Cases on SEASONAL WORKERS

ContentsCOCOMANGAS HOTEL v. VISCA (2008)...........................................................................................2

THE PENINSULA MANILA v. ALIPIO (2008)....................................................................................15

URSUMCO v. CABALLEDA (2008)..................................................................................................22

HACIENDA FATIMA v. NATIONAL FEDERATION (2003).................................................................34

HACIENDA BINO v. CUENCA (2005)..............................................................................................41

CASERES v. URSUMCO (2007).......................................................................................................49

MANTLE TRADING v. NLRC (2009)................................................................................................55

PHILIPPINE FRUIT v. NLRC (1999)..................................................................................................63

PHILIPPINE TOBACCO v. NLRC (1998)...........................................................................................72

CINDERELLA MARKETING v. NLRC (1998).....................................................................................87

ABASOLO v. NLRC (2000)..............................................................................................................93

BENARES v. PANCHO (2005).......................................................................................................102

PRICE v. INNODATA (2008).........................................................................................................109

GAPAYAO v. FULO (2013)...........................................................................................................125

GLORY PHILIPPINES, INC. v. VERGARA (2007).............................................................................136

GOYA, INC. v. GOYA, INC. EU-FFW (2013....................................................................................143

IMBUIDO v. NLRC (2000)............................................................................................................153

PIER 8 ARRASTRE v. BOCLOT (2007)...........................................................................................161

MINDANAO TERMINAL v. NAGKAHIUSANG MAMUMUO (2012)................................................172

PULP AND PAPER, INC. v. NLRC (1997).......................................................................................185

SAN MIGUEL v. NLRC (1998).......................................................................................................194

MANILA HOTEL v. CIR (1963)......................................................................................................200

COCOMANGAS HOTEL v. VISCA (2008)

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 167045             August 29, 2008

COCOMANGAS HOTEL BEACH RESORT and/or SUSAN MUNRO, petitioners, vs.FEDERICO F. VISCA, JOHNNY G. BAREDO, RONALD Q. TIBUS, RICHARD G. VISCA and RAFFIE G. VISCA, respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision1 dated July 30, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 78620 which reversed and set aside the Resolution dated February 27, 2003 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000714-2000; and the CA Resolution2 dated February 2, 2005 which denied petitioners' Motion for Reconsideration.

The present controversy stemmed from five individual complaints3 for illegal dismissal filed on June 15, 1999 by Federico F. Visca (Visca), Johnny G. Barredo, Ronald Q. Tibus, Richard G. Visca and Raffie G. Visca (respondents) against Cocomangas Hotel Beach Resort and/or its owner-manager, Susan Munro (petitioners) before Sub-Regional Arbitration Branch No. VI of the National Labor Relations Commission (NLRC) in Kalibo, Aklan.

In their consolidated Position Paper,4 respondents alleged that they were regular employees of petitioners, with designations and dates of employment as follows:

Name Designation Date Employed

Federico F. Visca Foreman October 1, 1987

Johnny G. Barredo Carpenter April 23, 1993

Ronald Q. Tibus Mason November 9, 1996

Richard G. Visca Carpenter April 1988

Raffie G. Visca Mason/Carpenter March 27, 1993

tasked with the maintenance and repair of the resort facilities; on May 8, 1999, Maria Nida Iñigo-Tañala, the Front Desk Officer/Sales Manager, informed them not to report for work since the ongoing constructions and repairs would be temporarily suspended because they caused irritation and annoyance to the resort's guests; as instructed, they did not report for work the succeeding days; John Munro, husband of petitioner Susan Munro, subsequently visited respondent foreman Visca and informed him that the work suspension was due to budgetary constraints; when respondent Visca later discovered that four new workers were hired to do respondents' tasks, he confronted petitioner Munro who explained that respondents' resumption of work was not possible due to budgetary constraints; when not less than ten workers were subsequently hired by petitioners to do repairs in two cottages of the resort and two workers were retained after the completion without respondents being allowed to resume work, they filed their individual complaints for illegal dismissal. In addition to reinstatement with payment of full backwages, respondents prayed for payment of premium pay for rest day, service incentive leave pay, 13thmonth pay, and cost-of-living allowance, plus moral and exemplary damages and attorney's fees.

In their Position Paper,5 petitioners denied any employer-employee relationship with respondents and countered that respondent Visca was an independent contractor who was called upon from time to time when some repairs in the resort facilities were needed and the other respondents were selected and hired by him.

On June 30, 2000, the Labor Arbiter (LA) rendered a Decision6 dismissing the complaint, holding that respondent Visca was an independent contractor and the other respondents were hired by him to help him with his contracted works at the resort; that there was no illegal dismissal but completion of projects; that respondents were project workers, not regular employees.

On August 9, 2000, respondents filed a Memorandum of Appeal7 with the NLRC. No comment thereon was filed by the petitioners.

On August 29, 2002, the NLRC rendered a Decision,8 setting aside the Decision of the LA and ordering the payment to respondents of backwages computed from May 8, 1999 to July 31, 2002, 13th month pay and service incentive leave pay for three years, in addition to 10% attorney's fees. The dispositive portion of the NLRC Decision reads:

WHEREFORE, the decision dated June 30, 2000 of the Labor Arbiter is VACATED and SET ASIDE and a new decision rendered declaring the Illegal Dismissal of the complainant (sic) and ordering respondent Susan Munro to pay the complainants the following:

1. Federico F. Visca P 288,816.53

2. Johnny G. Barredo P 211,058.47

3. Ronald Q. Tibus P 175,774.00

4. Richard C. Visca P 200,977.85

5. Raffie C. Visca P   211,058.47

P1,087,685.32

6. Attorney's fees (10%) P 108,768.53

Total Award P1,196,453.859

Petitioners failed to convince the NLRC that respondent Visca was not an independent contractor and the other respondents were selected and hired by him. The NLRC held that respondents were regular employees of petitioners since all the factors determinative of employer-employee relationship were present and the work done by respondents was clearly related to petitioners' resort business. It took into account the following: (a) respondent Visca was reported by petitioners as an employee in the Quarterly Social Security System (SSS) report; (b) all of the respondents were certified to by petitioner Munro as workers and even commended for their satisfactory performance; (c) respondents were paid their holiday and overtime pay; and (d) respondents had been continuously in petitioners' employ from three to twelve years and were all paid by daily wage given weekly.

On November 18, 2002, petitioners filed a Motion for Reconsideration, arguing that respondents were project employees.10 Petitioners also filed a Supplemental to their Motion for Reconsideration.11 No opposition or answer to petitioners' motion for reconsideration and supplement was filed by respondents despite due notice.12

On February 27, 2003, the NLRC made a complete turnabout from its original decision and issued a Resolution13 dismissing the complaint, holding that respondents were not regular employees but project employees, hired for a short period of time to do some repair jobs in petitioners' resort business. Nonetheless, it ordered payment of P10,000.00 to each complainant as financial assistance.

Respondents then filed a Petition for Certiorari14 with the CA raising three issues for resolution: (a) whether or not the respondents were project employees of petitioners; (b) whether or not the respondents'

dismissal from work was based on valid grounds; (c) whether or not the NLRC had sufficient basis to overturn its own decision despite its overwhelming findings that respondents were illegally dismissed.

On July 30, 2004, the CA rendered its assailed Decision,15 the dispositve portion of which reads:

WHEREFORE, in view of the foregoing, judgment is hereby rendered by us REVERSING and SETTING ASIDE the NLRC Resolution dated February 28, 2003, REINSTATING the NLRC Decision dated August 29, 2000 [sic], and ORDERING the private respondents to pay damages in the amount of P50,000.00. The instant case is hereby REMANDED to the 4thDivision NLRC, Cebu City for the purpose of UPDATING the award promulgated in its Decision dated August 29, 2000 [sic].

SO ORDERED.16

The CA held respondents were regular employees, not project workers, since in the years that petitioners repeatedly hired respondents' services, the former failed to set, even once, specific periods when the employment relationship would be terminated; that the repeated hiring of respondents established that the services rendered by them were necessary and desirable to petitioners' resort business; at the least, respondents were regular seasonal employees, hired depending on the tourist season and when the need arose in maintaining petitioners' resort for the benefit of guests.

In addition to the amounts granted by the NLRC in its August 29, 2002 Decision, the CA awarded respondents P50,000.00 as damages, since their termination was attended by bad faith, in that petitioners not only gave respondents the run-around but also blatantly hired others to take respondents' place despite their claim that the so-called temporary stoppage of work was due to budgetary constraints.

On August 18, 2004, petitioners filed a Motion for Reconsideration,17 but it was denied by the CA in a Resolution18 dated February 2, 2005.

Petitioners then filed the present petition19 on the following grounds:

I

THE HONORABLE COURT OF APPEALS ERRED IN GIVING DUE COURSE TO THE SPECIAL CIVIL ACTION UNDER RULE 65 NOTWITHSTANDING THE FACT THAT RESPONDENTS HAVE FAILED TO PROVE THE GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION THAT WOULD ALLOW THE NULLIFICATION

OF THE ASSAILED RESOLUTION OF THE NATIONAL LABOR RELATIONS COMMISSION.

II

THE HONORABLE COURT OF APPEALS ERRED IN REVERSING AND SETTING ASIDE THE RESOLUTION DATED FEBRUARY 27, 2003 AND REINSTATING THE DECISION DATED AUGUST 29, 2002 RENDERED BY THE NATIONAL LABOR RELATIONS COMMISSION.20

Petitioners argue that the CA erred in giving due course to respondents' petition, since respondents failed to recite specifically how the NLRC abused its discretion, an allegation essentially required in a petition for certiorari under Rule 45 of the Rules of Court; the three issues raised by respondents in their petition before the CA required appreciation of the evidence presented below and are therefore errors of judgment, not of jurisdiction; that the factual findings of the LA and the NLRC on the lack of employer-employee relationship between petitioners and respondents should be accorded not only respect but finality.

On the other hand, respondents contend that the issues raised by the petitioners call for reevaluation of the evidence presented by the parties, which is not proper in petitions for review under Rule 45 of the Rules of Court; in any case, they argue that they have amply established that they are regular employees of petitioners, since their jobs as carpenters, which include the repairs of furniture, motor boats, cottages and windbreakers, are not at all foreign to the business of maintaining a beach resort.

The petition is bereft of merit.

The extent of judicial review by certiorari of decisions or resolutions of the NLRC, as exercised previously by this Court and now by the CA, is described in Zarate, Jr. v. Olegario,21 thus:

The rule is settled that the original and exclusive jurisdiction of this Court to review a decision of respondent NLRC (or Executive Labor Arbiter as in this case) in a petition for certiorari under Rule 65 does not normally include an inquiry into the correctness of its evaluation of the evidence. Errors of judgment, as distinguished from errors of jurisdiction, are not within the province of a special civil action for certiorari, which is merely confined to issues of jurisdiction or grave abuse of discretion. It is thus incumbent upon petitioner to satisfactorily establish that respondent Commission or executive labor arbiter acted capriciously and whimsically in total disregard of evidence material to or even decisive of the controversy, in order that the extraordinary

writ of certiorari will lie. By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, and it must be shown that the discretion was exercised arbitrarily or despotically. For certiorari to lie, there must be capricious, arbitrary and whimsical exercise of power, the very antithesis of the judicial prerogative in accordance with centuries of both civil law and common law traditions.22 (Emphasis supplied)

The CA, therefore, can take cognizance of a petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, committed grave abuse of discretion by capriciously, whimsically, or arbitrarily disregarding evidence which is material to or decisive of the controversy. The CA cannot make this determination without looking into the evidence presented by the parties. The appellate court needs to evaluate the materiality or significance of the evidence, which is alleged to have been capriciously, whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence on record.23

In Garcia v. National Labor Relations Commission,24 the Court elucidated on when certiorari can be properly resorted to, thus:

[I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual findings complained of are not supported by the evidence on record. Earlier, in Gutib v. Court of Appeals, we emphasized thus:

[I]t has been said that a wide breadth of discretion is granted a court of justice incertiorari proceedings. The cases in which certiorari will issue cannot be defined, because to do so would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the court that authority is not wanting to show that certiorari is more discretionary than either prohibition or mandamus. In the exercise of our superintending control over inferior courts, we are to be guided by all the circumstances of each particular case "as the ends of justice may require." So it is that the writ will be granted where necessary to prevent a substantial wrong or to do substantial justice.

And in another case of recent vintage, we further held:

In the review of an NLRC decision through a special civil action for certiorari, resolution is confined only to issues of jurisdiction and grave abuse of discretion on the part of the labor tribunal. Hence, the Court refrains from reviewing factual assessments of lower courts and agencies

exercising adjudicative functions, such as the NLRC.Occasionally, however, the Court is constrained to delve into factual matters where, as in the instant case, the findings of the NLRC contradict those of the Labor Arbiter.

In this instance, the Court in the exercise of its equity jurisdiction may look into the records of the case and re-examine the questioned findings. As a corollary, this Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary to arrive at a just decision of the case. The same principles are now necessarily adhered to and are applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated through a petition for certiorari; thus, we see no error on its part when it made anew a factual determination of the matters and on that basis reversed the ruling of the NLRC.25(Emphasis supplied)

Thus, pursuant to Garcia, the appellate court can grant a petition for certiorari when the factual findings complained of are not supported by the evidence on record; when it is necessary to prevent a substantial wrong or to do substantial justice; when the findings of the NLRC contradict those of the LA; and when necessary to arrive at a just decision of the case.26

In the present case, respondents alleged in its petition with the CA that the NLRC’s conclusions had no basis in fact and in law, in that "it totally disregarded the evidence of the [respondents] and gave credence to the [petitioners'] asseverations which were in themselves insufficient to overturn duly established facts and conclusions."27 Consequently, the CA was correct in giving due course to the Petition for Certiorari, since respondents drew attention to the absence of substantial evidence to support the NLRC's complete turnabout from its original Decision dated August 29, 2002 finding that respondents were regular employees, to its subsequent Resolution dated February 27, 2003 classifying respondents as project employees.

The next issue before the Court is whether the CA committed an error in reversing the NLRC Resolution dated February 27, 2003. The resolution of this issue principally hinges on the determination of the question whether respondents are regular or project employees.

Generally, the existence of an employer-employee relationship is a factual matter that will not be delved into by this Court, since only questions of law may be raised in petitions for review.28However, the

Court is constrained to resolve the issue of whether respondents are regular or permanent employees due to the conflicting findings of fact of the LA, the NLRC and the CA, thus, necessitating a review of the evidence on record.29

The petitioners were ambivalent in categorizing respondents. In their Position Paper30 filed before the LA, petitioners classified respondent Visca as an independent contractor and the other respondents as his employees; while in their Motion for Reconsideration31 before the NLRC, petitioners treated respondents as project employees.

Further, petitioners' position in their Motion for Reconsideration before the NLRC runs contrary to their earlier submission in their Position Paper before the LA. While initially advancing the absence of an employer-employee relationship, petitioners on appeal, sang a different tune, so to speak, essentially invoking the termination of the period of their employer-employee relationship.

The NLRC should not have considered the new theory offered by the petitioners in their Motion for Reconsideration. As the object of the pleadings is to draw the lines of battle, so to speak, between the litigants and to indicate fairly the nature of the claims or defenses of both parties, a party cannot subsequently take a position contrary to, or inconsistent, with his pleadings.32 It is a matter of law that when a party adopts a particular theory and the case is tried and decided upon that theory in the court below, he will not be permitted to change his theory on appeal. The case will be reviewed and decided on that theory and not approached and resolved from a different point of view. To permit a party to change his theory on appeal will be unfair to the adverse party.33

At any rate, after a careful examination of the records, the Court finds that the CA did not err in finding that respondents were regular employees, not project employees. A project employee is 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 season."34 Before an employee hired on a per-project basis can be dismissed, a report must be made to the nearest employment office, of the termination of the services of the workers every time completes a project, pursuant to Policy Instruction No. 20.35

In the present case, respondents cannot be classified as project employees, since they worked continuously for petitioners from three to twelve years without any mention of a "project" to which they were specifically assigned. While they had designations as "foreman,"

"carpenter" and "mason," they performed work other than carpentry or masonry. They were tasked with the maintenance and repair of the furniture, motor boats, cottages, and windbreakers and other resort facilities. There is likewise no evidence of the project employment contracts covering respondents' alleged periods of employment. More importantly, there is no evidence that petitioners reported the termination of respondents' supposed project employment to the DOLE as project employees. Department Order No. 19, as well as the old Policy Instructions No. 20, requires employers to submit a report of an employee’s termination to the nearest public employment office every time his employment is terminated due to a completion of a project. Petitioners' failure to file termination reports is an indication that the respondents were not project employees but regular employees.36

This Court has held that an employment ceases to be coterminous with specific projects when the employee is continuously rehired due to the demands of employer’s business and re-engaged for many more projects without interruption.37

The Court is not persuaded by petitioners' submission that respondents' services are not necessary or desirable to the usual trade or business of the resort. The repeated and continuing need for their services is sufficient evidence of the necessity, if not indispensability, of their services to petitioners' resort business.38

In Maraguinot, Jr. v. National Labor Relations Commission,39 the Court ruled that "once a project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and jurisprudence."40

That respondents were regular employees is further bolstered by the following evidence: (a) the SSS Quarterly Summary of Contribution Payments41 listing respondents as employees of petitioners; (b) the Service Record Certificates stating that respondents were employees of petitioners for periods ranging from three to twelve years and all have given "very satisfactory performance";42 (c) petty cash vouchers43 showing payment of respondents' salaries and holiday and overtime pays.

Thus, substantial evidence supported the CA finding that respondents were regular employees. Being regular employees, they were entitled to security of tenure, and their services may not be terminated except for causes provided by law.

Article 27944 of the Labor Code, as amended, provides that an illegally dismissed employee shall be entitled to reinstatement, 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 Court notes that the NLRC, in its earlier Decision dated August 29, 2002 which was affirmed by the CA, computed the award for backwages from May 8, 1999 to July 31, 2002 only. It is evident that respondents’ backwages should not be limited to said period. The backwages due respondents must be computed from the time they were unjustly dismissed until actual reinstatement to their former positions. Thus, until petitioners implement the reinstatement aspect, its obligation to respondents, insofar as accrued backwages and other benefits are concerned, continues to accumulate.

The fact that the CA failed to consider this when it affirmed the August 29, 2002 decision of the NLRC or that respondents themselves did not appeal the CA Decision on this matter, does not bar this Court from ordering its modification. While as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, this Court is imbued with sufficient authority and discretion to review matters, not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice.45

Besides, substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules.46 The computation of the award for backwages from the time compensation was withheld up to the time of actual reinstatement is a mere legal consequence of the finding that respondents were illegally dismissed by petitioners.

WHEREFORE, the petition is DENIED. The assailed Decision dated July 30, 2004 and Resolution dated February 2, 2005 of the Court of Appeals in CA-G.R. SP No. 78620 are AFFIRMED withMODIFICATION that the award for backwages should be computed from the time compensation was withheld up to the time of actual reinstatement.

Double costs against petitioners.

SO ORDERED.

Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, Reyes, JJ., concur.

Footnotes

1 Penned by Associate Justice Isaias P. Dicdican and concurred in by Associate Justices Elvi John S. Asuncion and Ramon Bato, Jr., CA rollo, p. 133.

2 Penned by Associate Justice Isaias P. Dicdican and concurred in by Associate Justices Arsenio J. Magpale and Ramon Bato, Jr., CA rollo, p. 166.

3 Records, pp. 1-10.

4 Records, p. 48.

5 Records, p. 45.

6 Id. at 94.

7 Id. at 100.

8 Id. at 119.

9 Records, p. 126.

10 Id. at 127.

11 Id. at 139.

12 Id.

13 Id. at 157.

14 Records, p. 2.

15 Supra note 1.

16 CA rollo, p. 138.

17 CA rollo, p. 149.

18 Supra note 2.

19 Rollo, p. 12.

20 Id. at 18-19.

21 331 Phil. 278 (1996).

22 Id. at 287-288.

23 Marival Trading, Inc. v. National Labor Relations Commission ,  G.R. No. 169600, June 26, 2007, 525 SCRA 708, 722; DOLE Philippines, Inc. v. Esteva, G.R. No. 161115, November 30, 2006, 509 SCRA 332, 363.

24 G.R. No. 147427, February 7, 2005, 450 SCRA 535.

25 Id. at 548-549.

26 Marival Trading, Inc. v. National Labor Relations Commission, supra note 23.

27 CA rollo, p. 14.

28 Pacquing v. Coca-Cola Philippines, Inc. ,  G.R. No. 157966, January 31, 2008, 543 SCRA 344; Sigaya v. Mayuga , G.R. No. 143254, August 18, 2005, 467 SCRA 341, 352; Centeno v. Spouses Viray, 440 Phil. 881, 887 (2002); Villarico v. Court of Appeals, 424 Phil. 26, 32 (2002).

29 Pacquing v. Coca-Cola Philippines, Inc., supra note 28; Heirs of Dicman v. Cariño ,  G.R. No. 146459, June 8, 2006, 490 SCRA 240, 261; Bank of the Philippine Islands v. Sarmiento , G.R. No. 146021, March 10, 2006, 484 SCRA 261, 267-268; Almendrala v. Ngo ,  G.R. No. 142408, September 20, 2005, 471 SCRA 311, 322.

30 Records, p. 45.

31 Id. at 127.

32 Manila Electric Company v. Benamira, G.R. No. 145271, July 14, 2005, 463 SCRA 331;Philippine Ports Authority v. City of Iloilo ,  G.R. No. 109791, July 14, 2003, 406 SCRA 88, 95.

33 Toledo v. People, G.R. No. 158057, September 24, 2004, 439 SCRA 94, 102-103; Chua v. Court of Appeals, 449 Phil. 25, 41 (2003).

34 Labor Code, Art. 280.

35 Liganza v. RBL Shipyard Corporation, G.R. No. 159862, October 17, 2006, 504 SCRA 678, 684; Brahm Industries, Inc. v. National Labor Relations Commission, 345 Phil. 1077, 1083 (1997).

36 Philippine Long Distance Telephone Company, Inc. (PLDT) v. Ylagan, G.R. No. 155645, November 24, 2006, 508 SCRA 31, 36; Grandspan Development Corporation v. Bernardo,G.R. No. 141464, September 21, 2005, 470 SCRA 461, 470; Filipinas Pre-Fabricated Building Systems (Filsystems), Inc. v. Puente, G.R. No. 153832, March 18, 2005, 453 SCRA 820, 827-828.

37 Liganza v. RBL Shipyard Corporation, supra note 35; Tomas Lao Construction v. National Labor Relations Commission, 344 Phil. 268, 279 (1997).

38 Universal Robina Corporation v. Catapang ,  G.R. No. 164736, October 14, 2005, 473 SCRA 189, 204; Magsalin v. National Organization of Working Men, 451 Phil. 254, 261 (2003).

39 348 Phil. 580 (1998).

40 Id. at 600-601.

41 Exhibit "A", Records, p. 68.

42 Id. at 59-63.

43 Exhibits "B", "B-1" to "B-6", "G", "G-1" to "G-3", "H", "H-1"to "H-6", "I", "I-1" to "I-6", "J", "J-1" to "J-5", Id. at 68.

44 Labor Code, 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. (As amended by Sec. 34, Republic Act No. 6715).

45 Asian Terminals, Inc. v. National Labor Relations Commission, G.R. No. 158458, December 19, 2007, 541 SCRA 105, 115; Aurora Land Projects Corp. v. National Labor Relations Commission, 334 Phil. 44, 59 (1997).

46 Asian Terminals, Inc. v. National Labor Relations Commission, supra note 45, at 115; St. Michael's Institute v. Santos, 422 Phil. 723, 736 (2001).

THE PENINSULA MANILA v. ALIPIO (2008)

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 167310             June 17, 2008

THE PENINSULA MANILA, ROLF PFISTERER AND BENILDA QUEVEDO-SANTOS, petitioners, vs.ELAINE M. ALIPIO, respondent.

D E C I S I O N

QUISUMBING, J.:

For review on certiorari are the Decision1 dated August 23, 2004 and Resolution2 dated March 11, 2005 of the Court of Appeals in CA-G.R. SP No. 67007, which reversed the Decision3 dated December 29, 2000 of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 023890-00. The NLRC had earlier affirmed with modification the Labor Arbiter's Decision,4 dismissing the complaint for illegal dismissal against herein petitioners, but awarding respondent herein separation pay amounting to P20,000.

The pertinent facts are as follows:

Petitioner, The Peninsula Manila, is a corporation engaged in the hotel business. Co-petitioners Rolf Pfisterer and Benilda Quevedo-Santos were the general manager and human resources manager, respectively, of the hotel at the time of the controversy.

The hotel operates a clinic 24 hours a day and employs three regular nurses who work eight hours each day on three separate shifts. The hotel also engages the services of reliever nurses who substitute for the regular nurses who are either off-duty or absent.

Respondent Elaine M. Alipio was hired merely as a reliever nurse. However, she had been performing the usual tasks and functions of a regular nurse since the start of her employment on December 11, 1993. Hence, after about four years of employment in the hotel, she inquired why she was not receiving her 13th month pay.

In response, petitioners required her to submit a summary of her tour of duty for 1997. After she had submitted the said summary, Alipio was paid P8,000 as her 13th month pay for 1997. Alipio likewise requested for the payment of her 13th month pay for 1993 to 1996, but her request was denied.

On December 18, 1998, Alipio was informed by a fellow nurse that she can only report for work after meeting up with petitioner Santos. When Alipio met with Santos on December 21, 1998, Alipio was asked regarding her payslip vouchers. She told Santos that she made copies of her payslip vouchers because Peninsula does not give her copies of the same. Santos was peeved with Alipio's response because the latter was

allegedly not entitled to get copies of her payslip vouchers. Santos likewise directed Alipio not to report for work anymore.

Aggrieved, Alipio filed a complaint for illegal dismissal against the petitioners.

After due proceedings, the Labor Arbiter dismissed the complaint for lack of merit, but directed that Peninsula pay Alipio separation pay amounting to P20,000. The Labor Arbiter held,

WHEREFORE, in view of the foregoing, judgment is hereby rendered DISMISSING the instant complaint for lack of merit. However, considering that complainant had served as reliever for respondent hotel for a long period, the respondent hotel is ordered to give her separation pay equivalent to one-half month pay for every year of complainant's reliever service, in the total amount of P20,000.00 based on an average monthly pay of P8,000.00.

SO ORDERED.5

On appeal, the NLRC affirmed with modification the Labor Arbiter's decision, to wit:

WHEREFORE, the appeal of the complainant is dismissed for lack of merit. Accordingly, the decision appealed from is affirmed with the modification that the award of separation pay is hereby deleted.

SO ORDERED.6

Upon further review, the Court of Appeals reversed the decision of the NLRC after ascertaining that the findings of the Labor Arbiter and the NLRC that Alipio is not an employee of Peninsula and that she was validly dismissed is not supported by the evidence on record.7 The dispositive portion of the Decision dated August 23, 2004 of the Court of Appeals reads:

WHEREFORE, the petition is GRANTED and the Decision dated December 29, 2000 and the Order dated June 29, 2001 of the National Labor Relations Commission are REVERSED and SET ASIDE.

Private respondents The Peninsula Manila and Benilda Quevedo-Santos are ordered to reinstate petitioner Elaine M. Alipio as regular staff nurse without loss of seniority rights; to pay petitioner, jointly and severally, full backwages and all the benefits to which she is entitled under the Labor Code from December 12, 1994 up to the time of her actual reinstatement; moral damages in the amount ofP30,000.00, exemplary damages in the amount of P20,000[.]00, and attorney's fees equivalent to ten (10%) percent of the total monetary award.

Let this case be remanded to the Labor Arbitration Branch, National Labor Relations Commission for the computation of the monetary claims of petitioner.

SO ORDERED.8 (Emphasis supplied.)

Petitioners moved for reconsideration but their motion was denied. Hence, the instant petition for review on certiorari contending that the Court of Appeals seriously erred:

I.

IN GIVING DUE COURSE TO THE RESPONDENT'S PETITION FOR CERTIORARI WHICH WAS MAINLY BASED ON ALLEGATIONS OF SUPPOSED FACTUAL ERRORS COMMITTED BY THE NATIONAL LABOR RELATIONS COMMISSION

AND IN REVERSING THE LATTER'S FINDINGS OF FACT WHICH WERE SUPPORTED BY SUBSTANTIAL EVIDENCE IN THE RECORD; AND

II.

IN DECLARING THE RESPONDENT'S DISMISSAL TO BE ILLEGAL AND ORDERING HER REINSTATEMENT WITH FULL BACK WAGES, TOGETHER WITH PAYMENT OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES.9

Petitioners contend that the Court of Appeals should have accorded the unanimous findings of the Labor Arbiter and the NLRC due respect and finality as the conclusion reached by the two bodies is supported by substantial evidence on record. Petitioners insist Alipio was terminated for a just cause and with due process. Petitioners likewise argue that Alipio cannot be reinstated as a regular staff nurse because (1) she never served in that capacity; and (2) there is no vacancy for the said position or any equivalent position to which she may be reinstated.

Alipio, for her part, counters that the NLRC decision, affirming that of the Labor Arbiter, is not beyond the scope of judicial review because palpable mistake was committed in disregarding evidence showing (1) her status as a regular employee of Peninsula; and (2) petitioners' failure to observe substantive and procedural due process. She points out that a Certification dated April 22, 1997 issued by the hotel proves she was a regular staff nurse until her illegal dismissal. She stresses that her supposed employment at the Quezon City Medical Center does not negate the fact that she also worked as a regular nurse of the hotel. Additionally, she contends that obtaining copies of her own payslips does not indicate a perverse attitude justifying dismissal for serious misconduct or willful disobedience. She adds, there is no showing that her refusal to return copies of her payslips caused material damage to petitioners. She further claims that bad faith attended her dismissal.

After carefully weighing the parties' arguments, we resolve to deny the petition.

It is doctrinal that the factual findings of quasi-judicial agencies like the NLRC are generally accorded respect and finality if such are supported by substantial evidence. In some instances, however, the Court may be compelled to deviate from this general rule if the Labor Arbiter and the NLRC misappreciated the facts, thereby resulting in the impairment of the worker's constitutional and statutory right to security of tenure.10

The conclusions reached by the NLRC and the Labor Arbiter, that Alipio was not a regular employee of the hotel and that she was validly dismissed, are not supported by law and evidence on record.

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. (Emphasis supplied.)

Thus, an employment is deemed regular when the activities performed by the employee are usually necessary or desirable in the usual business of the employer. However, any employee who has rendered at least one year of service, even though intermittent, is deemed regular with respect to the activity performed and while such activity actually exists.11

In this case, records show that Alipio's services were engaged by the hotel intermittently from 1993 up to 1998. Her services as a reliever nurse were undoubtedly necessary and desirable in the hotel's business of providing comfortable accommodation to its guests. In any case, since she had rendered more than one year of intermittent service as a reliever nurse at the hotel, she had become a regular employee as early as December 12, 1994. Lastly, per the hotel's own Certification dated April 22, 1997, she was already a "regular staff nurse" until her dismissal.

Being a regular employee, Alipio enjoys security of tenure. Her services may be terminated only upon compliance with the substantive and procedural requisites for a valid dismissal: (1) the dismissal must be for any of the causes provided in Article 28212 of the Labor Code; and (2) the employee must be given an opportunity to be heard and to defend himself.13

Did Alipio commit serious misconduct when she obtained copies of her payslips?

We have defined misconduct as any forbidden act or dereliction of duty. It is willful in character and implies a wrongful intent, not a mere error in judgment. The misconduct, to be serious, must be grave and not merely trivial.14

In this case, Alipio's act of obtaining copies of her payslips cannot be characterized as a misconduct, much less a grave misconduct. On the contrary, we find it absurd that she had to resort to her own resourcefulness to get hold of these documents since it was incumbent upon Peninsula, as her employer, to give her copies of her payslips as a matter of course. We are thus convinced that Alipio's dismissal was not based on a just cause.

Was Alipio afforded an opportunity to be heard and to defend herself?

When Santos had a meeting with Alipio on December 21, 1998, she was not informed that the hotel was contemplating her dismissal. Neither was she informed of the ground for which her dismissal was sought. She was simply told right there and then that she was already dismissed, thereby affording no opportunity for her to be heard and defend herself. Thus, Alipio was likewise deprived of procedural due process.

Clearly, Alipio was illegally dismissed because petitioners failed on both counts to comply with the twin requisites for a valid termination. She is thus entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, inclusive of allowances, and to other benefits, or their monetary equivalent computed from the time compensation was withheld up to the time of actual reinstatement.15 Should reinstatement be no longer feasible, Alipio is entitled to separation pay equivalent to one month pay for her every year of service in lieu of reinstatement.16

Furthermore, as a rule, moral damages are recoverable where the dismissal of the employee was attended with bad faith or was done in a manner contrary to good customs.17 Exemplary damages may also be awarded if the dismissal is effected in a wanton, oppressive or malevolent manner.18

In this case, while the petitioners issued a Certification dated April 22, 1997 and recognized Alipio as a regular employee, they deprived her of copies of her own payslips. Moreover, her dismissal was effected in a manner whereby she was deprived of due process. Under these circumstances, she is also entitled to moral damages in the amount of P15,000 and exemplary damages in the amount of P10,000.

Lastly, the award of attorney's fees equivalent to ten percent (10%) of the total monetary award is consistent with prevailing jurisprudence19 and thus ought to be affirmed.

WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated August 23, 2004 and Resolution dated March 11, 2005 of the Court of Appeals in CA-G.R. SP No. 67007 are hereby AFFIRMED as MODIFIED, such that the amount of moral damages is reduced to only P15,000 and the exemplary damages to only P10,000.

No pronouncement as to costs.

SO ORDERED.

LEONARDO A. QUISUMBINGAssociate Justice

WE CONCUR:

DANTE O. TINGAAssociate Justice

* RUBEN T. REYESAssociate Justice

** TERESITA J. LEONARDO-DE CASTROAssociate Justice

ARTURO D. BRIONAssociate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

LEONARDO A. QUISUMBINGAssociate Justice

Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

REYNATO S. PUNOChief Justice

Footnotes

* Additional member in place of Associate Justice Presbitero J. Velasco, Jr. who is on official leave.

** Additional member in place of Associate Justice Conchita Carpio Morales who is on official leave.

1 Rollo, pp. 34-52. Penned by Associate Justice Marina L. Buzon, with Associate Justices Mario L. Guariña III and Santiago Javier Ranada concurring.

2 Id. at 53-57.

3 Id. at 74-82.

4 Id. at 62-72 (Dated March 15, 2000).

5 Id. at 72.

6 Id. at 81.

7 Id. at 40.

8 Id. at 50.

9 Id. at 139-140.

10 Trendline Employees Association-Southern Philippines Federation of Labor v. NLRC, G.R. No. 112923, May 5, 1997, 272 SCRA 172, 179.

11 De Leon v. National Labor Relations Commission, G.R. No. 70705, August 21, 1989, 176 SCRA 615, 621.

12 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.

13 Voyeur Visage Studio, Inc. v. Court of Appeals, G.R. No. 144939, March 18, 2005, 453 SCRA 721, 729.

14 Lakpue Drug, Inc. v. Belga, G.R. No. 166379, October 20, 2005, 473 SCRA 617, 623.

15 Labor Code, 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.

16 P.J. Lhuillier, Inc. v. National Labor Relations Commission, G.R. No. 158758, April 29, 2005, 457 SCRA 784, 799, citing Gaco v. National Labor Relations Commission, G.R. No. 104690, February 23, 1994, 230 SCRA 260, 268.

17 Mayon Hotel & Restaurant v. Adana, G.R. No. 157634, May 16, 2005, 458 SCRA 609, 639.

18 Kay Products, Inc. v. Court of Appeals, G.R. No. 162472, July 28, 2005, 464 SCRA 544, 559.

19 Micro Sales Operation Network v. National Labor Relations Commission, G.R. No. 155279, October 11, 2005, 472 SCRA 328, 331.

URSUMCO v. CABALLEDA (2008)

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 156644               July 28, 2008

UNIVERSAL ROBINA SUGAR MILLING CORPORATION (URSUMCO) and/or RENATO CABATI, as Manager,Petitioners, vs.AGRIPINO CABALLEDA and ALEJANDRO CADALIN, Respondents.

D E C I S I O N

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision2 dated September 11, 2002 which modified the Decision3 of the National Labor Relations Commission (NLRC) dated January 27, 2000.

The Facts

Petitioner Universal Robina Sugar Milling Corporation (URSUMCO) is a domestic corporation engaged in the sugar milling business and petitioner Renato Cabati4 is URSUMCO's manager.

Respondent Agripino Caballeda (Agripino) worked as welder for URSUMCO from March 1989 until June 23, 1997 with a salary of P124.00 per day, while respondent Alejandro Cadalin (Alejandro) worked for URSUMCO as crane operator from 1976 up to June 15, 1997 with a salary of P209.30 per day.

On April 24, 1991, John Gokongwei, Jr., President of URSUMCO, issued a Memorandum5 establishing the company policy on "Compulsory Retirement" (Memorandum) of its employees. The memorandum provides:

All employees corporate-wide who attain 60 years of age on or before April 30, 1991 shall be considered retired on May 31, 1991.

Henceforth, any employee shall be considered retired 30 days after he attains age 60.

Personnel department shall prepare the retirement notices to be co-signed and served by respective Department managers to employees concerned. The notices must be served as least 30 days before the designated retirement date. Reports of retiring/retired employees shall be submitted by the Personnel Department every end of the month to the President, copy furnished the Senior Vice-Presidents.

Employees who are retiring on May 11, 1991 shall continue reporting to work up to the middle of May. Thereafter, they may make use of their remaining vacation leave credits. Similarly, employees considered retired 30 days after attainment of age 60 shall

continue reporting for work during the first hall of the 30-day period, then make use of available VL credits.

Vacation and sick leave credits remaining unused by the employee’s designated retirement date shall be converted into cash (VL at 100%, SL at 50% or per CBA) and be included with the Final Accountability/Retirement Benefits. Accountability clearance shall be per SOP.

Engaging the services of any retiree after his retirement must first be cleared with the President or the Senior Vice-President concerned especially the terms and condition of such engagement. Retirees can be re-engaged only under a Retainer or Consultancy arrangement and only for a limited period of time.

Subsequently, on December 9, 1992, Republic Act (RA) No. 76416 was enacted into law, and it took effect on January 7, 1993,7 amending Article 287 of the Labor Code, to read:

Art. 287. Retirement. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.

xxxx

Retail, service and agricultural establishments or operations employing not more than (10) employees or workers are exempted from the coverage of this provision.

Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code.

On April 29, 1993, URSUMCO and the National Federation of Labor (NFL), a legitimate labor organization and the recognized sole and exclusive bargaining representative of all the monthly and daily paid employees of URSUMCO, of which Alejandro was a member, entered into a Collective Bargaining Agreement (CBA).8 Article XV of the said CBA particularly provided that the retirement benefits of the members of the collective bargaining unit shall be in accordance with law.9

Agripino and Alejandro (respondents), having reached the age of 60, were allegedly forced to retire by URSUMCO. Agripino averred that URSUMCO illegally dismissed him from employment on June 24, 1997 when he was forced to retire upon reaching the age of sixty (60) years old. Upon the termination of his employment, he accepted his

separation pay and applied for retirement benefits with the Social Security System (SSS). Earlier, on April 15, 1997, Alejandro turned 60 years old. On May 28, 1997, he filed his application for retirement with URSUMCO, attaching his birth and baptismal certificates. On July 23, 1997, he accepted his retirement benefits and executed a quitclaim in favor of URSUMCO.

Thereafter, on August 6, 1997, Agripino filed a Complaint10 for illegal dismissal, damages and attorney’s fees before the Labor Arbiter (LA) of Dumaguete City. He alleged that his compulsory retirement was in violation of the provisions of Republic Act (R.A.) 7641 and, was in effect, a form of illegal dismissal.

On August 26, 1997, Alejandro likewise filed a Complaint11 for illegal dismissal, underpayment of retirement benefits, damages and attorney’s fees before the LA, alleging that he was given only 15 days per year of service by way of retirement benefits and further assails that his compulsory

retirement was discriminatory considering that there were other workers over sixty (60) years of age who were allowed to continuously report for work.

The LA's Ruling

On September 30, 1998, the LA rendered a Decision,12 the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring the respondent guilty of illegal dismissal and thus ordered to pay complainants: Agripino Caballeda and Alejandro Cadalin their respective backwages from: June 23, 1997 and from June 15, 1997 up to the promulgation of this Decision. Also, the respondent is hereby ordered to reinstate the complainants to their former or equivalent positions without loss of seniority rights and privileges appurtenant thereto.

The computation of complainants’ awards is shown below and forms as integral part of this Decision.

1. AGRIPINO CABALLEDAJune 23, 1997 – Sept. 30, 1998

= 1 year and 3 months

= 15 months

= P124.00 x 26 days x 15 months . . . . P48,360.00

2. ALEJANDRO CADALINJune 15, 1997 – Sept. 30, 1998

= 1 year and 3 months

= 15 months

= P209.00 x 26 x 15 months . . . . . P 81,627.00

TOTAL . . . . . . . . . . . P129,987.00

A ten percent (10%) attorney’s fees is also adjudicated from the aggregate award.All other claims are Dismissed for lack of merit.

SO ORDERED.

The NLRC's Ruling

Petitioners appealed to the NLRC. On January 27, 2000, the NLRC held that Alejandro voluntarily retired because he freely submitted his application for retirement together with his birth and baptismal certificates. Moreover, he had his clearance processed and he received the amount of P33,476.77 as retirement benefit. Nevertheless, the NLRC found that since Alejandro's retirement benefit was based merely on fifteen (15) days salary for every year of service, such benefit should be recomputed to conform to the provisions of Art. 287 of the Labor Code as amended. With respect to Agripino, the NLRC held that URSUMCO's claim that Agripino was a mere casual employee was obviously designed to avoid paying Agripino his retirement benefit. Thus, the NLRC ruled:

WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new one entered DISMISSING the complaint for illegal dismissal. Respondents are hereby ordered to pay complainants their retirement benefits computed as follows:

1. Alejandro Cadalin:Jan. 13/88 to June 15/97 = 9 years, 5 months & 3 days

a) P209.58/day x 15 days = P3,143.70

b) 1/12 of 13th Month Pay = 523.95

c) 5 days SILP = 1,047.90

P4,715.55

P4,715.55/year of service x 9 years = P42,439.95

Less:Retirement proceeds received (p. 107, records) 28,293.30Retirement differential of Alejandro Cadalin = P 14,146.65

2. Agripino Caballeda:March 1989 to June 23/97 = 8 years, 3 months & 3 days

a) 124.00/day x 15 days = 1,860.00

b) 1/12 of 13th Month Pay = 310.00

c) 5 days SILP = 620.00

P2,790.00

P2,790.00/year of service x 8 years =Retirement benefits of Agripino Caballeda P 22,320.00

SO ORDERED.13

Respondents filed their Motion for Reconsideration14 which the NLRC denied in its Resolution15 dated May 22, 2000, on the ground that it was the respondents who voluntarily applied for retirement upon reaching the age of 60 pursuant to the CBA and established company policy.

Aggrieved, respondents went to the CA via a Petition for Certiorari. 16

The CA's Ruling

The CA declared that URSUMCO illegally dismissed the respondents since the Memorandum unilaterally imposed upon the respondents compulsory retirement at the age of 60. The CA found that there is no existing CBA or employment contract between the parties that provides for early compulsory retirement. Hence, the CA held:

It is beyond doubt that [petitioner] violated the rights of the [respondents] [insofar] as the latter were not given the prerogative to choose for themselves to retire early or wait for the compulsory retirement age which is sixty[-five] (65) years. "If the intention to retire is not clearly established or if the retirement is involuntary, it is to be treated as discharge" (San Miguel Corporation vs. National Labor Relations Commission, 293 SCRA 13, 21[,] citing the case of De Leon vs. NLRC, 100 SCRA 691 [1980]). Corollary, such involuntary retirement on the part of [respondents] was in effect an illegal dismissal.17

However, the CA held that the NLRC properly computed the retirement benefits of the respondents. Thus:

WHEREFORE, premises considered, the assailed Decision dated January 27, 2000 of the National Labor Relations Commission, Fourth Division, Cebu City is hereby AMENDED as follows:

1. The respondents are hereby ordered to pay the petitioners their retirement benefits computed as follows:

(1) Alejandro CadalinJan. 13/88 to June 15/97 = 9 years, 5 months & 3 days

a.) P209.58/days x 15 days = 3,143.70

b.) 1/12 of 13th Month Pay = 523.95

c.) 5 days SILP = 1,047.90

P4,715.55

P4,715.55/year of service x 9 years = P42,439.95

Less: Retirement proceeds received (p. 107, records) 28,293.30Retirement differential of Alejandro Cadalin P14,146.65

(2) Agripino CaballedaMarch 1989 to June 23/97 = 8 years, 3 months & 3 days

a.) P124.00/day x 15 days = 1,860.00

b.) 1/12 of 13th Month Pay 310.00

c.) 5 days SILP 620.00

P2,790.00

P2,790/year of service x 8 yearsRetirement benefits of Agripino Caballeda P22,320.00

2. The respondents are further ordered to pay the petitioners theirbackwages computed from June 1997 up to 2002.

SO ORDERED.18

On October 7, 2002, petitioners filed a Motion for Reconsideration19 which the CA denied in its Resolution20dated January 8, 2003 for lack of merit.

Hence, this Petition raising the following issues:

I. WHETHER OR NOT THE RESPONDENTS AGRIPINO CABALLEDA AND ALEJANDRO CADALIN VOLUNTARILY RETIRED FROM THE SERVICE.

II WHETHER OR NOT THE NEW RETIREMENT LAW CAN BE GIVEN RETROACTIVE EFFECT UNDER PAIN OF VI[O]LATING THE NON-IMPAIRMENT CLAUSE ENSHRINED IN THE BILL OF RIGHTS OF THE PHILIPPINE CONSTITUTION.

III. WHETHER OR NOT CABALLEDA IS A SEASONAL WORKER IN THE SUGAR INDUSTRY, AND NOT A CASUAL WORKER AS ERRONEOUSLY TERMED BY THE COURT OF APPEALS.

IV. WHETHER OR NOT THE FINDING OF THE COURT OF APPEALS THAT THE RESPONDENTS ARE ENTITLED TO RETIREMENT DIFFERENTIAL IS CONTRARY TO LAW AND JURISPRUDENCE.21

Petitioners submit that there is a need to review the records and evidence in this case since the factual findings of the LA and the CA are in conflict with those of the NLRC; that petitioners stand by the factual findings of the NLRC that Alejandro voluntarily retired from the service and as proof, he executed a valid quitclaim in favor of petitioners; that R.A. 7641 cannot be given retroactive effect since there is an existing CBA that covers the retirement benefits of the employees; that the Memorandum was no longer being implemented at the time of respondents' retirement since R.A. 7641 was already in effect at the time, thus, the CA erred when it ruled that respondents were forced to retire pursuant to said Memorandum; that the CBA entered into by URSUMCO and the NFL of which Alejandro is a member, is proof that URSUMCO stopped implementing the Memorandum and that, assuming the said Memorandum was still implemented despite the advent of R.A. 7641 and the CBA, retirement notices should have been served to the respondents as directed by the Memorandum or, at most, a collective action should have been taken against URSUMCO by NFL. With respect to Agripino, petitioners claim that he is merely a seasonal or project worker and not a casual worker since the sugar milling business is seasonal in nature; that as such, Agripino was not forced to retire, rather the termination of his employment was essentially based on the fact that the period stated in his contract with URSUMCO had already lapsed; and that assuming Agripino is not a project employee, his retirement pay should be reduced proportionately by the number of months per year that his services were not engaged by URSUMCO since the milling season covers only six months within a year.22

On the other hand, respondents aver that petitioners’ plea for this Court to review the facts and pieces of evidence presented below is contrary to the rule that the issues in cases brought before this Court via a petition for review under Rule 45 are limited only to questions of law; that respondents were forced to retire at the age of 60 by virtue of the Memorandum which the employees did not ratify or freely agree upon, hence, respondents' dismissal from work was without valid cause and due process, amounting to illegal dismissal; that the Memorandum which unilaterally directed the compulsory retirement of employees reaching the age of 60 is contrary to the security of tenure guaranteed in the Constitution, Art. 287 of the Labor Code as amended by R.A. 7641, pertinent Labor and Civil Code provisions, public policy and good customs; and that the respondents were merely compelled to sign the prepared retirement forms and comply with the other retirement requirements because they were no longer given any work assignment and they could only receive their retirement benefits if they sever their employment relations with URSUMCO and comply with the latter's directives. Respondents submit that they were given no option but to follow URSUMCO's orders regarding their retirement, hence, the same was not voluntary.23

Based on the foregoing, this Court is called upon to resolve three ultimate issues, as follows:

1. Whether R.A.7641 can be given retroactive effect;

2. Whether Agripino is a seasonal or project employee; and

3. Whether respondents were illegally terminated on account of compulsory retirement or the same voluntarily retired.

The Court's Ruling

The Petition lacks merit.

First. The issue of the retroactive effect of R.A. 7641 on prior existing employment contracts has long been settled. In Enriquez Security Services, Inc. v. Cabotaje,24 we held:

RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that — absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer — can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said employment contracts have started.

This doctrine has been repeatedly upheld and clarified in several cases.25 Pursuant thereto, this Court imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive effect: (1) the claimant for retirement benefits was still in the employ of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility for such retirement benefits under the statute.

It is evident from the records that when respondents were compulsorily retired from the service, R.A. 7641 was already in full force and effect. The petitioners failed to prove that the respondents did not comply with the requirements for eligibility under the law for such retirement benefits. In sum, the aforementioned requisites were adequately satisfied, thus, warranting the retroactive application of R.A. 7641 in this case.

Second. It is a well-established rule that a petition for review on certiorari under Rule 45 of the Rules of Court should raise only questions of law, subject to certain exceptions.26 Whether or not Agripino was a seasonal/project employee or a regular employee is a question of fact.27 As such, this Court is not at liberty to review the said factual issue because our jurisdiction is generally limited to reviewing errors of law that the CA may have committed. Time and again, we have held that this Court is not a trier of facts, and it is not for us to re-examine and re-evaluate the probative value of evidence presented before the LA, the NLRC and the CA, which formed the basis of the assailed decision. Indeed, when their findings are in absolute agreement, the same are accorded not only respect but even finality as long as they are amply supported by substantial evidence.28

In this case, it is noteworthy that the LA, the NLRC and the CA are one in ruling that Agripino was not a casual employee much less a seasonal or project employee. In their findings, Agripino was considered a regular employee of URSUMCO. Consequently, such uniform finding of the LA, the NLRC, and the CA binds this Court. We find no cogent reason to depart from this ruling.

Third. Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former.29 The age of retirement is primarily determined by the existing agreement between the employer and the employees. However, in the absence of such agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor Code as amended, the legally mandated age for compulsory retirement is 65 years, while the set minimum age for optional retirement is 60 years.30

1avvphi1

In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory retirement age nor does it provide for an optional retirement plan. It merely provides that the retirement benefits accorded to an employee shall be in accordance with law. Thus, we must apply Art. 287 of the Labor Code which provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the second is primarily determined by the collective bargaining agreement or other employment contract or employer's retirement plan. In the absence of any provision on optional retirement in a collective bargaining agreement, other employment contract, or employer's retirement plan, an employee may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least five years in the establishment concerned. That prerogative is exclusively lodged in the employee.31

Indubitably, the voluntariness of the respondents' retirement is the meat of the instant controversy. Petitioners postulate that respondents voluntarily retired particularly when Alejandro filed his application for retirement, submitted all the documentary requirements, accepted the retirement benefits and executed a quitclaim in favor of URSUMCO. Respondents claim otherwise, contending that they were merely forced to comply as they were no longer given any work assignment and considering

that the severance of their employment with URSUMCO is a condition precedent for them to receive their retirement benefits.

We rule in favor of respondents.

Generally, the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of employees.32 They are frowned upon as contrary to public policy. A quitclaim is ineffective in barring recovery of the full measure of a worker's rights, and the acceptance of benefits therefrom does not amount to estoppel.33

The reason is laid down in Lopez Sugar Corporation v. Federation of Free Workers:34

The reason is plain. Employer and employee, obviously, do not stand on the same footing. The employer drove the employee to the wall. The latter must have to get hold of money. Because, out of the job, he had to face harsh necessities of life. He thus found himself in no position to resist money proferred. His, then, is a case of adherence, not of choice. One thing sure, however, is that petitioners did not relent their claim. They pressed it. They are deemed not to have waived any of their rights. Renuntiatio non praesumitur.

In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if the employer is able to prove the following requisites: (1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law.35 In this case, petitioners failed to establish all the foregoing requisites.

To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus, it is clear from the decisions of the LA, NLRC and CA that petitioners are still liable to pay Alejandro the differential on his retirement benefits. On the other hand, Agripino was actually and totally deprived of his retirement benefit.

Moreover, the petitioners, not the respondents, have the burden of proving that the quitclaim was voluntarily entered into.36 In previous cases, we have considered, among others, the educational attainment of the employees concerned in upholding the validity of the quitclaims which

they have executed in favor of their employers.37 However, in Becton Dickinson Phils., Inc. v. National Labor Relations Commission,38 we held:

There is no nexus between intelligence, or even the position which the employee held in the company when it concerns the pressure which the employer may exert upon the free will of the employee who is asked to sign a release and quitclaim. A lowly employee or a sales manager, as in the present case, who is confronted with the same dilemma of whether signing a release and quitclaim and accept what the company offers them, or refusing to sign and walk out without receiving anything, may do succumb to the same pressure, being very well aware that it is going to take quite a while before he can recover whatever he is entitled to, because it is only after a protracted legal battle starting from the labor arbiter level, all the way to this Court, can he receive anything at all. The Court understands that such a risk of not receiving anything whatsoever, coupled with the probability of not immediately getting any gainful employment or means of livelihood in the meantime, constitutes enough pressure upon anyone who is asked to sign a release and quitclaim in exchange of some amount of money which may be way below what he may be entitled to based on company practice and policy or by law.

It is worth mentioning that the respondents are rank-and-file employees. They are simple folks who rely on their work for the daily sustenance of their respective families. Absent any convincing proof of voluntariness in the submission of the documentary requirements and in the execution of the quitclaim, we cannot simply assume that respondents were not subjected to the very same pressure mentioned in Becton. Furthermore, the fact that respondents filed a complaint for illegal dismissal against petitioners completely negates their claim that respondents voluntarily retired. To note, respondents vigorously pursued this case against petitioners, all the way up to this Court. Without doubt, this is a manifestation that respondents had no intention of relinquishing their employment, wholly incompatible to petitioners' assertion that respondents voluntarily retired.39

We find no reversible error and, thus, sustain the ruling of the CA that respondents did not voluntarily retire but were rather forced to retire, tantamount to illegal dismissal.

WHEREFORE, the instant Petition is DENIED. The Decision dated September 11, 2002 and the Resolution dated January 8, 2003 of the Court of Appeals in CA-G.R. SP No. 59552 are hereby AFFIRMED. Costs against the petitioners.

SO ORDERED.

ANTONIO EDUARDO B. NACHURAAssociate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGOAssociate Justice

Chairperson

MA. ALICIA AUSTRIA-MARTINEZAssociate Justice

MINITA V. CHICO-NAZARIOAssociate Justice

RUBEN T. REYESAssociate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

CONSUELO YNARES-SANTIAGOAssociate JusticeChairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNOChief Justice

Footnotes

1 Dated February 24, 2003, rollo, pp. 10-35.

2 Particularly docketed as CA-G.R. SP No. 59552; penned by Associate Justice B.A. Adefuin-De La Cruz (retired), with Associate Justices Wenceslao I. Agnir, Jr. (retired) and Edgardo F. Sundiam, concurring; id. at 50-61.

3 Particularly docketed as NLRC Case No. V-000080-99; CA rollo, pp. 51-60.

4 Also referred to as Rene Cabate in other pleadings and documents.

5 CA rollo, p. 20.

6 Entitled: AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, BY PROVIDING FOR RETIREMENT PAY TO QUALIFIED PRIVATE SECTOR EMPLOYEES IN THE ABSENCE OF ANY RETIREMENT PLAN IN THE ESTABLISHMENT.

7 Pantranco North Express, Inc. v. National Labor Relations Commission, 328 Phil. 470, 484 (1996).

8 Rollo, pp. 86-100.

9 Id. at 94.

10 CA rollo, p. 22.

11 Id. at 21.

12 Id. at 30-36.

13 Id. at 58-59.

14 Id. at 61-71.

15 Id. at 73-74.

16 Id. at 2-17.

17 Id. at 162.

18 Id. at 164-165.

19 Rollo, pp. 39-47.

20 Id. at 38.

21 Rollo, pp. 15-16.

22 Petitioner’s memorandum dated May 17, 2005; id. at 134-158.

23 Respondents' Memorandum dated April 4, 2005; id. at 113-132.

24 G.R. No. 147993, July 21, 2006, 496 SCRA 169, 173-174, citing Rufina Patis Factory v. Alusitain, 434 SCRA 418 (2004), which further cited Oro Enterprises, Inc. v. NLRC, 238 SCRA 105 (1994) (Emphasis supplied).

25 Manuel L. Quezon University v. NLRC, G.R. No. 141673, October 17, 2001,367 SCRA 488, 495 (2001); J.V. Angeles Construction Corporation v. NLRC, G.R. No. 126888, April 14, 1999, 305 SCRA 734, 738; Cabcaban v. NLRC (Fourth Division), G.R. No. 120256, August 18, 1997, Phil. 277 SCRA 671, 677; Philippine Scout Veterans Security and Investigation Agency v. NLRC, G.R. No. 115019, April 14, 1997, 271 SCRA 209, 215; and CJC Trading, Inc. v. NLRC, G.R. No. 115884, July 20, 1995, 246 SCRA 724.

26 The exceptions are: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion (Chuayuco Steel Manufacturing Corporation v. Buklod ng Manggagawa sa Chuayuco Steel Manufacturing Corporation, G.R. No. 167347, January 31, 2007, 513 SCRA 621, 627-628).

27 Caseres v. Universal Robina Sugar Milling Corporation (URSUMCO), G.R. No. 159343, September 28, 2007, 534 SCRA 356, 359, citing Hanjin Engineering and Construction Co., Ltd. v. Court of Appeals, 487 SCRA 78, 100 (2006).

28 Pepsi Cola Products Philippines, Inc. and Ernesto F. Gochuico v. Emmanuel V. Santos, G.R. No. 165968, April 14, 2008.

29 Jaculbe v. Silliman University, G.R. No. 156934, March 16, 2007, 518 SCRA 445, 451.

30 Eastern Shipping Lines, inc. v. Sedan, G.R. No. 159354, April 7, 2006, 486 SCRA 565, 572.

31 Capili v. National Labor Relations Commission, G.R. No. 120802, June 17, 1997, 273 SCRA 576, 585-586.

32 JMM Promotions and Management, Inc. v. Court of Appeals, 439 Phil. 1, 11 (2002).

33 R & E Transport, Inc. v. Latag, 467 Phil. 355, 369 (2004).

34 G.R. Nos. 75700-01, August 30, 1990, 189 SCRA 179, 193.

35 Sime Darby Pilipinas, Inc. v. Arguilla, G.R. No. 143542, June 8, 2006, 490 SCRA 183, 201.

36 EMCO Plywood Corporation v. Abelgas, G.R. No. 148532, April 14, 2004, 427 SCRA 496, 514, citing Salonga v. NLRC, 324 Phil. 330 (1996).

37 In Mendoza, Jr. v. San Miguel Foods, Inc., G.R. No. 158684, May 16, 2005, 458 SCRA 664, we held that the petitioner therein was not an unsuspecting or a gullible person. As adverted to by the respondents, the petitioner was a graduate of the University of the Philippines, no less, with a Bachelor of Arts degree in Economics. Surely, he knew the nature and the legal effect of the said deed.

In Agustilo v. Court of Appeals, 417 Phil. 218 (2001), we held that the petitioner therein was not an illiterate person who needed special protection. The petitioner held a master's degree in library science and was an instructor in political science at the University of San Carlos. He was also at that time a law student in the said university.

In Sicangco v. National Labor Relations Commission, G.R. No. 110261, August 4, 1994, 235 SCRA 96, we held that the petitioner therein, who was a lawyer, could not renege on the release, waiver and quitclaim he executed, since lawyers are not easily coerced into signing legal documents.

38 G.R. Nos. 159969 & 160116, November 15, 2005, 475 SCRA 123, 147.

39 Amkor Technology Philippines, Inc. v. Juangco, G.R. No. 166507, September 27, 2006, 503 SCRA 683, 689, citing Molave Tours Corporation v. National Labor Relations Commission, 250 SCRA 325, 330 (1995).

HACIENDA FATIMA v. NATIONAL FEDERATION (2003)

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 149440            January 28, 2003

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE SEGURA,petitioners, vs.NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE, respondents.

PANGANIBAN, J.:

Although the employers have shown that respondents performed work that was seasonal in nature, they failed to prove that the latter worked only for the duration of one particular season. In fact, petitioners do not deny that these workers have served them for several years already. Hence, they are regular — not seasonal — employees.

The Case

Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the February 20, 2001 Decision of the Court of Appeals 1 (CA) in CA-GR SP No. 51033. The dispositive part of the Decision reads:

"WHEREFORE, premises considered, the instant special civil action for certiorari is hereby DENIED." 2

On the other hand, the National Labor Relations Commission (NLRC) Decision, 3 upheld by the CA, disposed in this wise:

"WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new one entered declaring complainants to have been illegally dismissed. Respondents are hereby ORDERED to reinstate complainants except Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva to their previous position and to pay full backwages from September 1991 until reinstated. Respondents being guilty of unfair labor practice are further ordered to pay complainant union the sum of P10,000.00 as moral damages and P5,000.00 as exemplary damages." 4

The Facts

The facts are summarized in the NLRC Decision as follows:

"Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused to work and/or were choosy in the kind of jobs they wanted to perform, the records is replete with complainants' persistence and dogged determination in going back to work.

"Indeed, it would appear that respondents did not look with favor workers' having organized themselves into a union. Thus, when complainant union was certified as the collective bargaining representative in the certification elections, respondents under the pretext that the result was on appeal, refused to sit down with the union for the purpose of entering into a collective bargaining agreement. Moreover, the workers including complainants herein were not given work for more than one month. In protest, complainants staged a strike which was however settled upon the signing of a Memorandum of Agreement which stipulated among others that:

'a) The parties will initially meet for CBA negotiations on the 11th day of January 1991 and will endeavor to conclude the same within thirty (30) days.

'b) The management will give priority to the women workers who are members of the union in case work relative . . . or amount[ing] to gahit and [dipol] arises.

'c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week.

'd) The management will provide fifteen (15) wagons for the workers and that existing workforce prior to the actual strike will be given priority. However, in case the said workforce would not be enough, the management can hire additional workers to supplement them.

'e) The management will not anymore allow the scabs, numbering about eighteen (18) workers[,] to work in the hacienda; and

'f) The union will immediately lift the picket upon signing of this agreement.'

"However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its commitment to sit down and bargain collectively. Instead, respondent employed all means including the use of private armed guards to prevent the organizers from entering the premises.

"Moreover, starting September 1991, respondents did not any more give work assignments to the complainants forcing the union to stage a strike on January 2, 1992. But due to the conciliation efforts by the DOLE, another Memorandum of Agreement was signed by the complainants and respondents which provides:

'Whereas the union staged a strike against management on January 2, 1992 grounded on the dismissal of the union officials and members;

'Whereas parties to the present dispute agree to settle the case amicably once and for all;

'Now therefore, in the interest of both labor and management, parties herein agree as follows:

'1. That the list of the names of affected union members hereto attached and made part of this agreement shall be referred to the Hacienda payroll of 1990 and determine whether or not this concerned Union members are hacienda workers;

'2. That in addition to the payroll of 1990 as reference, herein parties will use as guide the subjects of a Memorandum of Agreement entered into by and between the parties last January 4, 1990;

'3. That herein parties can use other employment references in support of their respective claims whether or not any or all of the listed 36 union members are employees or hacienda workers or not as the case may be;

'4. That in case conflict or disagreement arises in the determination of the status of the particular hacienda workers subject of this agreement herein parties further agree to submit the same to voluntary arbitration;

'5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby created to be composed of three representatives each and is given five working days starting Jan. 23, 1992 to resolve the status of the subject 36 hacienda workers. (Union representatives: Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.)"

"Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed as follows:

'The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko based on who received their 13th month pay. The following are deemed not considered employees:

1. Luisa Rombo

2. Ramona Rombo

3. Bobong Abrega

4. Boboy Silva

'The name Orencio Rombo shall be verified in the 1990 payroll.

'The following employees shall be reinstated immediately upon availability of work:

1. Jose Dagle 7. Alejandro Tejares

2. Rico Dagle 8. Gaudioso Rombo

3. Ricardo Dagle 9. Martin Alas-as Jr.

4. Jesus Silva 10. Cresensio Abrega

5. Fernando Silva 11. Ariston Eruela Sr.

6. Ernesto Tejares 12. Ariston Eruela Jr.'

"When respondents again reneged on its commitment; complainants filed the present complaint.

"But for all their persistence, the risk they had to undergo in conducting a strike in the face of overwhelming odds, complainants in an ironic twist of fate now find themselves being accused of 'refusing to work and being choosy in the kind of work they have to perform'." 5 (Citations omitted)

Ruling of the Court of Appeals

The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on leave during the off-season and were therefore still employed by petitioners. Moreover, the workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal.

The appellate court found neither "rhyme nor reason in petitioner's argument that it was the workers themselves who refused to or were choosy in their work." As found by the NLRC, the record of this case is "replete with complainants' persistence and dogged determination in going back to work." 6

The CA likewise concurred with the NLRC's finding that petitioners were guilty of unfair labor practice.

Hence this Petition. 7

Issues

Petitioners raise the following issues for the Court's consideration:

"A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal workers, were regular employees, contrary to the clear provisions of Article 280 of the Labor Code, which categorically state that seasonal employees are not covered by the definition of regular employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual employees who have served for at least one year.

"B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, . . . and relying instead on rulings which are not directly applicable to the case at bench, viz, Philippine Tobacco, Bacolod-Murcia, and Gaco, . . .

"C Whether or not the Court of Appeals committed grave abuse of discretion in upholding the NLRC's conclusion that private respondents were illegally dismissed, that petitioner[s were] guilty of unfair labor practice, and that the union be awarded moral and exemplary damages." 8

Consistent with the discussion in petitioners' Memorandum, we shall take up Items A and B as the first issue and Item C as the second.

The Court's Ruling

The Petition has no merit.

First Issue:

Regular Employment

At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for review on certiorari of CA decisions. 9 Questions of fact are not entertained. 10 The Court is not a trier of facts and, in labor cases, this doctrine applies with greater force. 11 Factual questions are for labor tribunals to resolve. 12 In the present case, these have already been threshed out by the NLRC. Its findings were affirmed by the appellate court.

Contrary to petitioners' contention, the CA did not err when it held that respondents were regular employees.

Article 280 of the Labor Code, as amended, states:

"Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual

business 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 exist." (Italics supplied)

For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. The evidence proves the existence of the first, but not of the second, condition. The fact that respondents — with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva — repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of regular employment is applicable.

In Abasolo v. National Labor Relations Commission, 13 the Court issued this clarification:

"[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in which this Court held:

"The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual trade or business of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.

xxx           xxx           xxx

". . . [T]he fact that [respondents] do not work continuously for one whole year but only for the duration of the . . . season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but merely considered on leave until re-employed." 14

The CA did not err when it ruled that Mercado v. NLRC 15 was not applicable to the case at bar. In the earlier case, the workers 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. They were not hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase thereof. On the other hand, herein respondents, having performed the same tasks for petitioners every season for several years, are considered the latter's regular employees for their respective tasks. Petitioners' eventual refusal to use their services — even if they were ready, able and willing to perform their usual duties whenever these were available — and hiring of other workers to perform the tasks originally assigned to respondents amounted to illegal dismissal of the latter.

The Court finds no reason to disturb the CA's dismissal of what petitioners claim was their valid exercise of a management prerogative. The sudden changes in work assignments reeked of bad faith. These changes were implemented immediately after respondents had organized themselves into a union and started demanding collective bargaining. Those who were union members were effectively deprived of their jobs. Petitioners' move actually amounted to unjustified dismissal of respondents, in violation of the Labor Code.

"Where there is no showing of clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized cause." 16 In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed above, are regular employees.

Second Issue:

Unfair Labor Practice

The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows:

"Indeed, from respondents' refusal to bargain, to their acts of economic inducements resulting in the promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to come in, and the dismissal of union officials and members, one cannot but conclude that respondents did not want a union in their hacienda—a clear interference in the right of the workers to self-organization."17

We uphold the CA's affirmation of the above findings. Indeed, factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality. Their findings are binding on the Supreme Court. 18 Verily, their conclusions are accorded great weight upon appeal, especially when supported by substantial evidence. 19 Consequently, the Court is not duty-bound to delve into the accuracy of their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any rational basis." 20

The finding of unfair labor practice done in bad faith carries with it the sanction of moral and exemplary damages." 21

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners.

SO ORDERED.

Puno, Sandoval-Gutierrez and Corona, JJ., concur.

Footnotes

1 Eighth Division, composed of Justices Ramon A. Barcelona (chairman and ponente), Rodrigo V. Cosico and Alicia L. Santos (members).

2 Assailed CA Decision, p. 7; rollo, p. 36.

3 Fourth Division, composed of Commissioner Bernabe S. Batuhan (ponente), Presiding Commissioner Irenea E. Ceniza and Commissioner Amorito V. Cañete.

4 NLRC Decision, pp. 9–10; rollo, pp. 63–64; records, pp. 28–29.

5 NLRC Decision, pp. 5–9; rollo, pp. 59–63; records, pp. 24–28. Italics provided.

6 Assailed CA Decision, p. 6; rollo, p. 35.

7 This case was deemed submitted for resolution on April 30, 2002, upon receipt by the Court of petitioners' Memorandum, which was signed by Atty. Teodoro V. Cortes. Respondents' Memorandum, signed by Attys. Francisco D. Yap and Whelma F. Siton-Yap, was received by the Court on March 7, 2002.

8 Petitioners' Memorandum, p. 6; rollo, p. 275.

9 Viloria v. Court of Appeals, 309 SCRA 529, June 30, 1999.

10 Cebu Shipyard and Engineering Works, Inc. v. William Lines, Inc., 306 SCRA 762, May 5, 1999;Villarico v. Court of Appeals, 309 SCRA 193, June 28, 1999; Alipoon v. Court of Appeals, 305 SCRA 118, March 22, 1999; Baguio v. Republic, 301 SCRA 450, January 21, 1999.

11 Rapali Trading Corporation v. National Labor Relations Commission, 296 SCRA 309, September 25, 1998.

12 Chua v. National Labor Relations Commission, 267 SCRA 196, January 30, 1997.

13 346 SCRA 293, November 29, 2000.

14 Id., pp. 304–305, per De Leon Jr., J.

15 201 SCRA 332, September 5, 1991.

16 Valiant Machinery and Metal Corp. v. National Labor Relations Commission, 252 SCRA 369, January 25, 1996, per Mendoza, J.

17 NLRC Decision, p. 9; rollo, p. 63; records, p. 28.

18 C. Planar Commercial v. National Labor Relations Commission, 303 SCRA 49, February 11, 1999.

19 Barros v. National Labor Relations Commission, 315 SCRA 23, September 22, 1999.

20 Tan v. National Labor Relations Commission, supra.

21 Nueva Ecija I Electric Cooperative, Inc. v. National Labor Relations Commission, 323 SCRA 86, January 24, 2000.

HACIENDA BINO v. CUENCA (2005)

Republic of the PhilippinesSUPREME COURT

SECOND DIVISION

G.R. No. 150478. April 15, 2005

HACIENDA BINO/HORTENCIA STARKE, INC./HORTENCIA L. STARKE, Petitioners, vs.CANDIDO CUENCA, FRANCISCO ACULIT, ANGELINA ALMONIA, DONALD ALPUERTO, NIDA BANGALISAN, ROGELIO CHAVEZ, ELMO DULINGGIS, MERCEDES EMPERADO, TORIBIO EMPERADO, JULIANA ENCARNADO, REYNALDO ENCARNADO, GENE FERNANDO, JOVEN FERNANDO, HERNANI FERNANDO, TERESITA FERNANDO, BONIFACIO GADON, JOSE GALLADA, RAMONITO KILAYKO, ROLANDO KILAYKO, ALFREDO LASTIMOSO, ANTONIO LOMBO, ELIAS LOMBO, EMMA LOMBO, LAURENCIA LOMBO, LUCIA LOMBO, JOEL MALACAPAY, ADELA MOJELLO, ERNESTO MOJELLO, FRUCTOSO MOJELLO, JESSICA MOJELLO, JOSE MOJELLO, MARITESS MOJELLO, MERLITA MOJELLO, ROMEO MOJELLO, RONALDO MOJELLO, VALERIANA MOJELLO, JAIME NEMENZO, RODOLFO NAPABLE, SEGUNDIA OCDEN, JARDIOLINA PABALINAS, LAURO PABALINAS, NOLI PABALINAS, RUBEN PABALINAS, ZALDY PABALINAS, ALFREDO PANOLINO, JOAQUIN PEDUHAN, JOHN PEDUHAN, REYNALDO PEDUHAN, ROGELIO PEDUHAN, JOSEPHINE PEDUHAN, ANTONIO PORRAS, JR., LORNA PORRAS, JIMMY REYES, ALICIA ROBERTO, MARCOS ROBERTO, JR., MARIA SANGGA, RODRIGO SANGGA, ARGENE SERON, SAMUEL SERON, SR., ANGELINO SENELONG, ARMANDO SENELONG, DIOLITO SENELONG, REYNALDO SENELONG, VICENTE SENELONG, FEDERICO STA. ANA, ROGELIO SUASIM, EDNA TADLAS, ARTURO TITONG, JR., JOSE TITONG, JR., NANCY VINGNO, ALMA YANSON, JIMMY YANSON, MYRNA VILLANUEVA BELENARIO, SALVADOR MALACAPAY, and RAMELO TIONGCO, Respondents.

D E C I S I O N

CALLEJO, SR., J.:

Before us is a petition for review of the Decision1 of the Court of Appeals (CA), dated July 31, 2001, and the Resolution dated September 24, 2001 denying the petitioners’ motion for reconsideration. The assailed decision modified the decision of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000099-98.

Hacienda Bino is a 236-hectare sugar plantation located at Barangay Orong, Kabankalan City, Negros Occidental, and represented in this case by Hortencia L. Starke, owner and operator of the said hacienda.

The 76 individual respondents were part of the workforce of Hacienda Bino consisting of 220 workers, performing various works, such as cultivation, planting of cane points, fertilization, watering, weeding, harvesting, and loading of harvested sugarcanes to cargo trucks.2

On July 18, 1996, during the off-milling season, petitioner Starke issued an Order or Notice which stated, thus:

To all Hacienda Employees:

Please bear in mind that all those who signed in favor of CARP are expressing their desire to get out of employment on their own volition.

Wherefore, beginning today, July 18, only those who did not sign for CARP will be given employment by Hda. Bino.

(Sgd.) Hortencia Starke3

The respondents regarded such notice as a termination of their employment. As a consequence, they filed a complaint for illegal dismissal, wage differentials, 13th month pay, holiday pay and premium pay for holiday, service incentive leave pay, and moral and exemplary damages with the NLRC, Regional Arbitration Branch No. VI, Bacolod City, on September 17, 1996.4

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

For her part, petitioner Starke recounted that the company’s Board of Directors petitioned the Sangguniang Bayan of Kabankalan for authority to re-classify, from agricultural to industrial, commercial and residential, the whole of Hacienda Bino, except the portion earmarked for the CARP. She asserted that half of the workers supported the re-classification but the others, which included the herein respondents, opted to become beneficiaries of the land under the CARP. Petitioner Starke alleged that in July 1996, there was little work in the plantation as it was off-season; and so, on account of the seasonal nature of the work, she issued the order giving preference to those who supported the re-classification. She pointed out that when the milling season began in October 1996, the work was plentiful again and she issued notices to all workers, including the respondents, informing them of the availability of work. However, the respondents refused to report back to work. With respect to the respondents’ money claims, petitioner Starke submitted payrolls evidencing payment thereof.

On October 6, 1997, Labor Arbiter Ray Allan T. Drilon rendered a Decision,6 finding that petitioner Starke’s notice dated July 18, 1996 was tantamount to a termination of the respondents’ services, and holding that the petitioner company was guilty of illegal dismissal. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of the complainants illegal and ordering respondent Hortencia L. Starke, Inc. represented by Hortencia L. Starke, as President, to:

1. Reinstate the complainants to their former position without loss of seniority rights immediately upon receipt of this decision;

2. PAY the backwages and wage differentials of the complainants, to wit:

…

in the total amount of Four Hundred Ninety-Five Thousand Eight Hundred Fifty-Two and 72/100 (P495,852.72) Pesos; and

3. TO PAY the complainants attorney's fee in the amount of Forty-Nine Thousand Five Hundred Eighty-Five and 27/100 (P49,585.27) Pesos.

Respondents are further directed to deposit to this Office the total judgment award of FIVE HUNDRED FORTY-FIVE THOUSAND AND FOUR HUNDRED THIRTY-SEVEN AND 99/100 (P545,437.99) PESOS within ten (10) days from receipt of this decision.

All other claims are hereby DISMISSED for lack of merit.

SO ORDERED.7

Both the petitioners and the respondents appealed the case to the NLRC. On July 24, 1998, the NLRC affirmed with modification the decision of the Labor Arbiter. The dispositive part of its decision reads:

WHEREFORE, premises considered, the Decision of the Labor Arbiter is AFFIRMED WITH MODIFICATIONS. Respondent is further ordered to pay the complainants listed in the Holiday Pay Payroll the amounts due them.

SO ORDERED.8

A motion for reconsideration of the said decision was denied by the NLRC.9 Dissatisfied, the respondents appealed the case to the CA where the following issues were raised:

A. THE HONORABLE COMMISSION GRAVELY ABUSED ITS DISCRETION AND POWER BY VIOLATING THE DOCTRINE OF "STARE DECISIS" LAID DOWN BY THE SUPREME COURT AND THE APPLICABLE LAWS AS TO THE STATUS OF THE SUGAR WORKERS.

B. THE HONORABLE COMMISSION COMMITTED SERIOUS ERRORS BY ADMITTING THE MOTION TO DISMISS AND/OR ANSWER TO PETITIONERS’ APPEAL MEMORANDUM DATED MARCH 26, 1998 FILED BY COUNSEL FOR THE HEREIN RESPONDENTS INSPITE OF THE FACT THAT IT WAS FILED WAY BEYOND THE REGLEMENTARY PERIOD.

C. THE HONORABLE COMMISSION COMMITTED GRAVE ERROR IN GIVING CREDENCE TO THE SWEEPING ALLEGATIONS OF THE COMPLAINANTS AS TO THE AWARD OF BACKWAGES AND HOLIDAY PAY WITHOUT ANY BASIS.10

On July 31, 2001, the CA rendered a Decision,11 the dispositive portion of which reads:

WHEREFORE, the decision of the National Labor Relations Commission is hereby MODIFIED by deleting the award for holiday pay and premium pay for holidays. The rest of the Decision is hereby AFFIRMED.

SO ORDERED.12

The CA ruled that the concept of stare decisis is not relevant to the present case. It held that the ruling inMercado, Sr. v. NLRC13 does not operate to abandon the settled doctrine that sugar workers are considered regular and permanent farm workers of a sugar plantation owner, considering that there are facts peculiar in that case which are not present in the case at bar. In the Mercado case, the farm laborers worked only for a definite period for a farm owner since the area of the land was comparatively small, after which they offer their services to other farm owners. In this case, the area of the hacienda, which is 236 hectares, simply does not allow for the respondents to work for a definite period only.

The CA also held that the petitioners’ reliance on Bacolod-Murcia Milling Co. Inc. v. NLRC14 was misplaced, as it in fact, bolstered the respondents' posture that they are regular employees. In that case, the Court held that a sugar worker may be considered as in regular employment even during those years when he is merely a seasonal worker where the issues concern the determination of an employer-employee relationship and security of tenure.

Further, the CA held that the respondents’ appeal to the NLRC was not perfected since they failed to accompany their notice of appeal with a memorandum of appeal, or to timely file a memorandum of appeal. Thus, as to them, the decision of the Labor Arbiter became final and executory. The NLRC, therefore, gravely abused its discretion when it modified the decision of the Labor Arbiter and awarded to the respondents holiday pay and premium for holiday pay. Finally, the CA affirmed the award of backwages, finding no circumstance that would warrant a reversal of the findings of the Labor Arbiter and NLRC on this point. 15

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

Hence, this petition for review.

The petitioners submit the following issues:

A. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND POWER BY VIOLATING THE DOCTRINE OF "STARE DECISIS" LAID DOWN BY THE SUPREME COURT AND THE APPLICABLE LAWS AS TO THE STATUS OF THE SUGAR WORKERS.

B. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE MOTION FOR RECONSIDERATION FOR FAILURE TO STATE THE DATE OF THE RECEIPT OF THE DECISION IN THE MOTION FOR RECONSIDERATION.17

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

Petitioner Starke also takes exception to the denial of her motion for reconsideration due to failure to state the date of the receipt of the decision. She asserts that a denial of a motion for reconsideration due to such cause is merely directory and not mandatory on the part of the CA. Considering that the amount involved in this case and the fact that

the motion was filed within the reglementary period, the CA should have considered the motion for reconsideration despite such procedural lapse.20

On the other hand, the respondents aver that the petitioners erroneously invoke the doctrine of stare decisissince the factual backdrop of this case and the Mercado case is not similar. The respondents posit that theMercado case ruled on the status of employment of farm laborers who work only for a definite period of time for a farm owner, after which they offer their services to other farm owners. Contrarily, the respondents contend that they do not work for a definite period but throughout the whole year, and do not make their services available to other farm owners. Moreover, the land involved in the Mercado case is comparatively smaller than the sugar land involved in this case. The respondents insist that the vastness of the land involved in this case requires the workers to work on a year-round basis, and not on an "on-and-off" basis like the farm workers in the Mercado case.

Finally, the respondents maintain that the requirement that the date of receipt of the decision should be indicated in the motion for reconsideration is mandatory and jurisdictional and, if not complied with, the court must deny the motion outright.21

The petition is without merit.

On the substantial issue of whether the respondents are regular or seasonal employees, the petitioners contend that the CA violated the doctrine of stare decisis by not applying the ruling in the Mercado case that sugar workers are seasonal employees. We hold otherwise. Under the doctrine of stare decisis, when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same.22 Where the facts are essentially different, however, stare decisis does not apply, for a perfectly sound principle as applied to one set of facts might be entirely inappropriate when a factual variance is introduced.23

The CA correctly found that the facts involved in this case are different from the Mercado case; therefore, the ruling in that case cannot be applied to the case at bar, thus:

We do not find the concept of stare decisis relevant in the case at bench. For although in the Mercado case, the Supreme Court held the petitioners who were sugar workers not to be regular but seasonal workers, nevertheless, the same does not operate to abandon the settled doctrine of the High Court that sugar workers are considered regular and permanent farm workers of a sugar plantation owner, the reason being that there are facts present that are peculiar to the Mercado case. The disparity in facts between the Mercado case and the instant case is best exemplified by the fact that the former decision ruled on the status of employment of farm laborers, who, as found by the labor arbiter, work only for a definite period for a farm worker, after which they offer their services to other farm owners, considering the area in question being comparatively small, comprising of seventeen and a half (17½) hectares of land, such that the planting of rice and sugar cane thereon could not possibly entail a whole year operation. The herein case presents a different factual condition as the enormity of the size of the sugar hacienda of petitioner, with an area of two hundred thirty-six (236) hectares, simply do not allow for private respondents to render work only for a definite period.

Indeed, in a number of cases, the Court has recognized the peculiar facts attendant in the Mercado case. InAbasolo v. NLRC,24 and earlier, in Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC,25 the Court made the following observations:

… In Mercado, although respondent constantly availed herself of the petitioners’ services from year to year, it was clear from the facts therein that they were not in her

regular employ. Petitioners therein performed different phases of agricultural work in a given year. However, during that period, they were free to work for other farm owners, and in fact they did. In other words, they worked for respondent, but were nevertheless free to contract their services with other farm owners. The Court was thus emphatic when it ruled that petitioners were mere project employees, who could be hired by other farm owners….26

Recently, the Court reiterated the same observations in Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade27 and added that the petitioners in the Mercado case were "not hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase thereof."

In this case, there is no evidence on record that the same particulars are present. The petitioners did not present any evidence that the respondents were required to perform certain phases of agricultural work for a definite period of time. Although the petitioners assert that the respondents made their services available to the neighboring haciendas, the records do not, however, support such assertion.

The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer.28 There is no doubt that the respondents were performing work necessary and desirable in the usual trade or business of an employer. Hence, they can properly be classified as regular employees.

For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have been employed only for the duration of one season.29 While the records sufficiently show that the respondents’ work in the hacienda was seasonal in nature, there was, however, no proof that they were hired for the duration of one season only. In fact, the payrolls,30 submitted in evidence by the petitioners, show that they availed the services of the respondents since 1991. Absent any proof to the contrary, the general rule of regular employment should, therefore, stand. It bears stressing that the employer has the burden of proving the lawfulness of his employee’s dismissal.31

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

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

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Footnotes

1 Penned by Associate Justice Romeo A. Brawner (now Presiding Justice of the Court of Appeals), with Associate Justices Remedios Salazar-Fernando and Rebecca de Guia-Salvador, concurring.

2 Rollo, p. 102.

3 CA Rollo, p. 43.

4 Rollo, p. 103.

5 Id. at 36.

6 Id. at 35-51.

7 Id. at 49-51.

8 CA Rollo, p. 47.

9 Id. at 56-58.

10 Id. at 5.

11 Rollo, pp. 19-28.

12 Id. at 27-28.

13 G.R. No. 79869, 5 September 1991, 201 SCRA 332.

14 G.R. No. 84272, 21 November 1991, 204 SCRA 155.

15 Rollo, pp. 25-27.

16 Id. at 34.

17 Id. at 6.

18 Supra.

19 Rollo, pp. 87-96.

20 Id. at 14-16.

21 Rollo, pp. 105-108.

22 Villena v. Chavez, G.R. No. 148126, 10 November 2003, 415 SCRA 33.

23 Lee v. Insurance Company of North America, 70 Haw. 120, 763 P.2d 567 (1988).

24 G.R. No. 118475, 29 November 2000, 346 SCRA 293.

25 G.R. No. 127395, 10 December 1998, 300 SCRA 37.

26 Id. at 61.

27 G.R. No. 149440, 28 January 2003, 396 SCRA 518.

28 Tan v. Lagrama, G.R. No. 151228, 15 August 2002, 387 SCRA 393.

29 Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade, supra.

30 CA Rollo, pp. 58-60.

31 Tan v. Lagrama, supra.

32 See Vergara v. National Labor Relations Commission, G.R. No. 117196, 5 December 1997, 282 SCRA 486.

CASERES v. URSUMCO (2007)

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R.No. 159343               September 28, 2007

PEDY CASERES and ANDITO PAEL, Petitioners, vs.UNIVERSAL ROBINA SUGAR MILLING CORPORATION (URSUMCO) and/or RESIDENT MANAGER RENE CABATE, Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Universal Robina Sugar Milling Corporation (respondent) is a corporation engaged in the cane sugar milling business. Pedy Caseres (petitioner Caseres) started working for respondent in 1989, while Andito Pael (petitioner Pael) in 1993. At the start of their respective employments, they were made to sign a Contract of Employment for Specific Project or Undertaking. Petitioners' contracts were renewed from time to time, until May 1999 when they were informed that their contracts will not be renewed anymore.

Petitioners filed a complaint for illegal dismissal, regularization, incentive leave pay, 13th month pay, damages and attorney’s fees.

In a Decision1 dated August 24, 1999, the Labor Arbiter (LA) dismissed the complaint "for not being substantiated with clear and convincing evidence."

The National Labor Relations Commission (NLRC) affirmed the LA's dismissal,2 and the Court of Appeals (CA)3dismissed the petition filed before it.4

Hence, herein Petition for Review on Certiorari under Rule 45 of the Rules of Court with the issues set forth as follows:

I. WHETHER OR NOT THE PETITIONERS ARE SEASONAL/PROJECT/TERM EMPLOYEES NOT REGULAR EMPLOYEES OF RESPONDENTS;

II. WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY DISMISSED AND ARE ENTITLED TO BACKWAGES AND OTHER MONETARY BENEFITS PRAYED FOR IN THE COMPLAINT.5

The petition is without merit.

The rule is clear that a petition for review on certiorari under Rule 45 of the Rules of Court should raise only questions of law, subject to certain exceptions.6 Whether or not respondents were project employees or regular employees is a question of fact.7

The LA, the NLRC and the CA are one in ruling that petitioners were not illegally dismissed as they were not regular, but contractual or project employees. Consequently,

the finding of the LA, the NLRC, and the CA that petitioners were project employees binds this Court.8

The Court finds no cogent reason to depart from their ruling.

Article 280 of the Labor Code provides:

ART. 280. Regular and Casual Employees. – The provision of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists.

The foregoing provision provides for three kinds of employees: (a) 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"; (b) project employees or those "whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season"; and (c) casual employees or those who are neither regular nor project employees.9

The principal test for determining whether an employee is a project employee or a regular employee is whether 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.10 A project employee is 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 season.11 A true project employee should be assigned to a project which begins and ends at determined or determinable times, and be informed thereof at the time of hiring.12

Petitioners contend that respondent's repeated hiring of their services qualifies them to the status of regular employees. On this score, the LA ruled:

This is further buttress[ed] by the fact that the relationship between complainants and the respondent URSUMCO, would clearly reveal that the very nature of the terms and conditions of their hiring would show that complainants were required to perform phases of special projects which are not related to the main operation of the respondent for a definite period, after which their services are available to any farm owner.13

The NLRC, agreeing with the LA, further ruled that:

In the case at bar, We note that complainants never bothered to deny that they voluntarily, knowingly and willfully executed the contracts of employment. Neither was there any showing that respondents exercised moral dominance on the complainants, x

x x it is clear that the contracts of employment are valid and binding on the complainants.

The execution of these contracts in the case at bar is necessitated by the peculiar nature of the work in the sugar industry which has an off milling season. The very nature of the terms and conditions of complainants' hiring reveals that they were required to perform phases of special projects for a definite period after, their services are available to other farm owners. This is so because the planting of sugar does not entail a whole year operation, and utility works are comparatively small during the off-milling season. x x x14

Finally, the CA noted:

Petitioner Pedy Caseres first applied with private respondent URSUMCO on January 9, 1989 as a worker assisting the crane operator at the transloading station. Upon application, Caseres was interviewed and made to understand that his employment would be co-terminus with the phase of work to which he would be then assigned, that is until February 5, 1989 and thereafter he would be free to seek employment elsewhere. Caseres agreed and signed the contract of employment for specific project or undertaking. After an absence of more than five (5) months, Caseres re-applied with respondent as a seasonal project worker assisting in the general underchassis reconditioning to transport units on July 17, 1989. Like his first assignment, Caseres was made to understand that his services would be co-terminus with the work to which he would be then assigned that is from July 17, 1989 to July 20, 1989 and that thereafter he is free to seek employment elsewhere to which Caseres agreed and readily signed the contract of employment for specific project or undertaking issued to him. Thereafter Caseres voluntarily signed several other employment contracts for various undertakings with a determinable period. As in the first contract, Caseres' services were co-terminus with the work to which he was assigned, and that thereafter, he was free to seek employment with other sugar millers or elsewhere.

The nature and terms and conditions of employment of petitioner Andito Pael were the same as that of his co-petitioner Caseres.

x x x

It must be noted that there were intervals in petitioners' respective employment contracts, and that their work depended on the availability of such contracts or projects. Consequently, the employment of URSUMCO's work force was not permanent but co-terminous with the projects to which the employees were assigned and from whose payrolls they were paid (Palomares vs. NLRC, 277 SCRA 439).

Petitioners' repeated and successive re-employment on the basis of a contract of employment for more than one year cannot and does not make them regular employees. Length of service is not the controlling determinant of the employment tenure of a project employee (Rada vs. NLRC, 205 SCRA 69). x x x15

It should be stressed that contracts for project employment are valid under the law. In Villa v. National Labor Relations Commission,16 the Court stated that:

x x x by entering into such contract, an employee is deemed to understand that his employment is coterminous with the project. He may not expect to be employed continuously beyond the completion of the project. It is of judicial notice that project employees engaged for manual services or those for special skills like those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is not a valid reason for bestowing special treatment on them or for invalidating a contract of employment. Project employment contracts are not lopsided agreements in favor of only one party thereto. The employer’s interest is equally important as that of the employee’s

for theirs is the interest that propels economic activity. While it may be true that it is the employer who drafts project employment contracts with its business interest as overriding consideration, such contracts do not, of necessity, prejudice the employee. Neither is the employee left helpless by a prejudicial employment contract. After all, under the law, the interest of the worker is paramount.17

1âwphi1

The fact that petitioners were constantly re-hired does not ipso facto establish that they became regular employees. Their respective contracts with respondent show that there were intervals in their employment. In petitioner Caseres's case, while his employment lasted from August 1989 to May 1999, the duration of his employment ranged from one day to several months at a time, and such successive employments were not continuous. With regard to petitioner Pael, his employment never lasted for more than a month at a time. These support the conclusion that they were indeed project employees, and since their work depended on the availability of such contracts or projects, necessarily the employment of respondent’s work force was not permanent but co-terminous with the projects to which they were assigned and from whose payrolls they were paid. As ruled in Palomares v. National Labor Relations Commission,18 it would be extremely burdensome for their employer to retain them as permanent employees and pay them wages even if there were no projects to work on.

Moreover, even if petitioners were repeatedly and successively re-hired, still it did not qualify them as regular employees, as length of service is not the controlling determinant of the employment tenure of a project employee,19 but whether the employment has been fixed for a specific project or undertaking, its completion has been determined at the time of the engagement of the employee.20 Further, the proviso in Article 280, stating that an employee who has rendered service for at least one (1) year shall be considered a regular employee, pertains to casual employees and not to project employees.21

Accordingly, petitioners cannot complain of illegal dismissal inasmuch as the completion of the contract or phase thereof for which they have been engaged automatically terminates their employment.

WHEREFORE, the petition is DENIED.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZAssociate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGOAssociate Justice

Chairperson

MINITA V. CHICO-NAZARIOAssociate Justice

ANTONIO EDUARDO B. NACHURAAssociate Justice

RUBEN T. REYESAssociate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

CONSUELO YNARES-SANTIAGOAssociate JusticeChairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNOChief Justice

Footnotes

1 Rollo, p. 69.

2 Id. at 80.

3 Penned by Associate Justice Portia Aliño-Hormachuelos, with Associate Justices Elvi John S. Asuncion and Edgardo F. Sundiam, concurring; rollo, p. 99.

4 Id. at 338.

5 Id. at 19.

6 The exceptions are: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion. (Chuayuco Steel Manufacturing Corporation and/or Edwin Chua v. Buklod ng Manggagawa sa Chuayuco Steel Manufacturing Corporation, G.R. No. 167347, January 31, 2007).

7 Hanjin Engineering and Construction Co., Ltd. v. Court of Appeals, G.R. No. 165910, April 10, 2006, SCRA 78, 100 .

8 Big AA Manufacturer v. Antonio, G.R. No. 160854, March 3, 2006, 484 SCRA 33, 42.

9 Rockwell Industrial Corporation v. Court of Appeals, G.R. No. 167714, March 6, 2007; Villa v. National Labor Relations Commission, 348 Phil. 116, 140 (1998).

10 Filipinas Pre-Fabricated Building Systems (Filsystems), Inc. v. Puente, G.R. No. 153832, March 18, 2005, 453 SCRA 821, 828.

11 Imbuido v. National Labor Relations Commission, 385 Phil. 999, 1009 (2000).

12 Olongapo Maintenance Services, Inc. v. Chantengco, G.R. No. 156146, June 21, 2007.

13 Rollo, p. 68.

14 Id. at 79.

15 Id. at 334-336.

16 Supra note 9.

17 Id. at 141.

18 343 Phil. 213 (1997).

19 Abesco Construction and Development Corporation v. Ramirez, G.R. No. 141168, April 10, 2006, 487 SCRA 9, 14.

20 D.M. Consunji, Inc. v. National Labor Relations Commission, 401 Phil. 635, 641 (2000).

21 Fabela v. San Miguel Corporation, G.R. No. 150658, February 9, 2007.

MANTLE TRADING v. NLRC (2009)

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 166705               July 28, 2009

MANTLE TRADING SERVICES, INCORPORATED AND/OR BOBBY DEL ROSARIO, Petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION and PABLO S. MADRIAGA, Respondents.

D E C I S I O N

PUNO, C.J.:

This petition for review seeks to reverse the Decision1 of the Court of Appeals in C.A.-G.R. SP No. 84796 which nullified and set aside the Decision2 and Resolution of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 034291-03 which modified an earlier decision by the Labor Arbiter holding that respondent Pablo S. Madriaga (Madriaga) was illegally dismissed.

Petitioner company, Mantle Trading Services, Inc., is engaged in the fishing business.3 Sometime in June 1989, Madriaga was hired by petitioner company as a "batilyo" or fish hauler. Subsequently, he became a "tagapuno" (someone who filled up tubs with fish). He worked from 6:00 p.m. up to 6:00 a.m. the following day with a daily pay of P150.00.

On August 10, 1999, Madriaga was reported by one Henry Gallos, a fish broker, to have received money from a fish trader, Mr. Edwin Alfaro. As consideration, Madriaga would put more fish in Alfaro’s tubs. On August 25, 1999, Madriaga was again reported to have received money from Alfaro for the same illicit purpose. In both incidents, formal incident reports were submitted to the petitioner company.4

On September 11, 1999, Madriaga was allegedly barred by the payroll master, Mr. Charlie Baqued, from reporting for work. Petitioner company, on the other hand, alleged that Madriaga abandoned his work when he was about to be investigated for the two incident reports.

On February 7, 2001, Madriaga filed a complaint with the Regional Office of the Department of Labor and Employment (DOLE)—National Capital Region (NCR) against petitioners, for illegal dismissal, underpayment of wages and nonpayment of holiday pay, 13th month pay, overtime pay, service incentive leave pay and night shift differential pay.

On June 20, 2001, the DOLE-NCR Regional Office endorsed the complaint to the NCR Arbitration Branch. Petitioner company alleged, among others, that Madriaga was a seasonal employee and he was not dismissed. In a decision rendered on August 26, 2002, Labor Arbiter Melquiades Sol D. Del Rosario found Madriaga to be a regular employee who was illegally dismissed. The dispositive portion states, viz.:

CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered finding complainant to have been illegally dismissed. Respondent Mantle Trading Services, Inc. is hereby ordered to pay complainant the sums computed in the body of this decision, which dispositions are made a part hereof.

SO ORDERED.5

The Labor Arbiter ruled that Madriaga was a regular employee because "the nature of [Madriaga’s] work is filling tubs with fish everytime the fishing vessel would come to port, and that the business of respondent is the disposition of fish catch."6 He found that since the signing of the employment agreement with petitioner company on August 1, 1996, Madriaga had been working as "tagapuno" continuously.7 He held that Madriaga’s work was necessary or desirable in the usual business or trade of the petitioner company.8 The Labor Arbiter concluded that Madriaga could not have been a project worker as alleged by the petitioner company because there is no specific project that appeared on the contract and neither was there a statement as to the specific period of time when that the project will be completed.

The Labor Arbiter also faulted the petitioner company in failing to comply with the requirement of notice before dismissing an employee. He held that the employer must furnish the employee, sought to be dismissed, with two (2) written notices before termination can be legally effected: first, there must be a notice which apprises the employee of the particular acts or omissions for which the dismissal is sought; and second, a subsequent notice which informs the employee of the employer’s decision to dismiss him.9 The Labor Arbiter held that even if the ground of dismissal is abandonment of work, there must still be a notice to be served at the employee’s last known address.10

The Labor Arbiter awarded Madriaga with backwages to be paid not from the date he was dismissed, on September 11, 1999, but on February 7, 2001 "as a matter of penalty for dilly-dallying in the filing of the case."11As of June 11, 2002, respondent’s backwages amounted to P82,368.00. In addition, the Labor Arbiter awarded Madriaga P15,444.00 as separation pay, P24,240.00 for underpayment of wages, P1,980.00 for unpaid holiday pay, or the total amount of P124,032.00.12

Petitioner company appealed to the NLRC. It charged that the Labor Arbiter committed grave abuse of discretion in holding that: (1) Madriaga was a regular and not a contractual employee; (2) he was illegally dismissed; and (3) his money claims were granted.1avvphi1

On January 30, 2004, the NLRC modified the decision of the Labor Arbiter. It affirmed the Labor Arbiter’s ruling that Madriaga was a regular employee but it held that Madriaga was not illegally dismissed, viz.:

As regards the second issue, respondent [Mantle] contends that [Madriaga] was not illegally dismissed because being a contractual/seasonal/project employee, his employment was terminated at the end of the undertaking or at the latest, at the end of the fishing season for 1999, hence, there was no need to comply with the two-notice requirement under the law. It claims that when the incidents of August 10 and August 25, 1999 were about to be investigated, complainant [Madriaga] disappeared from the fish port and abandoned his work, only to surface again when this complaint was heard. It avers that complainant committed serious misconduct since by the account of his co-workers, he received money from a fish trader to intentionally injure the interest of the respondent.

We find that complainant was neither dismissed by the respondent nor did he abandon his work. Based on the records, no notice of termination was sent to the complainant by the respondent company, much less was complainant verbally told by any officer of the

respondent not to report for work. Complainant’s allegation that he was barred by the payroll master from reporting for work has not been substantiated. In any case, even if it were true, the act of the payroll master in preventing the complainant from reporting for work cannot be deemed respondent’s act in the absence of evidence that said payroll master had the authority to dismiss employees. What appears to have happened here is that complainant was not dismissed by the respondent company but the complainant without ascertaining the authority of the payroll master, heeded the latter’s order for him not to report for work.13

The NLRC rejected petitioner company’s contention that Madriaga abandoned his work. It ruled that mere absence is not sufficient. There must be proof that there was deliberate and unjustified refusal on the part of the employee to resume his employment without any intention of returning.

Thus, the dispositive portion of the NLRC decision held:

Wherefore, the Decision dated August 26, 2002 is MODIFIED. Complainant is declared not illegally dismissed and directed to report for work. Respondent is directed to accept complainant back to work and to pay complainant the amount of twenty four thousand two hundred forty pesos (P24,240.00) as salary differentials, five thousand one hundred forty eight pesos (P5,148.00) as 13th month pay and one thousand nine hunded eighty pesos (P1,980.00) as holiday pay, or the aggregate sum of thirty one thousand three hundred twenty eight pesos (P31,328.00).

SO ORDERED.14

Both petitioner company and respondent filed their respective motions for reconsideration. Petitioner company contended that the NLRC erred when it found Madriaga to have been employed since 1989 and not 1999. It reiterated its argument that Madriaga was not a regular employee and that he abandoned his work. Respondent, on the other hand, insisted he was illegally dismissed. On March 31, 2004, their motions for reconsideration were denied for lack of merit.

Petitioner company sought recourse with the Court of Appeals through a Petition for Certiorari. It alleged that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in ruling that: (1) Madriaga was a regular employee; (2) his employment commenced in 1989 as testified to by the employee and not 1999 as stated in their employment contract; and (3) he did not abandon his work.

On August 31, 2004, the Court of Appeals affirmed the finding of the Labor Arbiter and the NLRC that Madriaga was a regular employee. It held that Madriaga’s work as tagapuno may be likened to the work of a cargador which is directly related, necessary and vital to the operations of the employer’s business.15 It ruled that the distribution of the day’s catch to the tubs of different fish traders has a reasonable connection to the fishing business of petitioner company.

The Court of Appeals also sustained the ruling that Madriaga began work in 1989 and not in 1999. It affirmed the joint finding of the Labor Arbiter and the NLRC based on the testimony of the employee that he began work in 1989 as opposed to the questionable employee contract dated 1999.

The Court of Appeals, however, reversed the Labor Arbiter and the NLRC on the issue of abandonment of work. It held that there was a causal connection between the charge against Madriaga of having received money from a fish trader and his failure to seek his immediate reinstatement. It ruled that Madriaga abandoned his work as it was only invoked two years after his alleged dismissal. However, despite the finding that Madriaga abandoned his work, the Court of Appeals held that "[c]onsidering that

petitioner has not established the compliance with due process in terminating respondent’s employment, it is still considered to have committed illegal dismissal."16 The dispositive portion of its Decision held:

Wherefore, the Decision dated January 30, 2004 of the National Labor Relations Commission is ANNULLED and SET ASIDE. Accordingly, the Decision dated August 26, 2002 of the Labor Arbiter finding private respondent to have been illegally dismissed is REINSTATED.

SO ORDERED.17

Petitioner company filed a Motion for Reconsideration and a Supplemental Motion for Reconsideration, which were both denied in a Resolution dated January 13, 2004.18

It now comes before this Court raising the following issues:

I.

Whether or not the Honorable Court of Appeals erred when it went beyond the scope of a writ of certiorari in resolving that private respondent was illegally dismissed although such issue was not raised [in] the petition for certiorari.

II.

Whether or not the Honorable Court of Appeals erred when it held that private respondent was illegally dismissed because petitioner did not comply with the notice requirement despite its finding of abandonment of work.

The first ground patently lacks merit. Petitioner company raised three (3) assignment of errors before the Court of Appeals, i.e., whether the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction: (1) in ruling that Madriaga is a regular employee; (2) in holding that Madriaga’s employment commenced in 1989; and (3) in concluding that respondent did not abandon his work. All these issues cannot be divorced from the question of whether Madriaga was illegally dismissed by the petitioner company. More specifically, the issue of abandonment is inextricably linked with the issue of the validity of the dismissal.19Indeed, the illegal dismissal of Madriaga was the subject of his complaint that was resolved by the Labor Arbiter, the NLRC and the Court of Appeals. It is the heart of the case at bar.

We now come to the ruling of the Court of Appeals that Madriaga who abandoned his work was nevertheless illegally dismissed for non-compliance by the petitioner company with the notice requirement. It is settled that to effect a valid dismissal, the law requires that a) there be just and valid cause as provided under Article 282 of the Labor Code; and b) the employee be afforded an opportunity to be heard and to defend himself. The two-notice requirement must be complied with, to wit: a) a written notice containing a statement of the cause for the termination to afford the employee ample opportunity to be heard and defend himself with the assistance of his representative, if he so desires; and b) if the employer decides to terminate the services of the employee, the employer must notify him in writing of the decision to dismiss him, stating clearly the reason therefore.20

The case of Agabon v. NLRC, et al.21 applies to the case at bar. In Agabon, the dismissal was found by the Court to be based on a just cause because the employee abandoned his work. But it also found that the employer did not follow the notice requirement demanded by due process. It ruled that this violation of due process on the part of the employer did not nullify the dismissal, or render it illegal, or ineffectual. Nonetheless, the employer was ordered to indemnify the employee for the violation of his right to due

process. It further held that the penalty should be in the nature of indemnification, in the form of nominal damages and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer.22 The amount of such damages is addressed to the sound discretion of the court, considering the relevant circumstances.23 Thus, in Agabon, the Court ordered the employer to pay the employee nominal damages in the amount of P30,000.00.

Again, we stress that though the Court is given the latitude to determine the amount of nominal damages to be awarded to an employee who was validly dismissed but whose due process rights were violated, a distinction should be made between a valid dismissal due to just causes under Article 282 of the Labor Code and those based on authorized causes, under Article 283. The two causes for a valid dismissal were differentiated in the case of JAKA Food Processing Corporation v. Pacot24 where the Court held that:

A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee himself initiated the dismissal process.

On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employer's exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program.

x x x x

Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employer's exercise of his management prerogative.25

Since in the case of JAKA, the employee was terminated for authorized causes as the employer was suffering from serious business losses, the Court fixed the indemnity at a higher amount of P50,000.00. In the case at bar, the cause for termination was abandonment, thus it is due to the employee’s fault. It is equitable under these circumstances to order the petitioner company to pay nominal damages in the amount of P30,000.00, similar to the case of Agabon.

We affirm the award of salary differentials, 13th month pay and holiday pay, awarded by the NLRC and the Court of Appeals. We note that although petitioner company had cause to terminate Madriaga, this has no bearing on the issue of award of salary differentials, holiday pay and 13th month pay because prior to his valid dismissal, he performed work as a regular employee of petitioner company, and he is entitled to the benefits provided under the law. Thus, in the case of Agabon, even while the Court found that the dismissal was for a just cause, the employee was still awarded his monetary claims.

An employee should be compensated for the work he has rendered in accordance with the minimum wage, and must be appropriately remunerated when he was suffered to work on a regular holiday during the time he was employed by the petitioner company. As regards the 13th month pay, an employee who was terminated at any time before the

time for payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year up to the time of his termination from the service.26

As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege nonpayment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove nonpayment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents — which will show that overtime, differentials, service incentive leave and other claims of workers have been paid — are not in the possession of the employee but in the custody and absolute control of the employer. 27 Since in the case at bar petitioner company has not shown any proof of payment of the correct amount of salary, holiday pay and 13th month pay, we affirm the award of Madriaga’s monetary claims.

IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of Appeals in C.A.-G.R. SP No. 84796, dated August 31, 2004, annulling and setting aside the Decision of the NLRC dated January 30, 2004 and reinstating the Decision dated August 26, 2002 of the Labor Arbiter finding respondent Pablo S. Madriaga a regular employee and ordering the petitioner company to pay the amount of twenty-four thousand, two hundred forty pesos (P24,240.00) as salary differentials, five thousand, one hundred forty-eight pesos (P5,148.00) as 13th month pay, and one thousand, nine hundred eighty pesos (P1,980.00) as holiday pay, is hereby AFFIRMED.In accordance with the ruling in Agabon, the award for backwages is deleted, but in addition, the amount of thirty thousand pesos as nominal damages (P30,000.00) is awarded to the respondent. The aggregate sum of the award to Madriaga shall be the total of sixty-one thousand, three hundred twenty-eight pesos (P61,328.00).

No costs.

SO ORDERED.

REYNATO S. PUNOChief Justice

WE CONCUR:

ANTONIO T. CARPIOAssociate Justice

RENATO C. CORONAAssociate Justice

TERESITA J. LEONARDO-DE CASTROAssociate Justice

LUCAS P. BERSAMINAssociate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNOChief Justice

Footnotes

1 Penned by Justice Magdangal M. De Leon, with Justices Romeo A. Brawner and Mariano C. Del Castillo concurring; promulgated on August 31, 2004.

2 Penned by Presiding Commissioner Lourdes C. Javier, with Commissioners Ernesto C. Verceles and Tito F. Genilo concurring; promulgated on January 30, 2004.

3 Co-petitioner Bobby del Rosario was alleged by the respondent as part of the employers. However, the Labor Arbiter and the NLRC both found that Mantle Trading Services, Inc. has in its incorporators and officers no person by the name of "Bobby del Rosario."

4 CA rollo, p. 30; Annexes B & C, Mantle’s Original NLRC Position Paper.

5 Id. at pp. 66-78, Decision of the Labor Arbiter, dated August 26, 2002.

6 Rollo, p. 142.

7 Id.

8 Id. at 143.

9 Id. at 46.

10 Citing Labor Congress of the Philippines v. NLRC, et al., G.R. No. 123938, May 21, 1998, 290 SCRA 509.

11 Rollo, p. 47.

12 CA Rollo, pp. 76-77.

13 Rollo, pp. 102-103. NLRC NCR CA No. 034291-03, dated January 30, 2004, pp. 5-6 (emphasis supplied).

14 Decision of the Third Division, National Labor Relations Commission, dated January 30, 2004.

15 Citing Caurdanetaan Piece Workers Union v. Laguesma, G.R. No. 113542, February 24, 1998, 286 SCRA 401.

16 Rollo, p. 37.

17 Id. at 37.

18 Id. at 40.

19 See RBC Cable Master System, et al. v. Marcial Baluyot, G.R. No. 172670, January 20, 2009.

20 Shoppes Manila, Inc. v. NLRC, G.R. No. 147125, January 14, 2004, 419 SCRA 354; R Transport Corp. v. Rogelio Ejandra, G.R. No. 148508, May 20, 2004, 428 SCRA 75.

21 G.R. No. 158693, November 17, 2004, 442 SCRA 573.

22 Id.

23 Id.

24 G.R. No. 151378, March 28, 2005, 454 SCRA 119.

25 Id. at 124-126.

26 Revised Guidelines On The Implementation Of The 13th Month Pay Law, November 16, 1987.

27 Villar v. NLRC, G.R. No. 130935, May 11, 2000, 331, SCRA 686, 695.

PHILIPPINE FRUIT v. NLRC (1999)

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

 

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:

I

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.

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. 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 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 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 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.

Under the above 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. 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 inMercado, 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

Davide, Jr., C.J., Melo, Pardo and Ynarez-Santiago, JJ., concur.

Footnotes

1 Rollo, p. 69.

2 Id., at 40.

3 Id., at 43.

4 Id., at 14.

5 Id., at 16-17.

6 Id., at 17-19.

7 Id., at 22-23.

8 Id., at 23.

9 Western Shipping Agency, Inc. vs. National Labor Relations Commission, 253 SCRA 405 (1996).

10 Rollo, pp. 60-61.

11 Id., at 32, 39, and 40.

12 Mehitabel Furniture Co., Inc. vs. NLRC, 220 SCRA 602 (1993).

13 Tacloban Sagkahan Rice and Corn Mills, Co. vs. NLRC, 183 SCRA 425 (1990).

14 201 SCRA 332 (1991).

15 Jimenez vs. NLRC, 256 84 (1996).

16 Rollo, pp. 183-184.

PHILIPPINE TOBACCO v. NLRC (1998)

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

 

G.R. No. 127395 December 10, 1998

PHILIPPINE TOBACCO FLUE-CURING & REDRYING CORPORATION, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, LIGAYA LUBAT, MARY JANE ESTARIS, EUFRECINA JAVIER, OFELIA PLANDEZ, EDGARDO FORMENTO, CRESCENCIA TIU, MA. VICTORIA LEON, GELLEN EULALIA, AIDA LICUDO, LUCINA LURIS, ERLINDA BORCE, DOMINGA AYALA, CARMELITA APANTO, AIDA ALBANIEL, SALVACION SORIO, PETRONILA SAMSON, ERLINDA CARANAY, ROSALIE TIU, MILAGROS QUISMUNDO, LUZ DELA CRUZ, VIVIAN DERLA, IRENE ENIEGO, VICENTA GARCIA, YOLANDA IGNACIO, ADORACION LADERA, GLORIA MENDEZ, LEONILA MENDOZA, REBECCA MORALES, TERESITA TIU, EMELITA QUILANO, JULIETA PEDRIGAL, ANTONIA REYES, JOSEFA ROSALES, FRANCISCA TISMO, NORMA AGUIRRE, CAROLINA AVISO, AMELIA BAUTISTA, ROSA BORJA, APOLONIA CASTILLO, CARMELITA CAYETANO, ROSELFIDA CENTINA, PATRIA BUSTILLO, FELICIAD CIPRIANO, MARINA CORPUZ, MATILDE CORPUZ, JOSEFINA CUENZA, BIENVENIDA DE GUZMAN, EUGENIA DELA CRUZ, MARIA PINEDA, PANCHITA NARCA, CRISANTA MULAWIN, VIRGINIA MENGOLIO, ROSARIO OSMA, ARCELI MADRILEJO, CRISTOPHER LABADOR, CANDELARIA LAZONA, ANGELITA LESTINGYO, CARMELITA ESPIRITU, HELEN ESTARIS, ROSA JAPSON, ARDIONELA LAZONA, ARIEL ULTRA, REYNANTE TUMBUCON, ANTENOR REMOLLINO, ALEXANDER REMOLLINO, ARNALDO NAPALIT, MACARIO MORIEL, JOSELITO LICUDO, PATERNO LAVALLA, JERRY LICUDO, CESAR SAMSON, EDUARDO ESGUERRA JR., RAMISES CENTARAN, JUAN BUSTILLO, ROLANDO ALBANIEL, REYNALDO AQUINO, JAIME ESGUERRA, ARMANDO JAPSON, FERNANDO ESGUERRA, CARLITO ENIEGO, REYNALDO DAYOT, MARCELO DAYOT, RODOLFO CERBITE, ARTEMIO BOQUILLA, PASCUAL AGUJA, ERIC AGUJA, CELESTINA AQUINO, REYNALDO BARQUIN, FELOMENA BEGONIA, ROSITA BAGONIA, REGINA BENITEZ, EDGARDO BERGANO, RODOLFO BORROMEO, LUDIVICO DALAY, ASCILIPIADES GOYENA, REMEDIO GOYENA, OSCAR EMNACE, GERTRUDES GUIAO, LOLITA MUSNE, ALBERTO PARAMA, LUNINGNING PERALTA, AMELIA RANCHES, ERNESTO SAN JUAN, LIWAYWAY SAN JUAN, RICARDO TRIUMFANTE, LORENA TORCIDO, PRISCILLA VILLASIN, LUZVIMINDA VILLEGAS, ROSILE VERSOZA, CHARITO ISIDRO, PETER LABAYNE, and SHIRLEY LUBAT, respondents.

 

PANGANIBAN, J.:

This case involves two groups of seasonal workers who claimed separation benefits after the closure of petitioner's tobacco processing plant in Balintawak, Metro Manila and the transfer of its tobacco operations to Candon, Ilocos Sur. Petitioner refuses to grant separation pay to the workers belonging to the first batch (referred to as the Lubat group), because they had not been given work during the preceding year and, hence, were no longer in its employ at the time it closed its Balintawak plant. Likewise, it claims exemption from awarding

separation pay to the second batch (the Luris group), because the closure of its plant was due to "serious business losses," as defined in Article 283 of the Labor Code.

In resolving this controversy, this Court issues the following rulings: (1) the aforecited Article 283 applies to both complete and partial cessation of operations; (2) "serious business losses" that would have exempted petitioner from paying separation benefits were not proven by its "recasted financial statements"; (3) the employer's refusal to rehire the first batch of employees had no legal justification and was thus an illegal dismissal; and (4) the second batch of employees are entitled to the separation pay provided by the Labor Code "in cases of closure . . . not due to serious business losses."

The Case

The foregoing point encapsulate our ruling on the present Petition for Certiorari, assailing the August 30, 1996 Decision of the National Labor Relations Commission (NLRC) 1 in NLRC NCR Case No. 00-08-06061-94 and NLRC Case No. 08-06082-94, the dispositive portion of which reads:

WHEREFORE, the instant appeals are hereby dismissed for lack of merit. 2

The NLRC upheld the November 27, 1995 Decision of the labor arbiter 3 which disposed:

WHEREFORE, premises considered, respondent PHILIPPINE TOBACCO FLUE-CURING and REDRYING CORPORATION is hereby ordered to pay within ten (10) days from receipt hereof herein complainants (Lubat group) their respective separation pay, equivalent to one-half month pay for every year of service considering the above stated conditions, as follows: under Lubat Group: Mary Jane Estaris — P9,206.25 (P122.75 x 15 days x 5 yrs.); Eufrecina Javier — P9,131.25 (P121.75 x 15 days x 5 yrs.); Ofelia Plandez — P10,957.50 (P121.75 x 15 days x 6 yrs.); Edgardo Pormento — P5,310 (P118 x 15 x 3 yrs.); Cresencia Tiu — P7,140 (P119 x 15 days x 4 yrs.); Ma. Victoria Leon — P7,305 (P121.75 x 15 days x 4 yrs.); Ligaya Lubat — P11,047.50 (122.75 x 15 days x 6 yrs.); Gellen Eulalia — P12,888.75 (P122.75 x 15 days x 7 yrs.); and Aida Licudo — P18,630 (P124.20 x 15 days x 10 yrs.); and [u]nder Luris group: Erlinda Borce — P37,116 (P154.65 x 15 days x 21 yrs.) — (less) of P11,598.75); Dominga Ayala — P56,477.94 (P156.40 x 15 days x 32 yrs.) — P18,594.06); Carmelita Apanto — P42,720.20 (P154.65 x 15 days x 22 yrs.) — P13,757.74); Aida Albaniel — P6,693.75 (P148.75 x 15 days x 5 yrs.) — P4,462.50); Salvacion Sorio — (P51,034.50 (P154.65 x 15 days x 30 yrs.) — P18,558.00); Petronila Samon Petronilo Samson) — P13,567.50 (P150.75 x 15 days x 9 yrs.) P6,783.75); Erlinda Caranay — P34,615.81 (P153.65 x 15 days x 20 yrs.) P11,479.19); Rosalie Tiu — P11,231.25 (P149.75 x 15 days x 7 yrs.) — P4,492.50); Milagros Quismundo — P44,943.73 (P154.65 x 15 days x 26 yrs.) — P16,149.78); Luz dela Cruz — P13,567.50 (P150.75 x 15 days x 9 yrs.) — P6,783.75); Vivian Derla — P13,477.50 (P149.75 x 15 days x 8 yrs.) — P4,492.50); Irene Eniego — P7,475.31 (P149.75 x 15 days x 5 yrs.) — (P3,755.94); Vicenta Garcia — P44,618.56 (P155.35 x 15 days x 26 yrs.) — P15,967.94); Yolanda Ignacio — P7,400.31 (P148.75 x 15 days x 5 yrs.) — P3,755.94); Adoracion Ladera P18,276 (P152.30 x 15 days x 12) — P9,138); Luciana Luris — P64,577.78 (P159 x 15 days x 35 yrs.) — P18,975.97); Gloria Mendez — P32,266.50 (P153.65 x 15 x 18 yrs.) — P9,219 Leonila Mendoza — P41,485.50 (P153.65 x 15 days x 23 yrs.) — P11,523.75); Rebecca Morales — P29,835 (P153 x 15 x 17 yrs.) — P9,180); Teresita Tiu — P27,657 (P153.65 x 15 x 17 yrs.) — P11,523.75); Emelita Quilano — P23,901.06 (P148.75 x 15 x 5 yrs.) — P3,755.94); Julieta Pedrigal — P54,622.68 (P156.40 x 15 x 32 yrs.) — P20,449.32); Antonia Reyes — P52,410.26 (P155.35 x 15 x 33 yrs.) — P24,487.99); Josefa Rosales — P32,291.83) P153.65 x 15 x 18 yrs.) — P9,193.67); Francisca Tismo —

P25,377.67); (P153.65 x 15 x 5 yrs.) — P9,193.58); Norma Aguirre — P11,300.25 (P150.75 x 15 x 8 yrs.) P6,783.75); Carolina Aviso — P4,522.50 (P150.75 x 15 x 4 yrs.) — P4,522.50); Amelia Bautista — P13,567.50 (P150.75 x 15 x 9 yrs.) — P6,783.75); Rosa Borja — P2,863.75 (P145 x 15 x 3 yrs.) — P3,661.25); Apolonia Castillo — P27,540 (P153 x 15 x 17 yrs.) — P11,475); Carmelita Cayetano P34,571.25 (P153.65 x 15 x 20 yrs.) — P11,523.75); Roselfida Centina — P11,231.25 (P149.75 x 15 x 7 yrs.) — P4,492.50); Patria Bustillo — P39,461.41 (P154.65 x 16 x 24 yrs.) — P16,212.59); Felicidad Cipriano — P11,306.25 (P150.75 x 15 x 8 yrs.) — P6,783.75); Marina Corpuz — P15,716.25 (150.75 x 15 x 10 yrs.) — P6,783.75); Matilde Corpuz — P34,312.50 (P152.50 x 15 x 20 yrs.) — P11,437.50); Josefina Cuenza — P70,241.05 (P159.85 x 15 x 40 yrs.) — P25,668.95); Bienvenida De Guzman — P68,974.45 (P159.15 x 15 x 39 yrs.) — P24,128.30; Eugenio dela Cruz — P30,281.21 (P153.65 x 15 x 17 yrs.) — P8,899.54); Maria Pineda — P11,306.25 (P150.75 x 15 x 8 yrs.) — P6,783.75); Panchita Narca — P34,571.25 (P153.65 x 18 x 20) — P11,523.75); Crisanta Mulawin — P25,389.98 (P153.65 x 15 x 15 yrs. — P9,181.87); Virginia Mengolio — P34,571.25 (P153.65 x 15 x 20 yrs. — P11,523.75); Rosario Osma — P25,286.14 (P153. x 15 x 15 yrs.) — P9,138.80); Arceli Madrilejo — P51,034.50 (P154.65 x 15 x 28 yrs.) — P13,918.50); Christopher Labador — P13,507.57 (P149.75 x 15 x 8 yrs.) — P4,462.43); Candelaria Lazona — P39,435.80 (P154.65 x 15 x 22 yrs.) — P11,598.75); Angelita Lestingyo — P56,469.28 (156 x 15 x 32 yrs.) — P18,602.72); Carmelita Espiritu — P20,499.75 (P151.85 x 15 x 13 yrs.) — P9,111); Helen Estaris — P11,156.25 (P148.75 x 15 x 7 yrs.) — P4,462.50); Rosa Japson — P29,961.75 (P153.65 x 15 x 18 yrs.) — P11,523.75); Ardionela Lazona — P13,479.50) (P149.75 x 15 x 8 yrs.) — P4,490.50), Ariel Ultra — P20,773.70 (P150.75 x 15 x 13 yrs.) — P8,622.55); Reynante Tumbucon — P4,343.50 (P147.75 x 15 x 7 yrs. — P6,738.75); Antenor Remollino — P13,609.36) P148-75 x 15 x 8 yrs.) — P4,240.64); Alexander Remollino — P7,425.56 (P148.75 x 15 x 5 yrs.) — P3,760.69); Arnaldo Napalit — P27,817.29 (P152.30 x 15 x 16 yrs. — P8,734.71); Macario Moriel — P37,046.96 (153.65 x 15 x 22 yrs. — (P13,657.57); Joselito Licudo — P5,135 (P147.75 x 15 x 4 yrs. — P3,730.69); Paterno Lavalle — P7,350.56 (P147.75 x 15 x 5 yrs. — P3,730.69); Jerry Licudo — P11,257.05 (P149.75 x 15 x 7 yrs. — P4,466.70); Cesar Samson — P2,918.06 (P147.75 x 15 x 3 yrs. — P3,730.69); Eduardo Esguerra, Jr. P20,412 (P151.20 x 15 x 15 yrs. — P13,608); Ramises Centaran — P17,970 (P149.75 x 15 x 8 yrs. less the amount advanced to him if any; Juan Bustillo — P9,665.26 (P148.75 x 15 x 6 yrs. — P3,722.24); Rolando Albaniel — P20,351.25 (P150.75 x 15 x 12 yrs. — P6,783.75); Reynaldo Aquino — P27,475.35 (P150.75 x 15 x 16 yrs. — P8,704.65); Jaime Esguerra — P3,175.20 (P151.20 x 15 x 19 yrs. — P11,340); Armando Japson — P11,156.25 (P148.75 x 15 x 7 yrs. — P4,462.50); Fernando Esguerra — P15,723[.]75 (P149.75 x 15 x 9 yrs. — P4,492.50); Carlito Eniego — P13,066.14 (P145.94 x 15 x 8 yrs. — P4,446.66); Carlito Eniego — P13,066.14 (P145.95 x 15 x 8 yrs. — P4,446.66); Reynaldo Dayot — P9,566.81 (P147.75 x 15 x 6 yrs. — P3,730.69); Marcelo Dayot — P9,074.36 (P149.75 x 15 x 7 yrs. — P6,649.39); Rodolfo Cerbite — P24,873.75 (P150.75 x 15 x 16 yrs. — P11,306.25); Artemio Boquilla — P44,362.93 (P153.65 x 15 x 25 yrs. — P13,255.82); and the following subject to the no. of years provided they rendered at least one (1) month service each season as appearing in their personnel and service records. Pascuala Aguja — P48,399.75 (P153.65 x 15 x 26 yrs. — P11,523.75); Eric Aguja — P9,667.50 (P118 x 15 x 8 yrs. — P4,492.50); Celestina Aquino — P11,257.51 (P149,75 x 15 x 8 yrs. — P6,712.49); Reynaldo Barquin — P13,519.26 (P149.75 x 15 x 9 yrs. — P6,696.99); Felomena Bagonia — P24,716.25 (150 x 15 x 14 yrs. — P6,783.75); Rosita Bagonia — P42,386.26 (P149.75 x 15 x 24 years. — P11,523.75); Regina Benitez — P56,586.75 (P151 x 15 x 28 yrs. — P6,833.25); Edgardo Bergano — P9,784.75 (P149.40 x 15 x 6 yrs. —

P3,661.25); Rodolfo Borromeo — P26,979.81 (P150 x 15 x 18 yrs. — P13,520.19); Ludivico Dalay — P14,180.36 (P152.50 x 15 x 10 yrs. — P8,694.64); Ascilipiades Goyena — P27,020.63 (P150 x 15 x 18 yrs. — P13,479.37); Remedios Goyena — P22,511.25 (P150 x 15 x 13 yrs. — P6,738.75); Oscar Emnace — P17,970 (P149.75 x 15 x 8 yrs. less the amount he received if any); Gertrudes Guiao P59,670 (P153 x 15 x 29 yrs. — P6,885); Lolita Musne — P53,394.36 (P154,65 x 15 x 29 yrs. — P13,878.39); Alberto Parama —P12,161.25 (P140 x 15 x 9 yrs. — P6,738.75); Luningning Peralta — P48,448.50 (P153.65 x 15 x 26 yrs. — P11,475); Amelia Ranches — P58,102.04 (P157.60 x 15 x 34 yrs. — P22,273.96); Ernesto San Juan — P11,261.25 (P149.75 x 15 x 7 yrs. — P4,462.50); Liwayway San Juan — P67,655.08) P160.35 x 15 x 39 yrs. — P26,149.67); Ricardo Triumfante — P8,986.00 (P149.75 x 15 x 7 yrs. — P6,738.75); Lorena Torcido — P11,231.25 (P149.75 x 15 x 8 yrs. — P6,738.75); Priscilla Villasin — P64,162.50 (P147.50 x 15 x 29 yrs. less any amount she received from the respondent; Luzviminda Villegas — P13,478 (P149.75 x 15 x 8 yrs. — P4,492.00); Rosile Verzosa — P13,387.50 (P149. x 15 x 8 yrs. — P4,492.50); Charito Isidro — P53,997 (P155.85 x 15 x 32 yrs. — P20,811); Peter Labayne — P17,130.36 (P150.45 x 15 x 7 yrs. — P15,132.38); Shirley Lubat — P13,773 (P149.75 x 15 x 8 yrs. — P4,196.22); or a total sum of P2,811,724.33, plus ten (10%) percent attorney's fee, or a grand total sum of P3,092,896.76.

As . . . data o[n] their salary rates were not indicated on record, the claims of complainants Milagros Calubayan, Carmencita Cruz, Armando Goyena, Erlinda Nakpil, Pacita Narca, Virgilio Punzalan, Roberto Reduta, Maritess Medina, Nestor Medina, and Dominga Siababa can not be ascertained, and therefore, the same should be dismissed but without prejudice.

With respect to the other claims of the above Luris group including their charge of illegal dismissal, they are hereby dismissed for lack of merit. 4

The Facts

The facts are summarized in the challenged NLRC Decision as follows:

These refer to the consolidated cases for payment of separation pay lodged by [the] Lubat Group, and for illegal dismissal and underpayment of separation pay by [the] Luris group, with prayers for damages and attorney's fees against the above respondents.

The record reveals that all complainants in both cases were former workers of respondent with their respective periods of employment and latest wages stated in the parties' pleadings/[a]nnexes.

On August 1, 1994, due to supposed serious financial reverses and losses suffered by respondent and its desire to prevent further losses, a notice of permanent closure of its red[r]ying operations at Balintawak, Quezon City and transfer [of] the same to Candon, Ilocos Sur was served to the DOLE.

On August 3, 1994, complainants were also notified of the said decision to close and transfer.

On August 16, 1994, their separation benefits were given to them but allegedly [based on] wrong computation when management did not consider 3/4 of their length of service as claimed by complainants (Luris group).

While the Lubat group were not granted . . . separation pay as their previous seasonal service [was] not continuous, and as of August, 1994, they were not employed ther[e]with as declared by respondent

Based on the complaint and from the above facts, the issues are as follows:

1) Whether or not the Lubat Group are entitled to the payment of separation pay[:]

2) Whether or not the Luris Group can be legally awarded separation pay differentials[,] or whether or not the computation adopted by respondent in granting complainants' separation pay is erroneous[;] and

3) Whether or not the Luris group can be properly allowed backwages and damages by reason of their alleged illegal dismissal, and for both groups, attorney's fees[.]

In [its] position paper respondent maintains that [the] Lubat group are not entitled to separation pay for the reason that they were not among those separated or could not have been separated from employment on August 3, 1994 due to such closure and transfer as they were not employed or did not report for work at the plant for the 1994 tobacco season as shown by [the] company's records.

As to the Luris group, although being questioned by this group, respondent considers the following formula in determining the length of service in years as basis for computing the separation pay of this group to be fair and reasonable and . . . supported by Article 283 of the Labor Code, as amended, such as the total number of working days actually worked over total number of working days in a year (303 days), multipl[ied] by the daily rate and further multipl[ied] by 15 days.

Respondent explains that this is so because complainants' nature of work is seasonal as they are employed every year only during the tobacco season which may fall within the months of February to November but actually work for a period of less [than] six (6) months for each season. The law qualifies tenure for purposes of separation benefits as based on "service" and not "employment".

With these considerations, respondent claims that complainants' relief for separation pay differentials must fail.

On the charge of illegal dismissal by the Luris group, respondent asserts that complainants were separated from employment for [a] just cause that is the closure of its REDRYING operations at the Balintawak Plant and the transfer of the same to Candon, Ilocos Sur which was authorized by the law and the parties' CBA.

The decision of management to close and transfer its tobacco processing and REDRYING operations was based on the fact that it had consistently incurred a net loss from these operations, its principal line of business, although its audited financial statement showed a net profit after tax from 1990 to 1993 based on over-all operations.

Moreover, respondent points out that as the Luris group and the DOLE were served a written notice at least one (1) month before the intended date of closure effective on Sept. 15, 1994, the due process requirement was met.

Viewed from the above, respondent cannot prosper.

On the other hand, the Lubat group declare that originally there were seven complainants but eight were added.

Being seasonal workers, they were hired by respondent to operate the Balintawak factory from January to September, averaging 6 to 8 months annually.

As alleged by them, when they reported for their annual shift, respondent refused to extend them assignment for no apparent reason up to the end of the season in August, 1994. When they ask[ed] for separation pay, respondent told them that because they were not in the payroll for 1994, no such benefit would be paid to them.

It is their contention that complainants are entitled to separation pay [of] at least one-half month pay for every year of service[,] as they were illegally dismissed[,] to be computed each season ranging from 6 to 8 months [which] should be considered as one year, contrary to the respondent's basis which is the total no. of days they actually rendered service.

To back up the above, complainants cite a case wherein the Supreme Court held that seasonal employees are not strictly speaking, separated from the service but merely considered on leave of absence without pay until reemployed. Their employment relationship is never severed but only suspended.

For the prosecution of this case, complainants were forced to hire the services of counsel for which they claim . . . attorney's fees.

As far as the Luris group are concerned, they state that they were factory workers of respondents numbering one hundred (100) whose names, periods of employment and latest salaries are contained in the lists attached to their position paper.

As claimed by this group, on August 3, 1994, respondents told them that their services were already terminated and all of them dismissed as the factory would be transferred to Candon, Ilocos Sur.

Letter-notices dated August 3, 1994, (Annexes F, F-1 and F-2 to their position paper) showing that the date when they were notified of the closure was the same date they were instantly dismissed although it is admitted in the notice that their decision to transfer was made as early as March 5, 1994.

Furthermore, complainants question the basis of the computations of their separation benefits which should include the period when there [was] no work to be done in a year. [B]ecause of necessity, they received the short amount as their separation pay by way of voucher but "under protest" as shown in Annexes C-C-1 to C-5 to their pleading.

With the sudden transfer of the machiner[y] of respondents without giving them advance notice leaving them with insufficient separation pay, complainants experienced serious anxiety and wounded feelings for which they p[r]ay for damages including attorney's fees.

Consequently, complainants also pray for backwages, allowance and other benefits from the date of their illegal dismissal up to the final disposition of the case.

Furthermore, complainants maintain that since the company is being transferred to the province, the former's separation may be considered

compulsory retirement under R.A. 7641, providing for one-half month pay benefit for every year of service, and under Section 3, Rule V, Book III of the Labor Code, as amended for which they also demand payment thereof;

Complainants also submitted the computation of their differential in separation pay (addendum and supplemental addendum to their position paper) Annex "G", "G-1" to "G-4".

To state the facts simply, there are two groups of employees, namely, the Lubat group and the Luris group. The Lubat group is composed of petitioner's seasonal employees who not rehired for the 1994 tobacco season. At the start of that season, they were merely informed that their employment had been terminated at the end of the 1993 season. They claimed that petitioner's refusal to allow them to report for work without mention of any just or authorized cause constituted illegal dismissal. In their Complaint, they prayed for separation pay, back wages, attorney's fees and moral damages.

On the other hand, the Luris group is made up of seasonal employees who worked during the 1994 season. On August 3, 1994, they received a notice informing them that, due to serious business losses, petitioner planned to close its Balintawak plant and transfer its tobacco processing and redrying operations to Ilocos Sur. Although the closure was to be effective September 15, 1994, they were no longer allowed to work starting August 4, 1994. Instead, petitioner awarded them separation pay computed according to the following formula:

total no. of days actually worked

———————————————— x daily rate x 15 days

total no. of working days in one year

In their Complaint, they claimed that the computation should be based not on the above mathematical equation, but on the actual number of years served. In addition, they contended that they were illegally dismissed, and thus they prayed for back wages.

Against these factual antecedents, the labor arbiter ordered the petitioner to pay complainant's separation pay differential plus attorney's fees in the total amount of P3,092,896.76. Dissatisfied with said Decision, Philippine Tobacco and the complainants filed their respective appeals before the NLRC. 5

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

Ruling of the NLRC

The NLRC agreed with the labor arbiter that the closure by petitioner herein of its operations at Balintawak and its transfer thereof to Ilocos Sur were due to serious financial losses. Nonetheless, both labor agencies held that the Luris and Lubat groups were entitled to separation pay equivalent to one-half (1/2) month salary for every of service, provided that the employee worked at least one month in a given year.

The NLRC further ruled that private respondents were not entitled to back wages and damages, since the closure of the factory and the termination of their employment were due to a legally recognized cause.

Issues

Petitioner raises the following issues:

A

SUBSTANTIAL AND UNDISPUTED EVIDENCE ON RECORD PROVES THAT THE CLOSURE OF PETITIONER'S OPERATION WAS DUE TO SERIOUS BUSINESS LOSSES AND FINANCIAL REVERSES. PRIVATE RESPONDENTS ARE NOT LEGALLY ENTITLED TO SEPARATION PAY. THE PAYMENT OF SEPARATION PAY TO THE LURIS GROUP IS BASED ONLY ON PETITIONER'S LIBERALITY.

B

EVEN ASSUMING THAT PETITIONER'S CLOSURE WAS NOT DUE TO SERIOUS BUSINESS LOSSES AND FINANCIAL REVERSES. THE LUBAT GROUP WORKERS ARE STILL NOT ENTITLED [TO] SEPARATION PAY. THE LUBAT GROUP WERE NOT EMPLOYED WITH PETITIONER AT THE TIME OF PETITIONER'S CLOSURE.

C

EVEN ASSUMING THAT THE LURIS GROUP IS ENTITLED TO SEPARATION PAY. PETITIONER MUST NOT AND CANNOT BE LEGALLY COMPELLED TO PAY MORE THAN THE AMOUNTS ALREADY GIVEN TO THE [SAID] LURIS GROUP. 7

In the Court's view, there issues must be tackled: First, did petition we prove "serious business losses," its justification for the nonpayment of separation pay? Second, was the dismissal of the employees valid? Third, how should the separation pay of illegally dismissed seasonal employees be computed?

The Court's Ruling

The petition is not meritorious.

First Issue:

Serious Business Losses Not Proven

Petitioner asserts that it submitted before the labor arbiter a Statement of Income and Expenses, as well as a recasted version thereof, showing that it had suffered serious business losses in its tobacco processing and redrying operations. Citing Articles 283 of the Labor Code, it concludes that it is not obligated to award separation pay to its dismissed workers (whether belonging to the Lubat or the Luris group), because the closure of its tobacco business was due to an authorized cause.

Petitioner further claims that it complied with the procedural requirement in closing the aforementioned aspect of its business. It filed at the DOLE on August 2, 1994, a Petition for Closure. On August 3, 1994, it also sent to its employees letters informing them of its desire to close its tobacco operations in Balintawak effective September 15, 1994. The fact that it did award separation pay to private respondents was solely out of generosity, and not out of legal duty.

Art. 283 of the labor Code, which we quote below, prescribes the requisites and the procedure for an employee's dismissal arising from the closure or cessation of operation of the establishment.

Art. 283. Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

It must be noted that the present case involves the closure of merely a unit or division, not the whole business of an otherwise viable enterprise. Although Article 283 uses the phrase "closure or cessation of operation of an establishment or undertaking," this Court previously ruled in Coca-Cola Bottlers (Phil.), Inc. v. NLRC that said statutory provision applies in cases of both complete and partial cessation of the business operation:

. . . Ordinarily, the closing of a warehouse facility and the termination of the services of employees there assigned is a matter that is left to the determination of the employer in the good faith exercise of its management prerogatives. The applicable law in such a case is Article 283 of the Labor Code which permits "closure or cessation of operation of an establishment or undertaking not due to serious business losses or financial reverses," which, in our reading, includes both the complete cessation of operations and the cessation of only part of a company's business. 8

In Somerville Stainless Steel Corporation v. NLRC, 9 the Court held that "[t]he 'loss' referred to in Article 283 cannot be just any kind or amount of loss; otherwise, a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. To guard against this possibility of abuse, the Court laid down the following standard which a company must meet to justify retrenchment:

. . . Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character, the bonafide nature of the retrenchment would appear to be seriously in question. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. There should, in other words, be a certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laid off. Because of the consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively prevent the expected losses. The employer should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs other than labor costs. An employer who, for instance, lays off substantial numbers of workers while continuing to dispense fat executive bonuses and perquisites or so-called "golden parachutes," can scarcely claim to be retrenching in good faith to avoid losses. To impart operational meaning to the constitutional policy of providing "full protection" to labor, the employers prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means — e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving

manufacturing efficiencies, trimming of marketing and advertising costs,etc. — have been tried and found wanting.

Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this quantum of proof is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees. . . .

To repeat, petitioner did not actually close its entire business. It merely transferred or relocated its tobacco processing and redrying operations. Moreover, it was also engaged in, among others, corn and rental operations, which were unaffected by the closure of its Balintawak plant.

Tested against the aforecited standards, we hold that herein petitioner was not able to prove serious financial losses arising from its tobacco operations. A close examination of its Statement of Income and Expenses and its recasted version thereof, which were presented in support of its contention, suggests its failure to show business losses.

In the recasted Statement, petitioner tried to prove that there was a net loss from its tobacco processing and redrying operations. It did so by subtracting all of its selling, administrative and interest expenses for a given year from the earning in its tobacco sales for the corresponding year. This formula, however, is at best illogical and misleading. Petitioner would have us believe that all of its expenses — selling, administrative and interest expenses — resulted only from its tobacco processing and redrying operations, and that it incurred noexpenses in its other profit centers.

On the contrary, the Statement of Income and Expenses shows that the selling and administrative expenses pertain not only to the tobacco business of petitioner, but also to its corn and rental operations, and that the interest expenses pertain to all of its business operations. In fact, the aforementioned Statement shows that there was a net gain from operations in each year covered by the report. In other words, the recasted financial statement effectively modified the Statement of Income and Expenses by deducting form the tobacco operationsalone the operating costs pertaining to all business of petitioner.

The contention of petitioner that tobacco was its main business does not justify the devious contents of the recasted financial statement. It is difficult to accept that it could not have incurred any expenses in its other operations. Common sense revolts against such proposition.

Misleading is petitioner's argument that "public respondent cannot recognize petitioner's aforesaid Statement as the 'normal and reliable method of proof of the profit and loss', and at the same time inconsistently assert that the same does not show that the losses were serious or incurred solely by petitioner's tobacco operations." 10An audited financial statement is indeed the normal method of proof. But this norm does not compel this Court to accept the contents of the said documents blindly and without thinking. As stated already, the above documents failed to show that petitioner had incurred from its tobacco operations serious losses sufficient to justify the termination of the employment of its workers sans separation pay.

Defective Notice

Art. 283 of the Labor Code also requires the employer to furnish both the employee and the Department of Labor and Employment a written Notice of Closure at least one month prior to closure. True, in the present case the Notices of Termination were given to the employees on August 3, 1994, and the intended date of closure was September 15, 1994. However, the employees were in fact not allowed to work after August 3, 1994. Therefore, the termination

notices to the employees were given in violation of the requisite one-month prior notice under Article 283 of the Labor Code.

Petitioner contention that the tobacco season was about to end anyway is without merit, because the law clearly provides, without any qualification, that the employees must be given one-month notice prior to closure. At the very least, respondent members of the Luris group were deprived of work for the remaining days of the 1994 tobacco season. Petitioner could have easily complied with the aforesaid requirement by sending the notices earlier. In fact, according to petitioner, the decision to cease its tobacco operations was made as early as March 5, 1994; hence, petitioner had plenty of time within which to send the notices.

Given the illogical and misleading entries in the Statement of Income and Expenses, as well as the recasted version thereof, and the defective Notice of Closure, this Court holds that petitioner was not able to establish that the closure of its business operations in its Balintawak plant was in fact due to serious financial losses. Therefore, under the last two sentences of Article 283 of the Labor Code, the dismissed employees belonging to the Luris group are entitled to separation pay "equivalent to one (1) month pay or at least one half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year."

Second Issue:

Lubat Group Illegally Dismissed

Petitioner relies upon our ruling in Mercado v. NLRC 11 that the "employment [of seasonal employees] legally ends upon completion of the . . . season," a statement which was subsequently reiterated in Magcalas v.NLRC. 12 Thus, petitioner argues that it was not obliged to rehire the members of the Lubat group for the 1994 season, because their employment had been terminated at the end of the 1993 season. Since they were not employed for the 1994 season when the Balintawak plant was closed, it follows that petitioner has no obligation to award them separation pay due to the said closure.

We are not persuaded. From the facts, we are convinced that petitioner illegally dismissed the members of the Lubat group when it refused to allow them to work during the 1994 season.

This Court has previously ruled in Manila Hotel Company v. CIR 13 that seasonal workers who are called to work from time to time and are temporarily laid of during off-season are not separated from service in said period, but are merely considered on leave until reemployed, viz.:

The nature of their relationship . . . is such that during off season they are temporarily laid off but during summer season they are re-employed, or when their services may be needed. They are not strictly speaking separated from the service but are merely considered as on leave of absence without pay until they are re-employed.

The above doctrine was echoed by this Court in Industrial-Commercial-Agricultural Workers' Organization (ICAWO) v. CIR 14 and Visayan Stevedore Transportation Company v. CIR. 15

Petitioner claims that the aforecited ruling has been superseded by Article 280 of the Labor Code, which took effect on November 1, 1974. We disagree. There is no clear conflict between the above doctrine and Article 280 of the Labor Code. In fact, the same doctrine was reiterated by this Court in Tacloban Sagkahan Rice and Corn Mills Co. v. NLRC 16 in 1990, which was promulgated after the labor Code took effect. Furthermore, inBacolod-Murcia Milling Co, Inc. v. NLRC, 17 this Court considered a seasonal workers

"in regular employment" in cases involving the determination of an employer-employee relationship and security of tenure. The Court ruled:

While under prevailing jurisprudence, Canete may be considered as in regular employment even during those years when she was merely a seasonal worker, that legal conclusion will hold true only in cases involving the determination of an employer-employee relationship or security of tenure.

Again in Gaco v. NLRC, petitioner therein was a seasonal worker employed and repeatedly rehired in a business enterprise similar to that of petitioner herein. Finding that he was in regular employment and thus entitled to separation pay for having been constructively dismissed, the Court stated:

I may appear that the work in private respondent Orient Leaf Tobacco Corporation is seasonal, however, the records reveal that petitioner Zenaida Gaco was repeatedly re-hired, sufficiently evidencing the necessity and indispensability of her services to the former's business or trade. Furthermore, she has been employed since 1974 up to the end of the season in 1989. Owing to her length of service, she became a regular employee, by operation of law, one year after she was employed. 18

From the foregoing, it follows that the employer-employee relationship between herein petitioner and members of the Lubat group was not terminated at the end of the 1993 season. From the end of the 1993 season until the beginning of the 1994 season, they were considered only on leave but nevertheless still in the employ of petitioner.

The facts in the above-mentioned cases are different from those in Mercado v. NLRC 19 and in Magcalas v. NLRC. 20 In Mercado, although respondent constantly availed herself of petitioners' services from year to year, it was clear from the facts therein that they were not in her regular employ. Petitioners therein performed different phases of agricultural work in a given year. However, during that period that period, they were free to work for other farm owners, and in fact they did. In other words, they worked for respondent, but were nevertheless free to contract their services with other farm owners. The Court was thus emphatic when it ruled that petitioners were mere project employees, who could be hired by other farm owners. As such, their employment would naturally end upon the completion of each project or each phase of farm work which has been contracted. In Magcalas v. NLRC, the Court merely cited the aforequoted ruling to explain the difference among regular, project and seasonal employees. In fact, it concluded that the employees therein were regular and not project employees.

From the peculiar facts of Mercado and Magcalas, it is clear that the ruling therein is not inconsistent withManila Hotel, Gaco and other cases. It is noteworthy that the ponente in Mercado concurred in the Court's ruling in Gaco awarding to the seasonal employee separation pay for every year of service.

Prescinding from the above, we hold that petitioner is liable for illegal dismissal and should be responsible for the reinstatement of the Lubat group and the payment of their back wages. However, since reinstatement is no longer possible as petitioner has already closed its Balintawak plant, respondent members of the said group should instead be awarded normal separation pay (in lieu of reinstatement) equivalent to at least one month pay, or one month pay for every year of service, whichever is higher. It must be stressed that the separation pay being awarded to the Lubat group is due to illegal dismissal; hence, it is different from the amount of separation pay provided for in Article 283 in case of retrenchment to prevent losses or in case of closure or cessation of the employer's business, in either of which the separation pay is equivalent to at least one (1) month or one-half (1/2) month pay for every year of service, whichever is higher.

However, despite the fact that the respondent members of the Lubat group were entitled to separation pay equivalent to at least one (1) month pay, or one (1) month pay for

every year of service, whichever is higher, they cannot receive more than the amount awarded to them in the NLRC Decision — at least one (1) month or one-half (1/2) month pay for every year of service, whichever is higher — because they did not appeal from the said Decision. 21 Therefore, no affirmative award can be given to them. In the same manner, although respondents should have been entitled to back wages because petitioner illegally deprived them of work during the 1994 season, no such award can given to them, since they did not appeal the NLRC Decision. The elementary norms of due process prevent the grant of such awards, as the employer was not given notice that its filing of its own Petition for Certiorari would put it in jeopardy of such relief.

Third Issue:

Amount of Separation Pay

Petitioner posits that the separation pay of a seasonal worker, who works for only a fraction of a year, should not be equated with that of a regular worker. Positing that the total number of working days in one year is 303 days, petitioner submits the following formula for the computation of a seasonal worker's separation pay:

Total No. of Days Actually Worked

———————————————— x Daily Rate x 15 days 22

Total No. of Working Days In One Year

Agreeing with the labor arbiter and the NLRC, private respondents, on the other hand, claim that their separation pay should be based on the actual number of years they have been in petitioner's service. They cite the law on service incentive leave, 23 the implementing rules regarding the 13th month pay, 24 Manila Hotel v. CIR, 25 andChartered Bank v. Ople 26 which allegedly stated that "each season in a year in a year should be construed as one year of service." 27

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

The formula that petitioner proposes, wherein a year of work is equivalent to actual work rendered for 303 days, is both unfair and inapplicable, considering that Articles 283 and 284 provide that in connection with separation pay, a fraction of at least six months shall be considered one whole year. Under these provisions, an employee who worked for only six months in a given year — which is certainly less than 303 days — is considered to have worked for one whole year.

In the same manner, Chartered Bank v. Ople, 30 which private respondents cite, does not support their cause. The said case ruled that regular workers and those who are paid by the month are both entitled to holiday pay. On the other hand, the law on service incentive leave pay 31 does not necessarily apply to retirement benefits or separation pay. Likewise, the provision regarding the 13th month pay 32 is not applicable to separation pay. In fact, an employee who worked for a single month in a year is entitled to a 13th month pay equivalent to only 1/12 of his or her monthly salary. Finally, Manila

Hotel Company v. CIR 33 did not rule that seasonal workers are considered at work during off season with regard to the computation of separation pay. Said case merely held that, in regard to season workers, the employer-employee relationship is not severed during off-season but merely suspended.

WHEREFORE, the assailed Decision of Respondent NLRC is hereby AFFIRMED WITH THE MODIFICATION that private respondents are hereby awarded separation pay equivalent to one (1) month, or to one-half (1/2) month pay 34 for each year that they rendered service, whichever is higher, provided that they rendered service for at least six (6) months in a given year. The separation pay to be awarded to members of the Luris group shall be taken from the amount which petitioner has already awarded to them, and any excess need not be refunded by the workers. The ten percent (10%) attorney's fees given by the NLRC and the labor arbiter shall be based on the award modified herein.

SO ORDERED.

Davide, Jr., C.J., Melo, Vitug and Quisumbing, JJ., concur.

Footnotes

1 Third Division. The Decision was penned by Comm. Joaquin A. Tanodra, with the concurrence of Presiding Comm. Lourdes C. Javier and Comm. Ireneo B. Bernardo.

2 NLRC Decision, p. 18; rollo, p. 57

3 Felipe T. Garduque II.

4 Decision of the Labor Artiber, pp. 11-16; rollo, pp. 35-40.

5 NLRC Decision, pp. 10-17; rollo, pp. 50-56.

6 The case was deemed submitted for resolution on February 6, 1998, upon receipt by this Court of public respondent's Memorandum.

7 Memorandum for Petitioner, p. 9; rollo, p. 417.

8 194 SCRA 592, 599, February 27, 1991, per Feliciano, J.

9 G.R. No. 125887, pp. 8-9, March 11, 1998, per Panganiban, J.; quoting Lopez v. Federation of Free Workers, 189 SCRA 179, 190, August 30, 1990.

10 Petitioner's Memorandum, p. 10; rollo, p. 418.

11 201 SCRA 332, 343, September 5, 1991, per Padilla, J.

12 269 SCRA 453, March 13, 1997.

13 9 SCRA 184, 186, September 30, 1963, per Bautista Angelo, J.

14 16 SCRA 562, March 31, 1966.

15 19 SCRA 426, February 25, 1967.

16 183 SCRA 425, March 21, 1990.

17 204 SCRA 155, 158, November 21, 1991, per Fernan, CJ.

18 230 SCRA 260, February 23, 1994, per Nocon, J.

19 Supra.

20 Supra.

21 See Paguio Transport v. NLRC, GR No. 119500, August 28, 1998.

22 Memorandum for Petitioner, p. 5; rollo, p. 413.

23 § 3, Rule V, Book III, Rules Implementing the Labor Code.

24 Presidential Decree No. 851.

25 Supra.

26 138 SCRA 273, August 28, 1985.

27 Memorandum for Respondents, p. 5; rollo, p. 382.

28 Book Six of the Labor Code contains the provisions pertaining to termination of employment and computation of separation pay.

29 Because the employees in this case worked for six to eight months for every season, the Court is not called upon to determine what rule applies when the season is less than six months. Thus, any pronouncement of the Court on this question will be hypothetical and academic.

30 Supra.

31 Said law states that one year of service shall mean service within 12 months whether continuous or broken.

32 According to this law, an employee who has worked at least one month during the calendar year is entitled to 13th month pay.

33 Supra.

34 "Month pay" shall be understood as "average monthly pay during the last season they worked," per explanation in the text.

CINDERELLA MARKETING v. NLRC (1998)

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

 

G.R. No. 112535 June 22, 1998

CINDERELLA MARKETING CORPORATION, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION and JULIO DAET, JOSELITO ARAMBULO, FELINA PAGTALUNAN, MARIETA DAET, EMMA AGUSTIN, GINA CIRIACO, ROSEMARIE TONIO, ELLEN ILEDAN, EMMANUEL LUMBERA, ELIZABETH DELIGOS, CORA VILLA, ALICE FIGURA, GRETHEL GARCIA, EVANGELINE CASAS and LIGAYA HIDALGO, respondents.

G.R. No. 113758 June 22, 1998

CINDERELLA MARKETING CORPORATION, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION, and AIDA ARNAIZ, MA. ANA ARAMBULO, MAGDALENA CASTILLO, ROWENA CONSTANTINO, JOJO MORILLO, IGNACIO RIMPOS, TERESA ROYECA, EVANGELINE SUMBILLA, LOLITA DE VEGA, FE MANGILIT, IRENE LUNA and NESTOR GUTIERREZ, respondents.

 

ROMERO, J.:

Petitioner is a corporation duly organized and existing under the laws of the Republic of the Philippines with its principal office at 825 Epifanio de los Santos Avenue, Quezon City. 1 Private respondents in G.R. Nos. 11235 and 113758 are employed by petitioner as "regular contractuals," 2 performing work as salesladies, wrappers, stockmen, pressers, as required by the regular business of petitioner. 3 The two petitions are herein consolidated. They are seasonal employees who are hired by petitioner at the start of the peak season of the year, which normally runs from September until January. As soon as the demand for their services ends, their employment is terminated. The temporary hiring of additional employees within the five-month peak season was practiced by petitioner until the 1988 CBA negotiations, in which the Union proposed that the employees who are hired during the peak season be allowed to stay. 4 Negotiations between petitioner and its employees resulted in the retention of season employees as "regular contractuals," 5 who would enjoy all the benefits of regular employees, including security to tenure, minimum wage, overtime pay and all benefits provided for in the Code for a regular employee. 6 Accordingly, as soon as a "regular contractual" is promoted or "regularized" to a position in a newly-opened branch of petitioner, said employee is authomatically included in the bargaining unit represented by the union, 7 and is entitled to the benefits of the CBA thereafter. 8 Pursuant to this arrangement, until a regular contractual is "regularized," he, although regarded as a regular employee, is excluded from the bargaining unit. Not satisfied with their exclusion from the bargaining unit, and the concomitant deprivation of the benefits granted to members thereof, petitioners

continually demanded their inclusion in the bargaining unit, which repeatedly denied. Hence, they filed a complaint with the National Labor Relations Commission (NLRC for brevity) praying, among others, that they be granted all benefits granted to regular employees in the Collective Bargaining Agreement (CBA) from the time they are regularized.

The parties filed their respective position paper, 9 with the petitioner acknowledging that the complainants were already regular employees. 10 The Labor Arbiter declared complainants as regular rank-and-file employees, with the additional right to membership in the bargaining unit defined under the CBA, ordering respondent to pay all benefits thereunder accorded to regular employees, with back benefits. 11 On appeal to the National Labor Relations Commission (NLRC), 12 the questioned decision was affirmed. In a Resolution dated December 14, 1993, 13 the NLRC ruled that private respondents are regular employees of petitioner and, thus, are entitled to all the benefits granted under the CBA. Petitioner's Motion for Reconsideration 14 was denied in a subsequent Resolution dated February 7, 1994. Hence, this petition seeking to annul and set aside both Resolutions.

Petitioner corollarily contests the inclusion of private respondents as regular contractual employees within the scope of the bargaining unit, thus entitling them to benefuts under the CBA. Althought it admits that once private respondents become regular employees, they shall be entitled to the benefits provided under the CBA, it contends that they are not entitled to the "regularization differential" covering the period from the time they rendered one year of service until their promotion or regularization because they were still "seasonal employees."

The issue which arises in this case is whether public respondent NLRC committed grave abuse of discretion in issuing said Resolutions.

We hold in the negative.

Petitioner has engaged in a semantic interplay of words in distorting the definition of a "regular employee" as provided by the Labor Code. Under Article 280 of the Labor Code:

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.

It is undeniable that private respondents have rendered at least one year of service to petitioner as sales clerks, an activity which is usually necessary or desirable in the usual business or trade of the employer. Therefore, they are regular employees under the CBA who are entitled to the benefits granted to all other regular employees of petitioner under the CBA. As held by public respondent:

. . . (t)o be sure, "an 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." (Article 280, Labor Code, as amended). On the basis of this express mandate and as established by the

evidence on record, the posture of the appellant that there is another classification of "regular contractuals" in the CBA cannot prevail over the provision of law as well pointed out by the appellees in their opposition to the appeal.15

Petitioner further assails the jurisdiction of public respondent 16 by alleging that the instant case involves "the interpretation or implementation of collective bargaining agreements," the resolution of which is within the exclusive jurisdiction of Voluntary Arbitration. It apparently relies on Articles 217(c) of the Labor Code which states,

Art. 217(c). Cases arising from the interpretation or implementation of collective bargaining agreement and those arising form the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreement.

The aforestated provision of law is inapplicable to the case at bar which, as petitioner failed consider, originated from a claim for benefits filed by private respondents and not an interpretation of a provision found in the collective bargaining agreement. Simply put, it does not involve the interpretation or implementation of the collective bargaining agreement as, in granting the relief sought by the parties, we are constrained to examine the basis of private respondents' claim and not the contents of the CBA.

Regarding the issue of jurisdiction, the applicable provision is Article 217(a)(6) of the Labor Code, to wit:

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) . . .

(2) . . .

(3) . . .

(4) . . .

(5) . . .

(6) Except claims for Employees Compensation, Social Security, Medicare and maternity benefits,all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (emphasis supplied)

Clearly, the Labor Arbiter had jurisdiction over the instant case, since the claims of private respondents arose out of employer-employee relations and involve amounts exceeding five thousand pesos (P5,000.00). As public respondent correctly ruled,

A close examination of the record . . . shows that in their basic complaint filed on March 27, 1992, the complainants sought full backwages and other benefits from the time they were dismissed to their actual reinstatement, back differentials in benefits as regular employees from the date they rendered one year service until their regularization, and moral damages. All these money claims, as expressly provided by law or appropriate agreement, are within the original and exclusive

jurisdiction of Labor Arbiters pursuant to Article 217 of the Labor Code, as amended by B.P. Blg. 130 and B.P. Blg. 227. Jurisdiction is conferred by law, and once the Labor Arbiter acquires jurisdiction over labor dispute, it continues to be exercised until the case has been finally decided on its merits as what transpired in the present proceeding. 17

As constantly reiterated in cases involving money claims of employees, 18 where the claim of an employee of a corporation is over and above the amount of five thousand pesos (P5,000.00), the power to adjudicate such claim belongs to the Labor Arbiter, who has the exclusive jurisdiction over employees' claims, where the amount of the claim exceed five thousand pesos (P5,000.00). 19 Here, the claim of each of the private respondents is well beyond the five thousand peso (P5,000.00) — requirement, thus placing the money claim of private respondents under the jurisdiction of the Labor Arbiter. A computation of the claims and differentials to which they are entitled is summarized as follows:

Julio B. Daet P31,881.33 20

Emma R. Agustin P31,901.88 21

Joselito A. Arambulo P32,861.94 22

Evangeline B. Casas P32,409.13 23

Gina Ciriaco P31,972.48 24

Marieta R. Daet P32,220.14 25

Elizabeth L. Deligos P12,440.06 26

Alice C. Figura P32,764.58 27

Grethel F. Gracia P32,478.43 28

Ligaya A. Hidalgo P32,639.09 29

Ellen I. Iledan P31,850.27 30

Felina C. Pagtalunan P22,520.92 31

Rosemarie Tonio P23,226.99 32

Emmanuel C. Lumbera P21,735.06 33

Cora Villa P23,038.39 34

WHEREFORE, considering the foregoing, neither of the questioned Resolutions assailed by petitioner may be struck down for having been issued with grave abuse of discretion. This petition is DISMISSED for lack of merit. No cost.

SO ORDERED.

Narvasa, C.J., Kapunan and Purisima, JJ., concur.

Footnotes

1 G.R. No. 112535, Rollo, p. 4.

2 Ibid., p. 4b.

3 Annex "D".

4 Ibid., p. 6.

5 Respondent's Position Paper, dated April 24, 1992, p. 2.

6 Ibid.

7 CBA, Article II (4), Annex "P".

8 Petition, dated February 16, 1994, p. 6.

9 Complainant's Position Paper filed on March 5, 1992, Supplemental Position Paper filed on April 23, 1992; Respondent's Position Paper filed on April 24, 1992.

10 Ibid., p. 3.

11 NLRC Decision penned by Labor Arbiter Arthur L. Amansec, dated October 29, 1992.

12 Dated December 15, 1992.

13 The dispositive portion of which reads as follows: "There can be no dispute that the complainants are regular workers. They served as Sales Clerks whose duties and functions are usually necessary or desirable in the usual business of respondent corporation, which maintains stores engaged in the sale of dresses. On top of this, they have all rendered more than one (1) years of service (emphasis supplied) with the respondent corporation. As such, they are entitled to all the benefits extended under the CBA to all other regular employees. Of course, we are aware of the agreement in the CBA that regular contractual employees of which the complainants were at that time, will become entitled to the benefits provided in the CBA, only upon promotion or regularization, meaning, when assigned to a newly-opened store or to a vacated regular position. The respondents invoked the application of this agreement to disqualify the complainants from the regularization differential covering the period from their one year of service until their promotion or regularization. Such argument of respondents is without merit. The agreement cited is contrary to law (emphasis supplied), particularly Article 280 of the Labor Code, as amended, which emphasized the voiding of stipulations exempting from legal regularization. Besides, their disqualification from the enjoyment of the CBA-granted benefit would be discriminatory, because they are not any different from those who enjoy them. And, barring them from union participation violates their right to sell-organization and equal work opportunities. . . ."

14 Dated June 10, 1993.

15 NLRC Resolution, dated December 14, 1993, pp. 6-7.

16 Petition, p. 11.

17 NLRC Resolution, dated December 14, 1993, p. 5.

18 To wit, Brokenshire Memorial Hospital, Inc. v. Minister of Labor (1990), Aboitiz Shipping Corp. v. De La Serna (1990) and Sevando's Inc. v. Secretary of Labor (1990).

19 Ibid.

20 Annex "A".

21 Annex "A-1".

22 Annex "A-2".

23 Annex "A-3".

24 Annex "A-4".

25 Annex "A-5".

26 Annex "A-6".

27 Annex "A-7".

28 Annex "A-8".

29 Annex "A-9".

30 Annex "A-10".

31 Annex "A-11".

32 Annex "A-12".

33 Annex "A-13".

34 Annex "A-14".

ABASOLO v. NLRC (2000)

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 118475               November 29, 2000

ELVIRA ABASOLO, ANTONIO ABAY, PURIFICACION ABAY, CATALINA ABELLERA, DANIEL ABELLERA, ELSIE ABELLERA, LOURDES ADUSE, PACITA ALAMAN, REYNALDO ALBAY, ROGELIO ALBAY, EMERITA ALCOY, ERLINDA ALEGRE, CORAZON ALOOT, IMELDA ALOOT, ROWENA ALOOT, SHIRLEY JULIANA ALOOT, ADORACION ANTALAN, ESTRELLA ANTOLIN, EPIFANIA ANTONIO, CARMELITA AQUINO, CECENIA ASPIRAS, EMILIANA ASPIRAS, ANA BELEN ASPREC, MELENCIO ASPURIA, ILUMINADA ASTRO, CARMELITA ASUNCION, FLORENTINA AVENA, EMILIA BACQUIL, GLORIA BAGALAN, BENJAMIN BALANAG, CLARITA BALANAG, CONSUELO BALANAG, DOLORES BALANAG, CANDIDA BALANGA, CLARITA BALANGA, FRANCISCA BALANGA, CORAZON BALANGUE, MILDRED BALANGUE, ERLINDA BALDERAS, MANUEL BALLESIL, ERLINDA BAMBAO, ROSEMARIE BASIO, AMALIA BATARIO, CONCHITA BATARIO, CORAZON BATARIO, ERLINDA BATARIO, GLORIA BATARIO, PEDRO BATARIO, JR., REBECCA BATARIO, PERLA BAUTISTA, SHIRLEY BAUTISTA, ANGELISA BAYANI, MORGAN BEGALAN, FRANCISCA BERBON, BERNARD VISITACION, EVELYN BIASON, VERONICA BLANDO, UFENIA BLANZA, AMBROSIA BOADO, CARLOS BOADO, LOLITA BORJE, MARILOU BUNGAY, RODRIGO BURGOS, AMELITA CABALBAG, ERNESTO CABALBAG, ELVIRA CABUGON, JOSEFINA CACANINDIN, CORAZON CACAYARA, JAIME CACHERO, JULIET CALLANO, ANDRES CALUZA, TERESITA CALUZA, ISABEL COMADRO, EDITA CARBONEL, LOLITA CARILLA, BIENVENIDA CARINO, DELIA CARINO, LOLITA CARINO, AMARIO CARREON, ARMELINDA CARREON, ERLINDA CARREON, FECIDAD CARREON, JOSE CARREON, MA. VICTORIA CARREON, BENJAMIN CASALLO, DEMETRIA CASEM, ALBERTO CASIM, GLORIA CASIM, FLORIDA CATUNGAL, ESTER CAVINTA, REMEDIOS CAVINTA, ROSALINDA CAVINTA, JULITA CAYABYAB, IRENE CELESTE CARMELITA CHAN, ESMENIA CORDERO, LYDIA CORPUZ, JOVA CORTEZ, NORA CORTEZ, MAGDALENA CUDAL, GENOVA DACANAY, SABINA BACLAN, CORAZON DANAO, ELISA DASALLA, AGNES BIBIANA DE CASTRO, ANITA DE CASTRO, EDITHA DE CASTRO, NIDA DE CASTRO, CORAZON DE JESUS, JOSE DE JESUS, MERLA DE JESUS, MILAGROS DE VERA, APOLINARIO DOLATRE, CAMILO DOLOR, JR., LOLITA DOLOR, WILMA DOMINGO, OLYMPIA DOMONOON, BASILIO DULATRE, BASILIO DULATRE, IMELDA DULATRE, LETICIA DULATRE, MARTINA DULATRE, RODRIGO DULATRE, JR., ROGELIO DULATRE, TRIFONA DULATRE, CONSOLACION DULAY, CRESILDA DULAY, DANILO DULAY, EDITHA DULAY, ELENA G. DULAY, ERLINDA DULAY, ESTRELLA DULAY, ESTELITA DULAY, ESTRELITA P. DULAY, EVANGELINE DULAY, FELICIDAD DULAY, FELISA DULAY, GINA DULAY, GINA DULAY, GLORIA DULAY, GUILLERMO DULAY, JAIME DULAY, LETICIA DULAY, LOLITA DULAY, LUIS DULAY, MARIA G. DULAY, MILAGROS DULAY, REMEDIOS DULAY, ROBERTO DULAY, SOTERO DULAY, TERESITA DULAY, TERESITA G. DULAY, TERESITA M. DULAY, THERESITA DULAY, VALENTIN DULAY, EDITHA DUMO, REMEDIOS DY, RIA MAPILI, VICTORIO MAPILI, ROBERTO MARAMBA, SUSANA MARAMBA, ANDRES MARCOS, LANIA MARCOS, AURORA MARGASA, ARSENIA MARIGZA, LOLITA MARQUEZ, ANA

MARIA MARZAN, ANGELITA MEDINA, ADELINA MEDRIANO, ELIZABETH MEDRIANO, HERMINIA M. MEDRIANO, ROSALINDA MEDRIANO, CLEOFE MELANA, LOLITA MELENDEZ, LOURDES MIGUEL, EMILIA G. MILANES, JOSE MILANES, LILIA MILO, LILIAN MILO, FELICIDA MORION, EVELYN MOSTER, ADORACION MUNAR, ELEONORA MUNAR, IMELDRA NAVARRO, TERESITA NAVERIDA, ANITA NINOBLA, AURELIA NINOBLA, CARMELITA NINOBLA, MARCELA NINOBLA, MYRNA NISPERO, JOSEFINA NUTO, LANY OBSRA, ELENA OCAMPO, SYLVIA OLINARES, ROSITA OPENIANO, TRINIDAD ORDUNA, ROSALINDA ORDONEZ, JESSIE ORIBELLO, REMEDIOS ORIBELLO, TERESITA ORIBELLO, HILARIO ORACION, AVELINA ORTILLA, MAGDALENA ORTILLA, MARIETTA ORTILLA, LEONORA PADER, AMALIA PADILLA, ARCELITA PADILLA, EVELYN PADILLA, FELICIDA ORTILLA, JOSELYN PADILLA, JOSEPHINE PADILLA, VIRGINIA PADILLA, CLARITA PAIS, EDUARDO PANIS, JESUS PANIS, JOSE PANIS, TEOFILA PANIS, VIOLETA PARADO, ROSITA PAROCHA, CARMELITA PASCUA, LUCIA PAYUMO, MARIA PICAR, REYNALDA PILARCA, LUZVIMINDA QUERO, ALEJANDRA QUEZADA, TEODORO QUEZADA, ARLENE QUIBAN, AIDA QUINDARA, JUANITA QUINONES, GLORIA RABOT, EFREN RACELIS, ERLINDA RACELIS, IMELDA RACELIS, REMEDIOS RACELIS, SUSANA RACELIS, TERESITA RACELIS, FLORITA RAQUEL, ALMA RAMIREZ, CARMEN RAMIREZ, ROSEMARIE RAMIREZ, GEMMA RAMOS, JUANITA RAMOS, IMELITA REYES, VICTORIA A. RIVERA, VIRGINIA RIVERA, LYDIA ROBLES, EMILIA RONQUILLO, ROSALLA ROSETE, FORTUNATO RUIZ, GLORIA RUIZ, RICARDO RUIZ, ROSALINDA RUIZ, ROLIE RUIZ, DANILO RULLA, EDITHA RULLA, MARITES RULLA, ANTONIO RULLAMOS, BERNADETEE RULLAMAS, JULITA R. RULLAMAS, SOLEDAD RULLAMAS, CELILIA RULLAN, NAPOLEON RULLAN, NORA RULLAN, WARLITO RULLAN, AURORA RULLODA, GLORIA RULLODA, REMEDIOS RULLODA, LETICIA RUMATAY, FELY RUNAS, RIZALITO RUNAS, DOMINGA SABADO, JOSE SACDAL, CLARITA SALAZAR, GLORIA SALTING, PURITA SAMSON, ESTRELLITA SERRANO, GEMMA SIABABA, SUSANA SIABANA, PERLITA SOBREMONTE, CARMEN SOBREVILLA, RUBIE SOLOMON, MONICA SORIANO, ERLINDA SUGUITAN, JULITA SUCNET, FEDEL TACIO, LETICIA TAGARA, JOSEFINA TALENG, MARILY TAMONDON, NIEVEZ TAMONDON, GLORI TANGALIN, LEONARDO TANGALIN, MYRNA TANGALIN, NOEMA TANGALIN, NORMA TANGALIN, CRISTETA TEANAN, RUFINA TRANCIA, ALMA TRINIDAD, GLORIA TUGADE, TERESITA TUMBAGA, ALICIA UBONGEN, ZENAIDA UCOL, ADELA UGAY, AMAILIA UGAY, ESTELLA UGAY, HONORATO UGAY, JULIETA UGAY, LOURDES UGAY, PURIFICACION UGAY, ROSEMARIE UGAY, RUFINA UGAY, ANGELITO UMEL, JOSEFINA VALDEZ, ALFREDO VERCELES, JOSIE VERCELES, HELEN VILLANUEVA, SALVACION VILLAROSA, DOMINGO YARANON, FELIMON YARANON, FELIX YARANON, MONICA YARES, CONSOLACION YARIZ, DEMETRIA YARIZ, IMELDA YARIZ, MARGARITA ZARATE, ESMERALDA ABAD, LOURDES ABELLERA, MILAGROS ADUBE, JOSEPHINE ARIAS, ERLINDA ASPERIN, EMELDA ASUNCION, LILIA ASUNCION, VIOLETA ASUNCION, ROSA BALAGOT, ADORACION BALANAG, ALICA J. BALANAG, GLECERIA BALANGA, CORAZON BAMBICO, RICARDO BAIARIO, ADELA BAUTISTA, CORAZON BRAVO, DINAH BULATAO, MARILOU BUNGAY, LORETO BURGOS, EVELYN CABUNIAS, CARLITO CACAYURAN, ISABEL CAMACHO, LUCRECIA CARREON, ALFREDO CASEM, HERA CASEM, MELY CASEM, NATIVIDAD CASIPIT, MARILYN CASTILLO, NENITA CASTANEDA, CARMELITA CAVINTA, LEONIDA CAVINTA, LEONILA CAVINTA, MELANIE CHAVEZ, LORETO CORTEZ, HERMANA DACANAY, MARIETTA DACANAY, MARITES G. DACANAY, MARIO DALAZA, AIDA DANAO, EVA DANAO, MARGIE DE GUZMAN, NATIVIDAD DE CASTRO, NATIVIDAD DELA CRUZ, LORETA DIFUNTORUM, LOLITA DISTOR, ADELINA DOMONDON, HELEN DULATRE, IMELDA M. DULATRE, JOSE N. DULATRE, LYDIA A. DULATRE, MERLY DULATRE, CONCEPCION DULAY, DOMINGA DULAY, ELENA C. DULAY, ERLINDA DULAY, ORPILINA R. DULAY, PABLO A. DULAY, RENATO DULAY, NORMA EISMA, EDNA ESTOQUE, TEOFILO FAJARDO, ADELINA FONTANILLA, TERESITA FORONDA, MARGARITA

FREDELUCES, RUFINA GALESTE, MARISSA GALI, LUZVIMINDA GAMBOA, CLEOFE GARCIA, ERLINDA GAPASIN, JULITA GATCHALIAN, MARISSA GATCHALIAN, ALFONSO HALOG, TERESITA IBASAN, RICARDO JUGO, ELMA JULOYA, ELENITA LACUATA, EPIFANIA LACUATA, SEBASTIAN LACUATA, JOSEFINA LARON, PEDRO LEGASPI, DOLORES LUCENA, FLORDELIZA MABANTA, PERLITA MACAGBA, CESAR MAGLAYA, ERNA MAGNO, GLORIA MAGNO, BONA P. MAMARIL, CONCEPCION MAMARIL, MARCELINA MAMARIL, TERESITA MAMARIL, ESTINILIE MANGADANG, HERMOGENES MANGADANG, LETICIA MANGADANG, LYDIA MANGADANG, SHIRLEY MANGADANG, SONIA MANGADANG, TRINIDAD MANGADANG, VICTORIANO MANGADANG, CRESTITA D. MANZANO, ERLINDA MAPALO, FABIAN F. MAPANAO, LYDIA MAPILE, RUMO MASON, SUSANA MEDRIANO, DOLORES MILAN, ANTONIO G. MUNAR, MARINA NINIALBA, CORAZON B. NINOBLE, SUSAN ORIBELLO, JOVENCIO ORLINO, CHARITO ORPILLA, FERDINAND PADILLA, LETECIA PAGADUAN, BERLINA PALMONES, ARISTON PANIS, PATRICIO PANIS, PRIMO PANIS, REMEDIOS B. PANIS, EMELITO PERALTA, GLORIA RAMIREZ, DOMINGA RAMOS, GERTRUDES RAMOS, DOROTEO REFUERZO, JR., JUANITA REFUERZO, FLORENCIO REGACHO, MAGDALENA REBACHO, ADELINA REYES, DELIA REYES, EUFENIA RIVERA, LEONORA RIVERA, ROSEMARIE ROSIMO, VICTORIA RUALO, DANILO RULLAN, AURORA RULLODA, SERAFICA RULLODA, ZENAIDO P. RULLODA, IMELDA RUNAS, REMEDIOS SANTOS, DOMINADOR TABABA, ROSENDA TABAO, JOSEFINA TALENS, REVELINA TORCEDO, RUFINA TUMBANGA, JULITA F. UGAY, BRENDA VILLANUEVA, GLORIA VILORIA, FLORIDA YARIS, MARGARITA ZARATE, FERNANDO SACDAL, ANICETA MANONGDO and BEATRIZ UGAY, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER RICARDO N. OLAIREZ, LA UNION TOBACCO REDRYING CORPORATION and SEE LIN CHAN, respondents.

D E C I S I O N

DE LEON, JR., J.:

Before us is a petition for certiorari seeking to annul two Resolutions of the National Labor Relations Commission (NLRC), Third Division, dated July 6, 19941 and September 23, 19942 , in its affirmance of the Decision3 of Labor Arbiter Ricardo N. Olairez dated December 29, 1993 dismissing petitioners’ consolidated complaint for separation pay for lack of merit.

The facts are as follows:

Private respondent La Union Tobacco Redrying Corporation (LUTORCO), which is owned by private respondent See Lin Chan, is engaged in the business of buying, selling, redrying and processing of tobacco leaves and its by-products. Tobacco season starts sometime in October of every year when tobacco farmers germinate their seeds in plots until they are ready for replanting in November. The harvest season starts in mid-February. Then, the farmers sell the harvested tobacco leaves to redrying plants or do the redrying themselves. The redrying plant of LUTORCO receives tobacco for redrying at the end of February and starts redrying in March until August or September.

Petitioners have been under the employ of LUTORCO for several years until their employment with LUTORCO was abruptly interrupted sometime in March 1993 when Compania General de Tabaccos de Filipinas (also known as TABACALERA) took over LUTORCO’s tobacco operations. New signboards were posted indicating a change of ownership and petitioners were then asked by LUTORCO to file their respective applications for employment with TABACALERA. Petitioners were caught unaware of

the sudden change of ownership and its effect on the status of their employment, though it was alleged that TABACALERA would assume and respect the seniority rights of the petitioners.

On March 17, 1993, the disgruntled employees instituted before the NLRC Regional Arbitration Branch No. 1, San Fernando, La Union a complaint4 for separation pay against private respondent LUTORCO on the ground that there was a termination of their employment due to the closure of LUTORCO as a result of the sale and turnover to TABACALERA. Other equally affected employees filed two additional complaints5 , also for separation pay, which were consolidated with the first complaint.

Private respondent corporation raised as its defense that it is exempt from paying separation pay and denied that it terminated the services of the petitioners; and that it stopped its operations due to the absence of capital and operating funds caused by losses incurred from 1990 to 1992 and absence of operating funds for 1993, coupled with adverse financial conditions and downfall of prices.6 It alleged further that LUTORCO entered into an agreement with TABACALERA to take over LUTORCO’s tobacco operations for the year 1993 in the hope of recovering from its serious business losses in the succeeding tobacco seasons and to create a continuing source of income for the petitioners.7 Lastly, it manifested that LUTORCO, in good faith and with sincerity, is willing to grant reasonable and adjusted amounts to the petitioners, as financial assistance, if and when LUTORCO could recover from its financial crisis.8

On December 29, 1993, Labor Arbiter Ricardo N. Olairez rendered his decision dismissing the complaint for lack of merit. In upholding private respondent LUTORCO’s position, the Labor Arbiter declared that the petitioners are not entitled to the benefits under Article 2839 of the Labor Code since LUTORCO ceased to operate due to serious business losses and, furthermore, TABACALERA, the new employer of the petitioner has assumed the seniority rights of the petitioners and other employment liabilities of the LUTORCO.10

Petitioners appealed11 then the decision of the Labor Arbiter to the public respondent NLRC where it was assigned to the Third Division.

In its Opposition to Appeal12 dated February 5, 1994 private respondent LUTORCO presented new allegations and a different stand for denying separation pay. It alleged that LUTORCO never ceased to operate but continues to operate even after TABACALERA took over the operations of its redrying plaint in Aringay, La Union. Petitioners were not terminated from employment but petitioners instead refused to work with TABACALERA, despite the notice to petitioners to return to work in view of LUTORCO’s need for workers at its Agoo plant which had approximately 300,000 kilos of Virginia tobacco for processing and redrying. Furthermore, petitioners are not entitled to separation pay because petitioners are seasonal workers.

Adopting these arguments of private respondent, the NLRC, in a Resolution13 dated July 6, 1994, affirmed the dismissal of the consolidated complaints for separation pay. Public respondent held that petitioners are not entitled to the protection of Article 283 of the Labor Code providing for separation pay since there was no closure of establishment or termination of services to speak of. It declared that there was no dismissal but a "non-hiring due mainly to [petitioners] own volition."14 Moreover, the benefits of Article 283 of the Labor Code apply only to regular employees, not seasonal workers like petitioners.15 Inasmuch as public respondent in its Resolution16 dated September 23, 1994 denied petitioners’ motion for reconsideration, petitioners now assail the correctness of the NLRC’s resolution via the instant petition.

Petitioners anchor their petition on the following grounds, to wit:

I. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN RULING THAT THERE WAS NO DISMISSAL OR TERMINATION OF SERVICES.

II. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN RULING THAT PETITIONERS WERE NOT REGULAR EMPLOYEES.

III. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN NOT AWARDING SEPARATION PAY TO THE PETITIONERS.

Petitioners vigorously maintain that they are regular workers of respondent LUTORCO since they worked continuously for many years with LUTORCO, some of them even for over 20 years, and that they performed functions necessary and desirable in the usual business of LUTORCO.17 According to them, the fact that some of them work only during the tobacco season does not affect their status as regular workers since they have been repeatedly called back to work for every season, year after year.18 Thus, petitioners take exception to the factual findings and conclusions of the NLRC, stressing that the conclusions of the NLRC were based solely on the new theory advanced by private respondent LUTORCO only on appeal, that is, that it was only LUTORCO’s tobacco re-drying operation that was sold, and hence, diametrically opposed to its theory before the Labor Arbiter, i.e., that it is the entire company (LUTORCO) itself that was sold.

Private respondent LUTORCO, on the other hand, insists that petitioners’ employment was not terminated; that it never ceased to operate, and that it was petitioners themselves who severed their employer-employee relationship when they chose employment with TABACALERA because petitioners found more stability working with TABACALERA than with LUTORCO.19 It likewise insists that petitioners are seasonal workers since almost all of petitioners never continuously worked in LUTORCO for any given year20 and they were required to reapply every year to determine who among them shall be given work for the season. To support its argument that petitioners are seasonal workers, private respondent LUTORCO cites the case of Mercado, Sr. v. NLRC21wherein this Court held that "the employment of [seasonal workers] legally ends upon the completion of the xxx season."

Clearly, the crux of the dispute boils down to two issues, namely, (a) whether petitioners’ employment with LUTORCO was terminated, and (b) whether petitioners are regular or seasonal workers, as defined by law. Both issues are clearly factual in nature as they involved appreciation of evidence presented before the NLRC whose finding of facts and conclusions thereon are entitled to respect and finality in the absence of proof that they were arrived at arbitrarily or capriciously.22 In the instant case, however, cogent reasons exist to apply the exception, to wit:

First, upon a thorough review, the records speak of a sale to TABACALERA in 1993 under conditions evidently so concealed that petitioners were not formally notified of the impending sale of LUTORCO’s tobacco re-drying operations to TABACALERA and its attendant consequences with respect to their continued employment status under TABACALERA. They came to know of the fact of that sale only when TABACALERA took over the said tobacco re-drying operations. Thus, under those circumstances, the employment of petitioners with respondent LUTORCO was technically terminated when TABACALERA took over LUTORCO’s tobacco re-drying operations in 1993.23

Moreover, private respondent LUTORCO’s allegation that TABACALERA assured the seniority rights of petitioners deserves scant consideration inasmuch as the same is not supported by documentary evidence nor was it confirmed by TABACALERA. Besides, there is no law requiring that the purchaser of an entire company should absorb the

employees of the selling company. The most that the purchasing company can do, for reasons of public policy and social justice, is to give preference to the qualified separated employees of the selling company, who in its judgment are necessary in the continued operation of the business establishment. In the instant case, the petitioner employees were clearly required to file new applications for employment. In reality then, they were hired as new employees of TABACALERA.

Second, private respondent LUTORCO’s contention that petitioners themselves severed the employer-employee relationship by choosing to work with TABACALERA is bereft of merit considering that its offer to return to work was made more as an afterthought when private respondent LUTORCO later realized it still had tobacco leaves for processing and redrying. The fact that petitioners ultimately chose to work with TABACALERA is not adverse to petitioners’ cause. To equate the more stable work with TABACALERA and the temporary work with LUTORCO is illogical. Petitioners’ untimely separation in LUTORCO was not of their own making and therefore, not construable as resignation therefrom inasmuch as resignation must be voluntary and made with the intention of relinquishing the office, accompanied with an act of relinquishment.24

Third, the test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC,25in which this Court held:

The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exists.

Thus, the nature of one’s employment does not depend solely on the will or word of the employer.1âwphi1 Nor on the procedure for hiring and the manner of designating the employee, but on the nature of the activities to be performed by the employee, considering the employer’s nature of business and the duration and scope of work to be done.26

In the case at bar, while it may appear that the work of petitioners is seasonal, inasmuch as petitioners have served the company for many years, some for over 20 years, performing services necessary and indispensable to LUTORCO’s business, serve as badges of regular employment.27 Moreover, the fact that petitioners do not work continuously for one whole year but only for the duration of the tobacco season does not detract from considering them in regular employment since in a litany of cases28 this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but are merely considered on leave until re-employed.

Private respondent’s reliance on the case of Mercardo v. NLRC is misplaced considering that since in said case of Mercado, although the respondent company therein consistently availed of the services of the petitioners therein from year to year, it was clear that petitioners therein were not in respondent company’s regular employ. Petitioners therein performed different phases of agricultural work in a given year. However, during that period, they were free to contract their services to work for other farm owners, as in fact they did. Thus, the Court ruled in that case that their employment would naturally end upon the completion of each project or phase of farm work for which they have been contracted.

All the foregoing considered, the public respondent NLRC in the case at bar erred in its total affirmance of the dismissal of the consolidated complaint, for separation pay, against private respondents LUTORCO and See Lin Chan considering that petitioners are regular seasonal employees entitled to the benefits of Article 283 of the Labor Code which applies to closures or cessation of an establishment or undertaking, whether it be a complete or partial cessation or closure of business operation.29

In the case of Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC30 this Court, when faced with the question of whether the separation pay of a seasonal worker, who works for only a fraction of a year, should be equated with the separation pay of a regular worker, resolved that question in this wise:

The amount of separation pay is based on two factors: the amount of monthly salary and the number of years of service. Although the Labor Code provides different definitions as to what constitutes "one year of service," Book Six31 does not specifically define "one year of service" for purposes of computing separation pay. However, Articles 283 and 284 both state in connection with separation pay that a fraction of at least six months shall be considered one whole year. Applying this case at bar, we hold that the amount of separation pay which respondent members xxx should receive is one-half (1/2) their respective average monthly pay during the last season they worked multiplied by the number of years they actually rendered service, provided that they worked for at least six months during a given year.

Thus, in the said case, the employees were awarded separation pay equivalent to one (1) month, or to one-half (1/2) month pay for every year they rendered service, whichever is higher, provided they rendered service for at least six (6) months in a given year. As explained in the text of the decision in the said case, "month pay" shall be understood as "average monthly pay during the last season they worked."32 An award of ten percent (10%) of the total amount due petitioners as attorney’s fees is legally and morally justifiable under Art. 111 of the Labor Code,33 Sec. 8, Rule VIII, Book III of its Implementing Rules,34 and par. 7, Art. 220835 of the Civil Code.36

WHEREFORE, the petition is hereby GRANTED, and the assailed Resolutions dated July 6, 1994 and September 23, 1994 of public respondent NLRC are REVERSED and SET ASIDE. Private respondent La Union Tobacco Redrying Corporation is ORDERED: (a) to pay petitioners separation pay equivalent to one (1) month, or one-half (1/2) month pay for each year that they rendered service, whichever is higher, provided that they rendered service for at least six (6) months in a given year, and; (b) to pay ten percent (10%) of the total amount due to petitioners, as and for attorney’s fees. Consequently, public respondent NLRC is ORDERED to COMPUTE the total amount of separation pay which each petitioner who has rendered service to private respondent LUTORCO for at least six (6) months in a given year is entitled to receive in accordance with this decision, and to submit its compliance thereon within forty-five (45) days from notice of this decision.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.

Footnotes

1 Penned by Commissioner Ireneo B. Bernardo and concurred in by Presiding Commissioner Lourdes C. Javier and Commissioner Joaquin A. Tanodra in NLRC

CN. RAB-I-03-1055-93, RAB-I-03-1056-93 and RAB-I-03-1100-93 CA No. L-001300, Rollo, pp. 37-55.

2 Rollo, pp. 27-36.

3 Rollo, pp. 56-64.

4 Docketed as NLRC Case No. RAB-I-03-1055-93, Rollo, pp. 69-75.

5 Filed on March 25, 1993 and June 15, 1993, docketed as NLRC Case Nos. RAB-I-03-1056-93 and RAB-I-03-1100-93, respectively, Rollo, pp. 65-68.

6 Rollo, pp. 85-86.

7 Ibid.

8 Rollo, p. 87.

9 Article 283. Closure of establishment and reduction of personnel.

x x x in cases of closure and 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 as one (1) whole year.

10 Rollo, pp. 61-64.

11 Rollo, pp. 90-102.

12 Rollo, pp. 103-109.

13 See Note No. 1, supra.

14 Rollo, p. 50.

15 Rollo, pp. 51-52.

16 See Note No. 2, supra.

17 Rollo, p. 304.

18 Rollo, p. 305.

19 Rollo, pp. 239-240.

20 Rollo, p. 236.

21 201 SCRA 332, 343 [1991].

22 PASVIL/Pascual Liner, Inc., Workers Union-NAFLU v. NLRC, 311 SCRA 444, 457 [1999].

23 See San Felipe Neri School of Mandaluyong, Inc. v. NLRC, 201 SCRA 478 [1991] citing Central Azucarera del Danao v. Court of Appeals, 137 SCRA 295 [1985].

24 Pascua v. NLRC (Third Division), 287 SCRA 554, 567 [1998]; see Tacloban Sagkahan Rice and Corn Mills Co. v. NLRC, 183 SCRA 425 [1990].

25 De Leon v. NLRC, 176 SCRA 615, 621 [1989].

26 Bernardo v. NLRC, 310 SCRA 186, 201 [1999].

27 Maraguinot, Jr. v. NLRC (Second Division), 284 SCRA 539, 556 [1998].

28 Bacolod-Murcia Milling Co., Inc. v. NLRC, 204 SCRA 155, 158 [1991]; Visayan Stevedore Transportation Company v. CIR, 19 SCRA 426 [1967]; Industrial-Commercial Agricultural Workers’ Organization (ICAWO)v. CIR, 16 SCRA 562, 565-566 [1966]; Manila Hotel Company v. Court of Industrial Relations, 9 SCRA 184, 186 [1963].

29 Coca-Cola Bottlers (Phils.), Inc. v. NLRC 194 SCRA 592, 599 [1991].

30 300 SCRA 37, 63 –65 [1998].

31 Book Six of the Labor Code contains the provisions pertaining to termination of employment and computation of separation pay.

32 See Note No. 30.

33 (a) In cases of unlawful withholding of wages the culpable party may be assessed attorney’s fees equivalent to ten percent of the amount of wages recovered.

(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of the wages, attorney’s fees, which exceed ten percent of the amount of wages recovered.

34 Attorney’s fees in any judicial or administrative proceedings for the recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party.

35 In absence of stipulation, attorney’s fees and expenses of litigation, other than judicial consist, cannot be recovered, except:

xxx (7) In actions for the recovery of wages of household helpers, laborers and skilled workers xxx.

36 Marsaman Manning Agency, Inc. v. NLRC, 313 SCRA 88, 99-100 [1999] citing Philippine National Construction Corporation v. NLRC, 277 SCRA 91, 105 [1997]; Sebuguero v. NLRC, 248 SCRA 532, 548 [1995].

BENARES v. PANCHO (2005)

Republic of the PhilippinesSUPREME COURT

SECOND DIVISION

G.R. No. 151827. April 29, 2005

JOSEFINA BENARES, Petitioners, vs.Jaime pancho, Rodolfo pancho, jr., joselito medalla, paquito magallanes, Alicia magallanes, evelyn magallanes, violeta villacampa, maritess pancho, rogelio pancho and arnolfo pancho, Respondents.

D E C I S I O N

Tinga, J.:

Assailed in this Petition for Review on Certiorari1 is the Decision2 of the Court of Appeals which affirmed the National Labor Relations Commission’s (NLRC) decision3 holding that respondents were illegally dismissed and ordering petitioner to pay respondents separation pay, backwages, 13th month pay, Cost of Living Allowance (COLA), emergency relief allowance (ERA), salary differentials and attorney’s fees. The NLRC reversed the Labor Arbiter’s finding that respondents failed to lay down the facts and circumstances surrounding their dismissal and to prove their entitlement to monetary awards.4

The antecedents, as narrated by the NLRC, follow.

Complainants alleged to have started working as sugar farm workers on various dates, to wit:

1. Jaime Pancho November 15, 1964

2. Rodolfo Pancho, Jr. February 1, 1975

3. Joselito Medalla November 15, 1964

4. Paquito Magallanes March 10, 1973

5. Felomino Magallanes November 15, 1964

6. Alicia Magallanes January 15, 1964

7. Evelyn Magallanes January 1, 1974

8. Violeta Villacampa December 1, 1979

9. Maritess Pancho December 15, 1985

10. Rogelio Pancho December 1, 1979

11. Arnolfo Pancho February 1, 1975

Respondent Hda. Maasin II is a sugar cane plantation located in Murcia, Negros Occidental with an area of 12-24 has. planted, owned and managed by Josefina Benares, individual co-respondent.

On July 24, 1991, complainants thru counsel wrote the Regional Director of the Department of Labor and Employment, Bacolod City for intercession particularly in the matter of wages and other benefits mandated by law.

On September 24, 1991, a routine inspection was conducted by personnel of the Bacolod District Office of the Department of Labor and Employment. Accordingly, a report and recommendation was made, hence, the endorsement by the Regional Director of the instant case to the Regional Arbitration Branch, NLRC, Bacolod City for proper hearing and disposition.

On October 15, 1991, complainants alleged to have been terminated without being paid termination benefits by respondent in retaliation to what they have done in reporting to the Department of Labor and Employment their working conditions viz-a-viz (sic) wages and other mandatory benefits.

On July 14, 1992, notification and summons were served to the parties wherein complainants were directed to file a formal complaint.

On July 28, 1992, a formal complaint was filed for illegal dismissal with money claims.

From the records, summons and notices of hearing were served to the parties and apparently no amicable settlement was arrived, hence, the parties were directed to file their respective position papers.

On January 22, 1993, complainant submitted their position paper, while respondent filed its position paper on June 21, 1993.

On March 17, 1994, complainants filed their reply position paper and affidavit. Correspondingly, a rejoinder was filed by respondent on May 16, 1994.

On August 17, 1994, from the Minutes of the scheduled hearing, respondent failed to appear, and that the Office will evaluate the records of the case whether to conduct a formal trial on the merits or not, and that the corresponding order will be issued.

On January 16, 1996, the Labor Arbiter issued an order to the effect that the case is now deemed submitted for resolution.

On April 30, 1998, the Labor Arbiter a quo issued the assailed decision dismissing the complaint for lack of merit.

On June 26, 1998, complainants not satisfied with the aforecited ruling interposed the instant appeal anchored on the ground that:

THE HONORABLE LABOR ARBITER GRAVELY ABUSED ITS DISCRETION AND SERIOUSLY ERRED IN HOLDING THAT THE COMPLAINANTS FAILED TO DISCUSS THE FACTS AND CIRCUMSTANCES SURROUNDING THEIR DISMISSAL, HENCE, THERE IS NO DISMISSAL TO SPEAK OF AND THAT COMPLAINANTS FAILED TO ALLEGE AND PROVE THAT THEIR CLAIMS ARE VALID, HENCE THE DISMISSAL OF THEIR COMPLAINT WOULD CAUSE GRAVE AND IRREPARABLE DAMAGE TO HEREIN COMPLAINANTS.5

The NLRC held that respondents attained the status of regular seasonal workers of Hda. Maasin II having worked therein from 1964-1985. It found that petitioner failed to discharge the burden of proving that the termination of respondents was for a just or authorized cause. Hence, respondents were illegally dismissed and should be awarded their money claims.

Petitioner’s motion for reconsideration6 dated May 12, 1999 was denied in the resolution7 dated October 29, 1999.

The Court of Appeals affirmed the NLRC’s ruling, with the modification that the backwages and other monetary benefits shall be computed from the time compensation was withheld in accordance with Article 279 of the Labor Code, as amended by Republic Act No. 6715.

In its Resolution8 dated November 28, 2001, the appellate court denied petitioner’s motion for reconsideration for lack of merit.

Petitioner is now before this Court averring that the Court of Appeals erred in affirming the decision of the NLRC. While petitioner concedes that the factual findings of the NLRC are generally binding on the appellate court, petitioner insists that the findings of the NLRC are vague and contradictory, thereby necessitating review.

According to petitioner, the fact that she was able to present sufficient proof to rebut the claim of illegal dismissal should be considered in light of the NLRC’s admission that there are gray areas in the case which require clarification. Petitioner avers that the NLRC should have at least remanded the case to the labor arbiter to thresh out these gray areas. She further claims that the NLRC was overly zealous in awarding COLA and ERA despite the fact that respondents did not even pray for these awards in their complaint. She also questions the NLRC’s general statement to the effect that the payroll she submitted is not convincing asserting that she submitted 235 sets of payroll, not just one, and that the NLRC did not even bother to explain why it found the payroll unconvincing.

Respondents filed a Comment9 dated May 10, 2002 alleging that petitioner failed to submit certified true copies of the assailed decisions and resolutions, and that the petition lacks proof of service and raises questions of fact.

In her Reply to Comment10 dated September 17, 2002, petitioner points out that the Rules of Court do not require that all copies of the petition contain certified true copies of the questioned decisions and resolutions. Further, all copies of the petition filed with the Court contain an affidavit of service. Respondents’ copy does not have an affidavit of service because the sworn declaration can not be executed before service of the petition is actually made. Petitioner also maintains that the rule on review of findings of fact by the Supreme Court admits of certain exceptions such as when the conclusions arrived at are grounded entirely on speculation, surmises and conjectures as in this case.

The petition was given due course and the parties were required to submit their respective memoranda in theResolution11 dated March 3, 2003. Petitioner filed a Manifestation and Compliance12 dated April 22, 2003 adopting the allegations in her Petition for Review on Certiorari and Reply to Comment as her memorandum. For their part, respondents filed a Memoranda For Private Respondents13 dated May 7, 2003 alleging that the Court of Appeals correctly relied upon the factual findings of the NLRC after having found the same to be supported by substantial evidence. They insist that they are regular seasonal employees of the sugar plantation. As such, petitioner has the burden of proving that their dismissal was for a just or authorized cause.

As regards the contention that the NLRC erroneously awarded COLA and ERA, respondents cite Osias Academy v. DOLE,14 which provides that the NLRC can extend monetary awards even if these are not prayed for if the monetary benefits are statutory grants intended to alleviate the laborer’s plight like the COLA and ERA.

The main question raised by the present petition is whether respondents are regular employees of Hacienda Maasin and thus entitled to their monetary claims. Related to this is the issue of whether respondents were illegally terminated.

This case presents a good opportunity to reiterate the Court’s rulings on the subject of seasonal employment. The Labor Code defines regular and casual employment, viz:

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 service to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

The law 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.15

In Mercado v. NLRC,16 the Court ruled that seasonal workers do not become regular employees by the mere fact that they have rendered at least one year of service, whether continuous or broken, because the proviso in the second paragraph of Article 280 demarcates as "casual" employees, all other employees who do not fall under the definition of the preceding paragraph. It 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.

The factual circumstances obtaining in the Mercado case, however, are peculiar. In that case, the workers were engaged to do a particular phase of agricultural work necessary for rice and/or sugarcane production, after which they would be free to render services to other farm workers who need their services.

In contrast, in the case of Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade,17 respondents performed the same tasks for petitioners every season for several years. Thus, they were considered the latter’s regular employees for their respective tasks. The fact that they do not work continuously for one whole year but only for the duration of the season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-

season are not separated from service in that period, but merely considered on leave until re-employed.18

Citing jurisprudence, the Court, in Hacienda Fatima, condensed the rule that the primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee vis-à-vis the usual trade or business of the employer. This 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. If the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.19

In this case, petitioner argues that respondents were not her regular employees as they were merely "pakiao" workers who did not work continuously in the sugar plantation. They performed such tasks as weeding, cutting and loading canes, planting cane points, fertilizing, cleaning the drainage, etc. These functions allegedly do not require respondents’ daily presence in the sugarcane field as it is not everyday that one weeds, cuts canes or applies fertilizer. In support of her allegations, petitioner submitted "cultivo" and milling payrolls.

The probative value of petitioner’s evidence, however, has been passed upon by the labor arbiter, the NLRC and the Court of Appeals. Although the labor arbiter dismissed respondents’ complaint because their "position paper is completely devoid of any discussion about their alleged dismissal, much less of the probative facts thereof,"20 the ground for the dismissal of the complaint implies a finding that respondents are regular employees.

The NLRC was more unequivocal when it pronounced that respondents have acquired the status of regular seasonal employees having worked for more than one year, whether continuous or broken in petitioner’s hacienda.

According to petitioner, however, the NLRC’s conclusion is highly suspect considering its own admission that there are "gray areas which requires (sic) clarification." She alleges that despite these gray areas, the NLRC "chose not to remand the case to the Labor Arbiter….as this would unduly prolong the agony of the complainants in particular." 21

Petitioner perhaps wittingly omitted mention that the NLRC "opted to appreciate the merits of the instant case based on available documents/pleadings."22 That the NLRC chose not to remand the case to the labor arbiter for clarificatory proceedings and instead decided the case on the basis of the evidence then available to it is a judgment call this Court shall not interfere with in the absence of any showing that the NLRC abused its discretion in so doing.

The Court of Appeals, in fact, found no such grave abuse of discretion on the part of the NLRC. Accordingly, it dismissed the petition for certiorari and affirmed with modification the findings of the NLRC. It is well to note at this point that in quasi-judicial proceedings, the quantum of evidence required to support the findings of the NLRC is only substantial evidence or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.23

The issue, therefore, of whether respondents were regular employees of petitioner has been adequately dealt with. The labor arbiter, the NLRC and the Court of Appeals have similarly held that respondents were regular employees of petitioner. Since it is a settled rule that the factual findings of quasi-judicial agencies which have acquired expertise in

the matters entrusted to their jurisdiction are accorded by this Court not only respect but even finality,24 we shall no longer disturb this finding.

Petitioner next underscores the NLRC decision’s mention of the "payroll" she presented despite the fact that she allegedly presented 235 sets of payroll, not just one payroll. This circumstance does not in itself evince any grave abuse of discretion on the part of the NLRC as it could well have been just an innocuous typographical error.

Verily, the NLRC’s decision, affirmed as it was by the Court of Appeals, appears to have been arrived at after due consideration of the evidence presented by both parties.

We also find no reason to disturb the finding that respondents were illegally terminated. When there is no showing of clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a just or authorized cause.25 In this case, as found both by the NLRC and the Court of Appeals, petitioner failed to prove any such cause for the dismissal of respondents.

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals respectively dated June 29, 2001 and November 28, 2001 are hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

Footnotes

1 Rollo, pp. 5-18. Dated January 14, 2002.

2 Id. at 23-29. Penned by Associate Justice Conchita Carpio Morales (now Associate Justice of this Court) and concurred in by Associate Justices Candido V. Rivera and Rebecca De Guia-Salvador.

3 Records, pp. 243-252.

4 Id. at 203-206.

5 Id. at 243-246.

6 Id. at 253-258.

7 Id. at 272-273.

8 Supra note 1 at 32-33.

9 Id. at 84-85.

10 Id. at 89-92.

11 Id. at 95

12 Id. at 96-97.

13 Id. at 99-111.

14 192 SCRA 612.

15 Perpetual Help Credit Cooperative, Inc. v. Faburada, G.R. No. 121948, October 8, 2001, 366 SCRA 693, 699-700.

16 G.R. No. 79869, September 5, 1991, 201 SCRA 332.

17 G.R. No. 149440, January 28, 2003, 396 SCRA 518.

18Ibid, citing Abasolo v. NLRC, 346 SCRA 293, November 29, 2000.

19Ibid.

20Supra note 3 at 205.

21Supra note 3 at 247.

22Ibid.

23Sec. 5, Rule 133, Rules of Court.

24Falguera v. Linsangan, G.R. No. 118448, December 14, 1995, 251 SCRA 364.

25Supra note 17.

PRICE v. INNODATA (2008)

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

CHERRY J. PRICE, STEPHANIE G. DOMINGO AND LOLITA ARBILERA, Petitioners,

- versus -

INNODATA PHILS. INC.,/ INNODATA CORPORATION, LEO RABANG AND JANE NAVARETTE, Respondents.

G.R. No. 178505

Present:

YNARES-SANTIAGO, J.,Chairperson,

AUSTRIA-MARTINEZ, CHICO-NAZARIO,NACHURA, and REYES, JJ.

Promulgated:September 30, 2008

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

CHICO-NAZARIO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision1dated 25 September 2006 and Resolution2 dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No. 72795, which affirmed the Decision dated 14 December 2001 of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 30-03-01274-2000 finding that petitioners were not illegally dismissed by respondents.

The factual antecedents of the case are as follows:

Respondent Innodata Philippines, Inc./Innodata Corporation (INNODATA) was a domestic corporation engaged in the data encoding and data conversion business. It employed encoders, indexers, formatters, programmers, quality/quantity staff, and others, to maintain its business and accomplish the job orders of its clients. Respondent Leo Rabang was its Human Resources and Development (HRAD) Manager, while respondent Jane Navarette was its Project Manager.

INNODATA had since ceased operations due to business losses in June 2002.

Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera were employed as formatters by INNODATA. The parties executed an employment contract denominated as a "Contract of Employment for a Fixed Period," stipulating that the contract shall be for a period of one year,3 to wit:

CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD

x x x x

WITNESSETH: That

WHEREAS, the EMPLOYEE has applied for the position of FORMATTER and in the course thereof and represented himself/herself to be fully qualified and skilled for the said position;

WHEREAS, the EMPLOYER, by reason of the aforesaid representations, is desirous of engaging that the (sic) services of the EMPLOYEE for a fixed period;

NOW, THEREFORE, for and in consideration of the foregoing premises, the parties have mutually agreed as follows:

TERM/DURATION

The EMPLOYER hereby employs, engages and hires the EMPLOYEE and the EMPLOYEE hereby accepts such appointment as FORMATTER effective FEB. 16, 1999 to FEB. 16, 2000 a period of ONE YEAR.

x x x x

TERMINATION

6.1 In the event that EMPLOYER shall discontinue operating its business, this CONTRACT shall also ipso facto terminate on the last day of the month on which the EMPLOYER ceases operations with the same force and effect as is such last day of the month were originally set as the termination date of this Contract. Further should the Company have no more need for the EMPLOYEE’s services on account of completion of the project, lack of work (sic) business losses, introduction of new production processes and techniques, which will negate the need for personnel, and/or overstaffing, this contract maybe pre-terminated by the EMPLOYER upon giving of three (3) days notice to the employee.

6.2 In the event period stipulated in item 1.2 occurs first vis-à-vis the completion of the project, this contract shall automatically terminate.

6.3 COMPANY’s Policy on monthly productivity shall also apply to the EMPLOYEE.

6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause, by giving at least Fifteen – (15) notice to that effect. Provided, that such pre-termination shall be effective only upon issuance of the appropriate clearance in favor of the said EMPLOYEE.

6.5 Either of the parties may terminate this Contract by reason of the breach or violation of the terms and conditions hereof by giving at least Fifteen (15) days written notice. Termination with cause under this paragraph shall be effective without need of judicial action or approval.4

During their employment as formatters, petitioners were assigned to handle jobs for various clients of INNODATA, among which were CAS, Retro, Meridian, Adobe, Netlib, PSM, and Earthweb. Once they finished the job for one client, they were immediately assigned to do a new job for another client.

On 16 February 2000, the HRAD Manager of INNODATA wrote petitioners informing them of their last day of work. The letter reads:

RE: End of Contract

Date: February 16, 2000

Please be informed that your employment ceases effective at the end of the close of business hours on February 16, 2000.5

According to INNODATA, petitioners’ employment already ceased due to the end of their contract.

On 22 May 2000, petitioners filed a Complaint6 for illegal dismissal and damages against respondents. Petitioners claimed that they should be considered regular employees since their positions as formatters were necessary and desirable to the usual business of INNODATA as an encoding, conversion and data processing company. Petitioners also averred that the decisions in Villanueva v. National Labor Relations Commission7 and Servidad v. National Labor Relations Commission,8 in which the Court already purportedly ruled "that the nature of employment at Innodata Phils., Inc. is regular,"9 constituted stare decisis to the present case. Petitioners finally argued that they could not be considered project employees considering that their employment was

not coterminous with any project or undertaking, the termination of which was predetermined.

On the other hand, respondents explained that INNODATA was engaged in the business of data processing, typesetting, indexing, and abstracting for its foreign clients. The bulk of the work was data processing, which involved data encoding. Data encoding, or the typing of data into the computer, included pre-encoding, encoding 1 and 2, editing, proofreading, and scanning. Almost half of the employees of INNODATA did data encoding work, while the other half monitored quality control. Due to the wide range of services rendered to its clients, INNODATA was constrained to hire new employees for a fixed period of not more than one year. Respondents asserted that petitioners were not illegally dismissed, for their employment was terminated due to the expiration of their terms of employment. Petitioners’ contracts of employment with INNODATA were for a limited period only, commencing on 6 September 1999 and ending on 16 February 2000.10Respondents further argued that petitioners were estopped from asserting a position contrary to the contracts which they had knowingly, voluntarily, and willfully agreed to or entered into. There being no illegal dismissal, respondents likewise maintained that petitioners were not entitled to reinstatement and backwages.

On 17 October 2000, the Labor Arbiter11 issued its Decision12 finding petitioners’ complaint for illegal dismissal and damages meritorious. The Labor Arbiter held that as formatters, petitioners occupied jobs that were necessary, desirable, and indispensable to the data processing and encoding business of INNODATA. By the very nature of their work as formatters, petitioners should be considered regular employees of INNODATA, who were entitled to security of tenure. Thus, their termination for no just or authorized cause was illegal. In the end, the Labor Arbiter decreed:

FOREGOING PREMISES CONSIDERED, judgment is hereby rendered declaring complainants’ dismissal illegal and ordering respondent INNODATA PHILS. INC./INNODATA CORPORATION to reinstate them to their former or equivalent position without loss of seniority rights and benefits. Respondent company is further ordered to pay complainants their full backwages plus ten percent (10%) of the totality thereof as attorney’s fees. The monetary awards due the complainants as of the date of this decision are as follows:

A. Backwages

1. Cherry J. Price

2/17/2000 – 10/17/2000 at 223.50/day

P5,811.00/mo/ x 8 mos. P46,488.00

2. Stephanie Domingo 46,488.00

(same computation)

3. Lolita Arbilera 46,488.00

(same computation)

Total Backwages P139,464.00

B. Attorney’s fees (10% of total award) 13,946.40

Total Award P153,410.40

Respondent INNODATA appealed the Labor Arbiter’s Decision to the NLRC. The NLRC, in its Decision dated 14 December 2001, reversed the Labor Arbiter’s Decision dated 17 October 2000, and absolved INNODATA of the charge of illegal dismissal.

The NLRC found that petitioners were not regular employees, but were fixed-term employees as stipulated in their respective contracts of employment. The NLRC applied Brent School, Inc. v. Zamora13 and St. Theresa’s School of Novaliches Foundation v. National Labor Relations Commission,14 in which this Court upheld the validity of fixed-term contracts. The determining factor of such contracts is not the duty of the employee but the day certain agreed upon by the parties for the commencement and termination of the employment relationship. The NLRC observed that the petitioners freely and voluntarily entered into the fixed-term employment contracts with INNODATA. Hence, INNODATA was not guilty of illegal dismissal when it terminated petitioners’ employment upon the expiration of their contracts on 16 February 2000.

The dispositive portion of the NLRC Decision thus reads:

WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and SET ASIDE and a new one entered DISMISSING the instant complaint for lack of merit.15

The NLRC denied petitioners’ Motion for Reconsideration in a Resolution dated 28 June 2002.16

In a Petition for Certiorari under Rule 65 of the Rules of Court filed before the Court of Appeals, petitioners prayed for the annulment, reversal, modification, or setting aside of the Decision dated 14

December 2001 and Resolution dated 28 June 2002 of the NLRC.lawphil.net

On 25 September 2006, the Court of Appeals promulgated its Decision sustaining the ruling of the NLRC that petitioners were not illegally dismissed.

The Court of Appeals ratiocinated that although this Court declared in Villanueva and Servidad that the employees of INNODATA working as data encoders and abstractors were regular, and not contractual, petitioners admitted entering into contracts of employment with INNODATA for a term of only one year and for a project called Earthweb. According to the Court of Appeals, there was no showing that petitioners entered into the fixed-term contracts unknowingly and involuntarily, or because INNODATA applied force, duress or improper pressure on them. The appellate court also observed that INNODATA and petitioners dealt with each other on more or less equal terms, with no moral dominance exercised by the former on latter. Petitioners were therefore bound by the stipulations in their contracts terminating their employment after the lapse of the fixed term.

The Court of Appeals further expounded that in fixed-term contracts, the stipulated period of employment is governing and not the nature thereof. Consequently, even though petitioners were performing functions that are necessary or desirable in the usual business or trade of the employer, petitioners did not become regular employees because their employment was for a fixed term, which began on 16 February 1999 and was predetermined to end on 16 February 2000.

The appellate court concluded that the periods in petitioners’ contracts of employment were not imposed to preclude petitioners from acquiring security of tenure; and, applying the ruling of this Court in Brent, declared that petitioners’ fixed-term employment contracts were valid. INNODATA did not commit illegal dismissal for terminating petitioners’ employment upon the expiration of their contracts.

The Court of Appeals adjudged:

WHEREFORE, the instant petition is hereby DENIED and the Resolution dated December 14, 2001 of the National Labor Relations Commission declaring petitioners were not illegally dismissed is AFFIRMED.17

The petitioners filed a Motion for Reconsideration of the afore-mentioned Decision of the Court of Appeals, which was denied by the same court in a Resolution dated 15 June 2007.

Petitioners are now before this Court via the present Petition for Review on Certiorari, based on the following assignment of errors:

I.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND GRAVE ABUSE OF DISCRETION WHEN IT DID NOT APPLY THE SUPREME COURT RULING IN THE CASE OF NATIVIDAD & QUEJADA THAT THE NATURE OF EMPLOYMENT OF RESPONDENTS IS REGULAR NOT FIXED, AND AS SO RULED IN AT LEAST TWO OTHER CASES AGAINST INNODATA PHILS. INC.

II.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN RULING THAT THE STIPULATION OF CONTRACT IS GOVERNING AND NOT THE NATURE OF EMPLOYMENT AS DEFINED BY LAW.

III.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT DID NOT CONSIDER THE EVIDENCE ON RECORD SHOWING THAT THERE IS CLEAR CIRCUMVENTION OF THE LAW ON SECURITY OF TENURE THROUGH CONTRACT MANIPULATION.18

The issue of whether petitioners were illegally dismissed by respondents is ultimately dependent on the question of whether petitioners were hired by INNODATA under valid fixed-term employment contracts.

After a painstaking review of the arguments and evidences of the parties, the Court finds merit in the present Petition. There were no valid fixed-term contracts and petitioners were regular employees of the INNODATA who could not be dismissed except for just or authorized cause.

The employment status of a person is defined and prescribed by law and not by what the parties say it should be.19 Equally important to consider is that a contract of employment is impressed with public interest such that labor contracts must yield to the common good.20 Thus, provisions of applicable statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.21

Regular employment has been defined by Article 280 of the Labor Code, as amended, which reads:

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 engagement of the employee or where the work or services to be performed is seasonal in nature and 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. (Underscoring ours).

Based on the afore-quoted provision, the following employees are accorded regular status: (1) those who are engaged to perform activities which are necessary or desirable in the usual business or trade of the employer, regardless of the length of their employment; and (2) those who were initially hired as casual employees, but have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed.

Undoubtedly, petitioners belong to the first type of regular employees.

Under Article 280 of the Labor Code, the applicable test to determine whether an employment should be considered regular or non-regular is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer.22

In the case at bar, petitioners were employed by INNODATA on 17 February 1999 as formatters. The primary business of INNODATA is data encoding, and the formatting of the data entered into the computers is an essential part of the process of data encoding. Formatting organizes the data encoded, making it easier to understand for the clients and/or the intended end users thereof. Undeniably, the work performed by petitioners was necessary or desirable in the business or trade of INNODATA.

However, it is also true that while certain forms of employment require the performance of usual or desirable functions and exceed one year,

these do not necessarily result in regular employment under Article 280 of the Labor Code.23 Under the Civil Code, 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 predetermined dates of completion; they also include those to which the parties by free choice have assigned a specific date of termination.24

The decisive determinant in term employment is 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. Seasonal employment and employment for a particular project are instances of employment in which a period, where not expressly set down, is necessarily implied.25

Respondents maintain that the contracts of employment entered into by petitioners with INNDOATA were valid fixed-term employment contracts which were automatically terminated at the expiry of the period stipulated therein, i.e., 16 February 2000.

The Court disagrees.

While this Court has recognized the validity of fixed-term employment contracts, it has consistently held that this is the exception rather than the general rule. More importantly, a fixed-term employment is valid only under certain circumstances. In Brent, the very same case invoked by respondents, the Court identified several circumstances wherein a fixed-term is an essential and natural appurtenance, to wit:

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 with all that it implies does not appear ever to have been applied, Article 280 of the Labor Code notwithstanding; also appointments to the positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity without which no reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy Instructions No. 8 of the Minister of Labor implicitly recognize that certain company officials may be elected for what would amount to fixed periods, at the expiration of which they would have to stand down, in providing that these officials, "x x may lose their jobs as president, executive vice-president or vice president, etc. because the stockholders or the board of directors for one reason or another did not reelect them."26

As a matter of fact, the Court, in its oft-quoted decision in Brent, also issued a stern admonition that where, from the circumstances, it is apparent that the period was imposed to preclude the acquisition of tenurial security by the employee, then it should be struck down as being contrary to law, morals, good customs, public order and public policy.27

After considering petitioners’ contracts in their entirety, as well as the circumstances surrounding petitioners’ employment at INNODATA, the Court is convinced that the terms fixed therein were meant only to circumvent petitioners’ right to security of tenure and are, therefore, invalid.

The contracts of employment submitted by respondents are highly suspect for not only being ambiguous, but also for appearing to be tampered with.

Petitioners alleged that their employment contracts with INNODATA became effective 16 February 1999, and the first day they reported for work was on 17 February 1999. The Certificate of Employment issued by the HRAD Manager of INNODATA also indicated that petitioners Price and Domingo were employed by INNODATA on 17 February 1999.

However, respondents asserted before the Labor Arbiter that petitioners’ employment contracts were effective only on 6 September 1999. They later on admitted in their Memorandum filed with this Court that petitioners were originally hired on 16 February 1999 but the project for which they were employed was completed before the expiration of one year. Petitioners were merely rehired on 6 September 1999 for a new project. While respondents submitted employment contracts with 6 September 1999 as beginning date of effectivity, it is obvious that in one of them, the original beginning date of effectivity, 16 February 1999, was merely crossed out and replaced with 6 September 1999. The copies of the employment contracts submitted by petitioners bore similar alterations.

The Court notes that the attempt to change the beginning date of effectivity of petitioners’ contracts was very crudely done. The alterations are very obvious, and they have not been initialed by the petitioners to indicate their assent to the same. If the contracts were truly fixed-term contracts, then a change in the term or period agreed upon is material and would already constitute a novation of the original contract.

Such modification and denial by respondents as to the real beginning date of petitioners’ employment contracts render the said contracts ambiguous. The contracts themselves state that they would be effective

until 16 February 2000 for a period of one year. If the contracts took effect only on 6 September 1999, then its period of effectivity would obviously be less than one year, or for a period of only about five months.

Obviously, respondents wanted to make it appear that petitioners worked for INNODATA for a period of less than one year. The only reason the Court can discern from such a move on respondents’ part is so that they can preclude petitioners from acquiring regular status based on their employment for one year. Nonetheless, the Court emphasizes that it has already found that petitioners should be considered regular employees of INNODATA by the nature of the work they performed as formatters, which was necessary in the business or trade of INNODATA. Hence, the total period of their employment becomes irrelevant.

Even assuming that petitioners’ length of employment is material, given respondents’ muddled assertions, this Court adheres to its pronouncement in Villanueva v. National Labor Relations Commission,28 to the effect that where a contract of employment, being a contract of adhesion, is ambiguous, any ambiguity therein should be construed strictly against the party who prepared it. The Court is, thus, compelled to conclude that petitioners’ contracts of employment became effective on 16 February 1999, and that they were already working continuously for INNODATA for a year.

Further attempting to exonerate itself from any liability for illegal dismissal, INNODATA contends that petitioners were project employees whose employment ceased at the end of a specific project or undertaking. This contention is specious and devoid of merit.

In Philex Mining Corp. v. National Labor Relations Commission,29 the Court defined "project employees" as those workers hired (1) for a specific project or undertaking, and wherein (2) the completion or termination of such project has been determined at the time of the engagement of the employee.

Scrutinizing petitioners’ employment contracts with INNODATA, however, failed to reveal any mention therein of what specific project or undertaking petitioners were hired for. Although the contracts made general references to a "project," such project was neither named nor described at all therein. The conclusion by the Court of Appeals that petitioners were hired for the Earthweb project is not supported by any evidence on record. The one-year period for which petitioners were hired was simply fixed in the employment contracts without reference or connection to the period required for the completion of a project. More importantly, there is also a dearth of evidence that such project or

undertaking had already been completed or terminated to justify the dismissal of petitioners. In fact, petitioners alleged - and respondents failed to dispute that petitioners did not work on just one project, but continuously worked for a series of projects for various clients of INNODATA.

In Magcalas v. National Labor Relations Commission,30 the Court struck down a similar claim by the employer therein that the dismissed employees were fixed-term and project employees. The Court here reiterates the rule that all doubts, uncertainties, ambiguities and insufficiencies should be resolved in favor of labor. It is a well-entrenched doctrine that in illegal dismissal cases, the employer has the burden of proof. This burden was not discharged in the present case.

As a final observation, the Court also takes note of several other provisions in petitioners’ employment contracts that display utter disregard for their security of tenure. Despite fixing a period or term of employment, i.e., one year, INNODATA reserved the right to pre-terminate petitioners’ employment under the following circumstances:

6.1 x x x Further should the Company have no more need for the EMPLOYEE’s services on account of completion of the project, lack of work (sic) business losses, introduction of new production processes and techniques, which will negate the need for personnel, and/or overstaffing, this contract maybe pre-terminated by the EMPLOYER upon giving of three (3) days notice to the employee.

x x x x

6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause, by giving at least Fifteen – (15) [day] notice to that effect. Provided, that such pre-termination shall be effective only upon issuance of the appropriate clearance in favor of the said EMPLOYEE. (Emphasis ours.)

Pursuant to the afore-quoted provisions, petitioners have no right at all to expect security of tenure, even for the supposedly one-year period of employment provided in their contracts, because they can still be pre-terminated (1) upon the completion of an unspecified project; or (2) with or without cause, for as long as they are given a three-day notice. Such contract provisions are repugnant to the basic tenet in labor law that no employee may be terminated except for just or authorized cause.

Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of security of tenure and free them from the bondage of uncertainty of tenure woven by some employers into their contracts of employment. This was exactly the purpose of the legislators in drafting Article 280 of the Labor Code – to prevent the circumvention

by unscrupulous employers of the employee’s right to be secure in his tenure by indiscriminately and completely ruling out all written and oral agreements inconsistent with the concept of regular employment.

In all, respondents’ insistence that it can legally dismiss petitioners on the ground that their term of employment has expired is untenable. To reiterate, petitioners, being regular employees of INNODATA, are entitled to security of tenure. In the words of Article 279 of the Labor Code:

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.

By virtue of the foregoing, an illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges, with full back wages computed from the time of dismissal up to the time of actual reinstatement.

Considering that reinstatement is no longer possible on the ground that INNODATA had ceased its operations in June 2002 due to business losses, the proper award is separation pay equivalent to one month pay31 for every year of service, to be computed from the commencement of their employment up to the closure of INNODATA.

The amount of back wages awarded to petitioners must be computed from the time petitioners were illegally dismissed until the time INNODATA ceased its operations in June 2002.32

Petitioners are further entitled to attorney’s fees equivalent to 10% of the total monetary award herein, for having been forced to litigate and incur expenses to protect their rights and interests herein.

Finally, unless they have exceeded their authority, corporate officers are, as a general rule, not personally liable for their official acts, because a corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders and members. Although as an exception, corporate directors and officers are solidarily held liable with the corporation, where terminations of employment are done with malice or in bad faith,33 in the absence of evidence that they acted with malice or bad faith herein, the Court exempts the individual respondents, Leo Rabang and Jane Navarette, from any personal liability for the illegal dismissal of petitioners.

WHEREFORE, the Petition for Review on Certiorari is GRANTED. The Decision dated 25 September 2006 and Resolution dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No. 72795are hereby REVERSED and SET ASIDE. RespondentInnodata Philippines, Inc./Innodata Corporation isORDERED to pay petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera: (a) separation pay, in lieu of reinstatement, equivalent to one month pay for every year of service, to be computed from the commencement of their employment up to the date respondent Innodata Philippines, Inc./Innodata Corporation ceased operations; (b) full backwages, computed from the time petitioners’ compensation was withheld from them up to the time respondent Innodata Philippines, Inc./Innodata Corporation ceased operations; and (3) 10% of the total monetary award as attorney’s fees. Costs against respondent Innodata Philippines, Inc./Innodata Corporation.

SO ORDERED.

MINITA V. CHICO-NAZARIOAssociate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGOAssociate Justice 

Chairperson

MA. ALICIA AUSTRIA-MARTINEZAssociate Justice

ANTONIO EDUARDO B. NACHURA

Associate Justice

RUBEN T. REYESAssociate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

CONSUELO YNARES-SANTIAGOAssociate JusticeChairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in

the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNOChief Justice

Footnotes

1 Penned by Associate Justice Monina Arevalo-Zenarosa with Associate Justices Martin S. Villarama Jr. and Lucas P. Bersamin, concurring. Rollo, pp. 47-61.

2 Id. at 64-66.

3 Id. at 16-17.

4 Id. at 241-242.

5 Id. at 116 and 120.

6 Id. at 92-112.

7 356 Phil. 638 (1998).

8 364 Phil. 518 (1999).

9 Rollo, p. 94.

10 Respondents’ Position Paper; id. at 236. Respondents subsequently explained before this Court that petitioners were initially hired on 16 February 1999 for a particular project, but the same was completed before the period of one year, and that petitioners were rehired on 6 September 1999. Petitioners’ employment contracts on record showed that their effectivity date of 16 February 1999 was crossed out and replaced with 6 September 1999.

11 Labor Arbiter Napoleon M. Menese.

12 Rollo, pp. 544-551.

13 G.R. No. 48494, 5 February 1990, 181 SCRA 702.

14 351 Phil. 1038 (1998).

15 Rollo, p. 560.

16 Id. at 563-564.

17 Id. at 61.

18 Id. at 13-45.

19 Industrial Timber Corporation v. National Labor Relations Commission, G.R. No. 83616, 20 January 1989, 169 SCRA 341, 348.

20 Article 1700 of the Civil Code.

21 Pakistan International Airlines Corporation v. Ople, G.R. No. 61594, 28 September 1990, 190 SCRA 90, 99.

22 Magsalin v. National Organization of Working Men, 451 Phil. 254, 260-261 (2003); Big AA Manufacturer v. Antonio, G.R. No. 160854, 3 March 2006, 484 SCRA 33, 44.

23 Millares v. National Labor Relations Commission, 434 Phil. 524, 538.

24 Brent School, Inc. v. Zamora, supra note 12 at 710.

25 Id.

26 Id. at 714.

27 Id.

28 Supra note 7 at 646.

29 371 Phil. 48, 57 (1999).

30 336 Phil. 433, 449 (1997).

31 Atlas Farms, Inc. v. National Labor Relations Commission, 440 Phil. 620, 636 (2002); Chavez v. National Labor Relations Commission, G.R. No. 146530, 17 January 2005, 448 SCRA 478, 496; Philippine Tobacco Flue-Curing and Redrying Corporation v. National Labor Relations Commission, 360 Phil. 218, 244 (1998); Angeles v. Fernandez, G.R. No. 160213, 30 January 2007, 513 SCRA 378, 388.

32 Bustamante v. National Labor Relations Commission, 332 Phil. 833, 843 (1996).

33 Uichico v. National Labor Relations Commission, 339 Phil. 242, 251-252 (1997).

GAPAYAO v. FULO (2013)

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 193493               June 13, 2013

JAIME N. GAPAYAO, Petitioner, vs.ROSARIO FULO, SOCIAL SECURITY SYSTEM and SOCIAL SECURITY COMMISSION, Respondents.

D E C I S I O N

SERENO, CJ.:

This is a Rule 45 Petition1 assailing the Decision2 and Resolution3 of the Court of Appeals (CA) in CA-G.R. SP. No. 101688, affirming the Resolution4 of the Social Security Commission (SSC). The SSC held petitioner Jaime N. Gapayao liable to pay the unpaid social security contributions due to the deceased Jaime Fulo, and the Social Security System (SSS) to pay private respondent Rosario L. Fulo, the widow of the deceased, the appropriate death benefits pursuant to the Social Security Law.

The antecedent facts are as follows:

On 4 November 1997, Jaime Fulo (deceased) died of "acute renal failure secondary to 1st degree burn 70% secondary electrocution"5 while doing repairs at the residence and business establishment of petitioner located at San Julian, Irosin, Sorsogon.

Allegedly moved by his Christian faith, petitioner extended some financial assistance to private respondent. On 16 November 1997, the latter executed an Affidavit of Desistance6 stating that she was not holding them liable for the death of her late husband, Jaime Fulo, and was thereby waiving her right and desisting from filing any criminal or civil action against petitioner.

On 14 January 1998, both parties executed a Compromise Agreement,7 the relevant portion of which is quoted below:

We, the undersigned unto this Honorable Regional Office/District Office/Provincial Agency Office respectfully state:

1. The undersigned employer, hereby agrees to pay the sum of FORTY THOUSAND PESOS (P40,000.00) to the surviving spouse of JAIME POLO, an employee who died of an accident, as a complete and full payment for all claims due the victim.

2. On the other hand, the undersigned surviving spouse of the victim having received the said amount do [sic] hereby release and discharge the employer from any and all claims that maybe due the victim in connection with the victim’s employment thereat.

Thereafter, private respondent filed a claim for social security benefits with the Social Security System (SSS)–Sorosogon Branch.8 However, upon verification and evaluation, it was discovered that the deceased was not a registered member of the SSS.9

Upon the insistence of private respondent that her late husband had been employed by petitioner from January 1983 up to his untimely death on 4 November 1997, the SSS conducted a field investigation to clarify his status of employment. In its field investigation report,10 it enumerated its findings as follows:

In connection with the complaint filed by Mrs. Rosario Fulo, hereunder are the findings per interview with Mr. Leonor Delgra, Santiago Bolanos and Amado Gacelo:

1. That Mr. Jaime Fulo was an employee of Jaime Gapayao as farm laborer from 1983 to 1997.

2. Mr. Leonor Delgra and Santiago Bolanos are co-employees of Jaime Fulo.

3. Mr. Jaime Fulo receives compensation on a daily basis ranging from P5.00 to P60.00 from 1983 to 1997.

Per interview from Mrs. Estela Gapayao, please be informed that:

1. Jaime Fulo is an employee of Mr. & Mrs. Jaime Gapayao on an extra basis.

2. Sometimes Jaime Fulo is allowed to work in the farm as abaca harvester and earn 1/3 share of its harvest as his income.

3. Mr. & Mrs. Gapayao hired the services of Jaime Fulo not only in the farm as well as in doing house repairs whenever it is available. Mr. Fulo receives his remuneration usually in the afternoon after doing his job.

4. Mr. & Mrs. Gapayao hires 50-100 persons when necessary to work in their farm as laborer and Jaime Fulo is one of them. Jaime Fulo receives more or less P50.00 a day. (Emphases in the original)

Consequently, the SSS demanded that petitioner remit the social security contributions of the deceased. When petitioner denied that the deceased was his employee, the SSS required private respondent to present documentary and testimonial evidence to refute petitioner’s allegations.11

Instead of presenting evidence, private respondent filed a Petition12 before the SSC on 17 February 2003. In her Petition, she sought social security coverage and payment of contributions in order to avail herself of the benefits accruing from the death of her husband.

On 6 May 2003, petitioner filed an Answer13 disclaiming any liability on the premise that the deceased was not the former’s employee, but was rather an independent contractor whose tasks were not subject to petitioner’s control and supervision.14 Assuming arguendo that the deceased was petitioner’s employee, he was still not entitled to be paid his SSS premiums for the intervening period when he was not at work, as he was an "intermittent worker who was only summoned every now and then as the need arose."15 Hence, petitioner insisted that he was under no obligation to report the former’s demise to the SSS for social security coverage.

Subsequently, on 30 June 2003, the SSS filed a Petition-in-Intervention16 before the SSC, outlining the factual circumstances of the case and praying that judgment be rendered based on the evidence adduced by the parties.

On 14 March 2007, the SSC rendered a Resolution,17 the dispositive portion of which provides:

WHEREFORE, PREMISES CONSIDERED, this Commission finds, and so holds, that Jaime Fulo, the late husband of petitioner, was employed by respondent Jaime N. Gapayao from January 1983 to November 4, 1997, working for nine (9) months a year receiving the minimum wage then prevailing.

Accordingly, the respondent is hereby ordered to pay P45,315.95 representing the unpaid SS contributions due on behalf of deceased Jaime Fulo, the amount of P217,710.33 as 3% per month penalty for late remittance thereof, computed as of March 30, 2006, without prejudice to the collection of additional penalty accruing thereafter, and the sum of P230,542.20 (SSS) and P166,000.00 (EC) as damages for the failure of the respondent to report the deceased Jaime Fulo for SS coverage prior to his death pursuant to Section 24(a) of the SS Law, as amended.

The SSS is hereby directed to pay petitioner Rosario Fulo the appropriate death benefit, pursuant to Section 13 of the SS Law, as amended, as well as its prevailing rules and regulations, and to inform this Commission of its compliance herewith.

SO ORDERED.

On 18 May 2007, petitioner filed a Motion for Reconsideration,18 which was denied in an Order19 dated 16 August 2007.

Aggrieved, petitioner appealed to the CA on 19 December 2007.20 On 17 March 2010, the CA rendered a Decision21 in favor of private respondent, as follows:

In fine, public respondent SSC had sufficient basis in concluding that private respondent’s husband was an employee of petitioner and should, therefore, be entitled to compulsory coverage under the Social Security Law.

Having ruled in favor of the existence of employer-employee relationship between petitioner and the late Jaime Fulo, it is no longer necessary to dwell on the other issues raised.

Resultantly, for his failure to report Jaime Fulo for compulsory social security coverage, petitioner should bear the consequences thereof. Under the law, an employer who fails to report his employee for social security coverage is liable to [1] pay the benefits of those who die, become disabled, get sick or reach retirement age; [2] pay all unpaid contributions plus a penalty of three percent per month; and [3] be held liable for a criminal offense punishable by fine and/or imprisonment. But an employee is still entitled to social security benefits even is (sic) his employer fails or refuses to remit his contribution to the SSS.

WHEREFORE, premises considered, the Resolution appealed from is AFFIRMED in toto.

SO ORDERED.

In holding thus, the CA gave credence to the findings of the SSC. The appellate court held that it "does not follow that a person who does not observe normal hours of work cannot be deemed an employee."22 For one, it is not essential for the employer to actually supervise the performance of duties of the employee; it is sufficient that the former has a right to wield the power. In this case, petitioner exercised his control through an overseer in the person of Amado Gacelo, the tenant on petitioner’s land.23 Most important, petitioner entered into a Compromise Agreement with private

respondent and expressly admitted therein that he was the employer of the deceased.24 The CA interpreted this admission as a declaration against interest, pursuant to Section 26, Rule 130 of the Rules of Court.25

Hence, this petition.

Public respondents SSS26 and SSC27 filed their Comments on 31 January 2011 and 28 February 2011, respectively, while private respondent filed her Comment on 14 March 2011.28 On 6 March 2012, petitioner filed a "Consolidated Reply to the Comments of the Public Respondents SSS and SSC and Private Respondent Rosario Fulo."29

ISSUE

The sole issue presented before us is whether or not there exists between the deceased Jaime Fulo and petitioner an employer-employee relationship that would merit an award of benefits in favor of private respondent under social security laws.

THE COURT’S RULING

In asserting the existence of an employer-employee relationship, private respondent alleges that her late husband had been in the employ of petitioner for 14 years, from 1983 to 1997.30 During that period, he was made to work as a laborer in the agricultural landholdings, a harvester in the abaca plantation, and a repairman/utility worker in several business establishments owned by petitioner.31 To private respondent, the "considerable length of time during which [the deceased] was given diverse tasks by petitioner was a clear indication of the necessity and indispensability of her late husband’s services to petitioner’s business."32 This view is bolstered by the admission of petitioner himself in the Compromise Agreement that he was the deceased’s employer.33

Private respondent’s position is similarly espoused by the SSC, which contends that its findings are duly supported by evidence on record.34 It insists that pakyaw workers are considered employees, as long as the employer exercises control over them. In this case, the exercise of control by the employer was delegated to the caretaker of his farm, Amado Gacelo. The SSC further asserts that the deceased rendered services essential for the petitioner’s harvest. While these services were not rendered continuously (in the sense that they were not rendered every day throughout the year), still, the deceased had never stopped working for petitioner from year to year until the day the former died.35 In fact, the deceased was required to work in the other business ventures of petitioner, such as the latter’s bakery and grocery store.36 The Compromise Agreement entered into by petitioner with private respondent should not be a bar to an employee demanding what is legally due the latter.37

The SSS, while clarifying that it is "neither adversarial nor favoring any of the private parties x x x as it is only tasked to carry out the purposes of the Social Security Law,"38 agrees with both private respondent and SSC. It stresses that factual findings of the lower courts, when affirmed by the appellate court, are generally conclusive and binding upon the Court.39

Petitioner, on the other hand, insists that the deceased was not his employee. Supposedly, the latter, during the performance of his function, was not under petitioner’s control. Control is not necessarily present even if the worker works inside the premises of the person who has engaged his services.40 Granting without admitting that petitioner gave rules or guidelines to the deceased in the process of the latter’s performing his work, the situation cannot be interpreted as control, because it was only intended to promote mutually desired results.41

Alternatively, petitioner insists that the deceased was hired by Adolfo Gamba, the contractor whom he had hired to construct their building;42 and by Amado Gacelo, the tenant whom petitioner instructed to manage the latter’s farm.43 For this reason, petitioner believes that a tenant is not beholden to the landlord and is not under the latter’s control and supervision. So if a worker is hired to work on the land of a tenant – such as petitioner – the former cannot be the worker of the landlord, but of the tenant’s.44

Anent the Compromise Agreement, petitioner clarifies that it was executed to buy peace, because "respondent kept on pestering them by asking for money."45 Petitioner allegedly received threats that if the matter was not settled, private respondent would refer the matter to the New Peoples’ Army.46 Allegedly, the Compromise Agreement was "extortion camouflaged as an agreement."47 Likewise, petitioner maintains that he shouldered the hospitalization and burial expenses of the deceased to express his "compassion and sympathy to a distressed person and his family," and not to admit liability.48

Lastly, petitioner alleges that the deceased is a freelance worker. Since he was engaged on a pakyaw basis and worked for a short period of time, in the nature of a farm worker every season, he was not precluded from working with other persons and in fact worked for them. Under Article 280 of the Labor Code,49 seasonal employees are not covered by the definitions of regular and casual employees.50 Petitioner cites Mercado, Sr. v. NLRC,51 in which the Court held that seasonal workers do not become regular employees by the mere fact that they have rendered at least one year of service, whether continuous or broken.52

We see no cogent reason to reverse the CA.

I

Findings of fact of the SSC are given weight and credence.

At the outset, it is settled that the Court is not a trier of facts and will not weigh evidence all over again. Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect but finality when affirmed by the CA.53 For as long as these findings are supported by substantial evidence, they must be upheld.54

II

Farm workers may be considered regular seasonal employees.

Article 280 of the Labor Code states:

Article 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 actually exists.

Jurisprudence has identified the three types of employees mentioned in the provision: (1) regular employees or those who have been engaged to perform activities that 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 their engagement, or those whose work or service is seasonal in nature and is performed for the duration of the season; and (3) casual employees or those who are neither regular nor project employees.55

Farm workers generally fall under the definition of seasonal employees. We have consistently held that seasonal employees may be considered as regular employees.56 Regular seasonal employees are those called to work from time to time. The nature of their relationship with the employer is such that during the off season, they are temporarily laid off; but reemployed during the summer season or when their services may be needed.57 They are in regular employment because of the nature of their job,and not because of the length of time they have worked.58

The rule, however, is not absolute. In Hacienda Fatima v. National Federation of Sugarcane Workers-Food & General Trade,59 the Court held that seasonal workers who have worked for one season only may not be considered regular employees. Similarly, in Mercado, Sr. v. NLRC,60 it was held that when seasonal employees are free to contract their services with other farm owners, then the former are not regular employees.

For regular employees to be considered as such, the primary standard used is the reasonable connection between the particular activity they perform and the usual trade or business of the employer.61 This test has been explained thoroughly in De Leon v. NLRC,62 viz:

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.

A reading of the records reveals that the deceased was indeed a farm worker who was in the regular employ of petitioner. From year to year, starting January 1983 up until his death, the deceased had been working on petitioner’s land by harvesting abaca and coconut, processing copra, and clearing weeds. His employment was continuous in the sense that it was done for more than one harvesting season. Moreover, no amount of reasoning could detract from the fact that these tasks were necessary or desirable in the usual business of petitioner.

The other tasks allegedly done by the deceased outside his usual farm work only bolster the existence of an employer-employee relationship. As found by the SSC, the deceased was a construction worker in the building and a helper in the bakery, grocery, hardware, and piggery – all owned by petitioner.63 This fact only proves that even during the off season, the deceased was still in the employ of petitioner.

The most telling indicia of this relationship is the Compromise Agreement executed by petitioner and private respondent. It is a valid agreement as long as the consideration is reasonable and the employee signed the waiver voluntarily, with a full understanding of

what he or she was entering into.64 All that is required for the compromise to be deemed voluntarily entered into is personal and specific individual consent.65 Once executed by the workers or employees and their employers to settle their differences, and done in good faith, a Compromise Agreement is deemed valid and binding among the parties.66

Petitioner entered into the agreement with full knowledge that he was described as the employer of the deceased.67 This knowledge cannot simply be denied by a statement that petitioner was merely forced or threatened into such an agreement. 1âwphi1 His belated attempt to circumvent the agreement should not be given any consideration or weight by this Court.

III

Pakyaw workers are regular employees,

provided they are subject to the control of petitioner.

Pakyaw workers are considered employees for as long as their employers exercise control over them. In Legend Hotel Manila v. Realuyo,68 the Court held that "the power of the employer to control the work of the employee is considered the most significant determinant of the existence of an employer-employee relationship. This is the so-called control test and is premised on whether the person for whom the services are performed reserves the right to control both the end achieved and the manner and means used to achieve that end." It should be remembered that the control test merely calls for the existence of the right to control, and not necessarily the exercise thereof.69 It is not essential that the employer actually supervises the performance of duties by the employee. It is enough that the former has a right to wield the power.70

In this case, we agree with the CA that petitioner wielded control over the deceased in the discharge of his functions. Being the owner of the farm on which the latter worked, petitioner – on his own or through his overseer – necessarily had the right to review the quality of work produced by his laborers. It matters not whether the deceased conducted his work inside petitioner’s farm or not because petitioner retained the right to control him in his work, and in fact exercised it through his farm manager Amado Gacelo. The latter himself testified that petitioner had hired the deceased as one of the pakyaw workers whose salaries were derived from the gross proceeds of the harvest.71

We do not give credence to the allegation that the deceased was an independent contractor hired by a certain Adolfo Gamba, the contractor whom petitioner himself had hired to build a building. The allegation was based on the self-serving testimony of Joyce Gapay Demate,72 the daughter of petitioner. The latter has not offered any other proof apart from her testimony to prove the contention.

The right of an employee to be covered by the Social Security Act is premised on the existence of an employer-employee relationship.73 That having been established, the Court hereby rules in h1vor of private respondent.

WHEREFORE, the Petition for Review on Certiorari is hereby DENIED. The assailed Decision and resolution of the Court of Appeals in CA-G.R. SP. No. 101688 dated 17 March 2010 and 13 August 2010, respectively, are hereby AFFIRMED.

SO ORDERED.

MARIA LOURDES P. A. SERENOChief Justice, Chairperson

WE CONCUR:

TERESITA J. LEONARDO-DE CASTROAssociate Justice

LUCAS P. BERSAMINAssociate Justice

MARTIN S. VILLARAMA, JR.Associate Justice

BIENVENIDO L. REYESAssociate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENOChief Justice

Footnotes

1 Rollo, pp. 4-36.

2 Id. at 54-65; CA Decision dated 17 March 2010, penned by Associate Justice Priscilla J. Baltazar-Padilla, and concurred in by Presiding Justice Andres R. Reyes, Jr., and Associate Justice Isaias P. Dicdican.

3 Id. at 87-88; CA Resolution dated 13 August 2010.

4 CA rollo, pp. 79-87.

5 Rollo, p. 55; CA Decision, p. 2.

6 Id. at 101.

7 Id. at 102.

8 Id. at 103; cited in Petition for Intervention of the SSS dated 30 June 2003.

9 Id.

10 CA rollo, p. 35.

11 Rollo, p. 55; CA Decision, p. 2.

12 Id. at 90-91.

13 Id. at 92-94.

14 Id.

15 Id.

16 Id. at 103-104.

17 CA rollo, pp. 79-87.

18 Rollo, pp. 108-110.

19 Id. at 107.

20 Id. at 37-52.

21 Id. at 54-65.

22 Id. at 60; CA Decision, p. 7.

23 Id. at 61; CA Decision, p. 8.

24 Id. at 62; CA Decision, p. 9. The relevant portion of the Compromise Agreement states – "We, the undersigned unto this Honorable Regional Office/District Office/Provincial Agency Office respectively state: 1. The undersigned employer, hereby agrees to pay the sum of FORTY THOUSAND PESOS (P40,000) to the surviving spouse of JAIME POLO, an employee who died of an accident, as a complete full payment for all claims due the victim. x x x (Emphasis and underscoring supplied)

25 Id. at 63; CA Decision, p. 10.

26 Id. at 125-130.

27 Id. at 139-147.

28 Id. at 149-161.

29 Id. at 179-191.

30 Id. at 155; Comment, p. 7.

31 Id.

32 Id. at 156; Comment, p. 8.

33 Id. at 157; Comment, p. 9.

34 Id. at 143; Comment, p. 5.

35 Id. at 144; Comment, p. 6.

36 Id. at 144-145; Comment, pp. 6-7.

37 Id.

38 Id. at 128; Comment. p. 4.

39 Id. at 126-127; Comment, pp. 2-3

40 Id. at 21; Petition, p. 18

41 Id. at 22; Petition, p. 19.

42 Id. at 23; Petition, p. 20

43 Id. at 26; Petition, p. 23.

44 Id.

45 Id. at 24; Petition, p. 21

46 Id.

47 Id.

48 Id. at 25; Petition, p. 22.

49 Article 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.

x x x x

50 Id. at 29-30; Petition, p. 26.

51 278 Phil. 345 (1991).

52 Rollo, p. 30; Petition, p. 27.

53 Ortega v. SSC, G.R. No. 176150, 25 June 2008, 555 SCRA 353, 363-364, citing Lazaro v. Social Security Commission, 479 Phil. 384 (2004); Reyes v. National Labor Relations Commission, G.R. No. 160233, 8 August 2007, 529 SCRA 487.

54 Signey v. SSS, G.R. No. 173582, 28 January 2008, 542 SCRA 629, 635-636.

55 Benares v. Pancho, 497 Phil. 181, 189-190 (2005), citing Perpetual Help Credit Cooperative, Inc. v. Faburada, 419 Phil. 147, 155 (2001).

56 AAG Trucking and/or Alex Ang Gaeid v. Yuag, G.R. No. 195033, 12 October 2011, 659 SCRA 91, 102.

57 Azucena, Everyone’s Labor Code, 325 (2012).

58 Id. at 326.

59 444 Phil. 587 (2003).

60 Supra note 51. See also Abasolo v. NLRC, 400 Phil. 86 (2000); Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC, 360 Phil. 218 (1998).

61 Hacienda Bino v. Cuenca, 496 Phil. 198, 209 (2005), citing Tan v. Lagrama, 436 Phil. 190 (2002).

62 De Leon v. NLRC, 257 Phil. 626, 632-633.

63 CA rollo, pp. 82-84; SSC Resolution, pp. 4-6.

64 Eurotech Hair Systems, Inc. v. Go, 532 Phil. 317, 325 (2006).

65 Id. at 325-326.

66 University of the East v. Secretary of Labor and Employment, G.R. Nos. 93310-12, 21 November 1991, 204 SCRA 254, 260, citing Dioncla v. Court of Industrial Relations, 118 Phil. 826 (l963); Pampanga Sugar Development Co. Inc. v. Court of Industrial Relations, 200 Phil. 204 (1982); Chua v. National Labor Relations Commission, 268 Phil. 590 (1990).

67 The relevant portion of the Compromise Agreement states: 1. The undersigned employer, hereby agrees to pay the sum of FORTY THOUSAND PESOS (P40,000.00) to the surviving spouse of JAIME POLO, an employee who died of an accident, as a complete and full payment for all claims due the victim. 2. On the other hand, the undersigned surviving spouse of the victim having received the said amount do hereby release and discharge the employer from any and all claims that maybe due with victim in connection with the victim’s employment thereat. (Emphasis ours)

68 G.R. No. 153511, 18 July 2012, 677 SCRA 10, 22, citing Coca Cola Bottlers Phils., Inc. v. NLRC, 366 Phil. 581, 591 (1999); Leonardo v. Court of Appeals, 524 Phil. 221 (2006).

69 Manila Water Company, Inc. v. Dalumpines, G.R. No. 175501, 4 October 2010, 632 SCRA 76, 94, citing Lopez v. Metropolitan Waterworks and Sewerage System, 501 Phil. 119 (2005).

70 Id.

71 Rollo, pp. 112-113.

72 CA rollo, p. 84; SSC Resolution, p. 6.

73 Social Security Commission v. Rizal Poultry And Livestock Association, Inc., G.R. No. 167050, I June 2011, 650 SCRA 50, 60, citing Chua v. Court of Appeals, 483 Phil. 126, 136 (2004).

GLORY PHILIPPINES, INC. v. VERGARA (2007)

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 176627               August 24, 2007

GLORY PHILIPPINES, INC., Petitioner, vs.BUENAVENTURA B. VERGARA and ROSELYN T. TUMASIS, Respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

This petition1 for review on certiorari assails the September 18, 2006 Decision2 of the Court of Appeals in CA-G.R. SP No. 73377 which set aside the December 20, 2001 Decision and July 22, 2002 Order of the National Labor Relations Commission in NLRC NCR CA No. 022914-00 and declared that respondents Buenaventura B. Vergara and Roselyn T. Tumasis were illegally dismissed; and the February 6, 2007 Resolution3 denying the motion for reconsideration.

Petitioner Glory Philippines, Inc. manufactures money-counting machines. In June 1998, it created a Parts Inspection Section (PIS) tasked to inspect the machine parts for exportation to its exclusive buyer, Glory Limited Japan (Glory Japan).

Petitioner hired respondents on July 6, 1998, allegedly as members of the PIS. However, the employment contracts4 which they signed only on August 18, 1998, indicated them as Production Operators in the Production Section with a daily wage of Php188.00. The contracts covered the period from July 31 to August 30, 1998.

Thereafter, respondents’ employment contracts were extended on a monthly basis. For the periods from August 31 to October 20, 1998, and October 21 to November 30, 1998, respondents signed their respective employment contracts designating them as members of the PIS. From December 1, 1998 to April 27, 1999, respondents performed the same duties and responsibilities despite the absence of employment contracts. On April 27, 1999, however, they were each made to sign employment contracts5 covering the period from February 28 to April 30, 1999.

On April 26, 1999,6 petitioner’s President, Mr. Takeo Oshima, informed the Assistant Manager that the contractual employees in the PIS would no longer be needed by the company as Glory Japan had cancelled its orders.

Nevertheless, despite the alleged lack of need for respondents’ services, petitioner claimed that it reluctantly agreed to extend respondents’ employment due to their insistent pleas. Thus, for the period from May 1 to May 15, 1999, respondents signed employment contracts with a higher wage of Php200.00 a day.

Respondents claimed that they continued to work until May 25, 1999 when, at the close of working hours, petitioner’s security guard advised them that their employment had

been terminated and that they would no longer be allowed to enter the premises. Consequently, on May 27, 1999, they filed separate complaints for illegal dismissal with the Department of Labor and Employment, Region IV. The cases were subsequently referred to the National Labor Relations Commission (NLRC) for resolution.

On October 29, 1999, the Labor Arbiter rendered a decision7 finding that respondents were regular employees because they performed activities desirable to the usual business or trade of petitioner for almost eleven (11) months; and that they were illegally dismissed for lack of just cause and non-observance of due process. Thus:

Hence, in accordance with Art. 280, we believe as we ought to believe that complainants [herein respondents] were regular employees since their engagement was not fixed for a specific project or undertaking for a particular season. As regular employees, complainants had all the rights to security of tenure.

x x x x

After a careful perusal of the record of this case, we could not find any glimpse of just cause and the observance of due process before and during the termination of complainants’ services. In this case, only general allegations were asserted by respondent such as "declining order from Glory Japan coupled with poor work performance of complainants" to justify the dismissal of the latter. This afterthought averment, in the absence of any substantial evidence to prove respondent’s defense, should be considered as empty allegation and must miserably fail.

Thus, we declare as we ought to declare that the dismissal of complainants Vergara and Tumasis were (sic) illegal in the absence of any just cause as enunciated in Art. 282 and the non-observance of due process in the termination of complainants’ services.8

On appeal, the NLRC affirmed the findings of the Labor Arbiter. However, upon motion for reconsideration, the NLRC reversed and set aside its earlier decision9 and dismissed the complaint for lack of merit. The NLRC ruled that respondents were project employees and that their employment was terminated upon expiration of their employment contracts. Respondents’ motion for reconsideration was denied hence, they filed a petition forcertiorari before the Court of Appeals. On September 18, 2006, the appellate court granted the petition, as follows:

WHEREFORE, the PETITION FOR CERTIORARI IS GRANTED.

The DECISION dated December 20, 2001 and the ORDER dated July 22, 2002 are SET ASIDE and the DECISION of Labor Arbiter Dominador B. Medroso, Jr. dated October 29, 1999 is REINSTATED subject to the following MODIFICATIONS:

1. Should the reinstatement of the petitioners [herein respondents] be no longer feasible because the section/division to which they used to be assigned no longer exists, separation pay equivalent to 1 month salary for every year of service from the time of dismissal until finality of this DECISION shall be paid;

2. Full backwages to be paid to the petitioners shall be from the time of dismissal until actual reinstatement or, in case separation pay is proper, until finality of this DECISION; and

3. Other monetary awards granted in the DECISION dated October 29, 1999 shall be paid reckoned from the start of their employment until their actual reinstatement or, in case separation pay is proper, until finality of this DECISION.

The case is remanded to the Labor Arbiter for the prompt computation of the benefits in favor of the petitioners as hereby determined.

The private respondent shall pay costs of suit.

SO ORDERED.10

Petitioner’s motion for reconsideration was denied hence, this petition raising the following issues:11

A.

THE COURT OF APPEALS COMMITTED SERIOUS AND MANIFEST ERROR IN AFFIRMING THE LABOR ARBITER’S DECISION FINDING THAT RESPONDENTS ARE REGULAR EMPLOYEES OF THE PETITIONER

B.

THE COURT OF APPEALS COMMITTED SERIOUS AND MANIFEST ERROR IN AFFIRMING THE LABOR ARBITER’S DECISION FINDING THAT RESPONDENTS WERE ILLEGALLY DISMISSED

C.

THE COURT OF APPEALS COMMITTED SERIOUS AND MANIFEST ERROR IN AFFIRMING THE LABOR ARBITER’S DECISION FINDING THAT RESPONDENTS ARE ENTITLED TO BACKWAGES, SEPARATION PAY, 13TH MONTH PAY AND SERVICE INCENTIVE LEAVE PAY

Petitioner claims that respondents were contractual and/or project employees because their employment was dependent on the transaction with Glory Japan. Respondents, on the other hand, claim that they were regular employees and that they were dismissed without just or authorized cause and due process of law.

The issues for resolution are: 1) whether respondents were regular employees; and 2) whether respondents were illegally dismissed.

The petition lacks merit.

In Perpetual Help Credit Cooperative, Inc. v. Faburada,12 we explained that there are three kinds of employees as provided under Article 280 of the Labor Code, thus:

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 x x x.13

There is no merit in petitioner’s claim that respondents were project employees whose employment was coterminous with the transaction with Glory Japan.

In Grandspan Development Corporation v. Bernardo,14 the Court held that the principal test for determining whether particular employees are properly characterized as ‘project employees,’ as distinguished from ‘regular employees,’ is whether or not the ‘project

employees’ were assigned to carry out a ‘specific project or undertaking,’ the duration and scope of which were specified at the time the employees were engaged for that project. As defined, project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee.15

In the instant case, respondents’ employment contracts failed to state the specific project or undertaking for which they were allegedly engaged. While petitioner claims that respondents were hired for the transaction with Glory Japan, the same was not indicated in the contracts. As correctly observed by the Court of Appeals, nothing therein suggested or even hinted that their employment was dependent on the continuous patronage of Glory Japan.16

Further, the employment contracts did not indicate the duration and scope of the project or undertaking as required by law. It is not enough that an employee is hired for a specific project or phase of work to qualify as a project employee. There must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was engaged,17 which is absent in this case.

Respondents were given pro forma employment contracts which were repeatedly renewed upon petitioner’s behest. Respondents were hired on July 6, 1998 but signed their initial employment contracts only on August 18, 1998. The contracts covered the period from July 31 to August 30, 1998 and respondents were designated therein as Production Operators. Thereafter, respondents were hired as members of the PIS and their employment contracts were extended several times, to wit: from August 31 to October 20, 1998; from October 21 to November 30, 1998; from February 28 to April 30, 1999; and, from May 1 to May 15, 1999.

It bears stressing that from December 1, 1998 to April 27, 1999, respondents reported for work despite the absence of employment contracts. On April 27, 1999, however, they were belatedly made to sign employment contracts for the period from February 28 to April 30, 1999. Although petitioner’s transaction with Glory Japan was terminated sometime in April 1999, yet respondents were allowed to work without interruption until May 25, 1999. In fact, petitioner even paid them higher salaries of Php200.00 a day.

To our mind, the foregoing factual circumstances negate petitioner’s claim that respondents were project employees. We quote with approval the ruling of the Court of Appeals, as follows:

The manner by which the private respondent [herein petitioner] dealt with the petitioners [herein respondents] was obviously plagued with basic irregularities. Although they were supposedly hired as PSI staff and started working on July 6, 1998, they were still made to sign individual pro forma employment contracts only much lateri.e., on August 18, 1999, with their employment position being stated therein as production operators in the Production Section being purportedly extended from July 31, 1998 to August 30, 1998. From then until October 20, 1998, they were made to sign employment contracts on more or less month-to-month terms for the position of PSI staff. Thereafter, they continued working for the private respondent from December 1, 1998 until April 27, 1999 even if they had [not] signed any written contract for such employment period. We are baffled why they were once again made to signify on April 27, 1999 their conformity to an employment contract for the period from February 28, 1999 to April 30, 1999 and later to another contract for the period from May 1, 1999 to May 15, 1999.

To us, the private respondent’s illegal intention became clearer from such acts. Its making the petitioners sign written employment contracts a few days before the purported end of their employment periods (as stated in such contracts) was a diaphanous ploy to set periods with a view for their possible severance from employment

should the private respondent so willed it. If the term of the employment was truly determined at the beginning of the employment, why was there delay in the signing of the ready-made contracts that were entirely prepared by the employer? Also, the changes in the positions supposedly held by the petitioners in the company belied the private respondent’s adamant contention that the petitioners were hired solely for the purpose of manning PIS during its alleged dry run period that ended on October 20, 1998. We view such situation as a very obvious ploy of the private respondent to evade the petitioner’s eventual regularization.18

Likewise, we cannot give credence to petitioner’s claim that respondents were fixed term employees. Petitioner’s reliance on our ruling in Philippine Village Hotel v. National Labor Relations Commission19 is misplaced because the facts in the said case are not in all fours with the case at bar. In said case, the employees were hired only for a one-month period and their employment contracts were never renewed. In the instant case, respondents’ original employment contracts were renewed four times. In the last instance, their contracts were extended despite the cessation of petitioner’s alleged transaction with Glory Japan. Thus, respondents were continuously under the employ of petitioner, performing the same duties and responsibilities, from July 6, 1998 to May 25, 1999.

In Philips Semiconductors (Phils.), Inc. v. Fadriquela,20 we held that such a continuing need for respondents’ services is sufficient evidence of the necessity and indispensability of their services to petitioner’s business.21Consequently, we find that respondents were regular employees defined under Article 280 of the Labor Code as those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of petitioner.

Respondents are entitled to security of tenure notwithstanding the contrary provisions of their employment contracts. Under the Labor Code, the requirements for the lawful dismissal of an employee are two-fold, the substantive and the procedural aspects. Not only must the dismissal be for a valid or authorized cause, the rudimentary requirements of due process - notice and hearing – must, likewise, be observed before an employee may be dismissed. Without the concurrence of the two, the termination would, in the eyes of the law, be illegal.22

As an employer, petitioner has the burden of proving that respondents’ dismissal was for a cause allowed under the law and that they were afforded due process. However, it failed to discharge this burden. While it claims that the dismissal was due to the expiration of respondents’ employment contracts and the termination of the transaction with Glory Japan, the facts and evidence show otherwise. Indeed, the periods of employment were imposed in circumvention of respondents’ right to security of tenure. Time and again, we held that the practice of imposing a limited period in an employment contract to circumvent the constitutional guarantee on security of tenure should be struck down or disregarded as contrary to public policy or morals.23 So it is in this case.1avvphi1

In sum, we find no reason to deviate from the findings of the Court of Appeals that respondents were regular employees and that they were illegally dismissed by petitioner.

Under Article 27924 of the Labor Code, an employee who was illegally dismissed from work is 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. Where reinstatement is no longer feasible, separation pay shall be granted in lieu of reinstatement.25

It appears that respondents were paid the amount of Php91,015.15 corresponding to their payroll reinstatement from March 29, 1999 up to November 30, 2000.26 The said amount should thus be deducted from the computation for respondents’ backwages.

WHEREFORE, the petition is DENIED. The September 18, 2006 Decision and the February 6, 2007 Resolution of the Court of Appeals in CA-G.R. SP. No. 73377 are AFFIRMED with MODIFICATIONS. Respondents are entitled to: a) reinstatement, and if reinstatement is no longer feasible, separation pay equivalent to one (1) month pay for every year of service; b) full backwages from the time the compensation was withheld until actual reinstatement or, in case separation pay is proper, until finality of this Decision less the amount of Php90,015.15; and c) 13th Month Pay and Service Incentive Leave Pay reckoned from the start of their employment until actual reinstatement or, in case separation pay is proper, until finality of this Decision.

SO ORDERED.

CONSUELO YNARES-SANTIAGOAssociate Justice

WE CONCUR:

MA. ALICIA AUSTRIA-MARTINEZAssociate Justice

MINITA V. CHICO-NAZARIOAssociate Justice

ANTONIO EDUARDO B. NACHURAAssociate Justice

RUBEN T. REYESAssociate Justice

A T T E S T A T I O N

I attest that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

CONSUELO YNARES-SANTIAGOAssociate Justice Chairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNOChief Justice

Footnotes

1 Rollo, pp. 3-26.

2 Id. at 28-40. Penned by Associate Justice Lucas P. Bersamin and concurred in by Associate Justices Martin S. Villarama, Jr. and Monina Arevalo-Zenarosa.

3 Id. at 42-43.

4 Id. at 53-54.

5 Id. at 57-58.

6 Id. at 59.

7 CA rollo, pp. 14-19.

8 Id. at 18.

9 Id. at 43-53.

10 Rollo, pp. 39-40.

11 Id. at 12-13.

12 419 Phil. 147 (2001).

13 Id. at 155.

14 G.R. No. 141464, September 21, 2005, 470 SCRA 461.

15 Id. at 470, citing Kiamco v. National Labor Relations Commission, G.R. No. 129449, June 29, 1999, 309 SCRA 424, 432.

16 Rollo, p. 34.

17 Chua v. Court of Appeals, G.R. No. 125837, October 6, 2004, 440 SCRA 121, 133; citing Violeta v. National Labor Relations Commission, 345 Phil. 762 (1997).

18 Rollo, pp. 35.

19 G.R. No. 105033, February 28, 1994, 230 SCRA 423.

20 G.R. No. 141717, April 14, 2004, 427 SCRA 408.

21 Id. at 420.

22 Vinoya v. National Labor Relations Commission, 381 Phil. 460, 482-483 (2000).

23 Philips Semiconductors (Phils.), Inc. v. Fadriquela, supra at 421; Romares v. National Labor Relations Commission, 355 Phil. 835, 846 (1998); Salinas, Jr. v. National Labor Relations Commission,377 Phil. 55, 63-64 (1999); Integrated Contractor and Plumbing Works, Inc. v. National Labor Relations Commission, G.R. No. 152427, August 9, 2005, 466 SCRA 265, 273.

24 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.

25 F.F. Marine Corporation v. National Labor Relations Commission, G.R. No. 152039, April 8, 2005, 455 SCRA 154, 172.

26 Rollo, p. 21.

GOYA, INC. v. GOYA, INC. EU-FFW (2013

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 170054               January 21, 2013

GOYA, INC., Petitioner, vs.GOYA, INC. EMPLOYEES UNION-FFW, Respondent.

D E C I S I O N

PERALTA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeks to reverse and set aside the June 16, 2005 Decision1 and October 12, 2005 Resolution2 of the Court of Appeals in CA-G.R. SP No. 87335, which sustained the October 26, 2004 Decision3 of Voluntary Arbitrator Bienvenido E. Laguesma, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered declaring that the Company is NOT guilty of unfair labor practice in engaging the services of PESO.

The company is, however, directed to observe and comply with its commitment as it pertains to the hiring of casual employees when necessitated by business circumstances.4

The facts are simple and appear to be undisputed.

Sometime in January 2004, petitioner Goya, Inc. (Company), a domestic corporation engaged in the manufacture, importation, and wholesale of top quality food products, hired contractual employees from PESO Resources Development Corporation (PESO) to perform temporary and occasional services in its factory in Parang, Marikina City. This prompted respondent Goya, Inc. Employees Union–FFW (Union) to request for a grievance conference on the ground that the contractual workers do not belong to the categories of employees stipulated in the existing Collective Bargaining Agreement (CBA).5 When the matter remained unresolved, the grievance was referred to the National Conciliation and Mediation Board (NCMB) for voluntary arbitration.

During the hearing on July 1, 2004, the Company and the Union manifested before Voluntary Arbitrator (VA) Bienvenido E. Laguesma that amicable settlement was no longer possible; hence, they agreed to submit for resolution the solitary issue of "[w]hether or not the Company is guilty of unfair labor acts in engaging the services of PESO, a third party service provider, under the existing CBA, laws, and jurisprudence."6 Both parties thereafter filed their respective pleadings.

The Union asserted that the hiring of contractual employees from PESO is not a management prerogative and in gross violation of the CBA tantamount to unfair labor practice (ULP). It noted that the contractual workers engaged have been assigned to

work in positions previously handled by regular workers and Union members, in effect violating Section 4, Article I of the CBA, which provides for three categories of employees in the Company, to wit:

Section 4. Categories of Employees.– The parties agree on the following categories of employees:

(a) Probationary Employee. – One hired to occupy a regular rank-and-file position in the Company and is serving a probationary period. If the probationary employee is hired or comes from outside the Company (non-Goya, Inc. employee), he shall be required to undergo a probationary period of six (6) months, which period, in the sole judgment of management, may be shortened if the employee has already acquired the knowledge or skills required of the job. If the employee is hired from the casual pool and has worked in the same position at any time during the past two (2) years, the probationary period shall be three (3) months.

(b) Regular Employee. – An employee who has satisfactorily completed his probationary period and automatically granted regular employment status in the Company.

(c) Casual Employee, – One hired by the Company to perform occasional or seasonal work directly connected with the regular operations of the Company, or one hired for specific projects of limited duration not connected directly with the regular operations of the Company.

It was averred that the categories of employees had been a part of the CBA since the 1970s and that due to this provision, a pool of casual employees had been maintained by the Company from which it hired workers who then became regular workers when urgently necessary to employ them for more than a year. Likewise, the Company sometimes hired probationary employees who also later became regular workers after passing the probationary period. With the hiring of contractual employees, the Union contended that it would no longer have probationary and casual employees from which it could obtain additional Union members; thus, rendering inutile Section 1, Article III (Union Security) of the CBA, which states:

Section 1. Condition of Employment. – As a condition of continued employment in the Company, all regular rank-and-file employees shall remain members of the Union in good standing and that new employees covered by the appropriate bargaining unit shall automatically become regular employees of the Company and shall remain members of the Union in good standing as a condition of continued employment.

The Union moreover advanced that sustaining the Company’s position would easily weaken and ultimately destroy the former with the latter’s resort to retrenchment and/or retirement of employees and not filling up the vacant regular positions through the hiring of contractual workers from PESO, and that a possible scenario could also be created by the Company wherein it could "import" workers from PESO during an actual strike.

In countering the Union’s allegations, the Company argued that: (a) the law expressly allows contracting and subcontracting arrangements through Department of Labor and Employment (DOLE) Order No. 18-02; (b) the engagement of contractual employees did not, in any way, prejudice the Union, since not a single employee was terminated and neither did it result in a reduction of working hours nor a reduction or splitting of the bargaining unit; and (c) Section 4, Article I of the CBA merely provides for the definition of the categories of employees and does not put a limitation on the Company’s right to engage the services of job contractors or its management prerogative to address temporary/occasional needs in its operation.

On October 26, 2004, VA Laguesma dismissed the Union’s charge of ULP for being purely speculative and for lacking in factual basis, but the Company was directed to observe and comply with its commitment under the CBA. The VA opined:

We examined the CBA provision Section 4, Article I of the CBAallegedly violated by the Company and indeed the agreement prescribes three (3) categories of employees in the Company and provides for the definition, functions and duties of each. Material to the case at hand is the definition as regards the functions of a casual employee described as follows:

Casual Employee – One hired by the COMPANY to perform occasional or seasonal work directly connected with the regular operations of the COMPANY, or one hired for specific projects of limited duration not connected directly with the regular operations of the COMPANY.

While the foregoing agreement between the parties did eliminate management’s prerogative of outsourcing parts of its operations, it serves as a limitation on such prerogative particularly if it involves functions or duties specified under the aforequoted agreement. It is clear that the parties agreed that in the event that the Company needs to engage the services of additional workers who will perform "occasional or seasonal work directly connected with the regular operations of the COMPANY," or "specific projects of limited duration not connected directly with the regular operations of the COMPANY", the Company can hire casual employees which is akin to contractual employees. If we note the Company’s own declaration that PESO was engaged to perform "temporary or occasional services" (See the Company’s Position Paper, at p. 1), then it should have directly hired the services of casual employees rather than do it through PESO.

It is evident, therefore, that the engagement of PESO is not in keeping with the intent and spirit of the CBA provision in question. It must, however, be stressed that the right of management to outsource parts of its operations is not totally eliminated but is merely limited by the CBA. Given the foregoing, the Company’s engagement of PESO for the given purpose is indubitably a violation of the CBA.7

While the Union moved for partial reconsideration of the VA Decision,8 the Company immediately filed a petition for review9 before the Court of Appeals (CA) under Rule 43 of the Revised Rules of Civil Procedure to set aside the directive to observe and comply with the CBA commitment pertaining to the hiring of casual employees when necessitated by business circumstances. Professing that such order was not covered by the sole issue submitted for voluntary arbitration, the Company assigned the following errors:

THE HONORABLE VOLUNTARY ARBITRATOR EXCEEDED HIS POWER WHICH WAS EXPRESSLY GRANTED AND LIMITED BY BOTH PARTIES IN RULING THAT THE ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT OF THE CBA.10

THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED A PATENT AND PALPABLE ERROR IN DECLARING THAT THE ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT OF THE CBA.11

On June 16, 2005, the CA dismissed the petition. In dispensing with the merits of the controversy, it held:

This Court does not find it arbitrary on the part of the Hon. Voluntary Arbitrator in ruling that "the engagement of PESO is not in keeping with the intent and spirit of the CBA." The said ruling is interrelated and intertwined with the sole issue to be resolved that is,

"Whether or not the Company is guilty of unfair labor practice in engaging the services of PESO, a third party service provider, under existing CBA, laws, and jurisprudence." Both issues concern the engagement of PESO by the Company which is perceived as a violation of the CBA and which constitutes as unfair labor practice on the part of the Company. This is easily discernible in the decision of the Hon. Voluntary Arbitrator when it held:

x x x x While the engagement of PESO is in violation of Section 4, Article I of the CBA, it does not constitute unfair labor practice as it (sic) not characterized under the law as a gross violation of the CBA. Violations of a CBA, except those which are gross in character, shall no longer be treated as unfair labor practice. Gross violations of a CBA means flagrant and/or malicious refusal to comply with the economic provisions of such agreement. x x x

Anent the second assigned error, the Company contends that the Hon. Voluntary Arbitrator erred in declaring that the engagement of PESO is not in keeping with the intent and spirit of the CBA. The Company justified its engagement of contractual employees through PESO as a management prerogative, which is not prohibited by law. Also, it further alleged that no provision under the CBA limits or prohibits its right to contract out certain services in the exercise of management prerogatives.

Germane to the resolution of the above issue is the provision in their CBA with respect to the categories of the employees:

x x x x

A careful reading of the above-enumerated categories of employees reveals that the PESO contractual employees do not fall within the enumerated categories of employees stated in the CBA of the parties. Following the said categories, the Company should have observed and complied with the provision of their CBA. Since the Company had admitted that it engaged the services of PESO to perform temporary or occasional services which is akin to those performed by casual employees, the Company should have tapped the services of casual employees instead of engaging PESO.

In justifying its act, the Company posits that its engagement of PESO was a management prerogative. It bears stressing that a management prerogative refers to the right of the employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of work, presupposing the existence of employer-employee relationship. On the basis of the foregoing definition, the Company’s engagement of PESO was indeed a management prerogative. This is in consonance with the pronouncement of the Supreme Court in the case of Manila Electric Company vs. Quisumbing where it ruled that contracting out of services is an exercise of business judgment or management prerogative.

This management prerogative of contracting out services, however, is not without limitation. In contracting out services, the management must be motivated by good faith and the contracting out should not be resorted to circumvent the law or must not have been the result of malicious arbitrary actions. In the case at bench, the CBA of the parties has already provided for the categories of the employees in the Company’sestablishment. These categories of employees particularly with respect to casual employees serve as limitation to the Company’s prerogative to outsource parts of its operations especially when hiring contractual employees. As stated earlier, the work to be performed by PESO was similar to that of the casual employees. With the provision on casual employees, the hiring of PESO contractual employees, therefore, is not in keeping with the spirit and intent of their CBA. (Citations omitted)12

The Company moved to reconsider the CA Decision,13 but it was denied;14 hence, this petition.

Incidentally, on July 16, 2009, the Company filed a Manifestation15 informing this Court that its stockholders and directors unanimously voted to shorten the Company’s corporate existence only until June 30, 2006, and that the three-year period allowed by law for liquidation of the Company’s affairs already expired on June 30, 2009. Referring to Gelano v. Court of Appeals,16 Public Interest Center, Inc. v. Elma,17 and Atienza v. Villarosa,18 it urged Us, however, to still resolve the case for future guidance of the bench and the bar as the issue raised herein allegedly calls for a clarification of a legal principle, specifically, whether the VA is empowered to rule on a matter not covered by the issue submitted for arbitration.

Even if this Court would brush aside technicality by ignoring the supervening event that renders this case moot and academic19 due to the permanent cessation of the Company’s business operation on June 30, 2009, the arguments raised in this petition still fail to convince Us.

We confirm that the VA ruled on a matter that is covered by the sole issue submitted for voluntary arbitration. Resultantly, the CA did not commit serious error when it sustained the ruling that the hiring of contractual employees from PESO was not in keeping with the intent and spirit of the CBA. Indeed, the opinion of the VA is germane to, or, in the words of the CA, "interrelated and intertwined with," the sole issue submitted for resolution by the parties. This being said, the Company’s invocation of Sections 4 and 5, Rule IV20 and Section 5, Rule VI21 of the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings dated October 15, 2004 issued by the NCMB is plainly out of order.

Likewise, the Company cannot find solace in its cited case of Ludo & Luym Corporation v. Saornido.22 In Ludo, the company was engaged in the manufacture of coconut oil, corn starch, glucose and related products. In the course of its business operations, it engaged the arrastre services of CLAS for the loading and unloading of its finished products at the wharf. The arrastre workers deployed by CLAS to perform the services needed were subsequently hired, on different dates, as Ludo’s regular rank-and-file employees. Thereafter, said employees joined LEU, which acted as the exclusive bargaining agent of the rank-and-file employees. When LEU entered into a CBA with Ludo, providing for certain benefits to the employees (the amount of which vary according to the length of service rendered), it requested to include in its members’ period of service the time during which they rendered arrastre services so that they could get higher benefits. The matter was submitted for voluntary arbitration when Ludo failed to act. Per submission agreement executed by both parties, the sole issue for resolution was the date of regularization of the workers. The VA Decision ruled that: (1) the subject employees were engaged in activities necessary and desirable to the business of Ludo, and (2) CLAS is a labor-only contractor of Ludo. It then disposed as follows: (a) the complainants were considered regular employees six months from the first day of service at CLAS; (b) the complainants, being entitled to the CBA benefits during the regular employment, were awarded sick leave, vacation leave, and annual wage and salary increases during such period; (c) respondents shall pay attorney’s fees of 10% of the total award; and (d) an interest of 12% per annum or 1% per month shall be imposed on the award from the date of promulgation until fully paid. The VA added that all separation and/or retirement benefits shall be construed from the date of regularization subject only to the appropriate government laws and other social legislation. Ludo filed a motion for reconsideration, but the VA denied it. On appeal, the CA affirmed in toto the assailed decision; hence, a petition was brought before this Court raising the issue, among others, of whether a voluntary arbitrator can award benefits not claimed in the submission agreement. In denying the petition, We ruled:

Generally, the arbitrator is expected to decide only those questions expressly delineated by the submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power to make a final settlement since arbitration is the final resort for the adjudication of disputes. The succinct reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a labor controversy has jurisdiction to render the questioned arbitral awards, deserves our concurrence, thus:

In general, the arbitrator is expected to decide those questions expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement. Thus, assuming that the submission empowers the arbitrator to decide whether an employee was discharged for just cause, the arbitrator in this instance can reasonably assume that his powers extended beyond giving a yes-or-no answer and included the power to reinstate him with or without back pay.

In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator had plenary jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope of his own authority subject only, in a proper case, to the certiorari jurisdiction of this Court. The Arbitrator, as already indicated, viewed his authority as embracing not merely the determination of the abstract question of whether or not a performance bonus was to be granted but also, in the affirmative case, the amount thereof.

By the same token, the issue of regularization should be viewed as two-tiered issue. While the submission agreement mentioned only the determination of the date or regularization, law and jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate prerogative to accomplish the reason for which the law on voluntary arbitration was created – speedy labor justice. It bears stressing that the underlying reason why this case arose is to settle, once and for all, the ultimate question of whether respondent employees are entitled to higher benefits. To require them to file another action for payment of such benefits would certainly undermine labor proceedings and contravene the constitutional mandate providing full protection to labor.23

Indubitably, Ludo fortifies, not diminishes, the soundness of the questioned VA Decision. Said case reaffirms the plenary jurisdiction and authority of the voluntary arbitrator to interpret the CBA and to determine the scope of his/her own authority. Subject to judicial review, the leeway of authority as well as adequate prerogative is aimed at accomplishing the rationale of the law on voluntary arbitration – speedy labor justice. In this case, a complete and final adjudication of the dispute between the parties necessarily called for the resolution of the related and incidental issue of whether the Company still violated the CBA but without being guilty of ULP as, needless to state, ULP is committed only if there is gross violation of the agreement.

Lastly, the Company kept on harping that both the VA and the CA conceded that its engagement of contractual workers from PESO was a valid exercise of management prerogative. It is confused. To emphasize, declaring that a particular act falls within the concept of management prerogative is significantly different from acknowledging that such act is a valid exercise thereof. What the VA and the CA correctly ruled was that the Company’s act of contracting out/outsourcing is within the purview of management prerogative. Both did not say, however, that such act is a valid exercise thereof. Obviously, this is due to the recognition that the CBA provisions agreed upon by the Company and the Union delimit the free exercise of management prerogative pertaining to the hiring of contractual employees. Indeed, the VA opined that "the right of the management to outsource parts of its operations is not totally eliminated but is merely limited by the CBA," while the CA held that "this management prerogative of contracting out services, however, is not without limitation. x x x These categories of employees particularly with respect to casual employees serve as limitation to the Company’s

prerogative to outsource parts of its operations especially when hiring contractual employees."

A collective bargaining agreement is the law between the parties:

It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to comply with its provisions. We said so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda:

A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. 1âwphi1 As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law.

Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of their stipulations shall control. x x x.24

In this case, Section 4, Article I (on categories of employees) of the CBA between the Company and the Union must be read in conjunction with its Section 1, Article III (on union security). Both are interconnected and must be given full force and effect. Also, these provisions are clear and unambiguous. The terms are explicit and the language of the CBA is not susceptible to any other interpretation. Hence, the literal meaning should prevail. As repeatedly held, the exercise of management prerogative is not unlimited; it is subject to the limitations found in law, collective bargaining agreement or the general principles of fair play and justice25 Evidently, this case has one of the restrictions- the presence of specific CBA provisions-unlike in San Miguel Corporation Employees Union-PTGWO v. Bersamira,26 De Ocampo v. NLRC,27 Asian Alcohol Corporation v. NLRC,28 and Serrano v. NLRC29cited by the Company. To reiterate, the CBA is the norm of conduct between the parties and compliance therewith is mandated by the express policy of the law.30

WHEREFORE, the petition is DENIED. The assailed June 16, 2005 Decision, as well as the October 12, 2005 Resolution of the Court of Appeals, which sustained the October 26, 2004 Decision of the Voluntary Arbitrator, are hereby AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTAAssociate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.Associate Justice

Chairperson

ROBERTO A. ABADAssociate Justice

JOSE CATRAL MENDOZAAssociate Justice

MARVIC MARIO VICTOR F. LEONENAssociate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

PRESBITERO J. VELASCO, JR.Associate JusticeChairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENOChief Justice

Footnotes

1 Penned by Associate Justice Eugenio S. Labitoria, with Associate Justices Eliezer R. de los Santos and Arturo D. Brion (now a member of this Court) concurring; rollo, pp. 33-42.

2 Id. at 43-44.

3 CA rollo, pp. 24-29.

4 Id. at29.

5 Id. at 62.

6 Id. at 30.

7 Id. at 27-28.

8 Id. at 70.

9 Id. at 6-18.

10 Id. at 10.

11 Id. at 13.

12 Id. at 83-88.

13 Id. at 91-97.

14 Resolution dated October 12, 2005; id. at 100-101.

15 Rollo, pp. 145-157.

16 No. L-39050, February 24, 1981, 103 SCRA 90; 190 Phil. 814 (1981).

17 G.R. No. 138965, June 30, 2006, 494 SCRA 53; 526 Phil. 550 (2006).

18 G.R. No. 161081, May 10, 2005, 458 SCRA 385; 497 Phil. 689 (2005).

19 In David v. Macapagal-Arroyo, G.R. Nos. 171396, 171409, 171485, 171483, 171400, 171489, and 171424 , May 3, 2006, 489 SCRA 160, 213-215; 522 Phil. 705, 753-754 (2006), the Court held:

A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical use or value. Generally, courts decline jurisdiction over such case or dismiss it on ground of mootness.

x x x x

The "moot and academic" principle is not a magical formula that can automatically dissuade the courts in resolving a case. Courts will decide cases, otherwise moot and academic, if: first, there is a grave violation of the Constitution; second, the exceptional character of the situation and the paramount public interest is involved; third, when constitutional issue raised requires formulation of controlling principles to guide the bench, the bar, and the public; and fourth, the case is capable of repetition yet evading review.

20 Rule IV, Sections 4 and 5 state:

Section 4. When Jurisdiction is Exercised. The voluntary arbitrator shall exercise jurisdiction over specific case/s:

1) Upon receipt of a submission agreement duly signed by both parties.

2) Upon receipt of the notice to arbitrate when there is refusal from one party;

3) Upon receipt of an appointment/designation as voluntary arbitrator by the board in either of the following circumstances:

3.1. In the event that parties fail to select an arbitrator; or

3.2. In the absence of a named arbitrator in the CBA and the party upon whom the notice to arbitrate is served does not favorably reply within seven days from receipt of such notice.

Section 5. Contents of submission agreement. The submission agreement shall contain, among others, the following:

1. The agreement to submit to arbitration;

2. The specific issue/s to be arbitrated;

3. The name of the arbitrator;

4. The names, addresses and contact numbers of the parties;

5. The agreement to perform or abide by the decision. (Emphasis supplied)

21 Rule VI, Sec. 5 provides:

Section 5. Simplification of Arbitrable Issue/s. The arbitrator must see to it that he understands clearly the issue/s submitted to arbitration. If, after conferring with the parties, he finds the necessity to clarify/simplify the issue/s, he shall assist the parties in the reformulation of the same.

22 G.R. No. 140960, January 20, 2003, 395 SCRA 45l; 443 Phil. 554 (2003).

23 Ludo & Luym Corporation v. Saornido, supra note 22, at 459; at 562-563. (Citations omitted.)

24 TSPIC Corporation v. TSPIC Employees Union (FFW), G.R. No. 163419, February 13, 2008, 545 SCRA 215, 225. (Citations omitted.)

25 DOLE Philippines, Inc. v. Pawis ng Makabayang Obrero, G.R. No. 146650, January 13, 2003,395 SCRA 112, 116; 443 Phil. 143, 149 (2003).

26 G.R. No. 87700, June 13, 1990, 186 SCRA 496; 264 Phil. 875 ( 1990).

27 G.R. No. 101539, September 4, 1992,213 SCRA 652.

28 G.R. No. 131108, March 25, 1999, 305 SCRA 416; 364 Phil. 912 (1999).

29 G.R. No. 117040, January 27,2000,323 SCRA 445; 380 Phil. 416 (2000).

30 DOLE Philippines, Inc. v. Pawis ng Makabayang Obrero, supra note 25, at 150.

IMBUIDO v. NLRC (2000)

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 114734             March 31, 2000

VIVIAN Y. IMBUIDO, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, INTERNATIONAL INFORMATION SERVICES, INC. and GABRIEL LIBRANDO, respondents.

BUENA, J.:

This special civil action for certiorari seeks to set aside the Decision1 of the National Labor Relations Commission (NLRC) promulgated on September 27, 1993 and its Order dated January 11, 1994, which denied petitioner's motion for reconsideration.

Petitioner was employed as a data encoder by private respondent International Information Services, Inc., a domestic corporation engaged in the business of data encoding and keypunching, from August 26, 1988 until October 18, 1991 when her services were terminated. From August 26, 1988 until October 18, 1991, petitioner entered into thirteen (13) separate employment contracts with private respondent, each contract lasting only far a period of three (3) months. Aside from the basic hourly rate, specific job contract number and period of employment, each contract contains the following terms and conditions:

a. This Contract is for a specific project/job contract only and shall be effective for the period covered as above-mentioned unless sooner terminated when the job contract is completed earlier or withdrawn by client, or when employee is dismissed for just and lawful causes provided by law. The happening of any of these events will automatically terminate this contract of employment.

b. Subject shall abide with the Company's rules and regulations for its employees attached herein to form an integral part hereof.

c. The nature of your job may require you to render overtime work with pay so as not to disrupt the Company's commitment of scheduled delivery dates made on said job contract.2

In September 1991, petitioner and twelve (12) other, employees of private respondent allegedly agreed to the filing of a petition for certification election involving the rank-and-file employees of private respondent.3 Thus, on October 8, 1991, Lakas Manggagawa sa Pilipinas (LAKAS) filed a petition for certification election with the Bureau of Labor Relations (BLR), docketed as NCR-OD-M-9110-128.4

Subsequently, on October 18, 1991, petitioner received a termination letter from Edna Kasilag, Administrative Officer of private respondent, allegedly "due to low volume of work."5

Thus, on May 25, 1992, petitioner filed a complaint for illegal dismissal with prayer for service incentive leave pay and 13th month differential pay, with the National Labor Relations Commission, National Capital Region, Arbitration Branch, docketed as NLRC-NCR Case No. 05-02912-92.6

In her position paper dated August 3, 1992 and filed before labor arbiter Raul T. Aquino, petitioner alleged that her employment was terminated not due to the alleged low volume of work but because she "signed a petition for certification election among the rank and file employees of respondents," thus charging private respondent with committing unfair labor practices. Petitioner further complained of non-payment of service incentive leave benefits and underpayment of 13th month pay.7

On the other hand, private respondent, in its position paper filed on July 16, 1992, maintained that it had valid reasons to terminate petitioner's employment and disclaimed any knowledge of the existence or formation of a union among its rank-and-file employees at the time petitioner's services were terminated.8 Private respondent stressed that its business ". . . relies heavily on companies availing of its services. Its retention by client companies with particular emphasis on data encoding is on a project to project basis,"9 usually lasting for a period of "two (2) to five (5) months." Private respondent further argued that petitioner's employment was for a "specific project with a specified period of engagement." According to private respondent, ". . . the certainty of the expiration of complainant's engagement has been determined at the time of their (sic) engagement (until 27 November 1991) or when the project is earlier completed or when the client withdraws," as provided in the contract. 10 "The happening of the second event [completion of the project] has materialized, thus, her contract of employment is deemed terminated per the Brent School ruling." 11 Finally, private respondent averred that petitioner's "claims for non-payment of overtime time (sic) and service incentive leave [pay] are without factual and legal basis." 12

In a decision dated August 25, 1992, labor arbiter Raul T. Aquino, ruled in favor of petitioner, and accordingly ordered her reinstatement without loss of seniority rights and privileges, and the payment of backwages and service incentive leave pay. The dispositive part of the said decision reads:

WHEREFORE, responsive to the foregoing, judgment is hereby rendered ordering respondents to immediately reinstate complainant [petitioner herein] as a regular employee to her former position without loss of seniority rights and privileges and to pay backwages from the time of dismissal up to the date of this decision, the same to continue until complainant ['s] [petitioner herein] actual reinstatement from (sic) the service. Respondents are likewise ordered to pay complainant [petitioner herein] service incentive leave pay computed as follows:

Backwages:

10/18/91 - 8/25/92 = 10.23 mos.

P118.00 x 26 x 10.23 mos. = P31, 385.64

Service Incentive Leave Pay

1989 = P89.00 x 5 days = P445.00

1990 = 106 x 5 days = P530.00

1991 = 118 x 5 days = P590.00

P 1,565.00

Total P 32,950.64==========

SO ORDERED. 13

In his decision, the labor arbiter found petitioner to be a regular employee, ruling that "[e]ven if herein complainant [petitioner herein] had been obstensively (sic) hired for a fixed period or for a specific undertaking, she should be considered as [a] regular employee of the respondents in conformity with the provisions (sic) laid down under Article 280 of the Labor Code," 14 after finding that ". . . [i]t is crystal clear that herein complainant [petitioner herein] performed a job which are (sic) usually necessary or desirable in the usual business of respondent [s]." 15 The labor arbiter further denounced ". . . the purpose behind the series of contracts which respondents required complainant to execute as a condition of employment was to evade the true intent and spirit of the labor laws for the workingmen . . . ." 16 Furthermore, the labor arbiter concluded that petitioner was illegally dismissed because the alleged reason for her termination, that is, low volume of work, is "not among the just causes for termination recognized by law," 17 hence, he ordered her immediate reinstatement without loss of seniority rights and with full backwages. With regard to the service incentive leave pay, the labor arbiter decided ". . . to grant the same for failure of the respondents to fully controvert said claims." 18 Lastly, the labor arbiter rejected petitioner's claim for 13th month pay ". . . since complainant [petitioner herein] failed to fully substantiate and argued (sic) the same." 19

On appeal, the NLRC reversed the decision of the labor arbiter in a decision 20 promulgated on September 27, 1993, the dispositive part of which reads:

WHEREFORE, the appealed decision is hereby set aside. The complaint for illegal dismissal is hereby dismissed for being without merit. Complainant's [petitioner herein] claim for service incentive leave pay is hereby remanded for further arbitration.

SO ORDERED. 21

The NLRC ruled that "[t]here is no question that the complainant [petitioner herein], viewed in relation to said Article 280 of the [Labor] Code, is a regular employee judging from the function and/or work for which she was hired. . . . But this does not necessarily mean that the complainant [petitioner herein] has to be guaranteed a tenurial security beyond the period for which she was hired." 22 The NLRC held that ". . . the complainant [petitioner herein], while hired as a regular worker, is statutorily guaranteed, in her tenurial security, only up to the time the specific project for which she was hired is completed." 23 Hence, the NLRC concluded that "[w]ith the specific project "at RCBC 014" admittedly completed, the complainant [petitioner herein] has therefore no valid basis in charging illegal dismissal for her concomittant (sic) dislocation." 24

In an Order dated January 11, 1994, the NLRC denied petitioner's motion for reconsideration. 25

In this petition for certiorari, petitioner, for and in her behalf, argues that (1) the public respondent "committed grave abuse of discretion when it ignored the findings of Labor Arbiter Raul Aquino based on the evidence presented directly before him, and when it made findings of fact that are contrary to or not supported by evidence," 26 (2) "[p]etitioner was a "regular employee," NOT a "project employee" as found by public respondent NLRC," 27 (3) "[t]he termination of petition (sic) was tainted with unfair labor practice," 28 and (4) the public respondent "committed grave abuse of discretion in remanding the awarded service incentive leave pay for further arbitration." 29

The petition is impressed with merit.

We agree with the findings of the NLRC that petitioner is a project employee. The principal test for determining whether an employee is a project employee or a regular employee is whether the project employee was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employee was engaged for that project. 30 A project employee is 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 season. 31 In the instant case, petitioner was engaged to perform activities which were usually necessary or desirable in the usual business or trade of the employer, as admittedly, petitioner worked as a data encoder for private respondent, a corporation engaged in the business of data encoding and keypunching, and her employment was fixed for a specific project or undertaking the completion or termination of which had been determined at the time of her engagement, as may be observed from the series of employment contracts 32 between petitioner and private respondent, all of which contained a designation of the specific job contract and a specific period of employment.1âwphi1.nêt

However, even as we concur with the NLRC's findings that petitioner is a project employee, we have reached a different conclusion. In the recent case of Maraguinot, Jr. vs. NLRC, 33 we held that "[a] project employee or a member of a work pool may acquire the status of a regular employee when the following concur:

1) There is a continuous rehiring of project employees even after [the] cessation of a project; 34and

2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer. 35

The evidence on record reveals that petitioner was employed by private respondent as a data encoder, performing activities which are usually necessary or desirable in the usual business or trade of her employer, continuously for a period of more than three (3) years, from August 26, 1988 to October 18, 1991 36 and contracted for a total of thirteen (13) successive projects. We have previously ruled that "[h]owever, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment." 37 Based on the foregoing, we conclude that petitioner has attained the status of a regular employee of private respondent.

At this point, we reiterate with emphasis that:

x x x           x x x          x x x

At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty to re-hire a project employee even after completion of the project for which he was hired. The import of this decision is not to impose a positive and sweeping obligation upon the employer to re-hire project employees. What this decision merely accomplishes is a judicial recognition of the employment status of a project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by the employer of project or work pool employees who perform tasks necessary or desirable to the employer's usual business or trade. Let it not be said that this decision "coddles" labor, for as Lao 38 has ruled, project or work pool employees who have gained the status of regular employees are subject to the "no work-no pay" principle, to repeat:

A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the same time enables the workers to attain the status of regular employees.

The Court's ruling here is meant precisely to give life to the constitutional policy of strengthening the labor sector, but, we stress, not at the expense of management. Lest it be misunderstood, this ruling does not mean that simply because an employee is a project or work pool employee even outside the construction industry, he is deemed, ipso jure, a regular employee. All that we hold today is that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and jurisprudence. To rule otherwise would allow circumvention of labor laws in industries not falling within the ambit of Policy Instruction No. Policy Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by project or work pool employees who have already gained the status of regular employees by the employer's conduct. 39 (emphasis supplied)

Being a regular employee, petitioner is entitled to security of tenure and could only be dismissed for a just or authorized cause, as provided in Article 279 of the Labor Code, as amended:

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 alleged causes of petitioner's dismissal (low volume of work and belatedly, completion of project) are not valid causes for dismissal under Articles 282 and 283 of the Labor Code. Thus, petitioner is entitled to reinstatement without loss of seniority rights and other privileges, and to her full backwages, inclusive of allowances, and to her other benefits or their monetary equivalent computed from the time her compensation was withheld from her up to the time of her actual reinstatement. However, complying with the principles of "suspension of work" and "no work, no pay" between the end of one project and the start of a new one, in computing petitioner's backwages, the amounts corresponding to what could have been earned during the periods from the date petitioner was dismissed until her reinstatement when private respondent was not undertaking any project, should be deducted.1âwphi1

With regard to petitioner's claim for service incentive leave pay, we agree with the labor arbiter that petitioner is entitled to service incentive leave pay, as provided in Article 95 of the Labor Code, which reads:

Art. 95 - Right to service incentive leave -

(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.

x x x           x x x          x x x

Having already worked for more than three (3) years at the time of her unwarranted dismissal, petitioner is undoubtedly entitled to service incentive leave benefits, computed from 1989 until the date of her actual reinstatement. As we ruled in the recent case of Fernandez vs. NLRC, 40 "[s]ince a service incentive leave is clearly demandable after one year of service - whether continuous or broken - or its equivalent period, and it is one of the "benefits" which would have accrued if an employee was not otherwise illegally dismissed, it is fair and legal that its computation should be up to the date of reinstatement as provided under Section [Article] 279 of the Labor Code, as amended, which reads:

Art. 279. Security of Tenure. - 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 is withheld from him up to the time of his actual reinstatement." (emphasis supplied).

WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations Commission in NLRC NCR CA No. 003845-92 dated September 27, 1993, as well as its Order dated January 11, 1994, are hereby ANNULLED and SET ASIDE for having been rendered with grave abuse of discretion, and the decision of the Labor Arbiter in NLRC NCR Case No. 05-02912-92 is REINSTATED with MODIFICATION as above-stated, with regard to computation of back wages and service incentive leave pay.1âwphi1.nêt

SO ORDERED.

Bellosillo, Mendoza, Quisumbing and De Leon, Jr., JJ., concur.

Footnotes

1 Penned by Commissioner Vicente S.E. Veloso, and concurred in by Commissioners Bartolome S. Carale and Alberto R. Quimpo.

2 Rollo, pp. 44-56.

3 Ibid., p. 117.

4 Ibid.

5 Ibid., p. 118.

6 Ibid., p. 26.

7 Ibid., pp. 26-27.

8 Ibid., pp. 27-28.

9 Ibid., p. 28.

10 Ibid., p. 32.

11 Ibid.

12 Ibid.

13 Ibid., pp. 24-25.

14 Ibid., p. 22.

15 Ibid.

16 Ibid., p. 23.

17 Ibid.

18 Ibid., p. 24.

19 Ibid.

20 Ibid., p. 26.

21 Ibid., p. 40.

22 Ibid., p. 38.

23 Ibid., p. 39.

24 Ibid.

25 Ibid., p. 42.

26 Ibid., p. 158.

27 Ibid., p. 161.

28 Ibid., p. 162.

29 Ibid., p. 163.

30 Nagusara, et al. vs. National Labor Relations Commission, G.R. Nos. 117936-37, May 20, 1998.

31 Brahm Industries, Inc. vs. National Labor Relations Commission, 280 SCRA 828, 834 (1997). See alsoArticle 280 of the Labor Code.

32 The Court observes that of the thirteen (13) employment contracts involved, only the second and the last contracts contain the signature of petitioner.

33 Maraguinot, Jr. vs. National Labor Relations Commission, 284 SCRA 539, 556 (1998), penned by Justice (now Chief Justice) Davide, Jr. and concurred in by Justices Bellosillo, Vitug and Kapunan.

34 Philippine National Construction Corp. vs. National Labor Relations Commission, 174 SCRA 191, 193 (1989).

35 Capitol Industrial Construction Groups vs. National Labor Relations Commission, 221 SCRA 469, 473-474 (1993).

36 Rollo, pp. 44-56.

37 Maraguinot, Jr. vs. National Labor Relations Commission, 284 SCRA 539, 556 (1998).

38 Tomas Lao Construction vs. National Labor Relations Commission, 278 SCRA 716 (1997).

39 Maraguinot, Jr. vs. National Labor Relations Commission, 284 SCRA 539, 560-561 (1998).

40 Fernandez vs. National Labor Relations Commission, 285 SCRA 149, 176 (1998).

PIER 8 ARRASTRE v. BOCLOT (2007)

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 173849               September 28, 2007

PIER 8 ARRASTRE & STEVEDORING SERVICES, INC. and/ or ELIODORO C. CRUZ, Petitioners, vs.JEFF B. BOCLOT, Respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

In this Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, petitioners pray that this Court annul and set aside the (a) Decision1 dated 18 November 2005 of the Court of Appeals in CA-G.R. SP No. 88929 affirming the twin Resolutions2 dated 29 October 20043 and 29 December 20044 of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 038683-04; and (b) Resolution dated 21 July 2006 of the appellate court in the same case, denying petitioners’ Motion for Reconsideration of the aforementioned Decision.

The factual antecedents of the present petition are as follows:

Petitioner Pier 8 Arrastre and Stevedoring Services, Inc. (PASSI) is a domestic corporation engaged in the business of providing arrastre and stevedoring services5 at Pier 8 in the Manila North Harbor. PASSI has been rendering arrastre and stevedoring services at the port area since 1974 and employs stevedores who assist in the loading and unloading of cargoes to and from the vessels. Petitioner Eliodoro C. Cruz is its Vice-President and General Manager.

Respondent Jeff B. Boclot was hired by PASSI to perform the functions of a stevedore starting 20 September 1999.

The facts show that respondent rendered actual services to PASSI during the following periods:

Period Duration

September - December 1999 (4 months) 21 days

January - April 2000 (4 months) 20 days

March - December 2001 (10 months) 85 days

January - December 2002 (12 months) 70.5 days

January – June 2003 (6 months) 32 days

Total 36 months 228.5 days6

On 15 April 2000, the Philippine Ports Authority (PPA) seized the facilities and took over the operations of PASSI through its Special Takeover Unit, absorbing PASSI workers as well as their relievers. By virtue of a Decision dated 9 January 2001 of the Court of Appeals, petitioners were able to regain control of their arrastre and stevedoring operations at Pier 8 on 12 March 2001.7

On 9 May 2003, respondent filed a Complaint with the Labor Arbiter of the NLRC, claiming regularization; payment of service incentive leave and 13th month pays; moral, exemplary and actual damages; and attorney’s fees. Respondent alleged that he was hired by PASSI in October 1999 and was issued company ID No. 304,8 a PPA Pass and SSS documents. In fact, respondent contended that he became a regular employee by April 2000, since it was his sixth continuous month in service in PASSI’s regular course of business. He argued on the basis of Articles 2809 and 28110 of the Labor Code. He maintains that under paragraph 2 of Article 280, he should be deemed a regular employee having rendered at least one year of service with the company.

According to respondent, he remained a casual employee from the time he was first hired to perform the services of a stevedore. Thus, respondent claimed he was denied the rights and privileges of a regular employee, including those granted under the Collective Bargaining Agreement (CBA) such as wage increase; medical, dental and hospitalization benefits; vacation and sick leaves; uniforms, Christmas gifts, productivity bonus, accident insurance, special separation pays, and others.11

Respondent relied on Article XXV of the company’s existing CBA, effective 4 March 1998 to 3 March 2003, which states the following:

The Company agrees to convert to regular status all incumbent probationary or casual employees and workers in the Company who have served the Company for an accumulated service term of employment of not less than six (6) months from his original date of hiring

The probationary period for all future workers or employees shall be the following:

a. All skilled workers such as crane operator, mechanic, carpenter, winchman, signalman and checkers shall become regular after three (3) months continuous employment;

b. All semi-skilled personnel shall become regular after four (4) months of continuous employment;

c. All non-skilled personnel shall be regular after six (6) months continuous employment.12

In opposition thereto, petitioners alleged that respondent was hired as a mere "reliever" stevedore and could thus not become a regular employee.

On 24 November 2003, NLRC Labor Arbiter Felipe P. Pati ruled for petitioners and dismissed respondent’s complaint. In finding no factual or legal basis for the regularization of respondent, the Labor Arbiter came to the conclusion that respondent was "nothing more than an extra worker who is called upon to work at the pier in the absence of regular stevedores at a certain shift."13 He deemed that Articles 280 and 281 of the Labor Code were inapplicable, on the contention that the aforementioned articles speak of probationary employees and casual employees while respondent, as a reliever,

is neither a probationary employee nor a casual employee. Neither was respondent qualified to avail himself of Service Incentive Leave benefits, even assuming he was a regular employee, because the number of days of service he had rendered reached a total of 228.5 days only -- short of 365 days, the one-year requirement to qualify for this benefit. Finally, respondent’s prayer for the grant of attorney’s fees, and for moral and exemplary damages, was also denied.

Respondent appealed the Labor Arbiter’s dismissal of his complaint to the NLRC. Thereafter, the NLRC issued a Resolution on 29 October 2004 modifying the Labor Arbiter’s Decision, ruling:

WHEREFORE, premises considered, complainant’s appeal is partly GRANTED. The Labor Arbiter’s assailed Decision in the above-entitled case is hereby MODIFIED. Complainant is hereby declared a regular employee of Respondents. The dismissal of Complainant’s claim for benefits under the CBA and other monetary claims are AFFIRMED for lack of jurisdiction and lack of merit, respectively.14 (Italics ours.)

The NLRC gave credence to respondent’s allegations that the Labor Arbiter committed grave abuse of discretion in dismissing respondent’s claim for regularization. The NLRC ruled that petitioners’ failure, without reasonable explanation, to present proof of absences of "regular" stevedores leads to the conclusion that the stevedores, termed by petitioners as "relievers," work on rotation basis, just like the "regular" stevedores. The NLRC predicated its findings that respondent is a regular employee of petitioners on the reasonable connection between the activity performed by the employee in relation to the usual business or trade of the employer. According to the NLRC, although respondent rendered an average of 6.34 days of work a month, the activities performed were usually necessary and desirable in the business of petitioners.

Petitioners filed a Motion for Reconsideration of the foregoing NLRC Resolution dated 29 October 2004 but this was subsequently denied in another NLRC Resolution issued on 29 December 2004.

Upon a denial of their motion for reconsideration by the NLRC, petitioners elevated their case to the Court of Appeals via a Petition for Certiorari with prayer for the issuance of a Temporary Restraining Order (TRO) and/or writ of preliminary injunction.

On 18 November 2005, the Court of Appeals dismissed the Petition for Certiorari and affirmed the Resolutions of the NLRC finding respondent to be a regular employee. The Court of Appeals grounded its Decision on this Court’s previous rulings that what determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. Citing De Leon v. National Labor Relations Commission,15 which enumerated the standards for determining regular employment, the Court of Appeals ruled that even assuming that respondent was able to render services for only 228.5 days in a period of 36 months, the fact remains that his services were continuously utilized by petitioners in their business. Where the job is usually necessary or desirable to the main business of the employer, then the employment is regular.16 The pertinent portions of the assailed Decision of the Court of Appeals are herein reproduced:

Applying the above-mentioned principles, private respondent’s task of loading and unloading cargoes to and from the vessels is undoubtedly necessary and desirable to the business of petitioners’ arrastre and stevedoring services. Equally unavailing is the petitioners’ contention that being a reliever or an extra worker, private respondent cannot be deemed as a regular employee. This cannot be accorded with merit as the same does not change the nature of the latter’s employment. Whether private respondent was hired only in the absence of regular stevedores, as petitioners maintain, let it be emphasized that the determination of whether the employment is casual or regular does

not depend on the will or word of the employer, and the procedure of hiring and manner of paying, but on the nature of the activities performed by an employee, and to some extent, the length of performance, and its continued existence. Petitioners’ admission that it has been an industry practice to hire relievers whenever the need arises to ensure that operations at the pier continue for 24 hours only proves that private respondent’s services are necessary or desirable in its usual business, otherwise, private respondent should not have been at the employ of petitioners for a period [of] 36 months. Even assuming that private respondent was able to render only 228.5 days out of 36 months, the undisputed fact remains that private respondent’s services was continuously utilized by petitioners in the operation of its business. Whether one’s employment is regular is not determined by the number of the hours one works, but by the nature of the work and by the length of time one has been in that particular job. To uphold petitioners’ argument would preclude and deprive workers, like private respondent herein, to acquire regular status favorably mandated by the Labor Code.

x x x x

WHEREFORE, the instant petition is DISMISSED for lack of merit and the assailed resolutions of public respondent National Labor Relations Commission dated October 29, 2004 and December 29, 2004 are hereby AFFIRMED.17

On 14 December 2005, petitioners filed a Motion for Reconsideration, which was denied by the Court of Appeals in a Resolution dated 21 July 2006.

Hence, through this Petition for Review on Certiorari, petitioners assail the Decision of the Court of Appeals, raising the sole argument that:

THE COURT OF APPEALS ERRED IN RULING THAT PRIVATE RESPONDENT JEFF BOCLOT IS A REGULAR EMPLOYEE OF PETITIONER PIER 8 ARRASTRE & STEVEDORING SERVICES, INC. BECAUSE HE PERFORMED TASKS WHICH ARE USUALLY NECESSARY AND DESIRABLE TO THE MAIN BUSINESS OF PETITIONER CORPORATION

Evidently, the only issue subject to the resolution of this Court is whether or not respondent has attained regular status as PASSI’s employee.

In the instant petition, petitioners are vehemently denying that respondent has become PASSI’s regular employee. Petitioners insist that respondent was hired as a mere "reliever" stevedore and, thus, could not become a regular stevedore. Petitioners presented a list of the days when respondent’s services as stevedore were engaged, to support its claim that respondent is a reliever. Petitioners aver that the employment of the stevedores is governed by a system of rotation. Based on this system of rotation, the work available to reliever stevedores is dependent on the actual stevedoring and arrastre requirements at a current given time. Petitioners posit that respondent, as a reliever stevedore, is a mere extra worker whose work is dependent on the absence of regular stevedores during any given shift. During "rotation proper," as petitioners term it, all regular employees are first called and given work before any reliever is assigned. Petitioners assert that while the regular stevedores work an average of 4 days a week (or 16 days a month), respondent performed services for a total of 228.5 days (or only for an average of 6.34 days a month) from September 1999 to June 2003. In defense of the Court of Appeals’ ruling grounded on Articles 280 and 281 of the Labor Code, petitioners maintain that the foregoing provisions are inapplicable on the postulation that respondent is neither a probationary nor a casual employee. For the same reasons, petitioners argue that Article XXV of the CBA cannot be used to support respondent’s contention that he is a regular employee since the CBA provision he invokes refers to "all incumbent probationary or casual employees and workers in the company" and not to respondent who is neither a casual nor a probationary employee.

After a deliberate study of Labor Law provisions and jurisprudence, and in light of the particular circumstances of this case, this Court has arrived at the same conclusion as those of the NLRC and the Court of Appeals that respondent is a regular employee, but on a different basis.

Under the 1987 Philippine Constitution, the State affords full protection to labor, local and overseas, organized and unorganized; and the promotion of full employment and equality of employment opportunities for all. The State affirms labor as a primary social economic force and guarantees that it shall protect the rights of workers and promote their welfare.18

The Labor Code, which implements the foregoing Constitutional mandate, draws a fine line between regular and casual employees to protect the interests of labor.19 "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."20 Thus, the standards for determining whether an employee is a regular employee or a casual or project employee have been delineated in Article 280 of the Labor Code, to wit:

Article 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 actually exist.

Under the foregoing provision, a regular employee is (1) one who is either engaged to perform activities that are necessary or desirable in the usual trade or business of the employer except for project21 or seasonal employees; or (2) a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed.22 Additionally, Article 281 of the Labor Code further considers a regular employee as one who is allowed to work after a probationary period. Based on the aforementioned, although performing activities that are necessary or desirable in the usual trade or business of the employer, an employee such as a project or seasonal employee is not necessarily a regular employee. The situation of respondent is similar to that of a project or seasonal employee, albeit on a daily basis.

Under the second paragraph of the same provision, all other employees who do not fall under the definition of the preceding paragraph are casual employees. However, the second paragraph also provides that it 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.

De Leon v. National Labor Relations Commission23 succinctly explains the delineation of the foregoing employee classification, to wit:

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. (Emphasis supplied.)

PASSI is engaged in providing stevedoring and arrastre services in the port area in Manila. Stevedoring, dock and arrastre operations include, but are not limited to, the opening and closing of a vessel’s hatches; discharging of cargoes from ship to truck or dock, lighters and barges, and vice-versa; movement of cargoes inside vessels, warehouses, terminals and docks; and other related work. In line with this, petitioners hire stevedores who assist in the loading and unloading of cargoes to and from the vessels.

Petitioners concede that whenever respondent worked as a reliever stevedore due to the absence of a regular stevedore, he performed tasks that are usually necessary and desirable to their business. Petitioners, however, contend that this in itself does not make him a regular stevedore, postulating that the hiring of respondent as a reliever is akin to a situation in which a worker goes on vacation leave, sick leave, maternity leave or paternity leave; and the employer is constrained to hire another worker from outside the establishment to ensure the smooth flow of its operations.

Based on the circumstances of the instant case, this Court agrees. It takes judicial notice24 that it is an industry practice in port services to hire "reliever" stevedores in order to ensure smooth-flowing 24-hour stevedoring and arrastre operations in the port area. No doubt, serving as a stevedore, respondent performs tasks necessary or desirable to the usual business of petitioners. However, it should be deemed part of the nature of his work that he can only work as a stevedore in the absence of the employee regularly employed for the very same function. Bearing in mind that respondent performed services from September 1999 until June 2003 for a period of only 228.5 days in 36 months, or roughly an average of 6.34 days a month; while a regular stevedore working for petitioners, on the other hand, renders service for an average of 16 days a month, demonstrates that respondent’s employment is subject to the availability of work, depending on the absences of the regular stevedores. Moreover, respondent does not contest that he was well aware that he would only be given work when there are absent or unavailable employees. Respondent also does not allege, nor is there any showing, that he was disallowed or prevented from offering his services to other cargo handlers in the other piers at the North Harbor other than petitioners. As aforestated, the situation of respondent is akin to that of a seasonal or project or term employee, albeit on a daily basis.

Anent petitioners’ contention that respondent is neither a probationary nor a casual employee, this Court again refers to Article 280 of the Labor Code.

The second paragraph thereof stipulates in unequivocal terms that all other employees who do not fall under the definitions in the first paragraph of regular, project and seasonal employees, are deemed casual employees.25Not qualifying under any of the kinds of employees covered by the first paragraph of Article 280 of the Labor Code, then respondent is a casual employee under the second paragraph of the same provision.

The same provision, however, provides that a casual employee can be considered as regular employee if said casual employee has rendered at least one year of service regardless of the fact that such service may be continuous or broken. Section 3, Rule V,

Book II of the Implementing Rules and Regulations of the Labor Code clearly defines the term "at least one year of service" to mean service within 12 months, whether continuous or broken, reckoned from the date the employee started working, including authorized absences and paid regular holidays, unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contract, is less than 12 months, in which case said period shall be considered one year.26 If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability, of that activity to the business of the employer.27 Applying the foregoing, respondent, who has performed actual stevedoring services for petitioners only for an accumulated period of 228.5 days does not fall under the classification of a casual turned regular employee after rendering at least one year of service, whether continuous or intermittent.28

Both the Constitution and the Labor Code mandate the protection of labor. Hence, as a matter of judicial policy, this Court has, in a number of instances, leaned backwards to protect labor and the working class against the machinations and incursions of their more financially entrenched employers.29 Where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by an employee, such imposition should be struck down or disregarded as contrary to public policy and morals.30 However, we take this occasion to emphasize that the law, while protecting the rights of the employees, authorizes neither the oppression nor the destruction of the employer. When the law tilts the scale of justice in favor of labor, the scale should never be so tilted if the result would be an injustice to the employer.31 Thus, this Court cannot be compelled to declare respondent as a regular employee when by the nature of respondent’s work as a reliever stevedore and his accumulated length of service of only eight months do not qualify him to be declared as such under the provisions of the Labor Code alone.32

NONETHELESS, this Court still finds respondent to be a regular employee on the basis of pertinent provisions under the CBA between PASSI and its Workers’ union, which was effective from 4 March 1998 to 3 March 2003:

The Company agrees to convert to regular status all incumbent probationary or casual employees and workers in the Company who have served the Company for an accumulated service term of employment of not less than six (6) months from his original date of hiring.

The probationary period for all future workers or employees shall be the following:

(a) All skilled workers such as crane operator, mechanic, carpenter, winchman, signalman and checkers shall become regular after three (3) months continuous employment;

(b) All semi-skilled personnel shall become regular after four (4) months of continuous employment;

(c) All non-skilled personnel shall be regular after six (6) months continuous employment.33 (Italics ours.)

Petitioners were crucified on this argument raised by respondent. The union which negotiated the existing CBA is the sole and exclusive bargaining representative of all the stevedores, dock workers, gang bosses, rank and file employees working at Pier 8, and its offices. The NLRC ruled that respondent’s reliance on the CBA to show that he has become a regular employee is misplaced for the reason that the CBA applies only to regular workers of the company.34 Respondent assents that he is not a member of the

union, as he was not recognized by PASSI as its regular employee, but this Court notes that PASSI adopts a union-shop agreement, culling from Article II of the CBA which stipulates:

The Union and the Company (PASSI) hereby agree to adopt the "Union Shop" as a condition of employment to the position (sic) covered by this Agreement.35

Under a union-shop agreement, although nonmembers may be hired, an employee is required to become a union member after a certain period, in order to retain employment. This requirement applies to present and future employees.36 The same article of the CBA stipulates that employment in PASSI cannot be obtained without prior membership in the union.1âwphi1

Apropos, applying the foregoing provisions of the CBA, respondent should be considered a regular employee after six months of accumulated service. It is clearly stipulated therein that petitioners shall agree to convert to regular status all incumbent probationary or casual employees and workers in PASSI who have served PASSI for an accumulated service term of employment of not less than six months from the original date of hiring. Having rendered 228.5 days, or eight months of service to petitioners since 1999, then respondent is entitled to regularization by virtue of the said CBA provisions.

In light of the foregoing, petitioners must accord respondent the status of a regular employee.

Additionally, respondent is not yet entitled to avail himself of service incentive leave benefits for his failure to render at least one year of service. As to the 13th month pay, petitioners have shown that respondent has been paid the same. Respondent is also not entitled to moral and exemplary damages and attorney’s fees for the reason that an employer may only be held liable for damages if the attendant facts show that it was oppressive to labor or done in a manner contrary to morals, good customs and public policy. None of the aforementioned circumstances are present. Neither was there any appeal raised by respondent pertaining to the non-award of the foregoing claims.

WHEREFORE, in view of the foregoing, the instant Petition is DENIED and the Decision of the Court of Appeals dated 18 November 2005 and its Resolution dated 21 January 2006, in CA-G.R. SP No. 88929 are AFFIRMED in the manner herein discussed. Costs against petitioners.

SO ORDERED.

MINITA V. CHICO-NAZARIOAssociate Justice

WE CONCUR:

REYNATO S. PUNOChief Justice

CONSUELO YNARES-SANTIAGOAssociate Justice

MA. ALICIA AUSTRIA-MARTINEZAssociate Justice

ANTONIO EDUARDO B. NACHURAAssociate Justice

Chairperson

A T T E S T A T I O N

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

CONSUELO YNARES-SANTIAGOAssociate JusticeChairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNOChief Justice

Footnotes

1 Penned by Associate Justice Aurora Santiago-Lagman with Associate Justices Ruben T. Reyes (now Associate Justice of the Supreme Court) and Rebecca de Guia-Salvador, concurring; CA rollo, pp. 165-174.

2 In NLRC NCR Case No. 00-05-05588-03, NLRC NCR CA No. 038683-04; the first resolution modified the Decision dated 24 November 2003 of the Labor Arbiter which dismissed private respondent’s complaint.

3 Penned by Commissioner Victoriano R. Calaycay with Presiding Commissioner Raul T. Aquino and Commissioner Angelita A. Gacutan, concurring; rollo, p. 48-49.

4 Resolution denying the Motion for Reconsideration filed by petitioner and affirming the Resolution dated 29 October 2004; rollo, pp. 60-61.

5 Stevedoring, dock and arrastre operations shall include but not be limited to, opening and closing of vessel’s hatches; discharging of cargoes from ship to truck or dock, lighters, barges and vice- versa; movement of cargoes inside vessels, warehouses, terminals and docks; and other related work.

6 Annexes "C" and "C-1," CA rollo, pp. 31-32.

7 G.R. Nos. and title of the case are not indicated in the records. The fact of the issuance and the content of such Decision not contested.

8 Petitioner questions the authenticity of this ID.

9 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 exist.

10 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.

11 Petitioner and its employees observe a union-shop agreement.

12 CA rollo, p. 55.

13 Decision of the Labor Arbiter dated 24 November 2003; rollo, p. 45.

14 Id. at 58-59.

15 G.R. No. 70705, 21 August 1989, 176 SCRA 615, 623-624.

16 Id.

17 Rollo, pp. 32-33.

18 Constitution, Article II, Sec. 18.

19 Highway Copra Traders v. National Labor Relations Commission, 355 Phil. 86, 91 (1998).

20 Id., citing Baguio Country Club Corporation v. National Labor Relations Commission, G.R. No. 71664, 28 February 1992, 206 SCRA 643, 651.

21 A project employee is one whose employment has been fixed for a specified 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.

22 Philippine Long Distance Telephone Company, Inc. v. Arceo, G.R. No. 149985, 5 May 2006, 489 SCRA 617, 622.

23 Supra note 15 at 621.

24 Matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of jurisdiction of the court. (D.O. Plaza Mgt. Corp. v. Co-owners Heirs of Andres Atega, G.R. No. 158526, 16 December 2004, 447 SCRA 171, 185.)

25 The second paragraph of Article 280 of the Labor Code provides that it 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.

26 Integrated Contractor and Plumbing Works, Inc. v. National Labor Relations Commission, G.R. No. 152427, 9 August 2005, 466 SCRA 265, 275.

27 See Mercado, Sr. v. National Labor Relations Commission, G.R. No. 79869, 5 September 1991, 201 SCRA 332, 341; Philips Semiconductors, Inc. v. Fadriquela, G.R. No. 141717, 14 April 2004, 427 SCRA 408, 419; E. Ganzon, Inc. v. National Labor Relations Commission, 378 Phil. 1048, 1055 (1999).

28 Concomitantly, respondent is not qualified to avail himself of Service Incentive Leave benefits, which may be enjoyed by an employee who has rendered at least one year of service. Article 95 of the Labor Code stipulates that every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay; JPL Marketing Promotions v. Court of Appeals, G.R. No. 151966, 8 July 2005, 463 SCRA 136, 148.

29 Philippine Today, Inc. v. National Labor Relations Commission, 334 Phil. 854, 880 (1997).

30 Philips Semiconductors, Inc. v. Fadriquela, supra note 27.

31 Saint Mary’s University v. Court of Appeals, G.R. No. 157788, 8 March 2005, 453 SCRA 61, 68-69, citing DI Security and General Services, Inc. v. National Labor Relations Commission, 332 Phil. 497, 506 (1996); St. Theresa’s School of Novaliches Foundation v. National Labor Relations Commission, 351 Phil. 1038, 1040 (1998).

32 The circumstances in Philippine Telegraph and Telephone Company v. National Labor Relations Commission, 338 Phil. 1093 (1997) are not on all fours with the instant case.

33 CA rollo, p. 55.

34 Rollo, p. 45.

35 CA rollo, p. 44.

36 Barron’s Law Dictionary, 3rd edition; Black’s Law Dictionary, 8th edition.

MINDANAO TERMINAL v. NAGKAHIUSANG MAMUMUO (2012)

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 174300               December 5, 2012

MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. and/or FORTUNATO V. DE CASTRO, Petitioners, vs.NAGKAHIUSANG MAMUMUO SA MINTERBRO–SOUTHERN PHILIPPINES FEDERATION OF LABOR and/or MANUEL ABELLANA, GILBERT ABELLO, SIXTO ABELLO, JR., IRENEO ABONITA, ALIEZER ADALIM, CONSTANCIO ALBISO, NELSON ANCAJAS, ROGELIO ANOUEVO, REYNALDO ANTOQUE, DEORIDO ARIOLA, BERNARDINO AROJADO, JAIME ATILANO, ALBERTO BAHALA, RODRISITO BAHALA, JR., JOVITO BASTASA, TEODORO BASTASA, PACIANO BATICAN, BENJAMIN BAYNOSA, APOLINARIO BERNALDEZ, GODOFREDO BIOCO, ERLINDO BRIGOLI, TEODRICO CABATO, ANARITO CABUDLAN, DARIO CALIBJO, ERDIE CALIBJO, JAIME CAMINERO, BENNY CASI, EDWIN CORTEZ, ARTURO CRISMAS, ALEJANDRO DIO, CATALINO DIONGZON, JR., MANUEL DORADO, ZACARIAS DUMAYAC, ORLANDO EBERO, LEONARDO ENRIQUEZ, GABRIEL ESPERA, ROBERTO ESTRERA, JOEL FERNANDEZ, EDGARDO FLORES, RUSTICO GALAN, ELIEZER GELECANA, PRIMO GELECANA, DANIEL GIDUCOS, FELIPE GUANZON, GORDONIO HURANO, FLORENTINO IBAÑEZ, ALFRED IBORI, NICANOR INTO, ROBERT JAMILA, JESUS JANDAYAN, EWAN JUGAN, DIEGO JULATON, JOVENCIO JULATON, ANGELITO JULIANE, WILFREDO LACNO, LAGRAMA DOMINGO, CERILO MAGDASAL, FERNANDO MANGARON, JOSEPH MANGARON, EDGARDO MANGILAYA, EDGARDO MANSARON, VIRGILIO MATALANG, JEREMIAS MOLATO, CARLOS MONARES, RAMON NECESARIO, DANILO OTADAY, ROGELIO PAL, EBELIO PALMA, GAVINO PAMAN, JR., DANILO PANDAPATAN, NOLI PATRICIO, MODESTO PIOQUINIO, NEMENSIO PLASABAS, JULIUS QUIBOY, RUEL QUINILATAN, SANTOS RASONABE, ROBERTO REBUCAS, ALEJANDRO REDOBLADO, SR., DARIO REYES, RODOLFO ROCA, ROGER MAGAN, NECITO ROSOS, PANTALEON SAGAYNO, VENANCIO SAGAYNO, VICENTE SALARDE, REYNALDO SALCEDO, JOSE SALINAS, DANIEL SAPIO, ROMY SEGOVIA, JENELITO SIOCON, RENATO SODE, EDUARDO SOLIZA, PABLITO TAC-AN, PEPITO TAGALAWAN, ARIEL TIBUS, ARTURO TOLIBAS, ROMEO TUBOG, ALFREDO VIDAD and ARNOLD TIBlJS, Respondents.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari 1 of the Decision2 and Resolution3 dated April 21, 2006 and August 7, 2006, respectively, of the Court of Appeals in CA-G.R. SP No. 51656, which dismissed the petition for certiorariof petitioners Mindanao Terminal and Brokerage Service, Inc. (Minterbro) and Fortunato V. De Castro.1

Minterbro is a domestic corporation managed by De Castro and engaged in the business of providing arrastre and stevedoring services to its clientele at Port Area, Sasa, Davao

City.4 It has a Contract for Use of Pier5 with Del Monte Philippines, Inc. (Del Monte), which provides for the exclusive use by Del Monte of the Minterbro pier.6Thus, at the time relevant to this controversy, Del Monte ~as Minterbro's only client.

The docking of vessels at the piers in Davao City, including that of Minterbro, is being carried out by the Davao Pilots' Association, Inc. (DPAI).7 In a letter8 dated January 6, 1996, DPAI requested Minterbro to waive any claim of liability against it for any damage to the pier or vessel. DPAI alleged that Minterbro’s pier vibrates everytime a ship docks due to weak posts at the underwater portion.

In a letter9 dated January 15, 1997, Minterbro denied the request explaining that DPAI’s observation had no basis as any damage to the pier was actually caused by a vessel under the control of DPAI which bumped the pier on December 28, 1996. DPAI replied in a letter10 dated January 23, 1997 informing Minterbro of its intention to refrain from docking vessels at Minterbro’s pier for security and safety reasons, until such time as Minterbro shall have caused the restoration of the original independent fenders of the said pier.

This prompted Minterbro to bring up the matter to the Philippine Ports Authority (PPA). The PPA promptly dispatched a team to conduct ocular inspection on Minterbro’s pier.11 In a communication12 dated February 3, 1997, on the basis of its ocular inspection, the PPA advised Minterbro "to conduct a thorough investigation of the underdeck and underwater structures of the pier and initiate corrective measures if necessary." Thereafter, Minterbro, DPAI, and the PPA had a meeting and agreed that Minterbro would seek the assistance of experts for an ocular inspection and survey of the pier. Minterbro engaged the Davao Engineering Works and Marine Services (Davao Engineering) to carry out the work.13

In its Survey Report No. 390/9714 dated May 6, 1997, Davao Engineering stated:

OBSERVATIONS:

The Pier facilities of Minterbro at Ilang, Davao City can still be used for loading and unloading of cargoes provided, however, that docking procedures were properly carried out.

The cracks and spalled concrete on the joints of the RC Piles and Pile caps [do] not affect the strength and capabilities of the Pier. However, immediate attention should be given to the Pier damages in order to prevent further deterioration of its structural members which will lead to a costly [repair] later on.15

Meanwhile, from January 1 until April 13, 1997, a total of sixteen (16) vessels were serviced at the Minterbro pier:

January 1997 – 7 vessels

February 1997 – 3 vessels

March 1997 – 4 vessels

April 1997 – 2 vessels16

Subsequently, Minterbro decided to rehabilitate the pier on August 1, 1997 and, on the same day, sent a letter to the Department of Labor and Employment (DOLE) to inform DOLE of Minterbro’s intention to temporarily suspend arrastre and stevedoring operations. Minterbro alleged that, despite the condition of the pier, it was able to service 16 vessels from January 1997 to April 13, 1997 and it was ready and awaiting vessels to

dock at the pier from April 14, 1997 to July 31, 1997 during which Minterbro’s office, motor pool, and field personnel continued operations.17

On November 4, 1997, respondent Nagkahiusang Mamumuo sa Minterbro-Southern Philippines Federation of Labor composed of respondents Manuel Abellana, et al., employees of Minterbro working on a rotation basis and employed for arrastre and stevedoring work depending on the actual requirements of the vessels serviced by Minterbro, filed a complaint for payment of separation pay against Minterbro and De Castro in the Regional Arbitration Branch No. XI at Davao City of the National Labor Relations Commission (NLRC).18

Meanwhile, on December 8, 1997, Minterbro sent a letter19 to the PPA the pertinent portion of which reads:

This is to advise you that we have completed the repair of our pier which we did inspite of the earlier certification issued by the Davao Engineering Works & Services, that after the latter carried out the underwater/above water ocular inspection and survey of the pier facilities, said pier can still be used for loading and unloading of cargoes provided that the docking procedures should be properly carried out.

In view of the foregoing, may we request your office to render your own ocular inspection and survey for the issuance of the corresponding certification on its readiness to accept vessels for loading and unloading operations.

At the initial hearing before the Labor Arbiter on December 10, 1997, Minterbro and De Castro informed the union and its members that the rehabilitation of the pier had been completed and that they were just awaiting clearance to operate from the PPA. In a manifestation dated December 12, 1997, the union and its members stated, among others, that "they x x x are not anymore amenable to going back to work with [the] company, for the reason that the latter has not been operating for more than six (6) months, even if it resumes operation at a later date and would just demand that they be given Retirement or Separation Pay, as the case may be."20

On December 17, 1997, the PPA issued the following Certification21 declaring Minterbro’s pier as safe and ready for operation:

C E R T I F I C A T I O N

This is to certify that the repair and rehabilitation of Minterbro Wharf owned by Mindanao Terminal & Brokerage Services, Inc. located at Tibungco, Ilang, Davao City was inspected by our Engineering Services Division office on Dec. 10, 1997 and was found to be totally completed. The structural design and the supervision of work was undertaken by Bow C. Moreno, Civil Structural Design Engineering Office of San Andres St., Manila.

Further, as certified by the Structural Consultants of the Contractor, copy attached, the Port [M]anagement Office of Davao, Philippine Ports Authority has now declared Minterbro Wharf as safe and ready for operationalization.

This certification is issued for whatever purpose the Mindanao Terminal & Brokerage Services, Inc. will deem necessary.

Done in the City of Davao, Philippines, this 17th day of December 1997.

(Sgd.)MANUEL C. ALBARRACINPort Manager

Thereafter, MV Uranus was serviced at the Minterbro pier on December 22 to 28, 1997.22

On June 15, 1998, the Labor Arbiter rendered a Decision23 with the following decretal portion:

WHEREFORE, judgment is hereby rendered dismissing the complaint for separation pay for lack of merit and declaring the ninety-five (95) complainants named in the final list filed on February 3, 1998 to have lost their employment status for abandonment of work; and

Declaring complainants Roberto D. Estrera, Sr., Gorgonio Huraño, Jeremias Molato and Constancio Albiso, who have formally withdrawn their complaint, not to have lost their employment status and ordering respondents to accept them back to their former positions without loss of seniority rights and other privileges.24

Aggrieved, the union members appealed the Labor Arbiter’s Decision to the NLRC. In a Decision25 dated September 30, 1998, the NLRC modified the Decision of the Labor Arbiter in this wise:

In denying complainants their separation benefits, the Executive Labor Arbiter considered the period embraced within August 1, 1997, when respondent formally informed [the] DOLE of the temporary cessation of operation up to December 16, 1997, when respondent was issued a certificate declaring the wharf safe and ready for operations and December 22-28, 1997, when the respondent company serviced a vessel MV Uranus which obviously did not exceed six (6) months, thus denying complainants their monetary benefits. Incidentally, the period reckoned is incorrect.

It is admitted by respondent that the last vessel that was serviced was on April 11-13, 1997 (MV Bosco Polar), and after the rehabilitation of the wharf, on December 22-28, 1997 (MV Uranus) was served, thereby covering a period of more or less eight months.

Respondent cannot conceal or make the August 1, 1997 formal notice to DOLE or the alleged continued operations of its office personnel until July 31, 1997, an excuse to evade the mandated six (6) months period (Article 286 of the Labor Code, as amended), since the issue at bar concerns the complainants who became jobless and penniless because of the December 28, 1996 accident.

With the unrefuted peculiar circumstances, complainants are therefore entitled to their claims for separation benefits.

Moreover, complainants cannot be considered to have abandoned their jobs for the reason that it took respondent a long period [of] time to rehabilitate the wharf causing uncertainties in their minds which culminated in the filing of the case.

WHEREFORE, the assailed Decision is Modified. Respondents are ordered to pay complainants their separation benefits to be assessed and computed during the post arbitral stage of the proceedings below upon finality of the herein Decision.26

In a Resolution27 dated January 25, 1999, the NLRC maintained its Decision and denied the motion for reconsideration of Minterbro and De Castro.

Thereafter, Minterbro and De Castro took the NLRC and the members of the union to task by filing a Petition forCertiorari28 in the Court of Appeals asserting that the NLRC acted with grave abuse of discretion in ordering Minterbro and De Castro to pay the union members separation pay under Article 286 of the Labor Code. This was docketed as CA-G.R. SP No. 51656.

In a Decision dated April 21, 2006, the Court of Appeals dismissed the petition. It ruled that the seasonal nature of the services rendered by the members of the union did not negate their status as regular employees and that the temporary suspension of Minterbro’s operations should be reckoned from April 14, 1997, the day no more vessel was serviced at Minterbro’s pier after MV Bosco Polar was serviced at the said pier on April 11 to 13, 1997. Thus, pursuant to Article 286 of the Labor Code and its application in Sebuguero v. National Labor Relations Commission,29 the NLRC correctly ordered Minterbro and De Castro to pay the union members their separation benefits as their temporary lay-off exceeded six months.

In a Resolution dated August 7, 2006, reconsideration was denied as the Court of Appeals found no reason to reverse its decision. Hence, this petition.

Petitioners Minterbro and De Castro insist that the Court of Appeals erred when it ruled that the union members are entitled to separation pay under Article 286 of the Labor Code. Petitioners concede that, as enunciated inSebuguero, where a temporary lay-off lasts longer than six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law.30 However, according to petitioners, the lack of arrastre and stevedoring services in the pier after the servicing of MV Bosco Polar on April 11 to 13, 1997 was a result of Del Monte’s decision, for reasons unknown to Minterbro, to suddenly stop docking its vessels at Minterbro’s pier. And while there were no arrastre and stevedoring services for lack of any vessel to service, Minterbro’s office, motorpool and field personnel continued their work until July 31, 1997, or a day before Minterbro filed the required notices with the DOLE on August 1, 1997. The decision to rehabilitate the pier is a business decision and had nothing to do with the unfounded complaint of DPAI in January 1997 about the condition of the pier.31

For their part, the union members contend that the petition is flawed as it presents a question of fact, not of law. In particular, the determination of the correct reckoning date of the temporary suspension of Minterbro’s business, whether April 14, 1997 or August 1, 1997, involves a review of facts and the respective evidence of the parties, which is prohibited under the Rules of Court. Moreover, the NLRC and the Court of Appeals have already fully discussed the matter and both came to the same conclusion, that Minterbro and De Castro are liable to the union members for separation pay. The factual findings of the NLRC and the Court of Appeals should therefore be accorded respect and conclusiveness.32

The issue thus presented in this petition is whether the union members/employees were deprived of gainful employment on April 14, 1997 after the last vessel was serviced prior to the repair of the pier or on August 1, 1997 when repair works on the pier were commenced. Resolution of this issue will determine whether petitioners are liable for separation pay for effectively dismissing the union members through their prolonged lay-off of more than six months.

Petitioners insist on August 1, 1997 as the reckoning date and rely on Article 286 of the Labor Code. On the other hand, the union members assert that the reckoning date is April 14, 1997 and invoke Sebuguero.

At the outset, the Court notes that the petition is fatally defective. The issue it presents is factual, not legal.

There is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts. There is a question of fact if the issue invites a review of the evidence presented.33

In this case, this Court is effectively being called upon to determine who among the parties is asserting the truth regarding the date the union members were laid-off. Such venture requires the evaluation of the respective pieces of evidence presented by the parties as well as the consideration of "the existence and relevancy of specific surrounding circumstances as well as their relation to each other and to the whole, and the probability of the situation."34 However, the nature of petitioners’ action, a petition for review under Rule 45 of the Rules of Court, renders that very action inappropriate for this Court to take. Only questions of law should be raised in a petition for review under Rule 45.35 While there are recognized exceptions to that rule, this case is not among them.

Moreover, this Court finds neither compelling reason nor substantial argument that will warrant the reversal of the NLRC Decision which has been affirmed by the Court of Appeals.

The NLRC and the Court of Appeals found that the union members/employees were not given work starting April 14, 1997 and that more than six months have elapsed after the union members were laid off when the next vessel was serviced at the Minterbro pier on December 22 to 28, 1997.

Minterbro claims that it had no hand whatsoever in the lack of work for the union members at the pier from April 14, 1997. It stated that it did not even have any idea as to why Del Monte suddenly stopped docking its vessels at Minterbro’s pier. Nonetheless, as between petitioners and the union members, it is petitioners who had the right to demand from Del Monte to perform its obligations under the Contract for Use of Pier. Petitioners’ right to compel Del Monte to comply with its contractual obligations becomes stronger in view of the following undertaking of Del Monte:

October 7, 1988

Atty. Eliodoro C. CruzVice-PresidentMindanao Terminal and Brokerage Service, Inc.Davao City

Dear Atty. Cruz:

With reference to our "Contract for Use of Pier", dated 3 October, 1988, (Doc. No. 348, No. 71, Book XXVI of Notary Public D. A. Soriano of Makati, Metro Manila), we confirm our commitment to maximize the use of the [Minterbro] Pier at Ilang, Davao City and not to dock any of the vessels of our principal elsewhere for as long as they can be accommodated therein as per your commitment in the contract and in the customary and usual manner and for the purpose which they are intended to serve.

If this reflects our understanding, please sign below and return to us our copy of this letter. This will serve as our supplemental agreement on the matter.

Very truly yours,

(Sgd.)JUAN F. SIERRAPresident

CONFORME:

Mindanao Terminal andBrokerage Service, Inc.

By:

(Sgd.)ELIODORO C. CRUZVice-President36 (Emphasis supplied.)

Unfortunately, petitioners failed to show any effort on their part to hold Del Monte to its end of the bargain even though the union members were being forced to be laid off. Effectively, when petitioners allowed Del Monte to abandon its agreement with Minterbro for eight months covering the middle of April 1997 until the latter part of December 1997 without holding Del Monte accountable for such breach, petitioners consented to Del Monte’s unexplained action and the prejudice it caused to the union members.

Moreover, the communications between Minterbro and the PPA during the relevant period are telling. Among these is a letter dated February 3, 1997 from the PPA:

03 February 1997

MR. FORTUNATO V. DE CASTRO, SR.General ManagerMindanao Terminal & Brokerage Services, Inc.Port Area, Sasa, Davao City

Dear Mr. de Castro,

We had been furnished copy of the communications of the Davao Pilot’s, Association dated January 6 and 23, 1997 with the same subject on weakened pier structure of your port facility.

On 22 January 1997, a PMO team was dispatched to conduct an ocular inspection. The related report is herewith furnished for your perusal.

Any report or observation of this nature from port users is considered critical and this should be investigated and verified for the safety of all parties concerned. We therefore advise your company to conduct a thorough investigation of the underdeck and underwater structures of the pier and initiate corrective measures if necessary.

Please advise this end of your action/s undertaken.

Very truly yours,

(Sgd.)MANUEL C. ALBARRACIN37 (Emphasis supplied.)

Another material document is the letter dated December 8, 1997 from Minterbro to the PPA wherein petitioners requested the PPA to confirm the repair and rehabilitation of the Minterbro pier and issue a certification on the pier’s "readiness to accept vessels for loading and unloading operations." 38

Petitioners exert much effort to dissociate themselves from Del Monte’s act of stopping its vessels from docking at Minterbro’s pier beginning April 14, 1997. They also went to great lengths not only to refute the complaint of DPAI that Minterbro’s pier is damaged and defective but also to establish that such allegedly baseless claims have no connection with the decision of the vessels not to dock at the Minterbro pier. The above communications, however, negate petitioners’ contention. As early as February 1997, the PPA had already advised petitioners that the observation of DPAI that the pier had

abnormal vibrations "is considered critical."39And in the Petition for Certiorari40 and Memorandum41 which they filed in the Court of Appeals, petitioners alleged as follows:

12. MINTERBRO sent copies of the Survey Report No. 390/97 to the PPA, the [Davao Pilots] Association and Del Monte Philippines, Inc. to inform them that the observation/complaint of the [Davao Pilots] Association was clearly unfounded and without any factual basis. Despite receipt of the Survey Report, Del Monte did not dock any of its vessels at MINTERBRO’s pier.42 (Emphasis supplied.)

The above statement shows that petitioners were fully aware that Del Monte’s decision to stop docking any of its vessels at the Minterbro pier was basically related to the issue of the condition of the pier. Moreover, petitioners may not rightfully shift the blame to Del Monte in view of the following provision of their Contract for Use of Pier:

3. MINTERBRO shall maintain the pier in good condition suitable for the loading and unloading of [Del Monte] or [Del Monte]-related cargoes[.]43 (Emphasis supplied.)

If petitioners really believed their claim that the pier’s condition was still suitable for normal operations even without having undertaken the repairs which it took starting August 1997, petitioners could have simply submitted Survey Report No. 390/97 to the PPA and requested for a certification similar to the PPA certification dated December 17, 1997. Yet, they did not. They had to rehabilitate the pier first before they requested for the certification. Furthermore, the very Survey Report No. 390/97 that petitioners use to support their claim that the claim of DPAI as to the condition of the pier is totally baseless is not completely true. As quoted by petitioners, the Survey Report states that the Minterbro pier "can still be used for loading and unloading of cargoes provided, however, that docking procedures were properly carried out."44 This can be reasonably taken to mean as saying that the operations at the pier should now be carried out in a mistake free manner because one wrong move may prove to be disastrous. That means that every time arrastre and stevedoring services are conducted at the pier, a sword would be hanging over the heads of those working at the pier. Moreover, the said Survey Report expressly directs that "immediate attention should be given to the Pier damages in order to prevent further deterioration of its structural members."45 This directive contradicts petitioners’ stance that the Minterbro pier was in good condition even prior to its repair and rehabilitation in August 1997. Thus, the Court of Appeals did not err when it made the following observations:

In view of the inspections and surveys conducted on the pier, it could not have failed to dawn upon petitioners that no vessel would take the risk of docking in their pier because of its damaged condition.46

To Our mind, both petitioners and the Labor Arbiter failed to realize that what had been indisputably established thereby was that petitioners’ pier was in critical condition, i.e., no longer viable for docking as early as May 1996 in spite of which petitioners decided to make the necessary repairs only in August [1996] or four months thereafter.

x x x Petitioners had already been amply notified of the unstable condition of their pier which required prompt corrective action for the safety of both the facilities and the lives of the laborers therein, so that petitioners should not have insisted that their pier was still in good shape.

x x x.47

In sum, petitioners’ inaction on what they allege to be the unexplained abandonment by Del Monte of its obligations under the Contract for the Use of Pier coupled with petitioners’ belated action on the damaged condition of the pier caused the absence of available work for the union members. As petitioners were responsible for the lack of

work at the pier and, consequently, the layoff of the union members, they are liable for the separation from employment of the union members on a ground similar to retrenchment. In this connection, this Court has ruled:

A lay-off, used interchangeably with "retrenchment," is a recognized prerogative of management. It is the termination of employment resorted to by the employer, through no fault of nor with prejudice to the employees, during periods of business recession, industrial depression, seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program, or the introduction of new methods or more efficient machinery, or of automation. Simply put, it is an act of the employer of dismissing employees because of losses in operation of a business, lack of work, and considerable reduction on the volume of his business, a right consistently recognized and affirmed by this Court. The requisites of a valid retrenchment are covered by Article 283 of the Labor Code.

When a lay-off is temporary, the employment status of the employee is not deemed terminated, but merely suspended. Article 286 of the Labor Code provides, in part, that the bona fide suspension of the operation of the business or undertaking for a period not exceeding six months does not terminate employment.48 (Citation omitted.)

When petitioners failed to make work available to the union members for a period of more than six months starting April 14, 1997 by failing to call the attention of Del Monte on the latter’s obligations under the Contract of Use of Pier and to undertake a timely rehabilitation of the pier, they are deemed to have constructively dismissed the union members. As this Court held in Valdez v. National Labor Relations Commission49:

Under Article 286 of the Labor Code, the bona fide suspension of the operation of a business or undertaking for a period not exceeding six months shall not terminate employment. Consequently, when the bona fidesuspension of the operation of a business or undertaking exceeds six months, then the employment of the employee shall be deemed terminated. By the same token and applying said rule by analogy, if the employee was forced to remain without work or assignment for a period exceeding six months, then he is in effect constructively dismissed. (Citation omitted.)

In Sebuguero,50 the Court ruled on a case regarding layoff or temporary retrenchment, which subsequently resulted to the separation from employment of the concerned employee as it lasted for more than six months, as follows:

Article 283 of the Labor Code which covers retrenchment, reads as follows:

Art. 283. Closure of establishment and reduction of personnel. – The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by servicing a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of 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 one (I) month pay or at least one-half ( 1/2) month pay for every year of service, whichever is higher.1âwphi1 A fraction of at least six (6) months shall he considered one (I) whole year.

This provision, however, speaks of a permanent retrenchment as opposed to a temporary lay-off as is the case here. There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a period or duration therefor. These employees cannot forever be temporarily laid-off. To remedy this situation or fill the hiatus, Article 286 may be applied but only by analogy to set a specific period that employees may remain temporarily laid-off or in floating status. u Six months is the period set by law that the operation of a business or undertaking may he suspended thereby suspending the employment of the employees concerned. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. After six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law, and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus he liable for such dismissal. 51 (Citation omitted.)

As the Court of Appeals did not err in ruling that Sebuguero applies to this case, the consequences arrived at inSebuguero also apply. Lay-off is essentially retrenchment and under Article 283 of the Labor Code a retrenched employee is entitled to separation pay equivalent to one (1) month salary or one-half (12) month salary per year of service, whichever is higher.

WHEREFORE, the petition 1s hereby DENIED. The Executive Labor Arbiter of the Regional Arbitration Branch No. XI at Davao City of the National Labor Relations Commission is DIRECTED to ensure the prompt implementation of this Decision.

SO ORDERED.

TERESITA J. LEONARDO-DE CASTROAssociate Justice

WE CONCUR:

LUCAS P. BERSAMINAssociate Justice

MARTIN S. VILLARAMA, JR.Associate Justice

JOSE P. PEREZ*

Associate Justice

BIENVENIDO L. REYESAssociate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

TERESITA J. LEONARDO-DE CASTROAssociate JusticeActing Chairperson, First Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article 1 VIII of the Constitution and the Division Acting Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

ANTONIO T. CARPIOSenior Associate Justice(Per Section 12, R.A. 296,The Judiciary Act of 1948, as amended)

Footnotes

* Per Special Order No. 1385 dated December 1l, 2012

1 Under Rule 45 of the Rules of Court.

2 Rollo, pp. 23-38; penned by Associate Justice Rornulo V. Rorja with Associate .Justices Myrna Dimaranan Vidal and Ramon R. Ci<lrcia, concurring.

3 ld. at 40-41.

4 ld. at 25.

5 CA rol/o, pp. 29-31.

6 Rollo, p. 26.

7 Id.

8 Id. at 42.

9 Id. at 44-45.

10 Id. at 46-47.

11 Id. at 27.

12 Id. at 48.

13 Id. at 27.

14 Id. at 50-55.

15 Id. at 53.

16 Id. at 83; Decision dated September 30, 1998 in NLRC CA No. M-004178-98 in Case No. RAB-11-11-01057-97 of the Labor Arbiter.

17 Id. at 27-28.

18 Id. at 28.

19 Id. at 67.

20 Id. at 28-29.

21 Id. at 69.

22 Id. at 79; Decision dated June 15, 1998 in Case No. RAB-11-11-01057-97 of the Labor Arbiter.

23 Id. at 73-80.

24 Id. at 79-80.

25 Id. at 81-85.

26 Id. at 84-85.

27 Id. at 86-87.

28 CA rollo, pp. 2-20.

29 G.R. No. 115394, September 27, 1995, 248 SCRA 532.

30 Rollo, p. 13.

31 Id. at 12-16.

32 Id. at 104-106.

33 Republic v. Malabanan, G.R. No. 169067, October 6, 2010, 632 SCRA 338, 345.

34 Cosmos Bottling Corporation v. Nagrama, Jr., G.R. No. 164403, March 4, 2008, 547 SCRA 571, 582-583, citing Republic v. Sandiganbayan, 426 Phil. 104, 110 (2002).

35 See Section 1, Rule 45.

36 CA rollo, p. 28.

37 Rollo, p. 48.

38 Id. at 67.

39 Id. at 48.

40 CA rollo, pp. 2-20.

41 Id. at 178-198.

42 Id. at 181.

43 Id. at 30.

44 Rollo, p. 53.

45 Id.

46 Id. at 34.

47 Id. at 41.

48 De la Cruz v. National Labor Relations Commission, 335 Phil. 932, 939-940 (1997).

49 349 Phil. 760, 765-766 (1998); De Guzman v. National Labor Relations Commission, G.R. No. 167701, December 12, 2007, 540 SCRA 21, 32.

50 Sebuguero v. National Labor Relations Commission, supra note 29.

51 ld. at 542-544.

PULP AND PAPER, INC. v. NLRC (1997)

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

 

G.R. No. 116593 September 24, 1997

PULP AND PAPER, INC., petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION AND EPIFANIA ANTONIO, respondents.

 

PANGANIBAN, J.:

In the absence of wage rates specially prescribed for piece-rate workers, how should the separation pay and salary differential of such workers be computed?

Statement of the Case

This is the main question raised in the instant petition for certiorari, filed under Rule 65 of the Rules of Court, to set aside and annul National Labor Relations Commission's 1 Decision 2 promulgated on September 24, 1993 and Resolution 3 dated December 16, 1993 in NLRC NCR CA No. 004041-92. 4 Public respondent's assailed Decision affirmed in toto Labor Arbiter Eduardo J. Carpio's decision 5 dated October 6, 1992, which disposed thus: 6

IN VIEW OF ALL THE FOREGOING, judgement [sic] is hereby rendered:

1. dismissing the complaint for illegal dismissal for lack of merit;

2. ordering respondent Pulp and Papers Distributors Inc. to pay complainant Efipania (sic) Antonio the sum of P49.088.00 representing her separation pay; and

3. ordering respondent to pay the complainant the sum of P31,149.56 representing the underpayment of wages.

4. dismissing all other issues far lack of merit.

The assailed Resolution denied petitioner's motion for reconsideration for lack of merit.

The Facts

The facts as found by the labor arbiter are as follows: 7

A case of illegal dismissal and underpayment of wages [was] filed by MS. EPIFANIA ANTONIO [private respondent herein] against PULP AND PAPER DISTRIBUTORS INC., [petitioner herein] . . . .

In filing the present complaint, complainant in her position paper alleges that she was a regular employee of the . . . corporation having served thereat as Wrapper sometime in September 1975. On November 29, 1991, for unknown reasons, she was advised verbally of her termination and was given a prepared form of Quitclaim and Release which she refused to sign. Instead she brought the present complaint for illegal dismissal.

In charging the [herein petitioner] of underpayment of wages, complainant in the same position paper alleges that, rarely during her employment with the respondent she received her salary, a salary which was in accordance with the minimum wage law. She was not paid overtime pay, holiday pay and five-day service incentive leave pay, hence she is claiming for payments thereof by instituting the present case.

Respondent on the otherhand [sic] denied having terminated the services of the complainant and alleges inter alia that starting 1989 the orders from customers became fewer and dwindled to the point that it is no longer practical to maintain the present number of packer/wrappers. Maintaining the same number of packers/wrappers would mean less pay because the work allocation is no longer the same as it was. Such being the case, the respondent has to reduce temporarily the number of packers/wrappers. Complainant was among those who were temporarily laid-off from work. Complainant last worked with the company on June 29, 1991.

As regards complainant's allegation that on November 29, 1991, she was forced to sign a quitclaim and release by the respondent, the latter clarified that considering that five months from the time the complainant last worked with the company, the management decided to release the complainant and give her a chance to look for another job in the meantime that no job is available for her with the company. In other words, complainant was given the option and considering that she did not sign the documents referred to as the Quitclaim and Release, the respondent did not insist, and did not terminate the services of the complainant. It was just surprise [sic] to receive the present complaint. In fact, respondent added that the reason why the complainant was called on November 29, 1991 was not to work but to receive her 13th month pay of P636.70 as shown by the voucher she signed (Annex-A, Respondent).

As regards the claim of the complainant for underpayment, respondent did not actually denied (sic) the same but give [sic] the reservation that should the same be determined by this Office it is willing to settle the same considering the fact that complainant herein being paid by results, it is not in a proper position to determine whether the complainant was underpaid or not.

The Issues

Petitioner couched the main issue in this wise: 8

Did the Public Respondent NLRC act correctly in affirming in toto the decision rendered by the labor arbitration branch a quo in NLRC NCR Case no. 00-01-00494-92?

While it expressly admits that private respondent is entitled to separation pay, petitioner raises nonetheless the following queries: "(a) Are the factors in determining the amount

of separation pay for a 'piece-rate worker' the same as that of a 'time-worker'? (b) Is a worker, who was terminated for lack of work, entitled to separation pay at the rate of one-month's pay for every year of service?" 9 The petition is based on the following "grounds":

I

Public Respondent NLRC committed grave abuse of discretion and serious reversible error when it affirmed in toto the award of separation pay in favor of private respondent, without bases in fact and in law.

II

Public Respondent NLRC committed grave abuse of discretion and serious reversible error when it affirmed in toto the award of underpayment in favor of private respondent, without bases in fact and in law.

The Public Respondent's Ruling

In dismissing the appeal of petitioner, public respondent reasoned: 10

It is true that all the above circumstances cited by the [herein petitioner] are not present in the case at bar, hence, separation pay based on those circumstances is not owing to the [herein private respondent]. However, it is quite obvious that [petitioner] missed the legal and factual basis why separation pay was awarded by the Labor Arbiter. In the first place, the [petitioner] admits that the complainant-appellee was temporarily laid off on June 29, 1991. This means that there was a temporary suspension of employer-employee relationship between the appellant and the appellee. Lay-off is a temporary termination initiated by the employer, but without prejudice to the reinstatement or recall of the workers who have been temporarily separated. The reasons for laying off employees are varied: lack of work, shutdown for repairs, business reverses, and the like. Always, however, there is the expectation that the employees who have been laid off will be recalled or rehired. This situation is governed by Rule I, Section 12, of Book VI of the Implementing Rules and Regulations of the Labor Code, which provides:

Sec. 12. Suspension of Relationship. — The employer-employee relationship shall be deemed suspended in case of suspension of operation of the business or undertaking of the employer for a period not exceeding six (6) months . . . .

From June 29, 1991 up to the time the complainant-appellee filed her complaint on January 21, 1992, there was more than six (6) months that already elapse (sic) and yet, the appellant failed to recall the appellee to let her resume working. If the appellant was not yet in a possession to recall or reinstate the appellee after six (6) months, up to when shall appellant let her keep in waiting. Of course, she cannot be allowed to wait interminably. That is the reason why the law imposes a period of six (6) months within which the resumption of employer-employee relationship must be resumed in temporary lay-offs. Otherwise, any employer can, in the guise of a temporary lay-off, close its doors to an employee for more than six months and their claim that the lay-off has ripened into termination and try to get away from any liability. The award of separation pay is hereby declared in order.

On the second issue raised by the (petitioner) on appeal, We are also for the Labor Arbiter's ruling upholding the appellee's right to salary differential in the amount computed.

The argument interposed by the [petitioner] based on Art. 101 of the Labor Code, in relation to Rule VII, Section (8), Book III of the Omnibus Implementing Rule and Regulations, will not lie in the case at bar. In the first place, pursuant to the provision of law cited by the [petitioner], all time and motion studies, or any other schemes or devices to determine whether the employees paid by results are being compensated in accordance with the minimum wage requirements, shall only be approved on petition of the interested employer. Thus, it is the fault of the [petitioner] on whose initiative, a time and motion study or any other similar scheme is not yet available in its establishment.

The Court's Ruling

The appeal is not meritorious.

First Issue: Computation of Minimum Wage

Petitioner argues that private respondent was a piece-rate worker and not a time-worker. Since private respondent's employment as "(p)acker/(w)rapper" in 1975 until her separation on June 29, 1991, "(h)er salary depended upon the number of 'reams of bond paper' she packed per day." Petitioner contends that private respondent's work "depended upon the number and availability of purchase orders from customers." Petitioner adds that, oftentimes, "packers/wrappers only work three to four hours a day." Thus, her separation pay "must be based on her latest actual compensation per piece or on the minimum wage per piece as determined by Article 101 of the Labor Code, whichever is higher, and not on the daily minimum wage applicable to time-workers." 11

Compensation of Pieceworkers

In the absence of wage rates based on time and motion studies determined by the labor secretary or submitted by the employer to the labor secretary for his approval, wage rates of piece-rate workers must be based on the applicable daily minimum wage determined by the Regional Tripartite Wages and Productivity Commission. To ensure the payment of fair and reasonable wage rates, Article 101 12 of the Labor Code provides that "the Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other nontime work." The same statutory provision also states that the wage rates should be based, preferably, on time and motion studies, or those arrived at in consultation with representatives of workers' and employers' organizations. In the absence of such prescribed wage rates for piece-rate workers, the ordinary minimum wage rates prescribed by the Regional Tripartite Wages and Productivity Boards should apply. This is in compliance with Section 8 of the Rules Implementing Wage Order Nos. NCR-02 and NCR-02-A — the prevailing wage order at the time of dismissal of private respondent, viz: 13

Sec. 8. Workers Paid by Results. — a) All workers paid by results including those who are paid on piece work, takay, pakyaw, or task basis, shall receive not less than the applicable minimum wage rates prescribed under the Order for the normal working hours which shall not exceed eight (8) hours work a day, or a proportion thereof for work of less than the normal working hours.

The adjusted minimum wage rates for workers paid by results shall be computed in accordance with the following steps:

1) Amount of increase in AMW x 100 = % increase Previous AMW

2) Existing rate/piece x % increase = increase in rate/piece;

3) Existing rate/piece + increase in rate/piece = adjusted rate/piece.

b) The wage rates of workers who are paid by results shall continue to be established in accordance with Art. 101 of the Labor Code, as amended and its implementing regulations. (Emphasis supplied.)

On November 29, 1991, private respondent was orally informed of the termination of her employment. Wage Order No. NCR-02, in effect at the time, set the minimum daily wage for non-agricultural workers like private respondent at P118.00. 14 This was the rate used by the labor arbiter in computing the separation pay of private respondent. We cannot find any abuse of discretion, let alone grave abuse, in the order of the labor arbiter which was later affirmed by the NLRC.

Moreover, since petitioner employed piece-rate workers, it should have inquired from the secretary of labor about their prescribed specific wage rates. In any event, there being no such prescribed rates, petitioner, after consultation with its workers, should have submitted for the labor secretary's approval time and motion studies as basis for the wage rates of its employees. This responsibility of the employer is clear under Section 8, Rule VII, Book III of the Omnibus Rules Implementing the Labor Code:

Sec. 8. Payment by result. (a) On petition of any interested party, or upon its initiative, the Department of Labor shall use all available devices, including the use of time and motion studies and consultations with representatives of employers' and workers' organizations, to determine whether the employees in any industry or enterprise are being compensated in accordance with the minimum wage requirements of this Rule.

(b) The basis for the establishment of rates for piece, output or contract work shall be the performance of an ordinary worker of minimum skill or ability.

(c) An ordinary worker of minimum skill or ability is the average worker of the lowest producing group representing 50% of the total number of employees engaged in similar employment in a particular establishment, excluding learners, apprentices and handicapped workers employed therein.

(d) Where the output rates established by the employer do not conform with the standards prescribed herein, or with the rates prescribed by the Department of Labor in an appropriate order, the employees shall be entitled to the difference between the amount to which they are entitled to receive under such prescribed standards or rates and that actually paid them by employer.

In the present case, petitioner as the employer unquestionably failed to discharge the foregoing responsibility. Petitioner did not submit to the secretary of labor a proposed wage rate — based on time and motion studies and reached after consultation with the representatives from both workers' and employers' organization — which would have applied to its piece-rate workers. Without those submissions, the labor arbiter had the duty to use the daily minimum wage rate for non-agricultural workers prevailing at the time of private respondent's dismissal, as prescribed by the Regional Tripartite Wages and Productivity Boards. Put differently, petitioner did not take the initiative of proposing an appropriate wage rate for its piece-rate workers. In the absence of such wage rate, the labor arbiter cannot be faulted for applying the prescribed minimum wage rate in the computation of private respondent's separation pay. In fact, it acted and ruled correctly and legally in the premises.

It is clear, therefore, that the applicable minimum wage for an eight-hour working day is the basis for the computation of the separation pay of piece-rate workers like private respondent. The computed daily wage should not be reduced on the basis of unsubstantiated claims that her daily working hours were less than eight. Aside from its

bare assertion, petitioner presented no clear proof that private respondent's regular working day was less than eight hours. Thus, the labor arbiter correctly used the full amount of P118.00 per day in computing private respondent's separation pay. We agree with the following computation: 15

Considering therefore that complainant had been laid-off for more than six (6) months now, we strongly feel that it is already reasonable for the respondent to pay the complainant her separation pay of one month for every year of service, a fraction of six (6) months to be considered as one whole year. Separation pay should be computed based on her minimum salary as will be determined hereunder.

Separation pay 1 month = 16 yearsP118.00 x 26 x 16 years = P49,088.00

The amount "P118.00" represents the applicable daily minimum wage per Wage Order Nos. NCR-02 and NCR-02-A; "26", the number of working days in a month after excluding the four Sundays which are deemed rest days; "16", the total number of years spent by private respondent in the employ of petitioner.

Second Issue: Computation of Separation Pay

Petitioner questions not only the basis for computing private respondent's monthly wage; it also contends that private respondent's separation pay should not have been computed at one month's pay for every year of service. Because private respondent should be considered retrenched, the separation pay should be "one month's pay or at least one/half (1/2) month pay for every year of service, whichever is higher, and not one (1) month's pay for every year of service as public respondent had ruled." 16

Petitioner misapprehended the ground relied upon by public respondent for awarding separation pay. In this case, public respondent held that private respondent was constructively dismissed, pursuant to Article 286 of the Labor Code which reads:

Art. 286. When employment not deemed terminated. — The bonafide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later that one (1) month from his resumption of operations of his employer or from his relief from the military or civic duty.

Petitioner failed to discern that public respondent, in finding that the services of private respondent were terminated, merely adopted by analogy the rule on constructive dismissal. Since private respondent was not reemployed within six (6) months from the "suspension" of her employment, she is deemed to have been constructively dismissed. 17 Otherwise, private respondent will remain in a perpetual "floating status." Because petitioner had not shown by competent evidence any just cause for the dismissal of private respondent, she is entitled to reinstatement 18 or, if this is not feasible, to separation pay equivalent to one (1) month salary for every year of service. Private respondent, however, neither asked for reinstatement 19 nor appealed from the labor arbiter's finding that she was not illegally dismissed; she merely prayed for the grant of her monetary claims. Thus, we sustain the award of separation pay made by public respondent, 20 for employees constructively dismissed are entitled to separation pay. Because she did not ask for more, we cannot give her more. We repeat: she appealed neither the decision of the labor arbiter nor that of the NLRC. Hence, she is not entitled to any affirmative relief.

Furthermore, we cannot sustain petitioner's claim that private respondent was retrenched. For retrenchment to be considered a ground for termination, the employer must serve a written notice on the workers and the Department of Labor and Employment at least one month before the intended date thereof. 21 Petitioner did not comply with this requirement.

Third Issue: Determination of Salary Differential

In light of the foregoing discussion, we must also dismiss petitioner's challenge to the computation of salary differential. As earlier observed, private respondent is entitled to the minimum wage prevailing at the time of the termination of her employment. The same rate of minimum wage, P118.00, should be used in computing her salary differential resulting from petitioner's underpayment of her wages. Thus, the labor arbiter correctly deducted private respondent's actually received wage of P60 a day from the prescribed daily minimum wage of P118.00, and multiplied the difference by 26 working days, and subsequently by 16 years, equivalent to her length of service with petitioner. Thus, the amount of P31,149.56 as salary differential. 22

Petitioner argues that "the work of the private respondent is seasonal, being dependent upon the availability of job-orders" and not "twenty-six (26) days a month." 23 Further, petitioner contends that private respondent herself admitted she was "a piece worker whose work [was] seasonal." 24

Contrary to the assertion of petitioner, neither the assailed Decision nor the pleadings of private respondent show that private respondent's work was seasonal. More important, petitioner utterly failed to substantiate its allegation that private respondent's work was seasonal. We observe that the labor arbiter based the computation of the salary differential on a 26-day month on the presumption that private respondent's work was continuous. In view of the failure of petitioner to support its claim, we must sustain the correctness of this computation.

WHEREFORE, premises considered, the petition is DISMISSED and the assailed Decision is AFFIRMED. Costs against petitioner.

SO ORDERED

Narvasa, C.J., Romero, Melo and Francisco, JJ., concur.

Footnotes

1 Second Division composed of Commissioner Rogelio I. Rayala, ponente, and Presiding Commissioner Edna Bonto-Perez and Commissioner Domingo H. Zapanta, concurring.

2 Rollo, pp. 40-47.

3 Ibid, pp. 54-55.

4 Formerly NLRC NCR 00-01-00494-92.

5 Rollo, pp. 25-29.

6 Ibid., pp. 28-29.

7 Ibid, pp. 25-27.

8 Ibid, pp. 8-9; some of the words in the text are originally in upper case.

9 Ibid, p. 9.

10 Ibid, pp. 44-46.

11 Ibid, pp. 11-13; emphasis omitted.

12 The provision reads:

Art. 101. Payment by results. — (a) The Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other nontime work, in order to ensure the payment of fair and reasonable wage rates, preferably through time and motion studies or in consultation with representatives of workers' and employers' organizations.

13 Issued in pursuance of Section 5, Rule IV of the National Wages and Productivity Commission Rules of Procedure on Minimum Wage Fixing and took effect per Section 16 of the same Rules on January 8, 1991.

14 Section 4 of the Rules Implementing Wage Order Nos. NCR-02 and NCR-02-A.

15 Labor arbiter's decision, p. 4; rollo, p. 28.

16 Rollo, p. 15.

17 Manipon, Jr. vs. National Labor Relations Commission, 239 SCRA 451, 457, December 27, 1994; People's Security, Inc. vs. NLRC, 226 SCRA 146, 152-153, September 8, 1993; International Hardware, Inc. vs. NLRC, 176 SCRA 256, 261, August 10, 1989.

18 "Article 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." (As amended by Section 34 of RA 6715).

19 Rollo, pp. 142-145.

20 Toogue vs. National Labor Relations Commission, 238 SCRA 241, 246, November 18, 1994.

21 Article 283, Labor Code. See Catatista vs. NLRC, 247 SCRA 46, August 3, 1995.

22 From the computation of the labor arbiter, the following figures were utilized:

Underpayment Average (P60/day)

1/21/89 - 6/30/89 = 5.3 mos.P64.00 (minimum wage [RA 6640] effective December 14, 1987) - P60.00= P4.00 x 26 x 5.3/ mos.= P551.20

7/1/89 - 10/31/90 = 16.0/mos.P89.00 (minimum wage [RA 6727], effective July 1, 1989) - P60.00 =P29.00 x 26 x 16.0/mos.= P12,064.00

11/1/90 — 1/7/91 = 2.23/mos.P106.00 (minimum wage-Wage Order No. [NCR-01], effective November1, 1990) - P60.00 = P46.00 x 26 x 2.23/mos.= P15,773.68

11/23/91 - 11/29/91 = 0.2/mo.P118.00 (minimum wage-Wage Order No. [NCR-02], effective January 8,1991) - P100.00 = P18.00 x 26 x 0.2/mo. = P 93.60————Total P31,149.56.

23 Rollo, pp. 16-17.

24 Ibid., p. 155.

SAN MIGUEL v. NLRC (1998)

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

 

G.R. No. 125606 October 7, 1998

SAN MIGUEL CORPORATION, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, THIRD DIVISION, and FRANCISCO DE GUZMAN, JR.,respondents.

 

QUISUMBING, J.:

Before us is the petition for certiorari under Rule 65 of the Revised Rules of Court seeking on set aside the April 18, 1996 Decision 1 and the May 30, 1996 Resolution 2 of public respondent National Labor Relations Commission 3 in NLRC CA No. 009490-95. Said decision reversed the JUne 30, 1995 judgment 4 of the labor Artiber 5 in NLRC-NCR Case No. 00-08-05954-94, and oredered the reinstatement of private respondent as follows:

WHEREFORE, premises considered, the assiled decision is hereby VACATED and SET ASIDE. A new one is hereby entered ordering herein respondent San Miguel Corporation to reinstate complainant to his former position with full backwages from the time he was dismissed from work until he is actually reinstated without loss of seniority rights and ther benefits, less earning elsewhere, if any. 6

The facts on record show that in November 1990, private respondent was hired by petitioner as helper/bricklayer for a specific project, the repair and upgrading of furnace C at its Manila Glass Plant. His contract of employment provided that said temporary employment was for a specific period of approximately four (4) months.

On April 30, 1991, private respondent was able to complete the repair and upgrading fo furnace C. Thus, his services were terminated on that same day as there was no more work to be done. His employment contract also ended that day.

On May 10, 1991, private respondent was again hired for a specific job or undertaking, which involved the draining/cooling down of fuenace F and the emergency repair of furnace E. This project was for a specific period of approximately three (3) months.

After the complesion of this task, namely the draining/cooling down of furnace F and the emergency repair of furnace E, at the end of July 1991, private respondent's services were terminated.

On August 1, 1991, complainant saw his name in a Memorandum posted at the Company's Bulletin Board as among those who were considered dismissed.

On August 12, 1994, or after the lapse of more than three (3) years from the completion of the last undertaking for which private respondent wa hired, private respondent filed a complaint for illegal dismissal against petitioner, docketed as NLRC NCR Case No. 08-05954-94. 7

Both parties submitted their respective position papers, reply and rejoinder to labor Arbiter Felipe Garduque II. On JUne 30, 1995, he rendered the decision dismissing said complaint for lack of merit. In his ruling Labor Arbiter Garduque sustained petitioner's argument that private respondent was a project employee. The position of a helper does not fall within the classification of regular employees. Hence, complainant never attained regular employment status. Moreover, his silence for more than three (3) years without any reasonable explanation tended to weken his claim. 8

Not satisfied with the decision, private respondent interposed his appeal with public respondent NLRC on August 8, 1995 Petitioner filed its opposition thereto on August 29, 1995.

On April 18, 1996, public respondent NLRC, promulgated its assailed decision, reversing Labor Arbiter Garduque's decision. In its ruling, public respondent made the following findings:

Respondent scheme of subsequently re-hiring complainant after only ten (10) days from the last day of the expiration of his contract of employment for a specific period, and giving him again another contract of employment for another specific period cannot be countenanced. This is one way of doing violence to the employee's constitutional right to security of tenure under which even employees under probationary status are amply protected.

Under the circumstances obtaining in the instant case we find that herein complainant was indeed illegally dismissed. Respondent failed to adduce substantial evidence to prove that Francisco de Guzman, Jr. was dismissed for a just or authorized cause and after due process. The only reason they advance is that his contract of employment which is for a specific period had already expired. We, however, find this scheme, as discussed earlier, no in accordance with law. 9

Petitioner then moved for the reconsideration of said decision. This was however denied by public respondent on May 30, 1996 as it found no cogent reason, or patent or palpable error, that would warrant the disturbance of the decision sought to be reconsidered.

Hence, this petition, based on the following grounds:

1. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN FAILING TO RULE THAT PRIVATE RESPONDENT IS A PROJECT OR A FIXED PERIOD EMPLOYEE.

2. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN RULING THAT PETITIONER VIOLATED PRIVATE RESPONDENT'S RIGHT TO SECURITY OF TENURE AND THAT PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED.

3. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN RULING THAT LACHES OR SILENCE OR INACTION FOR AN UNREASONABLE LENGTH OF TIME DID NOT BAR PRIVATE RESPONDENT'S CLAIM.

Given these ground, this petition may be resolved once the following issues are clarified: (a) What is tile nature of the employment of private respondent, that of a project employee or a regular employee? and (b) Was he terminated legally or dismissed illegally?

As a general rule the factual findings and conclusions drawn by the National Labor Relations Commission are accorded not only great weight and respect, but even clothed with finality and deemed binding on the Court, as long as they are supported by substantial evidence. However, when such findings and those of the Labor Arbiter are in conflict, it behooves this Court to scrutinize the records of the case, particularly the evidence presented, to arrive at a correct decision. 10

Art. 280 of the Labor Code defines regular, project and casual employment as follows:

Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of one parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists.

The above mentioned provision reinforces the Constitutional mandate to protect the interest of labor as it sets the legal framework for ascertaining one's nature of employment, and distinguishing different kinds of employees. Its language manifests the intent to safeguard the tenurial interes of worker who may be denied the enjoyment of the rights and benefits due to an employee, regardless of the nature of his employment, by virtue of lopsided agreements which the economically powerful employer who can maneuver to keep an employee on a casual or contractual status for as long as it is convenient to the employer.

Thus, under Article 280 of the Labor Code, 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 even if the parties enter into an agreement tating otherwise. But considered not regular under said Article (1) the so-called "project employment" the termination of which is more or less determinable at the time of employment, such as those connected, which by its nature is only for one season of the year and the employment is limited for the duration of that season, such as the Christmas holiday season. Nevertheless, an exception to this exception is made: any employee who has rendered at least one (1) year of service, whether continuous or intermitent, with respect to the activity he performed and while such activity actually exists, must be deemed regular.

Following Article 280, whether one is employed as a project employee or not would depend on whether he was hired to carry out a "specific project or undertaking", the duration and scope of which were specified at the time his services were engaged for that particular project. 11 Another factor that may be undertaken by the employee in relation to the usual trade or business of the employer, if without specifying the duration and scope, the work to be undertaken is usually necessary or desirable in the usual business or trade of the employer, then it is regular employment and not just "project" must less "casual" employment.

Thus, the nature of one's employment does not depend on the will or word of the employer. Nor on the procedure of hiring and the manner of designating the employee, but on the nature of the activities to be performed by the employee, considering the employer's nature of business 12 and the duration and scope of the work to be done.

In ALU-TUCP vs NLRC, 13 this Court discussed two types of projects:

In the realm of business and industry, we note that project could refer to one or the other of at least two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct at separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. . . .

The term project could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times . . . (Underscoring supplied)

Public respondent NLRC's findings that herein private respondent is a regular employee is erraneous as the latter's employment clearly falls within the definition of "project employees" under paragraph 1 of Article 280 of the Labor Code and such is a typical example of the second kind of project employment in the ALU TUCP case discussed above

Note that the plant where private respondent was employed for only even months is engaged in the manufacturer of glass, an integral component of the packaging and manufacturing business of petitioner. The process of manufacturing glass requires a furnace, which has a limited operating life. Petitioner resorted to hiring project or fixed term employees in having said furnaces repaired since said activity is not regularly performed. Said furnaces are to be repaired or overhauled only in case of need and after being used continuously for a varying period of five (5) to ten (10) years.

In 1990, one of the furnaces of petitioner required repair and upgrading. This was a undertaking distinct and separate from petitioner's business of manufacturing glass. For this purpose, petitioner must hire workers to undertake the said repair and upgrading. Private respondent was, thus, hired by petitioner on November 28, 1990 on a "temporary status for a specific job" for a determined period of approximately four months

Upon completion of the undertaking, or on April 30, 1991, private respondent's services were terminated. A few days, thereafter, two of petitioner's furnaces required "draining/coolong down" and "emergency repair". Private respondent was again hired on May 10, 1991 to help in the new undertaking, which would take approximately three (3) months to accomplish. Upon completion of the second undertaking, private respondent's services were likewise terminated. 14 He was not hired a third time, and his two engagements taken together did not total one full year in order to qualify him as an exception to the exception falling under the cited proviso in the second paragraph of Art. 280 of the Labor Code.

Clearly, private respondent was hired for a specific project that was not within the regular business of the corporation. For petitioner is not engaged in the business of repairing furnaces. Although the activity was necessary to enable petitioner to continue manufacturing glass, the necessity therefor arose only when a particular furnace reached the end of its life or operating cycle. Or, as on the second undertaking, when a particular furnace required an emergency repair. In other words, the undertakings where private respondent was hired primarily as helper/bricklayer have specified goals and purpose which are fulfilled once the designated work was completed. Moreover, such undertakings were also identifiably separate and distinct from the usual, ordinary or regular business operations of petitioner, which is glass manufacturing. Thses undertakings, the duration and scope of which had been determined and made known to private respondent at the time of his employment clearly indicated the nature of his

employment as a project employee. Thus, his services were terminated legally after the completion of the project. 15

Public respondent NLRC's decision, if upheld, would amount to negating the distinction made in Article 280 of the Labor Code. It would shunt aside the rule that since a project employee's work defends on the availability of a project, necessarily, the duration of his employment is coterminous with the project to which he is assigned. 16It would become a burden for an employer to retain an employee and pay him his corresponding wages it there was no project for him to work on. Well to remember is the language of the Court in the case of Mamansag vs. NLRC: 17

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every dispute will be automatically decided in favor of labor. Management has also rights, which, as such, are entitled to respect and enforcement in the interest of fair play. Although the Supreme Court has inclined more often than not toward the worker and has upheld has cause in his conflicts with the employer, such favoritism has no blinded the Court to the rule that justice is in avery case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.

Considering that private respondent was a project employee whose employment, the nature of which he was fully informed, related to a specific project, work or undertaking, we find that the Labor Arbiter correctly ruled that said employment legally ended upon completion of said project. Hence the tremination of his employment was not tantamount to an illegal dismissal; and it was a grave abuse of discretion on public respondent's part to order his reinstatement by petitioner.

WHEREFORE the instant petition is hereby GRANTED. The decision of respondent NLRC is hereby REVERSED, and the judgment of the Labor Arbiter REINSTATED.

NO COSTS.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Vitug and Panganiban, JJ., concur.

Footnotes

1 Rollo, pp. 28-35.

2 Ibid., pp. 36-37, denying the motion for reconsideration of petitioner.

3 Third Division, composed by Comm. Ireneo B. Bernardo, ponente; Comm. Joaquin A. Tanodra, concurring, and Pres. Comm. Lourdes C. Javier, concurring and dissenting.

4 Rollo, pp. 38-41.

5 Labor Arbiter Felipe T. Garduque II.

6 Rollo, p. 34.

7 Rollo, p. 42.

8 Rollo, pp. 38-41.

9 Rollo, pp. 33-34.

10 Jimenz v. NLRC, 256 SCRA 84 (1996); Madlos v. NLRC, 254 SCRA 248 (1996); Tanala v. NLRC, 252 SCRA 314 (1996).

11 Ibid.

12 L.T. Datu and Co. Inc. v NLRC, 253 SCRA 440 (1996); Raycor Aircontrol Systems Inc. V. NLRC, 261 SCRA 589 (1996).

13 234 SCRA 678 (1994) at 68.

14 Rollo, p 307-308.

15 Cosmos Bottling Co. V. NLRC, 255 SCRA 358 (1996); De Ocampo v. NLRC, 186 SCRA 360 (1990).

16 Archbuild Masters and Construction, Inc. V. NLRC, 251 SCRA 483 (1995); Cartagenas v. Romago Electric Company, 177 SCRA 637 (1989), citing Sandoval Shipyards Inc. v. NLRC, 136 SCRA 674.

17 218 SCRA 722 (1993).

MANILA HOTEL v. CIR (1963)

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-18873             September 30, 1963

MANILA HOTEL COMPANY, petitioner, vs.COURT OF INDUSTRIAL RELATIONS, ET AL., respondents.

Government Corporate Counsel Simeon M. Gopengco and Trial Attorney Jose S. Gomez for petitioner.Gregorio E. Fajardo and Jesus Jaramillo for respondent Union.Mariano B. Tuason for respondent Court.

 

BAUTISTA ANGELO, J.:

          The Pines Hotel Employees Association filed on February 24, 1960 before the Court of Industrial Relations a petition praying, among other things, that its employees who were working at the Pines Hotel be paid additional compensation for overtime service rendered due to the exigencies of the business, as well as additional compensation for Sunday, legal holiday and nighttime work.

          The Manila Hotel filed its answer denying the material averments of the petition and alleging, among others, that if overtime service was rendered the same was not authorized but was rendered voluntarily, for the employees were interested in the "tips" offered by the patrons of the hotel.

          Presiding Judge Jose S. Bautista, to whom the petition was assigned, after trial, rendered judgment stating that the employees were entitled to the additional compensation demanded, including that for overtime work, because an employee who renders overtime service is entitled to compensation even if he rendered it without prior authority. A motion for reconsideration was filed on the ground that the order was contrary to law and the evidence, but the same was denied by the industrial court en banc.1awphîl.nèt

          In compliance with the order of the court, the Examining Division of the Court of Industrial Relations submitted a report in which it stated that the amount due the employees as additional compensation for overtime and night services rendered from January to December 31, 1958 was P32,950.69. The management filed its objection to the report on the ground that it included 22 names of employees who were not employees of the Pines Hotel at the time the petition was filed so that insofar as said employees are concerned the petition merely involves a money claim which comes under the jurisdiction of the regular courts. The trial judge, however, overruled this objection holding that, while the 22 employees were actually not in the service at the time of the filing of the petition, they were however subsequently employed even during

the pendency of the incident, and so their claim comes within the jurisdiction of the Court of Industrial Relations. Hence, the present petition for review.

          There is no merit in this appeal it appearing that while it is true that the 22 employees whose claim is objected to were not actually in the service at the time the instant petition was filed, they were however, subsequently reemployed even while the present incident was pending consideration by the trial court. Moreover, it appears that the questioned employees were never separated from the service. Their status is that of regular seasonal employees who are called to work from time to time, mostly during summer season. The nature of their relationship with the hotel is such that during off season they are temporarily laid off but during summer season they are re-employed, or when their services may be needed. They are not strictly speaking separated from the service but are merely considered as on leave of absence without pay until they are re-employed. Their employment relationship is never severed but only suspended. As such, these employees can be considered as in the regular employment of the hotel.

          WHEREFORE, the order appealed from is affirmed. No costs.

Bengzon, C.J., Padilla, Labrador, Concepcion, Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.Reyes, J.B.L., J., took no part.