labor relations 4 full text

8/11/2019 Labor Relations 4 FULL TEXT

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G.R. No. 70705 August 21, 1989

MOISES DE LEON, petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION and LA TONDE;A

INC., respondents.

FERNAN,C.J.:

This petition forcertiorari seeks to annul and set aside: (1) the majority decision datedJanuary 28, 1985 of the National Labor Relations Commission First Division in Case No.NCR- 83566-83, which reversed the Order dated April 6,1984 of Labor ArbiterBienvenido S. Hernandez directing the reinstatement of petitioner Moises de Leon byprivate respondent La Tonde;a Inc. with payment of backwages and other benefits due

a regular employee; and, (2) the Resolution dated March 21, 1985 denying petitioner'smotion for reconsideration.

It appears that petitioner was employed by private respondent La Tonde;a Inc. onDecember 11, 1981, at the Maintenance Section of its Engineering Department inTondo, Manila. 1 His work consisted mainly of painting company building and equipment,and other odd jobs relating to maintenance. He was paid on a daily basis through pettycash vouchers.

In the early part of January, 1983, after a service of more than one (1) year, petitionerrequested from respondent company that lie be included in the payroll of regular

workers, instead of being paid through petty cash vouchers. Private respondent'sresponse to this request was to dismiss petitioner from his employment on January 16,1983. Having been refused reinstatement despite repeated demands, petitioner filed acomplaint for illegal dismissal, reinstatement and payment of backwages before theOffice of the Labor Arbiter of the then Ministry now Department of Labor andEmployment.

Petitioner alleged that he was dismissed following his request to be treated as a regularemployee; that his work consisted of painting company buildings and maintenancechores like cleaning and operating company equipment, assisting Emiliano Tanque Jr.,a regular maintenance man; and that weeks after his dismissal, he was re-hired by the

respondent company indirectly through the Vitas-Magsaysay Village Livelihood Council,a labor agency of respondent company, and was made to perform the tasks which heused to do. Emiliano Tanque Jr. corroborated these averments of petitioner in hisaffidavit. 2

On the other hand, private respondent claimed that petitioner was not a regularemployee but only a casual worker hired allegedly only to paint a certain building in the


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company premises, and that his work as a painter terminated upon the completion ofthe painting job.

On April 6, 1984, Labor Arbiter Bienvenido S. Hernandez rendered a decision 3 findingthe complaint meritorious and the dismissal illegal; and ordering the respondent

company to reinstate petitioner with full backwages and other benefits. Labor ArbiterHernandez ruled that petitioner was not a mere casual employee as asserted by privaterespondent but a regular employee. He concluded that the dismissal of petitioner fromthe service was prompted by his request to be included in the list of regular employeesand to be paid through the payroll and is, therefore, an attempt to circumvent the legalobligations of an employer towards a regular employee.

Labor Arbiter Hernandez found as follows:

After a thorough examination of the records of the case and evaluation ofthe evidence and versions of the parties, this Office finds and so holds that

the dismissal of complainant is illegal. Despite the impressive attempt ofrespondents to show that the complainant was hired as casual and for thework on particular project, that is the repainting of Mama Rosa Building,which particular work of painting and repainting is not pursuant to theregular business of the company, according to its theory, we finddifferently. Complainant's being hired on casual basis did not dissuadefrom the cold fact that such painting of the building and the painting andrepainting of the equipment and tools and other things belonging to thecompany and the odd jobs assigned to him to be performed when he hadno painting and repainting works related to maintenance as amaintenance man are necessary and desirable to the better operation of

the business company. Respondent did not even attempt to deny andrefute the corroborating statements of Emiliano Tanque Jr., who wasregularly employed by it as a maintenance man doing same jobs not onlyof painting and repainting of building, equipment and tools andmachineries or machines if the company but also other odd jobs in theEngineering and Maintenance Department that complainant Moises deLeon did perform the same odd jobs and assignments as were assignedto him during the period de Leon was employed for more than one yearcontinuously by Id respondent company. We find no reason not to givecredit and weight to the affidavit and statement made therein by EmilianoTanque Jr. This strongly confirms that complainant did the work pertainingto the regular business in which the company had been organized.Respondent cannot be permitted to circumvent the law on security oftenure by considering complainant as a casual worker on daily rate basisand after working for a period that has entitled him to be regularized thathe would be automatically terminated. ... . 4

On appeal, however, the above decision of the Labor Arbiter was reversed by the FirstDivision of the National Labor Relations Commission by virtue of the votes of two


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members 5 which constituted a majority. Commissioner Geronimo Q. Quadra dissented,voting "for the affirmation of the well-reasoned decision of the Labor Arbiterbelow." 6 The motion for reconsideration was denied. Hence, this recourse.

Petitioner asserts that the respondent Commission erred and gravely abuse its

discretion in reversing the Order of the Labor Arbiter in view of the uncontroverted factthat the tasks he performed included not only painting but also other maintenance workwhich are usually necessary or desirable in the usual business of private respondent:hence, the reversal violates the Constitutional and statutory provisions for the protectionof labor.

The private respondent, as expected, maintains the opposite view and argues thatpetitioner was hired only as a painter to repaint specifically the Mama Rosa building atits Tondo compound, which painting work is not part of their main business; that at thetime of his engagement, it was made clear to him that he would be so engaged on acasual basis, so much so that he was not required to accomplish an application form or

to comply with the usual requisites for employment; and that, in fact, petitioner wasnever paid his salary through the regular payroll but always through petty cashvouchers. 7

The Solicitor General, in his Comment, recommends that the petition be given duecourse in view of the evidence on record supporting petitioner's contention that his workwas regular in nature. In his view, the dismissal of petitioner after he demanded to beregularized was a subterfuge to circumvent the law on regular employment. He furtherrecommends that the questioned decision and resolution of respondent Commission beannulled and the Order of the Labor Arbiter directing the reinstatement of petitioner withpayment of backwages and other benefits be upheld.8

After a careful review of the records of this case, the Court finds merit in the petition asWe sustain the position of the Solicitor General that the reversal of the decision of theLabor Arbiter by the respondent Commission was erroneous.

The law on the matter is Article 281 of the Labor Code which defines regular and casualemployment as follows:

Art. 281. Regular and casual employment. The provisions of a writtenagreement to the contrary notwithstanding and regardless of the oralagreements of the parties, an employment shall be deemed to be regularwhere the employee has been engaged to perform activities which areusually necessary or desirable in the usual business or trade of theemployer, except where the employment has been fixed for a specificproject or undertaking the completion or termination of which has beendetermined at the time of the engagement of the employee or where thework or services to be performed is seasonal in nature and theemployment is for the duration of the season.


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

actually exists.

This provision reinforces the Constitutional mandate to protect the interest of labor. Itslanguage evidently manifests the intent to safeguard the tenurial interest of the workerwho may be denied the rights and benefits due a regular employee by virtue of lopsidedagreements with the economically powerful employer who can maneuver to keep anemployee on a casual status for as long as convenient. Thus, contrary agreementsnotwithstanding, an employment is deemed regular when the activities performed by theemployee are usually necessary or desirable in the usual business or trade of theemployer. Not considered regular are the so-called "project employment" the completionor termination of which is more or less determinable at the time of employment, such as

those employed in connection with a particular construction project

9

and seasonalemployment which by its nature is only desirable for a limited period of time. However,any employee who has rendered at least one year of service, whether continuous orintermittent, is deemed regular with respect to the activity he performed and while suchactivity actually exists.

The primary standard, therefore, of determining a regular employment is the reasonableconnection between the particular activity performed by the employee in relation to theusual business or trade of the employer. The test is whether the former is usuallynecessary or desirable in the usual business or trade of the employer. The connectioncan 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 hasbeen performing the job for at least one year, even if the performance is not continuousor merely intermittent, the law deems the repeated and continuing need for itsperformance as sufficient evidence of the necessity if not indispensability of that activityto the business. Hence, the employment is also considered regular, but only withrespect to such activity and while such activity exists.

In the case at bar, the respondent company, which is engaged in the business ofmanufacture and distillery of wines and liquors, claims that petitioner was contracted ona casual basis specifically to paint a certain company building and that its completionrendered petitioner's employment terminated. This may have been true at the beginning,and had it been shown that petitioner's activity was exclusively limited to painting thatcertain building, respondent company's theory of casual employment would have beenworthy of consideration.

However, during petitioner's period of employment, the records reveal that the tasksassigned to him included not only painting of company buildings, equipment and toolsbut also cleaning and oiling machines, even operating a drilling machine, and other odd

jobs assigned to him when he had no painting job. A regular employee of respondent


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company, Emiliano Tanque Jr., attested in his affidavit that petitioner worked with himas a maintenance man when there was no painting job.

It is noteworthy that, as wisely observed by the Labor Arbiter, the respondent companydid not even attempt to negate the above averments of petitioner and his co- employee.

Indeed, the respondent company did not only fail to dispute this vital point, it even wentfurther and confirmed its veracity when it expressly admitted in its comment that, "Themain bulk of work and/or activities assigned to petitioner was painting and other relatedactivities. Occasionally, he was instructed to do other odd things in connection withmaintenance while he was waiting for materials he would need in his job or when hehad finished early one assigned to him. 10

The respondent Commission, in reversing the findings of the Labor Arbiter reasonedthat petitioner's job cannot be considered as necessary or desirable in the usualbusiness or trade of the employer because, "Painting the business or factory building isnot a part of the respondent's manufacturing or distilling process of wines and liquors.11

The fallacy of the reasoning is readily apparent in view of the admitted fact thatpetitioner's activities included not only painting but other maintenance work as well, afact which even the respondent Commission, like the private respondent, also expresslyrecognized when it stated in its decision that, 'Although complainant's (petitioner) workwas mainly painting, he was occasionally asked to do other odd jobs in connection withmaintenance work. 12 It misleadingly assumed that all the petitioner did during his morethan one year of employment was to paint a certain building of the respondent company,whereas it is admitted that he was given other assignments relating to maintenancework besides painting company building and equipment.

It is self-serving, to say the least, to isolate petitioner's painting job to justify theproposition of casual employment and conveniently disregard the other maintenanceactivities of petitioner which were assigned by the respondent company when he wasnot painting. The law demands that the nature and entirety of the activities performed bythe employee be considered. In the case of petitioner, the painting and maintenancework given him manifest a treatment consistent with a maintenance man and not just apainter, for if his job was truly only to paint a building there would have been no basisfor giving him other work assignments In between painting activities.

It is not tenable to argue that the painting and maintenance work of petitioner are notnecessary in respondent's business of manufacturing liquors and wines, just as itcannot be said that only those who are directly involved in the process of producingwines and liquors may be considered as necessary employees. Otherwise, there wouldhave been no need for the regular Maintenance Section of respondent company'sEngineering Department, manned by regular employees like Emiliano Tanque Jr.,whom petitioner often worked with.

Furthermore, the petitioner performed his work of painting and maintenance activitiesduring his employment in respondent's business which lasted for more than one year,


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until early January, 1983 when he demanded to be regularized and was subsequentlydismissed. Certainly, by this fact alone he is entitled by law to be considered a regularemployee. And considering further that weeks after his dismissal, petitioner was rehiredby the company through a labor agency and was returned to his post in theMaintenance Section and made to perform the same activities that he used to do, it

cannot be denied that as activities as a regular painter and maintenance man still exist.

It is of no moment that petitioner was told when he was hired that his employment wouldonly be casual, that he was paid through cash vouchers, and that he did not comply withregular employment procedure. Precisely, the law overrides such conditions which areprejudicial to the interest of the worker whose weak bargaining position needs thesupport of the State. That determines whether a certain employment is regular or casualis not the will and word of the employer, to which the desperate worker often accedes,much less the procedure of hiring the employee or the manner of paying his salary. It isthe nature of the activities performed in relation to the particular business or tradeconsidering all circumstances, and in some cases the length of time of its performance

and its continued existence.

Finally, considering its task to give life and spirit to the Constitutional mandate for theprotection of labor, to enforce and uphold our labor laws which must be interpretedliberally in favor of the worker in case of doubt, the Court cannot understand the failureof the respondent Commission to perceive the obvious attempt on the part of therespondent company to evade its obligations to petitioner by dismissing the latter daysafter he asked to be treated as a regular worker on the flimsy pretext that his paintingwork was suddenly finished only to rehire him indirectly weeks after his dismissal andassign him to perform the same tasks he used to perform. The devious dismissal is tooobvious to escape notice. The inexplicable disregard of established and decisive facts

which the Commission itself admitted to be so, in justifying a conclusion adverse to theaggrieved laborer clearly spells a grave abuse of discretion amounting to lack ofjurisdiction.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of theNational Labor Relations Commission are hereby annulled and set aside. The Order ofLabor arbiter Bienvenido S. Hernandez dated April 6, 1984 is reinstated. Privaterespondent is ordered to reinstate petitioner as a regular maintenance man and to paypetitioner 1) backwages equivalent to three years from January 16,1983, in accordancewith the Aluminum Wage Orders in effect for the period covered, 2) ECOLA 3) 13thMonth Pay, 4) and other benefits under pertinent Collective Bargaining Agreements, ifany.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.


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G.R. Nos. 82643-67 August 30, 1990

PHILIPPINE GEOTHERMAL, INC., petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION, TEODULO C. CUEBILLAS,

ARMANDO CILOT, MARIANO CORULLO, YOLANDA CAL, EFREN CLERIGO,FELICISSIMO VARGAS, et al ., respondents.

PARAS,J.:

This is a petition for review on certiorari seeking to annul and set aside; (a) theResolution of the National Labor Relations Commission * dated November 9, 1987 inLabor Cases Nos. RAB-403-85 to 427-85 and RAB Nos. 0392-85 to 0393-85 entitledTeodulo C. Cuebillas, et. al. vs. Philippine Geothermal, Inc. et al. and Efren N. Clerigo

et. al. vs. Phil. Geothermal Inc. respectively which declared respondent employees asregular and permanent employees of petitioner company and ordered theirreinstatement and (b) the Resolution dated March 9,1988 which denied the Motion forReconsideration.

The facts of the case are as follows:

Petitioner Philippine Geothermal, Inc. is a U.S. corporation engaged in the explorationand development of geothermal energy resources as an alternative source of energy. Itis duly authorized to engage in business in the Philippines and at present is the primecontractor of the National Power Corporation at the latter's operation of the Tiwi, Albay

and the Makiling-Banahaw Geothermal Projects.

1

Private respondents, on the other hand, are employees of herein petitioner occupyingvarious positions ranging from carpenter to Clerk II who had worked with petitionercompany under individual contracts, categorized as contractual employment, for aperiod ranging from fifteen (15) days to three (3) months. These contracts wereregularly renewed to the extent that individual private respondents had rendered servicefrom three (3) to five (5) years until 1983 and 1984 when petitioner started terminatingtheir employment by not renewing their individual contracts. Subsequently petitionerentered into job contracting agreement with Dra. Generosa Gonzales who supplies itwith skilled

manpower.

2

Sometime in July 1983, herein private respondents organized a separate labor union inview of their exclusion in the bargaining unit of the regular rank and file employeesrepresented by the Federation of Free Workers. In August 1983, they filed a petition forcertification election with the Ministry of Labor and Employment, NCR, docketed asCase No. NCD-LRD-8-242-84. Because of this, herein petitioner allegedly startedharassing them and replaced them with so called "contract workers". Thus, complainant


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union and herein respondent employees filed a case for illegal lock-out and unfair laborpractice, docketed as Case No. 1420-83 and the instant consolidated cases RAB CaseNos. 0403-85 to 427-85 and RAB Cases Nos. 0392-85 to 0393-85, involving 26 workers,for unfair labor practice and/or illegal dismissal, reinstatement backwages and serviceincentive. 3

On March 3, 1987, Labor Arbiter Voltaire A. Balitaan rendered a decision in favor of therespondents the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the petitioners andthey are hereby declared regular and permanent employees of therespondent and finding their dismissal from the service illegal, respondentis ordered to reinstate them to their former positions without loss ofseniority rights and with one year backwages without qualification ordeduction in the amount of P590,021.76.

SO ORDERED.

4

On Appeal, the National Labor Relations Commission on November 9, 1987 rendered adecision dismissing the appeal and affirming the decision of the Labor Arbiter. 5Amotion for reconsideration was denied on March 9, 1988 for lack of merit. 6

Hence, this petition which was filed on April 22, 1988.

In the meantime, a writ of execution was issued by Executive Arbiter Gelacio L. Rivera,Jr. on April 11, 1988 on the ground that no appeal was interposed hence the decision ofthe Labor Arbiter had become final and executory. 7

On April 20, 1988, petitioner filed a motion for the issuance of a Temporary RestrainingOrder as the Sheriff tried to enforce the Writ of Execution dated April 11, 1988 againstpetitioner on April 18, 1988. They further alleged that they are ready, willing and able topost a supersedeas bond to answer for damages which respondents may suffer. 8

On June 29, 1988, this Court issued a Temporary Restraining Order enjoiningrespondents from enforcing the Resolution dated November 9, 1987, any writ ofexecution or notice of garnishment issued in RAB Cases Nos. 0403-85 to 427-85 andRAB Cases Nos. 0392-85 to 393-85 of the National Labor Relations Commission,Department of Labor and Employment. 9

On April 17, 1989, this Court resolved to dismiss the petition for failure to sufficientlyshow that the respondent commission had committed grave abuse of discretion inrendering the questioned judgment and lifted the Temporary Restraining Order issuedon June 29, 1988. 10A motion for reconsideration was filed by petitioner on May 25,1989. 11


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On June 5, 1989, this Court granted the motion; and set aside the resolution dated April17, 1989; gave due course to the petition and required the patties to submitsimultaneously, their respective memoranda. 12

Private respondents filed their memorandum on August 8, 1989 13 while public

respondent filed its memorandum on September 1, 1989.

14

Petitioner filed itsmemorandum on September 8, 1989. 15

The main issue in the case at bar is whether or not private respondents may beconsidered regular and permanent employees due to their length of service in thecompany despite the fact that their employment is on contractual basis.

Petitioner alleges that it engaged the services of private respondents on a monthly basisto ensure that manpower would be available when and where needed. Privaterespondents were fully aware of the nature of their employment as this was clearlyspelled out in the employment contracts. What happened to them was not a case of

unwarranted dismissal but simply one of expiration of the tenure of employmentcontracts and the completion of the phase of the project for which their services werehired. 16

In the recent case ofKimberly Independent Labor Union for Solidarity, Activism, andNationalism-Olalia vs. Hon. Franklin M. Drilon, G.R. Nos. 77629 and 78791promulgated last May 9, 1990, this Court classified the two kinds of regular employees,as: 1) those who are engaged to perform activities which are usually necessary ordesirable in the usual business or trade of the employer; and 2) those who haverendered at least one (1) year of service, whether continuous or broken with respect tothe activity in which they are employed. While the actual regularization of these

employees entails the mechanical act of issuing regular appointment papers andcompliance with such other operating procedures, as may be adopted by the employer,it is more in keeping with the intent and spirit of the law to rule that the status of regularemployment attaches to the casual employee on the day immediately after the end ofhis first year of service.

Assuming therefore, that an employee could properly be regarded as a casual (asdistinguished from a regular employee) he becomes entitled to be regarded as a regularemployee of the employer as soon as he has completed one year of service. Under thecircumstances, employers may not terminate the service of a regular employee exceptfor a just cause or when authorized under the Labor Code. It is not difficult to see that touphold the contractual arrangement between the employer and the employee would ineffect be to permit employers to avoid the necessity of hiring regular or permanentemployees indefinitely on a temporary or casual status, thus to deny them security oftenure in their jobs. Article 106 of the Labor Code is precisely designed to prevent suchresult. 17

It is the policy of the state to assure the right of workers to "security of tenure." 18 Theguarantee is an act of social justice. When a person has no property, his job may


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possibly be his only possession or means of livelihood. Therefore, he should beprotected against any arbitrary deprivation of his job. Article 280 of the Labor Code hasconstrued "security of tenure" as meaning that "the employer shall not terminate theservices of the employee except for a just cause or when authorized by the Code." 19

PREMISES CONSIDERED, the decision of the National Labor Relations Commission ishereby AFFIRMED and the Temporary Restraining Order issued on June 29, 1988 ishereby LIFTED permanently.

SO ORDERED.

Melencio-Herrera (Chairman), Padilla and Regalado, JJ., concur.

Sarmiento, J., is on leave.


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[G.R. No. 120969. January 22, 1998]

ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO,petitioners,vs. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION)

composed of Presiding Commissioner RAUL T. AQUINO, CommissionerROGELIO I. RAYALA and Commissioner VICTORIANO R. CALAYCAY(Ponente), VIC DEL ROSARIO and VIVA FILMS,respondents.

D E C I S I O N

DAVIDE, JR.,J.:

By way of this special civil action forcertiorari under Rule 65 of the Rules of Court, petitioners seekto annul the 10 February 1995 Decision [1] of the National Labor Relations Commission (hereafter NLRC),and its 6 April 1995 Resolution[2] denying the motion to reconsider the former in NLRC-NCR-CA No.006195-94. The decision reversed that of the Labor Arbiter in NLRC-NCR-Case No. 00-07-03994-92.

The parties present conflicting sets of facts.

Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on 18July 1989 as part of the filming crew with a salary of P375.00 per week. About four months later, he wasdesignated Assistant Electrician with a weekly salary of P400.00, which was increased to P450.00 in May1990. In June 1991, he was promoted to the rank of Electrician with a weekly salary of P475.00, whichwas increased toP593.00 in September 1991.

Petitioner Paulino Enero, on his part, claims that private respondents employed him in June 1990 asa member of the shooting crew with a weekly salary of P375.00, which was increased to P425.00 in May1991, then to P475.00 on 21 December 1991.[3]

Petitioners tasks consisted of loading, unloading and arranging movie equipment in the shootingarea as instructed by the cameraman, returning the equipment to Viva Films warehouse, assisting in the

fixing of the lighting system, and performing other tasks that the cameraman and/or director mayassign.[4]

Sometime in May 1992, petitioners sought the assistance of their supervisor, Mrs. Alejandria Cesario,to facilitate their request that private respondents adjust their salary in accordance with the minimumwage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree toincrease their salary only if they signed a blank employment contract. As petitioners refused to sign,private respondents forced Enero to go on leave in June 1992, then refused to take him back when hereported for work on 20 July 1992. Meanwhile, Maraguinot was dropped from the company payroll from 8to 21 June 1992, but was returned on 22 June 1992. He was again asked to sign a blank employmentcontract, and when he still refused, private respondents terminated his services on 20 July1992.[5] Petitioners thus sued for illegal dismissal[6] before the Labor Arbiter.

On the other hand, private respondents claim that Viva Films (hereafter VIVA) is the trade name of

Viva Productions, Inc., and that it is primarily engaged in the distribution and exhibition of movies -- butnot in the business of making movies; in the same vein, private respondent Vic del Rosario is merely anexecutive producer, i.e., the financier who invests a certain sum of money for the production of moviesdistributed and exhibited by VIVA.[7]

Private respondents assert that they contract persons called producers -- also referred to asassociate producers[8] -- to produce or make movies for private respondents; and contend thatpetitioners are project employees of the associate producers who, in turn, act as independentcontractors. As such, there is no employer-employee relationship between petitioners and privaterespondents.


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Private respondents further contend that it was the associate producer of the film Mahirap MagingPogi, who hired petitioner Maraguinot. The movie shot from 2 July up to 22 July 1992, and it was onlythen that Maraguinot was released upon payment of his last salary, as his services were no longerneeded. Anent petitioner Enero, he was hired for the movie entitled Sigaw ng Puso, later re-titledNarito ang Puso. He went on vacation on 8 June 1992, and by the time he reported for work on 20 July1992, shooting for the movie had already been completed.[9]

After considering both versions of the facts, the Labor Arbiter found as follows:

On the first issue, this Office rules that complainants are the employees of the respondents.The producer cannot be considered as an independent contractor but should be consideredonly as a labor-only contractor and as such, acts as a mere agent of the real employer, theherein respondents. Respondents even failed to name and specify who are theproducers. Also, it is an admitted fact that the complainants received their salaries from therespondents. The case cited by the respondents, Rosario Brothers, Inc. vs. Ople, 131SCRA 72 does not apply in this case.

It is very clear also that complainants are doing activities which are necessary and essential

to the business of the respondents, that of movie-making. Complainant Maraguinot workedas an electrician while complainant Enero worked as a crew [member]. [10]

Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as follows:

WHEREFORE, judgment is hereby rendered declaring that complainants were illegallydismissed.

Respondents are hereby ordered to reinstate complainants to their former positions withoutloss [of] seniority rights and pay their backwages starting July 21, 1992 to December 31,1993 temporarily computed in the amount of P38,000.00 for complainant Paulino Enero andP46,000.00 for complainant Alejandro Maraguinot, Jr. and thereafter until actually reinstated.

Respondents are ordered to pay also attorneys fees equivalent to ten (10%)and/or P8,400.00 on top of the award.[11]

Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No. 006195-94). In itsdecision[12] of 10 February 1995, the NLRC found the following circumstances of petitioners work clearlyestablished:

1. Complainants [petitioners herein] were hired for specific movie projects and theiremployment was co-terminus with each movie project the completion/termination of whichare pre-determined, such fact being made known to complainants at the time of theirengagement.

x x x

2. Each shooting unit works on one movie project at a time. And the work of the shootingunits, which work independently from each other, are not continuous in nature but dependson the availability of movie projects.


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3. As a consequence of the non-continuous work of the shooting units, the total workinghours logged by complainants in a month show extreme variations... For instance,complainant Maraguinot worked for only 1.45 hours in June 1991 but logged a totalof 183.25 hours in January 1992. Complainant Enero logged a total of only 31.57 hours inSeptember 1991 but worked for 183.35 hours the next month, October 1991.

4. Further shown by respondents is the irregular work schedule of complainants on a dailybasis. Complainant Maraguinot was supposed to report on 05 August 1991 but reportedonly on 30 August 1991, or a gap of 25 days. Complainant Enero worked on 10 September1991 and his next scheduled working day was 28 September 1991, a gap of 18 days.

5. The extremely irregular working days and hours of complainants work explain the lumpsum payment for complainants services for each movie project. Hence, complainants werepaid a standard weekly salary regardless of the number of working days and hours theylogged in. Otherwise, if the principle of no work no pay was strictly applied, complainantsearnings for certain weeks would be very negligible.

6. Respondents also alleged that complainants were not prohibited from working with suchmovie companies like Regal, Seiko and FPJ Productions whenever they are not working forthe independent movie producers engaged by respondents... This allegation was neverrebutted by complainants and should be deemed admitted.

The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances, taken together,indicated that complainants (herein petitioners) were project employees.

After their motion for reconsideration was denied by the NLRC in its Resolution[13] of 6 April 1995,petitioners filed the instant petition, claiming that the NLRC committed grave abuse of discretionamounting to lack or excess of jurisdiction in: (1) finding that petitioners were project employees; (2) rulingthat petitioners were not illegally dismissed; and (3) reversing the decision of the Labor Arbiter.

To support their claim that they were regular (and not project) employees of private respondents,petitioners cited their performance of activities that were necessary or desirable in the usual trade orbusiness of private respondents and added that their work was continuous, i.e., after one project wascompleted they were assigned to another project. Petitioners thus considered themselves part of a workpool from which private respondents drew workers for assignment to different projects. Petitionerslamented that there was no basis for the NLRCs conclusion that they were project employees, while theassociate producers were independent contractors; and thus reasoned that as regular employees, theirdismissal was illegal since the same was premised on a false cause, namely, the completion of a project,which was not among the causes for dismissal allowed by the Labor Code.

Private respondents reiterate their version of the facts and stress that their evidence supports theview that petitioners are project employees; point to petitioners irregular work load and work schedule;emphasize the NLRCs finding that petitioners never controverted the allegation that they were notprohibited from working with other movie companies; and ask that the facts be viewed in the context of

the peculiar characteristics of the movie industry.

The Office of the Solicitor General (OSG) is convinced that this petition is improper since petitionersraise questions of fact, particularly, the NLRCs finding that petitioners were project employees, a findingsupported by substantial evidence; and submits that petitioners reliance on Article 280 of the Labor Codeto support their contention that they should be deemed regular employees is misplaced, as said sectionmerely distinguishes between two types of employees, i.e., regular employees and casual employees,for purposes of determining the right of an employee to certain benefits.


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The OSG likewise rejects petitioners contention that since they were hired not for one project, but fora series of projects, they should be deemed regular employees. Citing Mamansag v. NLRC,[14] the OSGasserts that what matters is that there was a time-frame for each movie project made known to petitionersat the time of their hiring. In closing, the OSG disagrees with petitioners claim that the NLRCsclassification of the movie producers as independent contractors had no basis in fact and in law, since, onthe contrary, the NLRC took pains in explaining its basis for its decision.

As regards the propriety of this action, which the Office of the Solicitor General takes issue with, werule that a special civil action forcertiorari under Rule 65 of the Rules of Court is the proper remedy forone who complains that the NLRC acted in total disregard of evidence material to or decisive of thecontroversy.[15] In the instant case, petitioners allege that the NLRCs conclusions have no basis in factand in law, hence the petition may not be dismissed on procedural or jurisdictional grounds.

The judicious resolution of this case hinges upon, first, the determination of whether an employer-employee relationship existed between petitioners and private respondents or any one of privaterespondents. If there was none, then this petition has no merit; conversely, if the relationship existed,then petitioners could have been unjustly dismissed.

A related question is whether private respondents are engaged in the business of making motionpictures. Del Rosario is necessarily engaged in such business as he finances the production ofmovies. VIVA, on the other hand, alleges that it does not make movies, but merely distributes and

exhibits motion pictures. There being no further proof to this effect, we cannot rely on this self-servingdenial. At any rate, and as will be discussed below, private respondents evidence even supports theview that VIVA is engaged in the business of making movies.

We now turn to the critical issues. Private respondents insist that petitioners are project employeesof associate producers who, in turn, act as independent contractors. It is settled that the contracting outof labor is allowed only in case of job contracting. Section 8, Rule VIII, Book III of the Omnibus RulesImplementing the Labor Code describes permissible job contracting in this wise:

Sec. 8. Job contracting. -- There is job contracting permissible under the Code if thefollowing conditions are met:

(1) The contractor carries on an independent business and undertakes thecontract work on his own account under his own responsibility according tohis own manner and method, free from the control and direction of hisemployer or principal in all matters connected with the performance of thework except as to the results thereof; and

(2) The contractor has substantial capital or investment in the form of tools,equipment, machineries, work premises, and other materials which arenecessary in the conduct of his business.

Assuming that the associate producers are job contractors, they must then be engaged in thebusiness of making motion pictures. As such, and to be a job contractor under the preceding description,associate producers must have tools, equipment, machinery, work premises, and other materialsnecessary to make motion pictures. However, the associate producers here have none of these. Privaterespondents evidence reveals that the movie-making equipment are supplied to the producers andowned by VIVA. These include generators,[16] cables and wooden platforms,[17] cameras and shootingequipment;[18] in fact, VIVA likewise owns the trucks used to transport the equipment.[19] It is thus clear thatthe associate producer merely leases the equipment from VIVA. [20] Indeed, private respondents FormalOffer of Documentary Evidence stated one of the purposes of Exhibit 148 as:


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To prove further that the independent Producers rented Shooting Unit No. 2 from Viva tofinish their films.[21]

While the purpose of Exhibits 149, 149-A and 149-B was:

[T]o prove that the movies of Viva Films were contracted out to the different independentProducers who rented Shooting Unit No. 3 with a fixed budget and time-frame of at least 30shooting days or 45 days whichever comes first.[22]

Private respondents further narrated that VIVAs generators broke down during petitioners lastmovie project, which forced the associate producer concerned to rent generators, equipment and crewfrom another company.[23] This only shows that the associate producer did not have substantial capital norinvestment in the form of tools, equipment and other materials necessary for making a movie. Privaterespondents in effect admit that their producers, especially petitioners last producer, are not engaged inpermissible job contracting.

If private respondents insist that their associate producers are labor contractors, then theseproducers can only be labor-only contractors, defined by the Labor Code as follows:

Art. 106. Contractor or subcontractor.-- x x x

There is labor-only contracting where the person supplying workers to an employer doesnot have substantial capital or investment in the form of tools, equipment, machineries, workpremises, among others, and the workers recruited and placed by such persons areperforming activities which are directly related to the principal business of suchemployer. In such cases, the person or intermediary shall be considered merely as anagent of the employer who shall be responsible to the workers in the same manner andextent as if the latter were directly employed by him.

A more detailed description is provided by Section 9, Rule VIII, Book III of the Omnibus Rules

Implementing the Labor Code:

Sec. 9. Labor-only contracting. -- (a) Any person who undertakes to supply workers to anemployer shall be deemed to be engaged in labor-only contracting where such person:

(1) Does not have substantial capital or investment in the form of tools, equipment,machineries, work premises and other materials; and

(2) The workers recruited and placed by such person are performing activities whichare directly related to the principal business or operations of the employer in whichworkers are habitually employed.

(b) Labor-only contracting as defined herein is hereby prohibited and the personacting as contractor shall be considered merely as an agent or intermediaryof the employer who shall be responsible to the workers in the same mannerand extent as if the latter were directly employed by him.

(c) For cases not falling under this Article, the Secretary of Labor shalldetermine through appropriate orders whether or not the contracting out oflabor is permissible in the light of the circumstances of each case and after


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considering the operating needs of the employer and the rights of the workersinvolved. In such case, he may prescribe conditions and restrictions to insurethe protection and welfare of the workers.

As labor-only contracting is prohibited, the law considers the person or entity engaged in the same amere agent or intermediary of the direct employer. But even by the preceding standards, the associate

producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire theworkers. In the instant case, it was Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA,who recruited crew members from an available group of free-lance workers which includes thecomplainants Maraguinot and Enero. [24]And in their Memorandum, private respondents declared that theassociate producer hires the services of... 6) camera crew which includes (a) cameraman; (b) the utilitycrew; (c) the technical staff; (d) generator man and electrician; (e) clapper; etc.... [25] This clearly showedthat the associate producers did not supply the workers required by the movie project.

The relationship between VIVA and its producers or associate producers seems to be that ofagency,[26] as the latter make movies on behalf of VIVA, whose business is to make movies. As such,the employment relationship between petitioners and producers is actually one between petitioners andVIVA, with the latter being the direct employer.

The employer-employee relationship between petitioners and VIVA can further be established by the

control test. While four elements are usually considered in determining the existence of an employmentrelationship, namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c)the power of dismissal; and (d) the employers power to control the employees conduct, the mostimportant element is the employers control of the employees conduct, not only as to the result of thework to be done but also as to the means and methods to accomplish the same. [27] These four elementsare present here. In their position paper submitted to the Labor Arbiter, private respondents narrated thefollowing circumstances:

[T]he PRODUCER has to work within the limits of the budget he is given by the company,for as long as the ultimate finish[ed] product is acceptable to the company...

To ensure that quality films are produced by the PRODUCER who is an independent

contractor, the company likewise employs a Supervising PRODUCER, a Project accountantand a Shooting unit supervisor. The Companys Supervising PRODUCER is Mr. EricCuatico, the Project accountant varies from time to time, and the Shooting Unit Supervisoris Ms. Alejandria Cesario.

The Supervising PRODUCER acts as the eyes and ears of the company and of theExecutive Producer to monitor the progress of the PRODUCERs workaccomplishment. He is there usually in the field doing the rounds of inspection to see ifthere is any problem that the PRODUCER is encountering and to assist in threshing out thesame so that the film project will be finished on schedule. He supervises about 3 to 7 movieprojects simultaneously [at] any given time by coordinating with each film PRODUCER.The Project Accountant on the other hand assists the PRODUCER in monitoring the actual

expenses incurred because the company wants to insure that any additional budgetrequested by the PRODUCER is really justified and warranted especially when there is achange of original plans to suit the tast[e] of the company on how a certain scene must bepresented to make the film more interesting and more commercially viable. (emphasis ours)

VIVAs control is evident in its mandate that the end result must be a quality film acceptable to thecompany. The means and methods to accomplish the result are likewise controlled by VIVA, viz., themovie project must be finished within schedule without exceeding the budget, and additional expenses


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must be justified; certain scenes are subject to change to suit the taste of the company; and theSupervising Producer, the eyes and ears of VIVA and del Rosario, intervenes in the movie-makingprocess by assisting the associate producer in solving problems encountered in making the film.

It may not be validly argued then that petitioners are actually subject to the movie directors control,and not VIVAs direction. The director merely instructs petitioners on how to better comply with VIVAsrequirements to ensure that a quality film is completed within schedule and without exceeding the

budget. At bottom, the director is akin to a supervisor who merely oversees the activities of rank-and-fileemployees with control ultimately resting on the employer.

Moreover, appointment slips [28] issued to all crew members state:

During the term of this appointment you shall comply with the duties and responsibilities ofyour position as well as observe the rules and regulations promulgated by your superiorsand by Top Management.

The words superiors and Top Management can only refer to the superiors and TopManagement of VIVA. By commanding crew members to observe the rules and regulations promulgatedby VIVA, the appointment slips only emphasize VIVAs control over petitioners.

Aside from control, the element of selection and engagement is likewise present in the instant caseand exercised by VIVA. A sample appointment slip offered by private respondents to prove thatmembers of the shooting crew except the driver are project employees of the IndependentProducers[29] reads as follows:

VIVA PRODUCTIONS, INC.

16 Sct. Albano St.

Diliman, Quezon City

PEDRO NICOLAS Date: June 15, 1992

__________________

APPOINTMENT SLIP

You are hereby appointed as SOUNDMAN for the film project entitled MANAMBIT. Thisappointment shall be effective upon the commencement of the said project and shallcontinue to be effective until the completion of the same.

For your services you shall receive the daily/weekly/monthly compensation of P812.50.

During the term of this appointment you shall comply with the duties and responsibilities ofyour position as well as observe the rules and regulations promulgated by your superiorsand by Top Management.

Very truly yours,

(an illegible signature)


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CONFORME:

___________________

Name of appointee

Signed in the presence of:

_____________________

Notably, nowhere in the appointment slip does it appear that it was the producer or associateproducer who hired the crew members; moreover, it is VIVAs corporate name which appears on theheading of the appointment slip. What likewise tells against VIVA is that it paid petitioners salaries asevidenced by vouchers, containing VIVAs letterhead, for that purpose.[30]

All the circumstances indicate an employment relationship between petitioners and VIVA alone, thusthe inevitable conclusion is that petitioners are employees only of VIVA.

The next issue is whether petitioners were illegally dismissed. Private respondents contend that

petitioners were project employees whose employment was automatically terminated with the completionof their respective projects. Petitioners assert that they were regular employees who were illegallydismissed.

It may not be ignored, however, that private respondents expressly admitted that petitioners werepart of a work pool;[31] and, while petitioners were initially hired possibly as project employees, they hadattained the status of regular employees in view of VIVAs conduct.

A project employee or a member of a work pool may acquire the status of a regular employee whenthe following concur:

1) There is a continuous rehiring of project employees even after cessation of aproject;[32] and

2) The tasks performed by the alleged project employee are vital, necessary andindispensable to the usual business or trade of the employer. [33]

However, the length of time during which the employee was continuously re-hired is not controlling,but merely serves as a badge of regular employment.[34]

In the instant case, the evidence on record shows that petitioner Enero was employed for a total oftwo (2) years and engaged in at least eighteen (18) projects, while petitioner Maraguinot was employedfor some three (3) years and worked on at least twenty-three (23) projects. [35] Moreover, as petitionerstasks involved, among other chores, the loading, unloading and arranging of movie equipment in theshooting area as instructed by the cameramen, returning the equipment to the Viva Films warehouse,and assisting in the fixing of the lighting system, it may not be gainsaid that these tasks were vital,

necessary and indispensable to the usual business or trade of the employer. As regards the underscoredphrase, it has been held that this is ascertained by considering the nature of the work performed and itsrelation to the scheme of the particular business or trade in its entirety. [36]

A recent pronouncement of this Court anent project or work pool employees who had attained thestatus of regular employees proves most instructive:

The denial by petitioners of the existence of a work pool in the company because theirprojects were not continuous is amply belied by petitioners themselves who admit that: xxx


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A work pool may exist although the workers in the pool do not receive salaries and are freeto seek other employment during temporary breaks in the business, provided that theworker shall be available when called to report for a project. Although primarily applicableto regular seasonal workers, this set-up can likewise be applied to project workers insofaras the effect of temporary cessation of work is concerned. This is beneficial to both theemployer and employee for it prevents the unjust situation of coddling labor at the expenseof capital and at the same time enables the workers to attain the status of regularemployees. Clearly, the continuous rehiring of the same set of employees within theframework of the Lao Group of Companies is strongly indicative that private respondentswere an integral part of a work pool from which petitioners drew its workers for its variousprojects.

In a final attempt to convince the Court that private respondents were indeed projectemployees, petitioners point out that the workers were not regularly maintained in thepayroll and were free to offer their services to other companies when there were no on-going projects. This argument however cannot defeat the workers status of regularity. Weapply by analogy the case ofIndustrial-Commercial-Agricultural Workers Organization v.

CIR[16 SCRA 562, 567-68 (1966)] which deals with regular seasonal employees. There weheld: xxx

Truly, the cessation of construction activities at the end of every project is a foreseeablesuspension of work. Of course, no compensation can be demanded from the employerbecause the stoppage of operations at the end of a project and before the start of a newone is regular and expected by both parties to the labor relations. Similar to the case ofregular seasonal employees, the employment relation is not severed by merely beingsuspended. [citing Manila Hotel Co. v. CIR, 9 SCRA 186 (1963)] The employees are,strictly speaking, not separated from services but merely on leave of absence without payuntil they are reemployed. Thus we cannot affirm the argument that non-payment of salaryor non-inclusion in the payroll and the opportunity to seek other employment denote projectemployment.[37] (underscoring supplied)

While Lao admittedly involved the construction industry, to which Policy Instruction No.20/Department Order No. 19[38] regarding work pools specifically applies, there seems to be noimpediment to applying the underlying principles to industries other than the constructionindustry.[39] Neither may it be argued that a substantial distinction exists between the projects undertakenin the construction industry and the motion picture industry. On the contrary, the raison d' etre of bothindustries concern projects with a foreseeable suspension of work.

At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing aduty to re-hire a project employee even after completion of the project for which he was hired. The importof this decision is not to impose a positive and sweeping obligation upon the employer to re-hire projectemployees. 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 bythe employer of project or work pool employees who perform tasks necessary or desirable to theemployers usual business or trade. Let it not be said that this decision coddles labor, for as Lao hasruled, project or work pool employees who have gained the status of regular employees are subject to theno work-no pay principle, to repeat:

A work pool may exist although the workers in the pool do not receive salaries and are freeto seek other employment during temporary breaks in the business, provided that theworker shall be available when called to report for a project. Although primarily applicable


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to regular seasonal workers, this set-up can likewise be applied to project workers insofaras the effect of temporary cessation of work is concerned. This is beneficial to both theemployer and employee for it prevents the unjust situation of coddling labor at the expenseof capital and at the same time enables the workers to attain the status of regularemployees.

The Courts ruling here is meant precisely to give life to the constitutional policy of strengthening thelabor sector,[40] but, we stress, not at the expense of management. Lest it be misunderstood, this rulingdoes not mean that simply because an employee is a project or work pool employee even outside theconstruction industry, he is deemed, ipso jure, a regular employee. All that we hold today is that once aproject or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by thesame employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary andindispensable to the usual business or trade of the employer, then the employee must be deemed aregular employee, pursuant to Article 280 of the Labor Code and jurisprudence. To rule otherwise wouldallow circumvention of labor laws in industries not falling within the ambit of Policy Instruction No.20/Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by project orwork pool employees who have already gained the status of regular employees by the employersconduct.

In closing then, as petitioners had already gained the status of regular employees, their dismissalwas unwarranted, for the cause invoked by private respondents for petitioners dismissal, viz., completionof project, was not, as to them, a valid cause for dismissal under Article 282 of the Labor Code. As such,petitioners are now entitled to back wages and reinstatement, without loss of seniority rights and otherbenefits that may have accrued. [41] Nevertheless, following the principles of suspension of work and nopay between the end of one project and the start of a new one, in computing petitioners back wages, theamounts corresponding to what could have been earned during the periods from the date petitioners weredismissed until their reinstatement when petitioners respective Shooting Units were not undertaking anymovie projects, should be deducted.

Petitioners were dismissed on 20 July 1992, at a time when Republic Act No. 6715 was already ineffect. Pursuant to Section 34 thereof which amended Section 279 of the Labor Code of the PhilippinesandBustamante v. NLRC,[42] petitioners are entitled to receive full back wages from the date of theirdismissal up to the time of their reinstatement, without deducting whatever earnings derived elsewhere

during the period of illegal dismissal, subject, however, to the above observations.

WHEREFORE, the instant petition is GRANTED. The assailed decision of the National LaborRelations Commission in NLRC NCR CA No. 006195-94 dated 10 February 1995, as well as itsResolution dated 6 April 1995, are hereby ANNULLED and SET ASIDE for having been rendered withgrave abuse of discretion, and the decision of the Labor Arbiter in NLRC NCR Case No. 00-07-03994-92is REINSTATED, subject, however, to the modification above mentioned in the computation of backwages.

No pronouncement as to costs.

SO ORDERED.

Bellosillo, Vitug, and Kapunan, JJ., concur.

G.R. No. 79869 September 5, 1991


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FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO MERCADO, JR.,ANTONIO MERCADO, JOSE CABRAL, LUCIA MERCADO, ASUNCION GUEVARA,ANITA MERCADO, MARINA MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO,BRIGIDA ALCANTARA, EMERLITA MERCADO, ROMEO GUEVARA, ROMEOMERCADO and LEON SANTILLAN, petitioners,

vs.NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD DIVISION; LABORARBITER LUCIANO AQUINO, RAB-III; AURORA L. CRUZ; SPOUSES FRANCISCODE BORJA and LETICIA DE BORJA; and STO. NIO REALTY,INCORPORATED, respondents.

Servillano S. Santillan for petitioners.

Luis R. Mauricio for private respondents.

PADILLA,J.:p

Assailed in this petition for certiorari is the decision * of the respondent national LaborRelations Commission (NLRC) dated 8 August 1984 which affirmed the decision ofrespondent Labor Arbiter Luciano P. Aquino with the slight modification of deleting theaward of financial assistance to petitioners, and the resolution of the respondent NLRCdated 17 August 1987, denying petitioners' motion for reconsideration.

This petition originated from a complaint for illegal dismissal, underpayment of wages,non-payment of overtime pay, holiday pay, service incentive leave benefits, emergency

cost of living allowances and 13th month pay, filed by above-named petitioners againstprivate respondents Aurora L. Cruz, Francisco Borja, Leticia C. Borja and Sto. NioRealty Incorporated, with Regional Arbitration Branch No. III, National Labor RelationsCommission in San Fernando, Pampanga. 1

Petitioners alleged in their complaint that they were agricultural workers utilized byprivate respondents in all the agricultural phases of work on the 7 1/2 hectares of aceland and 10 hectares of sugar land owned by the latter; that Fortunato Mercado, Sr. andLeon Santillan worked in the farm of private respondents since 1949, FortunatoMercado, Jr. and Antonio Mercado since 1972 and the rest of the petitioners since 1960up to April 1979, when they were all allegedly dismissed from their employment; and

that, during the period of their employment, petitioners received the following dailywages:

From 1962-1963 P1.501963-1965 P2.001965-1967 P3.001967-1970 P4.001970-1973 P5.00


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1973-1975 P5.001975-1978 P6.001978-1979 P7.00

Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said

petitioners were her regular employees and instead averred that she engaged theirservices, through Spouses Fortunato Mercado, Sr. and Rosa Mercado, their"mandarols", that is, persons who take charge in supplying the number of workersneeded by owners of various farms, but only to do a particular phase of agriculturalwork necessary in rice production and/or sugar cane production, after which they wouldbe free to render services to other farm owners who need their services. 2

The other private respondents denied having any relationship whatsoever with thepetitioners and state that they were merely registered owners of the land in questionincluded as corespondents in this case. 3

The dispute in this case revolves around the issue of whether or not petitioners areregular and permanent farm workers and therefore entitled to the benefits which theypray for. And corollary to this, whether or not said petitioners were illegally dismissed byprivate respondents.

Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents andheld that petitioners were not regular and permanent workers of the private respondents,for the nature of the terms and conditions of their hiring reveal that they were required toperform phases of agricultural work for a definite period of time after which theirservices would be available to any other farm owner. 4 Respondent Labor Arbiterdeemed petitioners' contention of working twelve (12) hours a day the whole year round

in the farm, an exaggeration, for the reason that the planting of lice and sugar canedoes not entail a whole year as reported in the findings of the Chief of the NLRC SpecialTask Force. 5 Even the sworn statement of one of the petitioners, Fortunato Mercado,Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably showthat said petitioners were hired only as casuals, on an "on and off" basis, thus, it waswithin the prerogative of private respondent Aurora Cruz either to take in the petitionersto do further work or not after any single phase of agricultural work had been completedby them. 6

Respondent Labor Arbiter was also of the opinion that the real cause which triggeredthe filing of the complaint by the petitioners who are related to one another, either byconsanguinity or affinity, was the filing of a criminal complaint for theft against ReynaldoMercado, son of spouses Fortunate Mercado, Sr. and Rosa Mercado, for they evenasked the help of Jesus David, Zone Chairman of the locality to talk to privaterespondent, Aurora Cruz regarding said criminal case. 7 In his affidavit, Jesus Davidstated under oath that petitioners were never regularly employed by private respondent

Aurora Cruz but were, on-and-off hired to work and render services when needed, thusadding further support to the conclusion that petitioners were not regular and permanentemployees of private respondent Aurora Cruz. 8


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Respondent Labor Arbiter further held that only money claims from years 1976-1977,1977-1978 and 1978-1979 may be properly considered since all the other money claimshave prescribed for having accrued beyond the three (3) year period prescribed bylaw. 9 On grounds of equity, however, respondent Labor Arbiter awarded petitionersfinancial assistance by private respondent Aurora Cruz, in the amount of Ten Thousand

Pesos (P10,000.00) to be equitably divided among an the petitioners except petitionerFortunato Mercado, Jr. who had manifested his disinterest in the further prosecution ofhis complaint against private respondent. 10

Both parties filed their appeal with the National Labor Relations Commissions (NLRC).Petitioners questioned respondent Labor Arbiter's finding that they were not regular andpermanent employees of private respondent Aurora Cruz while private respondentsquestioned the award of financial assistance granted by respondent Labor Arbiter.

The NLRC ruled in favor of private respondents affirming the decision of the respondentLabor Arbiter, with the modification of the deletion of the award for financial assistance

to petitioners. The dispositive portion of the decision of the NLRC reads:

WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino datedMarch 3, 1983 is hereby modified in that the award of P10,000.00 financialassistance should be deleted. The said Decision is affirmed in all otheraspects.

SO ORDERED. 11

Petitioners filed a motion for reconsideration of the Decision of the Third Division of theNLRC dated 8 August 1984; however, the NLRC denied tills motion in a resolution

dated 17 August 1987.

12

In the present Petition for certiorari, petitioners seek the reversal of the above-mentioned rulings. Petitioners contend that respondent Labor Arbiter and respondentNLRC erred when both ruled that petitioners are not regular and permanent employeesof private respondents based on the terms and conditions of their hiring, for saidfindings are contrary to the provisions of Article 280 of the Labor Code. 13 They submitthat petitioners' employment, even assuming said employment were seasonal,continued for so many years such that, by express provision of Article 280 of the LaborCode as amended, petitioners have become regular and permanent employees. 14

Moreover, they argue that Policy Instruction No. 12

15

of the Department of Labor andEmployment clearly lends support to this contention, when it states:

PD 830 has defined the concept of regular and casual employment. Whatdetermines regularity or casualness is not the employment contract,written or otherwise, but the nature of the job. If the job is usuallynecessary or desirable to the main business of the employer, thenemployment is regular. If not, then the employment is casual. Employment


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for a definite period which exceeds one (1) year shall be considered re forthe duration of the definite period.

This concept of re and casual employment is designed to put an end tocasual employment in regular jobs which has been abused by many

employers to prevent so-called casuals from enjoying the benefits ofregular employees or to prevent casuals from joining unions.

This new concept should be strictly enforced to give meaning to theconstitutional guarantee of employment tenure. 16

Tested under the laws invoked, petitioners submit that it would be unjust, if not unlawful,to consider them as casual workers since they have been doing all phases ofagricultural work for so many years, activities which are undeniably necessary,desirable and indispensable in the rice and sugar cane production business of theprivate respondents. 17

In the Comment filed by private respondents, they submit that the decision of the LaborArbiter, as aimed by respondent NLRC, that petitioners were only hired as casuals, isbased on solid evidence presented by the parties and also by the Chief of the SpecialTask Force of the NLRC Regional Office and, therefore, in accordance with the rule onfindings of fact of administrative agencies, the decision should be given greatweight. 18 Furthermore, they contend that the arguments used by petitioners inquestioning the decision of the Labor Arbiter were based on matters which were notoffered as evidence in the case heard before the regional office of the then Ministry ofLabor but rather in the case before the Social Security Commission, also between thesame parties. 19

Public respondent NLRC filed a separate comment prepared by the Solicitor General. Itsubmits that it has long been settled that findings of fact of administrative agencies ifsupported by substantial evidence are entitled to great weight. 20 Moreover, it arguesthat petitioners cannot be deemed to be permanent and regular employees since theyfall under the exception stated in Article 280 of the Labor Code, which reads:

The provisions of written agreements to the contrary notwithstanding andregardless of the oral agreements of the parties, an employment shall bedeemed to be regular where the employee has been engaged to performactivities which are usually necessary or desirable in the usual business ortrade of the employer, except where the employment has been fixed for aspecific project or undertaking the completion or termination of which hasbeen determined at the time of the engagement of the employee orwherethe work or services to be performed is seasonal in nature and theemployment is for the duration of the season. 21 (emphasis supplied)

The Court resolved to give due course to the petition and required the parties to submittheir respective memoranda after which the case was deemed submitted for decision.


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The petition is not impressed with merit.

The invariable rule set by the Court in reviewing administrative decisions of theExecutive Branch of the Government is that the findings of fact made therein arerespected, so long as they are supported by substantial evidence, even if not

overwhelming or preponderant;

22

that it is not for the reviewing court to weigh theconflicting evidence, determine the credibility of the witnesses or otherwise substitute itsown judgment for that of the administrative agency on the sufficiency of theevidence; 23 that the administrative decision in matters within the executive's jurisdictioncan only be set aside upon proof of gross abuse of discretion, fraud, or error of law. 24

The questioned decision of the Labor Arbiter reads:

Focusing the spotlight of judicious scrutiny on the evidence on record andthe arguments of both parties, it is our well-discerned opinion that thepetitioners are not regular and permanent workers of the respondents.

The very nature of the terms and conditions of their hiring reveal that thepetitioners were required to perform p of cultural work for a definite period,after which their services are available to any farm owner. We cannotshare the arguments of the petitioners that they worked continuously thewhole year round for twelve hours a day. This, we feel, is an exaggerationwhich does not deserve any serious consideration inasmuch as the plan ofrice and sugar cane does not entail a whole year operation, the area inquestion being comparatively small. It is noteworthy that the findings of theChief of the Special Task Force of the Regional Office are similar to this.

In fact, the sworn statement of one of the petitioners Fortunato Mercado,

Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado,indubitably shows that said petitioners were only hired as casuals, on-and-off basis. With this kind of relationship between the petitioners and therespondent Aurora Cruz, we feel that there is no basis in law upon whichthe claims of the petitioners should be sustained, more specially theircomplaint for illegal dismissal. It is within the prerogative of respondent

Aurora Cruz either to take in the petitioners to do further work or not afterany single phase of agricultural work has been completed by them. Weare of the opinion that the real cause which triggered the filing of thiscomplaint by the petitioners who are related to one another, either byconsanguinity or affinity was due to the filing of a criminal complaint by therespondent Aurora Cruz against Reynaldo Mercado, son of spousesFortunato Mercado, Sr. and Rosa Mercado. In April 1979, according toJesus David, Zone Chairman of the locality where the petitioners andrespondent reside, petitioner Fortunato Mercado, Sr. asked for helpregarding the case of his son, Reynaldo, to talk with respondent AuroraCruz and the said Zone Chairman also stated under oath that thepetitioners were never regularly employed by respondent Aurora Cruz butwere on-and-off hired to work to render services when needed. 25


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A careful examination of the foregoing statements reveals that the findings of the LaborArbiter in the case are ably supported by evidence. There is, therefore, no circumstancethat would warrant a reversal of the questioned decision of the Labor Arbiter as affirmedby the National Labor Relations Commission.

The contention of petitioners that the second paragraph of Article 280 of the Labor Codeshould have been applied in their case presents an opportunity to clarify the afore-mentioned provision of law.

Article 280 of the Labor Code reads in full:

Article 280. Regular and Casual Employment. The provisions of writtenagreement to the contrary notwithstanding and regardless of the oralagreement of the parties, an employment shall be deemed to be regularwhere the employee has been engaged to perform activities which areusually necessary or desirable in the usual business or trade of the

employer, except where the employment has been fixed for a specificproject or undertaking the completion or termination of which has beendetermined at the time of the engagement of the employee or where thework or services to be performed is seasonal in nature and theemployment is for the duration of the season.

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

actually exists.

The first paragraph answers the question of who are employees. It states that,regardless of any written or oral agreement to the contrary, an employee is deemedregular where he is engaged in necessary or desirable activities in the usual business ortrade of the employer, except for project employees.

A project employee has been defined to be one whose employment has been fixed for aspecific project or undertaking, the completion or termination of which has beendetermined at the time of the engagement of the employee, or where the work orservice to be performed is seasonal in nature and the employment is for the duration ofthe season 26 as in the present case.

The second paragraph of Art. 280 demarcates as "casual" employees, all otheremployees who do not fan under the definition of the preceding paragraph. The proviso,in said second paragraph, deems as regular employees those "casual" employees whohave rendered at least one year of service regardless of the fact that such service maybe continuous or broken.


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Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 isapplicable to their case and that the Labor Arbiter should have considered them regularby virtue of said proviso. The contention is without merit.

The general rule is that the office of a proviso is to qualify or modify only the phrase

immediately preceding it or restrain or limit the generality of the clause that itimmediately follows. 27 Thus, it has been held that a proviso is to be construed withreference to the immediately preceding part of the provision to which it is attached, andnot to the statute itself or to other sections thereof. 28 The only exception to this rule iswhere the clear legislative intent is to restrain or qualify not only the phrase immediatelypreceding it (the proviso) but also earlier provisions of the statute or even the statuteitself as a whole. 29

Policy Instruction No. 12 of the Department of Labor and Employment discloses that theconcept of regular and casual employees was designed to put an end to casualemployment in regular jobs, which has been abused by many employers to prevent

called casuals from enjoying the benefits of regular employees or to prevent casualsfrom joining unions. The same instructions show that the proviso in the secondparagraph of Art. 280 was not designed to stifle small-scale businesses nor to oppressagricultural land owners to further the interests of laborers, whether agricultural orindustrial. What it seeks to eliminate are abuses of employers against their employeesand not, as petitioners would have us believe, to prevent small-scale businesses fromengaging in legitimate methods to realize profit. Hence, the proviso is applicable only tothe employees who are deemed "casuals" but not to the "project" employees nor theregular employees treated in paragraph one of Art. 280.

Clearly, therefore, petitioners being project employees, or, to use the correct

term, seasonal employees, their employment legally ends upon completion of theproject or the season. The termination of their employment cannot and should notconstitute an illegal dismissal. 30

WHEREFORE, the petition is DISMISSED. The decision of the National Labor RelationsCommission affirming that of the Labor Arbiter, under review, is AFFIRMED. Nopronouncement as to costs.

SO ORDERED.

Melencio-Herrera (Chairperson), Paras and Regalado, JJ., concur.

Sarmiento, J., on leave.


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G.R. No. L-48494 February 5, 1990

BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners,vs.RONALDO ZAMORA, the President ial Assistant for Legal Affairs, Office of the

President, and DOROTEO R. ALEGRE, respondents.

Quasha, Asperilla, Ancheta, Pea & Nolasco for petitioners.

Mauricio G. Domogon for respondent Alegre.

NARVASA,J.:

The question presented by the proceedings at bar1 is whether or not the provisions of

the Labor Code,

2

as amended,

3

have anathematized "fixed period employment" oremployment for a term.

The root of the controversy at bar is an employment contract in virtue of which DoroteoR. Alegre was engaged as athletic director by Brent School, Inc. at a yearlycompensation of P20,000.00. 4 The contract fixed a specific term for its existence, five(5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17,1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, andSeptember 14, 1974 reiterated the same terms and conditions, including the expiry date,as those contained in the original contract of July 18, 1971. 5

Some three months before the expiration of the stipulated period, or more precisely onApril 20,1976, Alegre was given a copy of the report filed by Brent School with theDepartment of Labor advising of the termination of his services effective on July 16,1976. The stated ground for the termination was "completion of contract, expiration ofthe definite period of employment." And a month or so later, on May 26, 1976, Alegreaccepted the amount of P3,177.71, and signed a receipt therefor containing the phrase,"in full payment of services for the period May 16, to July 17, 1976 as full payment ofcontract."

However, at the investigation conducted by a Labor Conciliator of said report oftermination of his services, Alegre protested the announced termination of his

employment. He argued that although his contract did stipulate that the same wouldterminate on July 17, 1976, since his services were necessary and desirable in theusual business of his employer, and his employment had lasted for five years, he hadacquired the status of a regular employee and could not be removed except for validcause. 6 The Regional Director considered Brent School's report as an applicationforclearance to terminate employment (not a report of termination), and accepting therecommendation of the Labor Conciliator, refused to give such clearance and insteadrequired the reinstatement of Alegre, as a "permanent employee," to his former position


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without loss of seniority rights and with full back wages. The Director pronounced "theground relied upon by the respondent (Brent) in terminating the services of thecomplainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite oddly, asprohibited by Circular No. 8, series of 1969, of the Bureau of Private Schools. 7

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

The School is now before this Court in a last attempt at vindication. That it will get here.

The employment contract between Brent School and Alegre was executed on July 18,

1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet beenpromulgated. Indeed, the Code did not come into effect until November 1, 1974, somethree years after the perfection of the employment contract, and rights and obligationsthereunder had arisen and been mutually observed and enforced.

At that time, i.e., before the advent of the Labor Code, there was no doubt whateverabout the validity of term employment. It was impliedly but nonetheless clearlyrecognized by the Termination Pay Law, R.A. 1052, 11 as amended by R.A.1787. 12 Basically, this statute provided that

In cases of employment, without a definite period, in a commercial,

industrial, or agricultural establishment or enterprise, the employer or theemployee may terminate at any time the employment with just cause; orwithout just cause in the case of an employee by serving written notice onthe employer at least one month in advance, or in the case of an employer,by serving such notice to the employee at least one month in advance orone-half month for every year of service of the employee, whichever islonger, a fraction of at least six months being considered as one wholeyear.

The employer, upon whom no such notice was served in case oftermination of employment without just cause, may hold the employeeliable for damages.

The employee, upon whom no such notice was served in case oftermination of employment without just cause, shall be entitled tocompensation from the date of termination of his employment in anamount equivalent to his salaries or wages corresponding to the requiredperiod of notice.


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There was, to repeat, clear albeit implied recognition of the licitness of term employment.RA 1787 also enumerated what it considered to be just causes for terminating anemployment without a definite period, either by the employer or by the employee withoutincurring any liability therefor.

Prior, thereto, it was the Code of Commerce which governed employment without afixed period, and also implicitly acknowledged the propriety of employment with a fixedperiod. Its Article 302 provided that

In cases in which the contract of employment does not have a fixed period,any of the parties may terminate it, notifying the other thereof one monthin advance.

The factor or shop clerk shall have a right, in this case, to the salarycorresponding to said month.

The salary for the month directed to be given by the said Article 302 of the Codeof Commerce to the factor or shop clerk, was known as the mesada (from mes,Spanish for "month"). When Article 302 (together with many other provisions ofthe Code of Commerce) was repealed by the Civil Code of the Philippines,Republic Act No. 1052 was enacted avowedly for the precise purpose ofreinstating the mesada.

Now, the Civil Code of the Philippines, which was approved on June 18, 1949 andbecame effective on August 30,1950, itself deals with obligations with a period insection 2, Chapter 3, Title I, Book IV; and with contracts of labor and for a piece of work,in Sections 2 and 3, Chapter 3, Title VIII, respectively, of Book IV. No prohibition against

term-or fixed-period employment is contained in any of its articles or is otherwisededucible therefrom.

It is plain then that when the employment contract was signed between Brent Schooland Alegre on July 18, 1971, it was perfectly legitimate for them to include in it astipulation fixing the duration thereof Stipulations for a term were explicitly recognizedas valid by this Court, for instance, in Biboso v. Victorias Milling Co., Inc., promulgatedon March 31, 1977, 13 and J. Walter Thompson Co. (Phil.) v. NLRC, promulgated onDecember 29, 1983. 14 The Thompsoncase involved an executive who had beenengaged for a fixed period of three (3) years. Biboso involved teachers in a privateschool as regards w

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