's operation due
to financial reverses merely suspended private respondents' employment. The employee-employer
relationship had come to an end when the employer had closed its business and ceased operations. The
hiring of new employees when it re-opened after three (3) years is valid and to be expected. The prior
employment which was terminated cannot be joined or tacked to the new employment for purposes of
security of tenure.
While it is true that security of tenure is a constitutionally guaranteed right of the employees, it does
not, however, mean perpetual employment for the employee because our law, while affording
protection to the employee, does not authorize oppression or destruction of an employer. 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. 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 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.9
Thus, public respondent NLRC had indubitably committed grave abuse of discretion when it modified the
final decision of the NLRC Case No. 8-3277-86 which remain unenforced as of this date. Private
respondents' remedy is to file a motion for execution, if it is still within the reglementary 5-year period,
or to file an action to enforce said decision. (Article 224(a), Labor Code)
WHEREFORE, this petition for certiorari is GRANTED and the questioned of the public respondent NLRC
is hereby SET ASIDE thereby dismissing the complaint against petitioner.
SO ORDERED
G.R. No. 79869 September 5, 1991
FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO MERCADO, JR., ANTONIO MERCADO,
JOSE CABRAL, LUCIA MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA MERCADO,
JULIANA CABRAL, GUADALUPE PAGUIO, BRIGIDA ALCANTARA, EMERLITA MERCADO, ROMEO
GUEVARA, ROMEO MERCADO and LEON SANTILLAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD DIVISION; LABOR ARBITER LUCIANO
AQUINO, RAB-III; AURORA L. CRUZ; SPOUSES FRANCISCO DE BORJA and LETICIA DE BORJA; and STO.
NIÑO REALTY, INCORPORATED, respondents.
Servillano S. Santillan for petitioners.

Luis R. Mauricio for private respondents.
PADILLA, J.:
Assailed in this petition for certiorari is the decision * of the respondent national Labor Relations
Commission (NLRC) dated 8 August 1984 which affirmed the decision of respondent Labor Arbiter
Luciano P. Aquino with the slight modification of deleting the award of financial assistance to
petitioners, and the resolution of the respondent NLRC dated 17 August 1987, denying petitioners'
motion for reconsideration.
This petition originated from a complaint for illegal dismissal, underpayment of wages, non-payment of
overtime pay, holiday pay, service incentive leave benefits, emergency cost of living allowances and 13th
month pay, filed by above-named petitioners against private respondents Aurora L. Cruz, Francisco
Borja, Leticia C. Borja and Sto. Niño Realty Incorporated, with Regional Arbitration Branch No. III,
National Labor Relations Commission in San Fernando, Pampanga.1
Petitioners alleged in their complaint that they were agricultural workers utilized by private respondents
in all the agricultural phases of work on the 7 1/2 hectares of ace land and 10 hectares of sugar land
owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan worked in the farm of private
respondents since 1949, Fortunato Mercado, Jr. and Antonio Mercado since 1972 and the rest of the
petitioners since 1960 up to April 1979, when they were all allegedly dismissed from their employment;
and that, during the period of their employment, petitioners received the following daily wages:
From 1962-1963 — P1.50

1963-1965 — P2.00
1965-1967 — P3.00
1967-1970 — P4.00
1970-1973 — P5.00
1973-1975 — P5.00
1975-1978 — P6.00
1978-1979 — P7.00
Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said petitioners
were her regular employees and instead averred that she engaged their services, through Spouses
Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is, persons who take charge in
supplying the number of workers needed by owners of various farms, but only to do a particular phase
of agricultural work necessary in rice production and/or sugar cane production, after which they would
be free to render services to other farm owners who need their services.2
The other private respondents denied having any relationship whatsoever with the petitioners and state
that they were merely registered owners of the land in question included as corespondents in this case.3
The dispute in this case revolves around the issue of whether or not petitioners are regular and
permanent farm workers and therefore entitled to the benefits which they pray for. And corollary to
this, whether or not said petitioners were illegally dismissed by private respondents.
Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents and held that
petitioners were not regular and permanent workers of the private respondents, for the nature of the
terms and conditions of their hiring reveal that they were required to perform phases of agricultural
work for a definite period of time after which their services would be available to any other farm
owner.4 Respondent Labor Arbiter deemed petitioners' contention of working twelve (12) hours a day
the whole year round in the farm, an exaggeration, for the reason that the planting of lice and sugar
cane does not entail a whole year as reported in the findings of the Chief of the NLRC Special Task
Force.5 Even the sworn statement of one of the petitioners, Fortunato Mercado, Jr., the son of spouses
Fortunato Mercado, Sr. and Rosa Mercado, indubitably show that said petitioners were hired only as
casuals, on an "on and off" basis, thus, it was within the prerogative of private respondent Aurora Cruz
either to take in the petitioners to do further work or not after any single phase of agricultural work had
been completed by them.6
Respondent Labor Arbiter was also of the opinion that the real cause which triggered the filing of the
complaint by the petitioners who are related to one another, either by consanguinity or affinity, was the
filing of a criminal complaint for theft against Reynaldo Mercado, son of spouses Fortunate Mercado, Sr.
and Rosa Mercado, for they even asked the help of Jesus David, Zone Chairman of the locality to talk to
private respondent, Aurora Cruz regarding said criminal case.7 In his affidavit, Jesus David stated under
oath that petitioners were never regularly employed by private respondent Aurora Cruz but were, on-
and-off hired to work and render services when needed, thus adding further support to the conclusion
that petitioners were not regular and permanent employees of private respondent Aurora Cruz.8
Respondent Labor Arbiter further held that only money claims from years 1976-1977, 1977-1978 and
1978-1979 may be properly considered since all the other money claims have prescribed for having
accrued beyond the three (3) year period prescribed by law.9 On grounds of equity, however,
respondent Labor Arbiter awarded petitioners financial assistance by private respondent Aurora Cruz, in
the amount of Ten Thousand Pesos (P10,000.00) to be equitably divided among an the petitioners
except petitioner Fortunato Mercado, Jr. who had manifested his disinterest in the further prosecution
of his complaint against private respondent.10
Both parties filed their appeal with the National Labor Relations Commissions (NLRC). Petitioners
questioned respondent Labor Arbiter's finding that they were not regular and permanent employees of
private respondent Aurora Cruz while private respondents questioned the award of financial assistance
granted by respondent Labor Arbiter.
The NLRC ruled in favor of private respondents affirming the decision of the respondent Labor Arbiter,
with the modification of the deletion of the award for financial assistance to petitioners. The dispositive
portion of the decision of the NLRC reads:
WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino dated March 3, 1983 is hereby modified in
that the award of P10,000.00 financial assistance should be deleted. The said Decision is affirmed in all
other aspects.
SO ORDERED.11
Petitioners filed a motion for reconsideration of the Decision of the Third Division of the NLRC dated 8
August 1984; however, the NLRC denied tills motion in a resolution dated 17 August 1987.12
In the present Petition for certiorari, petitioners seek the reversal of the above-mentioned rulings.
Petitioners contend that respondent Labor Arbiter and respondent NLRC erred when both ruled that
petitioners are not regular and permanent employees of private respondents based on the terms and
conditions of their hiring, for said findings are contrary to the provisions of Article 280 of the Labor
Code.13 They submit that petitioners' employment, even assuming said employment were seasonal,
continued for so many years such that, by express provision of Article 280 of the Labor Code as
amended, petitioners have become regular and permanent employees.14
Moreover, they argue that Policy Instruction No. 1215 of the Department of Labor and Employment
clearly lends support to this contention, when it states:
PD 830 has defined the concept of regular and casual employment. What determines regularity or
casualness is not the employment contract, written or otherwise, but the nature of the job. If the job is
usually necessary or desirable to the main business of the employer, then employment is regular. If not,
then the employment is casual. Employment for a definite period which exceeds one (1) year shall be
considered re for the duration of the definite period.
This concept of re and casual employment is designed to put an end to casual employment in regular
jobs which has been abused by many employers to prevent so-called casuals from enjoying the benefits
of regular employees or to prevent casuals from joining unions.
This new concept should be strictly enforced to give meaning to the constitutional guarantee of
employment tenure.16
Tested under the laws invoked, petitioners submit that it would be unjust, if not unlawful, to consider
them as casual workers since they have been doing all phases of agricultural work for so many years,
activities which are undeniably necessary, desirable and indispensable in the rice and sugar cane
production business of the private respondents.17
In the Comment filed by private respondents, they submit that the decision of the Labor Arbiter, as
aimed by respondent NLRC, that petitioners were only hired as casuals, is based on solid evidence
presented by the parties and also by the Chief of the Special Task Force of the NLRC Regional Office and,
therefore, in accordance with the rule on findings of fact of administrative agencies, the decision should
be given great weight.18 Furthermore, they contend that the arguments used by petitioners in
questioning the decision of the Labor Arbiter were based on matters which were not offered as evidence
in the case heard before the regional office of the then Ministry of Labor but rather in the case before
the Social Security Commission, also between the same parties.19
Public respondent NLRC filed a separate comment prepared by the Solicitor General. It submits that it
has long been settled that findings of fact of administrative agencies if supported by substantial
evidence are entitled to great weight.20 Moreover, it argues that petitioners cannot be deemed to be
permanent and regular employees since they fall under the exception stated in Article 280 of the Labor
Code, which reads:
The provisions of written agreements to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be deemed to be regular where the employee has been
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.21 (emphasis supplied)
The Court resolved to give due course to the petition and required the parties to submit their respective
memoranda after which the case was deemed submitted for decision.
The petition is not impressed with merit.
The invariable rule set by the Court in reviewing administrative decisions of the Executive Branch of the
Government is that the findings of fact made therein are respected, so long as they are supported by
substantial evidence, even if not overwhelming or preponderant;22 that it is not for the reviewing court
to weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its
own judgment for that of the administrative agency on the sufficiency of the evidence;23 that the
administrative decision in matters within the executive's jurisdiction can only be set aside upon proof of
gross abuse of discretion, fraud, or error of law.24
The questioned decision of the Labor Arbiter reads:
Focusing the spotlight of judicious scrutiny on the evidence on record and the arguments of both
parties, it is our well-discerned opinion that the petitioners are not regular and permanent workers of
the respondents. The very nature of the terms and conditions of their hiring reveal that the petitioners
were required to perform p of cultural work for a definite period, after which their services are available
to any farm owner. We cannot share the arguments of the petitioners that they worked continuously
the whole year round for twelve hours a day. This, we feel, is an exaggeration which does not deserve
any serious consideration inasmuch as the plan of rice and sugar cane does not entail a whole year
operation, the area in question being comparatively small. It is noteworthy that the findings of the Chief
of the Special Task Force of the Regional Office are similar to this.
In fact, the sworn statement of one of the petitioners Fortunato Mercado, Jr., the son of spouses
Fortunato Mercado, Sr. and Rosa Mercado, indubitably shows that said petitioners were only hired as
casuals, on-and-off basis. With this kind of relationship between the petitioners and the respondent
Aurora Cruz, we feel that there is no basis in law upon which the claims of the petitioners should be
sustained, more specially their complaint for illegal dismissal. It is within the prerogative of respondent
Aurora Cruz either to take in the petitioners to do further work or not after any single phase of
agricultural work has been completed by them. We are of the opinion that the real cause which
triggered the filing of this complaint by the petitioners who are related to one another, either by
consanguinity or affinity was due to the filing of a criminal complaint by the respondent Aurora Cruz
against Reynaldo Mercado, son of spouses Fortunato Mercado, Sr. and Rosa Mercado. In April 1979,
according to Jesus David, Zone Chairman of the locality where the petitioners and respondent reside,
petitioner Fortunato Mercado, Sr. asked for help regarding the case of his son, Reynaldo, to talk with
respondent Aurora Cruz and the said Zone Chairman also stated under oath that the petitioners were
never regularly employed by respondent Aurora Cruz but were on-and-off hired to work to render
services when needed.25
A careful examination of the foregoing statements reveals that the findings of the Labor Arbiter in the
case are ably supported by evidence. There is, therefore, no circumstance that would warrant a reversal
of the questioned decision of the Labor Arbiter as affirmed by the National Labor Relations Commission.
The contention of petitioners that the second paragraph of Article 280 of the Labor Code should have
been applied in their case presents an opportunity to clarify the afore-mentioned provision of law.
Article 280 of the Labor Code reads in full:
Article 280. Regular and Casual Employment. — The provisions of written agreement to the contrary
That, any employee who has rendered at least one year of service whether such service is continuous or
The first paragraph answers the question of who are employees. It states that, regardless of any written
or oral agreement to the contrary, an employee is deemed regular where he is engaged in necessary or
desirable activities in the usual business or trade of the employer, except for project employees.
A project employee has been defined to be one whose employment has been fixed for a specific project
or undertaking, the completion or termination of which has been determined at the time of the
engagement of the employee, or where the work or service to be performed is seasonal in nature and
the employment is for the duration of the season26 as in the present case.
The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not
fan under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as
regular employees those "casual" employees who have rendered at least one year of service regardless
of the fact that such service may be continuous or broken.
Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their
case and that the Labor Arbiter should have considered them regular by virtue of said proviso. The
contention is without merit.
The general rule is that the office of a proviso is to qualify or modify only the phrase immediately
preceding it or restrain or limit the generality of the clause that it immediately follows.27 Thus, it has
been held that a proviso is to be construed with reference to the immediately preceding part of the
provision to which it is attached, and not to the statute itself or to other sections thereof.28 The only
exception to this rule is where the clear legislative intent is to restrain or qualify not only the phrase
immediately preceding it (the proviso) but also earlier provisions of the statute or even the statute itself
as a whole.29
Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of
regular and casual employees was designed to put an end to casual employment in regular jobs, which
has been abused by many employers to prevent called casuals from enjoying the benefits of regular
employees or to prevent casuals from joining unions. The same instructions show that the proviso in the
second paragraph of Art. 280 was not designed to stifle small-scale businesses nor to oppress
agricultural land owners to further the interests of laborers, whether agricultural or industrial. What it
seeks to eliminate are abuses of employers against their employees and not, as petitioners would have
us believe, to prevent small-scale businesses from engaging in legitimate methods to realize profit.
Hence, the proviso is applicable only to the employees who are deemed "casuals" but not to the
"project" employees nor the regular employees treated in paragraph one of Art. 280.
Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal
employees, their employment legally ends upon completion of the project or the season. The
termination of their employment cannot and should not constitute an illegal dismissal.30
WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations Commission
affirming that of the Labor Arbiter, under review, is AFFIRMED. No pronouncement as to costs.
SO ORDERED.
G.R. No. 88636 October 3, 1991
LINA B. OCTAVIANO, petitioner
vs.
NATIONAL LABOR RELATIONS COMMISSION and GENERAL DIESEL POWER
CORPORATION, respondents.
D.R. Dando & Associates Law Offices for petitioner.
K.V. Faylona & Associates for private respondent.
SARMIENTO, J.:
The petitioner, Lina Octaviano, assails the decision of the National Labor Relations Commission (NLRC),
Fourth Division, dated March 20, 1989, affirming with modification the decision of the labor arbiter
reducing her award of full backwages to only one (1) year.
The facts in brief are:
The private respondent, General Diesel Power Corporation, hired Lina as a component mechanic and
issued a temporary employment as such from November 21, 1984 up to May 21, 1985. 1 She was
however made to work, in fact, as a secretary and parts clerk. 2
On May 22, 1985, the private respondent exyended her another contract of employment providing a probationary period of six (6) months. 3
On November 21,
1985, she was terminated as management decided to end her probationary employment. 4 On January
20, 1986, she was rehired as a parts clerk. 5 Pursuant to management's prior arrangement, she was
issued a six-month probationary employment. On June 5, 1986, she was again dismissed. 6
On July 8, 1986, she lodged a complaint for illegal dismissal and then filed an amended complaint on January 30, 1987.
On May 22, 1988, Labor Arbiter Felipe T. Garduque II ordered her reinstatement without loss of seniority rights and privileges, with full backwages from her dismissal on June 5, 1986
up to her actual reinstatement, including her legal holiday pay for ten regular holidays, and unpaid wages and allowance from June 1-15, 1986 in the amounts of P500.00 and
P215.00, respectively, and 13th month pay in the sum of P416.00 less P213.70 for advances and canteen bills, with ten (10)% thereof as attorney's fee. 7
All other claims
were dismissed. The respondent corporation appealed to the NLRC interposing grave abuse of
discretion.The NLRC affirmed the labor arbiter's ruling but reduced the award of full backwages to only
one year. Ironically, the NLRC cited in particular Lina's educational background to justify the reduction.
We quote:
It is not disputed that herein complainant is a graduate of chemical engineering and that the periods of
her separate employment contracts range from six (6) months to one (1) year. Having technical
engineering background, it would not be difficult for complainant find a job during her period of lay-off.
As such, she is therefore not expected to remain Idle and wait for a windfall for this would be
tantamount awarding her for her Idleness during her lay off. It is therefore more rasonable to limit her
backwages to one (1) year effective from her termination from the service on June 15, 1986. *
The petitioner now complains that the NLRC erred in limiting the award of backwages to one year. She
invokes Article 279 of the Labor Code which guarantees security of tenure to a regular employee,
prohobiting his termination, except for a just cause, and entitling an unjustly dismissed worker to
reinstatement with full backwages.
We find the petition meritorious and we grant it. We rule that the NLRC gravely abused its discretion in
limiting the award of backwages to one year.
The facts of the case as indicated by the arbiter and the NLRC are uncorroborated- Lina was unjustly and
unlawfully terminated even after she had already completed successively three six-month probationary
periods of employment which should have converted her status to that of a regular employee. Her
termination, therefore, violated her right to security of tenure in her employment. But even
probationary employees are protected by law. For one, probationary should not exceed six (6) months
from the date the employee started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. 8 True, 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 the reasonable standards made known by the employer to the employee at the time of his
employment. 9 But the law is explicit that an employee who is allowed to work after a probabtionary
period shall be considered a regular employee. 10
It is clear from the foregoing that Lina should be considered a regular employee on all counts. First, the
nature of her job as a parts clerk required her to perform activities which were deemed necessary and
desirable in the usual business of General Diesel Power Corporation, in connection with dealing in parts,
sales, and services. (She was neither contracted for a specified project nor required to perform work
that was seasonable in nature.) Under Article 280 of the Labor Code, when one performs such activities,
he is deemed a regular employee, "[tlhe provisions of written agreement to the contrary
notwithstanding . . ." Second, her employment was not covered by any apprenticeship agreement.
Third, she was rehired on May 22, 1985 and on January 20, 1986. This fact of rehiring negates
management's claims that she failed to qualify as a regular employee. On the contrary, management
promoted her to parts clerk. Finally, at the risk of being repetitious, Lina had been re-hired to work not
only after her first six-month probationary period from November 21, 1984 to May 21, 1985, she had
been also re-hired to work immediately after her second six-month probationary period from May 22,
1985 to November 21, 1985; and then again on January 20, 1986, she was rehired on a probationary
status - her third - and was again terminated on June 5, 1986. Thus, we can readily see that Lina had
been hired and again and again rehired and again and again and again fired. We perceive these
successive hirings and firings as a ploy to avoid the obligations imposed by law on employers for the
protection and benefit of probationary employees, who, more often than not, are kept in the bondage,
so to speak, of unending probationary employment without any complaint due to the serious
unemployment problem besetting our country today. The Court can not countenance this overreaching.
No member of the country's work force must be allowed to be taken advantage of by any employer.
An employee who is allowed to work after a probationary period, shall be considered a regular
employee. 11 The fact that Lina worked on a contract-to-contract basis can not alter the character of her
employment, because contracts can not override the mandate of law. 12 Hence, by operation of law, she
has likewise, become a regular employee. 13
We find self-defeating the private respondent's arguments that the petitioner, while in her probationary
periods, had failed to measure up to the standards of her work and had been found unfit for her job, in
the light of the circumstance discussed earlier. Second, the private respondent failed to establish that
there had been reasonable standards set forth by the company by which Lina would measure up to as a
regular employee. If indeed there were, the respondent should have attached copies of those standards,
as annexes to its pleadings; the records reveal nothing of the sort, hence, we dismiss such trivial
justifications.
We agree with the petitioner that she was unceremoniously terminated by the respondent company to
prevent her from becoming a regular employee and exc4ude her from all the benefits thereto. As we
previously stated, this is not only a common but a convenient practice of unscrupulous employers to
circumvent the law on security of tenure. Security of tenure, which is a right of paramount value
guaranteed by the Constitution, should not be denied to the workers bv such a stratagem. We can not
permit such a subterfuge, if we are to be true to the law and social justice. The law and social justice
mandate that an emplovee whose termination was illelyal is enntitled to reinstatement with full
backwages. 14
Under Article 279 of the Code, "[a]n employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of compensation that should have been earned but
were not collected because of unjust dismissal. 15 Such being the case, the award of backwages
computed from the time of Lina's dismissal up to the time of her reinstatement is not tantamount to
rewarding idleness but to enable her to recover her loss of income during her lack of employment
caused by her dismissal. Clearly then, the NLRC committed a grave abuse of discretion when it reduced
the award of backwages to one year and compounded that abuse by giving the reason that the
petitioner could have easily landed a better-paying job if she seriously looked for one, she being a
chemical engineering graduate.
Worth noting is the manifestation of the Solicitor General when required to comment by the Court: that
"[H]e does not agree with the position of the public respondent, NLRC and cannot represent said public
respondent in this case without, in his honest belief and understanding, going against the law, the
evidence and jurisprudence."
The respondent also argues that the petitioner should not be entitled to backwages because she was
given separation pay upon termination of her employment. Furthermore, she also signed a quitclaim
discharging the company from any liability.
These arguments are devoid of merit. The fact that the petitioner received separation pay should not be
taken against her for it is but natural for her to accept whatever amounts the company would give her.
Her receipt of separation pay does not relieve the company of its obligations under the law. Backwages
and separation pay are reliefs distinct and separate from each other. Payment of backwages in the forin
of rehef that restores the income that was lost by reason of unlawful dismissal is distinguished from
separation pay which provides the employee money during the period in which he is locating a new
job. 16 We have moreover held that a quitclaim wfll not estop a dismissed employee from complaining to
the authorities. 17
We have consistently adopted the policy of awarding back wages to illegally dismissed employees
equivalent to three years without qualification or deduction, in order to avoid protracted delay in the
execution of the award for backwage due to extended hearings and unavoidable delays and difficul ties
encountered in determining the earnings of laid-off employees ordered to be reinstated with backwages
during the pendency of the case for purposes of deducting the same from the gross backwages
awarded. 18 In the case at bar, we can not find good reason why we should depart from this established
policy The company had unlawfully terminated the petitioner fro her work. We take this opportunity to
reaffirm our concern fo the lowly worker who, like the petitioner, is often at the mere of her employer,
by reinstating her to her previous position or its equivalent, with backwages.
WHEREFORE, the petition is GRANTED. The private respondent is ORDERED to REINSTATE the petitioner
to her former position without loss of seniority rights and other privileges, with backwages equivalent to
three years without deduction or qualification.
Costs against the private respondent.
SO ORDERED.
G.R. No. 86408 February 15, 1990
BETA ELECTRIC CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER CRESENCIO INIEGO, BETA ELECTRIC
EMPLOYEES ASSOCIATION, and LUZVIMINDA PETILLA, respondents.
Ermitaño, Asuncion, Manzano & Associates for petitioner.
Leonardo C. Fernandez for private respondents.
SARMIENTO, J.:
The petitioner questions the decision of the National Labor Relations Commission affirming the
judgment of the labor arbiter reinstating the private respondent with backwages.
The petitioner hired the private respondent as clerk typist III 1 effective December 15, 1986 until January
16, 1987. 2
On January 16, 1987, the petitioner gave her an extension up to February 15, 1987.3
On February 15, 1987, it gave her another extension up to March 15, 1987. 4
On March 15, 1987, it gave her a further extension until April 30, 1987. 5
On May 1, 1987, she was given until May 31, 1987. 6
On June 1, 1987, she was given up to June 30, 1987. 7
Her appointments were covered by corresponding written contracts. 8
On June 22, 1987, her services were terminated without notice or investigation. On the same day, she
went to the labor arbiter on a complaint for illegal dismissal. As the court has indicated, both the labor
arbiter and the respondent National Labor Relations Commission ruled for her.
The Court likewise rules in her favor.
The petitioner argues mainly that the private respondent's appointment was temporary and hence she
may be terminated at will.
That she had been hired merely on a "temporary basis" "for purposes of meeting the seasonal or peak
demands of the business," 9 and as such, her services may lawfully be terminated "after the
accomplishment of [her] task" 10 is untenable. The private respondent was to all intents and purposes,
and at the very least, a probationary employee, who became regular upon the expiration of six months.
Under Article 281 of the Labor Code, a probationary employee is "considered a regular employee" if he
has been "allowed to work after [the] probationary period." 11 The fact that her employment has been a
contract-to-contract basis can not alter the character of employment, because contracts can not
override the mandate of law. Hence, by operation of law, she has become a regular employee.
In the case at bar, the private employee was employed from December 15, 1986 until June 22, 1987
when she was ordered laid off. Her tenure having exceeded six months, she attained regular
employment.
The petitioner can not rightfully say that since the private respondent's employment hinged from
contract to contract, it was ergo, "temporary", depending on the term of each agreement. Under the
Labor Code, an employment may only be said to be "temporary" "where [it] has been fixed for a specific
undertaking the completion of 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." 12 Quite to the contrary, the private respondent's
work, that of "typist-clerk" is far from being "specific" or "seasonal", but rather, one, according to the
Code, "where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business." 13 And under the Code, where one performs such activities, he is a
regular employee, "[t]he provisions of written agreement to the contrary notwithstanding . . . 14
It is true that in Biboso v. Victorias Milling Company, Inc., 15 we recognized the validity of contractual
stipulations as to the duration of employment, we can not apply it here because clearly, the contract-to-
contract arrangement given to the private respondent was but an artifice to prevent her from acquiring
security of tenure and to frustrate constitutional decrees.
The petitioner can not insist that the private respondent had been hired "for a specific undertaking i.e.
to handle the backlogs brought about by the seasonal increase in the volume of her work." 16 The fact
that she had been employed purportedly for the simple purpose of unclogging the petitioner's files does
not make such an undertaking "specific" from the standpoint of law because in the first place, it is
"usually necessary or desirable in the usual business or trade of the employer," 17 a development which
disqualifies it outrightly as a "specific undertaking", and in the second place, because a "specific
undertaking" is meant, in its ordinary acceptation, a special type of venture or project whose duration is
coterminous with the completion of the project, 18 e.g., project work. It is not the case in the proceeding
at bar.
WHEREFORE, the petition is DISMISSED. The private respondent is ordered REINSTATED with backwages
equivalent to three years with no qualification or deductions.
SO ORDERED.
G.R. Nos. 90010-11 September 14, 1990
CAGAYAN CAPITOL COLLEGE AND LAUREANA S. ROSALES, petitioners,

vs.
THE HON. NATIONAL LABOR RELATIONS COMMISSION, VIRGILIO P. VILLEGAS AND LEONOR
PAGAPONG, respondents.
Casimiro B. Juarez, Jr. for petitioners.
Francisco D. Alas for private respondents.
GANCAYCO, J.:
The propriety of the reinstatement of private respondents as faculty members of petitioner college is
the issue submitted in this petition.
Private respondents Virgilio Villegas and Leonor Pagapong were teachers on a probational basis of the
petitioner college.
Villegas was initially hired as an instructor in the Nautical Science Department of said petitioner and was
extended an appointment on a ten-month contractual basis which ended on March 31, 1982.
Upon expiration of said contract he re-applied and was given a new contract commencing on June 1,
1982 and ending on March 31, 1983. Thereafter he re-applied for employment and was given a contract
for a fixed period starting June 1, 1983 up to March 31, 1984. Upon mutual agreement the contract was
extended to include the summer of 1984 up to May 31, 1984 which is still part of the school-year 1983-
1984.
Upon expiration of said period he sent a letter re-applying for employment with the petitioner.
His application, however, was turned down because of various complaints from his students borne out
by the report of his superiors who investigated the matter.1
Thus, he filed a complaint in the Regional Arbitration Office of the National Labor Relations Commission
(NLRC) in Cagayan City for illegal dismissal with reinstatement, payment of backwages, moral damages
and attorney's fees. Included in the complaint were claims for underpayment of salary, allowances,
wage orders and his share in tuition fee increases per Presidential Decree No. 451. It was docketed as
NLRC Case No.
RAB-C-0513-84.
On the other hand, respondent Pagapong was initially hired as a probationary instructor in the High
School Department of petitioner college on June 15, 1981 on a contractual basis to end on March 31,
1982. Upon re-application her contract was renewed for another fixed period covering June 1, 1982 up
to March 31, 1983. Her employment was on a probationary basis. Similarly, a third contract was
executed by the petitioner college covering the period starting June 15, 1983 and ending on March 31,
1984. Upon the termination of the said third contract respondent Pagapong wrote to petitioner seeking
re-employment. Her application was accompanied by a clearance. However, her application was denied
upon the recommendation of her immediate superiors who considered her inefficient.
Thus, she filed with the Regional Arbitration Branch of the NLRC a complaint for illegal dismissal with
reinstatement, with backwages, moral damages and attorney's fees. She also included claims for
underpayment of wages, allowances, wage orders and non-payment of shares in tuition fee increases
per Presidential Decree No. 451. It was docketed as NLRC Case No. RAB-C-0560-84.
The cases of respondents Villegas and Pagapong were jointly heard upon agreement of the parties, the
issues and facts being identical.
In their position paper, private respondents Villegas and Pagapong alleged that they were dismissed by
petitioners without valid grounds and that they were deprived of their constitutional right to due
process and security of tenure. They also raised the issue of non-compliance with presidential decrees
and wage orders pertaining to the payment of emergency cost of living allowance (ECOLA) and their
basic salary, including non-payment of their shares in tuition fee increases under Presidential Decree No.
451.
Petitioners, on the other hand, filed their position paper and supplemental manifestations wherein they
denied that private respondents were illegally dismissed. They maintained that the private respondents
alleged employment contracts on a probation basis expired and that the same were not renewed
because their performances were considered unsatisfactory while they were on probation. Petitioners
further contended that private respondents, as probationary employees, did not qualify for tenureship
as their services on probation, upon evaluation, did not reach the standard prescribed for probationary
employees. Petitioners also denied that private respondents are entitled to backwages, since they were
not illegally dismissed and asserted that they have been paid their wages, allowances and their shares in
tuition fee increases and that they were not entitled to moral damages and attorney's fees.
On August 8, 1985, a decision was rendered by Executive Labor Arbiter Ildefonso G. Agbuya dismissing
the complaint for illegal dismissal based on the following disquisition:
From the above-quoted portion of the parties' position paper it is undisputed that Complainants were
hired on a ten (10) months contractual basis as faculty members for a period of three (3) consecutive
contracts of employment (school year). Based on these facts alone, the complaint for illegal dismissal
should be dismissed because it is judicial knowledge that probationary period of instructors or faculty
members of any particular school pursuant to the rules of the Ministry of Education, Culture and Sports
is for three (3) years. Since the employment of Complainants fall (sic) within the probationary period of
three (3) years, it is therefore management's prerogative whether to renew the same for permanency or
stop the relationship as what happened in this particular cases (sic). We are limiting the basis of our
opinion on the probationary period provided for by the Ministry of Education, Culture and Sports and
need not discuss the merits as argued by both parties in their respective position paper (sic). (pp. 211-
212, Records). 2
Private respondents appealed said decision to the NLRC which rendered a decision on May 30, 1989
modifying the appealed decision in this manner:
After a careful review of the records and based on the foregoing facts, we find and so hold that the
Labor Arbiter committed reversible error.
It is an undisputed fact that complainant Virgilio Villegas worked with respondent Cagayan Capitol
College for six (6) consecutive regular semesters, as college instructor, while complainant Leonor
Pagapong worked with the same respondent for three (3) consecutive years as classroom teacher.
In this regard, the Manual of Regulations for Private Schools expressly provides that . . . probationary
period for academic personnel shall not be more than ... six (6) consecutive regular semesters for those
in the tertiary level'. (Section 102 of the Manual, 7th Edition, 1984). The same Manual also provides that
'full time teachers who have rendered three (3) consecutive years of satisfactory service shall be
considered permanent' (Section 75, Ibid.).
Based on this Manual of Regulations of Private Schools both complainants obtained permanent status in
their appointment with the respondent Cagayan Capitol College and cannot be dismissed except for
cause. The non-renewal of their employment contract with the respondent is therefore tantamount to
illegal dismissal. Hence, complainants are entitled to reinstatement with backwages and other benefits.
As regards the claim for moral and exemplary damages, we concur with the findings of the Labor Arbiter
that the same is without basis. We likewise adopt the award of attorney's fees of 10% out of the total
monetary award that complainants may receive.
WHEREFORE, the appealed Decision is hereby MODIFIED, declaring respondents guilty of illegal dismissal
and ordering respondents to reinstate complainants to their former position or any equivalent position
with three (3) years backwages without qualification or deduction.
Respondents are likewise ordered to pay 10% of the total award as attorney's fee.
The claims for moral and exemplary damages are dismissed for lack of merit. 3
A motion for reconsideration was filed by petitioners but this was denied by the public respondent in a
resolution dated July 28, 1989. 4 Hence this petition wherein petitioners assail the said decision of public
respondent based on the following grounds:
THAT THE HON. NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF DISCRETION
AND SERIOUSLY ERRED IN INTERPRETING THE PERTINENT PROVISIONS OF THE MANUAL OF
REGULATIONS FOR PRIVATE SCHOOLS, 7th EDITION, 1970, THE LABOR CODE OF THE PHILIPPINES AND
OTHER APPLICABLE LAWS AND JURISPRUDENCE BY RULING THAT PRIVATE RESPONDENTS HAVE
ACQUIRED PERMANENT EMPLOYMENT STATUS AND CANNOT BE DISMISSED EXCEPT FOR CAUSE.
II
THAT PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF
DISCRETION AND SERIOUSLY ERRED IN THE INTERPRETATION OF EXISTING LAWS AND JURISPRUDENCE
BY RULING THAT THE ACT OF PETITIONERS IN NOT RENEWING THE TEACHING CONTRACTS OF PRIVATE
RESPONDENTS IS TANTAMOUNT TO ILLEGAL DISMISSAL AND IN CONSEQUENTLY ORDERING THEIR
REINSTATEMENT WITH BACKWAGES. 5
In the same petition is a prayer for the issuance of a writ of preliminary injunction to restrain the public
respondent from enforcing the questioned decision dated May 30,1989 pending resolution of the
petition. In sum, the petitioner prays for the annulment of said decision dated May 30, 1989 and the
resolution dated July 28, 1989 promulgated by the NLRC.
Acting on the petition, the Court, on October 4, 1989, without giving due course to the petition, required
the respondents to comment thereon within ten (10) days from notice and issued a temporary
restraining order enjoining the public respondent from enforcing the questioned decision and resolution
and further required petitioner to file a bond in the amount of P20,000.00 within forty-eight (48) hours
from notice.
After careful deliberation on the petition, the comment thereto of respondents and the memoranda of
the parties, the Court finds that the petition is impressed with merit.
There is no question that private respondents were probationary teachers. Thus, they are covered by
the policy instructions issued by the Department of Labor and Employment that the probationary
employment of professional instructors and teachers shall be subject to the standards established by
the Department of Education and Culture. Said standards are embodied in paragraph 75 of the Manual
of Regulations for Private Schools, as follows:
75. Full time teachers who have rendered three (3) consecutive years of satisfactory services shall be
considered permanent.
In University of Sto. Tomas vs. National Labor Relations Commission, 6 this Court in interpreting the
foregoing rule, held that the legal requisites for a teacher to acquire permanent employment and
security of tenure are as follows:
(1) The teacher is a full time teacher;
(2) The teacher must have rendered three (3) consecutive years of service; and
(3) Such service must have been satisfactory.
There is no question that private respondents have been employed for three (3) consecutive years as
teachers at petitioners' college and on a full time basis. However, they do not automatically become
permanent unless it is shown that their services during the probationary period were satisfactory.
The contention of respondents that upon termination of the three-year probationary period the teacher
automatically becomes permanent is not quite correct. It must be conditioned on the compliance with
the third requisite that the services of said teacher during the probationary period was satisfactory.
The employer is the one who is to set the standards and determine whether or not the services of an
employee are satisfactory. It is the prerogative of an employer to determine whether or not the said
standards have been complied with. In fact, it is the right of the employer to shorten the probationary
period if he is impressed with the services of the employees.
This prerogative of a school to provide standards for its teachers and to determine whether or not these
standards have been met is in accordance with academic freedom and constitutional autonomy which
give educational institution the right to choose who should teach. 7
At the start of their employment, private respondents were duly furnished the Faculty Manual expressly
stating among others, the duties of teachers and the grounds for termination of employment or non-
appointment to permanent status of a probationary employee.
In the case of respondent Villegas, it appears that there were complaints of students during his last year
of service and that these complaints were duly investigated by the Acting Dean of the Nautical
Department who came up with the report of the acts complained of. 8
Thus, his performance was considered unsatisfactory and was not renewed by petitioner college after
the third year. That he was made to teach in the summer of 1984 appears to be prompted by the fact
that the summer sessions were still part of the third probationary period which started in July of the first
semester of school year 1981-82.
Similarly, respondent Pagapong was found to be inefficient due to her absences.
The Court thus finds and so holds that private respondents were not illegally dismissed by petitioner.
WHEREFORE, the petition is hereby GRANTED and the questioned decision and resolution of the
National Labor Relations Commission dated May 30, 1989 and July 28, 1989, respectively, are hereby
SET ASIDE and another decision is hereby rendered DISMISSING the complaints filed by private
respondents. The restraining order issued by the Court on October 4,1989 is hereby made permanent.
SO ORDERED.
G.R. No. L-58958 July 16, 1984
GRAND MOTOR PARTS CORPORATION, petitioner,

vs.
THE MINISTER OF LABOR, THE REGIONAL DIRECTOR, MINISTRY OF LABOR, REGION VI, and NARCISO
BELICENA, JR., respondents.
Hector Teodosio for petitioner.
The Solicitor General for respondent Minister of Labor.
Narciso P. Belicena for private respondent.
GUERRERO, J.:
This is a petition for certiorari assailing the Order of the Minister of Labor which affirmed the decision of
the Regional Director of Region VI dated November 27, 1980 directing the reinstatement of the private
respondent Narciso Belicena, jr. as Branch Manager of the petitioner, Grand Motor Parts Corporation,
Iloilo Branch, Iloilo City, "with backwages from the time he was dismissed (August 31, 1980, the date
complainant received the letter of termination) up to the time he is actually reinstated without loss of
seniority rights, benefits, and other privileges under existing laws, decrees, and agreement, verbal or
written, entered into by the parties at the time of hiring."
Since the above decision of the Regional Director was rendered purely on the basis of the position
papers of the petitioner corporation and the private respondent, without hearing nor cross-examining
the parties, and petitioner claims grave abuse of discretion committed in public respondents' order for
the reinstatement of the Branch Manager, We gather the antecedent facts from the respective position
papers of the parties.
In the complaint filed by Narcism Belicena, Jr. against the Grand Motor Parts Corporation and Fred
Cisneros as Personnel Manager dated September 4, 1980 filed with the Regional Office No. VI, Labor
Relations Division, Ministry of Labor and Employment, the complainant charged respondents the
following causes of action:
1. Illegal dismissal with out justifiable reason or report from the Ministry of Labor & Employment —
August 25, 1980;
2. Reinstatement with backwages — P3,000.00 — monthly salary;
3. Transportation allowance as gasoline expenses — Total P300.00 at P100.00 per week since Aug. 18 to
Sept. 5/80;
4. Non-payment of 13th month bonus — Total P1,250.00 for 5 mos. at P3,000.00 monthly salary
5. 1% share in net profit at the end of the year — P25,000.00.
According to the position paper submitted by Branch Manager Belicena, Jr., the "facts concerning (his)
hiring and subsequent dismissal by the Grand Motor Parts Corp." are:
Just before Christmas of 1979, I met Mr. Alfredo Cisneros, who was introduced as the Acting Branch
Manager of Grand Motor Parts Corporation, Iloilo Office. In the course of our conversation, he told me
they need a man, preferable a CPA, to manage the Iloilo Office since he is really based in Cebu. When I
told him that I am a CPA, he offered me the job. I said I will seriously consider his offer. Then, he
interviewed me. In an honesty, I told who I am.
1. That I am presently connected with Warner, Barnes & Co., Inc. — Iloilo Office.
2. That I joined Warner, Barnes in 1966 and rose from the rank of bookkeeper to Chief Accountant and
to Finance Officer, the present position I am holding in a span of 14 years.
3. That I graduated from the University of the East in 1962 and had been working since I started college
work.
4. That my present salary is P2,408.00 per month.
5. That my fringe benefits are as follows:
a. Provided with company car
b. No limit in gasoline
c. No limit in repair expenses
d. Free medical dental hospitalization, medicines without station.
e. That I am a practicing CPA with monthly retainer's fees of P350.00.
f. That I hold unofficially the position of No. 2 man in the Branch and such is a signatory on all checks.
g. That I have never been involved in any acts of dishonesty or disloyalty to the company in my fourteen
(14) years of work
h. That they are free to make inquiries with Warner, Barnes as to the validity of the information I am
giving him.
In March 1980, Mr. Cisneros followed up his offer and this time in a more official manner with the
following benefits.
1. That I will be hired on a regular basis, not passing thru the probationary period since I more than
qualify for the position
2. My monthly basic pay is P3,000.00.
3. My entertainment allowance is P1,000.00
4. Free car with unlimited gasoline and repair expenses
5. That I will also have free hospitalization, dental, medical and medicines without limit
6. That aside from the usual 13th month pay, I will also get a 1% share on the net profit of the Branch at
the end of a 12-month operation. The Branch is averaging P600,000.00 as its net profit for a 12-month
operation or at least P5,000.00 a month
7. That I can only be terminated if in case I become grossly incompetent and dishonest
With all these agreements and benefits, I accepted the offer and forsook my 14 years service with
Warner, Barnes & Co., Inc.
xxx xxx xxx
In April 1, 1980, I started working as Branch Manager of Grand Motor Parts Corporation and also of
Grand Tire Recapping Plant, Iloilo Offices.
In April 22, 1980, I had a serious miss understanding with Mr. Benito Uy. I was blamed for a
misdemeanor by a probationary salesman and for which I was not aware nor told about it. Since, I
believed that I was judged rashly, I called Mr. Cisneros in Cebu and told him that I am leaving the
company since I have now misgiving concerning management's maturity and intelligence in handling
problems. But, he asked me to stay on since he will settle things with Mr. Uy in Bacolod. Since, I do not
want to put Mr. Cisneros, the company in a bad light I stayed but intent or, resigning upon Mr.
Cisneros's arrival from Bacolod. Mr. Cisneros arrived on April 26, 1980 and told me that Mr. Uy
understood the whole situation and I must understand the characters of my superiors. He prevailed me
to stay on. He fired the erring salesman because the company would rather fire the salesman than lose
me since it is hard to look for professional men. To show his sincerity, he followed me home. There, he
tell MY wife that she should not feel insecure since I am now working with a very stable and fraternal
company. That, again, I will never be terminated unless I am highly incompetent and dishonest. So, I
stayed on.
xxx xxx xxx
On August 18, 1980, after Mr. N. Garcia and company left Iloilo, I was relieved of some of my rights and
privileges as Branch Manager of GMPC and GTRC Iloilo Offices, Mr. A. Cisneros executed these relief.
On August 31, 1980 came the letter of termination signed by Mr. Alfredo Cisneros, now the Personel
Manager. It was not signed
xxx xxx xxx
On the other hand, the position paper submitted by the Grand Motor Parts Corporation through
counsel, states the following:
There were several persons who applied as manager, including the complainant herein. Mr. Cisneros
chose the complainant to take over the Iloilo Branch, subject to certain terms and conditions as herein
discussed.
The respondent is aware that complainant in his fourteen years of service with Warner Barnes and being
a Certified Public Accountant failed to get a promotion to the rank of Manager.
As a measure of protection, considering the responsibility and the amount of the investments attached
to the job, the respondent gave the complainant a 4 to 6 months probation or observation period. This
period of time was expressly agreed upon by the complainant and Fred Cisneros to determine the
standard of complainant's managerial ability, competency and excellence. It was spelled out to the
complainant that he may not qualify for the job based on his performance during the 4 to 6 months
period running the risk of not being able to qualify for the job and lose employment in the process. Mr.
Cisneros clarified to the complainant that if within the observation or probation period he failed to
qualify as branch -manager he will be refused final appointment and the respondent will be forced to
terminate him. It was precisely for this reason that committed complainant could not produce any
written appointment because the permanency of his position is still to be determined by the respondent
corporation after the lapse of the six months probationary period.
As a matter of fact, complainant as of April 1980 has not yet resigned from Warner Barnes hoping that in
the event of his disqualification from the respondent, he will have an opportunity to return to his job at
Warner Barnes, as Accountant or Finance Officer.
Within the said probation period, Fred Cisneros was the one who charge in the supervision of the
complainant's performance. Mr. Cisneros has to stay in Iloilo to give management advice to the
complainant, insuring that proper managerial policies are laid down.
II. Incidents after April 1, 1980.
A. Sometime in the month of May, 1980, a salesman of the respondent named Hernaldo Porquez figured
in a vehicular collision causing damage to the respondent's delivery 'pick-up' vehicle. This incident was
brought to the attention of the Cebu main office through the cashier of the Iloilo Branch three days after
the incident. The incident has cause damage to the respondent corporation assess to more than Two
Thousand Pesos (P2,000.00).
When Benito Uy, a member of the Board of Directors and Treasurer of the said respondent corporation,
inquired from the complainant as to the details of the vehicular incident and the remedy or measures
taken by the Iloilo Branch, the complainant claimed lack of knowledge about the incident. The
complainant likewise failed to promptly provide administrative discipline to the erring employee.
The posture of ignorance adopted by the complainant has shocked the Cebu head office. For a manager
ignorant of what happened to the activities of his erring personnels causing damage to the property of
the company place the business operation of the company in grave jeopardy.
On account of this incident, the complainant was reprimanded by the Cebu Head Office and Fred
Cisneros has to go back to Iloilo to enable the complainant manage the Iloilo Branch satisfactory to the
head office. As noted, this incident occurred during the observation period as previously mentioned.
III. Complainant's resignation with Warner Barnes:
Even as of May, 1980 while complainant was then performing his duties as Branch Manager, he was still
connected with Warner Barnes where he was employed as some sort of Accountant or Finance Officer.
He informed Mr. Cisneros that just in case he could not qualify he will go back to Warner Barnes.
Unfortunately, Warner Barnes pressed the complainant to you decide whether he Will stay with Warner
Barnes or to resign and join the respondent corporation. Thus facing the risk of not being qualified he
chose to stay with the respondent. After ala the benefits and privileges that he enjoys is much better
than that of Warner Barnes.
With that decision, the complainant tendered his resignation with Warner Barnes, willing to assume the
risk in connection with his new job as manager.
IV. Complainant repeatedly failed to follow company policies and instructions from Head Office.
In the course of complainant's operation, he was required to submit promptly a monthly Income or loss
Statement and Comparative Projection and Actual Sales Report, The prompt submission of these reports
are mandatory considering that his performance should be closely monitored while under probation.
These two reports were not submitted promptly to the Head Office of respondent Corporation, to the
extent that on several occasions, he was warned of his apparent neglect and inability to comply with this
basic instructions. Considering his lack of managerial experience, the respondents could not yet afford
to leave everything to the complainant the Iloilo Branch without the closest supervision on his
managerial ability.
Inspite of series of reminders to prepare and submit the said documents, he miserably failed to submit
the same. Finally he was called by Nemesio Garcia, the President of the respondent corporation, to
come to the head office in Cebu in order to evaluate his performance and to produce the latest monthly
Income and Loss Statement and Comparative Projection and Actual Sales Report. He was likewise
instructed to bring with him the Iloilo Branch Accountant, who will provide the basic information on the
operation of the Iloilo Branch. He was specifically informed by Mr. Cisneros that he win be ready to
present facts relative to average monthly expenditures, sales, collection, account receivables, minimum
and maximum inventory and all other matters related to the operation of the Iloilo Branch.
The meeting took place in the presence of the President and two Vice-President. When complainant was
asked basic information about company operations of the Iloilo Branch, the complainant failed to
provide accurate and necessary answers and could not produce the necessary data available. The
President and two Vice-President were so disappointed that they walked out of the conference. Mr.
Cisneros was then called up and he was made to explain to the President why the complainant selected
as probable manager could not provide basic information as to the operation of Iloilo Branch, inspite of
his stature as Certified Publish Accountant.
The President and the members of the Board of Directors began to feel apprehensive that they are
taking big risk in entrusting a multi-million peso investment to a man who could not comply simple
routinary information vital to management.
Again in August, 1980, when the President and the Vice-President went to Iloilo in an inspection trip,
supervising the operation of the Iloilo Branch, the complainant could not present the business condition
of the Iloilo Branch. Information sought by the President such as Sales, Cash and Charges Collection,
Budgeted and Actual Sales, Projection, Accounts Receivables could hot be obtained and no datas to this
effect were provided. Facts and reports were in disarray.
V. The Performance of the Complainant.
In the Comparative Performance Report dated July 8, 1980, on the operation of Iloilo Branch for the
month of June and May, 1980, the cash sales of the Iloilo Branch went down to P91,318.41 for June,
1980 as compared to the sales for the month of May, 1980 in the sum of P174,697.77. The lowering of
the sales could have been averted had the necessary reports been submitted on time to assess the
performance of the complainant. This sudden dip in the sales of the Iloilo Branch was not properly
explained by the complainant.
Extension of personal accounts, were committed by the complainant in blatant violation of company
policy. lt was repeatedly stressed to the complainant that no personal accounts will be extended by the
Iloilo Branch unless served with clearance from the Head Office in Cebu, considering the unpaid
collections accumulated by the former manager of the Iloilo Branch.
The personal accounts extended by the complainant were as follows:
(List omitted.)
As of November 6, 1980, these personal accounts extended by the complainant produce delinquent
accounts amounting to P18,435.80.
Subsequently attached to the above position paper of the Grand Motor Parts Corporation is the letter of
termination addressed to the complainant Branch Manager which reads:
25 August 1980
Mr. Narciso Belicena, Jr.

Grand Motor Parts Corporation
Iloilo City
Dear Nonong:
When you applied for the position of Branch Manager, our understanding was clear that you will be on
provision (sic) for a period of between four to six months, within which, you may quit with either verbal
or formal notice if you should not desire to continue.
Likewise, the Management reserves the right to terminate your services, if, upon observation., the same
is not satisfactory. It was emphasized that you were taking the risk of possibly losing your job.
Management's observation indicate that you do not qualify for the position. It is with regret that based
on our agreement upon employment, we have to terminate your services effective immediately.
Upon receipt of this formal notice, kindly turn over to Mr. Sammy Gang the Iloilo Branch.
Very truly yours,
GRAND MOTOR PARTS CORPORATION
SGD.) FRED CISNEROS

Personnel Manager
On November 13, 1980, complainant Branch Manager filed his answers to the position paper of the
corporation, reiterating that he was hired as Branch Manager but not on an acting capacity and on the
terms and conditions recited in his original position paper; that his resignation from Warner Barnes took
effect on May 1, 1980 and he started working with Grand Motor Parts Corporation on April 1, 1980 as he
was on a 30-day vacation/sick leave from Warner; that the mishap involving the company's vehicle
which was used without his permission and knowledge could not be blamed upon him; that the alleged
reports which he failed to send were not reminded to him, verbally or in writing; that his sales for the
period April to August, 1980 is higher compared to that for the same period in 1979; that the alleged
accounts remaining unpaid as of November 6, 1980 would have been collected in full if he were still the
Manager; that if ever there was no written contract on his employment on a regular basis, it was
because he was now a regular employee and contracts are given only to those who will pass the
probationary period and the rank-and-file employees, not to those managerial ones.
He further stated and We quote: "I trusted management, Besides, if I will pass through the probationary
period, I will reject the offer. Furthermore, I was employed, very secure and happy in my job when Mr.
Cisneros offered me the job. I had a very nice, comfortable, secure and well-paying job at Warner,
Barnes and enjoying certain privileges and fringe benefits which other companies in Iloilo City does not
offer. Mr. Fred Cisneros 'pirated' me from Warner, Barnes. ..."
To further support his stand, Belicena submitted: (1) Letter of Warner, Barnes & Co., Inc. dated April 28,
1-980 accepting his resignation effective May 1, 1980; (2) Letter of transmittal dated August 19, 1980 of
all the reports as discussed thoroughly with Mr. Fred Cisneros on August 18, 1980; (3) Letter of April 29,
1980 requesting for written instructions. This was not answered; (4) Letter of July 7, 1980 from head
office addressing him as Manager; (5) Certification from BF Goodrich, Bacolod City; and (6) Profit and
Loss Statement of Grand Motor Parts Corp. for the period April to June, 1980 showing net profit of
11196,267.85 for three months operation of P65,422.63 per month.
As earlier indicated, the Regional Director, Nazareno Q. Bedia, ruled in favor of the Branch Manager,
ordering his reinstatement to his former position with backwages without loss of seniority rights,
benefits and other privileges under existing laws, decrees and agreements, verbal or written, entered
into by the parties at the time of hiring. He held that "(f)rom the quantum of evidence, We are of the
opinion, and so hold that complainant's appointment was permanent in nature. Complaint was 'pirated'
so to speak. He was persuaded to leave his position as the No. 2 official of Warner, Barnes Co., Inc., Iloilo
Branch, where he has already served for 14 years. For complainant to leave an already lucrative position
for another job which is not permanent would be highly incomprehensible. The argument by respondent
that complainant was motivated by the fact that he wants to be No. I in the office is pure conjecture.
Complainant rose from the ranks to the No. 2 position. It is safe to assume that in the ordinary course of
events he would rise to the No. 1 position in the office where he was employed."
On the issue whether complainant was dismissed for cause or not, the Regional Director held that there
were no such acts or omissions committed or omitted by the complainant as charged by the
corporation; that the assertion of respondent corporation that complainant could not prepare the
financial reports promptly is unbelievable considering that complainant is a financial officer of a
marketing firm, Warner Barnes & Co., inc.; that as regards his sales performance, complainant's
assertion is explicit in that his sales for the period of his employment is bigger than the sales in the
previous year covering the same period; that the alleged extension of credit against company policy is
not backed up by even an iota of evidence since no policy, which was made known to complainant was
presented; that complainant was not neglectful nor incompetent in respect to the wrong doing of a
personnel of the Iloilo Branch who later tendered his resignation and the incident settled.
The Grand Motor Parts Corporation appealed the decision of the Regional Director to the Ministry of
Labor and in his order dated October 22, 1981, the Deputy Minister, Vicente Leogardo, Jr., by authority
of the Minister, affirmed the order appealed from and dismissed the appeal of the Corporation for lack
of merit.
According to the Deputy Minister's order now under review, respondent's contention that complainant
was hired on a temporary or probationary basis for a period of four to six months and as such, his
services could be terminated anytime and that his dismissal on the main is premised on his failure to
qualify for the job of manager and inability to manage the branch, "is without merit. The fact that
complainant was enticed and pirated by respondent from the Warner Barnes Co., Inc. and given higher
pay and benefits is an eloquent proof of respondent having recognized complainant's technical
qualification and experience, which exempt him from the probationary provisions of the Labor Code.
The grounds for dismiss cited by respondent are in the nature of generalizations and do not constitute
justifiable causes which should be substantiated by proof of specific acts of managerial incompetence.
Considering that complainant was hardly four months in the service, we are more inclined to believe
that any shortcoming on his part perceived by the respondent was attributable to his newness on the
job for which a reasonable time for orientation and adjustment must be permitted, considering the
magnitude of his duties and responsibilities as Branch Manager."
Petitioner now comes to Us and assails the order of the Deputy Minister of Labor on the ground that:
I. The petitioner was denied due process when it was ordered to reinstate private respondent with
backwages without hearing with opportunity to cross-examine and submit evidence on the basis merely
of position papers, inspite of an agreement by the parties that summary investigation will be conducted
thereafter; and
II. Grave abuse of discretion was committed against petitioner when it was ruled that private
respondent cannot be dismissed during the period of probation and on the fifth month he was dismissed
for failing to pass probation, and the Labor Minister admitted in his order that private respondent had
shortcomings.
The more important and substantial issue that We must first resolve is whether private respondent's
employment as Branch Manager was temporary or probationary, and not regular and permanent.
It is quite significant and very striking at the outset that Belicena, private respondent herein, did not and
could not present any written proof of his appointment or employment as regular and permanent
Branch Manager of petitioner corporation, which he assume as of April 1, 1980. It is admitted by him
that it was only on April 28, 1980 that he resigned from his previous possition as Finance Officer of
Warner, Barnes & Co., Inc. efective May 1, 1980, which fact lends strong support to the petitioner's
contention that the hiring of Belicena was probationary for a period of four to six months. For
otherwise, Belicena, if his appointment was regular and permanent as of April 1, 1980, would have
resigned immediately from Warner, Barnes & Co. on April 1, 1980 because by then, he was assured of a
permanent tenure. But he had to submit his resignation letter on April 28, 1980, hence, it is only logical
and reasonable to conclude that before April 28, 1980, he was not yet sure of his status in the petitioner
corporation, weather he would qualify for a job as Manager and thus be hired permanently, or not.
Private respondent's claim that if there was no recent contract on his employment on a regular basis, it
was because he was now a regular employee and contract are given only to those who will pass the
probationary period and the rank-and file employee, not to those Managerial ones, is not only
unsupported by the evidence but also contrary to the usual and customarybusiness pratices, especially
in multi-million enterprises as the petitioner corporation herein. And considering the magnitude of its
sales and operation, petitioner corporation must have taken the necessary precautions to test the
qualifications, ability and performance of its Branch Manager, but he did not. The conclusion is
inevitable that his hiring was tempory.
We find merit in the contention of the petitioner that "private respondent has not been hired as
manager of any firm before his employment with petitioner. The highest previous possition he attained
was that of Finance Officer. His possition with petitioner's Iloilo Branch was his first as Manager.
Moveover, Warner, Barnes & Co., private respondent privious employer, and petitioner are engaged in
different kind of business. Managing petitioner's Iloilo Branch was entirely new experience for private
respondent. It was, therefore, necessary for private respondent to undergo a period of probation to test
his qualification, skill and experience." Indeed, the employer has the rigth or is at liberty to choose as to
who will be hired and who will be decline. It is within the exercise of this rigth to select his employees
that the employer may set or fix probationary period within which the latter may test and observed the
conduct of the former before hiring him permanently. "The right of the 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 purchased labor
from any person whom it chooses. The employer and the employee have thus an equality of rigths
guaranteed by the Constitution. 'If the employer can compel the employer 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''' (Mills vs. United States Printing Co., 99 App. Div., 605; 91 N.Y.S. 185,
189-192, cited in Pampanga Bus Company, Inc. vs. Pambusco Employee' Union, Inc., 68 Phil. 541).
The finding of the regional Director and the Deputy Minister of Labor that private respondent was "
pirated" is not supported by the evidence on record. On the contrary the records disclosed the Bilecena
applied for the possition as branch Manager on March 18, 1980 as shown in his application marked
Annex "F" to the petition pp. 41-43, rollo, P3,250.00. Even assuming that he was induced to work with
the petitioner corporation, the inducement is a normal and legitimate pratice in business circles and
concerned in the face in the stiff competition to net more sales and increase the market for their
products.
The next issue to be resolved is weather private respondent, being a probationary Branch Manager, was
terminated for just cause. It is petitioner's contention that Bilecena was terminated during his
probationary Period because (a) he failed to submit promptly the monthly Income and Loss Statement,
Comparative Projections & Actual Sales Report; (b) the Comparative Performance Report dated July 8,
1980 on the operation of the Iloilo Branch for the month of June and May, 1980, the Cash Sales of the
Iloilo Branch went down to P91,318.41 for June, 1980, as compared with the sales for the month of May,
1980 in the sum of P174,697.77; (c) Belicena in violation of company policy and without clearance from
the head office in Cebu, extended personal accounts in favor of 15 persons which as of November, 1980
produced delinquent accounts amounting to P18,435.80; and (d) Belicena claimed lack of knowledge of
the vehicular accident caused by a subordinate and failed to provide prompt administrative disciplinary
action against the erring employee.
The answers of Belicena to the above charges submitted in his position papers dated October 22, 1980
and November 13, 1980 hereinabove cited, indicate, to Our mind, inadequacy, if not inefficiency in the
discharge of his duties as Branch Manager. His letter dated August 19, 1980 to the President of
petitioner corporation enclosing (1) Actual Sales and Collection for GMPC from Jan.-July, 1980; (2) Cash
and Charge Sales for GMPC from Jan.-JULY, 1980 compared to Budget; (3) GMPC — Financial Statement
from January to June 1980; (4) GMPC Trial Balance as of June 30, 1980; (5) Monthly breakdown of our
expenses from January to June 1980; (6) Our GTRC Report on actual sales and collection, January-July
1980; (7) Our GTRC report on Charge and Cash Sales as compared to Budget, clearly prove and
demonstrate his failure to submit monthly reports. The reports submitted by him in the cited letter are
for the seven months period of January to July, 1980. That a monthly report of operations is essential to
the business of the petitioner cannot be evaded or ignored by a Branch Manager, for the viability of its
business life may well depend on these monthly reports.
Again private respondent's letter-request dated April 29, 1980 requesting "a. My specific jobs and
responsibilities and stations, as well; b. Our company's accounting policies and procedures and the
monthly reports and deadlines; c. Our committed company's policies and procedures in the extension of
CREDIT and approval of CREDIT LIMITS," simply shows that after being on the job as Branch Manager for
nearly a month (he joined the corporation on April 1, 1980), Belicena has not shown any effort or
initiative to familiarize himself with his duties and obligations, although petitioner corporation submits
that a copy of the company brochure containing the re. requested data was given him (See Annex "I",
pp. 106-131, rollo). Further, the fact that the erring salesman involved in the vehicular accident resigned
afterwards does not absolve the Branch Manager for his failure to exercise supervision over his
subordinates and to impose discipline over him. Neither can he escape responsibility for extending
personal accounts to some 15 individuals in violation of a company policy by citing the letter of the Vice
President/General Manager of petitioner corporation (Annex "K", rollo, p. 133) which refers to the
corporate account of Asturias Sugar Central to the corporation.
The records further disclose that petitioner's Vice President/General Manager caned the attention of
Branch Manager Belicena in his letter dated July 7, 1980 (Annex "K" to the petition, records, p. 133) that
"(h)is June sales is only about 50% of our target. Can we not improve that performance this July?" This in
effect proved that the Branch Manager was not discharging his duties to the satisfaction of the
management.
In fine, from the documentary evidence on record, We hold that petitioner has clearly and convincingly
established that the private respondent failed to pass the probationary period for the position of Branch
Manager, and for lack of confidence, petitioner was justified in terminating or dismissing private
respondent herein. As the respondent Deputy Minister of Labor has admittedly confirmed in the assailed
Order, the 1 4 shortcoming on his (Belicena) was attributable to his newness on the job."
Recent decisions of this Court on the dismissal of managerial employees have laid down the doctrine
that under Policy Instructions No. 8 of the Secretary of Labor "the employer is not required to obtain a
previous written clearance to terminate managerial employees in order to enable him to manage
effectively." (Associated Citizens Bank vs. Ople, L-48896, Feb. 24, 1981, cited in Bondoc vs. People, s
Bank & Trust Company, 103 SCRA 599). In St. Luke's Hospital, Inc. vs. Minister of Labor, 116 SCRA 240,
We held that "it looks to Us more practical and proper to leave things as they are instead of compelling
petitioner to reinstate in a sensitive position one whose attitude could per chance spell not only more
financial difficulties to petitioner but also possible inadequacies in the required dietary standards it has
to maintain for its patients. Petitioner does not have to wait 'for one more serious act of insubordination
and disrespect to express instructions of management — (which would warrant or) mean forfeiture of
[her] right to employment with petitioner.' "
Under the law, Article 282 of the Labor Code, a probationary employee may be terminated after six
months for a just cause or when he fails to qualify as a regular em employee, to p wit:
Art. 282. Probationary Employment. — Probationary employment shall not exceed six (6) months from
the date the employee started working, unless it is covered by an apprenticeship agreement stipulating
a longer period. The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee at the time of his
engagement. An employee who is allowed to work after a probationary period shall be considered a
regular employee.
It is true that mere allegation of loss of confidence by employer on his employee is not sufficient cause
for his dismissal. But loss of confidence is a valid ground for dismissing an employee, and proof beyond
reasonable doubt of the employee's misconduct is not required to dismiss him of this charge. It is
sufficient if there is some basis for such loss of confidence. (Central Textile Mills, Inc. vs. National Labor
Relations Commission, 90 SCRA 9). While a managerial employee may be dismissed merely on the
ground of loss of confidence, the matter of determining whether the cause for dismissing an employee is
justified on ground of loss of confidence, cannot be left entirely to the employer. Impartial tribunals do
not rely only on the statement made by the employer that there is "loss of confidence" unless duly
proved or sufficiently substantiated. (De Leon vs. National Labor Relations Commission, 100 SCRA 691).
In the case at bar, We are satisfied that petitioner has valid grounds to charge its Branch Manager with
loss of confidence by reason of the overall performance he has demonstrated within the probationary
period which showed that he is not qualified to be the regular or permanent Branch Manager of
petitioner corporation in Iloilo City. His dismissal does not appear to Us as arbitrary, fanciful or
whimsical. In the last and ultimate analysis, the prerogative and judgment to hire employees under
terms and conditions designed to achieve success in its business activities belongs to management
which may not be unduly impaired, limited or restricted. We, therefore, rule that public respondents
committed grave abuse of discretion in ordering the reinstatement of private respondent without
substantial evidence in support thereof.
With the resolution of the issue under consideration in favor of the petitioner corporation, We deem it
unnecessary to discuss and resolve the assailment of the petitioner that it was denied due process in the
proceedings before the Regional Director.
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Order of the Deputy Minister of Labor dated
October 22, 1981 is hereby REVERSED and SET ASIDE. No costs.
PETITION GRANTED.
SO ORDERED.
G.R. No. 121962 April 30, 1999

ESPERANZA C. ESCORPIZO, and UNIVERSITY OF BAGUIO FACULTY EDUCATION WORKERS
UNION, petitioners,
vs.
UNIVERSITY OF BAGUIO and VIRGILIO C. BAUTISTA and NATIONAL LABOR RELATIONS
COMMISSION, respondents.
QUISUMBING, J.
This special civil action for certiorari seeks to annul the Resolution 1 of NLRC promulgated on May 31,
1995 in NLRC Case No. RAB-CAR-07-0217-92 which dismissed petitioners' appeal and affirmed the
decision of the Labor Arbiter.
Petitioner Esperanza Escorpizo was initially hired by respondent university on June 13, 1989 as a high
school classroom teacher. Under the rules of the respondent university, appointment to teach during
the first two years at the university is probationary in nature. During the probation period, the teacher is
observed and evaluated to determine his competency. Attainment of a permanent status by a faculty
member is conditioned upon compliance with certain requirements, such as passing the professional
board examination for teachers (PBET).
On March 18, 1991, respondent university informed Escorpizo that employment was being terminated
at the end of the school semester in view of her failure to pass the PBET. But before the start of the
school year 1991-1992, Escorpizo reapplied and pleaded that she be given another chance. She told the
respondent school that she had just taken the PBET and hoped to pass it.
As Escorpizo's appeal was favorably considered, she was allowed to teach during the school year 1991-
1992. However, her continued employment was conditioned on her passing the PBET. Unfortunately,
Escorpizo failed again. Undaunted, Escorpilo took the examination a third time in November 1991. At
the end of the school year 1991-1992, respondent university evaluated the teachers performance to
determine who would be in the list for the next school year. Escorpizo, not having passed the PBET yet,
was not included.
Much later, on June 8, 1992, the results of the PBET were released and this time Escorpizo passed said
examination. Nevertheless, on June 15, 1992, respondent university no longer renewed Escorpizo's
contract of employment on the ground that she failed to qualify as a regular teacher. This prompted
Escorpizo to file on July 16, 1992 a complaint for illegal dismissal, payment of backwages and
reinstatement against private respondents.
On June 22, 1993, the labor arbiter ruled that respondent university had a "permissible reason" in not
renewing the employment contract of Escorpizo. 2 Nevertheless, the labor official ordered the
reinstatement of Escorpizo and disposed of the case as follows:
WHEREFORE, evidence and law considered, the respondents are hereby directed to cause the
immediate reinstatement of the complainant but without backwages, and to extend to her regular
status.
All other claims are hereby dismissed for lack of merit.

SO ORDERED. 3
Dissatisfied with the decision there being no award of backwages, Escorpizo appealed to the National
Labor Relations Commission (NLRC). But in its assailed Resolution 4 dated May 31, 1995, the NLRC
dismissed said appeal and affirmed the labor arbiter's decision.
Instead of filing the required motion for reconsideration, petitioners filed this instant petition 5 imputing
grave abuse of discretion on the part of public respondent in affirming the decision of the labor arbiter.
This precipitate filing of petition for certiorari under Rule 65 without first moving for reconsideration of
the assailed resolution warrants the outright dismissal of this case. As we consistently held in numerous
cases, 6 a motion for reconsideration is indispensable for it affords the NLRC an opportunity to rectify
errors or mistakes it might have committed before resort to the courts can be had.1âwphi1.nêt
It is settled that certiorari will lie only if there is no appeal or any other plain, speedy and adequate
remedy in the ordinary course of law against acts of public respondents. In the case at bar, the plain and
adequate remedy expressly provided by law was a motion for reconsideration of the impugned
resolution, based on palpable or patent errors, to be made under oath and filed within ten (10) days
from receipt of the questioned resolution of the NLRC, 7 a procedure which is jurisdictional. Hence,
original action of certiorari, as in this case, will not prosper. Further, it should be stressed that without a
motion for reconsideration seasonably filed within the ten-day reglementary period, the questioned
order, resolution or decision of NLRC, after ten (10) calendar days from receipt thereof. Consequently,
the merits of the case can no longer be reviewed to determine if the public respondent had committed
any grave abuse of discretion. 8
Besides, petitioners did not comply with the rule on certification against forum shopping. As pointed out
by the private respondents, the certification in the present petition was executed by the counsel of
petitionerd, 9 which is not correct. The certification of non-forum shopping must be by the plaintiff or
any of the principal party and not the attorney. 10 This procedural lapse on the part of petitioners is also
a cause for the dismissal of this action.
To be sure, even if the aforesaid procedural and technical infirmities were to be set aside, we find no
cogent reason to depart from the decision of public respondent as hereunder elucidated. Definitely, no
gave abuse of discretion could be imputed to the public respondent in affirming the decision of the labor
arbiter.
Petitioners contend that Escorpizo had attained the status of a regular employee having rendered very
satisfactory performance as probationary teacher for two years, consistent with the collective
bargaining agreement between the respondent university and petitioner union of which Escorpizo is a
member. They argue that the prerequisite prescribed by respondent university that teachers pass the
PBET to attain regular employment has no legal basis because it is not stipulated in the collective
bargaining agreement.
This contention, in our view, is bereft of merit.
A probationary employee is one who, for a given period of time, is being observed and evaluated to
determine whether or not he is qualified for permanent employment. A probationary appointment
affords the employer an opportunity to observe the skill, competence and attitude of a probationer. The
word "probationary", as used to describe the period of employment, implies the purpose of the term or
period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment, the probationer at the same time, seeks to prove to
the employer that be has the qualifications to meet the reasonable standards for permanent
employment. 11
There is no dispute that Escorpizo was a probationary employee from the time she was employed on
June 13, 1989 and until the end of the school semester in March 1991 or for two academic years.
Thereafter, on her plea, she was again allowed to teach for school year 1991-1992. She knew that her
status then was not that of a regular employee. For, she was also aware that her attainment of a regular
employment is conditioned upon compliance with the requisites attached to her position, pursuant to
the rules prescribed by respondent university, to wit:
PROBATIONARY STATUS
An appointment to teach during the first two years at the University is probationary in nature . . .
During the period of probation (four semesters, excluding summer terms), the teacher is observed and
evaluated formally by a committee composed of: (1) the most ranking/senior member of the faculty in
his discipline/field of specialization, (2) his department head or college dean, (3) the Personnel Director
and (4) the Vice President for Academic Affairs, including his students to determine his competency and
fitness to be elevated to permanent status.
xxx xxx xxx
Permanent status is granted to the faculty member of the high school or elementary school who has
satisfactorily complied with the requirements of the probationary period, has at least a bachelor's
degree in education, and has passed the Professional Teacher Board Examination or an equivalent Civil
Service Examination. 12
Under the aforecited rule, the following conditions must concur in order that a probationary teacher
may be extended a regular appointment; (1) the faculty member must satisfactorily complete the
probationary period of four semesters or two years, within which his performance shall be observed and
evaluated for the purpose of determining his competency and fitness to be extended permanent status;
and (2) the faculty member must pass the PBET or an equivalent civil service examination.
Admittedly, while Escorpizo met the first requirement, she did not fulfill the second. She had failed the
PBET twice at the time her probationary period ended. That she did not qualify to become a permanent
employee is further evidenced by the fact that before her employment contract expired, she was
informed that her services would be terminated by the end of the school year in March 1991. When she
was given, upon her plea, a teaching load in the next succeeding school year, it was already beyond the
two-year probationary period. The most that could be conceded in this situation is that her continued
employment was deemed an extension, ex-gratia, of her probationary period, affording her another
chance to pass the requisite licensure test for teachers. 13 Petitioners did not even deny that Escorpizo
was rehired on a temporary basis on condition that she has to pass the PBET in order to become a
permanent employee. Under no circumstance could continued employment alone beyond the two-year
period bestow on her the status of a regular employee. It was only after fulfilling the cited second
requirement when, on the third try, she passed the PBET that she qualified for regular and permanent
employment.
Petitioners' reliance on the collective bargaining agreement (CBA) one is not tenable. Indeed, provisions
of a CBA must be respected since its terms and conditions constitute the law between the contracting
parties. Those who are entitled to its benefits can invoke its provisions. And in the event that an
obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court for
redress. 14 To buttress their position, petitioners cite the following provision of the CBA between
respondent university and petitioner union:
Sec. 3. Probationary academic employees. A probationary academic employee is one hired by the
Administration on trial or probation for the purpose of occupying, if found fit and qualified, a permanent
or regular position in the University. Before such probationary employee becomes regular or
permanent, he shall undergo for two (2) years, which period however, may be reduced by the
Administration at the latter's discretion. 15
Clearly, the abovequoted provision does not mention that passing the PBET is a prerequisite for
attaining permanent status as a teacher. Nevertheless, the aforecited CBA provision must be read in
conjunction with statutory and administrative regulations governing faculty qualifications. It is settled
that an existing law enters into and forms part of a valid contract without the need for the parties
expressly making reference to it. 16 Further, while contracting parties may establish such stipulations,
clauses, terms and conditions as they may see fit, such right to contract is subject to limitation that the
agreement must not be contrary to law or public policy. 17
In this connection, DECS Order No. 38, series of 1990, a regulation implementing Presidential Decree No.
1006 18 or the Decree Professionalizing Teaching stipulates that no person shall be allowed to engage in
teaching and/or act as a teacher unless he has registered as professional teacher with the National
Board for Teachers. To be eligible as professional teacher, one must have passed the board examination
for teachers or the examinations given by the Civil Service Commission or jointly by the Department of
Education, Culture & Sports and the Civil Service Commission. The Order also provides that effective
January 1, 1992, no teacher in the private schools shall be allowed to teach unless he or she is a
registered professional teacher. Significantly, school officials are enjoined by the said administrative
order to ensure that all persons engaged in teaching in the public or private elementary or secondary
schools are registered professional teachers.
Undoubtedly, the requirement of passing the PBET before one could become a regular employee as
prescribed by respondent university is legally in order. Being a prerequisite imposed by law, such
requirement could not have been waived by respondent university, as herein insisted by petitioners. In
the same vein, petitioners proposition that upon completion of two-year probationary period with a
very satisfactory performance, Escorpizo automatically becomes permanent is not correct. For as earlier
stressed, Escorpizo could only qualify to become permanent employee upon fulfilling the reasonable
standards for permanent employment which include passing the board examination for teachers.
This is by no means to assert that probationary teachers do not enjoy security of tenure. They enjoy
security of tenure in the sense that during their probationary employment they cannot be dismissed
except for cause. However, upon expiration of their contract of employment, probationary academic
personnel cannot claim security of tenure and compel their employers to renew their employment
contracts. 19 In fact, the services of an employee hired on probationary basis may be terminated when
he fails to qualify as a regular employee in accordance with reasonable standards made know by the
employer to the employee at the time of his engagement. There is nothing that would hinder the
employer from extending a regular or 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, the law does not preclude the employer from terminating the probationary employment on
justifiable ground. 20
In the instant case, Escorpizo was entitled to security of tenure during the period of her probation but
such protection ended the moment her employment contract expired at the close of school year 1991-
1992 and she was not extended a new appointment. No vested right to a permanent appointment had
as yet accrued in Escorpizo's favor since she had not yet complied, during her probation, with the
prerequisites necessary for the acquisition of permanent status. 21 Consequently, as respondent
university was not under obligation to renew Escorpizo's contract of employment, her separation cannot
be said to have been without justifiable cause. Legally speaking, Escorpizo was not illegally dismissed.
Her contract merely expired.
WHEREFORE, the instant petition is hereby DISMISSED, and the assailed RESOLUTION of public
respondent is hereby AFFIRMED. Costs against petitioners.1âwphi1.nêt
SO ORDERED.
G.R. No. 149859 June 9, 2004
RADIN C. ALCIRA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, MIDDLEBY PHILIPPINES CORPORATION/FRANK THOMAS,
XAVIER G. PEÑA and TRIFONA F. MAMARADLO, respondents.
DECISION
CORONA, J.:
Before us on appeal is the decision1 of the Court of Appeals2 dated June 22, 2001 affirming the
decision3 of the National Labor Relations Commission4 dated March 23, 1999 which, in turn, affirmed the
decision5 of labor arbiter Pedro Ramos dated May 19, 1998 dismissing petitioner Radin Alcira’s
complaint for illegal dismissal with prayer for reinstatement, backwages, moral damages, exemplary
damages and attorney’s 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 petitioner’s
performance, respondent Middleby terminated petitioner’s 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 Alcira’s appointment paper, claimed conflicting starting
dates of employment: May 20, 1996 according to petitioner and May 27, 1996 according to respondent.
Both documents indicated petitioner’s employment status as "probationary (6 mos.)" and a remark that
"after five months (petitioner’s) performance shall be evaluated and any adjustment in salary shall
depend on (his) work performance."6
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 Peña (Human Resources Manager) and Trifona
Mamaradlo (Engineering Manager).
In their defense, respondents claim that, during petitioner’s 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, petitioner’s 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 Mamaradlo’s affidavit showed that petitioner "did not perform well in his assigned work and
his attitude was below par compared to the company’s standard required of him" and (3) petitioner’s
dismissal on November 20, 1996 was before his "regularization," considering that, counting from May
20, 1996, the six-month probationary period ended on November 20, 1996.7
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 expired.8
Hence, this petition for review based on the following assignment of errors:
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 Court in Serrano vs. NLRC, et. al., G.R. No. 117040,
January 27, 2000.9
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 petitioner’s employment status was "probationary (6 mos.)." The five-month period
referred to the evaluation of his work.10
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 petitioner’s 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 petitioner’s status was "probationary (6 mos.)" without any specific date of
termination, the 180th day fell on November 16, 1996. Thus, when he was dismissed on November 20,
1996, he was already a regular employee.
Petitioner’s contention is incorrect. In CALS Poultry Supply Corporation, et. al. vs. Roco, et. al.,11 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 Philippines vs. National Labor Relations
Commission,12 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 petitioner’s performance
would be evaluated. It is only but natural that the evaluation should be made vis-à-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 company’s standard required of him.13
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 their engagement.14
But we have also ruled in Manlimos, et. al. vs. National Labor Relations Commission 15 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 of whether there was a just cause for the dismissal of the
petitioners xxx."16 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 petitioner’s 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-44360 March 31, 1977
REGINA S. BIBOSO, NENITA B. BISO, FE CUBIN, MAGELENDE H. DEMEGILLDO, EMERITA O. PANALIGAN,

NILDA P. TAYO, NELDA TORMON, ARDE M. VALENCIANO, MA. LINDA E. VILLA and the VICMICO
SUPERVISORY EMPLOYEES ASSOCIATION (VICSEA), petitioners,
vs.
VICTORIAS MILLING COMPANY, INC. and the OFFICE OF THE PRESIDENT OF THE
PHILIPPINES, respondents.
FERNANDO, J.:têñ.£îhqwâ£
The present Constitution of expanding the mandate of protection to labor specifically casts on the State
the obligation to assure workers security of tenure. 1 The decisive question in the controversy now
before this Court is wether the mantle of such guarantee covers the case of the nine petitioners, whose
employment admittedly were on a basis. It was the rulling of the respondent Presidential Executive
Assistant Jacobo C. Clave that its benificent effects could not be invoked by them that is assailed before
this Court. While they are pleading by captioned petition for review, this Court considered it as a
cetiorari proceeding in view on his part, the issue of an alleged unfair labor pratice indulged in by private
respondent public official, who acted serious accusation against respondent public, who acted on behalf
of the Office of the President. The petition is not impressed with the merit.
The order of respondent Jacobo C. Clave, who asss Presidential Executive Assistant acted on an appeal
by private respondent from a decision of the Secretary of Labor dismissed the complaint of petitioners
for reinstatement. He noted at the outset of such challenged order: "Individual complainants herein
were employed by respondent as academic teachers in respondent's school, the St. Mary Mazzarello
School, which is operated by respondent. On or about April 14, 1973, complainants were notified by the
school Directress that they (complainants) were not going to be rehired for the school year 1973-
74.äüsl•älFº The necessary report for such action was filed by respondent with the Department of Labor
on May 28, 1973, informing that complainants' services were thus terminated after the business hours
on June 30, 1973. 2 He then pointed out that petitioners were quite successful with the Arbitrator, the
former National Labor Relations Commission under Presidential Decree No. 21, and the Secretary of
Labor. It was private respondent that appealed to the Office of the President. After which, his order
went into the basic issue thus: "This Office had examined and analyzed the various contracts Identified
during the hearing below and admitted by the complainants to have been signed by them which clearly
show that the complainants were hired as teachers of the school on a year-to-year basis and that they
reapplied before the expiration of the contracts and/or signed new ones, as the case may be, if the
school decided to renew the same. None of the complainants who testified disputed the fact that they
all signed Identical contracts of employment which provided for a definite period of employment which
provided for a definite period of employment expiring June 30 of the particular school year. Thus, under
'Status of Employment' of said contracts, the complainants were hired as 'temporary as and when
required until June 30, 1973,' or whatever year the contract is supposed to terminate. To he specific,
Exhs. '4', '5' and '6' signed by complainant Arde Valenciano show that she was hired on a yearly basis for
school year 1970-71, and 1971-72. The same is true with Exhs. '13' and '14' signed by Linda Villa; Exhs.
'16', '17','18' and '19', signed by Emerita 0. Panaligan; and Exhs.'22' and '23', signed by Magelinde
Demegillo all showing that they were hired on a year-to-year basis. 3 Reference was then made to "the
official stand of the Department of Labor respecting recognition by the Labor Code of the policy of the
Bureau of Private Schools settling the maximum probationary period for teachers at three years. Of
pertinence hereto is the official letter dated March 12, 1975, of Undersecretary of Labor Amado G.
Inciong to the President of the Coordinating Council of Private Educational Associations touching on the
probationary period for teachers at three years, to wit: ... This refers to your letter of 5 March 1975 in
connection with the probationary period for teachers. The Labor Code does not set the maximum
probationary period at six months. Under the Labor Code, the probationary period is the period required
to learn a skill, trade. occupation or profession. In other words, the Labor Code recognizes the policy of
the Bureau of Private Schools settling the maximum probationary period for teachers at three years. 4 It
was likewise made plain therein that as regards the allegation of unfair labor practice, the Office of the
President "finds the same untenable. 5
The petition, as noted at the outset, cannot proper.
1. It is to be noted that in Philippine Air Lines, Inc. v. Philippine Air Lines Employees Association, 6 after
reference was made to the specific provision in the present Constitution not found in the 1935 Charter
requiring the State to assure workers security of tenure, it was stressed that there should be fealty to
[such] constitutional command. 7 Such a mandate was construed in the subsequent case of Almira v. B.
F. Goodrich Philippines, Inc., 8 that even in cases affording justification for disciplinary action to be taken
by management against an employee, "where a penalty less punitive [than dismissal] would suffice,
whatever missteps may be committed by [the latter ought not to be visited with a consequence so
severe." 9 The opinion then went on to state: "It is not only because of the law's concern for the
workingman. There is, in addition, his family to consider. Unemployment brings untold hardships and
sorrows on those dependent on the wage-earner. The misery and pain attendant on the loss of jobs
then could be avoided if there be acceptance of the view that under all the circumstance of this case,
petitioners should not be deprived of their means of livelihood. Nor is this to condone what had been
paid. From the strictly juridical standpoint, it cannot be too strongly stressed, to follow Davis in his
masterly work, Discretionary Justice, that were a decision may be made to rest on informed judgment
rather than rigid rules, all the equities of the case must be accorded their due weight. Finally, labor law
determinations, to quote from Bultmann, should be not secundum rationem but also secundum
caritatem. " 10 That is a doctrine to which this case is whether it applies to the case of petitioner. The
Office of the President answered in the negative. Thus it exercised its discretion. It cannot be said that
an abuse could rightfully be imputed by it, much less one that is of such gravity that calls fir judicial
correction. What is decisive is that petitioners were well aware all 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. It was the decision of private respondent that it should cease. The Office of the
President could find nothing objectionable when it determined that the will of the parties as to the
limited duration thereof should be respected. That was all that was decided.
2. This is by no means to assert that the security of tenure protection of the constitution does not apply
t probationary employees. The Labor code has wisely provided for such a case thus: "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 priscribe to prevent the circum\vention of the right of the
employees to be secured in their employment as provided herein." 11 There is no question here, as
noted in the assailed order of Presidential Executive Assistant Clave, that petitioners did not enjoy a
permanent status. During such period they could remian in their positions and any circumvention of
their of the rights, in accordance with the statutory statutory scheme, subject to inquirey and therafter
correction by the Department of Labor. Thus there was the safeguard as to the duration of their
employment being respected. To that extent, their tenure was secure. The moment, however, the
period expired in accordance with contracts freely entered into, they could no longer invoke the
constitutional protection. To repeat, that was what transpired in this case.äüsl•älFº The ruling of the
Office of the President, now assailed, is not without support in law.
3. It would be a different matter of course had the failure to renew the contracts of petitioners been
justly attributable to their joining petitioner labor union, Vicmico Supervisoyr Employees Association.
That would be a clear case of an unfair labor practice. 12 There was such an allegation by them. The
Office of the President found "the same untenable." 13 Nor did it stop there. It explained why: "The
records disclose, and it is a fact admitted by the union, that the teachers of Don Bosco Technical
Institute, also run and operated by respondent, are all members of the VICSEA. The allegation that the
Company refused re-employment of complainants simply because they joined the VICSEA isnegated by
the fact that in a much bigger school, the Don bosco Technical Institute, respondent has allowed the
members of the faculty to join the CIVSEA without any serious objection or reprisal. If at all the
respondent had objected to the teachers of the St. Mary Mazzarello school being considered within the
same bargaining unit as the otgher employees of the company, it was for the reason that the exemption
from coverage of employes hired for a definite period of employment, like the complainants herein, who
were indisputably shown that the term of their contract of employment prior to the time that they
become permanent under the Manual of the Bureau of Private Schools, was temporary in nature or for
a definite period." 14
In the comment submitted on behalf of respondent public official, reference was made to the admission
by individual petitioners that before they joined such labor union, "they had serious differences with the
school officials respecting their methods of teaching and conduct in school." 15 That was followed by a
recital of what was testified to by some of the petitioners. Then came this portion of the comment: "The
above-quoted testimonies of individual petitioners clearly show that their competence, efficiency,
loyalty and integrity were in question long before they became members of petitioner union VICSEA and
it was because of these failings on their part that their contracts to teach were not renewed. This also
shown by Exhibit 39, ... (3) Some of the teachers retained to teach in the school were also members of
petitioner union VICSEA.... If respondent VICMICO was against individual petitioners joining the union,
why did it not terminate the employment of these two teachers as well? (4) Don Bosco of Bacolod City,
another school run by respondent VICMICO, is manned by teachers who are members of petitioner
union VICSEA ... Considering "he foregoing circumstances, it is difficult to believe the submission of
individual petitioners that they were terminated from employment because they joined petitioner union
VICSEA It would appear that it was the other way around. Knowing that their contracts were about to
expire and that they would probably not be extended new ones, petitioners sought membership in
petitioner union VICSEA to render it more difficult for respondent VICMICO to remove them from their
teaching positions. This is indicated by the fact that petitioners became members of petitioner union
VICSEA only in January, 1973. Before this date, individual petitioners were already being closely
observed to gauge their performance for purposes of determining who shall be accorded permanent
status. Thus, individual petitioners knew that they would either be made permanent or will be dropped
from the faculty roster at the end of the school year 1972-73. So they joined the union. That the
purpose of individual petitioners in joining the union is to avert their forthcoming removal from the
faculty roster was impliedly admitted by one of the individual petitioners in her testimony: 'Q — But
according to you, precisely, the reason why you joined the union was because it would be very hard for
the school toterminate you if you are already a member of the union, did you not say that? A — I said
it!" 16 The memorandum for petitioners did stress testimony coming from the Directress of the school in
question to show that the refusal to retain them in employment was due to their membership in the
union. Certainly, it cannot be assumed that the Office of the President in the evaluation of the
conflicting evidence did not take it into consideration. The conclusion it reached was adverse to
petitioners. It is now well-settled that the certiorari jurisdiction of this Tribunal extends only to a grave
abuse of discretion. There must be the element of arbitrariness or caprice. In the light of what appears
of record, the conclusion that the decision reached by it is tainted by such infirmity is unwarranted.
WHEREFORE, the petition for certiorari is dismissed.

G.R. No. L-43835 March 31, 1981
DOMINGO F. BONDOC, petitioner,
vs.
PEOPLE'S BANK AND TRUST COMPANY, BANK OF THE PHILIPPINES ISLANDS (Surviving Bank) and
JACOBO C. CLAVE (as Presidential Executive Assitant), respondents.
AQUINO, J.:
This certiorari case involves the issue of whether respondent Presidential Executive Assistant committed
a grave abuse of discretion amounting to lack of jurisdiction in confirming the abolition of petitioner's
position as a department manager in a bank and the payment to him of separation pay instead of
reinstating him with backwages.
Domingo F. Bondoc, who used to be an assistant of Jaime C. Velazquez in the Ayala Secutrities
Corporation (p. 116, Rollo), joined the People's Bank and Trust Company on October 1, 1966 upon the
recommendation of Velazquez, a director, to Roman Azanza, the bank president (p. 35, Rollo).
He replaced Ariston Estrada, Jr. (p. 37, Rollo). Bondoc was chosen by the bank's board of directors on
February 21, 1967 as the first manager of the bank's department of economic research and statistics
which was organized in January, 1967 (Exh. 4 and 5).
That department had only four employees: a stenographer and three clerks who were formerly
employed in the comtroller's office, accounting department and office of the corporate secretary (p.
117-118, Rollo).
Every year, from 1968 to 1973, Bondoc was elected to the position of department manager and
assistant vice-president by the bank's board of directors at its annual organizational meeting (Exh. 1-B to
1-F).
On May 15, 1973, Bondoc reported in writing to Manuel Chuidian, a bank director, certain anomalies
committed by the officers of the bank. The Central Bank found that some officers of the bank utilized its
found for their own interests. Because of those anomalies, the Monetary Board suspendedBenito R.
Araneta, a director and vice-president, and reprimanded the other officers involved, namely, Severino
Coronacion, Nicanor O. Corpus, Guillermo D. Teodoro, Feldres G. San Pedro, Carlos Villaluz, Godofredo
Galindez, Fernando Macalanlayand Manuel P. Elepaño (pp. 6-8 Rollo).
On September 19, 1973, the board of directors of the People's Bank, in the course of its deliberation on
the bank's projected merger with the Bank of the Philippine islands, resolved to abolish itts department
of economic research and statistics which, as already noted, was headed by Bondoc (p. 35, Rollo).
The board regarded the said department as a rededant unit whose functions could be performed by
other departments. The Bank of P.I., like twenty-three other commercial banks, has no such department
(p. 117, Rollo). Bondoc's four subordinates were absorbed by the accounting department.
Bondoc was advised of the abolition ofhis department in the later part of September, 1973. He asked
the personnel manager to compute his separations pay. Bondoc was told that his separation pay was
equivalent to seventy-five percent of his salary for every year of service. It amounted to P10,481.33
under its car finacing plan. (p. 118, Rollo).
Bondoc allegedly told the personnel manager that he would use his separation pay to liquidate his debt
and issue a check for P3,012.08 to cover the balance of his debt. He requested the personnel manager
to expedite the preparation of the bill of sale for the Toyota car so that he could get the document on
the following day. But he did not show up that day (p. 118, Rollo).
It is relevant to state that the merger of the two banks was effected in accompliance with the Central
Bank's requirement that commercial banks should increase their capital stock to a minimum of one
hundred million pesos through mergers and consolidations or other lawful means. The merger was
approved by the Monetary Board and the Securities and Exchange Commission. The merger agreement
was signed in January, 1974. It was consummated on June 1, 1974.
On November 2, 1973, the People's Bank, pursuant to section 11 of Presidential Decree No. 21 (creating
the ad hoc National Labor Relations Commission), applied with the Secretary of Labor for clearnce to
terminate Bondoc's services effective on November 5 (p. 35, Rollo).
He lost no time in filing with the NLRC his opposition to the termination his services. He alleged in his
opposition that he was dismissed without cause (p. 114, Rollo).
As all efforts for the amicable settlement of the case were fruitless, it was submitted for compulsory
arbitration.
During the hearing, Bondoc tried to prove that the abolition of his position was a reprisal for his
aforementioned exposure of some anomalies in the bank which resulted in the suspension or reprimand
by the Monetary Board of certain senior officers of the bank headed by Benito R. Araneta, a nephew of
J. Antonio Araneta, the chairman of the board (p. 48, Rollo).
After hearing, the NLRC arbitrator recommended to the Secretary of Labor the denial of the application
to terminate Bondoc's employment and ordered the People's Bank to reinstate him with backwages
from November 16, 1973 and with allowances and other benefits guaranteed by law and without loss of
status and seniority rights (pp. 42-43, Rollo).
On appeal, the NLRC (Commissioners Castro, Borromeo ans Seno) in its decision of January 21, 1975
reversed the decision of the arbitrartor, approved the clearance for Bondoc's dismissal and ordered the
People's Bank to pay him seventy five percent (75%) of his monthly salary for every year of service in
lieu of one-half month salary for every year of service fixed in the Termination Pay Law, Republic Act No.
1052, as amended by Republic Act no. 1787 (p. 45, Rollo).
The NLRC adduced as reason to justify the abolition of Bondoc's position (1) the fact that his position as
manager being confidential in character, the bank had the rperogative to terminate his employment
anytimel (2) Bondoc's department was nolonger necessary to the efficient operation of the bank in view
of the merger; (3) the management is not precluded from undertakings a reorganization or making
changes to meet the demands of the present and (4) in case of mergers, departments or position may
be abolished or new ones created, as the necessity for them requires (p. 44-45, Rollo).
Bondoc appealed tot he Secretary of Labor. That high official in the resolution of September 29, 1975
reversed the NLRC's decision on the grounds that the motivation for the termination of Bondoc's
services was not taken into account by the NLRC and that the People's Bank should not have abolished
Bondoc's department without prior clearance. He denied the application for clearance to dismiss
Bondocs (p. 50, Rollo).
He ordered the People's Bank to reinstate Bondoc to his former position or any substantially equivalent
position with backwages equivalent to his salary for six months, it being undrstood that the Bank of the
P.I. has assumred all the liabilities and obligations of the People's Bank. The Secretary denied the
application for clearance to dismiss Bondoc. (pp. 48-50, Rollo).
From the resolution, the Bank of P.I., as successor of the People's Bank, appealed tot he president of the
Philippines.
One the grounds relied upon in that appeal was that Bondoc was convicted of bigamy, a crime involving
moral turpitude (Criminal Case No. 7185, Manila CFI, Exh. 1).
The Bank of P.I. cited Central Bank Circular No. 356, which disqualifies a person convicted of a crime
involving moral turpitude from becoming an officer of a bank (pp. 213-4, Rollo).
In a decision dated May 17, 1976, Presidential Executive Assistant Jacobo C. Clave set aside the decisions
of the arbitrator and the Secretary and confirmed in toto the NLRC's decision (p. Rollo).
The office of the President held that under the Termination Pay Law an employment without a definite
period may be terminated with or without a cause, thatthe abolition of Bondoc's position was a
necesary incident of the merger of the two banks and that his services were no longer indispensable to
them. hence, the clearance for his removal was authorized for his removal was authorized (pp. 52-54,
Rollo).
The review of the Presidential decision was sought by Bondoc in the petition which he filed in this
Courton May 27, 1976. This is the fifth decision to be rendered in this case.
We hold that under the peculiar or particular facts of this case the termination of bondoc's employment
was lawful and justified and that no grave abuse of discretion was lawful and justified and that no grave
abuse of discretion amounting to lack of jurisdiction was committed by the Presidential Executive
Assistant in affirming the NLRC's decision sustaining ther termination of his employment.
Bondoc was not employed for a fixed period. He held his position of department manager at the
pleasure of the bank's board of directors. He occupied a managerial position and his stay in therein
depended on his retention of the trust and confidence of the management and whether there was any
need for his services.
Although some vindictive motivation might have impelled the aboliton of his position, yet, it is
undeniable that the bank's board of directors possessed the power to remove him and to determine
whether the interest of the bank justified the existence of his department.
Under the old Termination Pay Law, it was held that in the absence of a contract of employment for a
specific period the employer has the right to dismiss his employees at anytime with or without just
cause (De Dios vs. Bristol Laboratories (Phils.), Inc., L-25530, January 29, 1974, 55 SCRA 349, 358; Jaguar
Transportation Co., Inc. vs. Cornista, L-32959, May 11, 1978, 83 SCRA 77).
It may be noted that under Policy Instructions No. 8 of the Secretary of Labor "the employer is not
required to obtain a previous written clearnace to terminate managerial employees in order to enable
him to manage effectively". (SEe Associated Citizens Bank vs. Ople, L-48896, February 24, 1981.)
The petitioner invokes the policy of the State to assure the right of "workers" to security of tenure (Sec.
9, Art. II, Constitution).
That guarantee is an act of social justice. When a person has no property, his job may possibly be his
only possession or means of livelihood. Therefore, he should be protected against any arbitrary and
unjust deprivation of his job.
Article 280 of the Labor Code has construed security of tenure as referring to regular employment and
as meaning that "the employer shall not terminate the services of an employee except for a just cause
or when authorized by" the Code.
As already noted above, the facts of this case do not warrant the conclusion that Bondoc's right to
security of tenure was oppressively abridged. He knew all along that his tenure as a department
manager rested in the discretion of the bank's board of directors and that at anytime his services might
be dispensed with or his position might be abolished.
On equitable considerations, we hold that Bondoc should be paid as separation pay his salary and
allowances, if any, for seven months.
WHEREFORE, the decision of respondent Presidential Executive Assistant is affirmed with the
modification that the Bank of the P.I. should pay to the petitioner separation pay equivalent to his salary
and allowances (if any) for seven months. No costs.
SO ORDERED.
G.R. No. 106161 February 1, 1995
ILOCOS SUR ELECTRIC COOPERATIVE, INC. and EFREN BAUTISTA, petitioners,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, and the NLRC, REGIONAL ARBITRATORS, BRANCH
NO. I, (San Fernando, La Union), respondents.
KAPUNAN, J.:
This is a petition for certiorari questioning the jurisdiction of the National Labor Relations Commission
over termination cases involving employees of electric cooperatives.
Briefly, the facts of the case are as follows:
Engr. Egdon Sabio was employed as Manager of the Engineering Department of Ilocos Sur Electric
Cooperative (ISECO), herein petitioner, in May 1982. He was relieved of his duties on June 10, 1989 and
was dismissed on July 1, 1989 pursuant to ISECO's Board Resolution No. 63 s. 1989 dated July 19, 1989.
It appears that on June 8, 1989, Sabio wrote to the ISECO Board of Directors, thru its President, Atty.
Manuel Agpalo, about the expenses incurred by Acting General Manager, Atty. Efren Bautista, in the
total amount of P131,788.79 from May 1988 to May 1989 for his travel to the office of the National
Electrification Administration (NEA) and places outside the area serviced by the cooperative. Sabio
revealed that in one year, Bautista was away for two hundred twenty (220) days, while in contrast the
previous Acting General Manager, Genaro Cada, who stayed out of the cooperative for not more than
thirty (30) days for the same length of time spent not more than ten thousand pesos (P10,000.00). 1
On June 9, 1989, Bautista summoned Sabio to his office and asked him to file a letter of irrevocable
resignation with the assurance that separation benefits will be granted to him. Bautista also suggested
to Sabio to apply as Acting General Manager of Abra Electric Cooperative. When asked why he made
such request, Bautista could not give any satisfactory answer. Bautista also offered Sabio a one-month
vacation leave with pay but Sabio refused the offer. Bautista made known that the resignation letter or
the application for leave must be in before 9:00 in the morning of June 10. With or without the letter of
resignation or application for leave, Sabio was told, he would be terminated just the same.
Instead of filing either, Sabio on June 10, 1989 sent a letter of apology 2 to Bautista with copies furnished
to the Board of Directors, Department Managers and Sub-Area Managers, but maintaining that he had
not violated any of the cooperative's rules and regulations.3 However, on that same day Sabio received
Memo No. 47-80 from Bautista, relieving him from his position as Engineering Manager without giving
any reason.4
On June 16, 1989; Bautista issued Memo No. 55-89 requiring Sabio to explain in writing within 24 hours
upon receipt why he should not be separated from the service for grave and serious misconduct for
committing the following acts:
1. Unauthorized assumption of authority and power to relay massage through the Radio Operator when
such authority is exclusively reposed to (sic), the General Manager or his duly authorized representative
for confidentiality of communication.
2. Unauthorized assumption of power and authority by requesting NEA for my replacement of another
NEA Manager with the caliber of Engr. Genaro O. Cada, when such authority is exclusively reposed and
vested to (sic) the Board of Directors as a corporate body for corporate action which authority you
arrogated upon yourself without authority.
3. Your alleged solicitation of signatures to the petition for my replacement with another NEA Manager,
personally or thru, linemen from personnel of Main Office and sub-officers during office hours,
hampering the operation of their respective offices, causing confusion and diversion among rank and
file, factionalism among supervisors, endangering the positive gains of the coop as proven by the 25%
system loss for the months of March, April and May, which ultimately and finally will lead to the
downfall and disintegration of ISECO as in the part (sic), of which you are very well aware of, and part of
the confusion; leading to the disconnection of ISECO by NPC and depriving the coop employees of the
benefits they are now receiving/enjoying.
4. Your failure to coordinate with NPC on the higher contracted energy and demand for power allocating
to NPC when NPC deferred its operation for one month causing NPC to penalize ISECO in the amount of
P139,000.00 for failure to use the higher contracted energy and demand allocation for NPC.5
On June 24, 1989, Sabio submitted his answer denying all the charges against him. On June 30, l989
Bautista placed him under preventive suspension without pay effective July 1, 1989, which prompted
Sabio to file a complaint for illegal suspension and a claim for representation/travel allowances before
the Labor Arbiter. On July 13, 1989 Bautista issued Office Memo No. 69-89, creating an ad
hoc committee; to investigate the case against Sabio. Thereafter, the ad hoc committee submitted a
report of its investigation containing the following conclusions and recommendations to wit:
CONCLUSIONS :
In view of the foregoing the ADHOC Committee finds that:
1. Engr. Egdon Sabio is guilty of No. 2, of VI of the Rules and Regulations governing the conduct. of
employees for willfully ordering his subordinate, Mr. Onofre Habon (Annex 1) to type a petition for the
ouster of AGM Bautista for his allegedly being extravagant a charge which he failed to substantiate.
2. Egdon Sabio did indeed solicit signatures of employees to a petition for the ouster of the AGM, as
shown and verified by the execution of affidavits of at least 6 employees (annex 2) which act is inimical
to the smooth operation of the cooperative as it promotes divisiveness among the employees;
3. Egdon Sabio ordered the radio operator to transmit a radio message quoted as follows:
From: ISECO Concerned employees
To: NEA Administrator
Please send another GM with a caliber of GM Cada. Present GM is gastador.
EGDON SABIO
Although such message is not in the possession of the Radio Operator, an affidavit to this effect has
been executed (Annex 3). The actuation is corroborated by Egdon Sabio himself when he sent a letter of
Apology addressed to AGM Bautista (Annex 9). Premises above-stated, Egdon Sabio is also guilty of
Board Policy No. 3-3 dated November 3, l974 specifically "and all other acts prejudicial to the interest
and welfare of the coop and such other grounds as provided by existing laws" (Annex 14).
4. For gross negligence of duty, for failure to coordinate with the National Power Corporation on the
anticipated lean period, causing the Coop to lose P139-T which it could have been avoided if proper
representation was made earlier (see letter of Engr. Cu undated). All these factors contribute to loss of
trust and confidence on Egdon Sabio which is punishable by dismissal as per labor laws.
5. Egdon Sabio is also guilty of No. 2 of VI of the Rules and Regulations governing the conduct of
employees for airing publicly over station DWRS derogatory remarks and malicious accusations against
AGM Bautista, his superior. Especially that the informations being fed to media are incorrect.
RECOMMENDATION:
Human considerations taken into account, it would best serve the best interest of cooperative if Egdon
Sabio be DISMISSED if only to serve as a precedent and/or stern warning to all employees especially
from among the staff, not to indulge themselves in any act which could be detrimental to the welfare of
the coop by using their influence or their subordinates to attain their personal ambitions or whatever
purposes regardless of whether they have valid grounds or none at all. 6
On July 27, 1989, Bautista recommended to the ISECO Board of Directors the approval of the report and
recommendation of the ad hoc committee. On July 29, 1989, the Board adopted the recommendation of
the ad hoc committee and passed Resolution No. 63 s. 1989, terminating the services of Sabio
retroactive July 1, 1989.7 Consequently, Sabio filed a complaint for illegal dismissal with claim for
damages against petitioner with respondent National Labor Relations Commission (NLRC), docketed as
NLRC Case No. RAB-1-07-1050-89, which was assigned to Labor Arbiter Amado T. Adquilen of the
Regional Arbitration Branch, DOLE, for compulsory arbitration.
On January 8, 1990, the Labor Arbiter, after considering the evidence on record, held in his decision
dated January 8, 19908 that Sabio was illegally and unjustly dismissed without due process of law.
The dispositive portion of the decision reads:
WHEREFORE, with all the foregoing considerations whereby order the respondents Ilocos Sur Electric
Cooperative, Inc, (ISECO) and/or AGM Efren Bautista as follows:
1. To reinstate complainant Engr. Egdon Sabio to his former position as ISECO engineering Department
Manager, without loss of seniority rights and to pay him full backwages in the amount of THIRTY THREE
THOUSAND TWENTY PESOS (P33,020.00) plus medical, rice allowances, 1989 13th month pay balance as
well as all other benefits/
bonuses customarily granted to employees by ISECO as a matter of company policy and established
practice; and
2. To pay complainant THIRTY THOUSAND PESOS (P30,000.00) as moral and exemplary damages.
SO ORDERED.
Petitioners appealed to the National Labor Relations Commission which, in a resolution promulgated
June 26, 19909 dismissed the appeal for having been filed out of time. The NLRC found that petitioners
received a copy of the Labor Arbiter's decision on January 20, 1990 but interposed their appeal only on
January 1, 1990 which was beyond the ten-day period prescribed by the Revised Rules of the NLRC,
specifically Rule VIII section I(a). A motion for reconsideration was, likewise, denied by the NLRC in its
resolution of November 16, 1990. 10 A notice of appeal to the President was filed. This was merely noted
by the Commission on June 24, 1991, a petition for the issuance of a writ of execution was submitted by
Sabio. Upon computation of the exact amount to be awarded to Sabio, the Executive Labor Arbiter
issued a writ of execution dated April 13, 1992, to wit:
WHEREFORE, let writ of execution issue in order to effect the following:
1. The reinstatement aspect of the decision of the Labor Arbiter dated January 8, 1990; and
2. The payment of the monetary award due the complainant in the total amount of P74,487.50, as, also
decreed in said decision.
SO ORDERED.11
Thus, this petition which raises the following issues:
1. Whether or not the NLRC has jurisdiction over the case of Engr. Egdon A. Sabio.
2. Whether or not Engr. Egdon A. Sabio was dismissed by the Board of Directors of ISECO in accordance
with law.
The petition is devoid of merit.
Presidential Decree No. 269, as amended by P.D. 1645, relied upon by petitioners, does not apply in this
case. Said Decree pertains to NEA 's exercise of its power of supervision and control over electric
cooperative.
Thus, Section 10, of P.D. 269, as amended, provides:
Enforcement Powers and Remedies. In the exercise of its power of supervision and control over electric
cooperatives and other borrower, supervised or controlled entities, the NEA is empowered to issue
orders, rules and regulations and motu propio or upon petition of third parties, to conduct
investigations, referenda and other similar actions in all matters affecting said electric cooperatives and
other borrower, or supervised or controlled entities.
If the electric cooperative concerned or other similar entity fails after due notice to comply, with NEA
orders, rules and regulations and/or decisions or with any of the terms of the Loan Agreement, the NEA
Board of Administrators may avail of any or all of the following remedies:
xxx xxx xxx
(e) Take preventive and/or disciplinary measures including suspension and/or removal and replacement
of any or all the members of the Board of Directors, officers or employees of the Cooperative, other
borrower institutions or supervised controlled entities as the NEA Board of Administrator may deem fit
and necessary and to take any other remedial measures as the law or the Loan Agreement may provide.
(Emphasis supplied.)
It is clear from the aforequoted provision of P.D. 269, as amended by P.D. 1645 that only the power of
supervision and control over electric cooperatives and other borrowers, supervised or controlled, is
given to the NEA. There is nothing said law which provides that the NEA administration has the power to
hear and decide termination cases of employees in electric cooperatives. That authority is vested in the
Labor Arbiter.
In the present case, there is no dispute that Sabio is an employee of ISECO whose services as manager of
the Engineering Department of ISECO were terminated. The dismissal arose from a purely labor dispute
which falls within the original and exclusive jurisdiction of the Labor Arbiters and the NLRC. Thus,
Section. 217 of the Labor Code provides:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as otherwise provided under
this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within
thirty (30) calendar days after the submission of the case by the parties for decision without extension,
even in the absence of stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination of disputes;
x x x x x x x x x
Moreover, the NLRC 's jurisdiction was only raised for the first time in this petition. Petitioners did not
question the jurisdiction of the Labor Arbiter either in a motion to dismiss or in their answer. In fact,
petitioners participated in the proceedings before the Labor Arbiter, as well as in the NLRC to which they
appealed the Labor Arbiter's decision. It has been consistently held by this Court that while jurisdiction
may be assailed at any stage, a party's active participation in the proceedings before a court without
jurisdiction will estop such party from assailing such lack of it. 12 It is an undesirable practice of a party
participating in the proceedings and submitting his case for decision and then accepting the judgment
only if favorable, and attacking it for lack of jurisdiction, when adverse.13
Petitioners also claim that the dismissal of Sabio was an exercise of management prerogative under
Article 283 of the Labor Code. We do not agree.
Well settled is the rule that the employer's prerogative/power to dismiss an employee must not be
exercised arbitrarily and without just cause, otherwise the constitutional guarantee of security of tenure
would be rendered nugatory. 14 Moreover, it must be done without abuse of discretion. 15
In the case, at bench records show that petitioner Bautista acted with grave abuse of discretion in
having Sabio dismissed. After Sabio denounced the excessive expenditures of Bautista for one year and
his (Bautista) absences totaling 220 days for the same period, he was called by Bautista himself who told
him to resign and when asked for the reason why he was being asked to do so, Bautista was not able to
answer and instead gave another option to Sabio, that is for Sabio to take a vacation leave. Failing to
convince Sabio, Bautista informed him that he would be terminated just the same. 16
It should be noted that the ad hoc committee which recommended the dismissal of Sabio was composed
of Bautista's men and, in fact, two of them executed affidavits in favor of Bautista.17
The factual circumstances clearly demonstrate that petitioners arbitrarily exercised their prerogative in
dismissing Sabio.
Article 283 of the Labor Code on which the dismissal of Sabio was claimed to have been anchored states:
Art. 283. Closure of establishments and reduction of personnel. — The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment (now Department of Labor and Employment) at
least one (1) month before the intended date thereof. . . . (Emphasis supplied)
Here, the instances when the employer may validly terminate the employment of an employee in the
exercise of management prerogative are not present. Petitioners claim that the position of Sabio as
Manager of the Engineering Department was already deleted or abolished. However, the memorandum
dated January 15, 1990 18 which contained the recommendations for reorganization and replacement of
ISECO personnel did not satisfactorily explain or give a credible justification why the Engineering
Department was abolished. As correctly observed by the Solicitor General, there was merely a change in
nomenclature from "Engineering Department" to "Technical Services Department" while the
classifications of the other departments, namely Administrative, Finance and Member Services were
retained. As there was no evidence presented to show that the abolishment of the Engineering
Department was due to the installation of labor saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment, then said deletion of the position of
Sabio cannot be said to be a proper exercise of management prerogative. Thus, the dismissal of Sabio
was illegal. On this point, we quote with favor the findings of the Labor Arbiter:
On the first issue, we find complainant illegally and unjustly dismissed and without due process of law.
Gleaned from the facts presented and the evidence adduced, respondents anchored the dismissal of
complainant on the alleged overt (sic) acts of unauthorized assumption of authority and power to relay
message through the Radio Operator when such authority is exclusively reposed to the General
Manager or his duly authorized representative for confidentiality of information; unauthorized
assumption of power and authority by requesting NEA for the replacement of respondent AGM Bautista
when such authority is exclusively repose and vested to the Board of Directors as a corporate body for a
corporate action which complainant arrogated unto himself without authority; alleged solicitation of
signatures to the petition for the replacement of AGM Bautista, personally or thru linemen from
Personnel of Main Office and Sub-Offices during office hours, hampering the operation of their
respective offices, causing confusion and diversion among rank and file employees, factionalism among
supervisors, endangering the positive gains of the cooperative as proven by the 25% system loss for the
months March, April and May which ultimately and finally will lead to the downfall and disintegration of
ISECO and as part of the confusion; lead to the disconnection of ISECO by the National Power
Corporation and depriving the cooperative employees of the benefits they are now enjoying; and the
alleged failure of complainant to coordinate with the NPC on the higher contracted energy and demand
for power allocation to NPC when National Tobacco Corporation deferred its operation for one month
causing the NPC to penalize ISECO in the amount of P139,000.00 for failure to use the higher contracted
energy and demand allocation for National Tobacco Corporation. All these accusations were ably refuted
by complainant and the record is bereft of any substantial evidence to show complainant's alleged
offenses. Indeed, nowhere in the record shows that complainant sent unauthorized messages or
communication duly signed by him and relayed through the radio operator to the NEA or to any other
agency. Nor is there any showing that Engr. Sabio prepared any letter/request or petition for the
replacement of respondent Bautista as ISECO Acting General Manager. What is clear and revealing
though, and respondent admits, is that AGM Bautista called the complainant to his office on June 9,
1989, a day after complainant wrote Atty. Manuel Agpalo, President of the ISECO Board of Directors
about the expenses of AGM Bautista in the amount of P131,788.79 covering the period May 1988 to
May 1989 and his absences totalling two hundred-twenty (220) days as compared to the expenses of
the previous Acting General Manager Genaro O. Cada which is only P10,000.00 more or less covering
the same span of time. On this occasion, AGM Bautista tried to convince the complainant to resign so he
could paid (sic) all his separation benefits or that complainant may apply as Acting General Manager of
the Abra Electric Cooperative. But when complainant inquired as to the reason why he is being asked to
resign, respondent Bautista cannot give an answer and again presented another option to complainant
for the latter to file his vacation leave immediately or on or before 10:00 o'clock in the morning of the
following day (June 10, 1989). And failing to convince complainant either to resign or file his vacation
leave, AGM Bautista informed complainant that he (Bautista) will terminate him just the same. These
acts of respondent Bautista, taken together, clearly manifest and indubitably show his desire to ease out
complainant from his job. And true enough, he carried out his scheme and succeeded in having
complainant eventually terminated by issuing his Office Order to that effect in succession — firstly, by
relieving complainant thru Memorandum No. 47-89, dated June 10, 1989, immediately and directing
him to turn over all the documents and accountabilities in his (complainant) possession to the
designated OIC, Engr. Fred R. Jacob. The said relief memo does not contain any reason why complainant
is being relieved from his job; secondly, by placing complainant under preventive suspension effective
July 1, 1989 for 30 days as per Official Order No. 143-89 dated June 29, 1989 on the sole ground that
complainant's explanation in compliance to Memo No. 55-89 dated June 16, 1989 is allegedly
satisfactory; thirdly, creating an Ad Hoc thru Office Memo No. 68-89 dated July 13, 1989 to investigate
complainant which is composed of his chosen men two (2) of whom, before being named as members of
the Ad Hoc Committee, executed affidavits in favor of AGM Bautista. Hesitantly, complainant did not
submit himself to the Ad Hoc Committee for it is evident that the body cannot act objectively on his
case. While AGM Bautista may be clothed with the authority to create the same and appoint members
thereto, fairness demand and prudence dictates that the members composing the investigating body
should be free from any cloud of doubt of being partial, nay, subservient to the appointing authority and
biased against the person under investigation. This is not so in this case. As heretofore mentioned, two
members had previously executed their written support in favor of AGM Bautista which they have
coupled with their strongly worded subsequent recommendation for the ouster of complainant after
their "ex-parte" investigation which ended with their verdict thus . . . "regardless of whether they have
valid grounds or none at all." A perusal of this portion of the Ad Hoc Committee's recommendation, read
together with the rest of the committee's disposition and taking into account all the attendant
circumstances of the issue, they have delved upon, creates an impression that within the ISECO, even
legitimate grievances from employees as what complainant did in this instant case, seemingly cannot be
tolerated. It is too clear that the main reason complainant earned the ire and disgust of respondent
AGM Bautista is his courage in bringing to the attention of the ISECO Board of Directors what he
believed as extravagance on the part of respondent Acting General Manager and his absences from his
ISECO office for 220 days covering the period May 26, 1988 to May 25, 1989 and spending the amount
of P131,732,79 as compared to the expenses and absences of the former Acting General Manager who
spent no more than P10,000.00 and stayed out of his ISECO office for not more than 30-days covering
almost the same period of time in comparison. Clearly, the complainant was acting in good faith and
merely exercising his bounden duty, as he puts it in his letter of apology and explanation, to protect the
interest of the cooperative of which he is a member-consumer and incidentally its employee. 19
Finally, the findings of fact of the Labor Arbiter that Sabio was illegally dismissed by ISECO Board of
Directors were based on substantial evidence. In certiorari proceedings under Rule 65 of the Rules of
Court, judicial review by this Court does not go so far as to evaluate the sufficiency of evidence upon
which the Labor Arbiter and the NLRC based their determinations, the inquiry being limited essentially
to whether or not said public respondents had acted without or in excess of its jurisdiction or with grave
abuse of discretion. 20 More importantly, this Court is bound by the findings of fact there being no
showing that either the Labor Arbiter or the NLRC gravely abused its discretion or otherwise acted
without jurisdiction or in excess of the same. 21
WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of merit.
SO ORDERED.
G.R. No. L-25953 August 27, 1979
VICENTE FORTICH, petitioner
vs.
COURT OF INDUSTRIAL RELATIONS and ARTEX DEVELOPMENT CO., INC., respondents.
Mendoza & Hernandez Law Office, for petitioner.
Emiliano Morabe for private respondent.
FERNANDO, C.J.:
The present Constitution specifically protects security of tenure. 1 It was not so under the former
Charter, but the mantle of protection to labor found in the 1935 Charter 2 did cover a situation where
dismissal is arbitrary or improvident. It is in accordance with such a mandate that there is this specific
provision in the Civil Code: "Dismissal of laborers shall be subject to the supervision of the Government,
under special laws." 3 Even more to the point where this litigation is concerned is the provision of the
Industrial Peace Act: 4 "It shall be unfair labor practice for an employer:* * * To discriminate in regard to
hire or tenure of employment or any term or condition of employment to encourage or discourage
membership in any labor organization." 5
It is the contention of petitioner Vicente Fortich in this certiorari proceeding by way of review of a
decision of the Court of Industrial Relations that his employment was terminated after five months of
service as chief mechanical engineer and plant superintendent with private respondent, allegedly "no
other cause than his active participation in the formation of the Artex Technical Union" as well as his
active union membership. 6 Respondent Court, however, in its decision, concluded "that Mr. Vicente
Fortich was employed by the respondent company only on a temporary (trial) capacity without any fixed
tenure of employment and as such, his employment could be terminated at the pleasure of the
employer, the respondent here in." 7 Moreover, it likewise concluded: "Consequently, the charge that
his dismissal was due to union membership and activities therein is unfounded." 8 A motion for
reconsideration having been denied, the matter was elevated to this Court in this certiorari proceeding.
Notwithstanding the very able brief for the petitioner filed by the Mendoza and Fernandez law firm,
with its exhaustive discussion of the legal issues involved, this Court, in the light of the facts as found,
finds no justifiable basis for reversal.
1. On the question of whether or not petitioner Fortich had a fixed tenure of employment, the decision
sought to be reviewed appraised the facts as follows: "From the foregoing, we are convinced that the
complainant, Mr. Vicente Fortich, was employed in the respondent company as Chief Mechanical
Engineer and Plant Superintendent only on a trial basis or in a temporary capacity. The fact that the
probationary period of three months was extended for another two months did not change the
temporary character of complainant's employment in the respondent company. This is more so because
the reason for the extension had been clearly explained by no less than three witnesses for the
respondent, including for that matter Mr. Ricardo Perez who, admittedly was the very same person who
introduced and recommended Mr. Vicente Fortich for employment with the respondent company and
who, again, interceded for the complainant in having his services extended for another two months.,* *
* Even the complainant himself was not certain whether or not he would be employed permanently or
be fired out of job; that he was only told by the management that he could continue working; * * * and
he knew that there was no definite or fixed term for him to work as such. Complainants pretense that he
was already a permanent employee after the probationary period of three months is hardly acceptable
for it does not jibe with the circumstances then obtaining in the respondent company as it was just
starting operation with the advent or arrival of new machineries from abroad and everything was then
on trial basis including for that matter the choice by the respondent company for a very high and
responsible official to occupy the position of Plant Superintendent and Chief Mechanical Engineer.-
Under these circumstances, we are constrained to conclude that Mr. Vicente Fortich was employed by
the respondent company only on a temporary (trial) capacity without any fixed tenure of employment
and as such, his employment could be terminated at the pleasure of the employer, the respondent
herein. 9 Such a finding of fact, supported as it was by substantial evidence, is entitled to full respect. So
it has been decided by this Court time and time again. As was pointed out in Phil. Educational Institution
v. MLQSEA Faculty Association, 10 Justice Laurel, "in the first decision promulgated in 1939, concerning
the scope of the power of this Court to alter factual conclusions reached by the Court of industrial
Relations, expressed the view that we should not disturb 'the findings of facts made by the Court of
Industrial Relations * * *." A year and two months later on November, 1940, he was much more
definite. Such findings "are conclusive and will not be disturbed in the absence of a showing [of abuse
of] discretion." 11 The 1939 decision is Pambusco Employees' Union inc. v. Court of Industrial
Relations. 12 Then came in 1940 Manila Electric Co. v. National Labor Union. 13 The latest case point,
decided less than a year ago, is National Labor Union v. Court of Industrial Relations. 14
2. Nor did respondent Court of Industrial Relations neglect to pass upon the claim of petitioner that his
services were terminated for "no other cause than his active participation in the formation of the Artex
Technical Union." 15 As noted at the outset, respondent Court reached this conclusion: "Consequently,
the charge, that his dismissal was due to union membership and activities is unfounded." 16 It explained
why: "Apparently, management came to know of tills organization and so expressed its disapproval
thereof on the claim that it is against the law. Elucidating on this point, Col. Marinas the personnel
manager of respondent, on cross examination by counsel for the complainant, [petitioner] said: "[Atty.
Mendoza] Q - so you had occasion to inform Mr. Castillo that the AFTO proposed to include both
supervisors and workers. Is that right? A - I saw them in the list. Q - So you had occasion to inform Mr.
Castillo that you saw in the list members and prospective members of the AFTO both workers and
supervisors? A - Yes, sir. Q - That was before Mr. Fortich was separated from the company? A - Yes, sir.
Q - Did Mr. Castillo not tell you or instruct you to do anything to stop the organization of the AFTO
because it was against the law? A - Well, he just told me it was against the law and he did not want it
like that. He feels we might be part of it. Q - That is all he told you? A - That is all he told" (t.s.n., pp. 69-
71, October 1, 1962) That the AFTO is of mixed membership among the supervisors and ordinary
workers is every explicit from the document evidencing the same. This fact is likewise admitted by no
less than the complainant himself when he testified on direct examination as follows 'Q - Who are those
persons whom you approached to sign? A - Well, I approached the heads of the department as
technicians. [The Court The names? A - And then Mr. Soriano, I do not recall his first name - the
superintendent of the Preparatory Department; Mr. Passion of the refrigeration department; Mr. Rueda,
the spinning department; and then Mr. Ricardo Perez, the boiler superintendent and the electrician and
many others. I could not recall an of them but I got in touch with the heads and subheads of the
finishing department, a certain Mr. Acosta and Claro Romero, I approached those who are supposed to
be technicians and personnel and all that (t.s.n., pp. 16-17, Dec. 17, 1960). Thus, the personnel manager
of the respondent company further stated on the improper composition of the organization sought to
be established: 'A - Because the title of the organization says it is a technicians organization and the
members we found out are not technicians. You cannot expect the office to like it.' (t.s.n., pp. 20, August
25, 1962; also pp. 8 and 61, October 1, 1962). For being the plant superintendent and Chief Mechanical
Engineer, as well as a key man in the respondent company, (p. 26, t.s.n., Jan. 27, 1963), it cannot be
doubted that he (Mr. Vicente Fortich) cannot lawfully organize a labor union [composed] of the men
under his supervision. This prohibition is explicitly provided for in Section 3 of the Industrial Peace Act: ,*
* * Individuals employed as supervisors shall not be eligible for membership in a labor organization of
employees under their supervision but may form a separate organization of their own.' For this, a
supervisor, the complainant for that matter, may be dismissed without subjecting the employer to
prosecution under the Act. This is also the rule in the United States after whose law our own Industrial
Peace Act has been pattened. " 17 This is another finding of fact that must remain undisturbed.
Consequently, the charge of private respondent having committed an unfair labor practice falls to the
ground. So it was held in Genconsu Free Workers Union v. Inciong, 18 not only the latest case in point but
also a reiteration of the applicability of such principle to a controversy, the proven facts of which display
the closest similarity. Thus: "There is no occasion to pass upon the allegation in the petition that certain
discriminatory acts, anti-union in character, could be attributed to private respondent. Respondent
Deputy Minister of Labor and the National Labor Relations Commission absolved it from such a charge.
That norm has invariably been followed by this Court. " 19 Under the circumstances, the rather cogent
presentation of the Mendoza and Hernandez law firm as to the limits that must be imposed on the
power of management to terminate the service of a probationary employee to avoid an infringement on
the security of tenure mandate need not be considered.
WHEREFORE, this petition for certiorari by way of review is dismissed and the appealed decision of the
Court of Industrial Relations is affirmed. No costs.
G.R. No. 80609 August 23, 1988
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN ABUCAY, respondents.
Nicanor G. Nuevas for petitioner.
CRUZ, J.:
The only issue presented in the case at bar is the legality of the award of financial assistance to an
employee who had been dismissed for cause as found by the public respondent.
Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was accused by
two complainants of having demanded and received from them the total amount of P3,800.00 in
consideration of her promise to facilitate approval of their applications for telephone
installation. 1 Investigated and heard, she was found guilty as charged and accordingly separated from
the service.2 She went to the Ministry of Labor and Employment claiming she had been illegally
removed. After consideration of the evidence and arguments of the parties, the company was sustained
and the complaint was dismissed for lack of merit. Nevertheless, the dispositive portion of labor arbiter's
decision declared:
WHEREFORE, the instant complaint is dismissed for lack of merit.
Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally blameless in the
light of the fact that the deal happened outhide the premises of respondent company and that their act
of giving P3,800.00 without any receipt is tantamount to corruption of public officers, complainant must
be given one month pay for every year of service as financial assistance. 3
Both the petitioner and the private respondent appealed to the National Labor Relations Board, which
upheld the said decision in toto and dismissed the appeals. 4 The private respondent took no further
action, thereby impliedly accepting the validity of her dismissal. The petitioner, however, is now before
us to question the affirmance of the above- quoted award as having been made with grave abuse of
discretion.
In its challenged resolution of September 22, 1987, the NLRC said:
... Anent the award of separation pay as financial assistance in complainant's favor, We find the same to
be equitable, taking into consideration her long years of service to the company whereby she had
undoubtedly contributed to the success of respondent. While we do not in any way approve of
complainants (private respondent) mal feasance, for which she is to suffer the penalty of dismissal, it is
for reasons of equity and compassion that we resolve to uphold the award of financial assistance in her
favor. 5
The position of the petitioner is simply stated: It is conceded that an employee illegally dismissed is
entitled to reinstatement and backwages as required by the labor laws. However, an employee
dismissed for cause is entitled to neither reinstatement nor backwages and is not allowed any relief at
all because his dismissal is in accordance with law. In the case of the private respondent, she has been
awarded financial assistance equivalent to ten months pay corresponding to her 10 year service in the
company despite her removal for cause. She is, therefore, in effect rewarded rather than punished for
her dishonesty, and without any legal authorization or justification. The award is made on the ground of
equity and compassion, which cannot be a substitute for law. Moreover, such award puts a premium on
dishonesty and encourages instead of deterring corruption.
For its part, the public respondent claims that the employee is sufficiently punished with her dismissal.
The grant of financial assistance is not intended as a reward for her offense but merely to help her for
the loss of her employment after working faithfully with the company for ten years. In support of this
position, the Solicitor General cites the cases of Firestone Tire and Rubber Company of the Philippines v.
Lariosa 6 and Soco v. Mercantile Corporation of Davao, 7 where the employees were dismissed for cause
but were nevertheless allowed separation pay on grounds of social and compassionate justice. As the
Court put it in the Firestone case:
In view of the foregoing, We rule that Firestone had valid grounds to dispense with the services of
Lariosa and that the NLRC acted with grave abuse of discretion in ordering his reinstatement. However,
considering that Lariosa had worked with the company for eleven years with no known previous bad
record, the ends of social and compassionate justice would be served if he is paid full separation pay but
not reinstatement without backwages by the NLRC.
In the said case, the employee was validly dismissed for theft but the NLRC nevertheless awarded him
full separation pay for his 11 years of service with the company. In Soco, the employee was also legally
separated for unauthorized use of a company vehicle and refusal to attend the grievance proceedings
but he was just the same granted one-half month separation pay for every year of his 18-year service.
Similar action was taken in Filipro, Inc. v. NLRC, 8 where the employee was validly dismissed for
preferring certain dealers in violation of company policy but was allowed separation pay for his 2 years
of service. In Metro Drug Corporation v. NLRC, 9 the employee was validly removed for loss of
confidence because of her failure to account for certain funds but she was awarded separation pay
equivalent to one-half month's salary for every year of her service of 15 years. In Engineering
Equipment, Inc. v. NLRC, 10 the dismissal of the employee was justified because he had instigated labor
unrest among the workers and had serious differences with them, among other grounds, but he was still
granted three months separation pay corresponding to his 3-year service. In New Frontier Mines, Inc. v.
NLRC, 11 the employee's 3- year service was held validly terminated for lack of confidence and
abandonment of work but he was nonetheless granted three months separation pay. And in San Miguel
Corporation v. Deputy Minister of Labor and Employment, et al ., 12 full separation pay for 6, 10, and 16
years service, respectively, was also allowed three employees who had been dismissed after they were
found guilty of misappropriating company funds.
The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not
entitled to separation pay. 13 The cases above cited constitute the exception, based upon considerations
of equity. Equity has been defined as justice outside law, 14 being ethical rather than jural and belonging
to the sphere of morals than of law. 15 It is grounded on the precepts of conscience and not on any
sanction of positive law. 16 Hence, it cannot prevail against the expressed provision of the labor laws
allowing dismissal of employees for cause and without any provision for separation pay.
Strictly speaking, however, it is not correct to say that there is no express justification for the grant of
separation pay to lawfully dismissed employees other than the abstract consideration of equity. The
reason is that our Constitution is replete with positive commands for the promotion of social justice, and
particularly the protection of the rights of the workers. The enhancement of their welfare is one of the
primary concerns of the present charter. In fact, instead of confining itself to the general commitment to
the cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution
contains a separate article devoted to the promotion of social justice and human rights with a separate
sub- topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with
management, in the advancement of the national economy and the welfare of the people in general.
The categorical mandates in the Constitution for the improvement of the lot of the workers are more
than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for
cause.
The Court notes, however, that where the exception has been applied, the decisions have not been
consistent as to the justification for the grant of separation pay and the amount or rate of such award.
Thus, the employees dismissed for theft in the Firestone case and for animosities with fellow workers in
the Engineering Equipment case were both awarded separation pay notnvithstanding that the first
cause was certainly more serious than the second. No less curiously, the employee in the Soco case was
allowed only one-half month pay for every year of his 18 years of service, but in Filipro the award was
two months separation pay for 2 years service. In Firestone, the emplovee was allowed full separation
pay corresponding to his 11 years of service, but in Metro, the employee was granted only one-half
month separation pay for every year of her 15year service. It would seem then that length of service is
not necessarily a criterion for the grant of separation pay and neither apparently is the reason for the
dismissal.
The Court feels that distinctions are in order. We note that heretofore the separation pay, when it was
considered warranted, was required regardless of the nature or degree of the ground proved, be it mere
inefficiency or something graver like immorality or dishonesty. The benediction of compassion was
made to cover a multitude of sins, as it were, and to justify the helping hand to the validly dismissed
employee whatever the reason for his dismissal. This policy should be re-examined. It is time we
rationalized the exception, to make it fair to both labor and management, especially to labor.
There should be no question that where it comes to such valid but not iniquitous causes as failure to
comply with work standards, the grant of separation pay to the dismissed employee may be both just
and compassionate, particularly if he has worked for some time with the company. For example, a
subordinate who has irreconcilable policy or personal differences with his employer may be validly
dismissed for demonstrated loss of confidence, which is an allowable ground. A working mother who
has to be frequently absent because she has also to take care of her child may also be removed because
of her poor attendance, this being another authorized ground. It is not the employee's fault if he does
not have the necessary aptitude for his work but on the other hand the company cannot be required to
maintain him just the same at the expense of the efficiency of its operations. He too may be validly
replaced. Under these and similar circumstances, however, the award to the employee of separation
pay would be sustainable under the social justice policy even if the separation is for cause.
But where the cause of the separation is more serious than mere inefficiency, the generosity of the law
must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if
he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his
offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear
dishonesty. A security guard found sleeping on the job is doubtless subject to dismissal but may be
allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really
sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the
situation is changed completely. This is not only inefficiency but immorality and the grant of separation
pay would be entirely unjustified.
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those
instances where the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow
worker, the employer may not be required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than
punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal
only and that the separation pay has nothing to do with the wrong he has committed. Of course it has.
Indeed, if the employee who steals from the company is granted separation pay even as he is validly
dismissed, it is not unlikely that he will commit a similar offense in his next employment because he
thinks he can expect a like leniency if he is again found out. This kind of misplaced compassion is not
going to do labor in general any good as it will encourage the infiltration of its ranks by those who do not
deserve the protection and concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing simply because it is committed by
the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense.
Compassion for the poor is an imperative of every humane society but only when the recipient is not a
rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels
any more than can equity be an impediment to the punishment of the guilty. Those who invoke social
justice may do so only if their hands are clean and their motives blameless and not simply because they
happen to be poor. This great policy of our Constitution is not meant for the protection of those who
have proved they are not worthy of it, like the workers who have tainted the cause of labor with the
blemishes of their own character.
Applying the above considerations, we hold that the grant of separation pay in the case at bar is
unjustified. The private respondent has been dismissed for dishonesty, as found by the labor arbiter and
affirmed by the NLRC and as she herself has impliedly admitted. The fact that she has worked with the
PLDT for more than a decade, if it is to be considered at all, should be taken against her as it reflects a
regrettable lack of loyalty that she should have strengthened instead of betraying during all of her 10
years of service with the company. If regarded as a justification for moderating the penalty of dismissal,
it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining
the efforts of labor to cleanse its ranks of all undesirables.
The Court also rules that the separation pay, if found due under the circumstances of each case, should
be computed at the rate of one month salary for every year of service, assuming the length of such
service is deemed material. This is without prejudice to the application of special agreements between
the employer and the employee stipulating a higher rate of computation and providing for more
benefits to the discharged employee. 17
WHEREFORE, the petition is GRANTED. The challenged resolution of September 22,1987, is AFFIRMED in
toto except for the grant of separation pay in the form of financial assistance, which is hereby
DISALLOWED. The temporary restraining order dated March 23, 1988, is LIFTED. It is so ordered.
Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes and
Medialdea, JJ., concur.
Separate Opinions
FERNAN, C.J., dissenting:
The majority opinion itself declares that the reason for granting separation pay to lawfully dismissed
employees is that "our Constitution is replete with positive commands for the promotion of social
justice, and particularly the protection of the rights of the workers." 1
It is my firm belief that providing a rigid mathematical formula for determining the amounts of such
separation pay will not be in keeping with these constitutional directives. By computing the allowable
financial assistance on the formula suggested, we shall be closing our eyes to the spirit underlying these
constitutional mandates that "those who have less in life should have more in law." It cannot be denied
that a low salaried employee who is separated from work would suffer more hardship than a well-
compensated one. Yet, if we follow the formula suggested, we would in effect be favoring the latter
instead of the former, as it would be the low- salaried employee who would encounter difficulty finding
another job.
I am in accord with the opinion of Justice Sarmiento that we should not rationalize compassion and that
of Justice Padilla that the awards of financial assistance should be left to the discretion of the National
Labor Relations Commission as may be warranted by the "environmental facts" of the case.
PADILIA, J., separate opinion
I concur in the decision penned by Mr. Justice Cruz when it disallows separation pay, as financial
assistance, to the private respondent, since the ground for termination of employment is dishonesty in
the performance of her duties.
I do not, however, subscribe to the view that "the separation pay, if found due under the circumstances
of each case, should be computed at the rate of one month salary for every year of service, assuming
the length of such service is deemed material." (p.11, Decision). It is my considered view that, except for
terminations based on dishonesty and serious misconduct involving moral turpitude-where no
separation pay should be allowed--in other cases, the grant of separation pay, i.e. the amount thereof,
as financial assistance to the terminated employee, should be left to the judgment of the administrative
agency concemed which is the NLRC. It is in such cases- where the termination of employment is for a
valid cause without, however, involving dishonesty or serious misconduct involving moral turpitude-that
the Constitutional policy of affording protection to labor should be allowed full play; and this is achieved
by leaving to the NLRC the primary jurisdiction and judgment to determine the amount of separation
pay that should be awarded to the terminated employee in accordance with the "environmental facts"
of each case.
It is further my view that the Court should not, as a rule, disturb or alter the amount of separation pay
awarded by the NLRC in such cases of valid termination of employment but with the financial assistance,
in the absence of a demonstrated grave abuse of discretion on the part of the NLRC.
GRIÑO AQUINO, J., dissent:
We should not rationalize compassion. I vote to affirm the grant of financial assistance.
Separate Opinions
FERNAN, C.J., dissenting:
The majority opinion itself declares that the reason for granting separation pay to lawfully dismissed
employees is that "our Constitution is replete with positive commands for the promotion of social
justice, and particularly the protection of the rights of the workers." 1
It is my firm belief that providing a rigid mathematical formula for determining the amounts of such
separation pay will not be in keeping with these constitutional directives. By computing the allowable
financial assistance on the formula suggested, we shall be closing our eyes to the spirit underlying these
constitutional mandates that "those who have less in life should have more in law." It cannot be denied
that a low salaried employee who is separated from work would suffer more hardship than a well-
compensated one. Yet, if we follow the formula suggested, we would in effect be favoring the latter
instead of the former, as it would be the low- salaried employee who would encounter difficulty finding
another job.
I am in accord with the opinion of Justice Sarmiento that we should not rationalize compassion and that
of Justice Padilla that the awards of financial assistance should be left to the discretion of the National
Labor Relations Commission as may be warranted by the "environmental facts" of the case.
PADILIA, J., separate opinion
I concur in the decision penned by Mr. Justice Cruz when it disallows separation pay, as financial
assistance, to the private respondent, since the ground for termination of employment is dishonesty in
the performance of her duties.
I do not, however, subscribe to the view that "the separation pay, if found due under the circumstances
of each case, should be computed at the rate of one month salary for every year of service, assuming
the length of such service is deemed material." (p.11, Decision). It is my considered view that, except for
terminations based on dishonesty and serious misconduct involving moral turpitude-where no
separation pay should be allowed--in other cases, the grant of separation pay, i.e. the amount thereof,
as financial assistance to the terminated employee, should be left to the judgment of the administrative
agency concemed which is the NLRC. It is in such cases- where the termination of employment is for a
valid cause without, however, involving dishonesty or serious misconduct involving moral turpitude-that
the Constitutional policy of affording protection to labor should be allowed full play; and this is achieved
by leaving to the NLRC the primary jurisdiction and judgment to determine the amount of separation
pay that should be awarded to the terminated employee in accordance with the "environmental facts"
of each case.
It is further my view that the Court should not, as a rule, disturb or alter the amount of separation pay
awarded by the NLRC in such cases of valid termination of employment but with the financial assistance,
in the absence of a demonstrated grave abuse of discretion on the part of the NLRC.
GRIÑO AQUINO, J., dissent:
We should not rationalize compassion. I vote to affirm the grant of financial assistance.
G.R. No. 83320 February 9, 1989
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION (formerly CONSTRUCTION AND DEVELOPMENT

CORPORATION OF THE PHILIPPINES), petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Fourth Division) and CDCP TOLLWAYS OPERATION
EMPLOYEES AND WORKERS UNION-CLLC IN BEHALF OF DOMINGO MANREZA, respondents.
Apolo, Añasco & Associates for petitioners.
Nicolas and Nicolas Law Offices for private respondents.
GRIÑO-AQUINO, J.:
This is a petition for certiorari filed by petitioner Philippine National Construction Corporation seeking to
modify the decision dated November 4, 1987, of the National Labor Relations Commission awarding to
private respondent Manreza separation pay despite its finding that he was legally dismissed.
Domingo Manreza was hired by the CDCP in 1972, as a janitor and later promoted to Leadsman, having
the main duty of removing and/or changing damaged flexbeams on the expressway. On May 24, 1983,
the North Luzon Expressway (NLE) Security Services Investigation and. Intelligence Unit discovered NLE
flexbeams in the house of Alfonso Eusebio in Sipat, Plaridel, Bulacan, and also in the house of Nene
Enriquez. Both declared that the items were deposited there by Manreza and his companions. On June
23, 1983, Foreman Salvador Bautista sent a memo to Manreza asking him to explain within 48 hours
why no disciplinary action should be taken against him for alleged violations of the CDCP Code of
Employee Discipline. Complainant explained in writing that he and his men merely deposited the NLE
properties. in the homes of Eusebio and Enriquez temporarily. The case was referred to the Union
pursuant to the CBA, which concluded that complainant was merely negligent and recommended
suspension for ten to twenty days as penalty. Respondent conducted a separate investigation. On
October 7, 1983, the NLE administrative officer issued a memorandum finding the complainant guilty of
stealing or unauthorized taking of company property, a violation of Section 7 (a) (10) of the CDCP Code
of Employee Discipline. It placed the complainant under preventive suspension for thirty (30) days, and
thereafter terminated his employment.
Manreza filed a complaint for unfair labor practice and illegal dismissal, with a prayer for backwages,
moral damages, exemplary damages, and attorney's fees. After due hearing, Labor Arbiter Ireneo
Bernardo directed the petitioner to reinstate Manreza to his former or equivalent position without loss
of seniority rights and other benefits, but without backwages. The complaint for unfair labor practice
and other claims were dismissed.
Petitioner appealed to the National Labor Relations Commission, which set aside the Labor Arbiter's
decision and entered a new one, "finding the dismissal of the complainant (Manreza) to be valid and
with just cause. However, in the spirit of compassionate justice, the respondent-appellant is hereby
ordered to pay one (1) month pay for every year of service. The complainant for unfair labor practice
and other claims, being unsubstantiated, are dismissed for lack of merit." (P. 28, Rollo).
Not satisfied with that decision, PNCC filed a petition for certiorari in this Court, alleging that the NLRC
gravely abused its discretion in awarding separation pay to the employee despite its own finding that he
was legally dismissed for cause.
The petition is meritorious.
While it is true that in some earlier cases, We held that employees dismissed for cause are nevertheless
entitled to separation pay on the ground of social and compassionate justice (Firestone Tire & Rubber
Co. of the Philippines vs. Lariosa, 148 SCRA 187; Soco vs. Mercantile Corp. of Davao, 148 SCRA 526;
Filipro, Inc. vs. NLRC, 145 SCRA 123), that doctrine was abandoned by this Court in the recent case of
Philippine Long Distance Telephone Co. vs. NLRC and Marilyn Bucay, G.R. No. 80609, August 23, 1988,
where We held that:
... henceforth separation pay shall be allowed as a measure of social justice only in those instances
where the employee is validly dismissed for causes other than serious misconduct or those reflecting on
his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an
offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer
may not be required to give the dismissed employee separation pay, or financial assistance, or whatever
other name it is called, on the ground of social justice. (Emphasis supplied.)
xxx xxx xxx
The policy of social justice is not intended to countenance wrongdoing simply because it is committed by
the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense.
Compassion for the poor is an imperative of every humane society but only when the recipient is not a
rascal claiming an undeserved privilege. Social justice cannot be permitted to be the refuge of
scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who
invoke social justice may do so only if their hands are clean and their motives blameless and not simply
because they happen to be poor. This great policy of our Constitution is not meant for the protection of
those who have proved they are not worthy of it, like the workers who have tainted the cause of labor
with the blemishes of their own character.
Since Manreza was found guilty of dishonesty for having stolen company property and was dismissed for
cause, he is not entitled to separation pay.
WHEREFORE, the petition is granted. The decision of the NLRC is modified by deleting the award of
separation pay to the private respondent Domingo Manreza.
SO ORDERED.
[G.R. No. 80587. February 8, 1989.]
WENPHIL CORPORATION, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION AND ROBERTO

MALLARE, Respondents.
Renato B. Valdecantos & Associates for Petitioner.
The Solicitor General for public Respondent.
Diego O. Untalan for Private Respondent.
DECISION
GANCAYCO, J.:
Once again the dismissal of an employee without affording him due process is brought to the attention
of this Court by this petition.
Private respondent was hired by petitioner on January 18, 1984 as a crew member at its Cubao Branch.
He thereafter became the assistant head of the Backroom department of the same branch. At about
2:30 P.M. on May 20, 1985 private respondent had an altercation with a co-employee, Job Barrameda,
as a result of which he and Barrameda were suspended on the following morning and in the afternoon
of the same day a memorandum was issued by the Operations Manager advising private respondent of
his dismissal from the service in accordance with their Personnel Manual. The notice of dismissal was
served on private respondent on May 25, 1985.
Thus private respondent filed a complaint against petitioner for unfair labor practice, illegal suspension
and illegal dismissal. After submitting their respective position papers to the Labor Arbiter and as the
hearing could not be conducted due to repeated absence of counsel for respondent, the case was
submitted for resolution. Thereafter a decision was rendered by the Labor Arbiter on December 3, 1986
dismissing the complaint for lack of merit.
Private respondent appealed to the National Labor Relations Commission (NLRC) wherein in due course
a decision was rendered on October 16, 1987 setting aside the appealed decision and ordering the
reinstatement of private respondent to his former position without loss of seniority and other related
benefits and one (1) year backwages without qualification and deduction.
Hence the herein petition for certiorari with preliminary injunction and/or restraining order wherein
petitioner alleges that the public respondent NLRC committed a grave abuse of discretion in rendering
its decision contrary to the evidence on record.
On December 2, 1987, the court issued a restraining order as prayed for in the petition enjoining the
enforcement of the decision dated October 16, 1987 of public respondent NLRC upon petitioner posting
a bond of P20,000.00.
The theory of the petitioner is that on the aforesaid date, May 20, 1985, when private respondent and
Barrameda had a misunderstanding about tending the Salad Bar, private respondent slapped
Barrameda’s cap, stepped on his foot and picked up the ice scooper and brandished it against the latter.
Marijo B. Kolimlim who was a management trainee tried to pacify private respondent but he defied her
so Kolimlim reported the incident to the assistant manager, Delilah C. Hermosura, who immediately
asked private respondent to see her. Private respondent refused to see Hermosura and it took the
security guard to bring him to her. Private respondent then shouted and uttered profane words instead
of making an explanation before her. He stated the matter should be settled only by him and
Barrameda. The following day Kolimlim and Hermosura submitted a report on the incident and
recommended the imposition of the appropriate penalties on both. It was the store manager who issued
a report meting out the penalty of suspension on the two until further notice in the following morning.
Later that day the Operations Manager issued a memorandum advising Barrameda of one (1) week
suspension and the dismissal of private respondent from the service.
The main thrust of the petition is that under the Personnel Manual of petitioner which had been read
and understood by private respondent, private respondent waived his right to the investigation. It is
provided therein that —
"INVESTIGATION"
If the offense is punishable with a penalty higher than suspension for fifteen (15) days, upon the request
of the erring employee, there shall be convened an investigation board composed of the
following:chanrob1es virtual 1aw library
1. The Parlor Manager or Supervisor on duty when the incident occurred.
2. The General Manager or the Assistant Manager.
The investigation board shall discuss the merits of the case and shall issue a ruling, which shall be final
and conclusive." (p. 3, Personnel Manual: Emphasis supplied).chanrobles.com:cralaw:red
From the foregoing it appears that an investigation shall only be conducted if the offense committed by
the employee is punishable with the penalty higher than suspension of fifteen (15) days and the erring
employee requests for an investigation of the incident. Petitioner alleges that private respondent not
having asked for an investigation he is thus deemed to have waived his right to the same. Petitioner
avers that immediately after the incident when private respondent was asked to see Hermosura, he was
defiant and showed that he was not interested to avail of an investigation.
The contention of petitioner is untenable. The incident happened on May 20, 1985 and right then and
there as afore repeated on the following day private respondent was suspended in the morning and was
dismissed from the service in the afternoon. He received an official notice of his termination four (4)
days later.
The defiant attitude of private respondent immediately after the incident amounted to insubordination.
Nevertheless his refusal to explain his side under the circumstances cannot be considered as a waiver of
his right to an investigation.
Although in the Personnel Manual of the petitioner, it states that an erring employee must request for
an investigation it does not thereby mean that petitioner is thereby relieved of the duty to conduct an
investigation before dismissing private Respondent. Indeed said provision of the Personnel Manual of
petitioner which may effectively deprive its employees of the right to due process is clearly against the
law and hence null and void. The security of tenure of a laborer or employee is enshrined in the
Constitution, the Labor Code and other related laws. 1
Under Section 1, Rule XIV of the Implementing Regulations of the Labor Code, it is provided that "No
worker shall be dismissed except for just or authorized cause provided by law and after due process"
Sections 2, 5, 6, and 7 of the same rules require that before an employer may dismiss an employee the
latter must be given a written notice stating the particular act or omission constituting the grounds
thereof; that the employee may answer the allegations within a reasonable period; that the employer
shall afford him ample opportunity to be heard and to defend himself with the assistance of his
representative, if he so desires; and that it is only then that the employer may dismiss the employee by
notifying him of the decision in writing stating clearly the reasons therefor. Such dismissal is without
prejudice to the right of the employee to contest its validity in the Regional Branch of the NLRC.
Petitioner insists that private respondent was afforded due process but he refused to avail of his right to
the same; that when the matter was brought to the labor arbiter he was able to submit his position
papers although the hearing cannot proceed due to the non-appearance of his counsel; and that the
private respondent is guilty of serious misconduct in threatening or coercing a co-employee which is a
ground for dismissal under Article 283 of the Labor Code.chanrobles.com:cralaw:red
The failure of petitioner to give private respondent the benefit of a hearing before he was dismissed
constitutes an infringement of his constitutional right to due process of law and equal protection of the
laws. 2 The standards of due process in judicial as well as administrative proceedings have long been
established. In its bare minimum due process of law simply means giving notice and opportunity to be
heard before judgment is rendered. 3
The claim of petitioner that a formal investigation was not necessary because the incident which gave
rise to the termination of private respondent was witnessed by his co-employees and supervisors is
without merit. The basic requirement of due process is that which hears before it condemns, which
proceeds upon inquiry and renders judgment only after trial. 4
However, it is a matter of fact that when the private respondent filed a complaint against petitioner he
was afforded the right to an investigation by the labor arbiter. He presented his position paper as did the
petitioner. If no hearing was had, it was the fault of private respondent as his counsel failed to appear at
the scheduled hearings. The labor arbiter concluded that the dismissal of private respondent was for
just cause. He was found guilty of grave misconduct and insubordination. This is borne by the sworn
statements of witnesses. The Court is bound by this finding of the labor arbiter.
By the same token, the conclusion of the public respondent NLRC on appeal that private respondent was
not afforded due process before he was dismissed is binding on this Court. Indeed, it is well taken and
supported by the records. However, it can not justify a ruling that private respondent should be
reinstated with back wages as the public respondent NLRC so decreed. Although belatedly, private
respondent was afforded due process before the labor arbiter wherein the just cause of his dismissal
had been established. With such finding, it would be arbitrary and unfair to order his reinstatement with
back wages.chanrobles.com.ph : virtual law library
The Court holds that the policy of ordering the reinstatement to the service of an employee without loss
of seniority and the payment of his wages during the period of his separation until his actual
reinstatement but not exceeding three (3) years without qualification or deduction, when it appears he
was not afforded due process, although his dismissal was found to be for just and authorized cause in an
appropriate proceeding in the Ministry of Labor and Employment, should be re-examined. It will be
highly prejudicial to the interests of the employer to impose on him the services of an employee who
has been shown to be guilty of the charges that warranted his dismissal from employment. Indeed, it
will demoralize the rank and file if the undeserving, if not undesirable, remains in the service.
Thus in the present case, where the private respondent, who appears to be of violent temper, caused
trouble during office hours and even defied his superiors as they tried to pacify him, should not be
rewarded with re-employment and back wages. It may encourage him to do even worse and will render
a mockery of the rules of discipline that employees are required to observe. Under the circumstances
the dismissal of the private respondent for just cause should be maintained. He has no right to return to
his former employer.
However, the petitioner must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. The rule is explicit as above
discussed. The dismissal of an employee must be for just or authorized cause and after due process. 5
Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for
its failure to give a formal notice and conduct an investigation as required by law before dismissing
petitioner from employment. Considering the circumstances of this case petitioner must indemnify the
private respondent the amount of P1,000.00. The measure of this award depends on the facts of each
case and the gravity of the omission committed by the employer.chanrobles.com : virtual law library
WHEREFORE, the petition is GRANTED. The questioned decision of the public respondent NLRC dated
October 16, 1987 for the reinstatement with back wages of private respondent is REVERSED AND SET
ASIDE, and the decision of the labor arbiter dated December 3, 1986 dismissing the complaint is revived
and affirmed, but with the modification that petitioner is ordered to indemnify private respondent in the
amount of P1,000.00. The restraining order issued by this Court on December 2, 1987 is hereby made
permanent and the bond posted by petitioner is cancelled. This decision is immediately executory.
SO ORDERED.
Fernan C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Bidin, Sarmiento, Griño-Aquino, Medialdea
and Regalado, JJ., concur.
Separate Opinions
MELENCIO-HERRERA, J., concurring and dissenting:chanrob1es virtual 1aw library
I, too, share the majority view that private respondent is not entitled to reinstatement and backwages
for having been terminated for cause.
Like Justice Cortes, however, it is my view that private respondent-employee has not been denied due
process. But even if petitioner-employer had failed to comply with the requirements of investigation and
hearing, I believe with Justice Padilla that it is not an indemnity that petitioner should be made to pay
but rather separation pay in such amount as may be justified under the circumstances of the case, not
out of right, but to cushion the impact of his loss of employment. In fact, this is the practice presently
being followed by the National Labor Relations Commission.
PADILLA, J., concurring and dissenting:chanrob1es virtual 1aw library
I concur with the majority opinion that (1) the private respondent (employee) is not entitled to
reinstatement and backwages as it was clearly found by the Labor Arbiter that he was guilty of grave
misconduct and insubordination and (2) the petitioner (employer) failed to comply with the
requirements of administrative due process in not having given the employee, before his termination,
the notice and hearing required by law.
I am of the view, however, that for the employer’s omission he should be made to pay the separated
employee a separation pay (instead of indemnity) in the amount of P1,000.00.
"Indemnity" may connote —
"The obligation of a person to make good any loss or damage another has incurred or may incur by
acting at his request or for his benefit.
"That which is given to a person to prevent his suffering a damage. (Shurdut Mill Supply Co. v. Central
Azucarera del Danao, 44037-R, December 19, 1979;" Cited in Philippine Law Dictionary 3rd Ed., F.B.
Moreno, p. 463).
while "separation pay" is pay given to an employee on the occasion of his separation from employment
in order to assuage even a little the effects of loss of employment.
CORTES, J., concurring and dissenting:chanrob1es virtual 1aw library
I concur with the majority that a case for illegal dismissal has not been established. However, my reading
of the case reveals no denial of due process, hence there is no basis for the award of ONE THOUSAND
PESOS (P1,000.00) as indemnity in favor of private Respondent. On the other hand, if the P1,000.00 is
imposed as a sanction in the form of administrative penalty for failure of petitioner to comply strictly
with duly promulgated regulations implementing the Labor Code, the amount if authorized, should form
part of the public funds of the government.
G.R. No. 117040 January 27, 2000
RUBEN SERRANO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ISETANN DEPARTMENT STORE, respondents.
MENDOZA, J.:
This is a Petition seeking review of the resolutions, dated March 30, 1994 and August 26, 1994, of the
National Labor Relations Commission (NLRC) which reversed the decision of the Labor Arbiter and
dismissed petitioner Ruben Serrano's complaint for illegal dismissal and denied his motion for
reconsideration. The facts are as follows:
Petitioner was hired by private respondent Isetann Department Store as a security checker to
apprehend shoplifters and prevent pilferage of merchandise.1 Initially hired on October 4, 1984 on
contractual basis, petitioner eventually became a regular employee on April 4, 1985. In 1988, he became
head of the Security Checkers Section of private respondent.2
Sometime in 1991, as a cost-cutting measure, private respondent decided to phase out its entire security
section and engage the services of an independent security agency. For this reason, it wrote petitioner
the following memorandum:3
October 11, 1991
MR. RUBEN SERRANO
PRESENT
Dear Mr. Seranno,
In view of the retrenchment program of the company, we hereby reiterate our verbal notice to you of
your termination as Security Section Head effective October 11, 1991.
Please secure your clearance from this office.
Very truly yours,
[Sgd.] TERESITA A. VILLANUEVA

Human Resources Division Manager
The loss of his employment prompted petitioner to file a complaint on December 3, 1991 for illegal
dismissal, illegal layoff, unfair labor practice, underpayment of wages, and nonpayment of salary and
overtime pay.4
The parties were required to submit their position papers, on the basis of which the Labor Arbiter
defined the issues as follows:5
Whether or not there is a valid ground for the dismissal of the complainant.
Whether or not complainant is entitled to his monetary claims for underpayment of wages, nonpayment
of salaries, 13th month pay for 1991 and overtime pay.
Whether or not Respondent is guilty of unfair labor practice.
Thereafter, the case was heard. On April 30, 1993, the Labor Arbiter rendered a decision finding
petitioner to have been illegally dismissed. He ruled that private respondent failed to establish that it
had retrenched its security section to prevent or minimize losses to its business; that private respondent
failed to accord due process to petitioner; that private respondent failed to use reasonable standards in
selecting employees whose employment would be terminated; that private respondent had not shown
that petitioner and other employees in the security section were so inefficient so as to justify their
replacement by a security agency, or that "cost-saving devices [such as] secret video cameras (to
monitor and prevent shoplifting) and secret code tags on the merchandise" could not have been
employed; instead, the day after petitioner's dismissal, private respondent employed a safety and
security supervisor with duties and functions similar to those of petitioner.1âwphi1.nêt
Accordingly, the Labor Arbiter ordered:6
WHEREFORE, above premises considered, judgment is hereby decreed:
(a) Finding the dismissal of the complainant to be illegal and concomitantly, Respondent is ordered to
pay complainant full backwages without qualification or deduction in the amount of P74,740.00 from
the time of his dismissal until reinstatement. (computed till promulgation only) based on his monthly
salary of P4,040.00/month at the time of his termination but limited to (3) three years;
(b) Ordering the Respondent to immediately reinstate the complainant to his former position as security
section head or to a reasonably equivalent supervisorial position in charges of security without loss of
seniority rights, privileges and benefits. This order is immediately executory even pending appeal;
(c) Ordering the Respondent to pay complainant unpaid wages in the amount of P2,020.73 and
proportionate 13th month pay in the amount of P3,198.30;
(d) Ordering the Respondent to pay complainant the amount of P7,995.91, representing 10% attorney's
fees based on the total judgment award of P79,959.12.
All other claims of the complainant whether monetary or otherwise is hereby dismissed for lack of
merit.
SO ORDERED.
Private respondent appealed to the NLRC which, in its resolution of March 30, 1994; reversed the
decision of the Labor Arbiter and ordered petitioner to be given separation pay equivalent to one month
pay for every year of service, unpaid salary, and proportionate 13th month pay. Petitioner filed a motion
for reconsideration, but his motion was denied.
The NLRC held that the phase-out of private respondent's security section and the hiring of an
independent security agency constituted an exercise by private respondent of "[a] legitimate business
decision whose wisdom we do not intend to inquire into and for which we cannot substitute our
judgment"; that the distinction made by the Labor Arbiter between "retrenchment" and the
employment of cost-saving devices" under Art. 283 of the Labor Code was insignificant because the
company official who wrote the dismissal letter apparently used the term "retrenchment" in its "plain
and ordinary sense: to layoff or remove from one's job, regardless of the reason therefor"; that the rule
of "reasonable criteria" in the selection of the employees to be retrenched did not apply because all
positions in the security section had been abolished; and that the appointment of a safety and security
supervisor referred to by petitioner to prove bad faith on private respondent's part was of no moment
because the position had long been in existence and was separate from petitioner's position as head of
the Security Checkers Section.
Hence this petition. Petitioner raises the following issue:
IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE PRIVATE RESPONDENT TO REPLACE ITS
CURRENT SECURITY SECTION A VALID GROUND FOR THE DISMISSAL OF THE EMPLOYEES CLASSED
UNDER THE LATTER?7
Petitioner contends that abolition of private respondent's Security Checkers Section and the
employment of an independent security agency do not fall under any of the authorized causes for
dismissal under Art. 283 of the Labor Code.
Petitioner Laid Off for Cause
Petitioner's contention has no merit. Art. 283 provides:
Closure of establishment and reduction of personnel. — The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation of operations of the establishment or undertaking unless
the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on
the, workers and the Department of Labor and Employment at least one (1) month before the intended
date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the
worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay or
to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closure or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be equivalent to at least one
(1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered as one (1) whole year.
In De Ocampo v. National Labor Relations Commission,8 this Court upheld the termination of
employment of three mechanics in a transportation company and their replacement by a company
rendering maintenance and repair services. It held:
In contracting the services of Gemac Machineries, as part of the company's cost-saving program, the
services rendered by the mechanics became redundant and superfluous, and therefore properly
terminable. The company merely exercised its business judgment or management prerogative. And in
the absence of any proof that the management abused its discretion or acted in a malicious or arbitrary
manner, the court will not interfere with the exercise of such prerogative.9
In Asian Alcohol Corporation v. National Labor Relations Commission,10 the Court likewise upheld the
termination of employment of water pump tenders and their replacement by independent contractors.
It ruled that an employer's good faith in implementing a redundancy program is not necessarily put in
doubt by the availment of the services of an independent contractor to replace the services of the
terminated employees to promote economy and efficiency.
Indeed, as we pointed out in another case, the "[management of a company] cannot be denied the
faculty of promoting efficiency and attaining economy by a study of what units are essential for its
operation. To it belongs the ultimate determination of whether services should be performed by its
personnel or contracted to outside agencies . . . [While there] should be mutual consultation, eventually
deference is to be paid to what management decides."11 Consequently, absent proof that management
acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an
employer.12
In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security section,
private respondent's real purpose was to avoid payment to the security checkers of the wage increases
provided in the collective bargaining agreement approved in 1990.13 Such an assertion is not sufficient
basis for concluding that the termination of petitioner's employment was not a bona fide decision of
management to obtain reasonable return from its investment, which is a right guaranteed to employers
under the Constitution.14 Indeed, that the phase-out of the security section constituted a "legitimate
business decision" is a factual finding of an administrative agency which must be accorded respect and
even finality by this Court since nothing can be found in the record which fairly detracts from such
finding.15
Accordingly, we hold that the termination of petitioner's services was for an authorized cause, i.e.,
redundancy. Hence, pursuant to Art. 283 of the Labor Code, petitioner should be given separation pay at
the rate of one month pay for every year of service.
Sanctions for Violations of the Notice Requirement
Art. 283 also provides that to terminate the employment of an employee for any of the authorized
causes the employer must serve "a written notice on the workers and the Department of Labor and
Employment at least one (1) month before the intended date thereof." In the case at bar, petitioner was
given a notice of termination on October 11, 1991. On the same day, his services were terminated. He
was thus denied his right to be given written notice before the termination of his employment, and the
question is the appropriate sanction for the violation of petitioner's right.
To be sure, this is not the first time this question has arisen. In Subuguero v. NLRC,16 workers in a
garment factory were temporarily laid off due to the cancellation of orders and a garment embargo. The
Labor Arbiter found that the workers had been illegally dismissed and ordered the company to pay
separation pay and backwages. The NLRC, on the other hand, found that this was a case of
retrenchment due to business losses and ordered the payment of separation pay without backwages.
This Court sustained the NLRC's finding. However, as the company did not comply with the 30-day
written notice in Art. 283 of the Labor Code, the Court ordered the employer to pay the workers
P2,000.00 each as indemnity.
The decision followed the ruling in several cases involving dismissals which, although based on any of
the just causes under Art. 282,17 were effected without notice and hearing to the employee as required
by the implementing rules.18 As this Court said: "It is now settled that where the dismissal of one
employee is in fact for a just and valid cause and is so proven to be but he is not accorded his right to
due process, i.e., he was not furnished the twin requirements of notice and opportunity to be heard, the
dismissal shall be upheld but the employer must be sanctioned for non-compliance with the
requirements of, or for failure to observe, due process."19
The rule reversed a long standing policy theretofore followed that even though the dismissal is based on
a just cause or the termination of employment is for an authorized cause, the dismissal or termination is
illegal if effected without notice to the employee. The shift in doctrine took place in 1989 in Wenphil
Corp. v. NLRC.20 In announcing the change, this Court said:21
The Court holds that the policy of ordering the reinstatement to the service of an employee without loss
of seniority and the payment of his wages during the period of his separation until his actual
reinstatement but not exceeding three (3) years without qualification or deduction, when it appears he
was not afforded due process, although his dismissal was found to be for just and authorized cause in an
appropriate proceeding in the Ministry of Labor and Employment, should be re-examined. It will be
highly prejudicial to the interests of the employer to impose on him the services of an employee who
has been shown to be guilty of the charges that warranted his dismissal from employment. Indeed, it
will demoralize the rank and file if the undeserving, if not undesirable, remains in the service.
xxx xxx xxx
However, the petitioner must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. The rule is explicit as above
discussed. The dismissal of an employee must be for just or authorized cause and after due process.
Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for
its failure to give a formal notice and conduct an investigation as required by law before dismissing
petitioner from employment. Considering the circumstances of this case petitioner must indemnify the
private respondent the amount of P1,000.00. The measure of this award depends on the facts of each
case and the gravity of the omission committed by the employer.
The fines imposed for violations of the notice requirement have varied from P1,000.0022 to
P2,000.0023 to P5,000.0024 to P10,000.00.25
Need for Reexamining the Wenphil Doctrine
Today, we once again consider the question of appropriate sanctions for violations of the notice
experience during the last decade or so with the Wenphil doctrine. The number of cases involving
dismissals without the requisite notice to the employee, although effected for just or authorized causes,
suggest that the imposition of fine for violation of the notice requirement has not been effective in
deterring violations of the notice requirement. Justice Panganiban finds the monetary sanctions "too
insignificant, too niggardly, and sometimes even too late." On the other hand, Justice Puno says there
has in effect been fostered a policy of "dismiss now; pay later" which moneyed employers find more
convenient to comply with than the requirement to serve a 30-day written notice (in the case of
termination of employment for an authorized cause under Arts. 283-284) or to give notice and hearing
(in the case of dismissals for just causes under Art. 282).
For this reason, they regard any dismissal or layoff without the requisite notice to be null and void even
though there are just or authorized cause for such dismissal or layoff. Consequently, in their view, the
employee concerned should be reinstated and paid backwages.
Validity of Petitioner's Layoff Not Affected by Lack of Notice

We agree with our esteemed colleagues, Justices Puno and Panganiban, that we should rethink the
sanction of fine for an employer's disregard of the notice requirement. We do not agree, however, that
disregard of this requirement by an employer renders the dismissal or termination of employment null
and void. Such a stance is actually a reversion to the discredited pre-Wenphil rule of ordering an
employee to be reinstated and paid backwages when it is shown that he has not been given notice and
hearing although his dismissal or layoff is later found to be for a just or authorized cause. Such rule was
abandoned in Wenphil because it is really unjust to require an employer to keep in his service one who
is guilty, for example, of an attempt on the life of the employer or the latter's family, or when the
employer is precisely retrenching in order to prevent losses.
The need is for a rule which, while recognizing the employee's right to notice before he is dismissed or
laid off, at the same time acknowledges the right of the employer to dismiss for any of the just causes
enumerated in Art. 282 or to terminate employment for any of the authorized causes mentioned in Arts.
283-284. If the Wenphil rule imposing a fine on an employer who is found to have dismissed an
employee for cause without prior notice is deemed ineffective in deterring employer violations of the
notice requirement, the remedy is not to declare the dismissal void if there are just or valid grounds for
such dismissal or if the termination is for an authorized cause. That would be to uphold the right of the
employee but deny the right of the employer to dismiss for cause. Rather, the remedy is to order the
payment to the employee of full backwages from the time of his dismissal until the court finds that the
dismissal was for a just cause. But, otherwise, his dismissal must be upheld and he should not be
reinstated. This is because his dismissal is ineffectual.
For the same reason, if an employee is laid off for any of the causes in Arts. 283-284, i.e., installation of a
labor-saving device, but the employer did not give him and the DOLE a 30-day written notice of
termination in advance, then the termination of his employment should be considered ineffectual and
he should be paid backwages. However, the termination of his employment should not be considered
void but he should simply be paid separation pay as provided in Art. 283 in addition to backwages.
Justice Puno argues that an employer's failure to comply with the notice requirement constitutes a
denial of the employee's right to due process. Prescinding from this premise, he quotes the statement of
Chief Justice Concepcion Vda. de Cuaycong v. Vda. de Sengbengco26 that "acts of Congress, as well as of
the Executive, can deny due process only under the pain of nullity, and judicial proceedings suffering
from the same flaw are subject to the same sanction, any statutory provision to the contrary
notwithstanding." Justice Puno concludes that the dismissal of an employee without notice and hearing,
even if for a just cause, as provided in Art. 282, or for an authorized cause, as provided in Arts. 283-284,
is a nullity. Hence, even if just or authorized cause exist, the employee should be reinstated with full
back pay. On the other hand, Justice Panganiban quotes from the statement in People v. Bocar27 that
"[w]here the denial of the fundamental right of due process is apparent, a decision rendered in
disregard of that right is void for lack of jurisdiction."
Violation of Notice Requirement Not a Denial of Due Process
The cases cited by both Justices Puno and Panganiban refer, however, to the denial of due process by
the State, which is not the case here. There are three reasons why, on the other hand, violation by the
employer of the notice requirement cannot be considered a denial of due process resulting in the nullity
of the employee's dismissal or layoff.
The first is that the Due Process Clause of the Constitution is a limitation on governmental powers. It
does not apply to the exercise of private power, such as the termination of employment under the Labor
Code. This is plain from the text of Art. III, §1 of the Constitution, viz.: "No person shall be deprived of
life, liberty, or property without due process of law. . . ." The reason is simple: Only the State has
authority to take the life, liberty, or property of the individual. The purpose of the Due Process Clause is
to ensure that the exercise of this power is consistent with what are considered civilized methods.
The second reason is that notice and hearing are required under the Due Process Clause before the
power of organized society are brought to bear upon the individual. This is obviously not the case of
termination of employment under Art. 283. Here the employee is not faced with an aspect of the
adversary system. The purpose for requiring a 30-day written notice before an employee is laid off is not
to afford him an opportunity to be heard on any charge against him, for there is none. The purpose
rather is to give him time to prepare for the eventual loss of his job and the DOLE an opportunity to
determine whether economic causes do exist justifying the termination of his employment.
Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and hearing is not
to comply with Due Process Clause of the Constitution. The time for notice and hearing is at the trial
stage. Then that is the time we speak of notice and hearing as the essence of procedural due process.
Thus, compliance by the employer with the notice requirement before he dismisses an employee does
not foreclose the right of the latter to question the legality of his dismissal. As Art. 277(b) provides, "Any
decision taken by the employer shall be without prejudice to the right of the worker to contest the
validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor
Relations Commission."
Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is to
overlook the fact that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce of 1882 which
gave either party to the employer-employee relationship the right to terminate their relationship by
giving notice to the other one month in advance. In lieu of notice, an employee could be laid off by
paying him a mesada equivalent to his salary for one month.28 This provision was repealed by Art. 2270
of the Civil Code, which took effect on August 30, 1950. But on June 12, 1954, R.A. No. 1052, otherwise
known as the Termination Pay Law, was enacted reviving the mesada. On June 21, 1957, the law was
amended by R.A. No. 1787 providing for the giving of advance notice or the payment of compensation at
the rate of one-half month for every year of service.29
The Termination Pay Law was held not to be a substantive law but a regulatory measure, the purpose of
which was to give the employer the opportunity to find a replacement or substitute, and the employee
the equal opportunity to look for another job or source of employment. Where the termination of
employment was for a just cause, no notice was required to be given to the, employee.30 It was only on
September 4, 1981 that notice was required to be given even where the dismissal or termination of an
employee was for cause. This was made in the rules issued by the then Minister of Labor and
Employment to implement B.P. Blg. 130 which amended the Labor Code. And it was still much later
when the notice requirement was embodied in the law with the amendment of Art. 277(b) by R.A. No.
6715 on March 2, 1989. It cannot be that the former regime denied due process to the employee.
Otherwise, there should now likewise be a rule that, in case an employee leaves his job without cause
and without prior notice to his employer, his act should be void instead of simply making him liable for
damages.
The third reason why the notice requirement under Art. 283 can not be considered a requirement of the
Due Process Clause is that the employer cannot really be expected to be entirely an impartial judge of
his own cause. This is also the case in termination of employment for a just cause under Art. 282 (i.e.,
serious misconduct or willful disobedience by the employee of the lawful orders of the employer, gross
and habitual neglect of duties, fraud or willful breach of trust of the employer, commission of crime
against the employer or the latter's immediate family or duly authorized representatives, or other
analogous cases).
Justice Puno disputes this. He says that "statistics in the DOLE will prove that many cases have been won
by employees before the grievance committees manned by impartial judges of the company." The
grievance machinery is, however, different because it is established by agreement of the employer and
the employees and composed of representatives from both sides. That is why, in Batangas Laguna
Tayabas Bus Co. ·v. Court of Appeals,31 which Justice Puno cites, it was held that "Since the right of [an
employee] to his labor is in itself a property and that the labor agreement between him and [his
employer] is the law between the parties, his summary and arbitrary dismissal amounted to deprivation
of his property without due process of law." But here we are dealing with dismissals and layoffs by
employers alone, without the intervention of any grievance machinery. Accordingly in Montemayor v.
Araneta University Foundation,32 although a professor was dismissed without a hearing by his university,
his dismissal for having made homosexual advances on a student was sustained, it appearing that in the
NLRC, the employee was fully heard in his defense.
Lack of Notice Only Makes Termination Ineffectual
Not all notice requirements are requirements of due process. Some are simply part of a procedure to be
followed before a right granted to a party can be exercised. Others are simply an application of the
Justinian precept, embodied in the Civil Code,33 to act with justice, give everyone his due, and observe
honesty and good faith toward one's fellowmen. Such is the notice requirement in Arts. 282-283. The
consequence of the failure either of the employer or the employee to live up to this precept is to make
him liable in damages, not to render his act (dismissal or resignation, as the case may be) void. The
measure of damages is the amount of wages the employee should have received were it not for the
termination of his employment without prior notice. If warranted, nominal and moral damages may also
be awarded.
We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employer's failure to comply
with the notice requirement does not constitute a denial of due process but a mere failure to observe a
procedure for the termination of employment which makes the termination of employment merely
ineffectual. It is similar to the failure to observe the provisions of Art. 1592, in relation to Art. 1191, of
the Civil Code34 in rescinding a contract for the sale of immovable property. Under these provisions,
while the power of a party to rescind a contract is implied in reciprocal obligations, nonetheless, in cases
involving the sale of immovable property, the vendor cannot exercise this power even though the
vendee defaults in the payment of the price, except by bringing an action in court or giving notice of
rescission by means of a notarial demand.35 Consequently, a notice of rescission given in the letter of an
attorney has no legal effect, and the vendee can make payment even after the due date since no valid
notice of rescission has been given.36
Indeed, under the Labor Code, only the absence of a just cause for the termination of employment can
make the dismissal of an employee illegal. This is clear from Art. 279 which provides:
Security of Tenure. — In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
actual reinstatement.37
Thus, only if the termination of employment is not for any of the causes provided by law is it illegal and,
therefore, the employee should be reinstated and paid backwages. To contend, as Justices Puno and
Panganiban do, that even if the termination is for a just or authorized cause the employee concerned
should be reinstated and paid backwages would be to amend Art. 279 by adding another ground for
considering a dismissal illegal. What is more, it would ignore the fact that under Art. 285, if it is the
employee who fails to give a written notice to the employer that he is leaving the service of the latter, at
least one month in advance, his failure to comply with the legal requirement does not result in making
his resignation void but only in making him liable for damages.38 This disparity in legal treatment, which
would result from the adoption of the theory of the minority cannot simply be explained by invoking
resident Ramon Magsaysay's motto that "he who has less in life should have more in law." That would
be a misapplication of this noble phrase originally from Professor Thomas Reed Powell of the Harvard
Law School.
Justice Panganiban cites Pepsi-Cola Bottling Co. v. NLRC,39 in support of his view that an illegal dismissal
results not only from want of legal cause but also from the failure to observe "due process." The Pepsi-
Cola case actually involved a dismissal for an alleged loss of trust and confidence which, as found by the
Court, was not proven. The dismissal was, therefore, illegal, not because there was a denial of due
process, but because the dismissal was without cause. The statement that the failure of management to
comply with the notice requirement "taints the dismissal with illegality" was merely a dictum thrown in
as additional grounds for holding the dismissal to be illegal.
Given the nature of the violation, therefore, the appropriate sanction for the failure to give notice is the
payment of backwages for the period when the employee is considered not to have been effectively
dismissed or his employment terminated. The sanction is not the payment alone of nominal damages as
Justice Vitug contends.
Unjust Results of Considering Dismissals/Layoffs Without Prior Notice As Illegal
The refusal to look beyond the validity of the initial action taken by the employer to terminate
employment either for an authorized or just cause can result in an injustice to the employer. For not
giving notice and hearing before dismissing an employee, who is otherwise guilty of, say, theft, or even
of an attempt against the life of the employer, an employer will be forced to keep in his employ such
guilty employee. This is unjust.
It is true the Constitution regards labor as "a primary social economic force."40 But so does it declare that
it "recognizes the indispensable role of the private sector, encourages private enterprise, and provides
incentives to needed investment."41 The Constitution bids the State to "afford full protection to
labor."42 But it is equally true that "the law, in protecting the right's of the laborer, authorizes neither
oppression nor self-destruction of the employer."43 And it is oppression to compel the employer to
continue in employment one who is guilty or to force the employer to remain in operation when it is not
economically in his interest to do so.
In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the termination
of employment was due to an authorized cause, then the employee concerned should not be ordered
reinstated even though there is failure to comply with the 30-day notice requirement. Instead, he must
be granted separation pay in accordance with Art. 283, to wit:
In case of termination due to the installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least
one month for every year of service, whichever is higher. In case of retrenchment to prevent losses and
in cases of closures or cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six
months shall be considered one (1) whole year.
If the employee's separation is without cause, instead of being given separation pay, he should be
reinstated. In either case, whether he is reinstated or only granted separation pay, he should be paid full
backwages if he has been laid off without written notice at least 30 days in advance.
On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee
was dismissed for any of the just causes mentioned in said Art. 282, then, in accordance with that
article, he should not be reinstated. However, he must be paid backwages from the time his
employment was terminated until it is determined that the termination of employment is for a just
cause because the failure to hear him before he is dismissed renders the termination of his employment
without legal effect.
WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations Commission is
MODIFIED by ordering private respondent Isetann Department Store, Inc. to pay petitioner separation
pay equivalent to one (1) month pay for every year of service, his unpaid salary, and his proportionate
13th month pay and, in addition, full backwages from the time his employment was terminated on
October 11, 1991 up to the time the decision herein becomes final. For this purpose, this case is
REMANDED to the Labor Arbiter for computation of the separation pay, backwages, and other monetary
awards to petitioner.
SO ORDERED.
Davide, Jr., C.J., Melo, Kapunan, Quisumbing, Purisima, Pardo, Buena, Gonzaga-Reyes and De Leon, Jr.,
JJ., concur.
Bellosillo J., Please see Separate Opinion.
Puno, J., Please see Dissenting Opinion.
Vitug, J., Please see Separate opinion.
Panganiban J., Please see Separate Opinion.
Ynares-Santiago, J., I join the dissenting opinion of J. Puno.
Separate Opinions
BELLOSILLO, J., separate opinion;
We point out at the outset that this Petition for Review which was filed before the promulgation of St.
Martin Funeral Home v. National Labor Relations Commission,1 is not the proper means by which NLRC
decisions are appealed to this Court. Before St. Martin Funeral Home, it was only through a Petition
for Certiorari under Rule 65 that NLRC decisions could be reviewed and nullified by us on the ground of
lack of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. After St.
Martin Funeral Home, petitions like the one at bar are initially filed in the Court of Appeals for proper
adjudication.
In the interest of justice, however, and in order to write finis to the instant case which has already
dragged on for so long, we shall treat the petition pro hac vice as one for certiorari under Rule 65
although it is captioned Petition for Review on Certiorari; after all, it was filed within the reglementary
period for the filing of a petition for certiorari under Rule 65.
Briefly, on 4 April 1985 private respondent Isetann Department Store, Inc. (ISETANN), employed
petitioner Ruben Serrano as Security Checker until his appointment as Security Section Head. On
October 1991 ISETANN through its Human Resource Division Manager Teresita A. Villanueva sent
Serrano a memorandum terminating his employment effective immediately "in view of the
retrenchment program of the company," and directing him to secure clearance from their office.2
Petitioner Serrano filed with the NLRC Adjudication Office a complaint for illegal dismissal and
underpayment of wages against ISETANN. Efforts at amicable settlement proved futile. Ms. Cristina
Ramos, Personnel Administration Manager of ISETANN, testified that the security checkers and their
section head were retrenched due to the installation of a labor saving device, i.e., the hiring of an
independent security agency.
Finding the dismissal to be illegal, the Labor Arbiter ordered the immediate reinstatement of Serrano to
his former or to an equivalent position plus payment of back wages, unpaid wages, 13th month pay and
attorney's fees.
On appeal the NLRC reversed the Labor Arbiter and ruled that ISETANN acted within its prerogative
when it phased out its Security Section and retained the services of an independent security agency in
order to cut costs and economize. Upon denial of his motion for reconsideration3 Serrano filed the
instant petition imputing grave abuse of discretion on the part of the NLRC.
Art. 282 of the Labor Code enumerates the just causes for the termination of employment by the
employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or the latter's representative in connection with the employee's 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 his 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.
On the other hand, Arts. 283 and 284 of the same Code enumerate the so-called authorized causes: (a)
installation of labor saving devices; (b) redundancy: (b) retrenchment to prevent losses; (d) closure or
cessation of the establishment or undertaking unless the closure or cessation is for the purpose of
circumventing the provisions of the law; and, (e) disease.
The Just causes enumerated under Art. 282 of the Labor Code are provided by the employee who causes
the infraction. The authorized causes are provided by the employer either because of outside factors
such as the general decline in the economy or merely part of its long range plan for business
profitability. Corollarily, in termination for a just cause, the employee is not entitled to separation pay
unlike in termination for an authorized cause. In addition, the basis in computing the amount of
separation pay varies depending on whether the termination is due to the installation of a labor saving
device, or redundancy, in which case, the employee is entitled to receive separation pay equivalent to at
least one (1) month pay or to at least one (1) month pay for every year of service. In case the
termination is due to retrenchment in order to prevent losses or in case of closure or cessation of
operation of the establishment or undertaking not due to serious business losses or financial reverses,
the separation pay is lower, i.e., equivalent to one (1) month pay or at least one-half month pay for
every year of service, whichever is higher. As may be gleaned from the foregoing, where the cause of
termination is for the financial advantage or benefit of the employer, the basis in computing for
separation pay is higher compared to termination dictated by necessity with no appreciable financial
advantage to the employer.
In the instant case, we agree with the NLRC that the dismissal of petitioner Serrano was for an
authorized cause, i.e., redundancy, which exists where the services of an employee are in excess of what
are reasonably demanded by the actual requirements of the enterprise. A position is redundant where it
is superfluous, and the superfluity may be the outcome of other factors such as overhiring of workers,
decreased volume of other business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.4
The hiring of an independent security agency is a business decision properly within the exercise of
management prerogative. As such, this Court is denied the authority to delve into its wisdom although it
is equipped with the power to determine whether the exercise of such prerogative is in accordance with
law. Consequently, the wisdom or soundness of the management decision is not subject to the
discretionary review of the Labor Arbiter nor of the NLRC unless there is a violation of law or
arbitrariness in the exercise thereof, in which case, this Court will step in.5 Specifically, we held
in International Harvester Macleod, Inc. v. Intermediate Appellate Court 6 that the determination of
whether to maintain or phase out an entire department or section or to reduce personnel lies with
management. The determination of the need for the phasing out of a department as a labor and cost
saving device because it is no longer economical to retain its services is a management prerogative.
After having established that the termination of petitioner Ruben Serrano was for an authorized cause,
we now address the issue of whether proper procedures were observed in his dismissal.
Since the State affords protection to labor under the Constitution,7 workers enjoy security of tenure and
may only be removed or terminated upon valid reason and through strict observance of proper
procedure.8 Article 279 of the Labor Code specifically provides —
Art. 279. Security of Tenure. — In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
Security of tenure however does not guarantee perpetual employment. If there exists a just or an
authorized cause, the employer may terminate the services of an employee but subject always to
procedural requirements. The employer cannot be legally compelled to have in its employ a person
whose continued employment is patently inimical to its interest. The law, while affording protection to
the employee, does not authorize the oppression or destruction of his employer.9
Subject then to the constitutional right of workers to security of tenure and to be protected against
dismissal except for a just or authorized cause, and without prejudice to the requirement of notice
under Art. 283 of the Labor Code, the employer shall furnish the worker whose employment is sought to
be terminated a written notice containing a statement of the cause of 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 DOLE.10
As specifically provided in Art. 283 of the Labor Code, the employer may terminate the employment of
any employee due to redundancy by serving a written notice on the worker and the DOLE at least one
(1) month before the intended date thereof. In the instant case, ISETANN clearly violated the provisions
of Art. 283 on notice.11 It did not send a written notice to DOLE which is essential because the right to
terminate an employee is not an absolute prerogative. The lack of written notice denied DOLE the
opportunity to determine the validity of the termination.
The written notice ISETANN sent to Serrano was dated 11 October 1991 or on the same day the
intended termination was to take effect. This obviously did not comply with the 30-day mandatory
requirement. Although the cause for discharge may be just or authorized, it is still necessary and
obligatory to afford the employee concerned his basic and more important right to notice. Serrano was
not given the chance to make the needed adjustments brought about by his termination. Significantly,
the notice is intended to enable the employee not only to prepare himself for the legal battle to protect
his tenure of employment, which can be long, arduous, expensive and complicated by his own
standards, but also to find other means of employment and ease the impact of the loss of his job and,
necessarily, has income.
We are of the view that failure to send notice of termination to Serrano is not tantamount to violation of
his constitutional right to due process but merely constitutes non-compliance with the provision on
notice under Art. 283 of the Labor Code.
The legitimacy of a government is established and its functions delineated in the Constitution. From the
Constitution flows all the powers of government in the same manner that it sets the limits for their
proper exercise. In particular, the Bill of Rights functions primarily as a deterrent to any display of
arbitrariness on the part of the government or any of its instrumentalities. It serves as the general
safeguard, as is apparent in its first section which states, "No person shall be deprived of life, liberty or
property without due process of law, nor shall any person be denied the equal protection of the
laws."12 Specifically, due process is a requirement for the validity of any governmental action amounting
to deprivation of liberty.13 It is a restraint on state action not only in terms of what it amounts to but how
it is accomplished. Its range thus covers both the ends sough to be achieved by officialdom as well as the
means for their realization.14
Substantive due process is a weapon that may be utilized to challenge acts of the legislative body,
whether national or local, and presumably executive orders of the President and administrative orders
and regulations of a rule-making character. Procedural due process, on the other hand, is available for
the purpose of assailing arbitrariness or unreasonableness in the administration of the law by executive
department or the judicial branch. Procedural due process likewise may aid those appearing before
Congressional committees if the proceedings are arbitrary or otherwise unfair.13
Procedural due process demands that governmental acts, more specifically so in the case of the
judiciary, not be affected with arbitrariness.16 The same disinterestedness required of men on the bench
must characterize the actuations of public officials, not excluding the President, to satisfy the
requirements of procedural due process.17
In his dissent Mr. Justice Puno states that "the new majority opinion limiting violations of due process to
government action alone is a throwback to a regime of law long discarded by more progressive
countries." He opines that "today, private due process is a settled norm in administrative law," citing
Schwartz, an authority in administrative law.
We beg to disagree. A careful reading of Schwartz would reveal that requirements of procedural due
process extended from governmental to private action only in instances where there is "sufficient
governmental involvement" or "the private action was so saturated with governmental incidents."
The cardinal primary requirements of due process in administrative proceedings were highlighted in Ang
Tibay v. Court of Industrial Relations:18 (a) the right to a hearing, which includes the right to present one's
case and submit evidence in support thereof; (b) the tribunal must consider the evidence presented; (c)
the decision must have something to support itself; (d) the evidence must be substantial; (e) the
decision must be based on the evidence presented at the hearing, or at least contained in the record
and disclosed to the parties affected; (f) the tribunal or body or any of its judges must act on its own
independent consideration of the law and facts of the controversy, and not simply accept the views of a
subordinate; (g) the board or body should, in all controversial questions, render its decision in such
manner that the parties to the proceeding may know the various issues involved, and the reason for the
decision rendered.
Also in Lumiqued v. Exevea19 it was held —
In administrative proceedings, the essence of due process is simply the opportunity to explain one's
side. One may be heard, not solely by verbal presentation but also, and perhaps even more creditably as
it is more practicable than oral arguments, through pleadings. An actual hearing is not always an
indispensable aspect of due process. As long as a party was given the opportunity to defend his interests
in due course, he cannot be said to have been denied due process of law, for this opportunity to be
heard is the very essence of due process.
From the foregoing, it is clear that the observance of due process is demanded in governmental acts.
Particularly in administrative proceedings, due process starts with the tribunal or hearing officer and not
with the employer. In the instant case, what is mandated of the employer to observe is the 30-day
notice requirement. Hence, non-observance of the notice requirement is not denial of due process but
merely a failure to comply with a legal obligation for which we strongly recommend, we impose a
disturbance compensation as discussed hereunder.
In the instant case, we categorically declare that Serrano was not denied his right to due process.
Instead, his employer did not comply with the 30-day notice requirement. However, while Serrano was
not given the required 30-day notice, he was nevertheless given and, in fact, took advantage of every
opportunity to be heard, first, by the Labor Arbiter, second, by the NLRC, and third, by no less than this
Court. Before the Labor Arbiter and the NLRC, petitioner had the opportunity to present his side not
only orally but likewise through proper pleadings and position papers.
It is not correct therefore to say that petitioner was deprived of his right to due process.
We have consistently upheld in the past as valid although irregular the dismissal of an employee for a
just or authorized cause but without notice and have imposed a sanction on the erring employers in the
form of damages for their failure to comply with the notice requirement. We discussed the rationale
behind this ruling in Wenphil Corporation v. NLRC20 thus —
The Court holds that the policy of ordering reinstatement to the service of an employee without loss of
seniority and the payment of his wages during the period of his separation until his actual reinstatement
but not exceeding three years without qualification or deduction, when it appears he was not afforded
due process, although his dismissal was found to be for just and authorized cause in an appropriate
proceeding in the Ministry of Labor and Employment should be re-examined. It will be highly prejudicial
to the interests of the employer to impose on him the services of an employee who has been shown to be
guilty of the charges that warranted his dismissal from employment. Indeed, it will demoralize the rank
and file if the undeserving, if not undesirable, remains in the service . . . . However, the petitioner must
nevertheless be held to account for failure to extend to private respondent his right to an investigation
before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must
be for just or authorized cause and after due process. Petitioner committed an infraction of the second
requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an
investigation as required by law before dismissing petitioner from employment. Considering the
circumstances of this case petitioner must indemnify private respondent the amount of P1,000.00. The
measure of this award depends on the facts of each case and the gravity of the omission committed by
the employer (emphasis supplied).
In Sebuguero v. National Labor Relations Commission 21 Mr. Justice Davide Jr., now Chief Justice, made
this clear pronouncement —
It is now settled that where the dismissal of an employee is in fact for a just and valid cause and is so
proven to be but he is not accorded his right to due process, i.e. he was not furnished the twin
requirements of notice and the opportunity to be heard, the dismissal shall be upheld but the employer
must be sanctioned for non-compliance with the requirements of or for failure to observe due process.
The sanction, in the nature of indemnification or penalty, depends on the facts of each case and the
gravity of the omission committed by the employer.
This ruling was later ably amplified by Mr. Justice Puno in Nath v. National Labor Relations
Commission22 where he wrote —
The rules require the employer to furnish the worker sought to be dismissed with two written notices
before termination of employment can be legally effected: (1) notice which apprises the employee of
the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which
informs the employee of the employer's decision to dismiss him. In the instant case, private respondents
have failed to furnish petitioner with the first of the required two (2) notices and to state plainly the
reasons for the dismissal in the termination letter. Failure to comply with the requirements taints the
dismissal with illegality.
Be that as it may, private respondent can dismiss petitioner for just cause . . . . We affirm the finding of
the public respondent that there was just cause to dismiss petitioner, a probationary
employee (emphasis supplied).
Also, in Camua v. National Labor Relations Commission 23 this Court through Mr. Justice Mendoza
decreed —
In the case at bar, both the Labor Arbiter and the NLRC found that no written notice of the charges had
been given to petitioner by the respondent company. . . . Accordingly, in accordance with the well-
settled rule, private respondents should pay petitioner P1,000.00 as indemnity for violation of his right
to due process . . . . Although an employee validy dismissed for cause he may nevertheless be given
separation pay as a measure of social justice provided the cause is not serious misconduct reflecting on
his moral character (emphasis supplied).
Non-observance of this procedural requirement before would cause the employer to be penalized by
way of paying damages to the employee the amounts of which fluctuated through the years. Thus, for
just cause the indemnity ranged from P1,000.00 to P10,000.00.24 For authorized cause, as distinguished
from just cause, the award ranged from P2,000.00 to P5,000.00.25
This Court has also sanctioned the ruling that a dismissal for a just or authorized cause but without
observance of the mandatory 30-day notice requirement was valid although considered irregular. The
Court ratiocinated that employers should not be compelled to keep in their employ undesirable and
undeserving laborers. For the irregularity, i.e., the failure to observe the 30-day notice of termination,
the employer was made to pay a measly sum ranging from P1,000.00 to P10,000.00.
With regard to the indemnity or penalty, which we prefer seriously to be referred to as "disturbance
compensation," the Court has awarded varying amounts depending on the circumstances of each case
and the gravity of the commission. We now propose that the amount of the award be uniform and
rational and not arbitrary. The reason for the proposal or modification is that in their non-compliance
with the 30-day notice requirement the erring employers, regardless of the peculiar circumstances of
each case, commit the infraction only by the single act of not giving any notice to their workers. It
cannot be gainfully said that the infraction in one case is heavier than in the other as the non-
observance constitutes one single act. Thus, if the dismissal is illegal, i.e. there is no just or authorized
cause, a disturbance compensation in the amount of P10,000.00 may be considered reasonable. If the
dismissal is for a just cause but without notice, a disturbance compensation in the amount P5,000.00
may be given. In termination for an authorized cause and the notice requirement was not complied
with, we distinguish further: If it is to save the employer from imminent bankruptcy or business losses,
the disturbance compensation to be given is P5,000.00. If the authorized cause was intended for the
employer to earn more profits, the amount of disturbance compensation is P10,000.00. This disturbance
compensation, again we strongly recommend, should be given to the dismissed employee at the first
instance, the moment it is shown that his employer has committed the infraction — of not complying
with the 30-day written notice requirement — to tide him over during his economic dislocation.
The right of the laborers to be informed of their impending termination cannot be taken lightly, and the
award of any amount below P5,000.00 may be too anemic to satisfy the fundamental protection
especially accorded to labor and the workingman. In fact, it is hardly enough to sustain a family of three;
more so if the employee has five or more children, which seems to be the average size of a Filipino
family.
Henceforth, if the dismissal is for a just cause but without observance of the 30-day notice requirement,
the dismissal is deemed improper and irregular. If later the dismissal is ascertained to be without just
cause, the dismissed employee is entitled to reinstatement, if this be feasible, otherwise to separation
pay and back wages plus disturbance compensation of P10,000.00 and moral damages, if warranted. On
the other hand, if the dismissal is ascertained to be with just cause, the dismissed employee is entitled
nevertheless to a disturbance compensation of P5,000.00 if the legal requirement of the 30-day notice
to both employee and DOLE has not been complied with.
In instances where there is obviously a ground for dismissal, as when the employee has become violent
and his presence would cause more harm to his co-workers and the security and serenity of the
workplace, the employee may be suspended in the meantime until he is heard with proper observance
of the 30-day notice requirement. Likewise, if the dismissal is for an authorized cause but without the
required notice, the dismissal is improper and irregular and the employee should be paid separation
pay, back wages and disturbance compensation of P5,000.00 or P10,000.00.00 depending on the cause.
As already intimated, if the authorized cause is for the purpose of saving the employer from imminent
bankruptcy or business losses, the disturbance compensation should be P5,000.00; otherwise, if the
authorized cause is for the employer, in the exercise of management prerogative, to save and earn more
profits, the disturbance compensation should be P10,000.00.
In the instant case, Serrano was given his walking papers only on the very same day his termination was
to take effect. DOLE was not served any written notice. In other words, there was non-observance of the
30-day notice requirement to both Serrano and the DOLE. Serrano was thus terminated for an
authorized cause but was not accorded his right to 30-day notice. Thus, his dismissal being improper and
irregular, he is entitled to separation pay and back wages the amounts of which to be determined by the
Labor Arbiter, plus P10,000.00 as disturbance compensation which, from its very nature, must be paid
immediately to cushion the impact of his economic dislocation.
One last note. This Separate Opinion is definitely not advocating a new concept in imposing the so-called
"disturbance compensation." Since Wenphil Corporation v. NLRC 26 this Court has already recognized the
necessity of imposing a sanction in the form of indemnity or even damages, when proper, not
specifically provided by any law, upon employers who failed to comply with the twin-notice
requirement. At the very least, what is being proposed to be adopted here is merely a change in the
terminology used, i.e., from "sanction," "indemnity," "damages" or "penalty," to "disturbance
compensation" as it is believed to be the more appropriate term to accurately describe the lamentable
situation of our displaced employees.
Indeed, from the time the employee is dismissed from the service without notice — in this case since 11
October 1991 — to the termination of his case, assuming it results in his reinstatement, or his being paid
his back wages and separation pay, as the case may be, how long must he be made to suffer emotionally
and bear his financial burden? Will reinstating him and/or paying his back wages adequately make up for
the entire period that he was indistress for want of any means of livelihood? Petitioner Serrano has
been deprived of his only source of income — his employment — for the past eight (8) years or so. Will
his reinstatement and/or the payment of his back wages and separation pay enable him to pay off his
debts incurred in abject usury — to which he must have succumbed — during his long period of financial
distress? Will it be adequate? Will it be just? Will it be fair? Thus, do we really and truly render justice to
the workingman by simply awarding him full back wages and separation pay without regard for the long
period during which he was wallowing in financial difficulty?
FOR ALL THE FOREGOING, the Decision of respondent National Labor Relations Commission should be
MODIFIED. The termination of petitioner RUBEN SERRANO being based on an authorized cause should
be SUSTAINED AS VALID although DECLARED IRREGULAR for having been effected without the
mandatory 30-day notice.
ISETANN DEPARTMENT STORE INC. should PAY petitioner SERRANO back wages and separation pay the
amounts of which to be determined by the Labor Arbiter, plus P10,000.00 as disturbance compensation
which must be paid immediately. Consequently, except as regards the disturbance compensation, the
case should be REMANDED to the Labor Arbiter for the immediate computation and payment of the
back wages and separation pay due petitioner.
EXCEPT as herein stated, I concur with the majority.
PUNO, J., dissenting opinion;
The rule of audi alteram partem — hear the other side, is the essence of procedural due process. That a
"party is not to suffer in person or in purse without an opportunity of being heard" is the oldest
established principle in administrative law.1 Today, the majority is relies that the all important right of an
employee to be notified before he is dismissed for a just or authorized cause is not a requirement of due
process. This is a blow on the breadbasket of our lowly employees, a considerable erosion of their
constitutional right to security of tenure, hence this humble dissenting opinion.
A review of our law on dismissal is in order.
I. DISMISSAL DUE TO JUST CAUSE
The law allowing dismissal of an employee due to a just cause is provided in Article 282 of the Labor
Code:
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 the 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.
The long established jurisprudence2 is that to justify dismissal of an employee for a just cause, he must
be given two kinds of notice by his employer, viz: (1) notice to apprise the employee of the particular
acts or omissions for which the dismissal is sought, and (2) subsequent notice to inform him of the
employer's decision to dismiss him. Similarly, deeply ingrained is our ruling that these pre and post
notice requirements are not mere technicalities but are requirements of due process.3
Then came the case of Wenphil Corporation vs. NLRC and Mallare in 1989.4 It is the majority view that
Wenphil reversed the long standing policy of this Court on dismissal. This is too broad a reading of
Wenphil. A careful statement of the facts of Wenphil and the ruling of this Court is thus proper.
First, the facts. The private respondent Roberto Mallare is the assistant head of the backroom
department of petitioner Wenphil Corporation. At about 2:30 pm on May 20, 1985, Mallare had an
altercation with his co-employee, Job Barrameda, about tending the Salad Bar. He slapped Barrameda's
cap, stepped on his foot, picked up an ice scooper and brandished it against the latter. He refused to be
pacified by another employee who reported the incident to Delilah Hermosura, assistant manager.
Hermosura summoned Mallare but the latter refused to see the former. It took a security guard to bring
Mallare to Hermosura. Instead of making an explanation, Mallare shouted profane words against
Hermosura. He declared that their altercation should only be settled by him and Barrameda.
The following morning, Mallare was suspended. In the afternoon, he was dismissed from the service. He
received an official notice of his dismissal four (4) days later.
Mallare filed with the Labor Arbiter a complaint for illegal suspension, illegal dismissal and unfair labor
practice. No hearing was conducted in view of the repeated absence of the counsel of Mallare. The
parties submitted their respective position papers. On December 3, 1986, the Arbiter denied the
complaint as he found Mallare guilty of grave misconduct and insubordination, which are just causes for
dismissal. The Arbiter also ruled that Mallare was not denied due process. On appeal, the NLRC
reversed. It held that Mallare was denied due process before he was dismissed. It ordered Mallare's
reinstatement and the payment of his one (1) year backwages.
On certiorari to this Court, we reversed the NLRC and reinstated the decision of the Arbiter with the
modification that petitioner should pay to Mallare an indemnity of P1,000.00 for dismissing Mallare
without any notice and hearing. We held:
Petitioner insists that private respondent was afforded due process but he refused to avail of his right to
the same; that when the matter was brought to the labor arbiter he was able to submit his position
paper although the hearing cannot proceed due to the non-appearance of his counsel; and that the
private respondent is guilty of serious misconduct in threatening or coercing a co-employee which is a
ground for dismissal under Article 283 of the Labor Code.
The failure of petitioner to give private respondent the benefit of a hearing before he was dismissed
constitutes an infringement of his constitutional right to due process of law and equal protection of the
laws. The standards of due process in judicial as well as administrative proceedings have long been
heard before judgment is rendered.
The claim of petitioner that a formal investigation was not necessary because the incident, which gave
rise to the termination of private respondent, was witnessed by his co-employees and supervisors, is
without merit. The basic requirement of due process is that which hears before it condemns, which
proceeds upon inquiry and renders judgment only after trial.
However, it is a matter of fact that when the private respondent filed a complaint against petitioner, he
was afforded the right to an investigation by the labor arbiter. He presented his position paper as did the
petitioner. If no hearing was had, it was the fault of private respondent as his counsel failed to appear at
the scheduled hearings. The labor arbiter concluded that the dismissal of private respondent was for
just cause. He was found guilty of grave misconduct and insubordination. This is borne by the sworn
statements of witnesses. The Court is bound by this finding of the labor arbiter.
By the same token, the conclusion of the public respondent NLRC on appeal that private respondent was
not afforded due process before he was dismissed is binding on this Court. Indeed, it is well taken and
supported by the records. However, it can not justify a ruling that private respondent should be
reinstated with back wages as the public respondent NLRC so decreed. Although belatedly, private
respondent was afforded due process before the labor arbiter wherein the just cause of his dismissal
had been established. With such finding, it would be arbitrary and unfair to order his reinstatement with
back wages.
Three member of the Court filed concurring and dissenting opinions. Madam Justice Herrera opined
that: (a) Mallare was dismissed for cause, hence, he is not entitled to reinstatement and backwages; (b)
he was not denied due process; and (c) he has no right to any indemnity but to separation pay to
cushion the impact of his loss of employment Mr. Justice Padilla took the view that: (1) Mallare was not
entitled to reinstatement and backwages as he was guilty of grave misconduct and insubordination; (2)
he was denied administrative due process; and (3) for making such denial, Wenphil should pay
"separation pay (instead of indemnity) in the sum of P1,000.00." Madam Justice Cortes held that: (1)
Mallare was not illegally dismissed; (2) he was not denied due process; (3) he was not entitled to
indemnity; and (4) if P1,000.00 was to be imposed on Wenphil as an administrative sanction, it should
form part of the public fund of the government.
I shall discuss later that Wenphil did not change our ruling that violation of the pre-dismissal notice
requirement is an infringement of due process.
II. DISMISSAL DUE TO AUTHORIZED CAUSE
The applicable law on dismissal due to authorized cause is Article 283 of the Labor Code which provides:
Art. 283. Closure of establishment and reduction of personnel. — The employer may also terminate the
employment of any employee due to the installation of labor serving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving
a written notice on the workers and the [Department] of Labor and Employment at least one (1) month
before the intended date thereof. In case of termination due to the installation of labor-saving devices
or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least
his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In
case of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the separation pay
shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
In Sebuguero v. NLRC,5 we held thru our esteemed Chief Justice Davide that "the requirement of notice
to both the employees concerned and the Department of Labor and Employment (DOLE) is mandatory
and must be written and given at least one month before the intended date of retrenchment." We
explained that the "notice to the DOLE is essential because the right to retrench is not an absolute
prerogative of an employer but is subject to the requirement of law that retrenchment be proved to
prevent losses. The DOLE is the agency that will determine whether the planned retrenchment is
justified and adequately supported by fact."6 Nonetheless, we ruled:
The lack of written notice to the petitioners and to the DOLE does not, however, make the petitioners'
retrenchment illegal such that they are entitled to the payment of back wages and separation pay in lieu
of reinstatement as they contend. Their retrenchment, for not having been effected with the required
notices, is merely defective. In those cases where we found the retrenchment to be illegal and ordered
the employees' reinstatement and the payment of backwages, the validity of the cruse for
retrenchment, that is the existence of imminent or actual serious or substantial losses, was not proven.
But here, such a cause is present as found by both the Labor Arbiter and the NLRC. There is only a
violation by GTI of the procedure prescribed in Article 283 of the Labor Code in effecting the
retrenchment of the petitioners.1âwphi1.nêt
It is now settled that where the dismissal of an employee is in fact for a just and valid cause and is so
proven to be but he is not accorded his right to due process, i.e., he was not furnished the twin
requirements of notice and the opportunity to be heard, the dismissal shall be upheld but the employer
must be sanctioned for non-compliance with the requirements of or for failure to observe due process.
The sanction, in the nature of indemnification or penalty, depends on the facts of each case and the
gravity of the omission committed by the employer and has ranged from P1,000.00 as in the cases
of Wenphil vs. National Labor Relations Commission, Seahorse Maritime Corp. v. National Labor
Relations Commission, Shoemart, Inc. vs. National Labor Relations Commission, Rubberworld (Phils.) Inc.
vs. National Labor Relations Commission, Pacific Mills, Inc. vs. Alonzo, and Aurelio vs. National Labor
Relations Commission to P10,000.00 in Reta vs. National Labor Relations Commission and Alhambra
Industries, Inc. vs. National Labor Relations Commission. More recently, in Worldwide Papermills, Inc. vs.
National Labor Relations Commission, the sum of P5,000.00 was awarded to the employee as
indemnification for the employer's failure to comply with the requirements of procedural due process.
Accordingly, we affirm the deletion by the NLRC of the award of back wages, But because the required
notices of the petitioners' retrenchment were not served upon the petitioners and the DOLE, GTI must
be sanctioned for such failure and thereby required to indemnify each of the petitioners the sum of
P20,000.00 which we find to be just and reasonable under the circumstances of this case.
III. RE-EXAMINATION OF THE WENPHIL DOCTRINE:
FROM BAD TO WORSE
The minority of the Court has asked for a re-examination of Wenphil because as the majority correctly
observed, "the number of cases involving dismissals without the requisite notice to the employee
although effected for just or authorized causes suggests that the imposition of fine for violation of the
notice requirement has not been effective in deterring violations of the notice requirement."
We must immediately set Wenphil in its proper perspective as it is a very exceptional case. Its doctrine
must be limited to its distinct facts. Its facts therefore ought to be carefully examined again. In Wenphil,
it was clearly established that the employee had a violent temper, caused trouble during office hours
and even defied his superiors as they tried to pacify him. The employee was working for a fast food
chain that served the public and where violence has no place. These facts were established only in the
proceedings before the Labor Arbiter after the employee filed a complaint for illegal dismissal. There
were no formal investigation proceedings before the employer as the employment was dismissed
without any notice by the employer. Given these facts, we ruled that the pre-dismissal notice
requirement was part of due process; nonetheless, we held that the employee was given due process as
he was heard by the Labor Arbiter; we found that the proceedings before the Labor Arbiter proved that
the employer was guilty of grave misconduct and insubordination; we concluded with the rule that it
would be highly prejudicial to the interest of the employer to reinstate the employee, but the employer
must indemnify the employee the amount of P1,000.00 for dismissing him without notice. We further
held that "the measure of this award depends on the facts or each case and the gravity of the omission
committed by the employer."7
At the outset, I wish to emphasize that Wenphil itself held, and repeatedly held that "the failure of
petitioner to give private respondent the benefit of a hearing before he was dismissed, constitutes an
infringement of his constitutional right to due process of law and equal protection of the laws. The
standards of due process of law in judicial as well as administrative proceedings have long been
heard before judgment is rendered."8 The Court then satisfied itself with this bare minimum when it held
that the post dismissal hearing before the Labor Arbiter was enough compliance with demands of due
process and refused to reinstate an eminently undesirable employee. Heretofore, the Court was far
from satisfied with this bare minimum as it strictly imposed on an employer compliance with the
requirement of pre-dismissal notice, violation of which resulted in orders of reinstatement of the
dismissed employee. This is the only wrinkle wrought by Wenphil in our jurisprudence on dismissal.
Nonetheless, it should be stressed that the Court still punished Wenphil's violation of the pre-dismissal
notice requirement as it was ordered to pay an indemnity of P1,000.00 to the employee. The indemnity
was based on the iterated and reiterated rule that "the dismissal of an employee must be for just or
authorized cause and after due process."9
Our ten (10) years experience with Wenphil is not a happy one. Unscrupulous employers have abused
the Wenphil ruling. They have dismissed without notice employees including those who are not as
eminently undesirable as the Wenphil employee. They dismissed employees without notice as a general
rule when it should be the exception. The purpose of the pre-dismissal notice requirement was entirely
defeated by employers who were just too willing to pay an indemnity for its violation. The result, as the
majority concedes, is that the indemnity we imposed has not been effective to prevent unjust dismissals
employees. To be sure, this is even a supreme understatement. The ugly truth is that Wenphil is the
mother of many unjust and unauthorized dismissals of employees who are too weak to challenge their
powerful employees.
As the Wenphil indemnity doctrine has proved to be highly inimical to the interest of our employees, I
humbly submit a return to the pre-Wenphil rule where a reasonless violation of the pre-dismissal notice
requirement makes the dismissal of an employee illegal and results in his reinstatement. In fine, we
should strike down as illegal the dismissal of an employee even if it is for a justified end if it is done thru
unjustified means for we cannot be disciples of the Machiavellian doctrine of the end justifies the
means. With due respect, the majority decision comes too near this mischievous doctrine by giving
emphasis on the end and not the means of dismissal of employees. What grates is that the majority
today espouses a doctrine more pernicious than Wenphil for now it announces that a violation of the
pre-dismissal notice requirement does not even concern due process. The reasons relied upon by the
majority for this new ruling against the job security of employees cannot inspire assent.
FIRST. I would like to emphasize that one undesirable effect of Wenphil is to compel employees to seek
relief against illegal dismissals with the DOLE whereas before, a remedy can be sought before the
employer. In shifting this burden, an employee's uneven fight against his employer has become more
uneven. Now, an illegally dismissed employee often goes to the DOLE without an exact knowledge of the
cause of his dismissal. As a matter of strategy, some employers today dismiss employees without notice.
They know that it is more advantageous for them to litigate with an employee who has no knowledge of
the cause of dismissal. The probability is that said employee will fail to prove the illegality of his
dismissal. All that he can prove is that he was dismissed without notice and the penalty for the omission
is a mere fine, a pittance.
The case at bar demonstrates how disastrous Wenphil has been to our helpless employees. In holding
that the petitioner failed to prove his cause of action, the majority held ". . . we have only the bare
assertion of petitioner that, in abolishing the security section, private respondent's real purpose was to
avoid payment to the security checkers of the wage increases provided in the collective bargaining
agreement approved in 1990." The bare assertion of the petitioner is understandable. The notice given
to him spoke of a general ground — retrenchment. No details were given about the employer's sudden
retrenchment program. Indeed, the employee was dismissed on the day he received the notice in
violation of the 30-day requirement. He was given no time, no opportunity to ascertain and verify the
real cause of his dismissal. Thus, he filed with the DOLE a complaint for illegal dismissal with a hazy
knowledge of its real cause. Heretofore, it is the employer whom we blame and penalize if he does not
notify his employee of the cause of his dismissal. Today, the majority puts the blame on the employee
for not knowing why he was dismissed when he was not given any notice of dismissal. In truth, the
suspicion of the petitioner in the case at bar that he was dismissed to avoid payment of their wage
increases is not without basis. The DOLE itself found that petitioner has unpaid wages which were
ordered to be paid by the employer. The majority itself affirmed this finding.
What hurts is that while the majority was strict with the petitioner-employee, it was not so with the
employer ISETANN. Immediately, it validated the finding of the NLRC that petitioner was dismissed due
to the redundancy of his position. This is inconsistent with the finding of the Labor Arbiter that the
employer failed to prove retrenchment, the ground it used to dismiss the petitioner. A perusal of the
records will show that Ms. Cristina Ramos, Personnel Administration Manager of the employer ISETANN
testified on the cause of dismissal of the petitioner. She declared that petitioner was retrenched due to
the installation of a labor saving device. Allegedly, the labor saving device was the hiring of an
independent security agency, thus:10
xxx xxx xxx
Atty. Perdigon:
You said that your company decided to phase out the position of security checkers . . .
Ms. Ramos:
Yes Sir.
Q: And instead hired the services of a security agency?
A: Yes, sir.
xxx xxx xxx
Q: Did you not retrench the position of security checkers?
A: We installed a labor saving device.
Q: So you did not retrench?
A: No. sir.
Q: How about the position of Section Head of Security Department?
A: It was abolished in 1991.
xxx xxx xxx
Q: Are you aware of the retrenchment program of the company as stated in this letter?
A: Actually it's not a retrenchment program. It's an installation of a labor saving device.
Q: So you are telling this Court now that there was no retrenchment program?
A: It was actually an installation of a labor saving device (emphasis supplied).
xxx xxx xxx
Q: . . . What (is) this labor saving device that you are referring to?
A: The labor saving device is that the services of a security agency were contracted to handle the
services of the security checkers of our company.
Q: Are you sure of what labor saving means, Madam witness?

A: Yes, sir.
Q: You said you installed a labor saving device, and you installed a security agency as a labor saving
device?
A: We hired the services of a security agency.
Q: So according to you . . . a security agency is a labor saving device?
Atty. Salonga:
Already answered, your Honor.
Obviously, Ms. Ramos could not even distinguish between retrenchment and redundancy. The Labor
Arbiter thus ruled that petitioner's dismissal was illegal. The NLRC, however, reversed. The majority
affirmed the NLRC ruling that ISETANN's phase out of its security employees is a legitimate business
decision, one that is necessary to obtain reasonable return from its investment. To use the phrase of the
majority, this is a "bare assertion." Nothing in the majority decision shows how the return of ISETANN's
investment has been threatened to justify its so-called business decision as legitimate.
SECOND. The majority holds that "the need is for a rule which, while recognizing the employee's right to
notice before he is dismissed or laid off, at the same time acknowledges the right of the employer to
dismiss for any of the just causes enumerated in Art. 282 or to terminate employment for any of the
authorized causes mentioned in Arts. 283-284. If the Wenphil rule imposing a fine on an employer who
is found to have dismissed an employee for cause without prior notice is deemed ineffective in deterring
employer violations of the notice requirement, the remedy is not to declare the dismissal void if there
are just or valid grounds for such dismissal or if the termination is for an authorized cause. That would
be to uphold the right of the employee but deny the right of the employer to dismiss for cause. Rather,
the remedy is to consider the dismissal or termination to be simply ineffectual for failure of the
employer to comply with the procedure for dismissal or termination.
With due respect, I find it most difficult to follow the logic of the majority. Before Wenphil, we protected
employees with the ruling that dismissals without prior notice are illegal and the illegally dismissed
employee must be reinstated with backwages. Wenphil diluted that rule when it held that due process is
satisfied if the employee is given the opportunity to be heard by the Labor Arbiter. It further held that an
employee cannot be reinstated if it is established in the hearing that his dismissal is for a just cause. The
failure of the employer to give a pre-dismissal notice is only to be penalized by payment of an
indemnity. The dilution of the rule has been abused by unscrupulous employers who then followed the
"dismiss now, pay later" strategy. This evil practice of employers was what I expected the majority to
address in re-examining the Wenphil doctrine. At the very least, I thought that the majority would
restore the balance of rights between an employee and an employer by giving back the employee's
mandatory right to notice before dismissal. It is disquieting, however, that the majority re-arranged this
balance of right by tilting it more in favor of the employer's right to dismiss. Thus, instead of weakening
a bit the right to dismiss of employers, the majority further strengthens it by insisting that a dismissal
without prior notice is merely "ineffectual" and not illegal.
The stubborn refusal of the majority to appreciate the importance of pre-dismissal notice is difficult to
understand. It is the linchpin of an employee's right against an illegal dismissal. The notice tells him the
cause of his dismissal. It gives him a better chance to contest his dismissal in an appropriate proceeding
as laid down in the parties' collective bargaining agreement or the rules of employment established by
the employer, as the case may be. In addition, it gives to both the employee and employer more cooling
time to settle their differences amicably. In fine, the prior notice requirement and the hearing before the
employer give an employee a distinct, different and effective first level of remedy to protect his job. In
the event the employee is dismissed, he can still file a complaint with the DOLE with better knowledge
of the cause of his dismissal, with longer time to prepare his case, and with greater opportunity to take
care of the financial needs of his family pendente lite. The majority has taken away from employees this
effective remedy. This is not to say that the pre-dismissal notice requirement equalizes the fight
between an employee and an employer for the fight will remain unequal. This notice requirement
merely gives an employee a fighting chance but that fighting chance is now gone.
It is equally puzzling why the majority believes that restoring the employee's right to pre-dismissal
notice will negate the right of an employer to dismiss for cause. The pre-Wenphil rule simply requires
that before the right of the employer to dismiss can be exercised, he must give prior notice to the
employee of its cause. There is nothing strange nor difficult about this requirement. It is no burden to an
employer. He is bereft of reason not to give the simple notice. If he fails to give notice, he can only curse
himself. He forfeits his right to dismiss by failing to follow the procedure for the exercise of his right.
Employees in the public sector cannot be dismissed without prior notice. Equal protection of law
demands similar treatment of employees in the private sector.
THIRD. The case at bar specifically involves Article 283 of the Labor Code which lays down four (4)
authorized causes for termination of employment.11 These authorized causes are: (1) installation of
labor-saving devices; (2) redundancy; (3) retrenchment to prevent losses; and (4) closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of circumventing the
law. It also provides that prior to the dismissal of an employee for an authorized cause, the employer
must send two written notices at least one month before the intended dismissal — one notice to the
employee and another notice to the Department of Labor and Employment (DOLE). We have ruled that
the right to dismiss on authorized causes is not an absolute prerogative of an employer.12 We explained
that the notice to the DOLE is necessary to enable it to ascertain the truth of the cause of
termination.13 The DOLE is equipped with men and machines to determine whether the planned closure
or cessation of business or retrenchment or redundancy or installation of labor saving device is justified
by economic facts.14 For this reason too, we have held that notice to the employee is required to enable
him to contest the factual bases of the management decision or good faith of the retrenchment or
redundancy before the DOLE.15 In addition, this notice requirement gives an employee a little time to
adjust to his joblessness.16
The majority insists that if an employee is laid off for an authorized cause under Article 283 in violation
of the prior notice requirement, his dismissal should not be considered void but only ineffectual. He shall
not be reinstated but paid separation pay and some backwages. I respectfully submit that an employee
under Article 283 has a stronger claim to the right to a pre-dismissal notice and hearing. To begin with,
he is an innocent party for he has not violated any term or condition of his employment. Moreover, an
employee in an Article 283 situation may lose his job simply because of his employer's desire for more
profit. Thus, the installation of a labor saving device is an authorized cause to terminate employment
even if its non-installation need not necessarily result in an over-all loss to an employer possessed by his
possessions. In an Article 283 situation, it is easy to see that there is a greater need to scrutinize the
allegations of the employer that he is dismissing an employee for an authorized cause. The acts involved
here are unilateral acts of the employer. Their nature requires that they should be proved by the
employer himself. The need for a labor saving device, the reason for redundancy, the cause for
retrenchment, the necessity for closing or cessation of business are all within the knowledge of the
employer and the employer alone. They involve a constellation of economic facts and factors usually
beyond the ken of knowledge of an ordinary employee. Thus, the burden should be on the employer to
establish and justify these authorized causes. Due to their complexity, the law correctly directs that
notice should be given to the DOLE for it is the DOLE more than the lowly employee that has the
expertise to validate the alleged cause in an appropriate hearing. In fine, the DOLE provides the
equalizer to the powers of the employer in an Article 283 situation. Without the equalizing influence of
DOLE, the employee can be abused by his employer.
Further, I venture the view that the employee's right to security of tenure guaranteed in our
Constitution calls for a pre-dismissal notice and hearing rather than a post facto dismissal hearing. The
need for an employee to be heard before he can be dismissed cannot be overemphasized. As
aforestated, in the case at bar, petitioner was a regular employee of ISETANN. He had the right to
continue with his employment. The burden to establish that this right has ceased is with ISETANN, as
petitioner's employer. In fine, ISETANN must be the one to first show that the alleged authorized cause
for dismissing petitioner is real. And on this factual issue, petitioner must be heard. Before the validity of
the alleged authorized cause is established by ISETANN, the petitioner cannot be separated from
employment. This is the simple meaning of security of tenure. With due respect, the majority opinion
will reduce this right of our employees to a mere illusion. It will allow the employer to dismiss an
employee for a cause that is yet to be established. It tells the employee that if he wants to be heard, he
can file a case with the labor arbiter, then the NLRC, and then this Court. Thus, it unreasonably shifts the
burden to the employee to prove that his dismissal is for an unauthorized cause.
The pernicious effects of the majority stance are self-evident in the case at bar. For one, petitioner
found himself immediately jobless and without means to support his family. For another, petitioner was
denied the right to rely on the power of DOLE to inquire whether his dismissal was for a genuine
authorized cause. This is a valuable right for all too often, a lowly employee can only rely on DOLE's vast
powers to check employer abuses on illegal dismissals. Without DOLE, poor employees are preys to the
claws of powerful employers. Last but not the least, it was the petitioner who was forced to file a
complaint for illegal dismissal. To a jobless employee, filing a complaint is an unbearable burden due to
its economic cost. He has to hire a lawyer and defray the other expenses of litigation while already in a
state of penury. At this point, the hapless employee is in a no win position to fight for his right. To use a
local adage, "aanhin pa ang damo kung patay na ang kabayo."
In the case at bar, the job of the petitioner could have been saved if DOLE was given notice of his
dismissal. The records show that petitioner worked in ISETANN as security checker for six (6) years. He
served ISETANN faithfully and well. Nonetheless, in a desire for more profits, and not because of losses,
ISETANN contracted out the security work of the company. There was no effort whatsoever on the part
of ISETANN to accommodate petitioner in an equivalent position. Yet there was the position of Safety
and Security Supervisor where petitioner fitted like a perfect T. Despite petitioner's long and loyal
service, he was treated like an outsider, made to apply for the job, and given a stringent examination
which he failed. Petitioner was booted out and given no chance to contest his dismissal. Neither was the
DOLE given the chance to check whether the dismissal of petitioner was really for an authorized cause.
All these because ISETANN did not follow the notice and hearing requirement of due process.
FOURTH. The majority has inflicted a most serious cut on the job security of employees. The majority did
nothing to restore the pre-Wenphil right of employees but even expanded the right to dismiss of
employer by holding that the pre-dismissal notice requirement is not even a function of due process.
This seismic shift in our jurisprudence ought not to pass.
The key to the new majority ruling is that the "due process clause of the Constitution is a limitation on
governmental powers. It does not apply to the exercise of private power such as the termination of
employment under the Labor Code." The main reason alleged is that "only the State has authority to
take the life, liberty, or property of the individual. The purpose of the Due Process Clause is to ensure
that the exercise of this power is consistent with settled usage of civilized society."
There can be no room for disagreement on the proposition that the due process clause found in the Bill
of Rights of the Constitution is a limitation on governmental powers. Nor can there be any debate that
acts of government violative of due process are null and void. Thus, former Chief Justice Roberto
Concepcion emphasized in Cuaycong v. Senbengco 17 that ". . . acts of Congress as well as those of the
Executive, can deny due process only under pain of nullity, and judicial proceedings suffering from the
same flaw are subject to the same sanction, any statutory provision to the contrary notwithstanding."
With due respect to the majority, however, I part ways with the majority in its new ruling that the due
process requirement does not apply to the exercise of private power. This overly restrictive majority
opinion will sap the due process right of employees of its remaining utility. Indeed, the new majority
opinion limiting violations of due process to government action alone is a throwback to a regime of law
long discarded by more progressive countries. Today, private due process is a settled norm in
administrative law. Per Schwartz, a known authority in the field, viz:18
Private Due Process
As already stressed, procedural due process has proved of an increasingly encroaching nature.
Since Goldberg v. Kelly, the right to be heard has been extended to an ever-widening area, covering
virtually all aspects of agency action, including those previously excluded under the privilege concept.
The expansion of due process has not been limited to the traditional areas of administrative law. We
saw how procedural rights have expanded into the newer field of social welfare, as well as that of
education. But due process expansion has not been limited to these fields. The courts have extended
procedural protections to cases involving prisoners and parolees, as well as the use of established
adjudicatory procedures. Important Supreme Court decisions go further and invalidate prejudgment
wage garnishments and seizures of property under replevin statutes where no provision is made for
notice and hearing. But the Court has not gone so far as to lay down an inflexible rule that due process
requires an adversary hearing when an individual may be deprived of any possessory interest, however
brief the dispossession and however slight the monetary interest in the property. Due process is not
violated where state law requires, as a precondition to invoking the state's aid to sequester property of
a defaulting debtor, that the creditor furnish adequate security and make a specific showing of probable
cause before a judge.
In addition, there has been an extension of procedural due process requirements from governmental to
private action. In Section 5.16 we saw that Goldberg v. Kelly has been extended to the eviction of a
tenant from a public housing project. The courts have not limited the right to be heard to tenants who
have governmental agencies as landlords. Due process requirements also govern acts by "private"
landlords where there is sufficient governmental involvement in the rented premises. Such an
involvement exists in the case of housing aided by Federal Housing Administration financing and tax
advantages. A tenant may not be summarily evicted from a building operated by a "private" corporation
where the corporation enjoyed substantial tax exemption and had obtained an FHA-insured mortgage,
with governmental subsidies to reduce interest payments. The "private" corporation was so saturated
with governmental incidents as to be limited in its practices by constitutional process. Hence, it could
not terminate tenancies without notice and an opportunity to be heard.
But we need nor rely on foreign jurisprudence to repudiate the new majority ruling that due process
restricts government alone and not private employers like ISETANN. This Court has always protected
employees whenever they are dismissed for an unjust cause by private employers. We have consistently
held that before dismissing an employee for a just cause, he must be given notice and hearing by his
private employer. In Kingsize Manufacturing Corporation vs. NLRC,19 this Court, thru Mr. Justice
Mendoza, categorically ruled:
. . . (P)etitioners failure to give notice with warning to the private respondents before their services were
terminated puts in grave doubt petitioners' claim that dismissal was for a just cause. Section 2 Rule XIV
of the Rules implementing the Labor Code provides:
An employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts
or omission constituting the ground for dismissal. In case of abandonment of work, the notice shall be
served on the worker's last known address.
The notice required, . . ., actually consists of two parts to be separately served on the employee, to wit:
(1) notice to apprise the employee of the particular acts or omissions for which the dismissal is sought;
and (2) subsequent notice to inform him of the employer's decision to dismiss him.
This requirement is not a mere technicality but a requirement of due process to which every employee
is entitled to insure that the employer's prerogative to dismiss or lay off is not abused or exercised in an
arbitrary manner. This rule is clear and unequivocal . . . .20
In other words, we have long adopted in our decisions the doctrine of private due process. This is as it
ought to be. The 1987 Constitution guarantees the rights of workers, especially the right to security of
tenure in a separate article — section 3 of Article XIII entitled Social Justice and Human Rights. Thus, a
20-20 vision of the Constitution will show that the more specific rights of labor are not in the Bill of
Rights which is historically directed against government acts alone. Needless to state, the constitutional
rights of labor should be safeguarded against assaults from both government and private parties. The
majority should not reverse our settled rulings outlawing violations of due process by employers in just
causes cases.
To prop up its new ruling against our employees, the majority relates the evolution of our law on
dismissal starting from Article 302 of the Spanish Code of Commerce, to the New Civil Code of 1950, to
R.A. No. 1052 (Termination Pay Law), then to R.A. No. 1787. To complete the picture, let me add that on
May 1, 1974, the Labor Code (PD 442) was signed into law by former President Marcos. It took effect on
May 1, 1974 or six months after its promulgation. The right of the employer to terminate the
employment was embodied in Articles 283,21 284,22 and 285.23 Batas Pambansa Blg. 130 which was
enacted on August 21, 1981 amended Articles 283 and 284, which today are cited as Arts. 282 and 283
of the Labor Code.24
On March 2, 1989, Republic Act No. 6715 was approved which amended, among others, Article 277 of
the Labor Code. Presently, Article 277 (b) reads:
Art. 277. Miscellaneous provisions. — (a) . . . .
(b) Subject to the constitutional right of workers to security of tenure and their right to be protected
against dismissal except for a just or 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 the guidelines set by the Department of Labor and Employment. Any decision taken by the employer
shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by
filing a complaint with the regional branch of the National Labor Relations Commission. The burden of
proving that the termination was for a valid or authorized cause shall rest on the employer. . . . .
Previous to the amendment, Article 277 (b) read:
Art. 277. Miscellaneous provisions. — (a) . . . .
(b) With or without a collective agreement, no employer may shut down his establishment or dismiss or
terminate the employment of employees with at least one year of service during the last two years,
whether such service is continuous or broken, without prior written authority issued in accordance with
the rules and regulations as the Secretary may promulgate.
Rule XIV, Book V of the 1997 Omnibus Rules Implementing the Labor Code provides:
Termination of Employment
Sec. 1. Security of tenure and due process. — No worker shall be dismissed except for a just or
authorized cause provided by law and after due process.
Sec. 2. Notice of dismissal. — Any employer who seeks to dismiss a worker shall furnish him a written
notice stating the particular acts or omissions constituting the grounds for his dismissal. . . .
xxx xxx xxx
Sec. 5. Answer and hearing. — The worker may answer the allegations stated against him in the notice
of dismissal within a reasonable period from receipt of such notice. The employer shall afford the
worker ample opportunity to be heard and to defend himself with the assistance of his representative, if
he so desires.
These laws, rules and regulations should be related to our decisions interpreting them. Let me therefore
emphasize our rulings holding that the pre-dismissal notice requirement is part of due process.
In Batangas Laguna Tayabas Bus Co. vs. Court of Appeals,25 which was decided under the provisions of
RA No. 1052 as amended by RA No. 1787, this Court ruled that "the failure of the employer to give the
[employee] the benefit of a hearing before he was dismissed constitute an infringement on his
constitutional right to due process of law and not to be denied the equal protection of the laws. . . .
Since the right of [an employee] to his labor is in itself a property and that the labor agreement between
him and [his employer] is the law between the parties, his summary and arbitrary dismissal amounted to
deprivation of his property without due process." Since then, we have consistently held that before
dismissing an employee for a just cause, he must be given notice and hearing by his private employer as
a matter of due process.
I respectfully submit that these rulings are more in accord with the need to protect the right of
employees against illegal dismissals. Indeed, our laws and our present Constitution are more protective
of the rights and interests of employees than their American counterpart. For one, to justify private due
process, we need not look for the factors of "sufficient governmental involvement" as American courts
do. Article 1700 of our Civil Code explicitly provides:
Art. 1700. The relation between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good. Therefore, such contracts are
subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop,
wages, working conditions, hours of labor and similar subjects.
Nor do we have to strain on the distinction made by American courts between property and privilege
and follow their ruling that due process will not apply if what is affected is a mere privilege. It is our
hoary ruling that labor is property within the contemplation of the due process clause of the
Constitution. Thus, in Philippine Movie Pictures Workers Association vs. Premiere Productions,
Inc.,26 private respondent-employer filed with the Court of Industrial Relations (CIR) a petition seeking
authority to lay off forty-four of its employees. On the date of the hearing of the petition, at the request
of the counsel of the private respondent, the judge of the CIR conducted an ocular inspection in the
premises of the employer. He interrogated fifteen laborers. On the basis of the ocular inspection, the
judge concluded that the petition for lay off was justified. We did not agree and we ruled that "the right
of a person to his labor is deemed to he property within the meaning of constitutional guarantees. That
is his means of livelihood. He can not be deprived of his labor or work without due process of law. . . .
(T)here are certain cardinal primary rights which the Court of Industrial Relations must respect in the
trial of every labor case. One of them is the right to a hearing which includes the right of the party
interested to present his own case and to submit evidence in support thereof."
I wish also to stress that the 1999 Rules and Regulations implementing the Labor Code categorically
characterize this pre-dismissal notice requirement as a requirement of due process. Rule XXIII provides:
Sec. 2. Standards of due process: requirements of notice. — In all cases of termination of employment,
the following standards of due process shall be substantially observed.
I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the
employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him; and
(c) A written notice of termination served on the employee indicating that upon due consideration of all
the circumstance, grounds have been established to justify his termination.
In case of termination, the foregoing notices shall be served on the employee's last known address.
II. For termination of employment as based on authorized causes defined in Article 283 of the Code, the
requirements of due process shall be deemed complied with upon service of a written notice to the
employee and the appropriate Regional Office of the Department at least thirty (30) days before the
effectivity of the termination, specifying the ground or grounds for termination.
The new ruling of the majority is not in consonance with this Rule XXIII.
If we are really zealous of protecting the rights of labor as called for by the Constitution, we should
guard against every violation of their rights regardless of whether the government or a private party is
the culprit. Section 3 of Article XIII of the Constitution requires the State to give full protection to labor.
We cannot be faithful to this duty if we give no protection to labor when the violator of its rights
happens to be private parties like private employers. A private person does not have a better right than
the government to violate an employee's right to due process. To be sure, violation of the particular
right of employees to security of tenure comes almost always from their private employers. To suggest
that we take mere geriatric steps when it comes to protecting the rights of labor from infringement by
private parties is farthest from the intent of the Constitution. We trivialize the right of the employee if
we adopt the rule allowing the employer to dismiss an employee without any prior hearing and say let
him be heard later on. To a dismissed employee that remedy is too little and too late. The new majority
ruling is doubly to be regretted because it comes at a time when deregulation and privatization are
buzzwords in the world being globalized. In such a setting, the new gods will not be governments but
non-governmental corporations. The greater need of the day therefore is protection from illegal
dismissals sans due process by these non-governmental corporations.
The majority also holds that the "third reason why the notice requirement under Art. 283 is not a
requirement of due process is that the employer cannot really be expected to be entirely an impartial
judge of his own cause. This is also the case in termination of employment for a just cause under Art.
282." Again, with due respect, I beg to disagree. In an Article 283 situation, dismissal due to an
authorized cause, the employer is not called upon to act as an impartial judge. The employer is given the
duty to serve a written notice on the worker and the DOLE at least one month before the intended date
of lay-off. It is the DOLE, an impartial agency that will judge whether or not the employee is being laid
off for an authorized caused.27 It is not the employer who will adjudge whether the alleged authorized
cause for dismissing the employee is fact or fiction. On the other hand, in an Article 282 situation,
dismissal for a just cause, it is also incorrect to hold that an employer cannot be an impartial judge.
Today, the procedure on discipline and dismissal of employees is usually defined in the parties' collective
bargaining agreement or in its absence, on the rules and regulations made by the employer himself. This
procedure is carefully designed to be bias free for it is to the interest of both the employee and the
employer that only a guilty employee is disciplined or dismissed. Hence, where the charge against an
employee is serious, it is standard practice to include in the investigating committee an employee
representative to assure the integrity of the process. In addition, it is usual practice to give the aggrieved
employee an appellate body to review an unfavorable decision. Stated otherwise, the investigators are
mandated to act impartially for to do otherwise can bring havoc less to the employee but more to the
employer. For one, if the integrity of the grievance procedure becomes suspect, the employees may
shun it and instead resort to coercive measures like picketing and strikes that can financially bleed
employers. For another, a wrong, especially a biased judgment can always be challenged in the DOLE
and the courts and can result in awards of huge damages against the company. Indeed, the majority
ruling that an employer cannot act as an impartial judge has no empirical evidence to support itself.
Statistics in the DOLE will prove the many cases won by employees before the grievance committees
manned by impartial judges of the company.
Next, the majority holds that "the requirement to hear an employee before he is dismissed should be
considered simply as an application of the Justinian precept, embodied in the Civil Code, to act with
justice, give everyone his due, and observe honesty and good faith toward one's fellowmen." It then
rules that violation of this norm will render the employer liable for damages but will not render his act of
dismissal void. Again, I cannot join the majority stance. The faultline of this ruling lies in the refusal to
recognize that employer-employee relationship is governed by special labor laws and not by the Civil
Code. The majority has disregarded the precept that relations between capital and labor are impressed
with public interest. For this reason, we have the Labor Code that specially regulates the relationship
between employer-employee including dismissals of employees. Thus, Article 279 of the Labor Code
specifically provides that "in cases of regular employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to instatement without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement." This provision of the Labor Code clearly gives the remedies that an unjustly dismissed
employee deserves. It is not the Civil Code that is the source of his remedies.
The majority also holds that lack of notice in an Article 283 situation merely makes an employee
dismissal "ineffectual" but not illegal. Again, the ruling is sought to be justified by analogy and our
attention is called to Article 1592, in relation to Article 1191 of the Civil Code. It is contended that
"under these provisions, while the power to rescind is implied in reciprocal obligations, nonetheless, in
cases involving the sale of immovable property, the vendor cannot rescind the contract even though the
vendee defaults in the payment of the price, except by bringing an action in court or giving notice of
rescission by means of a notarial demand." The analogy of the majority cannot be allowed both in law
and in logic. The legal relationship of an employer to his employee is not similar to that of a vendor and
a vendee. An employee suffers from a distinct disadvantage in his relationship with an employer, hence,
the Constitution and our laws give him extra protection. In contrast, a vendor and a vendee in a sale of
immovable property are at economic par with each other. To consider an employer-employee
relationship as similar to a sale of commodity is an archaic abomination. An employer-employee
relationship involves the common good and labor cannot be treated as a mere commodity. As well-
stated by former Governor General Leonard Wood in his inaugural message before the 6th Philippine
Legislature on October 27, 1922, "it is opportune that we strive to impress upon all the people that labor
is neither a chattel nor a commodity, but human and must be dealt with from the standpoint of human
interests."
Next, the majority holds that under the Labor Code, only the absence of a just cause for the termination
of employment can make the dismissal of an employee illegal. Quoting Article 279 which provides:
Security of Tenure. — In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
it is then rationalized that "to hold that the employer's failure to give notice before dismissing an
employee . . . results in the nullity of the dismissal would, in effect, be to amend Article 279 by adding
another ground, for considering a dismissal illegal." With due respect, the majority has misread Article
279. To start with, the article is entitled "Security of Tenure" and therefore protects an employee
against dismissal not only for an unjust cause but also for an unauthorized cause. Thus, the phrase
"unjustly dismissed" refers to employees who are dismissed without just cause and to employees who
are laid off without any authorized cause. As heretofore shown, we have interpreted dismissals without
prior notice as illegal for violating the right to due process of the employee. These rulings form part of
the law of the land and Congress was aware of them when it enacted the Labor Code and when its
implementing rules and regulations were promulgated especially the rule ordering employers to follow
due process when dismissing employees. Needless to state, it is incorrect for the majority to urge that
we are in effect amending Article 279.
In further explication of its ruling, the majority contends "what is more, it would ignore the fact that
under Art. 285, if it is the employee who fails to give a written notice to the employer that he is leaving
the service of the latter, at least one month in advance, his failure to comply with the legal requirement
does not result in making his resignation void but only in making him liable for damages." Article 285(a)
states: "An employee may terminate without just cause the employee-employer relationship by serving
a written notice on the employer at least one (1) month in advance. The employer upon whom no such
notice was served may hold the employee liable for damages."
In effect, the majority view is that its new ruling puts at par both the employer and the employee —
under Article 285, the failure of an employee to pre-notify in writing his employer that he is terminating
their relationship does not make his walk-out void; under its new ruling, the failure of an employer to
pre-notify an employee before his dismissal does not also render the dismissal void. By this new ruling,
the majority in a short stroke has rewritten the law on dismissal and tampered its pro-employee
philosophy. Undoubtedly, Article 285 favors the employee as it does not consider void his act of
terminating his employment relationship before giving the required notice. But this favor given to an
employee just like the other favors in the Labor Code and the Constitution are precisely designed to
level the playing field between the employer and the employee. It cannot be gainsaid that employees
are the special subject of solicitous laws because they have been and they continue to be exploited by
unscrupulous employers. Their exploitation has resulted in labor warfare that has broken industrial
peace and slowed down economic progress. In the exercise of their wisdom, the founding fathers of our
1935, 1973 and 1987 Constitutions as well as the members our past and present Congresses, have
decided to give more legal protection and better legal treatment to our employees in their relationship
with their employer. Expressive of this policy is President Magsaysay's call that "he who has less in life
should have more in law." I respectfully submit that the majority cannot revise our laws nor shun the
social justice thrust of our Constitution in the guise of interpretation especially when its result is to favor
employers and disfavor employees. The majority talks of high nobility but the highest nobility it to stoop
down to reach the poor.
IV. NO UNJUST RESULTS OF CONSIDERING DISMISSALS WITHOUT PRIOR NOTICE AS ILLEGAL
The majority further justifies its new ruling by holding:
The refusal to look beyond the validity of the initial action taken by the employer to terminate
employment either for an authorized or just cause can result in an injustice to the employer. For not
having been given notice and hearing before dismissing an employee, who is otherwise guilty of, say,
theft, or even of an attempt against the life of the employer, an employer will be forced to keep in his
employ such guilty employee. This is unjust.
It is true the Constitution regards labor as "a primary social economic force." But so does it declare that
it "recognizes the indispensable role of the private sector, encourages private enterprise, and provides
incentives to needed investment." The Constitution bids the State to "afford full protection to labor."
But it is equally true that "the law, in protecting the rights of the laborer, authorizes neither oppression
nor self-destruction of the employer." And it is oppression to compel the employer to continue in
employment one who is guilty or to force the employer to remain in operation when it is not
economically in his interest to do so.
With due respect, I cannot understand this total turn around of the majority on the issue of the
unjustness of lack of pre-dismissal notice to an employee. Heretofore, we have always considered this
lack of notice as unjust to the employee. Even under Article 302 of the Spanish Code of Commerce of
1882 as related by the majority, an employer who opts to dismiss an employee without any notice has
to pay a mesada equivalent to his salary for one month because of its unjustness. This policy was
modified by our legislators in favor of a more liberal treatment of labor as our country came under the
influence of the United States whose major labor laws became the matrix of our own laws like R.A. 875,
otherwise known as the Industrial Peace Act. In accord with these laws, and as aforediscussed, we laid
down the case law that dismissals without prior notice offend due process. This is the case law when the
Labor Code was enacted on May 1, 1974 and until now despite its amendments. The 1935 and the 1973
Constitutions did not change this case law. So with the 1987 Constitution which even strengthened the
rights of employees, especially their right to security of tenure. Mr. Justice Laurel in his usual inimitable
prose expressed this shift in social policy in favor of employees as follows:
It should be observed at the outset that our Constitution was adopted in the midst of surging unrest and
dissatisfaction resulting from economic and social distress which was threatening the stability of
governments the world over. Alive to the social and economic forces at work, the framers of our
Constitution boldly met the problems and difficulties which faced them and endeavored to crystallize,
with more or less fidelity, the political, social and economic propositions of their age, and this they did,
with the consciousness that the political and philosophical aphorism of their generation will, in the
language of a great jurist, "be doubted by the next and perhaps entirely discarded by the third." (Chief
Justice Winslow in Gorgnis v. Falk Co., 147 Wis., 327; 133 N. W., 209). Embodying the spirit of the
present epoch, general provisions were inserted in the Constitution which are intended to bring about
the needed social and economic equilibrium between component elements of society through the
application of what may be termed as the justitia communis advocated by Grotius and Leibnitz many
years ago to be secured through the counter-balancing of economic and social forces and employers or
landlords, and employees or tenants, respectively; and by prescribing penalties for the violation of the
orders" and later, Commonwealth Act No. 213, entitled "An Act to define and regulate legitimate labor
organizations."28
This ingrained social philosophy favoring employees has now been weakened by the new ruling of the
majority. For while this Court has always considered lack of pre-dismissal notice as unjust to employees,
the new ruling of the majority now declares it is unjust to employers as if employers are the ones
exploited by employees. In truth, there is nothing unjust to employers by requiring them to give notice
to their employees before denying them their jobs. There is nothing unjust to the duty to give notice for
the duty is a reasonable duty. If the duty is reasonable, then it is also reasonable to demand its
compliance before the right to dismiss on the part of an employer can be exercised. If it is reasonable for
an employer to comply with the duty, then it can never be unjust if non-compliance therewith is
penalized by denying said employer his right to dismiss. In fine, if the employer's right to dismiss an
employee is forfeited for his failure to comply with this simple, reasonable duty to pre-notify his
employee, he has nothing to blame but himself. If the employer is estopped from litigating the issue of
whether or not he is dismissing his employee for a just or an authorized cause, he brought the
consequence on to himself. The new ruling of the majority, however, inexplicably considers this
consequence as unjust to the employer and it merely winks at his failure to give notice.
V. A LAST WORD
The new ruling of the majority erodes the sanctity of the most important right of an employee, his
constitutional right to security of tenure. This right will never be respected by the employer if we merely
honor the right with a price tag. The policy of "dismiss now and pay later" favors monied employers and
is a mockery of the right of employees to social justice. There is no way to justify this pro-employer
stance when the 1987 Constitution is undeniably more pro-employee than our previous fundamental
laws. Section 18 of Article II (State Policies) provides that "the State affirms labor as a primary social
economic force. It shall protect the rights of workers and promote their welfare." Section 1, Article XIII
(Social Justice and Human Rights) calls for the reduction of economic inequalities. Section 3, Article XIII
(Labor) directs the State to accord full protection to labor and to guaranty security of tenure. These are
constitutional polestars and not mere works of cosmetology. Our odes to the poor will be meaningless
mouthfuls if we cannot protect the employee's right to due process against the power of the peso of
employers.
To an employee, a job is everything. Its loss involves terrible repercussions — stoppage of the schooling
of children, ejectment from leased premises, hunger to the family, a life without any safety net. Indeed,
to many employees, dismissal is their lethal injection. Mere payment of money by way of separation pay
and backwages will not secure food on the mouths of employees who do not even have the right to
choose what they will chew.
I vote to grant the petition.
VITUG, J., separate (concurring and dissenting) opinion;

The lawful severance by an employer of an employer-employee relationship would require a valid cause.
There are, under the Labor Code, two groups of valid causes, and these are the just causes under Article
2821 and the authorized causes under Article 2832 and Article 284.3
An employee whose employment is terminated for a just cause is not entitled to the payment of
separation benefits.4 Separation pay would be due, however, when the lay-off is on account of an
authorized cause. The amount of separation pay would depend on the ground for the termination of
employment. A lay-off due to the installation of a labor saving device, redundancy (Article 283) or
disease (Article 284), entitles the worker to a separation pay equivalent to "one (1) month pay or at least
one (1) month pay for every year of service, whichever is higher." When the termination of employment
is due to retrenchment to prevent losses, or to closure or cessation of operations of an establishment or
undertaking not due to serious business losses or financial reverses, the separation pay is only an
equivalent of "one (1) month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher." In the above instances, a fraction of at least six (6) months is considered as one (1)
whole year.
Due process of law, in its broad concept, is a principle in our legal system that mandates due protection
to the basic rights, inherent or accorded, of every person against harm or transgression without an
intrinsically just and valid law, as well as an opportunity to be heard before an impartial tribunal, that
can warrant such an impairment. Due process guarantees against arbitrariness and bears on both
substance and procedure. Substantive due process concerns itself with the law, its essence, and its
concomitant efficacy; procedural due process focuses on the rules that are established in order to
ensure meaningful adjudications appurtenant thereto.
In this jurisdiction, the right to due process is constitutional and statutory.
Due process in the context of a termination of employment, particularly, would be two-fold, i.e.,

substantive due process which is complied with when the action of the employer is predicated on a just
cause or an authorized cause, and procedural due process which is satisfied when the employee has the
opportunity to contest the existence of the ground invoked by the employer in terminating the contract
of employment and to be heard thereon. I find it difficult to ascribe either a want of wisdom or a lack of
legal basis to the early pronouncements of this Court that sanction the termination of employment
when a just or an authorized cause to warrant the termination is clearly extant. Regrettably, the Court in
some of those pronouncements has used, less than guarded in my view, the term "due process" when
referring to the notices prescribed in the Labor Code5 and its implementing rules6 that could,
thereby, albeit unintendedly and without meaning to, confuse the latter with the notice requirement in
adjudicatory proceedings. It is not seldom when the law puts up various conditions in the juridical
relations of parties; it would not be accurate to consider, I believe, an infraction thereof to ipso-
facto raise a problem of due process. The mere failure of notice of the dismissal or lay-off does not
foreclose the right of an employee from disputing the validity, in general, of the termination of his
employment, or the veracity, in particular, of the cause that has been invoked in order to justify that
termination. In assailing the dismissal or lay-off, an employee is entitled to be heard and to be given the
corresponding due notice of the proceedings. It would be when this right is withheld without cogent
reasons that, indeed, it can rightly be claimed that the fundamental demands of procedural due process
have been unduly discarded.
I do appreciate the fact that the prescribed notices can have consequential benefits to an employee who
is dismissed or laid off, as the case may be; its non-observance by an employer, therefore, can verily
entitle the employee to an award of damage but, to repeat, not to the extent of rendering outrightly
illegal that dismissal or lay-off predicated on valid grounds. I would consider the indemnification to the
employee not a penalty or a fine against the employer, the levy of either of which would require an
appropriate legislative enactment; rather, I take the grant of indemnity as justifiable as an award of
nominal damages in accordance with the provisions of Articles 2221-2223 of the Civil Code, viz:
Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.
Art. 2222. The court may award nominal damages in every obligation arising from any source
enumerated in article 1157, or in every case where any property right has been invaded.
Art. 2223. The adjudication of nominal damages shall preclude further contest upon the right involved
and all accessory questions, as between the parties to the suit, or their respective heirs and assigns.
There is no fixed formula for determining the precise amount of nominal damages. In fixing the amount
of nominal damages to be awarded, the circumstances of each case should thus be taken into account,
such as, to exemplify, the —
(a) length of service or employment of the dismissed employee;
(b) his salary or compensation at the time termination of employment vis-a-vis the capability of the
employer to pay;
(c) question of whether the employer has deliberately violated the requirements for termination of
employment or has attempted to comply, at least substantially, therewith; and/or
(d) reasons for the termination of employment.
I might stress the rule that the award of nominal damages is not for the purpose of indemnification for a
loss but for the recognition and vindication of a right. The degree of recovery therefor can depend, on
the one hand, on the constitution of the right, and, upon the other hand, on the extent and manner by
which that right is ignored to the prejudice of the holder of that right.
In fine7 —
A. A just cause or an authorized cause and a written notice of dismissal or lay-off, as the case may be,
are required concurrently but not really equipollent in their consequence, in terminating an employer-
employee relationship.
B. Where there is neither just cause nor authorized cause, the reinstatement of the employee and the
payment of back salaries would be proper and should be decreed. If the dismissal or lay-off is attended
by bad faith or if the employer acted in wanton or oppressive manner, moral and exemplary damages
might also be a warded. In this respect, the Civil Code provides:
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court
should find that, under the circumstances, such damages are just due. The same rule applies to breaches
of contract where the defendant acted fraudulently or in bad faith.
Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant
acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner (Civil Code).
Separation pay can substitute for reinstatement if such reinstatement is not feasible, such as in case of a
clearly strained employer-employee relationship (limited to managerial positions and contracts of
employment predicated on trust and confidence) or when the work or position formerly held by the
dismissed employee plainly has since ceased to be available.
C. Where there is just cause or an authorized cause for the dismissal or lay-off but the required written
notices therefor have not been properly observed by an employer, it would neither be light and
justifiable nor likely intended by law to order either the reinstatement of the dismissed or laid-off
employee or the payment of back salaries to him simply for the lack of such notices if, and so long as,
the employee is not deprived of an opportunity to contest that dismissal or lay-off and to accordingly be
heard thereon. In the termination of employment for an authorized cause (this cause being attributable
to the employer), the laid-off employee is statutorily entitled to separation pay, unlike a dismissal for a
just cause (a cause attributable to an employee) where no separation pay is due. In either case, if an
employer fails to comply with the requirements of notice in terminating the services of the employee,
the employer must be made to pay, as so hereinabove expressed, corresponding damages to the
employee.
WHEREFORE, I vote to hold (a) that the lay-off in the case at bar is due to redundancy and that,
accordingly, the separation pay to petitioner should be increased to one month, instead of one-half
month, pay for every year of service, and (b) that petitioner is entitled to his unpaid wages,
proportionate 13th-month pay, and an indemnity of P10,000.00 in keeping with the nature and purpose
of, as well as the rationale behind, the grant of nominal damages.
PANGANIBAN, J., separate opinion;
In the case before us, the Court is unanimous in at least two findings: (1) petitioner's dismissal was due
to an authorized cause, redundancy; and (2) petitioner was notified of his dismissal only on the very day
his employment was terminated. The contentious issue arising out of these two findings is as follows:
What is the legal effect and the corresponding sanction for the failure of the employer to give the
employee and the Department of Labor and Employment (DOLE) the 30-day notice of termination
required under Article 283 of the Labor Code?
During the last ten (10) years, the Court has answered the foregoing question by ruling that the
dismissal should be upheld although the employee should be given "indemnity or damages" ranging
from P1,000 to P10,000 depending on the circumstances.
The present ponencia of Mr. Justice Mendoza holds that "the termination of his employment should be
considered ineffectual and the [employee] should be paid back wages" from the time of his dismissal
until the Court finds that the dismissal was for a just cause.
Reexamination of the "Indemnity Only" Rule
I am grateful that the Court has decided to reexamine our ten-year doctrine on this question and has at
least, in the process, increased the monetary award that should go to the dismissed employee — from a
nominal sum in the concept "indemnity or damages" to "full back wages." Shortly after my assumption
of office on October 10, 1995, I already questioned this practice of granting "indemnity only" to
employees who were dismissed for cause but without due process.1 I formally registered reservations on
this rule in my ponencia in MGG Marine Services v. NLRC2 and gave it full discussion in my Dissents
in Better Buildings v. NLRC3 and in Del Val v. NLRC.4
Without in any way diminishing my appreciation of this reexamination and of the more financially-
generous treatment the Court has accorded labor, I write to take issue with the legal basis of my
esteemed colleague, Mr. Justice Mendoza, in arriving at his legal conclusion that "the employer's failure
to comply with the notice requirement does not constitute a denial of due process but a mere failure to
observe a procedure for the termination of employment which makes the termination of employment
merely ineffectual." In short, he believes that (1) the 30-day notice requirement finds basis only in the
Labor Code, and (2) the sanction for its violation is only "full back wages."
With due respect, I submit the following counter-arguments:
(1) The notice requirement finds basis not only in the Labor Code but, more important, in the due
process clause of the Constitution.
(2) Consequently, when the employee is dismissed without due process, the legal effect is an illegal
dismissal and the appropriate sanction is full back wages plus reinstatement, not merely full back wages.
It is jurisprudentially settled, as I will show presently, that when procedural due process is violated, the
proceedings — in this case, the dismissal — will be voided, and the parties will have to be returned to
their status quo ante; that is, the employee will have to be given back his old job and paid all benefits as
if he were never dismissed.
(3) In any event, contrary to Mr. Justice Mendoza's premise, even the Labor Code expressly grants the
dismissed employee not only the right to be notified but also the right to be heard.
In short, when an employee is dismissed without notice and hearing, the effect is an illegal dismissal and
the appropriate reliefs are reinstatement and full back wages. In ruling that the dismissal should be
upheld, the Court majority has virtually rendered nugatory the employee's right to due process as
mandated by law and the Constitution. It implicitly allows the employer to simply ignore such right and
to just pay the employee. While it increases the payment to "full back wages," it doctrinally denigrates
his right to due process to a mere statutory right to notice.
Let me explain the foregoing by starting with a short background of our jurisprudence on the right to
due process.
Without Due Process, the Proceedings Are Illegal
In the past, this Court has untiringly reiterated that there are two essential requisites for an employer's
valid termination of an employee's services: (1) a just5 or authorized6 cause and (2) due process.7 During
the last ten years, the Court has been quite firm in this doctrinal concept, but it has been less than
consistent in declaring the illegality of a dismissal when due process has not been observed. This is
particularly noticeable in the relief granted. Where there has been no just or authorized cause, the
employee is awarded reinstatement or separation pay, and back wages.8 If only the second requisite
(due process) has not been fulfilled, the employee, as earlier stated, is granted indemnity or damages
amounting to a measly P1,000 up to P10,000.9
I respectfully submit that illegal dismissal results not only from the absence of a legal cause (enumerated
in Arts. 282 to 284 of the Labor Code), but likewise from the failure to observe due process. Indeed,
many are the cases, labor or otherwise, in which acts violative of due process are unequivocally voided
or declared illegal by the Supreme Court. In Pepsi-Cola Bottling Co. v. NLRC,10 the Court categorically
ruled that the failure of management to comply with the requirements of due process made its
judgment of dismissal "void and non-existent."
This Court in People v. Bocar 11 emphatically made the following pronouncement, which has been
reiterated in several cases:12
The cardinal precept is that where there is a violation of basis constitutional rights, courts are ousted of
their jurisdiction. Thus the violation of the State's right to due process raises a serious jurisdictional issue
(Gumabon vs. Director of the Bureau of Prisons, L-30026, 37 SCRA 420 [Jan. 30, 1971]) which cannot be
glossed over or disregarded at will. Where the denial of the fundamental right of due process is
apparent, a decision rendered in disregarded of the right is void for lack of jurisdiction (Aducayen vs.
Flores, L-30370, [May 25, 1973] 51 SCRA 78; Shell Co. vs. Enage, L-30111-12, 49 SCRA 416 [Feb. 27,
1973]). Any judgment or decision rendered notwithstanding such violation may be regarded as a
"lawless thing, which can be treated as an outlaw and slain at sight, or ignored wherever it exhibits its
head" (Aducayen vs. Flores, supra).
In the earlier case Bacus v. Ople,13 this Court also nullified the then labor minister's clearance to
terminate the employment of company workers who had supposedly staged an illegal strike. The reason
for this ruling was the denial of sufficient opportunity for them to present their evidence and prove their
case. The Court explained:14
A mere finding of the illegality of a strike should not be automatically followed by a wholesale dismissal
of the strikers from their employment. What is more, the finding of the illegality of the strike by
respondent Minister of Labor and Employment is predicated on the evidence ascertained through an
irregular procedure conducted under the semblance of summary methods and speedy disposition of
labor disputes involving striking employees.
While it is true that administrative agencies exercising quasi-judicial functions are free from the rigidities
of procedure, it is equally well-settled in this jurisdiction that avoidance of such technicalities of law or
procedure in ascertaining objectively the facts in each case should not, however, cause a denial of due
process. The relative freedom of the labor arbiter from the rigidities of procedure cannot be invoked to
evade what was clearly emphasized in the landmark case of Ang Tibay v. Court of Industrial
Relations that all administrative bodies cannot ignore or disregard the fundamental and essential
requirements of due process.
In the said case, the respondent company was ordered to reinstate the dismissed workers, pending a
hearing "giving them the opportunity to be heard and present their evidence."
In Philippine National Bank v. Apalisok,15 Primitivo Virtudazo, an employee of PNB, was served a
Memorandum stating the finding against him of a prima facie case for dishonesty and violation of bank
rules and regulations. He submitted his Answer denying the charges and explaining his defenses.
Later, two personnel examiners of the bank conducted a fact-finding investigation. They stressed to him
that a formal investigation would follow, in which he could confront and examine the witnesses for the
bank, as well as present his own. What followed, however, was a Memorandum notifying him that he
had been found guilty of the charges and that he was being dismissed. After several futile attempts to
secure a copy of the Decision rendered against him, he instituted against PNB a Complaint for illegal
dismissal and prayed for reinstatement and damages.
The trial court held that Virtudazo had been deprived of his rights to be formally investigated and to
cross-examine the witnesses. This Court sustained the trial court, stating resolutely: "The proceedings
having been conducted without according to Virtudazo the "cardinal primary rights of due process"
guaranteed to every party in an administrative or quasi-judicial proceeding, said proceedings must be
pronounced null and void."16
Also in Fabella v. Court of Appeals,17 this Court declared the dismissal of the schoolteachers illegal,
because the administrative body that heard the charges against them had not afforded them their right
to procedural due process. The proceedings were declared void, and the orders for their dismissal set
aside. We unqualifiedly reinstated the schoolteachers, to whom we awarded all monetary benefits that
had accrued to them during the period of their unjustified suspension or dismissal.
In People v. San Diego,18 People v. Sola,19 People v. Dactrdao,20 People v. Calo Jr.21 and People

v. Burgos,22 this Court similarly voided the trial court's grant of bail to the accused upon a finding that
the prosecution had been deprived of procedural due process.
In People v. Sevilleno,23 the Court noted that the trial judge "hardly satisfied the requisite searching
inquiry" due the accused when he pleaded guilty to the capital offense he had been charged with. We
thus concluded that "the accused was not properly accorded his fundamental right to be informed of
the precise nature of the accusation leveled against him." Because of the nonobservance of "the
fundamental requirements of fairness and due process," the appealed Decision was annulled and set
aside, and the case was remanded for the proper arraignment and trial of the accused.
Recently, the Court vacated its earlier Decision24 in People v. Parazo25 upon realizing that the accused —
"a deaf-mute, a mental retardate, whose mental age [was] only seven (7) years and nine (9) months, and
with low IQ of 60 only" — had not been ably assisted by a sign language expert during his arraignment
and trial. Citing People v. Crisologo,26 we ruled that the accused had been deprived of "a full and fair trial
and a reasonable opportunity to defend himself." He had in effect been denied his fundamental right to
due process of law. Hence, we set aside the trial proceedings and granted the accused a re-arraignment
and a retrial.
Of late, we also set aside a Comelec Resolution disallowing the use by a candidate of a certain nickname
for the purpose of her election candidacy. The Resolution was issued pursuant to a letter-petition which
was passed upon by the Comelec without affording the candidate the opportunity to explain her side
and to counter the allegations in said letter-petition. In invalidating the said Resolution, we again
underscored the necessity of the observance of the twin requirements of notice and hearing before any
decision can be validly rendered in a case.27
Clearly deducible from our extant jurisprudence is that the denial of a person's fundamental right to due
process amounts to the illegality of the proceedings against him. Consequently, he is brought back to
his status quo ante, not merely awarded nominal damages or indemnity.
Our labor force deserves no less. Indeed, the State recognizes it as its primary social economic force,28 to
which it is constitutionally mandated to afford full protection.29 Yet, refusing to declare the illegality of
dismissals without due process, we have continued to impose upon the erring employer the simplistic
penalty of paying indemnity only. Hence, I submit that it is time for us to denounce these dismissals as
null and void and to grant our workers these proper reliefs: (1) the declaration that the termination or
dismissal is illegal and unconstitutional and (2) the reinstatement of the employee plus full back wages.
The present ruling of the Court is manifestly inconsistent with existing prudence which holds that
proceedings held without notice and hearing are null and void, since they amount to a violation of due
process, and therefore bring back the parties to the status quo ante.
Exception: When Due Process Is Impractical and Futile
I am fully aware that in a long line of cases starting with Wenphil v. NLRC,30 the Court has held: where
there is just cause for the dismissal of an employee but the employer fails to follow the requirements of
procedural due process, the former is not entitled to back wages, reinstatement (or separation pay in
case reinstatement is no longer feasible) or other benefits. Instead, the employee is granted an
indemnity (or penalty or damages) ranging from P1,00031 to as much as P10,000,32 depending on the
circumstances of the case and the gravity of the employer's omission. Since then, Wenphil has
perfunctorily been applied in most subsequent cases33 involving a violation of due process (although just
cause has been duly proven), without regard for the peculiar factual milieu of each case. Indemnity or
damages has become an easy substitute for due process.
Be it remembered, however, that the facts in Wenphil clearly showed the impracticality and the futility
of observing the procedure laid down by law and by the Constitution for terminating employment. The
employee involved therein appeared to have exhibited a violent temper and caused trouble during
office hours. In an altercation with a co-employee, he "slapped [the latter's] cap, stepped on his foot and
picked up the ice scooper and brandished it against [him]." When summoned by the assistant manager,
the employee "shouted and uttered profane words" instead of giving an explanation. He was caught
virtually in flagrante delicto in the presence of many people. Under the circumstances action was
necessary to preserve order and discipline, as well as to safeguard the customers' confidence in the
employer's business — a fastfood chain catering to the general public where courtesy is a prized virtue.
However, in most of the succeeding cases, including the present one before us in which the petitioner
was dismissed on the very day he was served notice, there were ample opportunities for the employers
to observe the requisites of due process. There were no exigencies that called for immediate response.
And yet, Wenphil was instantly invoked and due process brushed aside.
I believe that the price that the Court has set for the infringement of the fundamental right to due
process is too insignificant, too niggardly, and sometimes even too late. I believe that imposing a stiffer
sanction is the only way to emphasize to employers the extreme importance of the right to due process
in our democratic system. Such right is too sacred to be taken for granted or glossed over in a cavalier
fashion. To hold otherwise, as by simply imposing an indemnity or even "full back wages," is to allow the
rich and powerful to virtually purchase and to thereby stifle a constitutional right granted to the poor
and marginalized.
It may be asked: If the employee is guilty anyway, what difference would it make if he is fired without
due process? By the same token, it may be asked: If in the end, after due hearing, a criminal offender is
found guilty anyway, what difference would it make if he is simply penalized immediately without the
trouble and the expense of trial? The absurdity of this argument is too apparent to deserve further
discourse.34
Worker's Right to Notice Is Constitutional, Not Merely Statutory
According to the ponencia of Mr. Justice Mendoza, the "violation of the notice requirement cannot be
considered a denial of due process resulting in the nullity of the employee's dismissal or lay-off." He
argues that the due process clause of the Constitution may be used against the government only. Since
the Labor Code does not accord employees the right to a hearing, ergo, he concludes, they do not have
the right to due process.
I disagree. True, as pointed out by Mr. Justice Mendoza, traditional doctrine holds that constitutional
rights may be invoked only against the State. This is because in the past, only the State was in a position
to violate these rights, including the due process clause. However, with the advent of liberalization,
deregulation and privatization, the State tended to cede some of its powers to the "market forces."
Hence, corporate behemoths and even individuals may now be sources of abuses and threats to human
rights and liberties. I believe, therefore, that such traditional doctrine should be modified to enable the
judiciary to cope with these new paradigms and to continue protecting the people from new forms of
abuses.34 -a
Indeed the employee is entitled to due process not because of the Labor code, but because of the
Constitution. Elementary is the doctrine that constitutional provisions are deemed written into every
statute, contract or undertaking. Worth noting is that "[o]ne's employment, profession, trade or calling
is a property right within the protection of the constitutional guaranty of due process of law."35
In a long line of cases involving judicial, quasi-judicial and administrative proceedings, some of which I
summarized earlier, the Court has held that the twin requirements of notice and hearing (or, at the very
least, an opportunity to be heard) constitute the essential elements of due process. In labor
proceedings, both are the conditio sine qua non for a dismissal to be validly effected.36 The perceptive
Justice Irene Cortes has aptly stated: "One cannot go without the other, for otherwise the termination
would, in the eyes of the law, be illegal."37
Even the Labor Code Grants the Right to a Hearing
Besides, it is really inaccurate to say that the Labor Code grants "notice alone" to employees being
dismissed due to an authorized cause. Article 277 (b)38 of the said Code explicitly provides that the
termination of employment by the employer is "subject to the constitutional right of workers to security
of tenure[;] . . . 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 . . . ." Significantly, the provision requires the employer "to afford [the employee] ample
opportunity to be heard" when the termination is due to a "just and authorized cause." I submit that this
provision on "ample opportunity to be heard" applies to dismissals under Articles 282, 283 and 284 of
the Labor Code.
In addition, to say that the termination is "simply ineffectual" for failure to comply with the 30-day
written notice and, at the same time, to conclude that it has "legal effect" appears to be contradictory.
Ineffectual means "having no legal force."39 If a dismissal has no legal force or effect, the consequence
should be the reinstatement of the dismissed employee and the grant of full back wages thereto, as
provided by law — not the latter only. Limiting the consequence merely to the payment of full back
wages has no legal or statutory basis. No provision in the Labor Code or any other law authorizes such
limitation of sanction, which Mr. Justice Mendoza advocates.
The majority contends that it is not fair to reinstate the employee, because the employer should not be
forces to accommodate an unwanted worker. I believe however that it is not the Court that forces the
employer to rehire the worker. By violating the latter's constitutional right to due process, the former
brings this sanction upon itself. Is it unfair to imprison a criminal? No! By violating the law, one brings
the penal sanction upon oneself. There is nothing unfair or unusual about this inevitable chain of cause
and effect, of crime and punishment, of violation and sanction.
Due Process Begins With Each of Us
To repeat, due process begins with the employer, not with the labor tribunals. An objective reading of
the Bill of Rights clearly shows that the due process protection is not limited to government action
alone. The Constitution does not say that the right cannot be claimed against private individuals and
entities. Thus, in PNB v. Apalisok, which I cited earlier, this Court voided the proceedings conducted by
petitioner bank because of its failure to observe Apalisok's right to due process.
Truly, justice is dispensed not just by the courts and quasi-judicial bodies like public respondent here.
The administration of justice begins with each of us, in our everyday dealings with one another and, as
in this case, in the employers' affording their employees the right to be heard. If we, as a people and as
individuals, cannot or will not deign to act with justice and render unto everyone his or her due in little,
everyday things, can we honestly hope and seriously expect to do so when monumental, life-or-death
issues are at stake? Unless each one is committed to a faithful observance of day-to-day fundamental
rights, our ideal of a just society can never be approximated, not to say attained.
In the final analysis, what is involved here is not simply the amount of monetary award, whether
insignificant or substantial; whether termed indemnity, penalty or "full back wages." Neither is it merely
a matter of respect for workers' rights or adequate protection of labor. The bottom line is really the
constitutionally granted right to due process. And due process is the very essence of justice itself. Where
the rule of law is the bedrock of our free society, justice is its very lifeblood. Denial of due process is thus
no less than a denial of justice itself.
In Addition to Reinstatement and Back Wages, Damages May Be Awarded
One last point. Justice Vitug argues in his Separate Opinion that the nonobservance of the prescribed
notices "can verily entitle the employee to an award of damages but . . . not to the extent of rendering
outrightly illegal that dismissal or lay-off . . . ." I, of course, disagree with him insofar as he denies the
illegality of the dismissal, because as I already explained, a termination without due process is
unconstitutional and illegal. But I do agree that, where the employee proves the presence of facts
showing liability for damages (moral, exemplary, etc.) as provided under the Civil Code, the employee
could be entitled to such award in addition to reinstatement and back wages. For instance, where the
illegal dismissal has caused the employee "physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury" due to the
bad faith of the employer, an award for moral damages would be proper, in addition to reinstatement
and back wages.
Summary
To conclude, I believe that even if there may be a just or an authorized cause for termination but due
process is absent, the dismissal proceedings must be declared null and void. The dismissal should still be
branded as illegal. Consequently, the employee must be reinstated and given full back wages.
On the other hand, there is an exception. The employer can adequately prove that under the peculiar
circumstances of the case, there was no opportunity to comply with due process requirements; or doing
so would have been impractical or gravely adverse to the employer, as when the employee is caught in
flagrante delicto. Under any of these circumstances, the dismissal will not be illegal and no award may
properly be granted. Nevertheless, as a measure of compassion, the employee may be given a nominal
sum depending on the circumstances, pursuant to Article 2221 of the Civil Code.
Depending on the facts of each case, damages as provided under applicable articles of the Civil Code
may additionally be awarded.
WHEREFORE, I vote to GRANT the petition. Ruben Serrano should be REINSTATED and PAID FULL BACK
WAGES from date of termination until actual reinstatement, plus all benefits he would have received as
if he were never dismissed.
[G.R. No. 148241. September 27, 2002.]
HANTEX TRADING CO., INC. and/or MARIANO CHUA, Petitioners, v. COURT OF APPEALS, Special
Former Tenth Division, and BERNARDO SINGSON, Respondents.
DECISION
BELLOSILLO, J.:
This petition seeks to review the Decision of the Court of Appeals 1 affirming in toto the decision of the
National Labor Relations Commission (NLRC), which in turn sustained the Labor Arbiter’s finding that
respondent was illegally dismissed and therefore entitled to reinstatement, backwages and 13th month
pay.chanrob1es virtua1 1aw 1ibrary
Private respondent Bernardo Singson was employed by petitioner Hantex Trading Co., Inc. (HANTEX) on
8 November 1994 as sales representative. HANTEX was engaged in selling laminating machines and ID
supplies. He was paid a regular salary of P165.00/day in addition to P500.00 travelling allowance and a
3%-5% commission from his sales. Sometime in February 1996 the management of HANTEX called the
attention of Singson regarding his deteriorating sales performance. Despite thereof, Singson’s
performance showed no sign of improvement as it remained inadequate and unsatisfactory. Thus,
HANTEX, through its president, petitioner Mariano Chua, held a "one-on-one" conference with him on 5
August 1996.
The parties presented conflicting versions of what actually transpired during the conference. Singson
alleged that petitioner Mariano Chua asked for his resignation from the company, and required him to
submit a resignation letter otherwise his separation pay, 13th month pay and other monetary benefits
would not be paid. When he refused, petitioner Mariano Chua ejected him from the premises of
HANTEX and left instructions to the guards on-duty to refuse him admittance.
On the other hand, petitioners denied that they dismissed Singson and maintained that the conference
was merely intended to motivate him "to exert more effort in his job and mend his work attitude;" and
that Singson apparently resented petitioner Chua for it that he never reported back for work after the
conference.
On 8 August 1996 Singson filed a complaint with the Labor Arbiter for illegal dismissal with prayer for
reinstatement asserting that he was dismissed from his employment without prior notice and hearing. 2
On the contrary, HANTEX averred that Singson was not dismissed but abandoned his job after he was
reprimanded.
On 5 May 1998 the Labor Arbiter rendered a decision finding private respondent Singson to have been
illegally dismissed and ordering HANTEX to reinstate him to his former or substantially equivalent
position, as well as to pay him P234,848.38 as backwages and P8,992.60 as 13th month pay. 3
HANTEX appealed to the National Labor Relations Commission (NLRC), which affirmed the Labor
Arbiter’s finding of illegal dismissal but ordered the reduction of backwages, holding that the
computation thereof should start not from the date complainant was hired in 1994 as held by the Labor
Arbiter, but from the date he was illegally dismissed in 1996. The NLRC observed —
The respondents would want us to believe that on August 5, 1996, they merely "reprimanded"
complainant for his poor performance (p. 10, Appeal, p. 109, Record). However, they have not
submitted any proof thereon, unlike on November 21, 1995 when they sent him a memorandum, which
he duly received, calling attention to his work deportment . . . Just because respondent asked him to
assume duties during the hearing before the Labor Arbiter on September 30, 1996 (p. 7, Record) does
not necessarily prove that they in fact did not dismiss him in the first place. On the contrary, that offer
could be a tacit admission of respondents that they erred in dismissing him verbally and without
observance of both substantive and procedural due process . . . On the matter of complainant’s alleged
abandonment . . . suffice it to say that his mere filing of a case for illegal dismissal already negates the
theory of abandonment . . . However, we find merit in respondents’ argument regarding the award of
backwages. Indeed, it was glaring error to base the computation thereof from the date complainant was
hired in 1994. Rather, the computation should start from the date he was found to have been illegally
dismissed . . . 4
On 8 June 2000 HANTEX and/or Mariano Chua, undaunted by reverses, elevated the case to the Court of
Appeals on a petition for certiorari 5 arguing that: (a) the complaint for illegal dismissal was a mere ploy
of private respondent to get back at them; (b) there was no termination letter which is the best
evidence of the alleged illegal dismissal, consequently, the NLRC should have adjudged that private
respondent was not dismissed but had voluntarily abandoned his employment; and, (c) private
respondent’s rejection of petitioners’ offer for him to resume his employment during the preliminary
conference before the Labor Arbiter was an overt act of abandonment. The appellate court, however,
likewise ruled against petitioners —
An ordinary member of the working class will not put at stake his primary source of income just to
satisfy his egoistic feeling of revenge. The expense of a protracted legal battle against a well-equipped
employer coupled with the uncertainty of winning and the prospect of a prolonged unemployment are
factors that negate petitioner’s supposition. Furthermore, a letter of dismissal is not the only material
evidence to establish the fact of termination. For in cases of constructive dismissal, as when the
employee was compelled to resign because continued employment has become impossible,
unreasonable and unlikely, his quitting his job amounts to constructive discharge or illegal dismissal.
Likewise, we find petitioner’s argument in support of their abandonment theory as misplaced . . . that
offer could be a tacit admission of petitioners that they erred in dismissing him verbally and without
observance of both substantive and procedural due process . . .
Its motion for reconsideration having been denied by the Court of Appeals on 10 May 2001, petitioners
now hope to secure relief from this Court. Relying once more on their defense of abandonment,
petitioners insist that other than the bare allegations of private respondent that he was illegally
dismissed, the records are bereft of any evidence to prove that petitioners indeed terminated his
services; that moreover, no notice or letter of dismissal was ever issued by petitioners to private
respondent, as there was no intent to dismiss him when he was called to a conference on 5 August
1996; and, that he was not prevented from returning to work as in fact he was asked repeatedly to
return to work, but he defiantly refused to do so.
To avoid delay in the disposition of the case, it appearing from the records that the parties had already
fully ventilated and exhaustively argued their respective positions before the Labor Arbiter, the NLRC
and the Court of Appeals, and even before this Court, through their respective petition, comment and
reply, we dispensed with the usual practice of requiring the parties to submit their memoranda and
would now proceed to decide the case.
The pivotal issue in the present recourse is whether private respondent Bernardo Singson deliberately
abandoned his employment, or was illegally dismissed by the management of petitioner HANTEX.
We deny the petition. Plainly, the petition raises a fundamentally factual issue, which we are not at
liberty to review because our jurisdiction is limited to reviewing errors of law that may have been
committed by the lower court. The resolution of factual questions is the primary and often the final task
of lower courts. This Court is not a trier of facts and it is not our function to examine and evaluate all
over again the probative value of all evidence presented to the concerned tribunal which formed the
basis of its impugned decision, resolution or order. 6
We reiterate time and again the much-repeated but not so well-heeded rule that findings of fact of the
Court of Appeals, particularly where it is in absolute agreement with that of the NLRC and the Labor
Arbiter, as in this case, are accorded not only respect but even finality and are deemed binding upon this
Court so long as they are supported by substantial evidence. 7
In any event, we waded into the records of this case and found no compelling reason to disturb the
unanimous findings and conclusions of the Court of Appeals, NLRC and the Labor Arbiter. Indeed,
petitioners’ persistent refrain, ad nauseam, that private respondent Singson was not dismissed but
voluntarily abandoned his employment, fails to persuade.
Considering the hard times in which we are in, it is incongruous for respondent to simply give up his
work after receiving a mere reprimand from his employer. No employee would recklessly abandon his
job knowing fully well the acute unemployment problem and the difficulty of looking for a means of
livelihood nowadays. With a family to support, we doubt very much that respondent would so easily
sacrifice his only source of income and unduly expose his family to hunger and untold hardships.
Certainly, no man in his right mind would do such thing.
What is more telling is that on 8 June 1996, or three (3) days after his employment was terminated,
respondent immediately instituted the instant case for illegal dismissal with a prayer for reinstatement
against his employer. An employee who loses no time in protesting his layoff cannot by any reasoning be
said to have abandoned his work, for it is already a well-settled doctrine that the filing by an employee
of a complaint for illegal dismissal with a prayer for reinstatement is proof enough of his desire to return
to work, thus negating the employer’s charge of abandonment. Verily, it would be illogical for
respondent Singson to have left his job and thereafter file the complaint against his employer. As we
held in Villar v. National Labor Relations Commission 8 —
. . . It is clear from the records that sometime in August 1994, immediately after petitioners supposedly
‘refused to work’ having lost earlier in the certification election, several complaints for illegal dismissal
against HI-TECH were filed by petitioners. These are sufficient proofs that they were never guilty of
leaving their jobs. The concept of abandonment of work is inconsistent with the immediate filing of
complaints for illegal dismissal. An employee who took steps to protest his layoff could not by any logic
be said to have abandoned his work.
Abandonment is a matter of intention and cannot lightly be presumed from certain equivocal acts. For
abandonment to exist, it is essential (a) that the employee must have failed to report for work or must
have been absent without valid or justifiable reason; and, (b) that there must have been a clear
intention to sever the employer-employee relationship manifested by some overt acts — the second
element is the more determinative factor. Mere absence of the employee is not sufficient. The burden
of proof is on the employer to show a clear and deliberate intent on the part of the employee to
discontinue employment without any intention of returning.
Petitioners dismally failed to discharge their burden. Their evidence, consisting entirely of cash vouchers
of respondent SINGSON and his co-salesman Raul Hista, for the months of May, June and July 1996, 9 is
grossly anemic — if not totally irrelevant — to establish that respondent Singson indeed deliberately
and unjustifiably abandoned his job. At best, these cash vouchers merely show respondent’s lackluster
performance during those months, and that he paled in comparison with his co-salesman Raul Hista in
terms of sales output. As astutely observed by the Court of Appeals —
. . . Neither can we see any evidentiary relevance of the vouchers of Raul Hista in comparison with that
of private Respondent. They do not in any way vouch petitioners’ claim of abandonment nor do they
refute the fact that private respondent was illegally dismissed because of petitioners’ failure to observe
the substantive as well as the procedural requirements of the law. If at all, they merely show the
unsatisfactory performance of private respondent which does not in any way authorizes the abrupt
dismissal of private respondent sans observance of due process.
At any rate, petitioners undoubtedly could have presented better evidence to buttress their claim of
abandonment. After all, being the employers, they are in possession of documents relevant to this case.
For instance, they could have at least presented in evidence copies of respondent’s daily time records,
which are on-file in its office, to prove the dates respondent was on AWOL (absence without leave); or
any letter wherein they required respondent to report for work and explain his unauthorized absences.
But, as it is, petitioners’ defense of abandonment cannot be given credence for lack of evidentiary
support.
Petitioners maintain that during the initial hearing before Labor Arbiter Bugarin on 30 September 1996
they made an offer to reinstate private respondent to his former position, but he "defiantly" refused the
offer despite the fact that in his complaint he was asking for reinstatement. Again, petitioners extended
the offer in their position paper filed with the Labor Arbiter but was likewise rejected by Respondent.
They assert that these circumstances are clear indications of respondent’s lack of further interest to
work and effectively negate respondent’s claim of illegal dismissal.
We hold otherwise. As we see it, respondent’s refusal to be reinstated is more of a symptom of strained
relations between the parties, rather than an indicium of abandonment of work as obstinately insisted
by petitioners. While respondent desires to have his job back, it must have later dawned on him that the
filing of the complaint for illegal dismissal and the bitter incidents that followed have sundered the
erstwhile harmonious relationship between the parties. Respondent must have surely realized that even
if reinstated, he will find it uncomfortable to continue working under the hostile eyes of the employer
who had been forced to reinstate him. He had every reason to fear that if he accepted petitioners’ offer,
their watchful eyes would thereafter be focused on him, to detect every small shortcoming of his as a
ground for vindictive disciplinary action. 10 In such instance, reinstatement would no longer be
beneficial to him.
Neither does the fact that petitioners made offers to reinstate respondent legally disproves illegal
dismissal. We agree with the observation of the Court of Appeals that the offer may very well be "a tacit
admission of petitioners that they erred in dismissing him verbally and without observance of both
substantive and procedural due process." Curiously, petitioners’ offer of reinstatement was made only
after more than one (1) month from the date of the filing of the illegal dismissal case. Their belated
gesture of goodwill is highly suspect. If petitioners were indeed sincere in inviting respondent back to
work in the company, they could have made the offer much sooner. In any case, their intentions in
making the offer are immaterial, for the offer to re-employ respondent could not have the effect of
validating an otherwise arbitrary dismissal.
In sum, we are convinced that respondent did not quit his job as insisted by petitioners, but was
unceremoniously dismissed therefrom without observing the twin requirements of due process, i.e., due
notice and hearing. While we recognize the right of the employer to terminate the services of an
employee for a just or authorized cause, nevertheless, the dismissal of employees must be made within
the parameters of law and pursuant to the tenets of equity and fair play. Truly, the employer’s power to
discipline its workers may not be exercised in an arbitrary manner as to erode the constitutional
guarantee of security of tenure.
Whatever doubts, uncertainties or ambiguities remain in this case should ultimately be resolved in favor
of the worker in line with the social justice policy of our labor laws and the Constitution. The consistent
rule is that the employer must affirmatively show rationally adequate evidence that the dismissal was
for a justifiable cause, failing in which makes the termination illegal.
Upon the foregoing considerations, the normal consequences of respondent’s illegal dismissal are
reinstatement without loss of seniority rights, and payment of back wages computed from the time his
compensation was withheld from him, that is, 5 August 1996, up to the date of his actual reinstatement.
These remedies give life to the workers’ constitutional right to security of tenure. However, under the
circumstances, reinstatement would be impractical and would hardly promote the best interest of the
parties. As heretofore discussed, the resentment and enmity between HANTEX and Singson which
culminated in and was compounded by the illegal dismissal suit necessarily strained the relationship
between them or even provoked antipathy and antagonism. Where reinstatement is no longer viable as
an option, separation pay equivalent to one (1) month salary for every year of service should be
awarded as an alternative. This has been our consistent ruling in the award of separation pay to illegally
dismissed employees in lieu of reinstatement. 11
WHEREFORE, the petition is DENIED and the assailed decision dated 23 October 2000 of the Court of
Appeals is AFFIRMED. Petitioners Hantex Trading Co., Inc., and Mariano Chua are directed jointly and
severally to pay respondent Bernardo Singson separation pay in lieu of reinstatement in the amount
equivalent to one (1) month pay for every year of service, backwages computed from 5 August 2002, the
time his compensation was withheld from him, up to the finality of this decision, plus the accrued 13th
month pay.chanrob1es virtua1 1aw 1ibrary
SO ORDERED.

Labor2 Assignment 3

Uploaded by

Labor2 Assignment 3

Uploaded by

G.R. No.

123769 December 22, 1999

Complainant Date Hired Position Latest Salary

Rene Permaran 04-14-'89 Machinist P18.75/hr.

Ernesto Guerra 11-00-'87 Elec. Engr. P18.25/hr.

Nerio Valenzuela 05-09 -'89 Welder/ 13.75/hr.

Emiliano Telacas 10-18-'89 Aluminum 12.50/hr.

Rodrigo Prado 06-00-'87 Aluminum 89.00/day/

Installer/ 10 hrs work

Mario Plaquia 10-03-'89 Laborer/Trainer 100.00/day

Gildardo Migabon 09-10-'87 Aluminum 15.00/hr.

Ernesto Mateo 03-09-'87 Laborer 13.75/hr./

Rommel Naadat 05-16-'87 Aluminum 13.75/hr.

Jimmy Cañete 07-20-'84 Laborer then 16.25/hr.

Artemio Agosto 05-11-'88 Helper-Welder 125.00/day

then Warehouse- 10 hrs/day

man, 17 July '88

Salvador Urbanozo 01-18-'90 Laborer then 76.00/day

Cesar Castillo 10-19-'89 Laborer- 125.00/day

Ponciano del 01-19-'89 Laborer then 12.50/hr.

No, the NLRC did not commit grave abuse of discretion.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,

G.R. No. L-77629 May 9, 1990

KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVISM AND NATIONALISM-ORGANIZED

KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVITISM AND NATIONALISM-OLALIA

1. KILUSAN-OLALIA = 246 votes

2. (UKCEU-PTGWO) = 266 votes

4. SPOILED BALLOTS = 4 votes

5. CHALLENGED BALLOTS = 64 votes

TOTAL 581 votes

4. The reinstatement of 28 dismissed KILUSAN-OLALIA members was ordered;

6. The company has reinstated Roque Jimenez as of January 11, 1987.

The Labor Code defines who are regular employees, as follows:

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,

WHEREFORE, judgment is hereby rendered in G.R. No. 77629:

The petition filed in G.R. No. 78791 is hereby DISMISSED.

L.B. Camins for petitioner.

Lino M. Patajo and Jose J. Torrefranca for private respondents.

Petitioner alleged in her position paper the following facts:

1. P26,575.00 backwages from August 9, 1986 up to date hereof.,

2. P14,650.00 as separation pay;

3. P18,000.00 as unpaid wages from August, 1983 up to August 8, 1986; and

4. P10,000.00 moral damages.

No, there was no employer employee relationship.

A painstaking review of the records compels Us to dismiss the petition.

PHILIPPINE JAI-ALAI & AMUSEMENT CORPORATION, petitioner,

Abad, Bonifacio, Legayada & Associates for petitioner.

The Solicitor General for public respondents.

Dante P. Mercado for private respondents.

The pertinent proposition of the Labor Code, as amended, reads:

The comment of the Solicitor General on this point is hereunder quoted.

HOLIDAY INN MANILA and/or HUBERT LINER and BABY DISQUITADO, petitioners,

Florante M. Yambot for private respondent.

The petition has no merit.

1. NLRC did not err in entertaining Honasan’s appeal.

2. Yes, Honasan was already a regular employee.

WHEREFORE, the petition is DISMISSED, with costs against petitioners. It is so ordered.

RJL MARTINEZ FISHING CORPORATION and/or PENINSULA FISHING CORPORATION, petitioners,

Martinez, Bermudez & Associates for petitioners.

The Solicitor General for respondent NLRC.

Petitioners submit the following issues for resolution:

III. Whether or not there is an employer-employee relationship between the parties;

Costs against petitioners.

Amorito V. Canete for petitioner.

Pablo R. Cruz for private respondent.

Labor Arbiter Hernandez found as follows:

W/N the petitioner can be considered as a regular employee.

TUCOR INDUSTRIES, INC. and PATRICK BOLL, petitioners,

Abad, Leano & Associates for petitioners.

1. To pay the backwages of the complainants in the total amount of P205,457.56;

The petition is devoid of merit.

Article 280 of the Labor Code, as amended, provides as follows:

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,

MEHITABEL FURNITURE COMPANY, INC. AND JOSEFINA A. BOOTH, petitioners,

E.B. Ramos & Associates for petitioner.

Pedro A. Rosito for private respondents.