REGULAR EMPLOYEES: AZEL - GR 164156 (September 26, 2006) ABS-CBN vs.

NAZARENO JOIDA - GR 150658 (February 9, 2007) Fabela vs. San MIGUEL CORP JOIDA - GR. 70705 (August 21, 1989) DE LEON vs. NLRC ABEGAIL - GR. 149440 (January 28, 2003) HACIENDA FATIMA vs. VILLEGAS CASUAL EMPLOYEES: ANNA - GR.119253 (April 10, 1997) CONTI vs. NLRC LAWRENCE - GR 71664 (Feb. 28, 1992) BCC vs. NLRC SHEERA - GR 154072 PAGUIO vs. PLDT PROJECT EMPLOYEES: KRISLYN - G.R. No. 116781 September 5, 1997 - TOMAS LAO vs. NLRC FIXED PERIOD EMPLOYEES: LESLIE - G.R. No. 122955 April 15, 1998 - St. THERESA vs. NLRC

p2 p26 p34 p40 p48 p55 p62

p70

p80

FIRST DIVISION

ABS-CBN BROADCASTING CORPORATION, Petitioner,

G.R. No. 164156 Present PANGANIBAN, C.J., Chairperson, YNARES-SANTIAGO, AUSTRIA-MARTINEZ, CALLEJO, SR., and CHICO-NAZARIO, JJ.

- versus -

MARLYN NAZARENO, Promulgated: MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE LERASAN, Respondents. September 26, 2006 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x DECISION

CALLEJO, SR., J.: Before us is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 76582 and the Resolution denying the motion for reconsideration thereof. The CA affirmed the Decision[2] and Resolution[3] of the National Labor Relations Commission (NLRC) in NLRC Case No. V-0007622001 (RAB Case No. VII-10-1661-2001) which likewise affirmed, with modification, the decision of the Labor Arbiter declaring the respondents Marlyn Nazareno, Merlou Gerzon, Jennifer Deiparine and Josephine Lerasan as regular employees. The Antecedents Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a network of television and radio stations, whose operations revolve around the broadcast, transmission, and relay of telecommunication signals. It sells and deals in or otherwise utilizes the airtime it

generates from its radio and television operations. It has a franchise as a broadcasting company, and was likewise issued a license and authority to operate by the National Telecommunications Commission. Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees identification cards and were required to work for a minimum of eight hours a day, including Sundays and holidays. They were made to perform the following tasks and duties:
a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of respondent ABS-CBN; b) Coordinate, arrange personalities for air interviews; c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports; d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints; e) Assist, anchor program interview, etc; and f) Record, log clerical reports, man based control radio.[4]

Their respective working hours were as follows:

Name 1. Marlene Nazareno 2. Jennifer Deiparine 3. Joy Sanchez 4. Merlou Gerzon Time No. of Hours 4:30 A.M.-8:00 A.M. 7 8:00 A.M.-12:00 noon 4:30 A.M.-12:00M.N. (sic) 7 1:00 P.M.-10:00 P.M.(Sunday) 9 hrs. 9:00 A.M.-6:00 P.M. (WF) 9 hrs. 9:00 A.M.-6:00 P.M. 9 hrs.[5]

The PAs were under the control and supervision of Assistant Station Manager Dante J. Luzon, and News Manager Leo Lastimosa. On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period from December 11, 1996 to December 11, 1999. However, since

petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.[6] On July 20, 2000, petitioner, through Dante Luzon, issued a Memorandum informing the PAs that effective August 1, 2000, they would be assigned to nondrama programs, and that the DYAB studio operations would be handled by the studio technician. Thus, their revised schedule and other assignments would be as follows:
Monday Saturday 4:30 A.M. 8:00 A.M. Marlene Nazareno. Miss Nazareno will then be assigned at the Research Dept. From 8:00 A.M. to 12:00 4:30 P.M. 12:00 MN Jennifer Deiparine Sunday 5:00 A.M. 1:00 P.M. Jennifer Deiparine 1:00 P.M. 10:00 P.M. Joy Sanchez

Respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo Lastimosa. On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC. The Labor Arbiter directed the parties to submit their respective position papers. Upon respondents failure to fil e their position papers within the reglementary period, Labor Arbiter Jose G. Gutierrez issued an Order dated

April 30, 2001, dismissing the complaint without prejudice for lack of interest to pursue the case. Respondents received a copy of the Order on May 16, 2001.[7] Instead of re-filing their complaint with the NLRC within 10 days from May 16, 2001, they filed, on June 11, 2001, an Earnest Motion to Refile Complaint with Motion to Admit Position Paper and Motion to Submit Case For Resolution.[8] The Labor Arbiter granted this motion in an Order dated June 18, 2001, and forthwith admitted the position paper of the complainants. Respondents made the following allegations:
1. Complainants were engaged by respondent ABS-CBN as regular and full-time employees for a continuous period of more than five (5) years with a monthly salary rate of Four Thousand (P4,000.00) pesos beginning 1995 up until the filing of this complaint on November 20, 2000. Machine copies of complainants ABS-CBN Employees Identification Card and salary vouchers are hereto attached as follows, thus: I. Jennifer Deiparine: Exhibit A - ABS-CBN Employees Identification Card Exhibit B, - ABS-CBN Salary Voucher from Nov. Exhibit B-1 & 1999 to July 2000 at P4,000.00 Exhibit B-2 Date employed: September 15, 1995 Length of service: 5 years & nine (9) months Merlou Gerzon Exhibit C Exhibit D Exhibit D-1 & Exhibit D-2 Date employed: Length of service: III. Marlene Nazareno Exhibit E Exhibit E Exhibit E-1 & Exhibit :E-2 Date employed: Length of service: - ABS-CBN Employees Identification Card

II.

- ABS-CBN Salary Voucher from March 1999 to January 2001 at P4,000.00 September 1, 1995 5 years & 10 months - ABS-CBN Employees Identification Card - ABS-CBN Salary Voucher from Nov. 1999 to December 2000 April 17, 1996 5 years and one (1) month

IV.

Joy Sanchez Lerasan Exhibit F - ABS-CBN Employees Identification Card

Exhibit F-1 Exhibit F-2 & Exhibit F-3 Exhibit F-4

- ABS-CBN Salary Voucher from Aug. 2000 to Jan. 2001 - Certification dated July 6, 2000 Acknowledging regular status of Complainant Joy Sanchez Lerasan Signed by ABS-CBN Administrative Officer May Kima Hife April 15, 1998 3 yrs. and one (1) month[9]

Date employed: Length of service:

Respondents insisted that they belonged to a work pool from which petitioner chose persons to be given specific assignments at its discretion, and were thus under its direct supervision and control regardless of nomenclature. They prayed that judgment be rendered in their favor, thus:
WHEREFORE, premises considered, this Honorable Arbiter is most respectfully prayed, to issue an order compelling defendants to pay complainants the following: 1. One Hundred Thousand Pesos (P100,000.00) each and by way of moral damages; 2. Minimum wage differential; 3. Thirteenth month pay differential; 4. Unpaid service incentive leave benefits; 5. Sick leave; 6. Holiday pay; 7. Premium pay; 8. Overtime pay; 9. Night shift differential. Complainants further pray of this Arbiter to declare them regular and permanent employees of respondent ABS-CBN as a condition precedent for their admission into the existing union and collective bargaining unit of respondent company where they may as such acquire or otherwise perform their obligations thereto or enjoy the benefits due therefrom. Complainants pray for such other reliefs as are just and equitable under the premises.[10]

For its part, petitioner alleged in its position paper that the respondents were PAs who basically assist in the conduct of a particular program ran by an anchor or talent. Among their duties include monitoring and receiving incoming calls from

listeners and field reporters and calls of news sources; generally, they perform leg work for the anchors during a program or a particular production. They are considered in the industry as program employees in that, as distinguished from regular or station employees, they are basically engaged by the station for a particular or specific program broadcasted by the radio station. Petitioner asserted that as PAs, the complainants were issued talent information sheets which are updated from time to time, and are thus made the basis to determine the programs to which they shall later be called on to assist. The program assignments of complainants were as follows:
a. Complainant Nazareno assists in the programs: 1) Nagbagang Balita (early morning edition) 2) Infor Hayupan 3) Arangkada (morning edition) 4) Nagbagang Balita (mid-day edition)

b. Complainant Deiparine assists in the programs: 1) Unzanith 2) Serbisyo de Arevalo 3) Arangkada (evening edition) 4) Balitang K (local version) 5) Abante Subu 6) Pangutana Lang c. Complainant Gerzon assists in the program: 1) On Mondays and Tuesdays: (a) Unzanith (b) Serbisyo de Arevalo (c) Arangkada (evening edition) (d) Balitang K (local version) (e) Abante Sugbu (f) Pangutana Lang 2) On Thursdays Nagbagang Balita 3) On Saturdays (a) Nagbagang Balita (b) Info Hayupan (c) Arangkada (morning edition) (d) Nagbagang Balita (mid-day edition) 4) On Sundays: (a) Siesta Serenata (b) Sunday Chismisan (c) Timbangan sa Hustisya (d) Sayri ang Lungsod

(e)

Haranahan[11]

Petitioner maintained that PAs, reporters, anchors and talents occasionally sideline for other programs they produce, such as drama

talents in other productions. As program employees, a PAs engagement is coterminous with the completion of the program, and may be extended/renewed provided that the program is on-going; a PA may also be assigned to new programs upon the cancellation of one program and the commencement of another. As such program employees, their compensation is computed on a program basis, a fixed amount for performance services irrespective of the time consumed. At any rate, petitioner claimed, as the payroll will show, respondents were paid all salaries and benefits due them under the law.[12] Petitioner also alleged that the Labor Arbiter had no jurisdiction to involve the CBA and interpret the same, especially since respondents were not covered by the bargaining unit. On July 30, 2001, the Labor Arbiter rendered judgment in favor of the respondents, and declared that they were regular employees of petitioner; as such, they were awarded monetary benefits. The fallo of the decision reads:
WHEREFORE, the foregoing premises considered, judgment is hereby rendered declaring the complainants regular employees of the respondent ABSCBN Broadcasting Corporation and directing the same respondent to pay complainants as follows: I II III IV Merlou A. Gerzon Marlyn Nazareno Jennifer Deiparine Josephine Sanchez Lerazan P12,025.00 12,025.00 12,025.00 12,025.00 _________ P48,100.00

plus ten (10%) percent Attorneys Fees or a TOTAL aggregate amount of PESOS: FIFTY TWO THOUSAND NINE HUNDRED TEN (P52,910.00). Respondent Veneranda C. Sy is absolved from any liability. SO ORDERED.[13]

However, the Labor Arbiter did not award money benefits as provided in the CBA on his belief that he had no jurisdiction to interpret and apply the agreement,

as the same was within the jurisdiction of the Voluntary Arbitrator as provided in Article 261 of the Labor Code. Respondents counsel received a copy of the decision on August 29, 2001. Respondent Nazareno received her copy on August 27, 2001, while the other respondents received theirs on September 8, 2001. Respondents signed and filed their Appeal Memorandum on September 18, 2001. For its part, petitioner filed a motion for reconsideration, which the Labor Arbiter denied and considered as an appeal, conformably with Section 5, Rule V, of the NLRC Rules of Procedure. Petitioner forthwith appealed the decision to the NLRC, while respondents filed a partial appeal. In its appeal, petitioner alleged the following:
1. That the Labor Arbiter erred in reviving or re-opening this case which had long been dismissed without prejudice for more than thirty (30) calendar days; That the Labor Arbiter erred in depriving the respondent of its Constitutional right to due process of law; That the Labor Arbiter erred in denying respondents Motion for Reconsideration on an interlocutory order on the ground that the same is a prohibited pleading; That the Labor Arbiter erred when he ruled that the complainants are regular employees of the respondent; That the Labor Arbiter erred when he ruled that the complainants are entitled to 13th month pay, service incentive leave pay and salary differential; and That the Labor Arbiter erred when he ruled that complainants are entitled to attorneys fees.[14]

2. 3.

4. 5. 6.

On November 14, 2002, the NLRC rendered judgment modifying the decision of the Labor Arbiter. The fallo of the decision reads:
WHEREFORE, premises considered, the decision of Labor Arbiter Jose G. Gutierrez dated 30 July 2001 is SET ASIDE and VACATED and a new one

is entered ORDERINGrespondent ABS-CBN Broadcasting Corporation, as follows: 1. To pay complainants of their wage differentials and other benefits arising from the CBA as of 30 September 2002 in the aggregate amount of Two Million Five Hundred, Sixty-One Thousand Nine Hundred Forty-Eight Pesos and 22/100 (P2,561,948.22), broken down as follows: a. Deiparine, Jennifer P 716,113.49 b. Gerzon, Merlou 716,113.49 c. Nazareno, Marlyn 716,113.49 d. Lerazan, Josephine Sanchez 413,607.75 Total - P 2,561,948.22 2. To deliver to the complainants Two Hundred Thirty-Three (233) sacks of rice as of 30 September 2002 representing their rice subsidy in the CBA, broken down as follows: a. Deiparine, Jennifer 60 Sacks b. Gerzon, Merlou 60 Sacks c. Nazareno, Marlyn 60 Sacks d. Lerazan, Josephine Sanchez 53 Sacks Total 233 Sacks; and 3. To grant to the complainants all the benefits of the CBA after 30 September 2002. SO ORDERED.[15]

The NLRC declared that the Labor Arbiter acted conformably with the Labor Code when it granted respondents motion to refile the complaint and admit their position paper. Although respondents were not parties to the CBA between petitioner and the ABS-CBN Rank-and-File Employees Union, the NLRC nevertheless granted and computed respondents monetary benefits based on the 1999 CBA, which was effective until September 2002. The NLRC also ruled that the Labor Arbiter had jurisdiction over the complaint of respondents because they acted in their individual capacities and not as members of the union. Their claim for monetary benefits was within the context of Article 217(6) of the Labor Code. The validity of respondents claim does not depend upon the interpretation of the CBA.

The NLRC ruled that respondents were entitled to the benefits under the CBA because they were regular employees who contributed to the profits of petitioner through their labor. The NLRC cited the ruling of this Court in New Pacific Timber & Supply Company v. National Labor Relations Commission.[16] Petitioner filed a motion for reconsideration, which the NLRC denied. Petitioner thus filed a petition for certiorari under Rule 65 of the Rules of Court before the CA, raising both procedural and substantive issues, as follows: (a) whether the NLRC acted without jurisdiction in admitting the appeal of respondents; (b) whether the NLRC committed palpable error in scrutinizing the reopening and revival of the complaint of respondents with the Labor Arbiter upon due notice despite the lapse of 10 days from their receipt of the July 30, 2001 Order of the Labor Arbiter; (c) whether respondents were regular employees; (d) whether the NLRC acted without jurisdiction in entertaining and resolving the claim of the respondents under the CBA instead of referring the same to the Voluntary Arbitrators as provided in the CBA; and (e) whether the NLRC acted with grave abuse of discretion when it awarded monetary benefits to respondents under the CBA although they are not members of the appropriate bargaining unit. On February 10, 2004, the CA rendered judgment dismissing the petition. It held that the perfection of an appeal shall be upon the expiration of the last day to appeal by all parties, should there be several parties to a case. Since respondents received their copies of the decision on September 8, 2001 (except respondent Nazareno who received her copy of the decision on August 27, 2001), they had until September 18, 2001 within which to file their Appeal Memorandum. Moreover, the CA declared that respondents failure to submit their position paper on time is not a ground to strike out the paper from the records, much less dismiss a complaint. Anent the substantive issues, the appellate court stated that respondents are not mere project employees, but regular employees who perform tasks necessary and desirable in the usual trade and business of petitioner and not just its project employees. Moreover, the CA added, the award of benefits accorded to rank-andfile employees under the 1996-1999 CBA is a necessary consequence of the NLRC ruling that respondents, as PAs, are regular employees.

Finding no merit in petitioners motion for reconsideration, the CA denied the same in a Resolution[17] dated June 16, 2004. Petitioner thus filed the instant petition for review on certiorari and raises the following assignments of error:
1. THE HONORABLE COURT OF APPEALS ACTED WITHOUT JURISDICTION AND GRAVELY ERRED IN UPHOLDING THE NATIONAL LABOR RELATIONS COMMISSION NOTWITHSTANDING THE PATENT NULLITY OF THE LATTERS DECISION AND RESOLUTION. 2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC FINDING RESPONDENTS REGULAR EMPLOYEES. 3. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC AWARDING CBA BENEFITS TO RESPONDENTS.[18]

Considering that the assignments of error are interrelated, the Court shall resolve them simultaneously. Petitioner asserts that the appellate court committed palpable and serious error of law when it affirmed the rulings of the NLRC, and entertained respondents appeal from the decision of the Labor Arbiter despite the admitted lapse of the reglementary period within which to perfect

the same. Petitioner likewise maintains that the 10-day period to appeal must be reckoned from receipt of a partys counsel, not from the time the party learns of the decision, that is, notice to counsel is notice to party and not the other way around. Finally, petitioner argues that the reopening of a complaint which the Labor Arbiter has dismissed without prejudice is a clear violation of Section 1, Rule V of the NLRC Rules; such order of dismissal had already attained finality and can no longer be set aside. Respondents, on the other hand, allege that their late appeal is a non-issue because it was petitioners own timely appeal that empowered the NLRC to reopen the case. They assert that although the appeal was filed 10 days late, it may still be given due course in the interest of substantial justice as an exception to the general rule that the negligence of a counsel binds the client. On the issue of the late filing of their position paper, they maintain that this is not a ground to strike it out from the records or dismiss the complaint. We find no merit in the petition. We agree with petitioners contention that the perfection of an appeal within the statutory or reglementary period is not only mandatory, but also jurisdictional; failure to do so renders the assailed decision final and executory and deprives the appellate court or body of the legal authority to alter the final judgment, much less entertain the appeal. However, this Court has time and again ruled that in exceptional cases, a belated appeal may be given due course if greater injustice may occur if an appeal is not given due course than if the reglementary period to appeal were strictly followed.[19] The Court resorted to this extraordinary measure even at the expense of sacrificing order and efficiency if only to serve the greater principles of substantial justice and equity.[20] In the case at bar, the NLRC did not commit a grave abuse of its discretion in giving Article 223[21] of the Labor Code a liberal application to prevent the miscarriage of justice. Technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties.[22] We have held in a catena of cases that technical rules are not binding in labor cases and are not to be applied strictly if the result would be detrimental to the workingman.[23]

Admittedly, respondents failed to perfect their appeal from the decision of the Labor Arbiter within the reglementary period therefor. However, petitioner perfected its appeal within the period, and since petitioner had filed a timely appeal, the NLRC acquired jurisdiction over the case to give due course to its appeal and render the decision of November 14, 2002. Case law is that the party who failed to appeal from the decision of the Labor Arbiter to the NLRC can still participate in a separate appeal timely filed by the adverse party as the situation is considered to be of greater benefit to both parties.[24] We find no merit in petitioners contention that the Labor Arbiter abused his discretion when he admitted respondents position paper which had been belatedly filed. It bears stressing that the Labor Arbiter is mandated by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without technicalities of law or procedure, all in the interest of due process.[25] Indeed, as stressed by the appellate court, respondents failure to submit a position paper on time is not a ground for striking out the paper from the records, much less for dismissing a complaint.[26] Likewise, there is simply no truth to petitioners assertion that it was denied due process when the Labor Arbiter admitted respondents position paper without requiring it to file a comment before admitting said position paper. The essence of due process in administrative proceedings is simply an opportunity to explain ones side or an opportunity to seek reconsideration of the action or ruling complained of. Obviously, there is nothing in the records that would suggest that petitioner had absolute lack of opportunity to be heard.[27] Petitioner had the right to file a motion for reconsideration of the Labor Arbiters admission of respondents position paper, and even file a Reply thereto. In fact, petitioner filed its position paper on April 2, 2001. It must be stressed that Article 280 of the Labor Code was encoded in our statute books to hinder the circumvention by unscrupulous employers of the employees right to security of tenure by indiscriminately and absolutely ruling out all written and oral agreements inharmonious with the concept of regular employment defined therein.[28] We quote with approval the following pronouncement of the NLRC:
The complainants, on the other hand, contend that respondents assailed the Labor Arbiters order dated 18 June 2001 as violative of the NLRC Rules of Procedure and as such is violative of their right to procedural due process. That while suggesting that an Order be instead issued by the Labor Arbiter for

complainants to refile this case, respondents impliedly submit that there is not any substantial damage or prejudice upon the refiling, even so, respondents suggestion acknowledges complainants right to prosecute this case, albeit with the burden of repeating the same procedure, thus, entailing additional time, efforts, litigation cost and precious time for the Arbiter to repeat the same process twice. Respondents suggestion, betrays its notion of prolonging, rather than promoting the early resolution of the case. Although the Labor Arbiter in his Order dated 18 June 2001 which revived and re-opened the dismissed case without prejudice beyond the ten (10) day reglementary period had inadvertently failed to follow Section 16, Rule V, Rules Procedure of the NLRC which states: A party may file a motion to revive or re-open a case dismissed without prejudice within ten (10) calendar days from receipt of notice of the order dismissing the same; otherwise, his only remedy shall be to re-file the case in the arbitration branch of origin. the same is not a serious flaw that had prejudiced the respondents right to due process. The case can still be refiled because it has not yet prescribed. Anyway, Article 221 of the Labor Code provides: In any proceedings before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process. The admission by the Labor Arbiter of the complainants Position Paper and Supplemental Manifestation which were belatedly filed just only shows that he acted within his discretion as he is enjoined by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process. Indeed, the failure to submit a position paper on time is not a ground for striking out the paper from the records, much less for dismissing a complaint in the case of the complainant. (University ofImmaculate Conception vs. UIC Teaching and NonTeaching Personnel Employees, G.R. No. 144702, July 31, 2001). In admitting the respondents position paper albeit late, the Labor Arbiter acted within her discretion. In fact, she is enjoined by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without technicalities

of law or procedure, all in the interest of due process. (Panlilio vs. NLRC, 281 SCRA 53). The respondents were given by the Labor Arbiter the opportunity to submit position paper. In fact, the respondents had filed their position paper on 2 April 2001. What is material in the compliance of due process is the fact that the parties are given the opportunities to submit position papers. Due process requirements are satisfied where the parties are given the opportunities to submit position papers. (Laurence vs. NLRC, 205 SCRA 737). Thus, the respondent was not deprived of its Constitutional right to due process of law.[29]

We reject, as barren of factual basis, petitioners contention that respondents are considered as its talents, hence, not regular employees of the broadcasting company. Petitioners claim that the functions performed by the respondents are not at all necessary, desirable, or even vital to its trade or business is belied by the evidence on record.

Case law is that this Court has always accorded respect and finality to the findings of fact of the CA, particularly if they coincide with those of the Labor Arbiter and the National Labor Relations Commission, when supported by substantial evidence.[30] The question of whether respondents are regular or project employees or independent contractors is essentially factual in nature; nonetheless, the Court is constrained to resolve it due to its tremendous effects to the legions of production assistants working in the Philippine broadcasting industry. We agree with respondents contention that where a person has rendered at least one year of service, regardless of the nature of the activity performed, or where the work is continuous or intermittent, the employment is considered regular as long as the activity exists, the reason being that a customary appointment is not indispensable before one may be formally declared as having attained regular status. 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.

In Universal Robina Corporation v. Catapang,[31] the Court reiterated the test in determining whether one is a regular employee:
The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be

determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.[32]

As elaborated by this Court in Magsalin v. National Organization of Working Men:[33]

Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a regular workers security of tenure, however, can hardly be doubted. In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The standard, supplied by the law itself, is whether the work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the particular business or trade. But, although the work to be performed is only for a specific project or seasonal, where a person thus engaged has been performing the job for at least one year, even if the performance is not continuous or is merely intermittent, the law deems the repeated and continuing need for its performance as being sufficient to indicate the necessity or desirability of that activity to the business or trade of the employer. The employment of such person is also then deemed to be regular with respect to such activity and while such activity exists.[34]

Not considered regular employees are project employees, the completion or termination of which is more or less determinable at the time of employment, such as those employed in connection with a particular construction project, and seasonal employees whose employment by its nature is only desirable for a limited period of time. Even then, any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity performed and while such activity actually exists.

It is of no moment that petitioner hired respondents as talents. The fact that respondents received pre-agreed talent fees instead of salaries, that they did not observe the required office hours, and that they were permitted to join other productions during their free time are not conclusive of the nature of their employment. Respondents cannot be considered talents because they are not actors or actresses or radio specialists or mere clerks or utility employees. They are regular employees who perform several different duties under the control and direction of ABS-CBN executives and supervisors. Thus, there are two kinds of regular employees under the law: (1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, [35] with respect to the activities in which they are employed. The law overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining situation necessitates the succor of the State. What determines whether a certain employment is regular or otherwise is not the will or word of the employer, to which the worker oftentimes acquiesces, much less the procedure of hiring the employee or the manner of paying the salary or the actual time spent at work. It is the character of the activities performed in relation to the particular trade or business taking into account all the circumstances, and in some cases the length of time of its performance and its continued existence.[36] It is obvious that one year after they were employed by petitioner, respondents became regular employees by operation of law.[37]

Additionally, respondents cannot be considered as project or program employees because no evidence was presented to show that the duration and scope of the project were determined or specified at the time of their engagement. Under existing jurisprudence, project could refer to two distinguishable types of activities. First, a project may refer to a particular job or undertaking that is within the regular or usual business of the employer, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. Second, the term project may also refer to a particular job or undertaking that is not within the regular business of the employer. 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.[38] The principal test 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.[39] In this case, it is undisputed that respondents had continuously performed the same activities for an average of five years. Their assigned tasks are necessary or desirable in the usual business or trade of the petitioner. The persisting need for their services is sufficient evidence of the necessity and indispensability of such services to petitioners business or trade.[40] While length of time may not be a sole controlling test for project employment, it can be a strong factor to determine whether the employee was hired for a specific undertaking or in fact tasked to perform functions which are vital, necessary and indispensable to the usual trade or business of the employer.[41] We note further that petitioner did not report the termination of respondents employment in the particular project to the Department of Labor and Employment Regional Office having jurisdiction over the workplace within 30 days following the date of their separation from work, using the prescribed form on employees termination/ dismissals/suspensions.[42] As gleaned from the records of this case, petitioner itself is not certain how to categorize respondents. In its earlier pleadings, petitioner classified respondents asprogram employees, and in later pleadings, independent contractors. Program employees, or project employees, are different from independent contractors because in the case of the latter, no employer-employee relationship exists.

Petitioners reliance on the ruling of this Court in Sonza v. ABS-CBN Broadcasting Corporation[43] is misplaced. In that case, the Court explained why Jose Sonza, a well-known television and radio personality, was an independent contractor and not a regular employee:
A. Selection and Engagement of Employee ABS-CBN engaged SONZAS services to co-host its television and radio programs because of SONZAS peculiar skills, talent and celebrity status. SONZA contends that the discretion used by respondent in specifically selecting and hiring complainant over other broadcasters of possibly similar experience and qualification as complainant belies respondents claim of independent contractorship. Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of SONZA,because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but would have hired him through its personnel department just like any other employee. In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We must consider all the circumstances of the relationship, with the control test being the most important element. B. Payment of Wages ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts that this mode of fee payment shows that he was an employee of ABS-CBN. SONZA also points out that ABS-CBN granted him benefits and privileges which he would not have enjoyed if he were truly the subject of a valid job contract. All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-CBNs employee, there would be no need for the parties to stipulate on benefits such as SSS, Medicare, x x x and 13th month pay which the law automatically incorporates into every employer-employee contract. Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship. SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary that they indicate more an

independent contractual relationship rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZAS unique skills, talent and celebrity status not possessed by ordinary employees. Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such huge talent fees for his services. The power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an independent contractual relationship. The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee accruing under the Agreement.[44]

In the case at bar, however, the employer-employee relationship between petitioner and respondents has been proven. First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was required from them because they were merely hired through petitioners personnel department just like any ordinary employee. Second. The so-called talent fees of respondents correspond to wages given as a result of an employer-employee relationship. Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship. Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and respondents are highly dependent on the petitioner for continued work. Fourth. The degree of control and supervision exercised by petitioner over respondents through its supervisors negates the allegation that respondents are independent contractors. The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor .[45] The

Court will peruse beyond any such agreement to examine the facts that typify the parties actual relationship.[46] It follows then that respondents are entitled to the benefits provided for in the existing CBA between petitioner and its rank-and-file employees. As regular employees, respondents are entitled to the benefits granted to all other regular employees of petitioner under the CBA.[47] We quote with approval the ruling of the appellate court, that the reason why production assistants were excluded from the CBA is precisely because they were erroneously classified and treated as project employees by petitioner:

x x x The award in favor of private respondents of the benefits accorded to rank-and-file employees of ABS-CBN under the 1996-1999 CBA is a necessary consequence of public respondents ruling that private respondents as production assistants of petitioner are regular employees. The monetary award is not considered as claims involving the interpretation or implementation of the collective bargaining agreement. The reason why production assistants were excluded from the said agreement is precisely because they were classified and treated as project employees by petitioner. As earlier stated, it is not the will or word of the employer which determines the nature of employment of an employee but the nature of the activities performed by such employee in relation to the particular business or trade of the employer. Considering that We have clearly found that private respondents are regular employees of petitioner, their exclusion from the said CBA on the misplaced belief of the parties to the said agreement that they are project employees, is therefore not proper. Finding said private respondents as regular employees and not as mere project employees, they must be accorded the benefits due under the said Collective Bargaining Agreement. A collective bargaining agreement is a contract entered into by the union representing the employees and the employer. However, even the non-member employees are entitled to the benefits of the contract. To accord its benefits only to members of the union without any valid reason would constitute undue discrimination against non-members. A collective bargaining agreement is binding on all employees of the company. Therefore, whatever benefits are given to the other employees of ABS-CBN must likewise be accorded to private respondents who were regular employees of petitioner.[48]

Besides, only talent-artists were excluded from the CBA and not production assistants who are regular employees of the respondents. Moreover, under Article 1702 of the New Civil Code: In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The assailed Decision and Resolution of the Court of Appeals in CAG.R. SP No. 76582 are AFFIRMED. Costs against petitioner.

G.R. No. 150658

February 9, 2007

NOELITO FABELA, MARCELO DELA CRUZ III, ROGELIO LASAT, HENRY MALIWANAG, MANUEL DELOS SANTOS, and ROMMEL QUINES, Petitioners, vs. SAN MIGUEL CORPORATION and ARMAN HICARTE, Respondents. DECISION CARPIO MORALES, J.: On review is the July 30, 2001 Decision of the Court of Appeals reversing the ruling of the National Labor Relations Commission (NLRC) and the Labor Arbiter finding petitioners to have been illegally dismissed. Petitioners, along with Joselito de Lara and John Alovera, were hired by respondent San Miguel Corporation (SMC) as "Relief Salesmen" for the Greater Manila Area (GMA) under separate but almost similarly worded "Contracts of Employment With Fixed Period." After having entered into successive contracts of the same nature with SMC, the services of petitioners, as well as de Lara and Alovera, were terminated after SMC no longer agreed to forge another contract with them. The dates of hiring of petitioners, et al. and the termination of their employment are set forth below:1 NAME NOELITO FABELA ROGELIO LASAT HENRY MALIWANAG MANUEL DELOS SANTOS JOSELITO DE LARA ROMMEL QUINES MARCELO DELA CRUZ JOHN ALOVERA DATE HIRED MAY, 1992 AUGUST, 1995 MAY, 1995 MAY, 1995 MAY, 1994 DATE OF TERMINATION OF EMPLOYMENT AUGUST, 1996 SEPTEMBER, 1997 SEPTEMBER, 1997 SEPTEMBER, 1997 JULY 30,1997

OCTOBER, 1994 SEPTEMBER, 1997 DECEMBER, 1991 JUNE, 1992 MAY, 1997 MAY, 1997

Respondent SMC and its co-respondent Arman Hicarte, who was its Human Resources Manager, claimed that the hiring of petitioners was not intended to be permanent, as the

same was merely occasioned by the need to fill in a vacuum arising from SMCs gradual transition to a new system of selling and delivering its products. Respondents explained that SMC previously operated under the "Route System," 2 but began implementing in 1993 the "Pre-Selling System"3 in which the salesmen under the earlier system would be replaced by Accounts Specialists which called for upgraded qualifications.4 In support of their claim, respondents presented the affidavit of Mariano N. Lopez, Assistant Vice President and Area Sales Manager for the GMA Sales Operations of San Miguel Brewing Philippines.5 While some of the qualified regular salesmen were readily upgraded to the position of Accounts Specialist, respondents claimed that SMC still had to sell its beer products using the conventional routing system during the transition stage, thus giving rise to the need for temporary employees; and the members of the regular Route Crew then existing were required to undergo a training program to determine whether they possessed or could be trained for the necessary attitude and aptitude required of an Accounts Specialist, hence, the hiring of petitioners and others for a fixed period, coterminus with the completion of the transition period and Training Program for all prospective Accounts Specialists.6 Claiming that they were illegally dismissed, petitioners, as well as de Lara and Alovera, filed separate complaints for illegal dismissal against respondents. The complaints were consolidated. By Decision dated September 23, 1998, Labor Arbiter Manuel P. Asuncion held that except for de Lara and Alovera, the complainants-herein petitioners were illegally dismissed. Thus the decision disposed: IN LIGHT OF THE FOREGOING CONSIDERATIONS, the respondents are hereby ordered to reinstate Marcelo Dela Cruz, Norlito Fabela, Henry Maliwanag, Rogelio Lasat, Manuel Delos Santos and Rommel Quines to their former positions with full backwages from the time their salaries were withheld until they are actually reinstated. As of this date, their backwages has reached the sum of P562,336.64. (See attached computation). The complaints of Jun Alovera and Joselito De Lara must be dismissed for lack of merit. SO ORDERED. The Decision of the Labor Arbiter was affirmed on appeal by the NLRC, by Resolution of April 28, 2000. Respondents Motion for Reconsideration was denied, hence, they filed a Petition for Certiorari with the Court of Appeals before which they contended that herein petitioners were validly hired for a fixed period which was not renewed, hence, the termination of their services was valid.

By Decision of July 30, 2001,7 the Court of Appeals granted respondents petition and accordingly reversed the decision of the Labor Arbiter and of the NLRC. The appellate court accordingly dismissed petitioners complaints. In granting respondents petition, the appellate court ratiocinated: At bar, there is not any least indication that the employment contract was not knowingly and voluntarily agreed upon between the parties nary any force or improper pressure upon the employee nor any circumstances vitiating his consent. Neither is there any indication or signal of improper pressure in the execution of the contract nor that the employer and the employee did not deal with each other on equal terms absent any moral dominance by the employer upon the employee. Finally, at the time the contracts were entered into, the parties were pretty aware of the day certain which must necessarily come although still unknown when at which time the contract will selfexpire.8 (Underscoring supplied) Their motion for reconsideration having been denied by the Court of Appeals by Resolution of October 29, 2001, petitioners filed the present petition. The validity of the termination of petitioners services depends on whether they were hired for a fixed period, as claimed by respondents, or as regular employees who may not be dismissed except for just or authorized causes. Article 280 of the Labor Code defines regular 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 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 actually exists. (Emphasis, italics and underscoring supplied) In Pure Foods Corp. v. NLRC,9 this Court held that under the above-quoted provision, there are two kinds of regular employees, namely: (1) those who are engaged to perform activities which are necessary or desirable in the usual business or trade of the employer, and (2) those casual employees who have rendered at least one year of

service, whether continuous or broken, with respect to the activity in which they are employed. Article 280 also recognizes project employees, those whose "employment has been fixed for a specific project or undertaking." (Underscoring supplied) Project employment is distinct from casual employment referred to in the second paragraph of Article 280 for, as clarified in Mercado, Sr. v. NLRC,10 the proviso that "any employee who has rendered at least one year of service . . . shall be considered a regular employee" does not apply to project employees, but only to casual employees. Although Article 280 does not expressly recognize employment for a fixed period, which is distinct from employment which has been fixed for a specific project or undertaking, Brent School, Inc. v. Zamora11 has clarified that employment for a fixed period is not in itself illegal, viz: There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist, e.g.,where it is indeed the employee himself who insists upon a period or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non, would an agreement fixing a period essentially evil or illicit, therefore anathema? Would such an agreement come within the scope of Article 280 which admittedly was enacted "to prevent the circumvention of the right of the employee to be secured in x x (his) employment?" xxxx Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been,. as already observed, to prevent circumvention of the employee s right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. x x x (Emphasis and underscoring supplied)
1awphi1.net

Thus, even if the duties of an employee consist of activities usually necessary or desirable in the usual business of the employer, it does not necessarily follow that the parties are forbidden from agreeing on a period of time for the performance of such activities through a contract of employment for a fixed term.12 Respondents, without disputing that the duties of petitioners consisted of activities necessary or desirable in its usual business or trade, claim that the contracts of employment entered into by respondent SMC with the herein petitioners are valid fixedterm contracts under the Brent doctrine. Albeit the Court of Appeals ruled in respondents favor on the basis of a finding that petitioners were validly hired as project employees,13 respondents deny that petitioners were project employees, asserting that they were hired only as fixed-term employees.14 Since respondents attribute the termination of petitioners employment to the expiration of their respective contracts, a determination of whether petitioners were hired as project or seasonal employees, or as fixed-term employees without any force, duress or improper pressure having been exerted against them is in order. If petitioners fall under any of these categories, then indeed their termination follows from the expiration of their contracts. Since, as earlier stated, respondents themselves deny that petitioners were project employees, and they do not allege that they were seasonal employees, what remains for determination is whether petitioners were fixed-term employees under the Brent doctrine. As the resolution of this issue necessarily involves a calibration of respondents evidence, the factual findings of the Labor Arbiter and the NLRC assume importance. 15 This Court has consistently adhered to the rule that in reviewing administrative decisions such as those rendered by the NLRC, the findings of fact made therein are to be accorded not only great weight and respect, but even finality, for as long as they are supported by substantial evidence. It is not the function of the Court to once again review and weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of the evidence. Nevertheless, when the inference made or the conclusion drawn on the basis of certain state of facts is manifestly mistaken, the Court is not estopped from exercising its power of review. (Emphasis and underscoring supplied) Significantly, both the Labor Arbiter and the NLRC found that petitioners were all regular employees. The NLRC even explicitly stated that the periods stated in petitioners contracts were fixed not because of temporary exigencies but because of a scheme to preclude petitioners from acquiring tenurial security.

The Court of Appeals, however, found that "[a]ll indications and established facts lead to the inevitable conclusion that the contracts of employment subject matter of this case were executed in good faith and for a lawful and moral purpose," 16 and thus concluded that the NLRC committed grave abuse of discretion for holding otherwise. A considered assessment of the findings of the Labor Arbiter and the NLRC, however, shows that the same are supported by substantial evidence. Respondents contention that there are fixed periods stated in the contracts of employment does not lie. Brentinstructs that a contract of employment stipulating a fixed-term, even if clear as regards the existence of a period, is invalid if it can be shown that the same was executed with the intention of circumventing security of tenure, and should thus be ignored. And so does Paguio v. NLRC,17 thus: x x x A stipulation [for a fixed-term] in an agreement can be ignored as and when it is utilized to deprive the employee of his security of tenure. The sheer inequality that characterizes employer-employee relations, where the scales generally tip against the employee, often scarcely provides him real and better options. Indeed, substantial evidence exists in the present case showing that the subject contracts were utilized to deprive petitioners of their security of tenure. The contract of employment of petitioner Fabela, for instance, states that the transition period from the Route System to the Pre-Selling System would be twelve (12) months from April 4, 1995, thus: WHEREAS, the FIRST PARTY [San Miguel Corporation] is undertaking a project to manage the transition in fully implementing the pre-selling system; WHEREAS, during the transition period, which is twelve (12) months before the new system will be fully implemented in the districts planned for in 1995, the FIRST PARTY will conduct a training for the regular Salesmen and will continue to sell its therefore (sic) beer products using the conventional system and will therefore need to hire relief personnel to undertake the activities thereinafter mentioned which are to be undertaken/performed for a limited/specific period which activities shall hereinafter be referred to as PROJECT ACTIVITIES. xxxx SECTION ONE: "TERM OF CONTRACT" The FIRST PARTY hereby hires the SECOND PARTY as "PROJECT RELIEF SALESMAN" to perform/undertake the activities listed in Annex "A" hereof at its Greater Manila Area Sales Operations, San Miguel Brewing Group and the latter hereby accepts and agrees such undertaking for a period of twelve (12) months, starting from April 4, 1995 to April 3, 1996 or upon completion of the project hereinafter referred to,

whichever comes first, subject to the general supervision, order, advice and directions of the FIRST PARTY. x x x x18 (Emphasis and underscoring supplied) It bears noting, however, that petitioner Fabela, besides being hired again for another fixed period of four (4) months after the lapse in April 1996 of the one-year contract, had already been working for respondent SMC on a fixed-term basis as early as 1992, or one year before respondent SMC even began its shift to the Pre-selling System in 1993. Similarly, petitioner Marcelo dela Cruz III was hired prior to the alleged transition to the new system. In fact, he was hired in December 1991, even earlier than petitioner Fabela. The NLRC, therefore, had sufficient basis to believe that the shift of SMC to the PreSelling System was not the real basis for the forging of fixed-term contracts of employment with petitioners and that the periods were fixed only as a means to preclude petitioners from acquiring security of tenure. Moreover, other than the earlier-mentioned affidavit of Mariano N. Lopez, respondents have presented no evidence that the shift to the Pre-Selling System occurred as early as 1993. The employment contracts presented by respondents in support of their claim that petitioners were hired only for the transition stage are dated not earlier than April 1995.19 Even the contract of petitioner Fabela expressly states that the transition period istwelve months, beginning in 1995, rather than 1993. If the shift to the new system only began in 1995, however, then not only petitioners Fabela and dela Cruz were hired prior to the transition, but also petitioner Quines, who was hired in 1994. As Brent pronounces, a fixed-term employment is valid only under certain circumstances, such as when the employee himself insists upon the period, or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non. That petitioners themselves insisted on the one-year fixed-term is not even alleged by respondents. In fact, the sustained desire of each of the petitioners to enter into another employment contract upon the termination of the earlier ones clearly indicates their interest in continuing to work for SMC. Moreover, respondents have not established that the engagement of petitioners services, which is not in the nature of a project employment, required a definite date of termination as a sine qua non. In fine, the finding of the Labor Arbiter and the NLRC that the execution of the contracts was merely intended to circumvent petitioners security of tenure merits this Courts concurrence.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is SET ASIDE. The Decision dated September 23, 1998 of the Labor Arbiter, which was affirmed by the National Labor Relations Commission by Resolution of April 28, 2000, is REINSTATED. SO ORDERED.

G.R. No. 70705 August 21, 1989 MOISES DE LEON, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and LA TONDE;A INC., respondents. Amorito V. Canete for petitioner. Pablo R. Cruz for private respondent.

FERNAN, C.J.: This petition for certiorari seeks to annul and set aside: (1) the majority decision dated January 28, 1985 of theNational Labor Relations Commission First Division in Case No. NCR- 83566-83, which reversed the Order dated April 6,1984 of Labor Arbiter Bienvenido S. Hernandez directing the reinstatement of petitioner Moises de Leon by private respondent La Tonde;a Inc. with payment of backwages and other benefits due a regular employee; and, (2) the Resolution dated March 21, 1985 denying petitioner's motion for reconsideration. It appears that petitioner was employed by private respondent La Tonde;a Inc. on December 11, 1981, at the Maintenance Section of its Engineering Department in Tondo, Manila. 1 His work consisted mainly of painting company building and equipment, and other
odd jobs relating to maintenance. He was paid on a daily basis through petty cash vouchers.

In the early part of January, 1983, after a service of more than one (1) year, petitioner requested from respondent company that lie be included in the payroll of regular workers, instead of being paid through petty cash vouchers. Private respondent's response to this request was to dismiss petitioner from his employment on January 16, 1983. Having been refused reinstatement despite repeated demands, petitioner filed a complaint for illegal dismissal, reinstatement and payment of backwages before the Office of the Labor Arbiter of the then Ministry now Department of Labor and Employment. Petitioner alleged that he was dismissed following his request to be treated as a regular employee; that his work consisted of painting company buildings and maintenance chores like cleaning and operating company equipment, assisting Emiliano Tanque Jr., a regular maintenance man; and that weeks after his dismissal, he was re-hired by the respondent company indirectly through the Vitas-Magsaysay Village Livelihood Council, a labor agency of respondent company, and was made to perform the tasks which he used to do. Emiliano Tanque Jr. corroborated these averments of petitioner in his affidavit. 2

On the other hand, private respondent claimed that petitioner was not a regular employee but only a casual worker hired allegedly only to paint a certain building in the company premises, and that his work as a painter terminated upon the completion of the painting job. On April 6, 1984, Labor Arbiter Bienvenido S. Hernandez rendered a decision 3 finding the
complaint meritorious and the dismissal illegal; and ordering the respondent company to reinstate petitioner with full backwages and other benefits. Labor Arbiter Hernandez ruled that petitioner was not a mere casual employee as asserted by private respondent but a regular employee. He concluded that the dismissal of petitioner from the service was prompted by his request to be included in the list of regular employees and to be paid through the payroll and is, therefore, an attempt to circumvent the legal obligations of an employer towards a regular employee.

Labor Arbiter Hernandez found as follows: After a thorough examination of the records of the case and evaluation of the evidence and versions of the parties, this Office finds and so holds that the dismissal of complainant is illegal. Despite the impressive attempt of respondents to show that the complainant was hired as casual and for the work on particular project, that is the repainting of Mama Rosa Building, which particular work of painting and repainting is not pursuant to the regular business of the company, according to its theory, we find differently. Complainant's being hired on casual basis did not dissuade from the cold fact that such painting of the building and the painting and repainting of the equipment and tools and other things belonging to the company and the odd jobs assigned to him to be performed when he had no painting and repainting works related to maintenance as a maintenance man are necessary and desirable to the better operation of the business company. Respondent did not even attempt to deny and refute the corroborating statements of Emiliano Tanque Jr., who was regularly employed by it as a maintenance man doing same jobs not only of painting and repainting of building, equipment and tools and machineries or machines if the company but also other odd jobs in the Engineering and Maintenance Department that complainant Moises de Leon did perform the same odd jobs and assignments as were assigned to him during the period de Leon was employed for more than one year continuously by Id respondent company. We find no reason not to give credit and weight to the affidavit and statement made therein by Emiliano Tanque Jr. This strongly confirms that complainant did the work pertaining to the regular business in which the company had been organized. Respondent cannot be permitted to circumvent the law on security of tenure by considering complainant as a casual worker on daily rate basis and after working for a period that has entitled him to be regularized that he would be automatically terminated. ... . 4 On appeal, however, the above decision of the Labor Arbiter was reversed by the First Division of the NationalLabor Relations Commission by virtue of the votes of two

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

Petitioner asserts that the respondent Commission erred and gravely abuse its discretion in reversing the Order of the Labor Arbiter in view of the uncontroverted fact that the tasks he performed included not only painting but also other maintenance work which are usually necessary or desirable in the usual business of private respondent: hence, the reversal violates the Constitutional and statutory provisions for the protection of labor. The private respondent, as expected, maintains the opposite view and argues that petitioner was hired only as a painter to repaint specifically the Mama Rosa building at its Tondo compound, which painting work is not part of their main business; that at the time of his engagement, it was made clear to him that he would be so engaged on a casual basis, so much so that he was not required to accomplish an application form or to comply with the usual requisites for employment; and that, in fact, petitioner was never paid his salary through the regular payroll but always through petty cash vouchers. 7 The Solicitor General, in his Comment, recommends that the petition be given due course in view of the evidence on record supporting petitioner's contention that his work was regular in nature. In his view, the dismissal of petitioner after he demanded to be regularized was a subterfuge to circumvent the law on regular employment. He further recommends that the questioned decision and resolution of respondent Commission be annulled and the Order of the Labor Arbiter directing the reinstatement of petitioner with payment of backwages and other benefits be upheld. 8 After a careful review of the records of this case, the Court finds merit in the petition as We sustain the position of the Solicitor General that the reversal of the decision of the Labor Arbiter by the respondent Commission was erroneous. The law on the matter is Article 281 of the Labor Code which defines regular and casual employment as follows: Art. 281. Regular and casual employment. The provisions of a written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or 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. This provision reinforces the Constitutional mandate to protect the interest of labor. Its language evidently manifests the intent to safeguard the tenurial interest of the worker who may be denied the rights and benefits due a regular employee by virtue of lopsided agreements with the economically powerful employer who can maneuver to keep an employee on a casual status for as long as convenient. Thus, contrary agreements notwithstanding, an employment is deemed regular when the activities performed by the employee are usually necessary or desirable in the usual business or trade of the employer. Not considered regular are the so-called "project employment" the completion or termination of which is more or less determinable at the time of employment, such as those employed in connection with a particular construction project 9 and seasonal
employment which by its nature is only desirable for a limited period of time. However, any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity he performed and while such activity actually exists.

The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists. In the case at bar, the respondent company, which is engaged in the business of manufacture and distillery of wines and liquors, claims that petitioner was contracted on a casual basis specifically to paint a certain company building and that its completion rendered petitioner's employment terminated. This may have been true at the beginning, and had it been shown that petitioner's activity was exclusively limited to painting that certain building, respondent company's theory of casual employment would have been worthy of consideration. However, during petitioner's period of employment, the records reveal that the tasks assigned to him included not only painting of company buildings, equipment and tools but also cleaning and oiling machines, even operating a drilling machine, and other odd jobs assigned to him when he had no painting job. A regular employee of respondent company, Emiliano Tanque Jr., attested in his affidavit that petitioner worked with him as a maintenance man when there was no painting job.

It is noteworthy that, as wisely observed by the Labor Arbiter, the respondent company did not even attempt to negate the above averments of petitioner and his co- employee. Indeed, the respondent company did not only fail to dispute this vital point, it even went further and confirmed its veracity when it expressly admitted in its comment that, "The main bulk of work and/or activities assigned to petitioner was painting and other related activities. Occasionally, he was instructed to do other odd things in connection with maintenance while he was waiting for materials he would need in his job or when he had finished early one assigned to him. 10 The respondent Commission, in reversing the findings of the Labor Arbiter reasoned that petitioner's job cannot be considered as necessary or desirable in the usual business or trade of the employer because, "Painting the business or factory building is not a part of the respondent's manufacturing or distilling process of wines and liquors. 11 The fallacy of the reasoning is readily apparent in view of the admitted fact that petitioner's activities included not only painting but other maintenance work as well, a fact which even the respondent Commission, like the private respondent, also expressly recognized when it stated in its decision that, 'Although complainant's (petitioner) work was mainly painting, he was occasionally asked to do other odd jobs in connection with maintenance work. 12 It misleadingly assumed that all the petitioner did during his more than one year
of employment was to paint a certain building of the respondent company, whereas it is admitted that he was given other assignments relating to maintenance work besides painting company building and equipment.

It is self-serving, to say the least, to isolate petitioner's painting job to justify the proposition of casual employment and conveniently disregard the other maintenance activities of petitioner which were assigned by the respondent company when he was not painting. The law demands that the nature and entirety of the activities performed by the employee be considered. In the case of petitioner, the painting and maintenance work given him manifest a treatment consistent with a maintenance man and not just a painter, for if his job was truly only to paint a building there would have been no basis for giving him other work assignments In between painting activities. It is not tenable to argue that the painting and maintenance work of petitioner are not necessary in respondent's business of manufacturing liquors and wines, just as it cannot be said that only those who are directly involved in the process of producing wines and liquors may be considered as necessary employees. Otherwise, there would have been no need for the regular Maintenance Section of respondent company's Engineering Department, manned by regular employees like Emiliano Tanque Jr., whom petitioner often worked with. Furthermore, the petitioner performed his work of painting and maintenance activities during his employment in respondent's business which lasted for more than one year, until early January, 1983 when he demanded to be regularized and was subsequently dismissed. Certainly, by this fact alone he is entitled by law to be considered a regular employee. And considering further that weeks after his dismissal, petitioner was rehired by the company through a labor agency and was returned to his post in the

Maintenance Section and made to perform the same activities that he used to do, it cannot be denied that as activities as a regular painter and maintenance man still exist. It is of no moment that petitioner was told when he was hired that his employment would only be casual, that he was paid through cash vouchers, and that he did not comply with regular employment procedure. Precisely, the law overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining position needs the support of the State. That determines whether a certain employment is regular or casual is not the will and word of the employer, to which the desperate worker often accedes, much less the procedure of hiring the employee or the manner of paying his salary. It is the nature of the activities performed in relation to the particular business or trade considering all circumstances, and in some cases the length of time of its performance and its continued existence. Finally, considering its task to give life and spirit to the Constitutional mandate for the protection of labor, to enforce and uphold our labor laws which must be interpreted liberally in favor of the worker in case of doubt, the Court cannot understand the failure of the respondent Commission to perceive the obvious attempt on the part of the respondent company to evade its obligations to petitioner by dismissing the latter days after he asked to be treated as a regular worker on the flimsy pretext that his painting work was suddenly finished only to rehire him indirectly weeks after his dismissal and assign him to perform the same tasks he used to perform. The devious dismissal is too obvious to escape notice. The inexplicable disregard of established and decisive facts which the Commission itself admitted to be so, in justifying a conclusion adverse to the aggrieved laborer clearly spells a grave abuse of discretion amounting to lack of jurisdiction. WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the National Labor Relations Commission are hereby annulled and set aside. The Order of Labor arbiter Bienvenido S. Hernandez dated April 6, 1984 is reinstated. Private respondent is ordered to reinstate petitioner as a regular maintenance man and to pay petitioner 1) backwages equivalent to three years from January 16,1983, in accordance with the Aluminum Wage Orders in effect for the period covered, 2) ECOLA 3) 13th Month Pay, 4) and other benefits under pertinent Collective Bargaining Agreements, if any. SO ORDERED

[G.R. 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. DECISION
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 (CA) in CA-GR SP No. 51033. The dispositive part of the Decision reads:
[1]

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, upheld by the CA, disposed in this wise:
[3]

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 x x x 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. 2. 3. 4.

Luisa Rombo Ramona Rombo Bobong Abrega 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. 2. 3. 4. 5. 6. Jose Dagle Rico Dagle Ricardo Dagle Jesus Silva Fernando Silva Ernesto Tejares 7. 8. 9. 10. 11. 12. Alejandro Tejares Gaudioso Rombo Martin Alas-as Jr. Cresensio Abrega Ariston Eruela Sr. 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. (Citations omitted)
[5]

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 petitioners 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 NLRCs finding that petitioners were guilty of unfair labor practice. Hence this Petition.
[7]

Issues Petitioners raise the following issues for the Courts 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, xxx, and relying instead on rulings which are not directly applicable to the case at bench, viz, Philippine Tobacco, Bacolod-Murcia, and Gaco, xxx. C. Whether or not the Court of Appeals committed grave abuse of discretion in upholding the NLRCs 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 Courts 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. Questions of fact are not entertained. The Court is not a trier of facts and, in labor cases, this doctrine applies with greater force. Factual questions are for labor
[9] [10] [11]

tribunals to resolve. In the present case, these have already been threshed out by the NLRC. Its findings were affirmed by the appellate court.
[12]

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 andthe 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, the Court issued this clarification:
[13]

[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 x xx xxx

x x x [T]he fact that [respondents] do not work continuously for one whole year but only for the duration of the x x x 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 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 latters 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.
[15]

The Court finds no reason to disturb the CAs 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. In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed above, are regular employees.
[16]

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 haciendaa clear interference in the right of the workers to self-organization.
[17]

We uphold the CAs 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. Verily, their conclusions are accorded great weight upon appeal, especially when supported by substantial evidence. 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.
[18] [19] [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 Decision AFFIRMED. Costs against petitioners. SO ORDERED.

the

assailed

[G.R. No. 119253. April 10, 1997]

AMOR CONTI and LEOPOLDO CRUZ, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (Third Division), CORFARM HOLDINGS CORPORATION, CARLITO J. RABANG and CIPRIANO Q. BARAYANG, respondents. DECISION
PADILLA, J.:

In this petition for certiorari under Rule 65 of the Rules of Court, petitioners Amor Conti and Leopoldo Cruz seek to annul 1) the decision, dated 24 November 1994, of the National Labor Relations Commission (NLRC) in NLRC-NCR-CA-007367-94 (NCR 00-02-00834-93) entitled "Amor Conti and Leopoldo Cruz v. Corfarm Holdings Corporation, et. al.", setting aside the labor arbiter's decision, dated 20 June 1994, declaring that herein petitioners were illegally dismissed from employment, and; 2) the resolution, dated 26 January 1995, denying petitioners' motion for reconsideration of said NLRC decision. Private respondent Corfarm Holdings Corporation (Corfarm, for brevity) is a duly organized domestic corporation that operates and manages the Manila Electric Company (MERALCO) Commissary for the benefit of MERALCO employees. Private respondents Carlito J. Rabang and Cipriano Q. Barayang are the President and Vice President, respectively, of said corporation. Petitioner Amor Conti was employed by respondent Corfarm as cashier on 2 February 1991. Petitioner Leopoldo Cruz was employed by the same respondent corporation as a warehouseman on 16 May 1991. Both Amor Conti and Leopoldo Cruz were subsequently promoted to the positions of Head of Commissary and Store Supervisor, respectively. In their respective employment contracts with Corfarm, it was stipulated that their employment shall be coterminous with the effectivity of the contract executed by and between Corfarm andMERALCO for the management of the latter's commissary (hereinafter referred to as the "management contract"). On 31 December 1992, said management contract between Corfarm and MERALCO expired. However, Corfarm continued to operate the MERALCO commissary despite the non-renewal of said contract.

On 13 January 1993, petitioners received a memorandum, dated 12 January 1993, from private respondents terminating their services effective on said date, allegedly for two reasons: 1) the expiration of their employment contracts, these being coterminous with the management contract between Corfarm and MERALCO, and; 2) the on-going evaluation of their past performances, and investigation of the internal auditor of Corfarm of certain anomalous transactions involving them (petitioners). On 2 February 1993, petitioners filed with the arbitration branch of the NLRC a complaint for illegal dismissal against private respondents. On 20 June 1994, Labor Arbiter Facundo L. Leda rendered a decision, the dispositive part of which reads: "Wherefore, decision is hereby rendered declaring the complainants to have been illegally dismissed and the respondents ordered to reinstate them immediately to their former or substantially equivalent positions and to pay them jointly and severally, the total amount of One Hundred Thirty-three Thousand Four Hundred Sixty Pesos and 70/100 (P133,460.70) representing backwages and attorney's fees. So ordered."
[1]

Private respondents appealed the aforementioned decision of the labor arbiter. On 24 November 1994, the NLRC promulgated a decision setting aside the labor arbiter's order and dismissing herein petitioners' complaint for lack of merit. Petitioners filed a motion for reconsideration of the NLRC decision, which motion was denied in a resolution dated 26 January 1995. Hence, this petition where petitioners allege that public respondent NLRC gravely abused its discretion in 1) reversing the labor arbiter's decision finding the petitioners' dismissal to have been illegal for lack of due notice and hearing as required by law, and; 2) "in ignoring the documents and testimony contained in the record which support the labor arbiter's decision finding the petitioners without fault on the alleged acts attributed to them." We find merit in this petition. At the outset, it will be noted that the Office of the Solicitor General (OSG), in its "Manifestation and Motion in lieu of Comment", dated 19 June 1995, agreed with the findings of the labor arbiter that the petitioners were illegally dismissed, and prayed of this Court that the questioned NLRC decision dated 24 November 1994 and resolution dated 26 January 1995, be set aside. Petitioners contend that they were denied due process when they were dismissed without a written notice (specifying the particular charges

constituting the grounds for their dismissal), and a hearing, as required by law. They further contend that the memorandum dated 11 January 1993, supposedly issued by Corfarm to petitioners directing them "to explain why they should not be dismissed for alleged acts of negligence and carelessness" was never received by them. Besides, said memorandum did not specify the particular acts or omissions of petitioners. It merely stated that based on the results of the investigation conducted by Corfarm's internal audit staff, petitioners were found to have been negligent in the performance of their duties. Petitioners' contentions are meritorious. This Court has consistently held that the twin requirements of notice and hearing constitute essential elements of due process in the dismissal of employees. As to the requirement of notice, it has been held that the employer must furnish the worker with two written notices before termination of employment can be legally effected: (a) notice which apprises the employee of the particular acts or omissions for which his dismissal is sought, and; (b) subsequent notice which informs the employee of the employer's decision to dismiss him.
[2] [3]

With regard to the requirement of a hearing, this Court has held that the essence of due process is simply an opportunity to be heard, and not that an actual hearing should always and indispensably be held.
[4] [5]

In the case at bar, neither notice nor hearing was afforded the petitioners. The records show that respondent Cipriano Barayang (Corfarm Vice-President), in his testimony, admitted that petitioners were not given written notice of the specific charges against them, but were only orally informed thereof.
[6]

Furthermore, the records show that the audit report which contained the alleged acts or omissions of petitioners were submitted to respondent Carlito Rabang (Corfarm President) only on 13 January 1993, notably the very same date when petitioners were dismissed. Thus, the testimony of one Salvador Ayes (Internal Auditor of Corfarm) reads as follows:
[7]

"x x x x x
Atty. Espinas: Witness: Atty. Espinas: Witness: Atty. Espinas: Did you know whether the President confronted these two persons? I know that the two persons were confronted. When? On January 11. With this audit report dated January 13?

Witness: Atty. Espinas: Witness:

No, not with the audit report. I was asking with this audit report dated January 13, where [sic] they confronted with that audit report. No, they were not confronted."[8]

Since petitioners were not furnished with a copy of said audit report prior to their dismissal, they were thus not given an opportunity to refute the findings stated therein.
[9]

It is logical that, as petitioners contend, their dismissal was without cause, since the private respondents failed to substantiate their allegations of negligence and carelessness (in the procurement of certain supplies) on the part of petitioners. Indeed, the records show that private respondents failed to controvert petitioners' testimony that they were never apprised of any policy on procurement; nor their testimony that the questioned orders were first checked by the auditor, the accountant, and respondent Vice President Barayang himself; nor petitioners' allegation that no payment could be made without the signatures of the above-mentioned officers. Thus, the labor arbiter correctly ruled that: "In fine, the evidence adduced tend to show that the complainants have not committed any irregularity to warrant their dismissal x x x ".
[10]

In order that the willful disobedience (herein interpreted to include negligence in carrying out company policies) by the employee may constitute a just cause for terminating his employment, the orders, regulations, or instructions of the employer or his representative must be: 1) reasonable and lawful; 2) sufficiently known to the employee; and 3) in connection with the duties which the employee has been engaged to discharge. (underscoring supplied).
[11]

And then, assuming arguendo that petitioners had indeed violated a company policy, still, this cannot justify so harsh a penalty as dismissal. It has been held that the dismissal of an employee due to an alleged violation of a company policy, where it was found that the violation was acquiesced in by said employee's immediate superiors and the policy violated had not always been adhered to by the management, is an act not amounting to a breach of trust; therefore, it is not a justification for said employee's dismissal. (underscoring supplied).
[12]

In the case at bar, petitioner Amor Conti, during her direct examination, testified that since the time of her employment with Corfarm, no written policies governed their purchasing activity, nor was she required to prepare a

canvass sheet for every purchase. Furthermore, as earlier noted, the fact that said questioned purchase orders had been approved and signed by petitioners' immediate superiors, including respondent Barayang himself, remains uncontroverted. Therefore, respondents' allegations of negligence and violation of company policy, made without substantial proof, cannot justify the dismissal of petitioners. On the other hand, respondents contend that the termination of petitioners' services was likewise due to the expiration of their respective employment contracts, these being coterminous with the management contract between Corfarm and MERALCO which supposedly expired on 31 December 1992. This contention is untenable, as the evidence clearly shows otherwise. During his direct examination, respondent Barayang testified that even without the formal renewal of the contract between Corfarm and MERALCO, Corfarm continued to operate the latter's commissary. Thus, "xxx
Atty. Espinas: In the memorandum of January 12, 1993 address(ed) to the complainant Conti, you stated that the contract between MERALCO and CHC was expired [sic] on December 31, 1992? Witness: Atty. Espinas: Witness: Atty. Espinas: Witness: That's right. Has this contract renewed after December 12, 1992? (sic) It has not been renewed. But are you still operating the commissary? We are still operating the commissary."[13]

Therefore, the labor arbiter correctly ruled that: "Evidence adduced from the records and during the formal hearings show that the contract between respondent Corfarm and MERALCO for the management of the MERALCO Commissary has been extended, albeit without formal renewal. Thus, the allegation of respondents that the employment of both complainants, being coterminous with said management contract, had already expired is completely false. The termination memo addressed to both complainants dated Jan. 12, 1993 stated in part, to wit: 'considering that said contract expired on Dec. 31, 1992 and has not been officially renewed, your employment with CHC is considered terminated effective the same date.'

It is very obvious that the respondents are resorting to a trial and error method in determining what would justify an otherwise illegal dismissal of herein complainants because while the above-quoted portion of the termination memo indicated that the complainants were deemed terminated as of December 31, 1992, the truth of the matter is that the complainants were still employed as of January 12, 1993 and that the effectivity of the termination of their employment as indicated in the handwritten notes in both memo to complainants was Jan. 13, 1993."
[14]

The settled rule is that factual findings of labor officials are conclusive and binding on the Supreme Court when supported by substantial evidence. Here, the labor arbiter relied not only on documentary evidence, but on the testimonies of witnesses taken during the formal hearings; and since he had the advantage of personally observing the deportment of witnesses while they were testifying, his findings thereon should not only be accorded great respect, but also given the stamp of finality absent any arbitrariness in the process of their deduction from the evidence adduced.
[15] [16] [17]

Considering therefore, the validity of the labor arbiter's finding that the management contract between MERALCO and Corfarm has been extended, i.e., it continues to have force and effect, it necessarily follows that petitioners' respective employment contracts with Corfarm likewise remain in force. There is thus merit in petitioners' contention that they have become regular employees of respondent Corfarm. Accordingly, they are entitled to security of tenure guaranteed by the Constitution and the Labor Code. Article 280 of the Labor Code, in part, provides: "The provisions of written agreement to the contrary notwithstanding, and regardless of the oral agreement of the parties, an employment shall be deemed 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, x x x. Provided, That, any employee who has rendered at least one year of service whether such service is continuous or broken, shall be considered as a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists." (underscoring supplied). In the case at bar, petitioners had been employed with private respondent Corfarm since 1991. They had been discharging their functions as head of commissary and store supervisor, respectively, for more than one (1) year. Under the law therefore, they are deemed regular employees and thus entitled to security of tenure, as provided in 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. This Court has held that if the employee has been performing the job for at least one (1) year, even if the performance is not continuous but 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 his employer. Hence, the employment is also considered regular, but only with respect to such activity, and while such activity exists. The law does not provide the qualification that the employee must first be issued a regular appointment or must first be formally declared as such before he can acquire a regular employee status. Obviously, where the law does not distinguish, no distinction should be drawn.
[18] [19]

Under the above circumstances, the private respondents may not terminate the services of petitioners except for just cause or when authorized under the Labor Code. This Court has held that it is not difficult to see that to uphold, in all cases, the contractual arrangement between the employer and the employee would in effect be to permit employers to avoid the necessity of hiring regular or permanent employees indefinitely, by hiring them on a temporary or casual status, thus denying them security of tenure in their jobs.
[20]

WHEREFORE, based on the foregoing, the decision of public respondent National Labor Relations Commission in NLRC-NCR-CA No. 007367-94 (NCR 00-02-00834-93) dated 24 November 1994 is hereby SET ASIDE and the decision of Labor Arbiter Facundo L. Leda, dated 20 June 1994, finding petitioners to have been illegally dismissed, is REINSTATED with the modification that full backwages, to be computed from the date of dismissal up to the time of their actual reinstatement, without any deductions, be awarded to petitioners.
[21]

SO ORDERED.

G.R. No. 71664 February 28, 1992 BAGUIO COUNTRY CLUB CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, ASSOCIATED LABOR UNION (ALU) and JIMMY CALAMBA,respondents. Guillermo B. Bandonill and A.N. Bolinao, Jr. for petitioner. Jose C. Evangelista for Jimmy Calamba.

MEDIALDEA, J.: This petition for certiorari seeks to annul and set aside the resolution issued by the respondent National Labor Relations Commission dated June 10, 1985 dismissing the appeal of petitioner for lack of merit and affirming in toto the decision of the Executive Labor Arbiter dated September 15, 1982 declaring private respondent Calamba as a regular employee entitled to reinstatement to the position of gardener without loss of seniority and with full backwages, benefits and privileges from the time of his dismissal up to reinstatement including 13th month pay. The antecedent facts are as follows: Petitioner Baguio Country Club Corporation (corporation) is a recreational establishment certified by the Ministry of Labor and Employment as an" entertainment-service" establishment. Respondent National Labor Relations Commission (Commission) is a government instrumentality created by law, impleaded in its official capacity, while private respondent Associated Labor Union (union) is a duly registered labor organization and private respondent Jimmy Calamba is an employee of the petitioner corporation as laborer, dishwasher, and gardener. Private respondent Jimmy Calamba was employed on a day to day basis in various capacities as laborer and dishwasher for a period of ten (10) months from October 1, 1979 to July 24, 1980. On September 1, 1980 to October 1, 1980, private respondent Calamba was hired as a gardener and rehired as such on November 15, 1980 to January 4, 1981 when he was dismissed by the petitioner corporation. (see Rollo, pp. 28-36) On August 3, 1981, private respondent Jimmy Calamba assisted by private respondent union instituted a complaint against petitioner corporation with the Ministry of Labor (now Department of Labor and Employment), Baguio District Office, Baguio City for unfair labor practice, illegal dismissal and non-payment of 13th month pay for 1979 and 1980.

The Executive Labor Arbiter Sotero L. Tumang rendered a decision on September 15, 1982 declaring private respondent Calamba as a regular employee and ordering petitioner to reinstate private respondent to the position of gardener without loss of seniority and with full backwages, benefits and privileges from the time of his dismissal up to reinstatement including 13th month pay. Labor Arbiter Tumang found as follows: After a careful perusal of the facts presented by the parties, we find the complaint for illegal dismissal and non-payment of thirteenth (13th) month pay, meritorious for the following reasons: 1. Complainant Jimmy Calamba has attained regular status as an employee of the Club on account of the nature of the job he was hired, to perform continuously and on staggered basis for a span of thirteen months. True that there were employment contracts executed between the Club and the complainant indicating the period or the number of days the complainant is being needed but what is to be considered is not the agreement, written or otherwise, of the parties in determining the regularity or casualness of job but it should be the nature of the job. Clearly, the work of a gardener is not a seasonal or for a specific period undertaking but it is a whole year round activity. We must not lose sight of the fact that the Baguio Country Club Corporation is an exclusive Club with sustaining members who avails (sic) of its facilities the whole year round and it is necessary, is has been observed and of common knowledge, that the gardens including the green of its golf course where the complainant was assigned must be properly kept and maintained. 2. Being a regular employee with more than one (1) year length of service with the respondent, Jimmy Calamba could not be terminated without a just or valid cause. This is so explicit in our Constitution that the security of tenure of a worker must be safeguarded and protected and Jimmy Calamba should enjoy no less protection. 3. Jimmy Calamba was dismissed without any written clearance from the Ministry of Labor and Employment prior to his termination. Worse, the respondent fired the complainant from his job due to the a (sic) alleged expiration of his employment contract ten (10) times but not even a single report of his dismissal as mandated by law was submitted to the Ministry of Labor and Employment. 4. The Company did not refute the claim of Jimmy Calamba for payment of his thirteenth (13th) month pay under P.D. 851 nor presented any report of compliance to that effect with the Ministry of Labor and Employment and, therefore, he must be paid correspondingly. (Rollo, pp. 39-40)

Hence, the petitioner interposed an appeal to the respondent Commission. On June 10, 1985, after finding that there existed no sufficient justification to disturb the appealed decision, the respondent Commission rendered a resolution dismissing the appeal for lack of merit. Hence, this present petition raising four (4) assignments of errors, which are as follows: I THAT THE RESPONDENT COMMISSION GRAVELY ERRED IN HOLDING THAT PRIVATE RESPONDENT JIMMY CALAMBA WAS A "CASUAL" EMPLOYEE AND HAD ATTAINED THE STATUS OF A REGULAR EMPLOYEE, DESPITE THE INCONTROVERTIBLE FACT THAT SAID PRIVATE RESPONDENT WAS A CONTRACTUAL AND SEASONAL EMPLOYEE. II THAT THE RESPONDENT COMMISSION GRAVELY ERRED IN HOLDING THAT THE CONCLUSIONS OF THE EXECUTIVE LABOR ARBITER WERE FULLY SUPPORTED BY THE EVIDENCE AND IN UPHOLDING THE REINSTATEMENT OF PRIVATE RESPONDENT JIMMY CALAMBA. III THAT THE RESPONDENT COMMISSION GRAVELY ERRED IN HOLDING THAT THE DISMISSAL OF PRIVATE RESPONDENT JIMMY CALAMBA REQUIRED PRIOR CLEARANCE FROM THE MINISTRY OF LABOR AND EMPLOYMENT EACH TIME HIS CONTRACT OF EMPLOYMENT EXPIRED. IV THAT THE RESPONDENT COMMISSION GRAVELY ERRED IN NOT HOLDING THAT PRIVATE RESPONDENT ASSOCIATED LABOR UNION HAS NO LEGAL PERSONALITY TO FILE THIS CASE FOR PRIVATE RESPONDENT JIMMY CALAMBA BEFORE THE REGIONAL OFFICE OF THE NATIONAL LABOR RELATIONS COMMISSION, AS SAID PRIVATE RESPONDENT BEING A CONTRACTUAL EMPLOYEE IS EXPRESSLY EXCLUDED FROM THE BARGAINING UNIT UNDER THE COLLECTIVE BARGAINING AGREEMENT (Rollo, pp. 98-99) Petitioner maintains that private respondent Calamba was a contractual employee whose employment was for a fixed and specific period as set forth and evidenced by the

private respondent's contracts of employment, the pertinent portions of which are quoted as follows: xxx xxx xxx . . . the employment may be terminated any time without liability to the Baguio Country Club other than for salary actually earned up to and including the date of last service. His/her employment shall be on a day to day BASIS for a temporary period . . . subject to termination at any time at the discretion of the Baguio Country Club Corporation. xxx xxx xxx (Rollo, p. 7) In addition, petitioner stresses that there was absolutely no oral or documentary evidence to support the conclusion of the Executive Labor Arbiter which was subsequently affirmed by the respondent Commission that private respondent Calamba has rendered thirteen (13) months of continuous service. On the contrary, respondent Commission through the Solicitor General argues that private respondent Calamba, having rendered services as laborer, gardener and dishwasher for more than one (1) year, was a regular employee at the time his employment was terminated. Moreover, the nature of private respondent Calamba's employment as laborer, gardener, and dishwasher pertains to a regular employee because they are necessary or desirable in the usual business of petitioner as a recreational establishment. The pivotal issue therefore in whether or not the private respondent Jimmy Calamba has acquired the status of a regular employee at the time his employment was terminated. After a careful review of the records of this case the Court finds no merit in the petition and holds that the respondent Commission did not gravely abuse its discretion when it affirmed in toto the decision of the labor arbiter. The law on the matter is Article 280 of the Labor Code which defines regular 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 the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are

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. This provision reinforces the Constitutional mandate to protect the interest of labor. Its language evidently manifests the intent to safeguard the tenurial interest of the worker who may be denied the rights and benefits due a regular employee by virtue of lopsided agreements with the economically powerful employer who can maneuver to keep an employee on a casual status for as long as convenient. Thus, contrary agreements notwithstanding, an employment is deemed regular when the activities performed by the employee are usually necessary or desirable in the usual business or trade of the employer. Not considered regular are the so-called "project employment" the completion or termination of which is more or less determinable at the time of employment, such as those employed in connection with a particular construction project, and seasonal employment which by its nature is only desirable for a limited period of time. However, any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity he performed and while such activity actually exits. 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. (De Leon v. National Labor Relations Commission, G.R. No. 70705, August 21, 1989. 176 SCRA 615, 620-621)

In the case at bar, the petitioner corporation, which is certified by the Ministry of Labor and Employment as an "entertainment-service" establishment, claims that private respondent was contracted for a fixed and specific period. However, the records are that the private respondent was repeatedly re-hired to perform tasks ranging from dishwashing and gardening, aside from performing maintenance work. Such repeated rehiring and the continuing need for his service are sufficient evidence of the necessity and indispensability of his service to the petitioner's business or trade. The law demands that the nature and entirety of the activities performed by the employee be considered. It is not tenable to argue that the aforementioned tasks of private respondent are not necessary in petitioner's business as a recreational establishment, just as it cannot be said that only those who are directly involved in providing entertainment service may be considered as necessary employees. Otherwise, there would have been no need for the regular maintenance section of petitioner corporation. Furthermore, the private respondent performed the said tasks which lasted for more than one year, until early January, 1981 when he was terminated. Certainly, by this fact alone he is entitled by law to be considered a regular employee. Owing to private respondent's length of service with the petitioner corporation, he became a regular employee, by operation of law, one year after he was employed. It is more in consonance with the intent and spirit of the law to rule that the status of regular employment attaches to the casual employee on the day immediately after the end of his first year of service. To rule otherwise is to impose a burden on the employee which is not sanctioned by law. (see Kimberly Independent Labor Union for Solidarity, Activism and Nationalism in Line Industries and Agriculture v. Drilon, G.R. No. 77629, May 9, 1990, 185 SCRA 190, 203-204) It is of no moment that private respondent was told when he was hired that his employment would only be "on a day to day basis for a temporary period" and may be terminated at any time subject to the petitioner's discretion. Precisely, the law overrides such conditions which are prejudicial to the interest of the worker. Evidently, the employment contracts entered into by private respondent with the petitioner have the purpose of circumventing the employee's security of tenure. The Court therefore, rigorously disapproves said contracts which demonstrate a clear attempt to exploit the employee and deprive him of the protection sanctioned by the Labor Code. It is noteworthy that what determines whether a certain employment is regular or casual is not the will and word of the employer, to which the desperate worker often accedes. It is the nature of the activities performed in relation to the particular business or trade considering all circumstances, and in some cases the length of time of its performance and its continued existence. (see De Leon v. NLRC, Ibid)

All premises considered, the Court is convinced that the assailed resolution of the respondent Commission is not tainted with arbitrariness that would amount to grave abuse of discretion or lack of jurisdiction and therefore, We find no reason to disturb the same. ACCORDINGLY, the petition is DISMISSED for lack of merit. SO ORDERED.

[G.R. No. 154072. December 3, 2002]

ALFREDO S. PAGUIO, petitioner, vs. PHILIPPINE LONG DISTANCE TELEPHONE CO., INC., ENRIQUE D. PEREZ, RICARDO P. ZARATE, ISABELO FERIDO, and RODOLFO R. SANTOS, respondents. DECISION
MENDOZA, J.:

This is a petition for review on certiorari of the decision, dated March 7, 2002, and resolution, dated June 25, 2002, Court of Appeals, affirming with modification a decision of the National Labor Relations Commission (NLRC) finding that petitioner had been demoted by respondent PLDT but deleting the award to petitioner of P384,000.00 representing salary increase from January 1997.
[1] [2]

The facts are as follows: Petitioner Alfredo S. Paguio was appointed Head of PLDTs Garnet Exchange on October 1, 1994. He reported to the Head of the Greater Metro Manila (GMM) East Center, Rodolfo R. Santos, one of the respondents herein. At about this time, PLDT implemented the Greater Metro Manila Network Performance Assessment program covering 27 exchanges of the 5 centers. Petitioner wrote respondent Santos a memorandum, dated January 27, 1995, criticizing the 1994 performance ranking of the GMM Exchanges. He pointed out that the old historical data applicable to a fifty-year old facility should not be used in determining the performance of a division with newly installed facilities because of the discrepancies between old and new facilities in terms of output, performance, and manpower required. According to petitioner, a newly-installed facility has less trouble and requires less manpower than an old facility, as a result of which divisions operating on newly installed facilities would appear to have performed better than divisions with old facilities, thereby causing inequality between these two in their performance rating. Ironically, despite these observations, petitioners Garnet Exchange, the oldest plant in the GMM East Center, placed in the top 10 Exchanges and ranked number one in the GMM performance assessment for November 1995. Nonetheless, petitioner again sent a memorandum to respondent Santos criticizing the 1995 East Exchanges performance ranking
[3]

for being based only on the attainment of objectives, without considering other relevant factors that contributed to the attainment of the same.
[4]

In June 1996, respondent PLDT implemented the East Center OPSIM Manpower Rebalancing. Petitioner again wrote respondent Santos requesting reconsideration, claiming that the scheme was not fair to an old exchange like Garnet. Respondent Santos denied petitioners request and instructed petitioner to submit the rebalancing schedules. Petitioner thus elevated the matter to respondent Ferido, the FVP-GMM Network Services, through a memorandum.
[5]

In January 1997, respondent Santos announced the 1996 performance assessment rating of the Exchanges. Petitioner wrote respondent Santos, complaining that the rating and ranking of the Exchanges were unfair. He reiterated his observation regarding the variance between the old and the new Exchanges. Respondent Santos furnished petitioner with a blank assessment sheet with instruction to rate his own performance during the period covered. Petitioner gave himself an outstanding rating with a total statistical points of 976 based on Garnets performance, but respondent Santos reduced it to 958, in turn lowering Garnets rank to number 4.
[6]

On January 17, 1997, respondent Santos issued a memorandum reassigning petitioner to a position in the Office of the GMM East Center Head for Special Assignments effective February 1, 1997. Protesting the said transfer, petitioner asked respondent Ferido for a formal hearing on the charges against him and for the deferment of his re-assignment pending resolution of the charges. Petitioner also filed with respondent Ferido a complaint against respondent Santos for grave abuse of discretion and manipulation. As no immediate action was taken by respondent Ferido, petitioner elevated the matter to respondent Enrique Perez, Senior Executive Vice-President and Chief Operating Officer of PLDT.
[7] [8] [9] [10]

In his memorandum to petitioner dated May 5, 1997, respondent Ferido affirmed the action of respondent Santos transferring him to any group in the company that may need his services. Respondent Ferido further indicated that the reassignment is based on respondent Santos well-founded conclusion that [petitioner is] not a team player and cannot accept decisions of management already arrived at, short of insubordination. In a memorandum dated May 23, 1997, respondent Perez affirmed the action taken by respondent Ferido and explained to petitioner that his transfer was not in the nature of a disciplinary action that required compliance with the process of investigation, confrontation, and evaluation before it can be implemented and that the same was not done in bad faith.
[11] [12]

As a result, petitioner filed a complaint for illegal demotion and damages against respondents. The Labor Arbiter dismissed the complaint on the ground that petitioners transfer was an exercise of a management prerogative and there was no showing that the same amounted to a demotion in rank and privileges. The Labor Arbiter said:
[13]

As we have earlier pointed out, in the operation of its business, respondent possessed the prerogative to move around its employees in such manner as the company might deem beneficial to its business, subject to the limitation that such action be in good faith. In this case, however, we have not found any other motivating factor in respondents action of transferring complainant, than to eliminate conflict and even hostility at the Garnet Exchange, and consequently, effect a smooth relay and implementation of policies and decisions emanating from higher management. .... We have considered complainants accusations that by his transfer, he had suffered a demotion in rank and privileges. But there is no evidence on record to substantiate that claim. It appeared that complainant maintained his previous salary and status as Manager. In regard to salary increases, even in his previous position, complainant did not have any demandable right thereto as the same was, as he himself admitted, dependent on the general standards of performance and efficiency. In his present position, complainant, as Manager, is subject to the same measure of merits. Thus, he cannot, therefore, complain of being no longer entitled to salary increases. In light of the foregoing, we hereby find the transfer of complainant to be valid. WHEREFORE, premises considered, the instant complaint is hereby dismissed for lack of merit. SO ORDERED. Petitioner appealed to the NLRC, which reversed the decision of the Labor Arbiter and ruled:
[14]

First, the alleged ground therefor, that is, Mr. Paguios opposition to company business decision in his submitted Comment on the performance rating of his division, is not just. The truth of the matter is that he was just presenting in good faith his criticism on the way the performance of his division was rated and ranked. His purpose in doing so was just to help his team see its deficiencies and point the way to improvement. Thus, he was then building teammanship, not destroying it as opined by his superior respondent-appellant Rodolfo Santos.

.... Secondly, his transfer involves a diminution of his salary, benefits and other privileges. On account of his transfer, he was assigned a functionless position. As a consequence, he was deprived of the opportunity to get promoted or to be entitled to wage increase equivalent to sixteen percent (16%) of his salary starting January 1997, as he could not have any performance to speak of in his present designation there being no work assigned to him. It bears to stress that salary increase in the company is periodically granted to employees based on performance and accomplishments. Thus, the NLRC ordered:
[15]

WHEREFORE, premises considered, the Appeal is PARTIALLY GRANTED. Accordingly, the Decision appealed is hereby modified to the effect that complainant-appellant Alfredo S. Paguio was illegally transferred; and that respondent-appellee PLDT is DIRECTED to reassign him to his former position without loss of seniority rights and other privileges and to pay him the amount of Three Hundred Eighty Four Thousand Pesos (P384,000.00) equivalent to sixteen percent (16%) of his monthly salary representing wage increase starting January, 1997. As to other aspects, the Decision is SUSTAINED. SO ORDERED. As the NLRC likewise denied its motion for reconsideration, respondent PLDT filed a special civil action for certiorari in the Court of Appeals, seeking a reversal of the decision of the NLRC. The appeals court upheld the NLRC decision that petitioners transfer was not justified by the circumstances. It noted that petitioner was well intentioned in criticizing the management of the company and that even as he criticized the management decisions petitioner nevertheless complied with them. As regards petitioners transfer, the appeals court said:
[16]

While it is true that private respondents re-assignment did not involve a diminution of salary, however, petitioners have not disputed that he was actually placed on a frozen status, as he was assigned to a functionless position, with no office and staff, and without any opportunity to get any promotion or wage increase as he does not have any performance to speak of because there is no work assigned to him. On the other hand, as Senior Manager or Head of Garnet Exchange, private respondent supervised the installation and repairs of telephone lines in Ortigas Complex, Valle Verde, Capitolyo and nearby residential areas.

Petitioners argue that reinstatement of private respondent to his former position is no longer feasible because the same was abolished on August 16, 1998 as a result of the consolidation of the Garnet and Cubao Exchanges to form the Ortigas Exchange. Considering the fact that the transfer of private respondent was illegal, petitioners are obliged to reinstate private respondent to an equivalent position of Senior Manager with the same salary, rank, privileges and other benefits. Nonetheless, the Court of Appeals found no basis for the award of salary increases to petitioner. It ruled:
[17]

However, we agree with petitioners that private respondent is not entitled to the amount of P348,000.00, equivalent to 16% of his monthly salary representing wage increases starting January 1997. Private respondent himself admits that the salary increase is periodically granted to employees based on performance and accomplishments. The fact that private respondent had previously been granted salary increases by reason of his outstanding performance does not automatically give rise to the presumption that if he was allowed to stay as Head of Garnet Exchange, his performance would continue to be outstanding. Hence, the Court of Appeals ordered:
[18]

WHEREFORE, the Decision of the National Labor Relations Commission finding that private respondent was illegally transferred is AFFIRMED, with Modification by ordering his reinstatement to his former or equivalent position with the same salary, rank, privileges and other benefits, and deleting the award of P348,000.00 equivalent to 16% of his monthly salary increase starting January 1997. SO ORDERED. Petitioner moved for reconsideration, but the Court of Appeals denied his motion. Petitioner now seeks review of the decision of the Court of Appeals, insofar as it deleted the original award of P384,000.00 to him representing his salary increase. This petition is no longer concerned with the legality of petitioners transfer from the Garnet Exchange of the PLDT, as head of that unit, to an unspecified assignment as respondent PLDT did not appeal from the decision of the Court of Appeals. What is in issue before us is whether petitioner is entitled to an amount equal to 16% of his monthly salary representing his salary increase during the period of his demotion. Petitioner bases his right to the award of P384,000.00 equivalent to 16% of his monthly salary increase starting from January 1997 on the fact that,

throughout his employment until his illegal transfer in 1997, he had been consistently given by the company annual salary increases on account of his above average or outstanding performance. He claims that his contemporaries now occupy higher positions as they had been promoted several times during the course of this case. Thus, even if he ranked higher and performed better than they during the past years, petitioner has now been left behind career-wise. Petitioner averred that this would not have taken place had he not been illegally transferred. He argues that justice and equity requires that he be given the monetary award deleted by the Court of Appeals from the decision of the NLRC.
[19]

Undeniably, this particular award which petitioner is seeking is not based on any wage order or decree but on an employees performance during a certain period, as evaluated according to a specified criteria. Petitioner claims that there is a high probability that he would have been granted the increase had he not been transferred from the Garnet Exchange of respondent PLDT. Petitioner likens his claim to that for backwages in illegal dismissal cases. In several cases, the Court had the opportunity to elucidate on the reason for the grant of backwages. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained, either by virtue of a lawful decree or order, as in the case of a wage increase under a wage order, or by rightful expectation, as in the case of ones salary or wage. The outstanding feature of backwages is thus the degree of assuredness to an employee that he would have had them as earnings had he not been illegally terminated from his employment.
[20]

Petitioners claim, however, is based simply on expectancy or his assumption that, because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased, it is probable that he would similarly have been given high ratings and salary increases but for his transfer to another position in the company. In contrast to a grant of backwages or an award of lucrum cessans in the civil law, this contention is based merely on speculation. Furthermore, it assumes that in the other position to which he had been transferred petitioner had not been given any performance evaluation. As held by the Court of Appeals, however, the mere fact that petitioner had been previously granted salary increases by reason of his excellent performance does not necessarily guarantee that he would have performed in the same manner and, therefore,

qualify for the said increase later. What is more, his claim is tantamount to saying that he had a vested right to remain as Head of the Garnet Exchange and given salary increases simply because he had performed well in such position, and thus he should not be moved to any other position where management would require his services. Notwithstanding the foregoing, we hold that petitioner is entitled to damages. Under Article 21 of the Civil Code, any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. The illegal transfer of petitioner to a functionless office was clearly an abuse by respondent PLDT of its right to control the structure of its organization. The right to transfer or reassign an employee is decidedly an employers exclusive right and prerogative. In several cases, however, we have ruled that such managerial prerogative must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner by which such right is to be exercised. As found by both the NLRC and the Court of Appeals, there is no clear justification for the transfer of petitioner except that it was done as a result of petitioners disagreement with his superiors with regard to company policies.
[21] [22]

Petitioner is entitled to an award of moral and exemplary damages. The Court has held that in determining entitlement to moral damages, it suffices to prove that the claimant has suffered anxiety, sleepless nights, besmirched reputation and social humiliation by reason of the act complained of. Exemplary damages, on the other hand, are granted in addition to moral damages by way of example or correction for the public good. Furthermore, as petitioner was compelled to litigate and incur expenses to enforce and protect his rights, he is entitled to an award of attorneys fees. The amount of damages recoverable is, in turn, determined by the business, social and financial position of the offended parties and the business and financial position of the offender.
[23] [24] [25]

With the finding that the transfer was illegal, petitioner is entitled to be reinstated to his former, or a substantially equivalent, position without loss of seniority rights. Reinstatement contemplates a restoration to a position from which one has been removed or separated so that the employee concerned may resume the functions of the position he already held. This position would be Senior Manager Level 2, the position he occupied before he was illegally transferred.
[26]

Respondent PLDT claims that, as a result of a major organizational change when Manuel Pangilinan became president of the company, the position of petitioner as Staff Executive of GMM Network Sector was now renamed as Staff Executive of GMM Operations. Petitioner, on the other hand, argues that his former position has been abolished as a result of the consolidation of the Garnet and Cubao Exchanges to form the Ortigas Exchange. He further added that granting him the very same position would not do so much in vindicating him since most of his contemporaries have already surpassed him in ranking, having been promoted to higher positions during the pendency of this case. Reinstatement, to which petitioner is lawfully entitled, must be given full effect and must restore petitioner to his rightful place in the present organizational structure of respondent company approximating his status before he was illegally transferred. As the position no longer exists, petitioner should be restored to an equivalent position. WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the MODIFICATION that respondents are hereby ORDERED to pay petitioner P50,000.00 as moral damages, P20,000.00 as exemplary damages and attorneys fees equivalent to 10% of the amount to which petitioner is entitled in this case. Costs against respondents. SO ORDERED.

[G.R. No. 116781. September 5, 1997]

TOMAS LAO CONSTRUCTION, LVM CONSTRUCTION CORPORATION, THOMAS and JAMES DEVELOPERS (PHIL.), INC., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, MARIO O. LABENDIA, SR., ROBERTO LABENDIA, NARCISO ADAN, FLORENCIO GOMEZ, ERNESTO BAGATSOLON, SALVADOR BABON, PATERNO BISNAR, CIPRIANO BERNALES, ANGEL MABULAY, SR., LEO SURIGAO, and ROQUE MORILLO, respondents. DECISION
BELLOSILLO, J.:

From October to December 1990 private respondents individually filed complaints for illegal dismissal against petitioners with the National Labor Relations Commission Regional Arbitration Branch No. VIII (NLRC - RAB VIII), Tacloban City. Alleging that they were hired for various periods as construction workers in different capacities they described their contractual terms as follows: (a) Roberto Labendia, general construction foreman, from 1971 to 17 October 1990 at P3,700/month; (b) Narciso Adan, tireman, from October 1981 to November 1990 at P75.00/day; (c) Florencio Gomez, welder, from July 1983 to July 1990 at P60.00/day; (d) Ernesto Bagatsolon leadman/checker, from June 1982 to October 1990 atP2,800/month; (e) Salvador Babon, clerk/timekeeper/paymaster, from June 1982 to October 1990 at P3,200/month; (f) Paterno Bisnar, road grader operator, from January 1979 to October 1990 at P105/day; (g) Cipriano Bernales, instrument man, from February 1980 to November 1990 at P3,200/month; (h) Angel Mabulay, Sr., dump truck driver, from August 1974 to October 1990 at P90/day; (I) Leo Surigao, payloader operator, from March 1975 to January 1978 at P100/day; (J) Mario Labendia, Sr. surveyor/foreman, from August 1971 to July 1990 at P2,900/month; and, (k) Roque Morillo, company watchman, from August 1983 to October 1990 at P3,200/month.
[1]

Within the periods of their respective employments, they alternately worked for petitioners Tomas Lao Corporation (TLC), Thomas and James Developers (T&J) and LVM Construction Corporation (LVM), altogether informally referred to as the Lao Group of Companies, the three (3) entities comprising a business conglomerate exclusively controlled and managed by members of the Lao family.

TLC, T&J and LVM are engaged in the construction of public roads and bridges. Under joint venture agreements they entered into among each other, they would undertake their projects either simultaneously or successively so that, whenever necessary, they would lease tools and equipment to one another. Each one would also allow the utilization of their employees by the other two (2). With this arrangement, workers were transferred whenever necessary to on-going projects of the same company or of the others, or were rehired after the completion of the project or project phase to which they were assigned. Soon after, however, TLC ceased its operations while T&J and LVM stayed on.
[2]

Sometime in 1989 Andres Lao, Managing Director of LVM and President of T&J, issued a memorandum requiring all workers and company personnel to sign employment contract forms and clearances which were issued on 1 July 1989 but antedated 10 January 1989. These were to be used allegedly for audit purposes pursuant to a joint venture agreement between LVM and T&J. To ensure compliance with the directive, the company ordered the withholding of the salary of any employee who refused to sign. Quite notably, the contracts expressly described the construction workers as project employees whose employments were for a definite period, i.e., upon the expiration of the contract period or the completion of the project for which the workers was hired.
[3] [4]

Except for Florencio Gomez all private respondents refused to sign contending that this scheme was designed by their employer to downgrade their status from regular employees to mere project employees. Resultantly, their salaries were withheld. They were also required to explain why their services should not be terminated for violating company rules and warned that failure to satisfactorily explain would be construed as disinterest in continued employment with the company. Since the workers stood firm in their refusal to comply with the directives their services were terminated.
[5]

NLRC RAB VIII dismissed the complaints lodged before it, finding that private respondents were project employees whose employments could be terminated upon completion of the projects or project phase for which they were hired. It upheld petitioners contention that the execution of their employment contracts was to forestall the eventuality of being compelled to pay the workers their salaries even if there was no more work to be done due to the completion of the projects or project phases. The labor court however granted each employee a separation pay of P6,435.00 computed at one-half (1/2) month salary for every year of service, uniformly rounded at five (5) years.
[6]

The decision of Labor Arbiter Gabino A. Velasquez, Jr., was reversed on appeal by the Fourth Division of the National Labor Relations Commission (NLRC) of Cebu City which found that private respondents were regular employees who were dismissed without just cause and denied due process. The NLRC also overruled the fixing by the Labor Arbiter of the term of employment of complainants uniformly at five (5) years since the periods of employment of the construction workers as alleged in their complaints were never refuted by petitioners. In granting monetary awards to complainants, NLRC disregarded the veil of corporate fiction and treated the three (3) corporations as forming only one entity on the basis of the admission of petitioners that the three (3) operated as one (1), intermingling and commingling all its resources, including manpower facility.
[7]

Petitioners now lay their cause before us and assign the following errors: (a) NLRC erred in classifying the employees as regular instead of project employees; (b) assuming that the workers were regular employees, NLRC failed to consider that they were terminated for cause; (c) assuming further that the employees were illegally dismissed, NLRC erred in awarding back wages in excess of three (3) years; and, (d) assuming finally that the decision is correct, NLRC erred when it pierced the veil of corporate personality of petitioner-corporations. The main thrust of petitioners expostulation is that respondents have no valid cause to complain about their employment contracts since these documents merely formalized their status as project employees. They cite Policy Instruction No. 20 of the Department of Labor which defines project employees as those employed in connection with a particular construction project, adding that the ruling in Sandoval Shipyards, Inc. v. NLRC applies squarely to the instant case because there the Court declared that the employment of project employees is co-terminous with the completion of the project regardless of the number of projects in which they have worked. And as their employment is one for a definite period, they are not entitled to separation pay nor is their employer required to obtain clearance from the Secretary of Labor in connection with their termination. Petitioners thus argue that their dismissal from the service of private respondents was legal since the projects for which they were hired had already been completed. As additional ground, they claim that Mario Labendia and Roberto Labendia had absented themselves without leave giving management no choice but to sever their employment.
[8]

We are not convinced. The principal test in determining whether particular employees are project employees distinguished from regular employees is whether the project employees are assigned to carry out specific project or

undertaking, the duration (and scope) of which are specified at the time the employees are engaged for the project. Project in the realm of business and industry refers to a particular job or undertaking that is within the regular or usual business of employer, but which is distinct and separate and identifiable as such from the undertakings of the company. Such job or undertaking begins and ends at determined or determinable times.
[9]

While it may be allowed that in the instant case the workers were initially hired for specific projects or undertakings of the company and hence can be classified as project employees, the repeated re-hiring and the continuing need for their services over a long span of time (the shortest, at seven [7] years) have undeniably made them regular employees. Thus, we held that where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and considered regular employees.
[10]

While length of time may not be a controlling test for project employment, it can be a strong factor in determining whether the employee was hired for a specific undertaking or in fact tasked to perform functions which are vital, necessary and indispensable to the usual business or trade of the employer. In the case at bar, private respondents had already gone through the status of project employees. But their employments became noncoterminous with specific projects when they started to be continuously rehired due to the demands of petitioners business and were re-engaged for many more projects without interruption. We note petitioners own admission [t]hese construction projects have been prosecuted by either of the three petitioners, either individually or in a joint venture with one another. Likewise, these construction projects have been prosecuted by either of the three petitioners, either simultaneously, one construction project overlapping another and/or one project commencing immediately after another project has been completed or terminated. Perhaps because of their capacity to prosecute government projects and their good record and performance, at least one of the three petitioners had an on-going construction project and/or one of the three petitioners construction project overlapped that of another.
[11]

The denial by petitioners of the existence of a work pool in the company because their projects were not continuous is amply belied by petitioners themselves who admit that All the employees of either of the three petitioners were actually assigned to a particular project to remain in said project until the completion or termination of that project. However, after the completion of that particular project or when their

services are no longer needed in the project or particular phase of the project where they were assigned, they were transferred and rehired in another on-going project.

[12]

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. Clearly, the continuous rehiring of the same set of employees within the framework of the Lao Group of Companies is strongly indicative that private respondents were an integral part of a work pool from which petitioners drew its workers for its various projects. In a final attempt to convince the Court that private respondents were indeed project employees, petitioners point out that the workers were not regularly maintained in the payroll 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. We apply by analogy the case of Industrial-Commercial-Agricultural Workers Organization v. CIR which deals with regular seasonal employees. There we held [13]

That during the temporary layoff the laborers are free to seek other employment is natural, since the laborers are not being paid, yet must find means of support. A period during which the Central is forced to suspend or cease operation for a time xxx should not mean starvation for employees and their families (emphasis supplied). Truly, the cessation of construction activities at the end of every project is a foreseeable suspension of work. Of course, no compensation can be demanded from the employer because the stoppage of operations at the end of a project and before the start of a new one is regular and expected by both parties to the labor relations. Similar to the case of regular seasonal employees, the employment relation is not severed by merely being suspended. The employees are, strictly speaking, not separated from services but merely on leave of absence without pay until they are reemployed. Thus we cannot affirm the argument that non-payment of salary or non-inclusion in the payroll and the opportunity to seek other employment denote project employment.
[14] [15]

Contrary to petitioners assertion, our ruling in Sandoval Shipyards is inapplicable considering the special circumstances attendant to the present

case. In Sandoval, the hiring of construction workers, unlike in the instant case, was intermittent and not continuous for the shipyard merely accepts contracts for shipbuilding or for repair of vessels from third parties and, only on occasions when it has work contract of this nature that it hires workers to do the job which, needless to say, lasts only for less than a year or longer.
[16]

Moreover, if private respondents were indeed employed as project employees, petitioners should have submitted a report of termination to the nearest public employment office every time their employment was terminated due to completion of each construction project. The records show that they did not. Policy Instruction No. 20 is explicit that employers of project employees are exempted from the clearance requirement but not from the submission of termination report. We have consistently held that failure of the employer to file termination reports after every project completion proves that the employees are not project employees. Nowhere in the New Labor Code is it provided that the reportorial requirement is dispensed with. The fact is that Department Order No. 19 superseding Policy Instruction No. 20 expressly provides that the report of termination is one of the indicators of project employment.
[17] [18] [19]

We agree with the NLRC that the execution of the project employment contracts was farcical. Obviously, the contracts were a scheme of petitioners to prevent respondents from being considered as regular employees. It imposed time frames into an otherwise flexible employment period of private respondents some of whom were employed as far back as 1969. Clearly, here was an attempt to circumvent labor laws on tenurial security. Settled is the rule that when periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public morals, good customs or public order. Worth noting is that petitioners had engaged in various joint venture agreements in the past without having to draft project employment contracts. That they would require execution of employment contracts and waivers at this point, ostensibly to be used for audit purposes, is a suspect excuse, considering that petitioners enforced the directive by withholding the salary of any employee who spurned the order.
[20] [21]

We likewise reject petitioners justification in re-hiring private respondents i.e., that it is much cheaper and economical to re-hire or reemploy the same workers than to train a new set of employees. It is precisely because of this cost-saving benefit to the employer that the law deems it fair that the employees be given a regular status. We need not belabor this point.

The NLRC was correct in finding that the workers were illegally dismissed. The rule is that in effecting a valid dismissal, the mandatory requirements of substantive and procedural due process must be strictly complied with. These were wanting in the present case. Private respondents were dismissed allegedly because of insubordination or blatant refusal to comply with a lawful directive of their employer. But willful disobedience of the employers lawful orders as a just cause for the dismissal of the employees envisages the concurrence of at least two (2) requisites: (a) the employees assailed conduct must have been willful or intentional, the willfulness being characterized by a wrongful and perverse attitude; and, (b) the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he has been engaged to discharge. The refusal of private respondents was willful but not in the sense of plain and perverse insubordination. It was dictated by necessity and justifiable reasons - for what appeared to be an innocent memorandum was actually a veiled attempt to deny them their rightful status as regular employees. The workers therefore had no option but to disobey the directive which they deemed unreasonable and unlawful because it would result in their being downsized to mere project workers. This act of self-preservation should not merit them the extreme penalty of dismissal.
[22]

The allegation of petitioners that private respondents are guilty of abandonment of duty is without merit. The elements of abandonment are: (a) failure to report for work or absence without valid or justifiable reason, and, (b) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor manifested by some overt acts. In this case, private respondents Roberto Labendia and Mario Labendia were forced to leave their respective duties because their salaries were withheld. They could not simply sit idly and allow their families to starve. They had to seek employment elsewhere, albeit temporarily, in order to survive. On the other hand, it would be the height of injustice to validate abandonment in this particular case as a ground for dismissal of respondents thereby making petitioners benefit from a gross and unjust situation which they themselves created. Private respondents did not intend to sever ties with petitioner and permanently abandon their jobs; otherwise, they would not have filed this complaint for illegal dismissal.
[23] [24] [25]

Petitioners submit that since private respondents were only project employees, they are not entitled to security of tenure. This is incorrect. In Archbuild Masters and Construction,Inc. v. NLRC we held [26]

x x x a project employee hired for a specific task also enjoys security of tenure. A termination of his employment must be for a lawful cause and must be done in a manner which affords him the proper notice and hearing x x x x To allow employers to exercise their prerogative to terminate a project workers employment based on gratuitous assertions of project completion would destroy the constitutionally protected right of labor to security of tenure (emphasis supplied). The burden of proving that an employee has been lawfully dismissed therefore lies with the employer. In the case at bar, the assertions of petitioners were self-serving and insufficient to substantiate their claim of proximate project completion. The services of the employees were terminated not because of contract expiration but as sanction for their refusal to sign the project employment forms and quitclaims. Finding that the dismissal was without just cause, we find it unnecessary to dwell on the non-observance of procedural due process. Suffice it to state that private respondents were not priorly notified of their impending dismissal and that they were not provided ample opportunity to defend themselves. Petitioners charge as erroneous the grant to private respondents by NLRC of back wages in excess of three (3) years or, in the alternative, to an award of separation pay if reinstatement is no longer feasible. We disagree. Since the illegal dismissal was made in 1990 or after the effectivity of the amendatory provision of RA No. 6715 on 21 March 1989, private respondents back wages should be computed on the basis of Art. 279 of the Labor Code which states that (a)n employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full back wages, 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. Conformably with our ruling in Bustamante v. NLRC the illegally dismissed employees are entitled to full back wages, undiminished by earnings derived elsewhere during the period of their illegal dismissal. In the event that reinstatement is no longer feasible, back wages shall be computed from the time of illegal termination until the time of the finality of the decision. The award shall be based on the documents submitted by private respondents, i.e. affidavits, SSS and Medicare documents, since petitioners failed to adduce competent evidence to the contrary. The separation pay shall be equivalent to "at least one (1) month salary or to one (1) month
[27] [28]

salary for every year of service, whichever is higher, a fraction of at least six (6) months being considered as one whole year."
[29]

Finally, public respondent NLRC did not err in disregarding the veil of separate corporate personality and holding petitioners jointly and severally liable for private respondents back wages and separation pay. The records disclose that the three (3) corporations were in fact substantially owned and controlled by members of the Lao family composed of Lao Hian Beng alias Tomas Lao, Chiu Siok Lian (wife of Tomas Lao), Andrew C. Lao, Lao Y. Heng, Vicente Lao Chua, Lao E. Tin, Emmanuel Lao and Ismaelita Maluto. A majority of the outstanding shares of stock in LVM and T&J is owned by the Lao family. T&J is 100% owned by the Laos as reflected in its Articles of Incorporation. The Lao Group of Companies therefore is a closed corporation where the incorporators and directors belong to a single family. Lao Hian Beng is the same Tomas Lao who owns Tomas Lao Corporation and is the majority stockholder of T&J. Andrew C. Lao is the Managing Director of LVM Construction, and President and Managing Director of the Lao Group of Companies. Petitioners are engaged in the same line of business under one management and use the same equipment including manpower services. Where it appears that [three] business enterprises are owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect the rights of third persons, disregard the legal fiction that the [three] corporations are distinct entities, and treat them as identical.
[30]

Consonant with our earlier ruling, we hold that the liability of petitioners extends to the responsible officers acting in the interest of the corporations. In view of the peculiar circumstances of this case, we disregard the separate personalities of the three (3) corporations and at the same time declare the members of the corporations jointly and severally liable with the corporations for the monetary awards due to private respondents. It should always be borne in mind that the fiction of law that a corporation as a juridical entity has a distinct and separate personality was envisaged for convenience and to serve justice; therefore it should not be used as a subterfuge to commit injustice and circumvent labor laws.
[31]

WHEREFORE, the petition is DENIED and the decision of the National Labor Relations Commission dated 05 August 1994 is AFFIRMED. Petitioners are ordered to reinstate private respondents to their former positions without loss of seniority rights and other privileges with full back wages, inclusive of allowances, computed from the time compensation was withheld up to the time of actual reinstatement. In the event that reinstatement is no longer feasible, petitioners are directed to pay private respondents separation pay equivalent to one month salary for every year of

service, a fraction of at least six (6) months being considered one (1) year in the computation thereof, and full back wages computed from the time compensation was withheld until the finality of this decision. All other claims of the parties are DISMISSED for lack of merit. Costs against petitioners. SO ORDERED. Vitug, Kapunan, and Hermosisima, Jr., JJ., concur.

[G.R. No. 122955. April 15, 1998]

ST. THERESAS SCHOOL OF NOVALICHES FOUNDATION and ADORACION ROXAS, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and ESTHER REYES, respondents. DECISION
PURISIMA, J.:

Justitia nemini neganda est. Justice is to be denied to none. The law, while protecting the rights of the employees, authorizes neither the oppression nor destruction of the employer.[1] When the law angles the scale of justice in favor of labor, the scale should never be so tilted if the result is an injustice to the employer. [2] The petition at bench seeks to modify the Resolution issued on November 29, 1994 by the National Labor Relations Commission (NLRC) and its Decision of 29 November, 1995 in NLRC NCR Case No. 00-6078-94. Petitioners contend that the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction in handing down its disposition wherein, notwithstanding the finding that the dismissal of private respondent was valid, it awarded backwages for the latter, computed from November 12, 1993 up to the time of rendition of the decision under attack. Undisputed are the following facts:

Petitioner Adoracion Roxas is the president of St. Theresas School of Novaliches Foundation. She hired private respondent, Esther Reyes, on a contract basis, for the period from June 1, 1991 to March 31, 1992. However, private respondent commenced work on May 2, 1991. During the said period of employment, private respondent became ill. She went on a leave of absence from February 17 to 21 and from February 24 to 28, 1992, such leave of absence having been duly approved by petitioner Roxas. On March 2, 1992, private respondent reported for work, but she only stayed in her place of work from 6:48 to 9:38 a.m. Thereafter, she never returned. For what reason did private respondent stop working? Petitioners theorize that the private respondent abandoned her work. On the other hand, the latter maintains that she was replaced. When she went back to work on February 20, 1992, she found out that her table, chair, and other belongings were moved to a corner of their office, and she was replaced by Annie Roxas, daughter of petitioner Adoracion Roxas. She tried to

contact her employer but the latter could not be found within the school premises. On March 25, 1992, petitioners sent private respondent a letter by registered mail, informing her that her contract, due to expire on March 31, 1992, would not be renewed. Prior thereto, or on March 3, 1992, to be precise, the private respondent instituted NLRC NCR Case No. 00-03-01481-92[3] against the herein petitioners for unfair labor practice based on harassment, illegal dismissal, 13 month pay, allowances, removal of desk and chair form place of work, and refusal to communicate, moral and exemplary damages.[4] On November 12, 1993, absent any amicable settlement hammered out by the parties, the Labor Arbiter came out with a decision, disposing, thus:
th

WHEREFORE, responsive to the foregoing, judgment is hereby ordered declaring complainant (sic) dismissal from the service illegal. Respondent is hereby ordered to reinstate complainant to her former position without loss of seniority rights and to pay for full backwages from the time of dismissal to her actual reinstatement in the amount of Seventy Six Thousand Seven Hundred One (P76,701.00) Pesos. Respondent is hereby ordered to pay complainant P25,000 as moral damages and P10,000 by way of exemplary damages. Respondent (sic) are further assessed attorneys fees of 10% of the award. On December 7, 1993, after posting the necessary supersedeas bond, petitioners appealed the aforesaid decision to the NLRC. On January 12, 1994, private respondent presented a Motion for Partial Execution of the reinstatement aspect of the Labor Arbiters decision. On April 5, 1994, when no action was taken by the Labor Arbiter on her motion, she filed a Motion for Immediate Resolution, and, on July 13, 1994, after three months, still without any action taken by the same Labor Arbiter on her yearning, the private respondent sent in a second Motion for Immediate Resolution. However, Labor Arbiter Raul T. Aquino was appointed as Commissioner of the NLRC, thereby leaving subject motions of private respondent unresolved. On November 29, 1994, petitioners appeal, docketed as NLRC NCR Case No. 006078-94, was resolved in the assailed Resolution of the of the Second Division of the NLRC; disposing, as follows:

WHEREFORE, all premises considered, the decision of the Labor Arbiter below dated November 12, 1993 is hereby reversed and set aside and another one rendered, declaring the separation of Esther Reyes from service legal and valid. However, respondent is directed to pay the backwages of herein complainant from November 12, 1993 up to the date of the promulgation of this Resolution. Therefrom, both parties moved for reconsideration; petitioners assailing the award of backwages in favor of private respondent. On November 29, 1995, the same Second Division of NLRC rendered its challenged Decision, denying subject motions for reconsideration. Sometime in February 1996, the private respondent filed with NLRC a Motion for Execution, through the deciding Labor Arbiter. But until now, no writ of execution issued. Unfortunately for private respondent, she never interposed any appeal from NLRCs ruling, upholding the validity of her dismissal. It is therefore settled, beyond the reach of this courts power of review, that private respondents employment was validly terminated.
On the part of petitioners, they have come here to question the award of backwages for the private respondent, whose dismissal has been upheld with finality. Before delving into and passing upon the propriety of the assailed award of backwages, which is the core of the Petition before us, the court takes note of the undisputed fact that private respondent was employed on a contract basis. Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period provided the same is entered into by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstance vitiating consent. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employees duties.[5] It goes without saying that contracts of employment govern the relationship of the parties. In this case, private respondents contract provided for a fixed term of nine (9) months, from June 1, 1991 to March 31, 1992. Such stipulation, not being contrary to law, morals, good customs, public order and public policy, is valid, binding and must be respected.[6] It bears stressing that private teachers are subject to special rules with respect to requisites for their permanent employment and security of tenure, to wit:

1. He must be a full time teacher; 2. He must have rendered at least three consecutive years of service; and, 3. Such service must be satisfactory.[7]
This is in accord with the Manual of Regulations for Private Schools issued by the then Department of Education.[8] We now tackle the pivotal point of inquiry - the award of backwages in favor of private respondent. Is it proper in light of the finding that her dismissal was valid? The term backwages has been defined as that for earnings lost by a worker due to his illegal dismissal.[9] Backwages are generally granted on grounds of equity.[10] Payment thereof is a form of relief that restores the income lost by reason of such unlawful dismissal.[11] It is not private compensation or damages, but is awarded in furtherance and effectuation of the public objectives of the Labor Code. Nor is it a redress of a private right but, rather, in the nature of a command to the employer to make public reparation for dismissing an employee, either due to the formers unlawful act or bad faith.[12] Jurisprudence is filled to the brim with cases wherein backwages were awarded to an employee illegally dismissed.[13] But where, as in this case of a pitiful employee rendered hapless by her lawyers inaction or ignorance, the dismissal has been adjudged valid and lawful, the challenged award of backwages is decidedly improper and contrary to law and jurisprudence. WHEREFORE, the Petition is GRANTED; the Decision of the respondent NLRC rendered on November 29, 1995 in NLRC NCR Case No. 00-6078-94 is hereby MODIFIED by deleting therefrom the award of backwages in question. No pronouncement as to costs. SO ORDERED. Narvasa, C.J., (Chairman), Romero, and Kapunan, JJ., concur.