G.R. No.

200712, July 04, 2018 ] Roger Martinez Poultry & Livestock Feed April 1995 May 2007
MARIO A. ABUDA, RODOLFO DEL REMEDIOS, EDWARDO DEL REMEDIOS, RODOLFO L. ZAMORA, Wilfredo Broñola Mixers December 2004 January 2006
DIONISIO ADLAWAN, ELPIDIO GARCIA, JR., ROGELIO ZAMORA, SR., JIMMY TORRES, POLICARPIO Arnel Capellan Poultry & Livestock Feed March 1989 November 2006
OBANEL, JOSE FERNANDO, JOHNNY BETACHE, JAYSON GARCIA, EDWIN ESPE, NEMENCIO CRUZ, LARRY Eduardo A. Cap[i]llan Mixers February 2003 December 2006
ABANES, ROLANDO SALEN, JOSEPH TORRES, FRANCISCO LIM, ARNALDO GARCIA, WILFREDO Jeremias Capellan Delivery Helper April 2000 August 2000[6]
BRONOLA, GLENN MORAN, JOSE GONZALES, ROGER MARTINEZ, JAIME CAPELLAN, RICHARD ORING, Temmie C. Nawal Checker
JEREMIAS CAPELLAN, ARNEL CAPELLAN, MELCHOR CAPELLAN, ROLLY PUGOY, JOEY GADONES, ARIES Security Guard
CATIANG, LEONEL LATUGA, CAPILLAN, PETITIONERS, V. L. NATIVIDAD POULTRY FARMS, JULIANA Poultry Helper
NATIVIDAD, AND MERLINDA NATIVIDAD, RESPONDENTS. On May 13, 2009, Labor Arbiter Robert A. Jerez (Labor Arbiter Jerez) dismissed the complaint due to
lack of employer-employee relationship between the workers and L. Natividad. He ruled that San
DECISION Mateo General Services (San Mateo), Wilfredo Broñola (Broñola), and Rodolfo Del Remedios (Del
LEONEN, J.: Remedios) were the real employers as they were the ones who employed the workers, not L.
The necessity or desirability of the work performed by an employee can be inferred from the length Natividad.[7]
of time that an employee has been performing this work. If an employee has been employed for at The workers appealed Labor Arbiter Jerez's Decision, and on August 31, 2010, the National Labor
least one (1) year, he or she is considered a regular employee by operation of law. Relations Commission modified the assailed Decision.[8]
This resolves the Petition for Review[1] filed by Mario A. Abuda, Rodolfo Del Remedios, Edwardo Del The National Labor Relations Commission found that the workers were hired as maintenance
Remedios, Rodolfo L. Zamora, Dionisio Adlawan, Elpidio Garcia, Jr., Rogelio Zamora, Sr., Jimmy Torres, personnel by San Mateo and Del Remedios on pakyaw basis to perform specific services for L.
Policarpio Obanel, Jose Fernando, Johnny Betache, Jayson Garcia, Edwin Espe, Nemencio Cruz, Larry Natividad. Furthermore, it ruled that Jose Gonzales (Gonzales) and Roger Martinez (Martinez) could
Abañes, Rolando Salen, Joseph Torres, Francisco Lim, Arnaldo Garcia, Wilfredo Broñola, Glenn Moran, not be considered as regular employees because their jobs as poultry livestock mixers were not
Jose Gonzales, Roger Martinez, Jaime Capellan, Richard Oring, Jeremias Capellan, Arnel Capellan, necessary in L. Natividad's line of business. However, it found Broñola, Jeremias Capellan (Jeremias),
Melchor Capellan, Rolly Pugoy, Joey Gadones, Aries Catiang, Leonel Latuga, Vicente Go, Temmie C. Arnel Capellan (Arnel), Temmie Nawal (Nawal), and Eduardo Capillan (Eduardo) to be regular
Nawal, and Eduardo A. Capillan (collectively, workers), assailing the October 11, 2011 Decision[2] and employees and ordered L. Natividad to reinstate them and pay their thirteenth month pay and service
February 8, 2012 Resolution[3] of the Court of Appeals in CA-G.R. SP No. 117681. incentive leave pay.[9]
The workers of L. Natividad Poultry Farms (L. Natividad) filed complaints for "illegal dismissal, unfair labor The dispositive portion of the National Labor Relations Commission August 31, 2010 Decision read:
practice, overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave WHEREFORE, the Decision dated May 13, 2009 is hereby MODIFIED. Complainants Wilfreda Bronola,
pay, thirteenth month pay, and moral and exemplary damages"[4] against it and its owner, Juliana Jeremias Capellan, Arnel Capellan, Temmie Nawal, and Eduardo Capellan, are hereby declared
Natividad (Juliana), and manager, Merlinda Natividad (Merlinda). [5] regular employees of respondent L. Natividad Poultry Farms. However, considering that the above-
The workers claimed that L. Natividad employed and terminated their employment after several years named complainants were not illegally dismissed by the respondents and the former's intention to be
of employment. The dates they were hired and terminated are as follows: reinstated to work, respondents L. Natividad Poultry Farms through respondents Juliana Natividad and
NAME POSITION DATE OF HIRING DATE OF TERMINATION Merlinda Natividad are hereby directed to reinstate the above-named complainants to their former
position or substantially equivalent position without backwages. Respondent [L. Natividad] is also
Arnaldo Garcia Maintenance Personnel May 1997 June 2005 directed to pay their respective 13th month pays and service incentive leave pays as follows:
Dionisio Adlawan Maintenance Personnel January 1991 November 2005 Name 13th Month Pay Service Incentive Total Amount
Edwardo Del Maintenance Personnel 1990 April 2005 Leave Pay (SILP)
Remedios Maintenance Personnel January 1997 April 2006 Not
Edwin Espe Maintenance Personnel March 1990 February 2006 Wilfredo Bronola P20,690.77 P20,690.77
Entitled/Supervisor
Elpidio Garcia, Jr. Maintenance Personnel May 1997 March 2007
Francisco Lim Maintenance Personnel March 1998 June 2005 Jeremias Capellan P14,952.60 P2,875.50 P17,828.10
Jayson Garcia Maintenance Personnel May 1990 November 2006
Jimmy Torres Maintenance Personnel May 1990 March 2005 Arnel Capellan P5,687.05 P1,093.66 P6,780.71
Johnny Betache Maintenance Personnel February 1999 March 2007
Jose Fernando Maintenance Personnel April 1997 April 2005
Larry Abañe[s] Maintenance Personnel September 2004 January 2007 Temmie Nawal P9,143.90 P1,758.44 P10,902.34
Mario A. Abuda Maintenance Personnel April 1990 May 2006
Nemencio Cruz Maintenance Personnel January 1991 September 2005 Eduardo Capellan P15,274.53 P2,937.41 P18,211.94
Policarpio Obanel Maintenance Personnel March 1990 March 2007
Rodolfo Del Remedios Maintenance Personnel January 1999 March 2005 TOTAL AWARDS P74,413.86
Rodolfo L. Zamora Maintenance Personnel March 1995 September 2005
Rogelio Zamora, Sr. Maintenance Personnel 1997 2005 For failure to comply with the requisites of Article 106 of the Labor Code on permissible job contracting,
Rolando Salen Poultry & Livestock Feed 1989 May 2007 third party respondents San Mateo General Services and Rodolfo Del Remedios are hereby declared
Jose Gonzales Mixers July 2002 May 2007 to be engaged in labor-only contracting. No employer-employee relationship existed, however,
between respondent [L. Natividad] and the following complainants: Rodolfo Del Remedios, Edward
Del Remedios, Dionisio Adlawan, Elpidio Garcia, Jr., Rogelio Zamora, Sr., Jimmy Torres, Policarpio
Obanel, Jose Fernando, Johnny Betache, Jayson Garcia, Edwin Espe, Nemencio Cruz, Larry Aba[ñ]es,
Rolando Salen, Francisco Lim, Arnold Garcia, Mario Abuda, Rodolfo Zamora, Jose Gonzales and
Roger Martinez, as they performed tasks not usually necessary or desirable in the business of
respondent [L. Natividad]. Thus, it is hereby declared that the above-named complainants were
engaged on pakyaw basis and not regular employees of the latter.
All other claims of the complainants are hereby dismissed for lack of merit.
SO ORDERED.[10]
The workers moved to reconsider the National Labor Relations Commission August 31, 2010 Decision,
but this was denied by the National Labor Relations Commission in its October 26, 2010 Resolution.[11]
The workers filed a Petition for Review on Certiorari[12] before the Court of Appeals.
On October 11, 2011, the Court of Appeals[13] modified the National Labor Relations Commission's
assailed Decision and ruled that San Mateo and Del Remedios were labor-only contractors, and as
such, they must be considered as L. Natividad's agents.[14]
The Court of Appeals also reversed the National Labor Relations Commission's ruling on Gonzales' and
Martinez's employment status since as poultry and livestock feed mixers, they performed tasks which
were necessary and desirable to L. Natividad's business and were not mere helpers. It deemed them
to be L. Natividad's regular employees.[15]
However, the Court of Appeals upheld the National Labor Relations Commission's finding that the
maintenance personnel were only hired on a pakyaw basis to perform necessary repairs or
construction within the farm as the need arose.[16]
As for the issue of illegal dismissal, the Court of Appeals also affirmed the National Labor Relations
Commission's finding that the workers failed to substantiate their bare allegation that L. Natividad
verbally notified them of their dismissal.[17]
The dispositive portion of the Court of Appeals October 11, 2011 Decision read:
ACCORDINGLY, the petition is PARTLY GRANTED and the Decision dated August 31, 2010, MODIFIED.
Petitioners Jose Gonzales and Roger Martinez are DECLARED regular employees of respondent L.
Natividad Poultry Farms; and the latter, DIRECTED to reinstate Jose Gonzales and Roger Martinez
without backwages and to pay their 13th month and service incentive leave pay.
No costs.
SO ORDERED.[18]
On October 24, 2011, the workers moved for the reconsideration of the Court of Appeals Decision, but
their motion was denied in the Court of Appeals February 8, 2012 Resolution.[19]
On March 27, 2012, the workers filed their Petition for Review on Certiorari before this Court.[20]
In their Petition, petitioners claim that as maintenance personnel assigned to respondent L. Natividad's
farms and sales outlets, they performed functions that were necessary and desirable to L. Natividad's
usual business.[21] They assert that they have been continuously employed by L. Natividad for a period
ranging from more than one (1) year to 17 years.[22]
Petitioners also state that as maintenance personnel, they repaired and maintained L. Natividad's
livestock and poultry houses, facilities, and sales outlets.[23] They worked from Monday to Saturday,
from 7:15 a.m. to 5:15 p.m., with their attendance checked by the guard on duty.[24]
Petitioners stress that L. Natividad provided all the tools, equipment, and materials they used as
maintenance personnel. Respondents Juliana and Merlinda then gave them specific tasks and
supervised their work.[25]
Petitioners argue that even if they were mere project employees as respondents claim, respondents
failed to present any service contract executed between them.[26]
Petitioners point out that respondents used the supposed contracting arrangement with petitioner Del
Remedios to prevent them from becoming L. Natividad's regular employees. They also highlight that
the Court of Appeals ruled that petitioner Del Remedios was engaged in labor-only contracting. Thus,
they declare that this should have already been equivalent to a finding of an employer-employee
relationship between them and L. Natividad[27] and that they were illegally dismissed.[28]
In their Comment,[29] respondents claim to be engaged in the business of livestock and poultry
production.[30] They also aver to have engaged San Mateo's services to clean-up the poultry farm,
and to repair and maintain their chicken pens.[31]
Respondents likewise state that they engaged petitioner Del Remedios to provide carpentry services.
They assert that petitioners who claim to be maintenance personnel were actually carpenters or
masons deployed by petitioner Del Remedios for his own account.[32]
Respondents refer to the statements of petitioners Rolando Salen and Larry Abañes as proof that the
maintenance personnel were employees of Del Remedios:
4.1.17. It must be also be (sic) pointed out that two (2) of the named petitioners, namely: ROLANDO
SALEN and LARRY ABA[Ñ]E[S], who were supposed to be among the "Maintenance Personnel" after
re-thinking their stance in the present controversy, in their own handwriting submitted their statements,
narrated and admitted that they were indeed the former employees of Rodolfo Del Remedios and
from whom they drew their respective salaries. And, that when they signed the complaint, they were
only forced by Rodolfo Del Remedios to do so. These two supposed petitioners are apologetic to
Respondent and that they were withdrawing their respective complaints as indicated in their written
statements. They should therefore be taken out from the list of the petitioners. The written retraction of
Rolando Salen is reproduced as follows:
"Ako po si Rolando A. Salen, dating tauhan ni Rody Del Remedios kusang loob na pumunta ditto (sic)
sa opisina ng L. Natividad Poultry Farms Corporation upang kami ay humingi ng tawad sa aming
ginawa sa pagsama sa pagrereklamo nila sa Labor. Ako po ay sumama lamang sa kadahilanang
ako ay pinilit lamang na sumama sa kanila.
Alam ko po naman na si Rody Del Remedios an[g] siyang tumangap at humanap sa amin upang
magtrabaho at siya rin ang nagpapasahod sa amin, hindi ang L. Natividad Poultry Farms Corporation.
Hindi na po ako sasama sa kanilang paghahabla o pagrereklamo sa Labor. Kusang loob po akong
bumibitiw sa kagustuhan ni Rody Del Remedios na magreklamo laban sa kanila.
SGD. ROLANDO A. SALEN"
(underscoring supplied)
Larry Aba[ñ]es' written retraction is similar with that of Rolando Salen.[33]
Respondents further assert that carpentry and masonry cannot be considered as necessary or
desirable in their business of livestock and poultry production. They point out that petitioners, through
petitioner Del Remedios, were only occasionally deployed as needed to repair and maintain their
farm and sales outlets as needed.[34]
Respondents then state that they engaged the services of petitioner Broñola to mix feeds for a specific
number of tons or on a pakyaw system. They assert that petitioners Gonzales and Martinez were
Broñola's employees, whom he hired specifically to help him mix feeds.[35]
Respondents deny that petitioners were illegally dismissed and contend that their contracts were
merely not renewed.[36]
Nonetheless, respondents state that pursuant to the National Labor Relations Commission August 31,
2010 Decision, they sent return to work notices to petitioners Jeremias, Arnel, Nawal, Eduardo, and
Broñola; however, they failed to return to work.[37]
In their Reply,[38] petitioners who claim to be maintenance personnel deny lodging their applications
with petitioner Del Remedios, who was then employed as L. Natividad's supervisor. They point out that
petitioner Del Remedios was included in the employees' payroll, therefore, disputing L. Natividad's
assertion that he was engaged as a contractor.[39]
Petitioners then reiterate that they were illegally dismissed and are entitled to damages.[40]
The primary issue for the resolution of this Court is whether or not the maintenance personnel in L.
Natividad Poultry Farms can be considered as its regular employees.
When a decision of the Court of Appeals decided under Rule 65 is brought to this Court through a
petition for review under Rule 45, the general rule is that this Court may only pass upon questions of
law. Meralco Industrial Engineering Services Corp. v. National Labor Relations
Commission[41] emphasized as follows:
This Court is not a trier of facts. Well-settled is the rule that the jurisdiction of this Court in a petition for
review on certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law,
not of fact, unless the factual findings complained of are completely devoid of support from the
evidence on record, or the assailed judgment is based on a gross misapprehension of facts. Besides,
factual findings of quasi-judicial agencies like the [National Labor Relations Commission], when
affirmed by the Court of Appeals, are conclusive upon the parties and binding on this Court.[42]
Furthermore, judicial review under Rule 45 is confined to the question of whether or not the Court of
Appeals correctly "determined the presence or absence of grave abuse of discretion in the [National
Labor Relations Commission] decision before it and not on the basis of whether the [National Labor
Relations Commission] decision on the merits of the case was correct."[43]
Respondents deny that the petitioners, who claim to be maintenance personnel are their employees
and declare that they were hired by independent contractors, who exercised control over them and
paid their wages.
Respondents fail to convince.
Permissible contracting or subcontracting, and labor-only contracting is provided for under Article 106
of the Labor Code:
Article 106. Contractor or subcontractor. — Whenever an employer enters into a contract with
another person for the performance of the former's work, the employees of the contractor and of the
latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work performed under the contract, in the same
manner and extent that he is liable to employees directly employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting
or restricting, he may make appropriate distinctions between labor-only contracting and job
contracting as well as differentiations within these types of contracting and determine who among
the parties involved shall be considered the employer for purposes of this Code, to prevent any
violation or circumvention of any provision of this Code.
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are
directly related to the principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him.
Labor-only contracting is prohibited as it is seen as a circumvention of labor laws; thus, the labor-only
contractor is treated as a mere agent or intermediary of its principal.[44]
The Court of Appeals found that San Mateo and petitioner Del Remedios were not independent
contractors but labor-only contractors since they did not have substantial investment in the form of
tools, equipment, or work premises.[45] As labor-only contractors, they were considered to be agents
of respondent L. Natividad:
The fact, however, that neither of the contractors [San Mateo] and Rodolfo Del Remedios had
substantial investment in the form of tools, equipment and even work premises, nor were the services
performed by their workers, i.e. carpentry and masonry works, directly related to and usually necessary
and desirable in [L. Natividad]'s main business of livestock and poultry production showed that they
were merely engaged in "labor-only" contracting. As "labor-only" contractors, [San Mateo] and
Rodolfo Del Remedios are considered as agents of the employer, [L. Natividad]. Liability, therefore, if
any, must be shouldered by either one or shared by both. As it was, however, petitioners failed to
prove any unpaid claims against [L. Natividad].[46]
However, the Court of Appeals ruled that even if petitioners were L. Natividad's employees, they still
cannot be considered as regular employees because there was no reasonable connection between
the nature of their carpentry and masonry work and respondents' usual business in poultry and
livestock production, sale, and distribution. It also found that the maintenance personnel were hired
on a piece rate or pakyaw basis about once or thrice a year, to perform repair or maintenance works;
thus, they could not be considered as regular employees.[47]
The Court of Appeals is mistaken.
A pakyaw or task basis arrangement defines the manner of payment of wages and not the
relationship between the parties.[48] Payment through pakyaw or task basis is provided for in Articles
97(f) and 101 of the Labor Code:
Article 97. Definitions. — As used in this Title:
....
(f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece,
or commission basis, or other method of calculating the same, which is payable by an employer to
an employee under a written or unwritten contract of employment for work done or to be done, or
for services rendered or to be rendered and includes the fair and reasonable value, as determined
by the Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished
by the employer to the employee. "Fair and reasonable value" shall not include any profit to the
employer, or to any person affiliated with the employer.
....
Article 101. Payment by results. — (a) The Secretary of Labor and Employment shall regulate the
payment of wages by results, including pakyao, piecework, and other non-time work, in order to
ensure the payment of fair and reasonable wage rates, preferably through time and motion studies
or in consultation with representatives of workers' and employers' organizations.
Both the National Labor Relations Commission and the Court of Appeals found respondent L.
Natividad to be petitioners' real employer, in light of the labor-only contracting arrangement between
respondents, San Mateo, and petitioner Del Remedios. This Court sees no reason to disturb their
findings since their findings are supported by substantial evidence.
Furthermore, a resort to the four (4)-fold test of "(1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's
conduct"[49] also strengthens the finding that respondent L. Natividad is petitioners' employer.
Respondents hired petitioners directly or through petitioner Del Remedios, a supervisor at respondents'
farm.[50] They likewise paid petitioners' wages, as seen by the vouchers[51] issued to Del Remedios and
San Mateo. They also had the power of dismissal inherent in their power to select and engage their
employees. Most importantly though, they controlled petitioners and their work output by maintaining
an attendance sheet and by giving them specific tasks and assignments.[52]
With an employer-employee relationship between respondent L. Natividad and petitioners duly
established, the next question for resolution is whether petitioners can be considered to be regular
employees.
A regular employee is an employee who is:
1) engaged to perform tasks usually necessary or desirable in the usual business or trade of the
employer, unless the employment is one for a specific project or undertaking or where the work is
seasonal and for the duration of a season; or 2) has rendered at least 1 year of service, whether such
service is continuous or broken, with respect to the activity for which he is employed and his
employment continues as long as such activity exists.[53] (Emphasis supplied, citation omitted)
This finds basis in Article 280 of the Labor Code which provides:
Article 295. [280] Regular and casual employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall
be deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, that any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which he
is employed and his employment shall continue while such activity exists.
De Leon v. National Labor Relations Commission[54] instructs that "[t]he 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." [55] The
connection is determined by considering the nature of the work performed vis-a-vis the entirety of the
business or trade. Likewise, if an employee has been on the job for at least one (1) year, even if the
performance of the job is intermittent, the repeated and continuous need for the employee's services
is sufficient evidence of the indispensability of his or her services to the employer's business.[56]
Respondents did not refute petitioners' claims that they continuously worked for respondents for a
period ranging from three (3) years to 17 years.[57] Thus, even if the Court of Appeals is of the opinion
that carpentry and masonry are not necessary or desirable to the business of livestock and poultry
production,[58] the nature of their employment could have been characterized as being under the
second paragraph of Article 280. Thus, petitioners' service of more than one (1) year to respondents
has made them regular employees for so long as the activities they were required to do subsist.
Nonetheless, a careful review of petitioners' activity as maintenance personnel and of the entirety of
respondents' business convinces this Court that they performed activities which were necessary and
desirable to respondents' business of poultry and livestock production.
As maintenance personnel, petitioners performed "repair works and maintenance services such as
fixing livestock and poultry houses and facilities as well as doing construction activities within the
premises of [L. Natividad's] farms and other sales outlets for an uninterrupted period of three (3) to
seventeen (17) years."[59] Respondents had several farms and offices in Quezon City and Montalban,
including Patiis Farm, where petitioners were regularly deployed to perform repair and maintenance
work.[60]
At first glance it may appear that maintenance personnel are not necessary to a poultry and livestock
business. However, in this case, respondents kept several farms, offices, and sales outlets, meaning
that they had animal houses and other related structures necessary to their business that needed
constant repair and maintenance. In petitioner Del Remedios' sworn affidavit:
1. RODOLFO DEL REMEDIOS — Noong Marso 1990, ako ay direktang tinanggap at nagtrabaho sa
malawak na farm ng L. Natividad Poultry Farms sa San Mateo Rizal na pagmamay-ari ni Gng. Juliana
Natividad at pinamamahalaan ng kanyang anak nasi Merlinda Natividad. Ako ang nangangasiwa
sa pagkukumpuni sa mga sirang bahay ng mga manok, baboy atbp., gumawa at tumulong sa
construction ng mga ito at magmentina ng mga pasilidad sa loob ng farm at maging sa mga sales
outlets nito sa iba’t ibang Iugar. Ako ay isa lamang empleyado ng L. Natividad Poultry Farms at
kasamang sumasahod ng iba pang mga trabahador. Ang lahat ng gamit o materyales sa paggawa
at pagkukumpuni ng mga bahay ng mga manok, baboy atbp. ay nanggagaling sa L. Natividad
Poultry Farms.[61] (Emphasis supplied)
Gapayao v. Fulo[62] likewise categorically stated that pakyaw workers may be considered as regular
employees provided that their employers exercised control over them. Thus, while petitioners may
have been paid on pakyaw or task basis, their mode of compensation did not preclude them from
being regular employees.
Being regular employees, petitioners, who were maintenance personnel, enjoyed security of
tenure[63] and the termination of their services without just cause entitles them to reinstatement and
full backwages, inclusive of allowances and other benefits.
Nonetheless, the prayer for moral and exemplary damages must be denied. The termination of
employment without just cause or due process does not immediately justify the award of moral and
exemplary damages. Philippine School of Business Administration v. National Labor Relations
Commission[64] stated:
This Court however cannot sustain the award of moral and exemplary damages in favor of private
respondents. Such an award cannot be justified solely upon the premise that the employer fired his
employee without just cause or due process. Additional facts must be pleaded and proved to warrant
the grant of moral damages under the Civil Code. The act of dismissal must be attended with bad
faith, or fraud or was oppressive to labor or done in a manner contrary to morals, good customs or
public policy and, of course, that social humiliation, wounded feelings, or grave anxiety resulted
therefrom. Similarly, exemplary damages are recoverable only when the dismissal was effected in a
wanton, oppressive or malevolent manner.[65] (Citations omitted)
Petitioners maintain that their employments were terminated by respondents in an "oppressive,
malicious and unjustified manner,"[66] yet they failed to explain or illustrate how their dismissal was
oppressive, malicious, or unjustified. It is not enough that they were dismissed without due process.
Additional acts of the employers must also be pleaded and proved to show that their dismissal was
tainted with bad faith or fraud, was oppressive to labor, or was done in a manner contrary to morals,
good customs, or public policy. Petitioners failed to allege any acts by respondents which would justify
the award of moral or exemplary damages.
As for petitioners Broñola, Gonzales, Martinez, Jeremias, Arnel, Nawal, and Eduardo, although the
Court of Appeals reversed the labor tribunals' decisions and held them to be regular employees, it
nonetheless upheld the findings of both Labor Arbiter Jerez and the National Labor Relations
Commission that they failed to support their allegation that they were illegally dismissed, thus:
In illegal dismissal cases, it is incumbent upon the employees to first establish the fact of their dismissal
before the burden is shifted to the employer to prove that the dismissal was legal. Here, [the National
Labor Relations Commission] found no dismissal, much less, an illegal one as petitioners failed to
substantiate their bare allegation that [L. Natividad] verbally notified them of their dismissal. It is settled
that in the absence of proof of dismissal, the remedy is reinstatement without backwages.[67]
Illegal dismissal is essentially a factual issue,[68] and therefore, not proper in a Rule 45 petition. This Court
does not try facts.[69] Moreover, the labor tribunals and the Court of Appeals unanimously held that
petitioners were not illegally dismissed. This Court sees no reason to overturn their findings as it is settled
that:
[T]he findings of facts and conclusion of the [National Labor Relations Commission] are generally
accorded not only great weight and respect but even clothed with finality and deemed binding on
this Court as long as they are supported by substantial evidence. This Court finds no basis for deviating
from said doctrine without any clear showing that the findings of the Labor Arbiter, as affirmed by the
[National Labor Relations Commission], are bereft of substantiation. Particularly when passed upon
and upheld by the Court of Appeals, they are binding and conclusive upon the Supreme Court and
will not normally be disturbed.[70] (Citations omitted)
WHEREFORE, this Court resolves to PARTIALLY GRANT the petition. The assailed October 11, 2011
Decision and February 8, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 117681
are AFFIRMED with MODIFICATION. The following petitioners are DECLARED to be regular employees of
L. Natividad Poultry Farms and are ORDERED to be REINSTATED to their former positions and to
be PAID their backwages, allowances, and other benefits from the time of their illegal dismissal up to
the time of their actual reinstatement:
a) Rodolfo Del Remedios
b) Edwardo Del Remedios
c) Dionisio Adlawan
d) Elpidio Garcia, Jr.
e) Rogelio Zamora, Sr.
f) Jimmy Torres
g) Policarpio Obanel
h) Jose Fernando
i) Johnny Betache
j) Jayson Garcia For its part, the respondent admitted that it hired the petitioner as Pitboss Supervisor on probationary
k) Edwin Espe basis beginning June 19, 2012 to November 18, 2012. With the conformity of the petitioner, the
l) Nemencio Cruz probationary period was extended for three (3) months from November 19, 2012 to February 18,
m) Larry Abañes 2013.6 The respondent claimed that the engagement of the petitioner's service as a probationary
n) Rolando Salen employee and the extension of the period of probation were both covered by separate
o) Francisco Lim employment contracts duly signed by the parties. After receiving a commendable rating by the end
p) Arnaldo Garcia of the extended probationary period, the petitioner was advised that the company will be retaining
q) Mario Abuda her services as Pitboss Supervisor. Surprisingly, the petitioner declined the offer for the reason that a
r) Rodolfo Zamora[71] fellow employee, her best friend, will not be retained by the company. Thereafter, on February 18,
The monetary awards shall bear the legal interest rate of six percent (6%) per annum to be computed 2013, she processed her exit clearance to clear herself of any accountability and for the purpose of
from the finality of this Decision until full payment. processing her remaining claims from the company. As a sign of good will, the company signed and
The case is REMANDED to the Labor Arbiter for the computation of backwages and other monetary issued a Waiver of Non Competition Agreement in her favor and a Certificate of Employment,
awards due to petitioners. indicating that she demonstrated a commendable performance during her stint. Thus, the
respondent was surprised to receive the summons pertaining to the complaint for illegal dismissal
tiled by the petitioner.7
G.R. No. 221356, March 14, 2018 Ruling of the Labor Arbiter (LA)

On October 7, 2013, the LA rendered a Decision,8 dismissing the complaint for lack of merit, the
MARIA CARMELA P. UMALI, Petitioner, v. HOBBYWING SOLUTIONS, INC., Respondent. dispositive portion of which reads as follows:
ACCORDINGLY, the cause of action for illegal dismissal is DENIED for lack of merit.
DECISION
Respondent Hobbywing Solutions, Inc. is ordered to pay complainant here NIGHT SHIFT
REYES, JR., J.: DIFFERENTIALS of [P]21,232.58 subject to 5% withholding tax upon execution whenever applicable. All
other claims are DENIED for lack of merit.

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
Decision1 dated May 29, 2015 and Resolution2 dated November 4, 2015 of the Court of Appeals
(CA) in CA G.R. SP No. 136194.
Antecedent Facts
The instant case stemmed from a complaint for illegal dismissal filed by Maria Carmela P. Umali
(petitioner) against Hobbywing Solutions, Inc. (respondent) and its general manager, Pate Tan (Tan).
Respondent Pate Tan is EXONERATED from all liabilities.
SO ORDERED.9
The LA ruled that the petitioner failed to substantiate her claim that she was dismissed from
employment. As it is, she opted not to continue with her work out of her own volition. Further, it noted
that the respondent did not commit any overt act to sever employer-employee relations with the
petitioner as, in fact, it even offered the petitioner a regular employment but she turned it down.10

In her position paper, the petitioner alleged that she started working for the respondent, an online
casino gaming establishment, on June 19, 2012, as a Pitboss Supervisor. Her main duties and
responsibilities involve, among others, supervising online casino dealers as well as the operations of
the entire gaming area or studio of the respondent company. She, however, never signed any
employment contract before the commencement of her service but regularly received her salary
every month.3
Sometime in January 2013, after seven (7) months since she started working for the respondent, the
petitioner was asked to sign two employment contracts. The first employment contract was for a
period of five (5) months, specifically from June 19,2012 to November 19,2012. On the other hand,
the second contract was for a period of three (3) months, running from November 19, 2012 to
February 18, 2013. She signed both contracts as directed.4
Unyielding, the petitioner filed an appeal with the National Labor Relations Commission (NLRC),
reiterating her claim of illegal dismissal.
Ruling of the NLRC
On January 15, 2014, the NLRC rendered a Decision,11 holding that the petitioner was illegally
dismissed, disposing thus:
WHEREFORE, premises considered, the appeal of complainant is partly GRANTED. The assailed
Decision of the Labor Arbiter dated October 7, 2013 is hereby MODIFIED. It is hereby declared that
complainant is a regular employee of respondent Hobbywing Solutions, Inc. We also find
complainant to have been illegally dismissed from employment and respondent Hobbywing
Solutions, Inc. is hereby ordered to:

On February 18, 2013, however, the petitioner was informed by the respondent that her employment 1.
has already ended and was told to just wait for advice whether she will be rehired or regularized.
She was also required to sign an exit clearance from the company apparently to clear her from 2.
accountabilities. She was no longer allowed to work thereafter.5 Thus, the filing of a complaint for
illegal dismissal against the respondent.
reinstate complainant to her former position without loss of seniority rights and
other privileges;
pay complainant her full backwages, inclusive of allowances, and to her other
benefits or their monetary equivalent computed from the date of dismissal up to
her actual reinstatement; and
 3. pay complainant an amount equivalent to 10% of the total judgment award as
and for attorney's fees.
All other awards of the Labor Arbiter STAND.
The Computation Division of this Office is hereby directed to make the necessary computation of
the monetary award granted to complainant, which computation shall form an integral part of this
decision.
SO ORDERED.12
The NLRC held that the petitioner attained the status of a regular employee by operation of law
when she was allowed to work beyond the probationary period of employment. From that point,
she enjoys security of tenure and may not be terminated except on just or authorized causes. The
respondent's claim that the petitioner's probationary period of employment was extended cannot
be given credence since the records are bereft of proof that the latter's performance was ever
evaluated based on reasonable standards during the probationary period and that there was a
need to extend the same.13
The respondent filed a motion for reconsideration but the NLRC denied the same in its
Resolution14 dated April 30, 2014.
Dissatisfied, the respondent filed a petition for certiorari with the CA, imputing grave abuse of
discretion on the part of the NLRC for ruling that there was an illegal dismissal. It argued that the
petitioner did not become a regular employee by operation of Jaw since the probationary period
of her employment was extended by agreement of the parties so as to give her a chance to
improve her performance. There was also no il1egal dismissal since the petitioner was never
terminated since she was the one who refused to accept the offer of the company to retain her
services. It pointed out that the petitioner even processed her Exit Clearance Form and requested
for a Certificate of Employment and Waiver of the Non-Competition Agreement.15
Ruling of the CA
On May 29, 2015, the CA rendered a Decision,16 reversing the decision of the NLRC, the dispositive
portion of which reads, as follows:
WHEREFORE, based on the foregoing, the petition is GRANTED. The 15 January 2014 Decision and the
30 April 2014 Resolution of the NLRC in NLRC NCR Case No. (M) 04-06101-13 [NLRC LAC No. 10-
003040-13] are REVERSED and SET ASIDE. The 07 October 2013 Decision of the Labor Arbiter dismissing
the Complaint for lack of merit is REINSTATED.
SO ORDERED.17
The CA agreed with the LA that the petitioner failed to prove the fact of her dismissal. It held that
aside from bare allegations, no evidence was ever submitted by the petitioner that she was refused
or was not allowed to work after the period of extension. There was no letter of termination given to
the petitioner but only an exit clearance form which she personally processed, which therefore
proved that the severance of her employment was her choice.18
The petitioner filed a motion for reconsideration but the CA denied the same in Resolution19 dated
November 4, 2015, the dispositive portion of which reads, thus:
WHEREFORE, based on the foregoing, the Motion for Reconsideration is DENIED.
SO ORDERED.20
The petitioner filed the instant petition for review on certiorari, questioning the issuances of the CA.
She claims that she had already attained the status of regular employment after she was suffered to
work for more than six months of probationary employment. She also reiterates that she was only
belatedly asked to sign two employment contracts on January 19, 2013 after she had rendered
seven (7) months of service.21 She claims that she was terminated without cause on February 18,
2013 when she was informed that the period of her probationary employment had already ended
and her services were no longer needed.
Ruling of the Court
The petition is meritorious.
Time and again, the Court has reiterated that, as a rule, it does not entertain questions of facts in a
petition for review on certiorari. In Pedro Angeles vs. Estelita B. Pascual,22 the Court emphasized, thus:
Section 1, Rule 45 of the Rules of Court explicitly states that the petition for review on certiorari shall
raise only questions of law, which must be distinctly set forth. In appeal by certiorari, therefore, only
questions of law may be raised, because the Supreme Court is not a trier of facts and does not
normally undertake the re-examination of the evidence presented by the contending parties during
the trial.23
There are, however, recognized exceptions to this rule, to wit:
(1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the
inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on a misapprehension of fads; (5) when the findings of
facts are conflicting; (6) When in making its findings the Court of Appeals went beyond the issues of
the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7)
when the findings are contrary to the trial court; (8) when the findings are conclusions without
citation of specific evidence on which they are based; (9) when the facts set forth in the petition as
well as in the petitioners main and reply briefs are not disputed by the respondent; (10) when the
findings of fact are premised on the supposed absence of evidence and contradicted by the
evidence on record: and (11) when the Court of Appeals manifestly overlooked certain relevant
facts not disputed by the parties, which, if properly considered, would justify a different conclusion.24
In the instant case, the Court finds that the CA misapprehended facts and overlooked details which
are crucial and significant that they can warrant a change in the outcome of the case.
In finding that there was no illegal dismissal, the CA echoed the ruling of the LA that the petitioner
failed to establish the fact of dismissal. It held that the petitioner failed to present evidence
manifesting the intention of the respondent to sever relations with her. Absent any overt act on the
part of the respondent, it ruled that there can be no dismissal to speak of. It also found credible the
respondent's claim that it was the petitioner who refused to accept the offer of continued
employment with the company.
The CA missed the point that the respondent employed a scheme in order to obscure the fact of
the petitioner's dismissal. The CA would have recognized this ploy if it only delved deeper into the
records and facts of the case.
It is beyond dispute that the petitioner started working for the respondent on June 19, 2012 as a
probationary employee and that there were two (2) employment contracts signed by the parties.
The parties, however, held conflicting claims with respect to the time when the contracts were
signed. The petitioner is claiming that there was no contract before the commencement of her
employment and that she was only asked to sign two employment contracts on January 19, 2013,
after having rendered seven months of service. On the other hand, the respondent maintains that
there was a contract of probationary employment signed at the beginning of the petitioner's service
and another one signed on November 18, 2012, extending the probationary period purportedly to
give the petitioner a chance to improve her performance and qualify for regular employment. The
LA and the CA, however, opted to believe the respondent's claim that the contract of probationary
employment was signed and extended on time. Having taken this theory, it is easy to dispose the
case by concluding that no dismissal had taken place.
There was, however, a single detail which convinced this Court to take a second look at the facts of
case. Contradicting the respondent's claim, the petitioner consistently reiterates that she was made
to sign two contracts of probationary employment, one covering the period from June 19, 2012 to
November 18, 2012, and the other purportedly extending the probationary employment from
November 19, 2012 to February 18, 2013, only on January 19, 2013. To support her claim, she alleged
that she was able to note the actual date when she signed the contracts, right beside her signature.
And indeed, attached with the position paper submitted by the respondent itself, copies of the two
contracts of employment signed by the petitioner clearly indicates the date "01.19.13" beside her
signature.25 This substantiates the petitioner's claim that the documents were signed on the same
day, that is, on January 19, 2013. Further, while the first contract was undated,26 the Probation
Extension Letter was dated January 10, 2013,27 which was way beyond the end of the supposed
probationary period of employment on November 18, 2013, therefore validating the petitioner's
claim that she had already worked for more than six months when she was asked to sign an
employment contract and its purported extension. Surprisingly, the respondent never explained the
disparity in the dates on the actual copies of the contracts which were submitted as annexes and
that alleged in its position paper as the time they were signed by the petitioner.
This brings to the conclusion that the contracts were only made up to create a semblance of legality
in the employment and severance of the petitioner. Unfortunately for the respondent, the significant
details left unexplained only validated the petitioner's claim that she had served way beyond the
allowable period for probationary employment and therefore has attained the status of regular
employment.
Article 281 of the Labor Code is pertinent. It provides:
ART. 281. Probationary Employment. - Probationary employment shall not exceed six (6) months from
the date the employee started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has been engaged on a probationary
basis may be terminated for a just cause or when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the employee at the time
of his engagement. An employee who is allowed to work after a probationary period shall be
considered a regular employee.
In this case, the petitioner commenced working fur the respondent on June 19, 2012 until February
18, 2013. By that time, however, she has already become a regular employee, a status which
accorded her protection from arbitrary termination.
In Dusit Hotel vs. Gatbonton,28 the Court reiterated, thus:
It is an elementary rule in the law on labor relations that a probationary employee engaged to work
beyond the probationary period of six months, as provided under Article 281 of the Labor Code, or
for any length of time set forth by the employer (in this case, three months), shall be considered a
regular employee. This is clear in the last sentence of Article 281. Any circumvention of this provision
would put to naught the State's avowed protection for labor.29
The CA, however, believes that the probationary period of employment was validly extended
citing Mariwasa vs. Leogardo.30 In the said case, the Court upheld as valid the extension of the
probationary period for another three (3) months in order to give the employee a chance to
improve his performance and qualify for regular employment, upon agreement of the parties. Upon
conclusion of the period of extension, however, the employee still failed to live up to the work
standards of the company and was thereafter terminated.
The mentioned case, however, finds no application in the instant case for two reasons: (1) there was
no evaluation upon the expiration of the period of probationary employment; (2) the supposed
extension of the probationary period was made after the lapse of the original period agreed by the
parties. Based on the evidence on record, the respondent only evaluated the performance of the
petitioner for the period of June 2012 to November 2013 on February 1, 2013, wherein she garnered
a rating of 88.3%, which translates to a satisfactory performance according to company
standards.31 At the time of the evaluation, the original period of probationary employment had
already lapsed on November 18, 2012 and the petitioner was allowed to continuously render service
without being advised that she failed to qualify for regular employment. Clearly then, there is no
reason to justify the extension since the petitioner had a commendable rating and, apart from this,
there is no more period to be extended since the probationary period had already lapsed.
It bears stressing that while in a few instances the Court recognized as valid the extension of the
probationary period, still the general rule remains that an employee who was suffered to work for
more than the legal period of six (6) months of probationary employment or less shall, by operation
of law, become a regular employee. In Buiser vs. Leogardo,32 the Court stated, thus:
Generally, the probationary period of employment is limited to six (6) months. The exception to this
general rule is when the parties to an employment contract may agree otherwise, such as when the
same is established by company policy or when the same is required by the nature of work to be
performed by the employee.33
Since extension of the period is the exception, rather than the rule, the employer has the burden of
proof to show that the extension is warranted and not simply a stratagem to preclude the worker's
attainment of regular status. Without a valid ground, any extension of the probationary period shall
be taken against the employer especially since it thwarts the attainment of a fundamental right,
that is, security of tenure.
In the instant case, there was no valid extension of the probationary period since the same had
lapsed long before the company thought of extending the same. More significantly, there is no
justifiable reason for the extension since, on the basis of the Performance Evaluation dated February
1, 2013, the petitioner had a commendable performance all throughout the probationary period.
Having rendered service even after the lapse of the probationary period, the petitioner had
attained regular employment, with all the rights and privileges pertaining thereto. Clothed with
security of tenure, she may not be terminated from employment without just or authorized cause
and without the benefit of procedural due process. Since the petitioner's case lacks both, she is
entitled to reinstatement with payment of full backwages, as correctly held by the NLRC.
The well-settled rule in this regard was reiterated in Peak Ventures Corporation vs. Heirs of
Villareal,34 to wit:
Under Article 279 of the Labor Code, as amended by Republic Act No. 6715, an employee who is
unjustly dismissed shall be entitled to (1) reinstatement without loss of seniority rights and other
privileges; and, (2) full backwages, inclusive of allowances, and to other benefits or their monetary
equivalent computed from the time his compensation was withheld up to the time of actual
reinstatement. If reinstatement is no longer viable, separation pay is granted.35
The Court therefore finds it proper to reinstate the decision of the NLRC which ruled that the
petitioner was illegally dismissed and held her entitled to the twin relief of reinstatement and
backwages.
WHEREFORE, the Decision dated May 29, 2015 and Resolution dated November 4, 2015 of the Court
of Appeals (CA) in CA-G.R. SP No. 136194 are REVERSED and SET ASIDE. The Decision dated January
15, 2014 of the National Labor Relations Commission in NLRC NCR Case No. 04-06101-13
is REINSTATED.
G.R. No. 184262**
UNIVERSITY OF SANTO TOMAS (UST), Petitioners
vs.
SAMAHANG MANGGAGAWA NG UST, FERNANDO PONTESOR,* RODRIGO CLACER, SANTIAGO BUISA,
JR., and JIMMY NAZARETH, Respondents
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated June 12, 2008 and the
Resolution3 dated August 22, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 85464, which
reversed and set aside the Resolutions dated March 26, 20044 and May 25, 20045 of the National
Labor Relations Commission (NLRC) in NLRC NCR CASE NO. 00-08-08586-99 (NLRC CA No. 035509-03)
and, accordingly, reinstated the Decision6 dated October 23, 2002 of the Labor Arbiter (LA) in NLRC-
NCR-0-08-08586-99 declaring respondents Fernando Pontesor (Pontesor ), Rodrigo Clacer (Clacer),
Santiago Buisa, Jr. (Buisa), and Jimmy Nazareth (Nazareth; Pontesor, et al., collectively) as regular
employees of petitioner University of Santo Tomas (petitioner) and, thus, were illegally dismissed by
the latter.
The Facts
The instant case stemmed from a complaint 7 for regularization and illegal dismissal filed by
respondents Samahang Manggagawa ng UST and Pontesor, et al. (respondents) against petitioner
before the NLRC. Respondents alleged that on various periods spanning the years 1990-1999,
petitioner repeatedly hired Pontesor, et al. to perform various maintenance duties within its
campus, i.e., as laborer, mason, tinsmith, painter, electrician, welder, carpenter. Essentially,
respondents insisted that in view of Pontesor, et al.' s performance of such maintenance tasks
throughout the years, they should be deemed regular employees of petitioner. Respondents further
argued that for as long as petitioner continues to operate and exist as an educational institution,
with rooms, buildings, and facilities to maintain, the latter could not dispense with Pontesor, et al. 's
services which are necessary and desirable to the business of petitioner.8
On the other hand, while petitioner admitted that it repeatedly hired Pontesor, et al. in different
capacities throughout the aforesaid years, it nevertheless maintained that they were merely hired
on a per-project basis, as evidenced by numerous Contractual Employee Appointments
(CEAs)9 signed by them. In this regard, petitioner pointed out that each of the CEAs that Pontesor, et
al. signed defined the nature and term of the project to which they are assigned, and that each
contract was renewable in the event the project remained unfinished upon the expiration of the
specified term. In accordance with the express provisions of said CEAs, Pontesor, et al. 's project
employment were automatically terminated: (a) upon the expiration of the specific term specified
in the CEA; (b) when the project is completed ahead of such expiration; or (c) in cases when their
employment was extended due to the non-completion of the specific project for which they were
hired, upon the completion of the said project. As such, the termination of Pontesor, et al. 's
employment with petitioner was validly made due to the completion of the specific projects for
which they were hired. 10
The LA Ruling
In a Decision 11 dated October 23, 2002, the LA ruled in Pontesor, et al. 's favor and, accordingly,
ordered petitioner to reinstate them to their former jobs with full backwages and without loss of
seniority rights. 12 The LA found that Pontesor, et al. should be deemed as petitioner's regular
employees, considering that: (a) they have rendered at least one (1) year of service to petitioner as
its employees; (b) the activities for which they were hired for are vital or inherently indispensable to
the maintenance of the buildings or classrooms where petitioner's classes were held; and (c) their
CEAs were contrived to preclude them from obtaining security of tenure. In this light and in the
absence of any valid cause for termination, the LA concluded that Pontesor, et al. were illegally
dismissed by petitioner. 13
Aggrieved, petitioner appealed14 to the NLRC.
The NLRC Ruling
In a Resolution 15 dated March 26, 2004, the NLRC vacated the LA ruling and, consequently,
entered a new one dismissing respondents' complaint for lack of merit. 16 Contrary to the LA's
findings, the NLRC found that Pontesor, et al. cannot be considered regular employees as they
knowingly and voluntarily entered into fixed term contracts of employment with petitioner. As such,
they could not have been illegally dismissed upon the expiration of their respective last valid and
binding fixed term employment contracts with petitioner. This notwithstanding, the NLRC rejected
petitioner's contention that Pontesor, et al. should be deemed project employees, ratiocinating that
their work were not usually necessary and desirable to petitioner's main business or trade, which is to
provide elementary, secondary, tertiary, and post-graduate education. As such, the NLRC classified
Pontesor, et al. as mere fixed term casual employees.17
Respondents moved for reconsideration, 18 which was, however, denied in a Resolution 19 dated
May 25, 2004. Dissatisfied, they filed a petition20 for certiorari before the CA.
The CA Ruling
In a Decision 21 dated June 12, 2008, the CA reversed and set aside the NLRC ruling and,
accordingly, reinstated that of the LA. 22 It held that Pontesor, et al. cannot be considered as merely
fixed term or project employees, considering that: (a) they performed work that is necessary and
desirable to petitioner's business, as evidenced by their repeated rehiring and petitioner's continuous
need for their services; and (b) the specific undertaking or project for which they were employed
were not clear as the project description set forth in their respective CEAs were either too general or
too broad. Thus, the CA classified Pontesor, et al. as regular employees, who are entitled to security
of tenure and cannot be terminated without any just or authorized caused. 23
Undaunted, petitioner moved for reconsideration,24 but the same was denied in a
Resolution25 dated August 22, 2008; hence, this petition.
The Issue Before the Court
The issue for the Court's resolution is whether or not the CA correctly ruled that Pontesor, et al. are
regular employees and, consequently, were illegally dismissed by petitioner.
The Court's Ruling
The petition is without merit.
"Preliminarily, the Court stresses the distinct approach in reviewing a CA's ruling in a labor
case.1âwphi1 In a Rule 45 review, the Court examines the correctness of the CA' s Decision in
contrast with the review of jurisdictional errors under Rule 65. Furthermore, Rule 45 limits the review to
questions of law. In ruling for legal correctness, the Court views the CA Decision in the same context
that the petition for certiorari was presented to the CA. Hence, the Court has to examine the CA's
Decision from the prism of whether the CA correctly determined the presence or absence of grave
abuse of discretion in the NLRC decision."26
Case law states that grave abuse of discretion connotes a capricious and whimsical exercise of
judgment, done in a despotic manner by reason of passion or personal hostility, the character of
which being so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act at all in contemplation of law.27
"In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and
conclusions are not supported by substantial evidence, which refers to that amount of relevant
evidence that a reasonable mind might accept as adequate to justify a conclusion. Thus, if the
NLRC's ruling has basis in the evidence and the applicable law and jurisprudence, then no grave
abuse of discretion exists and the CA should so declare and, accordingly, dismiss the petition."28
Guided by the foregoing considerations, the Court finds that the CA correctly ascribed grave abuse
of discretion on the part of the NLRC, as its finding that Pontesor, et al. are not regular employees of
petitioner patently deviates from the evidence on record as well as settled legal principles of labor
law.
Article 29529 of the Labor Code, 30 as amended, distinguishes project employment from regular
employment as follows:
Art. 295 [280]. Regular and casual employment. - The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That any employee who has rendered at least one year of service, whether
such service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists.
Under the foregoing provision, the law provides for two (2) types of regular employees,
namely: (a) those who are engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer (first category); and (b) those who have rendered at
least one year of service, whether continuous or broken, with respect to the activity in which they
are employed (second category). 31 In Universal Robina Corporation v. Catapang,32 citing Abasolo
v. NLRC,33 the Court laid down the test in determining whether one is a regular employee, to wit:
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.34 (Emphasis and underscoring supplied.
In Kimberly Independent Labor Union for Solidarity, Activism, and Nationalism - Organized Labor Ass
'n. in Line Industries and Agriculture (KILUSAN-OLALIA) v. Drilon (Kimberly), 35 the company was
engaged in the manufacture of paper products, while the questioned employees occupied the
positions of mechanics, electricians, machinists, machine shop helpers, warehouse helpers, painters,
carpenters, pipefitters and masons. In that case, the Court held that since they have worked for the
company for more than one (1) year, they should belong to the second category of regular
employees by operation of law. In the case at bar, a review of Pontesor, et al. 's respective CEAs36
reveal that petitioner repeatedly rehired them for various positions in the nature of maintenance
workers, such as laborer, mason, painter, tinsmith, electrician, carpenter, and welder, for various
periods spanning the years 1990-1999. Akin to the situation of the employees in Kimberly, Pontesor, et
al. 's nature of work are not necessary and desirable to petitioner's usual business as an educational
institution; hence, removing them from the ambit of the first category of regular employees under
Article 295 of the Labor Code. Nonetheless, it is clear that their respective cumulative periods of
employment as per their respective CEAs each exceed one (1) year. Thus, Pontesor, et al. fall under
the second category of regular employees under Article 295 of the Labor Code. Accordingly, they
should be deemed as regular employees but only with respect to the activities for which they were
hired and for as long as such activities exist.
In this relation, the Court clarifies that Pontesor, et al. were not project employees of petitioner, who
were validly terminated upon the completion of their respective projects/undertakings. In Gadia v.
Sykes Asia, Inc.,37 the Court discussed the requisites for a valid project employment, to wit:
A project employee is assigned to a project which begins and ends at determined or determinable
times. Unlike regular employees who may only be dismissed for just and/or authorized causes under
the Labor Code, the services of employees who are hired as "project[-based] employees" may be
lawfully terminated at the completion of the project.
According to jurisprudence, the principal test for determining whether particular employees are
properly characterized as "project[based] employees" as distinguished from "regular employees,"
is whether or not the employees were assigned to carry out a "specific project or undertaking," the
duration (and scope) of which were specified at the time they were engaged for that project. The
project could either be (1) a particular job or undertaking that is within the regular or usual business
of the employer company, but which is distinct and separate, and identifiable as such, from the
other undertakings of the company; or (2) a particular job or undertaking that is not within the
regular business of the corporation. In order to safeguard the rights of workers against the arbitrary
use of the word "project" to prevent employees from attaining a regular status, employers claiming
that their workers are project[-based] employees should not only prove that the duration and scope
of the employment was specified at the time they were engaged, but also, that there was indeed a
project.38 (Emphases and underscoring supplied)
As aptly held by the CA, Pontesor, et al. could not be considered as project employees because the
specific undertakings or projects for which they were employed were not clearly delineated. This is
evidenced by the vagueness of the project descriptions set forth in their respective CEAs,39 which
states that they were tasked "to assist" in various carpentry, electrical, and masonry work. In fact,
when the aforesaid CEAs are pieced together, it appears that during the years 1990 to 1999,
Pontesor, et al. were each engaged to perform all-around maintenance services throughout the
various facilities/installations in petitioner's campus. Thus, it seems that petitioner, through the CEAs,
merely attempted to compartmentalize Pontesor, et al.' s various tasks into purported "projects" so as
to make it appear that they were hired on a per-project basis. Verily, the Court cannot
countenance this practice as to do so would effectively permit petitioners to avoid hiring permanent
or regular employees by simply hiring them on a temporary or casual basis, thereby violating the
employees' security of tenure relative to their jobs. 40
Lest it be misunderstood, there are instances when the validity of project41 or fixed
term42 employments were upheld on the ground that it 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."43 However, if it is
apparent from the circumstances of the case "that periods have been imposed to preclude
acquisition of tenurial security by the employee," such project or fixed term contracts are
disregarded for being contrary to public policy, 44 as in this case.
In view of the foregoing, Pontesor, et al. should, as discussed earlier, be considered regularized
casual employees who enjoy, inter alia, security of tenure. Accordingly, they cannot be terminated
from employment without any just and/or authorized cause, which unfortunately, petitioner was
guilty of doing in this case. Hence, Pontesor, et al. must be reinstated to their former or equivalent
positions, with full backwages and without loss of seniority rights. As pointed out by the LA, the NLRC
Computation & Examination Unit should be directed to compute the monetary awards that
petitioner should be ordered to pay Pontesor, et al. as a consequence of this ruling.
WHEREFORE, the petition is DENIED. The Decision dated June 12, 2008 and the Resolution dated
August 22, 2008 of the Court of Appeals in CA-G.R. SP No. 85464 are hereby AFFIRMED.
G.R. No. 211892
INNODATA KNOWLEDGE SERVICES, INC., Petitioner
vs.
SOCORRO D'MARIE T. INTING, ISMAEL R. GARAYGAY, EDSON S. SOLIS, MICHAEL A. REBATO, JAMES
HORACE BALONDA, STEPHEN C. OLINGAY, DENNIS C. RIZON, JUNETH A. RENTUMA, HERNAN ED NOEL I.
DE LEON, JR., JESS VINCENT A. DELA PENA, RONAN V. ALAMILLO, ENNOH CHENTIS R. FERNANDEZ, FRITZ
J. SEMBRINO, DAX MATTHEW M. QUIJANO, RODOLFO M. VASQUEZ, MA. NAZELLE B. MIRALLES,
MICHAEL RAY B. MOLDE, WENDELL B. QUIBAN, ALDRIN O. TORRENTIRA, and CARL HERMES CARSKIT,
Respondents
DECISION
PERALTA, J.:
This is a petition for review seeking the reversal of the Decision1 of the Court of Appeals (CA), Cebu,
Twentieth (20th) Division, dated August 30, 2013 and its Resolution2 dated March 12, 2014 in CA-G.R.
CEB-SP No. 06443 which reversed and set aside Decision3 of the National Labor Relations
Commission (NLRC) on May 31, 2011.
The factual and procedural antecedents, as evidenced by the records of the case, are the
following:
Petitioner Innodata Knowledge Services, Inc. (IKSI) is a company engaged in data processing,
encoding, indexing, abstracting, typesetting, imaging, and other processes in the capture,
conversion, and storage of data and information. At one time, Applied Computer
Technologies (ACT), a company based in the United States of America, hired IKSI to review various
litigation documents. Due to the nature of the job, ACT required IKSI to hire lawyers, or at least, law
graduates, to review various litigation documents, classify said documents into the prescribed
categories, and ensure that outputs are delivered on time. For this purpose, IKSI engaged the
services of respondents Socorro D’Marie Inting, Ismael R. Garaygay, Edson S. Solis, Michael A.
Rebato, James Horace Balonda, Stephen C. Olingay, Dennis C. Rizon, Juneth A. Rentuma, Hernan
Ed Noel I. de Leon, Jr., Jess Vincent A. dela Pefia, Ronan V. Alamillo, Ennoh Chentis R. Fernandez,
Wendell B. Quiban, Aldrin 0. Torrentira, Michael Ray B. Molde, Fritz J. Sembrino, Dax Matthew M.
Quijano, Rodolfo M. Vasquez, Ma. Nazelle B. Miralles and Carl Hennes Carskit as senior and junior
reviewers with a contract duration of five (5) years.
On January 7, 2010, however, respondents received a Notice of Forced Leave from IKSI informing
them that they shall be placed on indefinite forced leave effective that same day due to changes
in business conditions, client requirements, and specifications. Hence, respondents filed a complaint
for illegal dismissal, reinstatement or payment of separation pay, backwages, and damages against
IKSI.
Subsequently, IKSI sent respondents separate notices dated May 27, 2010 informing them that due to
the unavailability of new work related to the product stream and uncertainties pertaining to the
arrival of new workloads, their project employment contracts would have to be terminated.
On November 10, 2010, the Labor Arbiter (LA), in the consolidated cases of NLRC RAB VII Case No.
01-0159-10, NLRC RAB VII Case No. O 1-0182-10, and NLRC RAB VII Case No. 02-0301-10, declared
that there was no illegal dismissal, thus:
WHEREFORE, in view of the foregoing, a decision is hereby rendered declaring that complainants
were not constructively dismissed but were placed on forced leave as a cost-saving measure.
Consequently, herein respondents are directed to recall complainants back to work as soon as work
becomes available. Complainants are likewise directed to report back to work within ten (10) days
from receipt of the order of respondents to report back to work, otherwise, their failure to do so
would be construed as an abandonment. In the event that reinstatement is no longer feasible, in
lieu thereof, separation pay is granted equivalent to one (1) month salary for every year of service, a
fraction of six (6) months is considered as one (1) whole year, sans backwages.
The claim for moral and exemplary damages as well as attorney’s fees are DISMISSED for lack of
merit.
SO ORDERED.4
WHEREFORE, the Decision of the Labor Arbiter is hereby AFFIRMED WITH MODIFICATION, in that in lieu
of reinstatement, to pay the twelve (12) complainants-appellants namely: Michael A. Rebato,
Hernan Ed Noel L. de Leon, Jr., Wendell B. Quiban, Fritz Sembrino, Ismael R. Garaygay III, Edson S.
Solis, Stephen Olingay, Ronan Alamillo, Jess Vincent A. dela Pena, Dax Matthew M. Quijano, Juneth
A. Rentuma and Socorro D'Marie T. Inting, the total amount of Php563,500.00.
SO ORDERED.5
Undaunted, the employees elevated the matter to the CA Cebu, alleging grave abuse of discretion
on the NLRC’s part. On August 30, 2013, the CA granted their petition and reversed the assailed
NLRC ruling, thus:
WHEREFORE, premises considered, this petition is GRANTED. The assailed Decision dated May 31, 2011
and Resolution dated August 26, 2011 of public respondent in NLRC Case No. VAC-01-000042-2011
are REVERSED and SET ASIDE. Petitioners Socorro D'Marie Inting, Ismael R. Garaygay, Edson S. Solis,
Michael A. Rebato, James Horace Balonda, Stephen C. Olingay, Dennis C. Rizon, Juneth A.
Rentuma, Hernan Ed Noel I. de Leon, Jr., Jess Vincent A. dela Pena, Ronan V. Alamillo, Ennoh
Chentis R. Fernandez, Wendell B. Quiban, Aldrin 0. Torrentira, Michael Ray B. Molde, Fritz J. Sembrino,
Dax Matthew M. Quijano, Rodolfo M. Vasquez, Ma. Nazelle B. Miralles and Carl Hermes Carskit are
declared to have been illegally dismissed by Innodata and hence, each of them is entitled to the
payment of the following:
(a) Backwages reckoned from the start of their employment up to the finality of this
Decision with interest as six percent (6%) per annum, and 12% legal interest
thereafter until fully paid;
(b) Separation pay equivalent to one (1) month salary for every year of service,
with a fraction of at least six (6) months to be considered as one (1) whole year, to
be computed from the date of their employment up to the finality of this decision;
(c) Moral damages of Php50,000 and exemplary damages of Php25,000; and
(d) Attorney's fees equivalent to 10 percent (10%) of the total award.
The case is hereby ordered REMANDED to the labor arbiter for the computation of the amounts due
each petitioner.
Costs on private respondent Innodata.
SO ORDERED.6
IKSI then filed a Motion for Reconsideration, but the same was denied in a Resolution dated March
12, 2014. Hence, the instant petition.
The main issue in this case is whether or not the CA committed an error when it reversed the NLRC,
which declared that respondent employees, as mere project employees, were validly placed on
floating status and, therefore, were not illegally dismissed.
The Court rules in the negative.
Substantive Issues
Nature of respondents’ employment contracts
It is true that factual findings of administrative or quasi-judicial bodies which are deemed to have
acquired expertise in matters within their respective jurisdictions are generally accorded, not only
respect, but even finality, and bind the Court when supp011ed by substantial evidence. However,
the Court may take cognizance of factual issues when the findings of fact and conclusions of law of
the LA and/or the NLRC are inconsistent with those of the CA,7 as in the case at bar.
Here, the NLRC ruled that respondents were project employees. It ratiocinated that their contracts
specifically indicated that they were to hold their positions for the duration of the project which was
expected to be completed after a maximum of five (5) years, or on or before July 2, 2013. 8 But the
CA found that respondents' employment contracts are fixed-term, which are contrary to the
Constitution and labor laws. It then cited several cases9 that supposedly involved IKSI itself and
would reveal that its fixed-term employment contracts have been consistently held as a form of
circumvention to prevent employees from acquiring tenurial rights and benefits.
The employment status of a person is defined and prescribed by law and not by what the parties
say it should be. Equally important to consider is that a contract of employment is impressed with
public interest such that labor contracts must yield to the common good. Thus, provisions of
applicable statutes are deemed written into the contract, and the parties are never at liberty to
insulate themselves and their relationships from the impact of labor laws and regulations by simply
entering into contracts with each other.10
Article 29511 of the Labor Code provides the distinction between a regular and a project
employment:
Art. 295. Regular and casual employment. - The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That any employee who has rendered at least one year of service, whether
such service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists.
The aforecited provision contemplates four (4) kinds of employees: (1) regular employees or those
who have been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; (2) project employees or those whose employment has been
fixed for a specific project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee; (3) seasonal employees or those who
work or perform services which are seasonal in nature, and the employment is for the duration of the
season; and (4) casual employees or those who are not regular, project, or seasonal employees.
Jurisprudence later added a fifth (5th) kind, the fixed-term employee. Based on Article 295, the law
determines the nature of the employment, regardless of any agreement expressing otherwise. The
supremacy of the law over the nomenclature of the contract and its pacts and conditions is to bring
life to the policy enshrined in the Constitution to afford full protection to labor. Thus, labor contracts
are placed on a higher plane than ordinary contracts since these are imbued with public interest
and, therefore, subject to the police power of the State.12
Project employment contracts, which fix the employment for a specific project or undertaking, are
valid under the law. By entering into such a contract, an employee is deemed to understand that his
employment is coterminous with the project. He may no longer be employed after the completion
of the project for which he was hired. But project employment contracts are not lopsided
agreements in favor of only one party. The employer's interest is equally important as that of the
employees'. While it may be true that it is the employer who drafts project employment contracts
with its business interest as overriding consideration, such contracts must not prejudice the
employee.13
As stated in IKSI’s petition itself, the following are the basic provisions of the employment contracts
which respondents signed with the company:
(a) the contracts are entitled "Project-Based Employment Contracts";
(b) the first Whereas clause states "the Company [IKSI] desires the services of a Project Employee for
the Content Supply Chain Project";
(c) Clause 1 on Term of Employment provides:
The Employee shall hold the position of [Junior/Senior] Reviewer and shall perform the duties and
responsibilities of such for the duration of the Project, which is expected to be completed after a
maximum of five (5) years, or on or before___________, (the "Term").
. . . Further, the Employee is granted one Saturday-off per month on a scheduled basis for the
duration of this PROJECT-BASED EMPLOYMENT CONTRACT ...
(d) The second paragraph of Clause 2 on Work Description provides:
The Employee shall render work in accordance with the schedule and/or program to which he/she
may be assigned or reassigned from time to time, in accordance with the operational requirements
for the completion of the Project. In addition, the Employee shall perform such other duties,
functions, and services related or incidental to the Project which, for purposes of expediency,
convenience, economy, customer interest, may be assigned by the Company.
(e) Clause 5 on Termination of Employment provides:
At any time during the Term of this Contract, or any extension thereof, the Company may terminate
this Contract, upon thirty (30) days' prior notice to the Employee...in the following instances:
a. the services contracted for by the Company under the Project is completed
prior to the agreed upon completion date; or
b. the specific phase of the Project requiring the Employee’s services is sooner
completed; or
c. substantial decrease in the volume of work for the Project; or
d. the contract for the Project is cancelled, indefinitely suspended or terminated;
(e) the first paragraph of Clause 6 on Compensation and Benefits provides:
The Employee shall receive a gross salary of ... In addition to his/her basic pay, Management may
grant an additional incentive pay should the Employee exceed the Project quota.14
IKSI argued that based on the contract, it is undeniable that respondents’ employment was fixed for
a specific project or undertaking, with its completion or termination clearly determined at the time
of the employee’s engagement. Indeed, records would disclose that respondents signed
employment contracts specifically indicating the Content Supply Chain Project,15 also known as the
ACT Project, as the project for which they were being hired, which was expected to be completed
after a maximum of five (5) years. However, sometime in November 2008, IKSI required respondents
to work on another project called "Bloomberg," which was not included in the original contracts that
they signed and without entering into a new project employment contracts. Such fact was never
refuted by IKSI. During that time, respondents were required to read and review decided cases in
the United States of America and they were no longer called Senior or Junior Reviewers, but referred
to as Case Classifiers. Respondents initially opposed working on said project but eventually agreed,
in fear of losing their employment altogether. Months later, they were again required to work on the
ACT Project and reverted to their previous designation as Document Reviewers.16
In the case of ALU-TUCP v. NLRC, 17the Court made a pronouncement on the two (2) categories of
project employees. The project for which project employees are hired would ordinarily have some
relationship to the usual business of the employer. There should be no difficulty in distinguishing the
employees for a certain project from ordinary or regular employees, as long as the duration and
scope of the project were determined or specified at the time of engagement of said project
employees.18
In order to safeguard the rights of workers against the arbitrary use of the word "project" which Ma. Nazelle B. Miralles May 21, ’08 May 20, ‘13
prevents them from attaining regular status, employers claiming that their workers are project
employees have the burden of showing that: (a) the duration and scope of the employment was Dennis C. Rizon July 3, ’08 July 2, ‘13
specified at the time they were engaged; and (b) there was indeed a project.19 Therefore, as
evident in Article 295, the litmus test for determining whether particular employees are properly Ronan V. Alamillo July 10, ’08 July 9, ‘13
characterized as project employees, as distinguished from regular employees, is whether or not the
Juneth A. Rentuma July 17, ’08 July16,’13
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.20 Jess Vincent A. Dela Peña Aug. 12, ’08 Aug. 11, ‘13

Here, while IKSI was able to show the presence of a specific project, the ACT Project, in the contract
and the alleged duration of the same, it failed to prove, however, that respondents were in reality
made to work only for that specific project indicated in their employment documents and that it
adequately informed them of the duration and scope of said project at the time their services were
engaged. It is well settled that a party alleging a critical fact must support his allegation with
substantial evidence, as allegation is not evidence. The fact is IKSI actually hired respondents to
work, not only on the ACT Project, but on other similar projects such as the Bloomberg. When
respondents were required to work on the Bloomberg project, without signing a new contract for
that purpose, it was already outside of the scope of the particular undertaking for which they were
hired; it was beyond the scope of their employment contracts. The fact that the same happened
only once is inconsequential. What matters is that IKSI required respondents to work on a project
which was separate and distinct from the one they had signed up for. This act by IKSI indubitably
brought respondents outside the realm of the project employees category.
IKSI likewise fell short in proving that the duration of the project was reasonably determinable at the
time respondents were hired. As earlier mentioned, the employment contracts provided for "the
duration of the Project, which is expected to be completed after a maximum of five (5) years, or on
or before______ ."The NLRC upheld the same, finding that the contracts clearly provided for the
duration of the project which was expected to end after a maximum of five (5) years, or on or
before July 2, 2013. It is interesting to note, however, that the five (5)-year period is not actually the
duration of the project but merely that of the employment contract. Naturally, therefore, not all of
respondents' employment would end on July 2, 2013, as the completion of the five (5)-year period
would depend on when each employee was employed, thus:21
Hiring Date Completion Date
Carl Hermes R. Carskit Nov. 1, ’07 May 31,’12
Ismael R. Garaygay III Mar. 5, ’08 Mar. 4, ‘13
Socorro D’ Marie T. Inting Apr. 7, ’08 Apr. 6, ‘13
James Horace A. Balonda May 12, ’08 May 11, ‘13
Dax Matthew M. Quijano Nov. 17, ’08 Nov. 16, ‘13
Michael Ray B. Molde May 18, ’09 May 17, ‘14
Aldrin O. Torrentira May 25, ’09 May24, ‘14
Ennoh Chentis R. Fernandez May 28, ’09 May 27, ‘14
Hernan Ed Noel L. De Leon, Jr. June 3, ’09 June 2, ‘14
This is precisely the reason why IKSI originally left a blank for the termination date because it varied
for each employee. If respondents were truly project employees, as IKSI claims and as found by the
NLRC, then the termination date would have been uniform for all of them.
Thus, while the CA erred in simply relying on the Court's rulings on previous cases involving Innodata
Phils., Inc. since there is no substantial proof that Innodata Phils., Inc. and herein petitioner, IKSI, are
one and the same entity, it would appear, however, that respondents indeed entered into fixed-
term employment contracts with IKSI, contracts with a fixed period of five (5) years. But project
employment and fixed-term employment are not the same. While the former requires a particular
project, the duration of a fixed-term employment agreed upon by the parties may be any day
certain, which is understood to be "that which must necessarily come although it may not be known
when." The decisive determinant in fixed-term employment is not the activity that the employee is
called upon to perform but the day certain agreed upon by the parties for the commencement
and termination of the employment relationship.22
The Court has previously recognized the validity of fixed-term employment contracts, but it has
consistently held that this is more of an exception rather than the general rule. Aware of the
possibility of abuse in the utilization of fixed-term employment contracts, the Court has declared that
where from the circumstances it is apparent that the periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck down as contrary to public
policy or morals.23

Wendell B. Quiban May 12, ’08 May 11, ‘13 It is evident that IKSI’s contracts of employment are suspect for being highly ambiguous. In effect, it
sought to alternatively avail of project employment and employment for a fixed term so as to
Fritz J. Sembrino May 12, ’08 May 11, ‘13 preclude the regularization of respondents' status. The fact that respondents were lawyers or law
graduates who freely and with full knowledge entered into an agreement with the company is
Edson S. Solis May 12, ’08 May 11, ‘13
inconsequential. The utter disregard of public policy by the subject contracts negates any argument
Rodolfo M. Vasquez, Jr. May 12, ’08 May 11, ‘13 that the agreement is the law between the parties24 and that the fixed period was knowingly and
voluntarily agreed upon by the parties. In the interpretation of contracts, obscure words and
Stephen C. Olingay May 16, ’08 May 15, ‘13 provisions shall not favor the party that caused the obscurity. Consequently, the terms of the present
contract should be construed strictly against the employer, for being the party who prepared
Michael A. Rebato May 19, ’08 May 18, ‘13
it.25 Verily, the private agreement of the parties can never prevail over Article 1700 of the Civil Code,
which states:
Art. 1700. The relation between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good. Therefore, such contracts
are subject to special laws on labor unions, collective bargaining, strikes and lockouts, closed shops,
wages, working conditions, hours of labor and similar subjects.
Thus, there were no valid fixed-term or project contracts and respondents were IKSI’s regular
employees who could not be dismissed except for just or authorized causes. Any ambiguity in said
contracts must be resolved against the company, especially because under Article 1702 of the Civil
Code, in case of doubt, all labor contracts shall be construed in favor of the worker. The Court
cannot simply allow IKSI to construe otherwise what appears to be clear from the wordings of the
contract itself. The interpretation which IKSI seeks to conjure is wholly unacceptable, as it would
result in the violation of respondents' right to security of tenure guaranteed in Section 3 of Article XIII
of the Constitution and in Article 29426 of the Labor Code.27
Presence of Just or Authorized Causes
for Termination of Employment
Here, IKSI placed respondents on forced leave, temporary lay-off, or floating status in January 2010
for the alleged decline in the volume of work in the product stream where they were assigned.
When respondents filed a complaint for illegal dismissal, the LA dismissed the same for having been
filed prematurely, since placing employees on forced leave or floating status is a valid exercise of
management prerogative and IKSI never really had an intention to terminate their employment. It
relied on the memoranda28 which IKSI issued to respondents, the tenor of which would show the
intention to recall the affected employees back to work once the company's condition improves.
The NLRC affirmed the LA’s ruling and declared that the fact of dismissal, whether legal or illegal, is
absent in this case.
Among the authorized causes for termination under Article 29829 of the Labor Code is retrenchment,
or what is sometimes referred to as a layoff, thus:
Art. 298. Closure of Establishment and Reduction of Personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the installation of labor-
saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (112)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
Retrenchment is the severance of employment, through no fault of and without prejudice to the
employee, which management resorts to during the periods of business recession, industrial
depression, or seasonal fluctuations, or during lulls caused by lack of orders, shortage of materials,
conversion of the plant to a new production program or the introduction of new methods or more
efficient machinery, or of automation. In other words, lay-off is an act of the employer of dismissing
employees because of losses in the operation, lack of work, and considerable reduction on the
volume of its business. However, a lay-off would amount to dismissal only if it is permanent. When it is
only temporary, the employment status of the employee is not deemed terminated, but merely
suspended.30
Article 298, however, speaks of permanent retrenchment as opposed to temporary lay-off, as in the
present case.1âwphi1 There is no specific provision of law which treats of a temporary retrenchment
or lay-off and provides for the requisites in effecting it or a specific period or duration.31 Notably, in
both permanent and temporary lay-offs, the employer must act in good faith - that is, one which is
intended for the advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under the law or under valid agreements.32
Certainly, the employees cannot forever be temporarily laid-off. Hence, in order to remedy this
situation or fill the hiatus, Article 30133 may be applied to set a specific period wherein employees
may remain temporarily laid-off or in floating status.34 Article 301 states:
Art. 301. When Employment not Deemed Terminated. The bona-fide suspension of the operation of
a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not terminate employment. In all such cases, the employer
shall reinstate the employee to his former position without loss of seniority rights if he indicates his
desire to resume his work not later than one (1) month from the resumption of operations of his
employer or from his relief from the military or civic duty.
The law set six (6) months as the period where the operation of a business or undertaking may be
suspended, thereby also suspending the employment of the employees concerned. The resulting
temporary lay-off, wherein the employees likewise cease to work, should also not last longer than six
(6) months. After the period of six (6) months, the employees should either then be recalled to work
or permanently retrenched following the requirements of the law. Failure to comply with this
requirement would be tantamount to dismissing the employees, making the employer responsible
for such dismissal.35 Elsewise stated, an employer may validly put its employees on forced leave or
floating status upon bona fide suspension of the operation of its business for a period not exceeding
six (6) months. In such a case, there is no termination of the employment of the employees, but only
a temporary displacement. When the suspension of the business operations, however, exceeds six
(6) months, then the employment of the employees would be deemed terminated,36 and the
employer would be held liable for the same.
Indeed, closure or suspension of operations for economic reasons is recognized as a valid exercise of
management prerogative. But the burden of proving, with sufficient and convincing evidence, that
said closure or suspension is bona fide falls upon the employer. In the instant case, IKSI claims that its
act of placing respondents on forced leave after a decrease in work volume, subject to recall upon
availability of work, was a valid exercise of its right to lay-off, as an essential component of its
management prerogatives. The Court agrees with the LA's pronouncement that requiring
employees on forced leave is one of the cost-saving measures adopted by the management in
order to prevent further losses. However, IKSI failed to discharge the burden of proof vested upon it.
Having the right should not be confused with the manner in which that right is exercised; the
employer cannot use it as a subterfuge to run afoul of the employees' guaranteed right to security
of tenure. The records are bereft of any evidence of actual suspension of IKSI's business operations or
even of the ACT Project alone. In fact, while IKSI cited Article 301 to support the temporary lay-off of
its employees, it never alleged that it had actually suspended the subject undertaking to justify such
lay-off. It merely indicated changes in business conditions and client requirements and specifications
as its basis for the implemented forced leave/lay-off.37
In light of the well-entrenched rule that the burden to prove the validity and legality of the
termination of employment falls on the employer, IKSI should have established the bona
fide suspension of its business operations or undertaking that could legitimately lead to the
temporary layoff of its employees for a period not exceeding six (6) months, in accordance with
Article 301.38 The LA severely erred when it sustained respondents' temporary retrenchment simply
because the volume of their work would sometimes decline, thus, several employees at the ACT
Project stream experienced unproductive time.39 Considering the grave consequences occasioned
by retrenchment, whether permanent or temporary, on the livelihood of the employees to be
dismissed, and the avowed policy of the State to afford full protection to labor and to assure the
employee's right to enjoy security of tenure, the Court stresses that not every loss incurred or
expected to be incurred by a company will justify retrenchment. The losses must be substantial and
the retrenchment must be reasonably necessary to avert such losses. The employer bears the
burden of proving this allegation of the existence or imminence of substantial losses, which by its
nature is an affirmative defense. It is the employer’s duty to prove with clear and satisfactory
evidence that legitimate business reasons exist in actuality to justify any retrenchment. Failure to do
so would inevitably result in a finding that the dismissal is unjustified. Otherwise, such ground for
termination would be susceptible to abuse by scheming employers who might be merely feigning
business losses or reverses in their business ventures to dispose of their employees.40
Here, IKSI never offered any evidence that would indicate the presence of a bona fide suspension
of its business operations or undertaking. IKSI’s paramount consideration should be the dire exigency
of its business that compelled it to put some of its employees temporarily out of work. This means that
it should be able to prove that it faced a clear and compelling economic reason which reasonably
constrained it to temporarily shut down its business operations or that of the ACT Project, incidentally
resulting in the temporary lay-off of its employees assigned to said particular undertaking. Due to the
grim economic repercussions to the employees, IKSI must likewise bear the burden of proving that
there were no other available posts to which the employees temporarily put out of work could be
possibly assigned.41 Unfortunately, IKSI was not able to fulfill any of the aforementioned duties. IKSI
cannot simply rely solely on the alleged decline in the volume of work for the ACT Project to support
the temporary retrenchment of respondents. Businesses, by their very nature, exist and thrive
depending on the continued patronage of their clients. Thus, to some degree, they are subject to
the whims of clients who may suddenly decide to discontinue patronizing their services for a variety
of reasons. Being inherent in any enterprise, employers should not be allowed to take advantage of
this entrepreneurial risk and use it in a scheme to circumvent labor laws. Otherwise, no worker could
ever attain regular employment status.42 In fact, IKSI still continued its operations and retained
several employees who were also working on the ACT Project even after the implementation of the
January 2010 forced leave. Much worse, it continued to hire new employees, with the same
qualifications as some of respondents, through paid advertisements and placements in Suns tar
Cebu, 43 a local newspaper, dated February 24, 2010 and March 7, 2010. The placing of an
employee on floating status presupposes, among others, that there is less work than there are
employees. But if IKSI continued to hire new employees then it can reasonably be assumed that
there was a surplus of work available for its existing employees. Hence, placing respondents on
floating status was unnecessary. If any, respondents - with their experience, knowledge, and
familiarity with the workings of the company - should be preferred to be given new projects and not
new hires who have little or no experience working for IKSI.44
There being no valid suspension of business operations, IKSI’s act amounted to constructive dismissal
of respondents since it could not validly put the latter on forced leave or floating status pursuant to
Article 301. And even assuming, without admitting, that there was indeed suspension of operations,
IKSI did not recall the employees back to work or place them on valid permanent retrenchment
after the period of six (6) months, as required of them by law. IKSI could not even use the completion
of the duration of the alleged project as an excuse for causing the termination of respondents’
employment. It must be pointed out that the termination was made in 2010 and the expected
completion of the project in respondents' contracts was still in 2012 to 2014. Also, if the Court would
rely on IKSI’s own Notice of Partial Appeal and Memorandum on Partial Appeal 45 before the NLRC
dated December 10, 2010, respondents might even had been put on floating status for a period
exceeding the required maximum of six (6) months. Evidence reveal that the assailed forced leave
took effect on January 7, 2010 and IKSI eventually sent its termination letters four (4) months after, or
on May 27, 2010, with the effectivity of said termination being on July 7, 2010. But as of December
10, 2010, IKSI was still insisting that respondents were never dismissed and were merely placed on
forced leave. It was only in its Comment on Complainants’ Motion for Reconsideration dated August
3, 2011 did IKSI admit the fact of dismissal when it appended its own termination letters dated May
27, 2010.
But even on May 27, 2010, there was still no basis for IKSI to finally make the retrenchment
permanent. While it acknowledged the fact that respondents could not be placed on an indefinite
floating status, it still failed to present any proof of a bona fide closing or cessation of operations or
undertaking to warrant the termination of respondents' employment. The termination letter46 reads:
As you are probably already been aware by now, our Product Stream ACTDR of Project CSP, have
been experiencing a considerably downward trend in terms of workload. The Company has
undertaken every effort to obtain new commitments from its clients abroad in order to proceed with
the expected volume of work under the same product stream.
Unfortunately, however, it has become evident that despite said efforts being exerted by the
Company, the prospect of new work related to the product stream coming in, remains uncertain at
this point. Management has already utilized all available options, which include placing its project
employees on forced leave. This, however, cannot go on indefinitely.
It is therefore, with deep regret, that we inform you that in view of the unavailability of work of the
aforementioned product stream as well as the uncertainties pertaining to the arrival of new
worldoads thereof, we are constrained to terminate your Project Employment Contract in
accordance with the terms and conditions stated under the Termination of Employment of your
Project Employment Contract, effective 7/7/2010.
xxx
It bears to point out that said termination letter did not even state any of the following valid grounds
under the law as anchor for the dismissal:
Art. 297. Termination by Employer. An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.47
Art. 298. Closure of Establishment and Reduction of Personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the installation of labor-
saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
The NLRC likewise committed a grave error when it held that there was no basis for respondents'
reliance on the case of Bontia v. NLRc48 on the sole ground that, in the present case, the employees
were neither actually nor constructively dismissed. The Court affirms respondents’ contention that
when IKSI feigned suspension of operations and placed respondents on forced leave, the same had
already amounted to constructive dismissal. And when IKSI sent letters informing them that they
would be terminated effective July 7, 2010, respondents then had been actually dismissed.
In Bontia, the manner by which the employer severed its relationship with its employees was
remarkably similar to the one in the case at bar, which was held to be an underhanded
circumvention of the law. Consolidated Plywood Industries summarily required its employees to sign
applications for forced leave deliberately crafted to be without an expiration date, like in this case.
This consequently created an uncertain situation which necessarily discouraged, if not altogether
prevented, the employees from reporting, or determining when or whether to report for work. The
Court further ruled that even assuming that the company had a valid reason to suspend operations
and had filed the necessary notice with the Department of Labor and Employment (DOLE), it still
would not be a legitimate excuse to cursorily dismiss employees without properly informing them of
their rights and status or paying their separation pay in case they were eventually laid off. Under the
Labor Code, separation pay is payable to an employee whose services are validly terminated as a
result of retrenchment, suspension, closure of business or disease. Thus, the Court held that
Consolidated Plywood's employees should, at the very least, have been given separation pay and
properly informed of their status so as not to leave them in a quandary as to how they would
properly respond to such a situation.49 Similarly, respondents never received any separation pay
when they were terminated in July of 2010 since IKSI had been denying the existence of a dismissal,
whether actual or constructive.
Withal, in both permanent and temporary lay-offs, jurisprudence dictates that the one (1)-month
notice rule to both the DOLE and the employee under Article 298 is mandatory.50 Here, both the
DOLE and respondents did not receive any prior notice of the temporary lay-off. The DOLE Region VII
Office was only informed on January 11, 201051 or four (4) days after the forced leave had already
taken effect. On the other hand, respondents received the notice52 of forced leave on January 7,
2010, after the business day of which the same forced leave was to take effect. Respondents also
pointed out that when they received said notice, they were told to no longer report starting the next
day, made to completely vacate their workstations and surrender their company identification
cards, and were not even allowed to use their remaining unused leave credits, which gave them
the impression that they would never be returning to the company ever again.
Since dismissal is the ultimate penalty that can be meted to an employee, the requisites for a valid
dismissal from employment must always be met, namely: (1) it must be for a just or authorized cause;
and (2) the employee must be afforded due process,53 meaning, he is notified of the cause of his
dismissal and given an adequate opportunity to be heard and to defend himself. Our rules require
that the employer be able to prove that said requisites for a valid dismissal have been duly
complied with. Indubitably, IKSI’s intent was not merely to put respondents' employment on hold
pending the existence of the unfavorable business conditions and call them back once the same
improves, but really to sever the employer-employee relationship with respondents right from the
very start. The Court cannot just turn a blind eye to IKSI’s manifest bad faith in terminating
respondents under the guise of placing them on a simple floating status. It is positively aware of the
unpleasant practice of some employers of violating the employees' right to security of tenure under
the pretense of a seemingly valid employment contract and/or valid termination. We must abate
the culture of employers bestowing security of tenure to employees, not on the basis of the latter's
performance on the job, but on their ability to toe the line.54 Unfortunately for IKSI, they chanced
upon respondents who, unlike the ordinary workingman who always plays an easy prey to these
perfidious companies, are fully aware of their rights under the law and simply refuse to ignore and
endure in silence the flagrant irruption of their rights, zealously safeguarded by the Constitution and
our labor laws.
Procedural Issues
Tested against the above-discussed considerations, the Court finds that the CA correctly granted
respondents’ certiorari petition before it, since the NLRC gravely abused its discretion in ruling that
respondents were merely IKSI’s project employees and that they were validly put on floating status
as part of management prerogative, when they had satisfactorily established by substantial
evidence that they had become regular employees and had been constructively
dismissed.55 Grave abuse of discretion connotes judgment exercised in a capricious and whimsical
manner that is tantamount to lack of jurisdiction.56 In labor disputes, grave abuse of discretion may
be ascribed to the NLRC when, inter alia, its findings and conclusions, as in the case at bar, are not
supported by substantial evidence, or that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion.57
In the NLRC’s Decision, only the following petitioners were included: Michael A. Rebato, Hernan Ed
Noel L. de Leon, Jr., Wendell B. Quiban, Fritz Sembrino, Ismael R. Garaygay III, Edson S. Solis, Stephen
Olingay, Ronan Alamillo, Jess Vincent A. dela Pefia, Dax Matthew M. Quijano, Juneth A. Rentuma
and Socorro D'Marie T. Inting. On the other hand, James Horace Balonda, Dennis C. Rizon, Ennoh
Chentis R. Fernandez, Aldrin 0. Torrentira, Michael Ray B. Molde, Rodolfo M. Vasquez, Ma. Nazelle B.
Miralles, and Carl Hermes Carskit were excluded. IKSI argued that those eight (8) who were
excluded did not sign the required Verification and Certification of Non-Forum Shopping of the
Appeal Memorandum before the NLRC, and some of them also failed to execute the Verification in
the Petition for Certiorari before the CA.
The Court has previously set the guidelines pertaining to non-compliance with the requirements on,
or submission of defective, verification and certification against forum shopping: 58
1) A distinction must be made between non-compliance with the requirement on or submission of
defective verification, and noncompliance with the requirement on or submission of defective
certification against forum shopping;
2) As to verification, non-compliance therewith or a defect therein does not necessarily render the
pleading fatally defective. The court may order its submission or correction, or act on the pleading if
the attending circumstances are such that strict compliance with the Rule may be dispensed with in
order that the ends of justice may be served;
3) Verification is deemed substantially complied with when one who has ample knowledge to swear
to the truth of the allegations in the complaint or petition signs the verification, and when matters
alleged in the petition have been made in good faith or are true and correct;
4) As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in
verification, is generally not curable by its subsequent submission or correction thereof, unless there is
a need to relax the Rule on the ground of substantial compliance or the presence of special
circumstances or compelling reasons;
5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in a
case; otherwise, those who did not sign will be dropped as parties to the case. Under reasonable or
justifiable circumstances, however, as when all the plaintiffs or petitioners share a common interest
and invoke a common cause of action or defense, the signature of only one of them in the
certification against forum shopping substantially complies with the Rule; and
6) Finally, the certification against forum shopping must be executed by the party-pleader, not by his
counsel.1âwphi1 If, however, for reasonable or justifiable reasons, the party-pleader is unable to
sign, he must execute a Special Power of Attorney designating his counsel of record to sign on his
behalf.
In the case at hand, only twelve (12) of respondents were able to sign the Verification and
Certification Against Forum Shopping since they were only given ten (10) days from the receipt of
the LA's decision to perfect an appeal. Some of them were even no longer based in Cebu City. But
it does not mean that those who failed to sign were no longer interested in pursuing their case.
In view of the circumstances of this case and the substantive issues raised by respondents, the Court
finds justification to liberally apply the rules of procedure to the present case. Rules of procedure
should be viewed as mere tools designed to facilitate the attainment of justice; their strict and rigid
application, which would result in technicalities that tend to frustrate rather than promote substantial
justice, must always be eschewed.59
In a similar case, the Court found that the signing of the Verification by only 11 out of the 59
petitioners already sufficiently assured the Court that the allegations in the pleading were true and
correct and not the product of the imagination or a matter of speculation; that the pleading was
filed in good faith; and that the signatories were unquestionably real parties-in-interest who
undoubtedly had sufficient knowledge and belief to swear to the truth of the allegations in the
petition.60 In the same vein, the twelve (12) respondents who signed the Verification in the instant
case had adequate knowledge to swear to the truth of the allegations in their pleadings, attesting
that the matters alleged therein have been made in good faith or are true and correct. With
respect to the failure of some of respondents to sign the Certification Against Forum Shopping, IKSI
cited the case of Altres, et al. v. Empleo61 which ruled that the non-signing petitioners were dropped
as parties to the case. However, the reason of the Court for removing said petitioners from the case
was not because of the failure to sign per se, but actually because of the fact that they could no
longer be contacted or were indeed no longer interested in pursuing the case.62 Here, as mentioned
earlier, those who failed to sign the certification against forum shopping will not be dropped as
parties to the case since reasonable or justifiable circumstances are extant, as all respondents share
a common interest and invoke a common cause of action or defense; the signatures of some or
even only one of them substantially complies with the Rule.
The Court previously held that the signature of only one of the petitioners substantially complied with
the Rules if all the petitioners share a common interest and invoke a common cause of action or
defense. In cases, therefore, where it is highly impractical to require all the plaintiffs to sign the
certificate of non-forum shopping, it is sufficient, in order not to defeat the ends of justice, for one of
the plaintiffs, acting as representative, to sign the certificate, provided that the plaintiffs share a
common interest in the subject matter of the case or filed the case as a "collective" raising only one
common cause of action or defense.63 Thus, when respondents appealed their case to the NLRC
and the CA, they pursued the same as a collective body, raising only one argument in support of
their rights against the illegal dismissal allegedly committed by IKSI. There was sufficient basis,
therefore, for the twelve (12) respondents to speak and file the Appeal Memorandum before the
NLRC and the petition in the CA for and in behalf of their co-respondents.
Clearly, verification, like in most cases required by the rules of procedure, is a formal requirement,
not jurisdictional.64 Such requirement is simply a condition affecting the form of pleading, the non-
compliance of which does not necessarily render the pleading fatally defective.65 It is mainly
intended to secure an assurance that matters which are alleged are done in good faith or are true
and correct and not of mere speculation. Thus, when circumstances so warrant, as in this case, the
court may simply order the correction of the unverified pleadings or act on it and waive strict
compliance with the rules in order that the ends of justice may be served.66 Moreover, no less than
the Labor Code directs labor officials to use all reasonable means to ascertain the facts speedily
and objectively, with little regard to technicalities or formalities, while Section 10, Rule VII of the New
Rules of Procedure of the NLRC provides that technical rules are not binding. Indeed, the
application of technical rules of procedure may be relaxed in labor cases to serve the demand of
substantial justice. Labor cases must be decided according to justice and equity and the substantial
merits of the controversy. After all, the policy of our judicial system is to encourage full adjudication
of the merits of an appeal. Procedural niceties should be avoided in labor cases in which the
provisions of the Rules of Court are applied only in suppletory manner. Indeed, rules of procedure
may be relaxed to relieve a part of an injustice not commensurate with the degree of non-
compliance with the process required. For this reason, the Court cannot indulge IKSI in its tendency
to nitpick on trivial technicalities to boost its self-serving arguments.67
The CA, however, erred when it still considered Atty. Ennoh Chentis Fernandez as one of the
petitioners before it and included him in the dispositive portion of its decision. It must be noted that
Fernandez was one of those who filed the Motion for Execution of Decision68 dated May 28, 2012,
which prayed for the issuance of a writ of execution of the LA and NLRC’s rulings. The movants
likewise admitted therein that while some of them elevated the case to the NLRC, they, however,
did not. Corollarily, Fernandez should have been dropped as one of the parties to the case before
the CA since the rulings of the labor tribunals had already attained finality with respect to him.
Award of Damages
Inasmuch as IKSI failed to adduce clear and convincing evidence to support the legality of
respondents' dismissal, the latter is entitled to reinstatement without loss of seniority rights and
backwages computed from the time compensation was withheld up to the date of actual
reinstatement, as a necessary consequence. However, reinstatement is no longer feasible in this
case because of the palpable strained relations between the parties and the possibility that the
positions previously held by respondents are already being occupied by new hires. Thus, separation
pay equivalent to one (1) month salary for every year of service should be awarded in lieu of
reinstatement.69
The Court sustains the CA’s award of moral and exemplary damages. Award of moral and
exemplary damages for an illegally dismissed employee is proper where the employee had been
harassed and arbitrarily terminated by the employer. Moral damages may be awarded to
compensate one for diverse injuries such as mental anguish, besmirched reputation, wounded
feelings, and social humiliation occasioned by the unreasonable dismissal. The Court has consistently
accorded the working class a right to recover damages for unjust dismissals tainted with bad faith,
where the motive of the employer in dismissing the employee is far from noble. The award of such
damages is based, not on the Labor Code, but on Article 2220 of the Civil Code. In line with recent
jurisprudence, the Court finds the amount of ₱50,000.00 for each of moral and exemplary damages
adequate.70
The award of attorney's fees is likewise due and appropriate since respondents incurred legal
expenses after they were forced to file an action to protect their rights.71 The rate of interest,
however, has been changed to 6% starting July 1, 2013, pursuant to the Bangko Sentral ng Pilipinas
Circular No. 799, Series of 2013.72
WHEREFORE, IN VIEW OF THE FOREGOING, the Court DISMISSES the petition,
and AFFIRMS with MODIFICATIONS the Decision of the Court of Appeals Cebu, Twentieth (20th)
Division, dated August 30, 2013 and Resolution dated March 12, 2014 in CA-G.R. CEB-SP No. 06443.
Respondents Socorro D'Marie Inting, Ismael R. Garaygay, Edson S. Solis, Michael A. Rebato, James
Horace Balonda, Stephen C. Olingay, Dennis C. Rizon, Juneth A. Rentuma, Hernan Ed Noel I. de
Leon, Jr., Jess Vincent A. dela Pefia, Ronan V. Alamillo, Wendell B. Quiban, Aldrin 0. Torrentira,
Michael Ray B. Molde, Fritz J. Sembrino, Dax Matthew M. Quijano, Rodolfo M. Vasquez, Ma. Nazelle
B. Miralles and Carl Hermes Carskit are declared to have been illegally dismissed by petitioner
Innodata Knowledge Services, Inc. and hence, the latter is hereby ORDERED to PAY each of them
the following:
a) Backwages and all other benefits from the time compensation was withheld on January
8, 2010 until finality of this Decision;
b) Separation pay equivalent to one (1) month salary for every year of service, with a
fraction of at least six (6) months to be considered as one (1) whole year, to be computed
from the date of their employment up to the finality of this Decision;
c) Moral and exemplary damages, each in the amount of ₱50,000.00;
d) Attorney’s fees equivalent to ten percent (10%) of the total awards; and
e) Legal interest of twelve percent (12%) per annum of the total monetary awards
computed from January 8, 2010 up to June 30, 2013 and six percent (6%) per annum from
July 1, 2013 until their full satisfaction.
The case is hereby ordered REMANDED to the labor arbiter for the computation of the amounts due
each respondent.
Costs on petitioner Innodata Knowledge Services, Inc.
G.R. No. 210565
EMMANUEL D. QUINTANAR, BENJAMIN O. DURANO, CECILIO C. DELAVIN, RICARDO G. GABORNI,
ROMEL G. GERARMAN, JOEL JOHN P. AGUILAR, RAMIRO T. GAVIOLA, RESTITUTO D. AGSALUD, MARTIN
E. CELIS, PATRICIO L. ARIOS, MICHAEL S. BELLO, LORENZO C. QUINLOG, JUNE G. BLAYA, SANTIAGO B.
TOLENTINO, JR., NESTOR A. MAGNAYE, ARNOLD S. POLVORIDO, ALLAN A. AGAPITO, ARIEL E.
BAUMBAD, JOSE T. LUTIVA, EDGARDO G. TAPALLA, ROLDAN C. CADAYONA, REYNALDO V. ALBURO,
RUDY C. ULTRA, MARCELO R. CABILI, ARNOLD B. ASIATEN, REYMUNDO R. MACABALLUG, JOEL R.
DELEÑA, DANILO T. OQUIÑO, GREG B. CAPARAS and ROMEO T. ESCARTIN, Petitioners,
vs.
COCA-COLA BOTTLERS, PHILIPPINES, INC., Respondent.
DECISION
MENDOZA, J.:
At bench is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the July
11, 2013 Decision1 and the December 5, 2013 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP
No. 115469, which reversed and set aside the March 25, 2010 Decision3 and the May 28, 2010
Resolution4 of the National Labor Relations Commission (NLRC), affirming the August 29, 2008
Decision of the Labor Arbiter (LA), in a case for illegal dismissal, damages and attorney's fees filed by
the petitioners against respondent Coca-Cola Bottlers Philippines, Inc. (Coca-Cola).
The gist of the subject controversy, as narrated by the LA and adopted by the NLRC and the CA, is
as follows:
Complainants allege that they are former employees directly hired by respondent Coca-Cola on
different dates from 1984 up to 2000, assigned as regular Route Helpers under the direct supervision
of the Route Sales Supervisors. Their duties consist of distributing bottled Coca-Cola products to the
stores and customers in their assigned areas/routes, and they were paid salaries and commissions at
the average of ₱3,000.00 per month. After working for quite sometime as directly-hired employees of
Coca-Cola, complainants were allegedly transferred successively as agency workers to the
following manpower agencies, namely, Lipercon Services, Inc., People's Services, Inc., ROMAC, and
the latest being respondent Interserve Management and Manpower Resources, Inc.
Further, complainants allege that the Department of Labor and Employment (DOLE) conducted an
inspection of Coca-Cola to determine whether it is complying with the various mandated labor
standards, and relative thereto, they were declared to be regular employees of Coca-Cola, which
was held liable to pay complainants the underpayment of their 13th month pay, emergency cost of
living allowance (ECOLA), and other claims. As soon as respondents learned of the filing of the
claims with DOLE, they were dismissed on various dates in January 2004. Their claims were later
settled by the respondent company, but the settlement allegedly did not include the issues on
reinstatement and payment of CBA benefits. Thus, on November 10, 2006, they filed their complaint
for illegal dismissal.
In support of their argument that they were regular employees of Coca-Cola, the complainants
relied on the pronouncement of the Supreme Court in the case of CCBPI vs. NOWM", G.R. No.
176024, June 18, 2007, as follows:
"In the case at bar, individual complainants were directly hired by respondent Coca-Cola as Route
Helpers. They assist in the loading and unloading of softdrinks. As such they were paid by respondent
Coca-Cola their respective salaries plus commission. It is of common knowledge in the sales of
softdrinks that salesmen are not alone in making a truckload of softdrinks for delivery to customers.
Salesmen are usually provided with route helpers or utility men who does the loading and unloading.
The engagement of the individual complainants to such activity is usually necessary in the usual
business of respondent Coca-Cola.
Contrary to the Labor Arbiter's conclusion that respondent Coca-Cola is engaged solely in the
manufacturing is erroneous as it is also engaged in the sales of the softdrinks it manufactured.
Moreover, having been engaged to perform, such activity for more than a year all the more bolsters
individual complainants' status as regular employees notwithstanding the contract, oral or written, or
even if their employment was subsequently relegated to a labor contractor."
Respondent Coca-Cola denies employer-employee relationship with the complainants pointing to
respondent Interserve with whom it has a service agreement as the complainants' employer. As
alleged independent service contractor of respondent Coca-Cola, respondent Interserve "is
engaged in the business of rendering substitute or reliever delivery services to its own clients and for
CCBPI in particular, the delivery of CCBPI's softdrinks and beverage products." It is allegedly free from
the control and direction of CCBPI in all matters connected with the performance of the work,
except as to the results thereof, pursuant to the service agreement. Moreover, respondent Interserve
is allegedly highly capitalized with a total of ₱21,658,220.26 and with total assets of ₱27,509,716.32.
Further, respondent Coca-Cola argued that all elements of employer-employee relationship exist
between respondent Interserve and the complainants. It was allegedly Interserve which solely
selected and engaged the services of the complainants, which paid the latter their salaries, which
was responsible with respect to
the imposition of appropriate disciplinary sanctions against its erring employees, including the
complainants, without any participation from Coca-Cola, which personally monitors the route
helpers' performance of their delivery services pointing to Noel Sambilay as the Interserve
Coordinator. Expounding on the power of control, respondent Coca-Cola vigorously argued that:
"12. According to Mr. Sambilay, he designates who among the route helpers, such as complainants
herein, will be assigned for each of the delivery trucks. Based on the route helpers' performance and
rapport with the truck driver and the other route helpers, he groups together a team of three (3) to
five (5) route helpers to undertake the loading and unloading of the softdrink products to the
delivery trucks and to their designated delivery point. It is his exclusive discretion to determine who
among the route helpers will be grouped together to comprise an effective team to render the most
efficient delivery service of CCBPI's products.
"13. Similarly, it is Interserve, through Mr. Sambilay, who takes charge of monitoring the attendance
of the route helpers employed by Interserve. At the start of the working day, Mr. Sambilay would
position himself at the gate of the CCBPI premises to check the attendance of the route helpers. He
also maintains a logbook to record the time route helpers appear for work. In case a route helper is
unable to report for duty, Mr. Sambilay reassigns another route helper to take his place."
On its part, respondent Interserve merely filed its position paper, pertaining only to complainants
Quintanar and Cabili totally ignoring all the other twenty-eight (28) complainants. It maintains that it
is a legitimate job contractor duly registered as such and it undertakes to perform utility, janitorial,
packaging, and assist in transporting services by hiring drivers. Complainants Quintanar and Cabili
were allegedly hired as clerks who were assigned to CCBPI Mendiola Office, under the supervision of
Interserve supervisors. Respondent Coca-Cola does not allegedly interfere with the manner and the
methods of the complainants' performance at work as long as the desired results are achieved.
While admitting employer-employee relationship with the complainants, nonetheless, respondent
Interserve avers that complainants are not its regular employees as they were allegedly mere
contractual workers whose employment depends on the service contracts with the clients and the
moment the latter sever said contracts, respondent has allegedly no choice but to either deploy the
complainants to other principals, and if the latter are unavailable, respondent cannot allegedly be
compelled to retain them.5
The Decision of the LA
On August 29, 2008, the LA rendered its decision granting the prayer in the complaint. In its
assessment, the LA explained that the documentary evidence submitted by both parties confirmed
the petitioners' allegation that they had been working for Coca-Cola for quite some time. It also
noted that Coca-Cola never disputed the petitioners' contention that after working for Coca-Cola
through the years, they were transferred to the various service contractors engaged by it, namely,
Interim Services, Inc. (ISI), Lipercon
Services, Inc. (Lipercon), People Services, Inc. (PSI), ROMAC, and lastly, Interserve Management and
Manpower Resources, Inc. (Interserve). In view of said facts, the LA concluded that the petitioners
were simply employees of Coca-Cola who were "seconded" to Interserve. 6
The LA opined that it was highly inconceivable for the petitioners, who were already enjoying a
stable job at a multi-national company, to leave and become mere agency workers. He dismissed
the contention of Coca-Cola that the petitioners were employees of Interserve, stressing that they
enjoyed the constitutional right to security of tenure which Coca-Cola could not compromise by
entering into a service agreement manpower supply contractors, make petitioners sign employment
contracts with them, and convert their employment status from regular to contractual. 7
Ultimately, the LA ordered Coca-Cola to reinstate the petitioners to their former positions and to pay
their full backwages. 8 The dispositive portion of the decision reads:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering
respondent Coca-Cola Bottlers Phils., Inc. to reinstate complainants to their former or substantially
equivalent positions, and to pay their full backwages which as of August 29, 2008 already amounts
to ₱15,319,005.00, without prejudice to recomputation upon subsequent determination of the
applicable salary rates and benefits due a regular route helper or substantially equivalent position
on the plantilla of respondent CCBPI.
SO ORDERED.9
The Decision of the NLRC
Similar to the conclusion reached by the LA, the NLRC found that the petitioners were regular
employees of Coca-Cola. In its decision, dated March 25, 2010, it found that the relationship
between the parties in the controversy bore a striking similarity with the facts in the cases of Coca-
Cola Bottlers Philippines, Inc. v. National Organization of Workingmen 10 (N. O. W) and Magsalin v.
National Organization of Workingmen (Magsalin). 11 The NLRC, thus, echoed the rulings of the Court
in the said cases which found the employees involved, like the petitioners in this case, as regular
employees of Coca-Cola. It stated that the entities ISI, Lipercon, PSI, ROMAC, and Interserve simply
"played to feign that status of an employer so that its alleged principal would be free from any
liabilities and responsibilities to its employees."12 As far as it is concerned, Coca-Cola failed to provide
evidence that would place the subject controversy on a different plane
from N.O.W and Magsalin as to warrant a deviation from the rulings made therein.
As for the quitclaims executed by the petitioners, the NLRC held that the same could not be used by
Coca-Cola to shield it from liability. The NLRC noted the Minutes of the National Conciliation and
Mediation Board (NCMB) which stated that the petitioners agreed to settle their claims with Coca-
Cola only with respect to their claims for violation of labor standards law, and that their claims for
illegal dismissal would be submitted to the NLRC for arbitration. 13
Coca-Cola sought reconsideration of the NLRC decision but its motion was denied.14
The Decision of the CA
Reversing the findings of the LA and the NLRC, the CA opined that the petitioners were not
employees of Coca-Cola but of Interserve. In its decision, the appellate court agreed with the
contention of Coca-Cola that it was Interserve who exercised the power of selection and
engagement over the petitioners considering that the latter applied for their jobs and went through
the pre-employment processes of Interserve. It noted that the petitioners' contracts of employment
and personal data sheets, which were filed with Interserve, categorically stipulated that Interserve
had the sole power to assign them temporarily as relievers for absent employees of their clients. The
CA also noted that the petitioners had been working for other agencies before they were hired by
Interserve. 15
The CA also gave credence to the position of Coca-Cola that it was Interserve who paid the
petitioners' salaries. This, coupled with the CA's finding that Coca-Cola paid Interserve for the
services rendered by the petitioners whenever they substituted for the regular employees of Coca-
Cola, led the CA to conclude that it was Interserve who exercised the power of paying the
petitioners' wages.
The CA then took into consideration Interserve's admission that they had to sever the petitioners'
from their contractual employment because its contract with Coca-Cola expired and there was no
demand for relievers from its other clients. The CA equated this with Interserve's exercise of its power
to fire the petitioners. 16
Finally, the CA was of the considered view that it was Interserve which exercised the power of
control. Citing the Affidavit17 of Noel F. Sambilay (Sambilay), Coordinator of Interserve, the CA noted
that Interserve exercised the power of control, monitoring the petitioners' attendance, providing
them with their assignments to the delivery trucks of Coca-Cola, and making sure that they were
able to make their deliveries. 18
The CA then went on to conclude that Interserve was a legitimate independent contractor. It noted
that the said agency was registered with the Department of Labor and Employment (DOLE) as an
independent contractor which had provided delivery services for other beverage products of its
clients, and had shown that it had substantial capitalization and owned properties and equipment
that were used in the conduct of its business operations. The CA was, thus, convinced that Interserve
ran its own business, separate and distinct from Coca-Cola. 19
The petitioners sought reconsideration, but they were rebuffed. 20
Hence, this petition, raising the following
GROUNDS FOR THE PETITION/
ASSIGNMENT OF ERRORS
THE COURT OF APPEALS IS GUILTY OF GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION IN:
I.
RENDERING A DECISION THAT IS CONTRARY TO LAW
AND ESTABLISHED JURISPRUDENCE
II.
MISAPPRECIATING FACTS WHICH GRAVELY PREJUDICED
THE RIGHTS OF THE PETITIONERS.21
In their petition for review on certiorari, the petitioners ascribed grave abuse of discretion on the part
of the CA when it reassessed the evidence and reversed the findings of fact of the LA and the NLRC
that ruled in their favor. 22
The petitioners also claimed that the CA violated the doctrine of stare decisis when it ruled that
Interserve was a legitimate job contractor. Citing Coca Cola Bottlers, Philippines, Inc. v. Agito
(Agito), 23the petitioners argued that because the parties therein were the same parties in the
subject controversy, then the appellate court should have followed precedent and declared
Interserve as a labor-only contractor.24
In further support of their claim that Interserve was a labor-only contractor and that Coca-Cola, as
principal, should be made ultimately liable for their claims, the petitioners asserted that Interserve
had no products to manufacture, sell and distribute to customers and did not perform activities in its
own manner and method other than that dictated by Coca-Cola. They claimed that it was Coca-
Cola that owned the softdrinks, the trucks and the equipment used by Interserve and that Coca-
Cola assigned supervisors to ensure that the petitioners perform their duties. 25
Lastly, the petitioners insisted that both Coca-Cola and Interserve should be made liable for moral
and exemplary damages, as well as attorney's fees, for having transgressed the petitioners' right to
security of tenure and due process.26
The Court's Ruling
Essentially, the core issue presented by the foregoing petition is whether the petitioners were illegally
dismissed from their employment with Coca-Cola. This, in turn, necessitates a determination of the
characterization of the relationship between route-helpers such as the petitioners, and softdrink
manufacturers such as Coca-Cola, notwithstanding the participation of entities such as ISI, Lipercon,
PSI, ROMAC, and Interserve. The petitioners insist that ISI, Lipercon, PSI, ROMAC, and Interserve are
labor-only contractors, making Coca-Cola still liable for their claims. The latter, on the other hand,
asserts that the said agencies are independent job contractors and, thus, liable to the petitioners on
their own.
Procedural Issues
Before the Court proceeds to resolve the case on its merits, it must first be pointed out that the
petitioners erred in resorting to this petition for review on certiorari under Rule 45 of the Rules of Court
and alleging, at the same time, that the CA abused its discretion in rendering the assailed decision.
Well-settled is the rule that grave abuse of discretion or errors of jurisdiction may be corrected only
by the special civil action of certiorari under Rule 65. Such corrective remedies do not avail in a
petition for review on certiorari which is confined to correcting errors of judgment only. Considering
that the petitioners have availed of the remedy under Rule 45, recourse to Rule 65 cannot be
allowed either as an add-on or as a substitute for appeal. 27
Moreover, it is observed that from a perusal of the petitioners' arguments, it is quite apparent that
the petition raises questions of facts, inasmuch as this Court is being asked to revisit and assess anew
the factual findings of the CA and the NLRC. The petitioners fundamentally assail the findings of the
CA that the evidence on record did not support their claims for illegal dismissal against Coca-Cola.
In effect, they would have the Court sift through, calibrate and re-examine the credibility and
probative value of the evidence on record so as to ultimately decide whether or not there is
sufficient basis to hold the respondents accountable for their alleged illegal dismissal. This clearly
involves a factual inquiry, the determination of which is the statutory function of the NLRC. 28
Basic is the rule that the Court is not a trier of facts and this doctrine applies with greater force in
labor cases. Questions of fact are for the labor tribunals to resolve.29 Only errors of law are generally
reviewed in petitions for review on certiorari under Rule 45 of the Rules of Court.
In exceptional cases, however, the Court may be urged to probe and resolve factual issues when
there is insufficient or insubstantial evidence to support the findings of the tribunal or the court below,
or when too much is concluded, inferred or deduced from the bare or incomplete facts submitted
by the parties or, where the LA and the NLRC came up with conflicting positions. 30 In this case,
considering the conflicting findings of the LA and the NLRC on one hand, and the CA on the other,
the Court is compelled to resolve the factual issues along with the legal ones.
Substantial Issues
The Court finds for the petitioners. The reasons are:
First. Contrary to the position taken by Coca-Cola, it cannot be said that route-helpers, such as the
petitioners no longer enjoy the employee-employer relationship they had with Coca-Cola since they
became employees of Interserve. A cursory review of the jurisprudence regarding this matter reveals
that the controversy regarding the characterization of the relationship between route-helpers and
Coca-Cola is no longer a novel one.
As early as May 2003, the Court in Magsalin struck down the defense of Coca-Cola that the
complainants therein, who were route-helpers, were its "temporary" workers. In the said Decision, the
Court explained:
The basic law on the case is Article 280 of the Labor Code. Its pertinent provisions read:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity exists.
Coca-Cola Bottlers Phils., Inc. is one of the leading and largest manufacturers of softdrinks in the
country. Respondent workers have long been in the service of petitioner company. Respondent
workers, when hired, would go with route salesmen on board delivery trucks and undertake the
laborious task of loading and unloading softdrink products of petitioner company to its various
delivery points.
Even while the language of law might have been more definitive, the clarity of its spirit and intent,
i.e., to ensure a "regular" worker's 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.
The argument of petitioner that its usual business or trade is softdrink manufacturing and that the
work assigned to respondent workers as sales route helpers so involves merely "postproduction
activities," one which is not indispensable in the manufacture of its products, scarcely can be
persuasive. If, as so argued by petitioner company, only those whose work are directly involved in
the production of softdrinks may be held performing functions necessary and desirable in its usual
business or trade, there would have then been no need for it to even maintain regular truck sales
route helpers. The nature of the work performed must be viewed from a perspective of the business
or trade in its entirety and not on a confined scope.
The repeated rehiring of respondent workers and the continuing need for their services clearly attest
to the necessity or desirability of their services in the regular conduct of the business or trade of
petitioner company. The Court of Appeals has found each of respondents to have worked for at
least one year with petitioner company. While this Court, in Brent School, Inc. vs. Zamora, has upheld
the legality of a fixed-term employment, it has done so, however, with a stern admonition that
where from the circumstances it is apparent that the period has been imposed to preclude the
acquisition of tenurial security by the employee, then it should be struck down as being contrary to
law, morals, good customs, public order and public policy. The pernicious practice of having
employees, workers and laborers, engaged for a fixed period
of few months, short of the normal six-month probationary period of employment, and, thereafter, to
be hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be
countenanced. The fact that respondent workers have agreed to be employed on such basis and
to forego the protection given to them on their security of tenure, demonstrate nothing more than
the serious problem of impoverishment of so many of our people and the resulting unevenness
between labor and capital. A contract of employment is impressed with public interest. The
provisions of applicable statutes are deemed written into the contract, and "the parties are not at
liberty to insulate themselves and their relationships from the impact of labor laws and regulations by
simply contracting with each other."31
Shortly thereafter, the Court in Bantolino v. Coca-Cola,32among others, agreed with the unanimous
finding of the LA, the NLRC and the CA that the route-helpers therein were not simply employees of
Lipercon, Peoples Specialist Services, Inc. or ISI, which, as Coca-Cola claimed were independent job
contractors, but rather, those of Coca-Cola itself. In the said case, the Court sustained the finding of
the LA that the testimonies of the complainants therein were more credible as they sufficiently
supplied every detail of their employment, specifically identifying their salesmen/drivers were and
their places of assignment, aside from the dates of their engagement and dismissal.
Then in 2008, in Pacquing v. Coca-Cola Philippines, Inc. (Pacquing), 33the Court applied the ruling
in Magsalin under the principle of stare decisis et non quieta movere (follow past precedents and
do not disturb what has been settled). It was stressed therein that because the petitioners, as route
helpers, were performing the same functions as the employees in Magsalin, which were necessary
and desirable in the usual business or trade of Coca- Cola Philippines, Inc., they were considered
regular employees of Coca-Cola entitled to security of tenure.
A year later, the Court in Agito34similarly struck down Coca-Cola's contention that the salesmen
therein were employees of Interserve, notwithstanding the submission by Coca-Cola of their
personal data files from the records of Interserve; their Contract of Temporary Employment with
Interserve; and the payroll records of Interserve. In categorically declaring Interserve as a labor-only
contractor, 35 the Court found that the work of the respondent salesmen therein, constituting
distribution and sale of Coca-Cola products, was clearly indispensable to the principal business of
petitioner Coca-Cola.36
As to the supposed substantial capital and investment required of an independent job contractor,
the Court stated that it "does not set an absolute figure for what it considers substantial capital for
an independent job contractor, but it measures the same against the type of work which the
contractor is obligated to perform for the principal."37 The Court reiterated that the contractor, not
the employee, had the burden of proof that it has the substantial capital, investment and tool to
engage in job contracting. As applied to Interserve, the Court ruled:
The contractor, not the employee, has the burden of proof that it has the substantial capital,
investment, and tool to engage in job contracting. Although not the contractor itself (since
Interserve no longer appealed the judgment against it by the Labor Arbiter), said burden of proof
herein falls upon petitioner who is invoking the supposed status of Interserve as an independent job
contractor. Noticeably, petitioner failed to submit evidence to establish that the service vehicles
and equipment of Interserve, valued at ₱510,000.00 and ₱200,000.00, respectively, were sufficient to
carry out its service contract with petitioner. Certainly, petitioner could have simply provided the
courts with records showing the deliveries that were undertaken by Interserve for the Lagro area, the
type and number of equipment necessary for such task, and the valuation of such equipment.
Absent evidence which a legally compliant company could have easily provided, the Court will not
presume that Interserve had sufficient investment in service vehicles and equipment, especially
since respondents' allegation that they were using equipment, such as forklifts and pallets belonging
to petitioner, to carry out their jobs was uncontroverted.
In sum, Interserve did not have substantial capital or investment in the form of tools, equipment,
machineries, and work premises; and respondents, its supposed employees, performed work which
was directly related to the principal business of petitioner. It is, thus, evident that Interserve falls under
the
definition of a labor-only contractor, under Article 106 of the Labor Code; as well as Section 5(i) of
the Rules Implementing Articles 106-109 of the Labor Code, as amended.38
As for the certification issued by the DOLE stating that Interserve was an independent job
contractor, the Court ruled:
The certification issued by the DOLE stating that Interserve is an independent job contractor does
not sway this Court to take it at face value, since the primary purpose stated in the Articles of
Incorporation of Interserve is misleading. According to its Articles of Incorporation, the principal
business of Interserve is to provide janitorial and allied services. The delivery and distribution of Coca-
Cola products, the work for which respondents were employed and assigned to petitioner, were in
no way allied to janitorial services. While the DOLE may have found that the capital and/ or
investments in tools and equipment of Interserve were sufficient for an independent contractor for
janitorial services, this does not mean that such capital and/ or investments were likewise sufficient to
maintain an independent contracting business for the delivery and distribution of Coca-Cola
products.39
Finally, the Court determined the existence of an employer-employee relationship between the
parties therein considering that the contract of service between Coca-Cola and Interserve showed
that the former indeed exercised the power of control over the complainants therein.40
The Court once more asserted the findings that route-helpers were indeed employees of Coca-Cola
in Coca-Cola Bottlers Philippines, Inc. v. Dela Cruz41and, recently, in Basan v. Coca-Cola Bottlers
Philippines, Inc. 42 and that the complainants therein were illegally dismissed for want of just or
authorized cause. Similar dispositions by the CA were also upheld by this Court
in N.O.W43and Ostani,44through minute resolutions.
It bears mentioning that the arguments raised by Coca-Cola in the case at bench even bear a
striking similarity with the arguments it raised before the CA in N.O.W45and Ostani.46
From all these, a pattern emerges by which Coca-Cola consistently resorts to various methods in
order to deny its route-helpers the benefits of regular employment. Despite this, the Court, consistent
with sound pronouncements above, adopts the rulings made in Pacquing that Interserve was a
labor-only contractor and that Coca-Cola should be held liable pursuant to the principle of stare
decisis et non quieta movere.
It should be remembered that the doctrine of stare decisis et non quieta movere is embodied in
Article 8 of the Civil Code of the Philippines which provides:
ART. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the
legal system of the Philippines.1âwphi1
And, as explained in Fermin v. People:47
The doctrine of stare decisis enjoins adherence to judicial precedents. It requires courts in a country
to follow the rule established in a decision of the Supreme Court thereof. That decision becomes a
judicial precedent to be followed in subsequent cases by all courts in the land. The doctrine of stare
decisis is based on the principle that once a question of law has been examined and decided, it
should be deemed settled and closed to further argument.48
[Emphasis Supplied]
The Court's ruling in Chinese Young Men's Christian Association of the Philippine Islands v. Remington
Steel Corporation is also worth citing, viz: 49
Time and again, the court has held that it is a very desirable and necessary judicial practice that
when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere
to that principle and apply it to all future cases in which the facts are substantially the same. Stare
decisis et non quieta movere. Stand by the decisions and disturb not what is settled. Stare
decisis simply means that for the sake of certainty, a conclusion reached in one case should be
applied to those that follow if the facts are substantially the same, even though the parties may be
different. It proceeds from the first principle of justice that, absent any powerful countervailing
considerations, like cases ought to be decided alike. Thus, where the same questions relating to the
same event have been put forward by the parties similarly situated as in a previous case litigated
and decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the
same issue. 50
[Emphases Supplied]
Verily, the doctrine has assumed such value in our judicial system that the Court has ruled
that "[a]bandonment thereof must be based only on strong and compelling reasons, otherwise, the
becoming virtue of predictability which is expected from this Court would be immeasurably
affected and the public's confidence in the stability of the solemn pronouncements
diminished."51 Thus, only upon showing that circumstances attendant in a particular case override
the great benefits derived by our judicial system from the doctrine of stare decisis, can the courts be
justified in setting it aside.
In this case, Coca-Cola has not shown any strong and compelling reason to convince the Court that
the doctrine of stare decisis should not be applied.1avvphi1 It failed to successfully demonstrate
how or why both the LA and the NLRC committed grave abuse of discretion in sustaining the pleas
of the petitioners that they were its regular employees and not of Interserve.
Second. A reading of the decision of the CA and the pleadings submitted by Coca-Cola before this
Court reveals that they both lean heavily on the service agreement52 entered into by Coca-Cola
and Interserve; the admission by Interserve that it paid the petitioners' salaries; and the affidavit of
Sambilay who attested that it was Interserve which exercised the power of control over the
petitioners.
The service agreements entered into by Coca-Cola and Interserve, the earliest being that dated
January 1998,53 (another one dated July 11, 2006)54 and the most recent one dated March 21,
200755 - all reveal that they were entered into One, after the petitioners were hired by Coca-
Cola (some of whom were hired as early as 1984), Two, after they were dismissed from their
employment sometime in January 2004,· and Three, after the petitioners filed their complaint for
illegal dismissal on November 10, 2006 with the LA.
To quote with approval the observations of the LA:
x x x The most formidable obstacle against the respondent's theory of lack of employer-employee
relationship is that complainants have [been] performing the tasks of route-helpers for several years
and that practically all of them have been rendering their services as such even before respondent
Interserve entered into a service agreement with Coca-Cola sometime in 1998. Thus, the
complainants in their position paper categorically stated the record of their service with Coca-Cola
as having started on the following dates: Emmanuel Quintanar - October 15, 1994; Benjamin Durano
- November 16, [1987]; Cecilio Delaving - June 10, 1991; Ricardo Gaborni - September 28, 1992;
Romel Gerarman - June 20, 1995; Ramilo Gaviola - October 10, 1988; Joel John Aguilar - June 1,
1992; Restituto Agsalud - September 7, 1989; Martin Celis - August 15, 1995; Patricio Arios - June 2,
1989; Michael Bello - February 15, 1992; Lorenzo Quinlog - May 15, 1992; Junne Blaya - September 15,
1997; Santiago Tolentino, Jr. - May 29, 1989; Nestor Magnaye - February 15, 1996; Arnold Polvorido -
February 8, 1996; Allan Agapito - April 15, 1995; Ariel Baumbad - January 15, 1995; Jose Lutiya -
February 15, 1995; Edgardo Tapalla - August
15, 1994; Roldan Cadayona - May 14, 1996; Raynaldo Alburo - September 15, 1996; Rudy Ultra -
February 28, 1997; Marcelo Cabili - November 15, 1995; Arnold Asiaten - May 2, 1992; Raymundo
Macaballug - July 31, 1995; Joel Delena - January 15, 1991; Danilo Oquino - September 15, 1990;
Greg Caparas - August 15, 1995; and Romeo Escartin - May 15, 1986.
It should be mentioned that the foregoing allegation of the complainants' onset of their services with
respondent Coca-Cola has been confirmed by the Bio-Data Sheets submitted in evidence by the
said respondent (Coca-Cola]. Thus, in the Bio-Data Sheet of complainant Quintanar (Annex "4"), he
stated therein that he was in the service of respondent Coca-Cola continuously from 1993 up to
2002. Likewise, complainant Quinlog indicated in his Bio-data Sheet submitted to respondent
Interserve that he was already in the employ of respondent Coca-Cola from 1992 (Annex "12").
Complainant Edgardo Tapalla also indicated in his Bio-Data Sheet that he was already in the
employ of Coca-Cola since 1995 until he was seconded to Interserve in 2002 (Annex "20").
As a matter of fact, complainants' allegation that they were directly hired by respondent Coca-Cola
and had been working with the latter for quite sometime when they were subsequently referred to
successive agencies such as Lipercon, ROMAC, People's Services, and most recently, respondent
Interserve, has not been controverted by the respondents. Even when respondent Coca-Cola filed its
reply to the complainants' position paper, there is nothing therein which disputed complainant's
statements of their services directly with the respondent even before it entered into service
agreement with respondent Interserve. 56
As to the payment of salaries, although the CA made mention that it was Interserve which paid the
petitioners' salaries, no reference was made to any evidence to support such a conclusion. The
Court, on the other hand, gives credence to the petitioners' contention that they were employees of
Coca-Cola. Aside from their collective account that it was Coca-Cola's Route Supervisors who
provided their daily schedules for the distribution of the company's products, the petitioners'
payslips,57 tax records,58 SSS59 and Pag-Ibig60 records more than adequately showed that they were
being compensated by Coca-Cola. More convincingly, the petitioners even presented their
employee Identification Cards,61 which expressly indicated that they were "[ d]irect hire[es]" of
Coca-Cola.
As for the affidavit of Sambilay, suffice it to say that the same was bereft of evidentiary weight,
considering that he failed to attest not only that he was already with Interserve at the time of the
petitioners hiring, but also that he had personal knowledge of the circumstances surrounding the
hiring of the petitioners following their alleged resignation from Coca-Cola.
Third. As to the characterization of Interserve as a contractor, the Court finds that, contrary to the
conclusion reached by the CA, the petitioners were made to suffer under the prohibited practice of
labor-only contracting. Article 106 of the Labor Code provides the definition of what constitutes
labor-only contracting. Thus:
Article 106. Contractor or subcontractor.- x x x
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are
directly related to the principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible to the workers in
the same manner and extent as if the latter were directly employed by him.
Expounding on the concept, the Court in Agito explained:
The law clearly establishes an employer-employee relationship between the principal employer and
the contractor's employee upon a finding that the contractor is engaged in '1abor-only"
contracting. Article 106 of the Labor Code categorically states: "There is 'labor-only' contracting
where the person supplying workers to an employer does not have substantial capital or investment
in the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such persons are performing activities which are directly related to the
principal business of such employer." Thus, performing activities directly related to the principal
business of the employer is only one of the two indicators that "labor-only" contracting exists; the
other is lack of substantial capital or investment. The Court finds that both indicators exist in the case
at bar.
[Emphases and Underscoring Supplied]
In this case, the appellate court considered the evidence of Interserve that it was registered with the
DOLE as independent contractor and that it had a total capitalization of ₱27,509,716.32 and
machineries and equipment worth P12,538859.55.62 As stated above, however, the possession of
substantial capital is only one element. Labor-only contracting exists when any of the two elements
is present. 63 Thus, even if the Court would indulge Coca-Cola and admit that Interserve had more
than sufficient capital or investment in the form of tools, equipment, machineries, work
premises, still, it cannot be denied that the petitioners were performing activities which were directly
related to the principal business of such employer. Also, it has been ruled that no absolute figure is
set for what is considered 'substantial capital' because the same is measured against the type of
work which the contractor is obligated to perform for the principal. 64
More importantly, even if Interserve were to be considered as a legitimate job contractor, Coca-
Cola failed to rebut the allegation that petitioners were transferred from being its employees to
become the employees of ISI, Lipercon, PSI, and ROMAC, which were labor-only contractors. Well-
settled is the rule that "[t]he contractor, not the employee, has the burden of proof that it has the
substantial capital, investment, and tool to engage in job contracting." 65 In this case, the said
burden of proof lies with Coca-Cola although it was not the contractor itself, but it was the one
invoking the supposed status of these entities as independent job contractors.
Fourth. In this connection, even granting that the petitioners were last employed by Interserve, the
record is bereft of any evidence that would show that the petitioners voluntarily resigned from their·
employment with Coca-Cola only to be later hired by Interserve. Other than insisting that the
petitioners were last employed by Interserve, Coca-Cola failed not only to show by convincing
evidence how it severed its employer relationship with the petitioners, but also to prove that the
termination of its relationship with them was made through any of the grounds sanctioned by law.
The rule is long and well-settled that, in illegal dismissal cases such as the one at bench, the burden
of proof is upon the employer to show that the employees' termination from service is for a just and
valid cause. 66 The employer's case succeeds or fails on the strength of its evidence and not the
weakness of that adduced by the employee,67 in keeping with the principle that the scales of justice
must be tilted in favor of the latter in case doubts exist over the evidence presented by the parties. 68
For failure to overcome this burden, the Court concurs in the observation of the LA that it was highly
inconceivable for the petitioners, who were already enjoying a stable job at a multi-national
company, to leave and become mere agency workers. Indeed, it is contrary to human experience
that one would leave a stable employment in a company like Coca-Cola, only to become a worker
of an agency like Interserve, and be assigned back to his original employer - Coca-Cola.
Although it has been said that among the four (4) tests to determine the existence of any employer-
employee relationship, it is the "control test" that is most persuasive, the courts cannot simply ignore
the other circumstances obtaining in each case in order to determine whether an employer-
employee relationship exists between the parties.
WHEREFORE, the petition is GRANTED. The July 11, 2013 Decision and the December 5, 2013
Resolution of the Court of Appeals, in CA-G.R. SP No. 115469 are REVERSED and SET ASIDE and the
August 29, 2008 Decision of the Labor Arbiter in NLRC Case Nos. 12-13956-07 and 12-14277-07, as
affirmed in toto by the National Labor Relations Commission, is hereby REINSTATED.
G.R. Nos. 190015 & 190019, September 14, 2016
GERALDINE MICHELLE B. FALLARME AND ANDREA MARTINEZ-GACOS, Petitioners, v. SAN JUAN DE DIOS
EDUCATIONAL FOUNDATION, INC., CHONA M. HERNANDEZ, VALERIANO ALEJANDRO III, SISTER
CONCEPTION GABATINO, D.C., AND SISTER JOSEFINA QUIACHON, D.C., Respondent.
DECISION
SERENO, C.J.:
Before this Court is a Petition for Review on Certiorari under Rule 45, assailing the Decision1 and the
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP Nos. 105355 and 105361. The CA affirmed the
Decision3 and the Resolution4 of the National Labor Relations Commission (NLRC), which had ruled in
favor of the validity of the termination of Geraldine Michelle B. Fallarme and Andrea Martinez-Gacos
(petitioners) by San Juan de Dios Educational Foundation, Inc., Chona M. Hernandez, Valeriano
Alejandro III, Sr., Concepcion Gabatino, D.C., and Sr. Josefina Quiachon, D.C. (respondents).
THE FACTS
Petitioners were hired by San Juan de Dios Educational Foundation, Inc. (respondent college), for
full-time teaching positions.5chanrobleslaw
The appointment of petitioner Fallarme was effective at the start of the first semester of School Year
(SY) 2003-20046 as signified by a memorandum7 issued by the school informing her that she had
been hired. The memorandum did not specify whether she was being employed on a regular or a
probationary status. Aside from being appointed to a faculty position, she was also appointed to
perform administrative work for the school as personnel officer8 and to serve as head of the Human
Development Counseling Services.9chanrobleslaw
Despite having served as a faculty member since SY 2003-2004, Fallarme was asked only on 1 March
2006 to sign and submit to respondent Chona M. Hernandez, dean of general education, a written
contract on the nature of the former's employment and corresponding obligations.10 The contract
was denominated as "Appointment and Contract for Faculty on Probation" (appointment
contract),11 and its effectivity period covered the second semester of SY 2005-2006 - specifically from
4 November 2005 to 18 March 2006.12 The appointment contract specified the status of Fallarme as
a probationary faculty member.
After the expiration of the contract, respondent college informed her that it would not be renewed
for the first semester of SY 2006-2007.13 When she asked on what basis her contract would not be
renewed, she was informed that it was the school's "administrative prerogative."14chanrobleslaw
Petitioner Martinez-Gacos taught at respondent college from the start of SY 2003-2004 and
continued to do so for a total of six semesters and one summer.15 Her engagement as a faculty
member was signified by a memorandum16 issued by the school, which informed her that she had
been hired. The memorandum, which was similar to that issued to Fallarme, did not specify whether
Martinez-Gacos was being employed on a regular or a probationary status.
Like Fallarme, even though Martinez-Gacos had been employed as a faculty member since SY
2003-2004, it was only on 1 March 2006 that the latter was ordered by respondent Valeriano
Alejandro III to sign and submit a written contract on the nature of her employment and
corresponding obligations.17 The terms of the contract were similar to those in the contract signed by
Fallarme. It was also denominated as "Appointment and Contract for Faculty on Probation,"18 and its
effectivity period also covered the second semester of SY 2005-2006 - specifically from 4 November
2005 to 18 March 2006.19 Under the appointment contract, the probationary status of Martinez-
Gacos was likewise specified for the first time.
After the lapse of the contract's effectivity, she was similarly informed that her contract would not be
renewed for the first semester of SY 2006-2007. She was also told that the nonrenewal of her contract
was made on the basis of "administrative prerogative."20chanrobleslaw
Petitioners submitted a letter to respondent Hernandez,21 questioning the nonrenewal of their
respective employment contracts. Not satisfied with the reply,22 they filed a Complaint against
respondents for illegal dismissal, reinstatement, back wages, and damages before the labor
arbiter.23chanrobleslaw
In their defense, respondents claimed that petitioners had been remiss in their duties. Specifically,
both of them reportedly sold computerized final examination sheets to their students without prior
school approval. Allegedly, Fallarme also sold sociology books to students, while Martinez-Gacos
served as part-time faculty in another school and organized out-of-campus activities, all without the
permission of respondent college.24 These infractions supposedly prevented it from considering their
services satisfactory.
THE LABOR ARBITER'S DECISION
The labor arbiter ruled that petitioners were regular employees who were entitled to security of
tenure.25cralawred The former cited the 1992 Manual of Regulations for Private Schools (1992
Manual), which provides that regularization must be given to a teacher who (i) is employed as a full-
time teacher; (ii) has rendered three consecutive years of service; and (iii) has performed
satisfactorily within that period.26 The labor arbiter held that petitioners had complied with these
requisites for their regularization and, contrary to respondents' contention, performed satisfactorily
within the years of their probationary employment. Thus, the labor arbiter ordered respondent
college to reinstate petitioners and pay them their back wages as well as their 13th month
pay.27chanrobleslaw
THE NLRC'S RULING
Upon respondents' appeal, the NLRC reversed the Decision of the labor arbiter.28 It held that
petitioners had failed to meet the third requirement for regularization as prescribed by the 1992
Manual; that is, they had not served respondent college satisfactorily. The NLRC found that certain
actions they had done without the requisite approval of respondent college brought about their
unsatisfactory performance during their probationary period. However, given the failure of
respondent to observe due process, the NLRC ordered it to pay them P20,000 each as indemnity.
Upon the denial of their Motion for Reconsideration,29 petitioners proceeded to the CA.
THE CA RULING
The CA affirmed the NLRC Decision.30 It upheld respondent college's administrative prerogative to
determine whether or not petitioners were entitled to regularization on the basis of respondents'
academic freedom.31 Furthermore, the award of P20,000 as indemnity to each of the petitioners was
upheld.
Upon the denial by the CA of their Motion for Reconsideration,32 petitioners have now come before
this Court via this Petition.
THE ISSUES
We cull the issues as follows:ChanRoblesVirtualawlibrary
1. Were petitioners regular employees of respondent college?
2. Was petitioners' dismissal for a valid cause?
3. If the dismissal of petitioners was for a valid cause, was the proper dismissal
procedure observed?
OUR RULING
We deny the Petition. While we agree with petitioners that they were regular employees of the
college, we differ on the basis they invoke for their regularization. Nevertheless, we agree with
respondents that as regular employees, petitioners were dismissed for a valid cause. But due to
respondents' failure to observe the proper procedure, petitioners are entitled to nominal damages.
The case calls for a review of questions of fact.
At the outset, we note the general rule that a petition for review on certiorari under Rule 45 is limited
to questions of law. However, an exception to this rule arises when the findings of the CA conflict
with those of the labor authorities, in which case this Court will not hesitate to review the evidence
on record.33chanrobleslaw
In this case, the labor arbiter's factual findings differ from those of the NLRC and the CA. The labor
arbiter found that the satisfactory service rendered by petitioners during their probationary period
warranted their regularization, while the NLRC and the CA found otherwise. These conflicting findings
of fact provide sufficient justification for our review of the facts involved.
We now proceed to the merits of the case.
Petitioners are deemed regular employees.
While the parties did not contest the allegation that petitioners were employed as probationary
employees, a review of the records will show that they were considered regular employees since
Day One of their employment.
It is established that while the Labor Code provides general rules as to probationary employment,
these rules are supplemented by the Manual of Regulations for Private Schools with respect to the
period of probationary employment of private school teachers.34chanrobleslaw
As prescribed by the 1992 Manual, a teacher must satisfy the following requisites to be entitled to
regular faculty status: (1) must be a full-time teacher; (2) must have rendered three years of service
(or six consecutive semesters of service for teachers on the tertiary level); and (3) that service must
have been satisfactory.35chanrobleslaw
In this case, the first two requisites for regularization under the 1992 Manual - full-time faculty status
and completion of the probationary period - are conceded in favor of petitioners. However, the
parties disagree on the fulfillment of the third requisite:36 whether petitioners' performance within the
probationary period was satisfactory.
It is with respect to the determination of whether petitioners' performance was satisfactory that
respondent college invokes its "administrative prerogative." As argued by respondents in their
Comment before this Court, the exercise of their administrative prerogative not to renew the
contracts was prompted by their dissatisfaction with the way petitioners conducted themselves in
school.37 Specifically, respondent college asserts that appellants were remiss in their fiduciary duty to
the school when they engaged in various acts like selling books and exam materials, as well as
organizing extracurricular activities with students without its permission.38 It contends that its
administrative prerogative is part of its academic freedom under the Constitution.39chanrobleslaw
These contentions are misplaced.
Indeed, the determination of whether the performance of probationary teaching personnel has
been sufficiently satisfactory as to warrant their regularization lies in the hands of the
school40 pursuant to its administrative prerogative, which is an extension of its academic freedom
under Section 5(2), Article XIV41 of the Constitution. Academic freedom gives the school the
discretion and the prerogative to impose standards on its teachers and to determine whether these
have been met upon the conclusion of the probationary period.42chanrobleslaw
It must be pointed out that the school's exercise of administrative prerogative in this respect is not
plenary as respondents would like us to believe. The exercise of that prerogative is still subject to the
limitations imposed by the Labor Code and jurisprudence on valid probationary
employment.43chanrobleslaw
In Abbott Laboratories v. Alcaraz,44 this Court explained that valid probationary employment under
Art. 281 presupposes the concurrence of two requirements: (1) the employer must have made
known to the probationary employee the reasonable standard that the latter must comply with to
qualify as a regular employee; and (2) the employer must have informed the probationary
employee of the applicable performance standard at the time of the latter's engagement. Failing in
one or both, the employee, even if initially hired as a probationary employee, shall be considered a
regular employee.45chanrobleslaw
With respect to the regularization of probationary teachers, the standards laid down in Abbott
Laboratories apply to the third requisite under the 1992 Manual: that they must have rendered
satisfactory service. As observed by this Court in Colegio del Santisimo Rosario v. Rojo,46 the use of
the term satisfactory "necessarily connotes the requirement for schools to set reasonable standards
to be followed by teachers on probationary employment. For how else can one determine if
probationary teachers have satisfactorily completed the probationary period if standards therefor
are not provided?" Therefore, applying Article 281 of the Labor Code, a school must not only set
reasonable standards that will determine whether a probationary teacher rendered satisfactory
service and is qualified for regular status; it must also communicate these standards to the teacher
at the start of the probationary period. Should it fail to do so, the teacher shall be deemed a regular
employee from Day One.47chanrobleslaw
However, the records lack evidence that respondent college clearly and directly communicated to
petitioners, at the time they were hired, what reasonable standards they must meet for the school to
consider their performance satisfactory and for it to grant them regularization as a result.
Respondents claim that the standards were provided in the appointment contracts signed by
petitioners. Each of the contracts supposedly provided that it "incorporates by reference the school
policies, regulations, operational procedures and guidelines provided for in the Manual of
Operations of the School xxx."48 However, this claim defeats respondents' own defense, because the
appointment contracts invoked were signed by petitioners only at the start of the second semester
of SY 2005-2006.49chanrobleslaw
Nonetheless, it is clear and undisputed that petitioners were hired by respondent college as early as
2003, but were required to sign appointment contracts for the first time only in 2005. An examination
of the records will show that when they were hired in 2003, they each signed a mere memorandum
informing them that they had passed the qualifying examinations for faculty members, and that
they were being hired effective first semester of SY 2003-2004.50 The memorandum did not indicate
their status as probationary employees, the specific period of effectivity of their status as such, and
the reasonable standards they needed to comply with to be granted regular status. The failure to
inform them of these matters was in violation of the requirements of valid probationary employment.
It also violated Section 91 of the 1992 Manual, which provides as follows:ChanRoblesVirtualawlibrary
Every contract of employment shall specify the designation, qualification, salary rate, the period and
nature of service and its date of effectivity, and such other terms and conditions of employment as
may be consistent with laws and the rules, regulations and standards of the school. A copy of the
contract shall be furnished the personnel concerned. (Emphasis supplied)
The appointment contracts invoked by respondents appear to be an afterthought, as they asked
petitioners to sign the contracts only when the latter's three-year probationary period was about to
expire. Apparently, this act was an effort to put a stamp of validity on respondents' refusal to renew
petitioners' contracts.
Respondents were clearly remiss in their duty under the Labor Code to inform petitioners of the
standards for the latter's regularization. Consequently, petitioners ought to be considered as regular
employees of respondent college right from the start.
Petitioners' dismissal was for a valid cause.
Now that petitioners' regular status has been settled, it is time to examine whether their contracts'
nonrenewal, which was effectively their dismissal, was valid.
Dismissals have two facets: the legality of the act of dismissal, which constitutes substantive due
process; and the legality of the manner of dismissal, which constitutes procedural due
process.51chanrobleslaw
With respect to substantive due process, insubordination or willful disobedience is one of the just
causes of dismissal under Article 282 of the Labor Code. For there to be a valid cause, two elements
must concur: (1) the employee's assailed conduct must have been willful, that is, characterized by a
wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful,
made known to the employee, and pertinent to the duties that the employee has been engaged to
discharge.52chanrobleslaw
Moreover, to be considered as a valid cause analogous to that specified in the law, it is simply
required that the cause must be due to the voluntary or willful act or omission of the
employee.53chanrobleslaw
Furthermore, under the 1992 Manual, the following has also been enumerated as one of the valid
causes for termination, in addition to those found in the Labor Code:ChanRoblesVirtualawlibrary
(f) The sale of tickets or the collection of any contributions in any form or for any purpose of project
whatsoever, whether voluntary or otherwise, from pupils, students and school personnel xxx.
In this case, the records bear out the following misdemeanors of petitioners:
chanRoblesvirtualLawlibrary
(1) Both petitioners were remiss in their obligation to secure respondent college's consent before
they sold computerized final examination sheets to their students.54 They failed to do so
despite the prior advice of their subject area coordinator that the dean's approval must first
be secured before examination sheets could be sold.55
(2) Petitioner Fallarme failed to secure respondent college's consent before selling sociology
textbooks to her students during the second semester of SY 2005-2006.56 This rule was violated
even after it had been clearly discussed during their department's general meeting held at
the opening of SY 2005-2006. The teachers were then told that they were prohibited from
transacting business with any publishing house or collecting any payment without informing
their respective area chairs.57
(3) Petitioner Martinez-Gacos organized out-of-campus activities with students, again without
respondent college's permission and in violation of the school's Student Handbook. 58
The above infractions imputed by respondent college to petitioners were admitted by the latter in
their letters to respondents59 and in their Petition before this Court.60 They made that admission in
conjunction with their defense that the supposed infractions did not cause serious damage to
respondents and were but a part of their academic freedom and freedom of expression, among
others.
We find that these infractions committed by petitioners in connection with their jobs have been
established by substantial evidence61 and constitute willful disobedience or conduct analogous
thereto.
First, the act of selling computerized final examination sheets to students without respondent
college's permission, despite the prior advice of their subject area coordinator, indicated a knowing
disregard by petitioners of their superior's express order not to do so. We find that order to be lawful
as well as reasonable. Clearly, the school was not prohibiting the sale of those sheets per se, but was
only requiring that its permission be secured first. This order was made in consideration of the
supervision and control that the school was expected to exercise over all matters relevant to its
students and personnel.62 The order was also pertinent to their duties as teachers, as the sheets were
used in examinations administered in their classes.
Furthermore, it is significant that petitioners' act of collecting money from their students falls under
one of the valid causes for termination under the 1992 Manual as enumerated above.
There is no merit in the defense that petitioners were not aware of the policy regarding the
examination sheets.63 In their letters to respondent college, they in fact apologized and recognized
the fault they committed when they did not inform school authorities before selling the
computerized sheets.64 The apologies of petitioners indicate their awareness of this requirement.
Second, when petitioner Fallarme sold textbooks to her students without permission, even after the
act had been clearly prohibited in a general meeting, her act also indicated her willful disregard of
a school policy. That policy, which was made known to her beforehand, was lawful in light of the
recognized authority exercised by schools over their students and personnel.65chanrobleslaw
Moreover, we consider that policy to be in line with the fiduciary relationship between the school
and its professors, teachers, and instructors. They are merely the school's agents in providing the
education it has contracted to deliver to its students.66 As such, they have an obligation to avoid
any conflict of interest with the school as their principal.67 Here, by selling textbooks without the
school's authorization, petitioners were harboring a conflict of interest, inasmuch as it was
commonplace for a school itself - not its individual teachers - to sell the textbooks, to its students.
Furthermore, the order was reasonable. As with the sale of examination sheets, the sale of books was
not being prohibited by the school, as it was only requiring teachers to first secure its authorization.
That such order was related to the duties of petitioner Fallarmeas a teacher can be easily discerned
from the fact that the focus of the policy was the textbooks used in the classroom.
It is noteworthy that this misdemeanor was substantiated by the letters of Fallarme's students
attesting to the fact before the school authorities.68 While she raised before the labor arbiter the
defense that some of the students had confided to her that they had written the letters involuntarily,
she failed to substantiate this self-serving claim with any proof.69chanrobleslaw
Third, petitioner Martinez-Gacos' act of organizing out-of-campus activities without the consent of
respondent college and in violation of its Student Handbook likewise shows traces of insubordination
or acts analogous thereto. Martinez-Gacos undertook the activities complained of in 2005,70 or two
years after she was hired. Her awareness of the Student Handbook's provisions, which she cavalierly
disregarded, can therefore be reasonable expected. It is notable that she never disputed or
debunked the existence of the Student Handbook provisions invoked by the Dean of Student
Services.
We find the defense invoked by petitioner — that the questioned activity was a personal trip71 -
insufficient to dispute an established fact. Specifically, while she was the publications adviser of the
school paper, she went on two out-of-town trips with several students, whose stories later on
appeared in that publication.72chanrobleslaw
It must be stressed that the rules and policies that were disobeyed by petitioners are necessary
incidents of the supervision and control schools exercise over teachers as well as students.73 The
exercise of such supervision has been declared to be an obligation of schools.74 In Miriam College
Foundation v. Court of Appeals,75 this Court recognized that the establishment of an educational
institution requires rules and regulations necessary for the maintenance of an orderly educational
program and the creation of an educational environment conducive to learning. These rules and
regulations are also necessary for the protection of the students, faculty, and property. Therefore, to
disobey school rules and regulations, as petitioners did in this case, is to go against this recognized
mandate.
All told, not just one but three infractions show that the continued service of petitioners in
respondent college was inimical to its interest, as their actions indicated lack of respect for the
school authorities. It is settled that an employer has the right to dismiss its erring employees as a
measure of self-protection against acts inimical to its interest.76 With respect to schools, this right must
be seen in light of their recognized prerogative to set high standards of efficiency for its teachers.
The exercise of that prerogative is pursuant to the mandate of the Constitution for schools to provide
quality education77 and its recognition of their academic freedom to choose who should teach
pursuant to reasonable standards.78 We find those standards to be present in this case.
Therefore, respondent college cannot be faulted for finding the performance of petitioners inimical
to its interest as a school after the cited infractions. As correctly pointed out by the NLRC, petitioners
were teachers who handled in their classrooms women and men at an impressionable age, not
mere inanimate and repeatable objects as in the manufacturing sector. Therefore, teachers stand
as role models for living out basic values, which include respect for authority. 79 Because of the failure
of petitioners to live up to that standard, this Court finds that their dismissal was for a valid cause.
Respondents failed to observe the proper procedure in petitioners' dismissal.
Although the dismissal of petitioner was for a valid cause, we nevertheless find that respondent
college failed to comply with the proper procedure for their dismissal in violation of procedural due
process.
For termination based on a just cause, as in this case, the law requires two written notices before the
termination of employment: (1) a written notice served by the employer on the employee specifying
the ground for termination and giving a reasonable opportunity for that employee to explain the
latter's side; and (2) a written notice of termination served by the employer on the employee
indicating that upon due consideration of all the circumstances, grounds have been established to
justify the latter's termination.80chanrobleslaw
We find a complete deviation from the two-notice rule in this case. The records show that
respondent college effectively dismissed petitioners by sending them a written notice informing
them that the school would no longer renew their contracts for the forthcoming semester.81 We find
that the letters were abruptly sent and lacked any specification of the grounds for their termination.
Neither did the letters give petitioners the opportunity to explain their side. To aggravate the matter,
upon their inquiry into the reason behind their termination, all that respondent college cited was its
supposed "administrative prerogative," which was misplaced as discussed earlier.
In Agabon v. National Labor Relations Commission,82 this Court held that if the dismissal was for a
valid cause, failure to comply with the proper procedural requirements shall not nullify the dismissal,
but shall only warrant the payment of indemnity in the form of nominal damages. The amount of
damages is addressed to the sound discretion of the Court, taking into account the relevant
circumstances. Since Agabon, this Court has consistently pegged the award of nominal damages
at P30,000 in cases where the employee's right to procedural due process has been violated.83 It
was held that the amount of nominal damages awarded is not intended to enrich the employee,
but to deter the employer from future violations of the procedural due process rights of the
former.84 Considering the circumstances in the present case and in compliance with prevailing
jurisprudence,85 we deem it appropriate for respondent college to pay petitioners P30,000 each. This
amount is in lieu of the P20,000 awarded to each petitioner by the NLRC and the CA.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Court of Appeals Decision dated 31
July 2009 and Resolution dated 20 October 2009 in CA-G.R. SP Nos. 105355 and 105361 are
hereby AFFIRMED with MODIFICATIONS, in that petitioners are each awarded nominal damages of
P30,000 for the violation of their right to procedural due process. Legal interest at the rate of 6% per
annum is imposed on the award of damages from the finality of this Decision until full payment.
G.R. No. 217455, October 05, 2016
OYSTER PLAZA HOTEL, ROLITO GO, AND JENNIFER AMPEL, Petitioners, v. ERROL O.
MELIVO, Respondent.
DECISION
MENDOZA, J.:
This Petition for Review on Certiorari seeks to reverse and set aside the April 30, 2014 Decision1 and
the March 12, 2015 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 122767, which
affirmed the June 21, 2011 Decision3 of the National Labor Relations Commission (NLRC) in NLRC
NCR Case No. 10-14771-09, a case for illegal dismissal.
The Antecedents:
On October 22, 2009, respondent Errol O. Melivo (Melivo) filed before the NLRC a Complaint4 for
illegal dismissal with prayers for reinstatement and payment of back wages, holiday pay, overtime
pay, service incentive leave, and, 13th month pay against petitioners Oyster Plaza Hotel (Oyster
Plaza), Rolito Go (Go), and Jennifer Ampel (Ampel).
The Summons,5 dated October 26, 2009, together with a copy of the complaint, was served on the
petitioners thru registered mail. The said summons ordered the petitioners to appear before the
Labor Arbiter (LA) for mandatory conciliation/mediation conferences on November 23, 2009 and
December 1, 2009. The registry return receipt,6 dated November 27, 2009, showed that the summons
and the copy of the complaint were duly served. The petitioners, however, failed to appear during
the scheduled conferences. Thereafter, the case was set for formal hearing on January 14, 2010 and
a notice of hearing7 was sent to the petitioners, requiring them to appear before the LA and file their
position paper, with a warning that failure to appear therein would be construed as a waiver of the
opportunity to be heard. The notice, however, was returned unserved as there was no one to
receive the same.8 The formal hearing was, thus, reset to February 17, 2010, and a notice of
hearing9 was again sent to the petitioners, wherein they were reminded to file their position paper.
The registry return receipt10 showed that the said notice was received by a certain Charlie
Miraña (Miraña) on January 25, 2010. At the February 17, 2010 hearing, however, only Melivo
appeared.
On even date, Melivo filed his Position Paper,11 alleging the following: that Oyster Plaza was a
business entity engaged in the business of hotel operation, under the ownership/management of Go
and Ampel; that in August 2008, Oyster Plaza hired him as a trainee room boy; that in November
2008, Oyster Plaza hired him as a probationary room boy and he was made to sign an employment
contract but he was not furnished a copy, that the said contract expired in March 2009 and his work
ended; that on April 7, 2009, Oyster Plaza hired him again as a room boy, but without any
employment contract or document; and that in September 2009, his supervisor Ampel verbally told
him that his contract was expiring, thus, he must stop reporting for work.
For the last time, another notice of hearing12 for the March 24, 2010, was again sent to the petitioners
with a directive to file their position paper, but it was again returned unserved. 13 Hence, the case
was submitted for decision ex parte.14
The LA Ruling
In its Decision,15 dated April 20, 2010, the LA ruled that Melivo was illegally dismissed. Considering
that Melivo had already rendered six (6) months of service for Oyster Plaza, the LA held that he had
become a regular employee by operation of law. The LA stated that having attained the regular
employment status, he could only be terminated for a valid cause; and because the petitioners
failed to present countervailing evidence to justify Melivo's dismissal, there could be no other
conclusion except that the dismissal was illegal.
The LA, however, found that there was no underpayment as Melivo was receiving the basic wage
plus cost of living allowance as mandated by law; that he was not entitled to service incentive
leave because he had not rendered at least one (1) year of service; and that there was no
underpayment of holiday pay and overtime pay because he failed to adduce evidence to support
these claims.
In the end, the LA ordered Oyster Plaza to reinstate Melivo to his previous position and to pay him
back wages reckoned from his dismissal on September 15, 2009 until the finality of its decision; his
proportionate 13th month pay; and attorney's fees in the amount equivalent to 10% of the total
money claims awarded. The dispositive portion of the LA decision reads:chanRoblesvirtualLawlibrary
CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered finding complainant illegally
dismissed.
Consequently, respondents must reinstate complainant to his former work as room boy within ten
(10) days from receipt of this decision and pay him, in solidum, the following
amounts:cralawlawlibrary
a) P57,572.00, as backwages as of March 19, 2010 and to accrue further until finality of this
decision;ChanRoblesVirtualawlibrary
b) P6,631.33, as proportionate 13th month pay; and
c) 10% of the money awards as attorney's fees.
SO ORDERED.16
chanrobleslaw
Thereafter, Melivo filed his Motion to Implement Order of Reinstatement.17 Acting thereon, the LA
issued the Writ of Execution18 on September 21, 2010.
On October 21, 2010, the petitioners filed their Motion to Quash (Writ of Execution, dated September
1, 2010)19 arguing that they did not receive the summons, the notices of hearings and the copy of
the LA decision. The petitioners averred that they were only able to secure copies of the records on
October 14, 2010.
Without awaiting the LA's action on their motion to quash, the petitioners filed an Appeal before the
NLRC In their Appeal Memorandum,20 the petitioners argued that none of them was served with
summons and notices of the November 23, 2009 and December 1, 2009 hearings; that the registry
return receipt, dated November 27, 2009, did not bear a legibly written name to determine who
received the summons; that the notice for the February 17, 2010 hearing was received by Miraña, a
security guard who was not its employee but merely assigned to it by VICAR Security Agency; that
"Oyster Plaza Hotel" was only a name and business style of its owner, Martyniuk Development
Corporation (MDC) and, hence, could not be sued because it had no legal personality; that Go
was not a stockholder, officer, or director of, and had no connection with, Oyster Plaza and MDC;
that Ampel, whose real name was Jennilyn not Jennifer, was a mere assistant desk officer of Oyster
Plaza; and that assuming there was valid service of summons, Melivo was not illegally dismissed
because he was merely employed for a fixed term, which term already expired. The petitioners also
submitted Melivo's Contract of Employment21 as an attachment to their memorandum.
The NLRC Ruling
On June 21, 2011, the NLRC affirmed the April 20, 2010 Decision of the LA. It observed that the
summons and the complaint, which were addressed to "Oyster Plaza Hotel, et al.," were served upon
the petitioners by registered mail and received by them on November 27, 2009. Thus, it was prudent
for them to verify the status of the case with the LA. It further explained that the petitioners' assertion
that they had no knowledge on who received the subject processes and pleading did not render
the service ineffectual; and that the Rules of Procedure of the NLRC did not specify any person upon
whom summons must be served in the event that the respondent was a juridical entity. Thus, Oyster
Plaza was bound by its employee's receipt of the summons.
The NLRC was of the view that the petitioners' denial of illegal dismissal did not deserve any
consideration. It posited that the contract of employment failed to reveal the specific project or any
phase of it where he was employed; and that the petitioners failed to submit a report of his
termination to the nearest public employment office, as required under Department
Order (D.O.) No, 19. The failure to file a termination report upon the alleged cessation of Melivo's
employment was an indication that he was not a project employee, but a regular employee. Thus,
for want of valid cause for his severance, the NLRC concluded that Melivo was illegally dismissed.
The petitioners moved for reconsideration, but their motion was denied by the NLRC in its
Resolution,22 dated September 26, 2011.
Aggrieved, the petitioners elevated the case to the CA.
The CA Ruling
In its assailed decision, dated April 30, 2014, the CA dismissed the petition for lack of merit and
affirmed the June 21, 2011 NLRC Decision. The appellate court held that the failure to implead MDC
in the proceedings before the LA and the NLRC was merely a procedural error which did not affect
the jurisdiction of the labor tribunals. The CA observed that the petitioners failed to raise a valid
argument, much less present sufficient evidence to show that there was irregularity in the service of
summons. It emphasized that the petitioners' alternative argument that Ampel was not authorized to
receive the summons bolstered the findings that she indeed received the said summons. It also
opined that the provisions of the Rules of Court only had suppletory application to labor cases and,
thus, not strictly applied thereto. Finally, it stated that petitioners failed to produce sufficient
evidence, such as the company's General Information Sheet, to show that Go was no longer
connected with either MDC or Oyster Plaza.
As to the issue of Melivo's illegal dismissal, the CA held that the petitioners failed to adduce
adequate evidence to the contrary. It noted that the petitioners barely argued on the nature of
Melivo's employment and they miserably failed to point specific acts by the NLRC which amounted
to grave abuse of discretion. The CA stated that a perusal of the assailed NLRC decision would
readily show that the same was arrived at after considering the evidence presented and arguments
raised by the parties. The fallo of the CA decision reads:chanRoblesvirtualLawlibrary
WHEREFORE, the instant Petition is hereby DENIED for lack of merit. The assailed Decision of the NLRC
dated 21 June 2011 is AFFIRMED.
SO ORDERED.23
chanrobleslaw
The petitioners filed their motion for reconsideration, but the same was denied by the CA in its
assailed Resolution, dated March 12, 2015.
Hence, this petition, raising the following:chanRoblesvirtualLawlibrary
ISSUES
I
WHETHER OR NOT THE PETITIONERS WERE DEPRIVED OF THEIR RIGHT TO DUE PROCESS OF LAW AS THEY
WERE NOT PROPERLY SERVED WITH SUMMONS
II
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT MELIVO WAS ILLEGALLY DISMISSED
III
WHETHER THE COURT OF APPEALS ERRED IN FINDING PETITIONERS GO AND AMPEL SOLIDARILY LIABLE
WITH OYSTER PLAZA/MDC]
chanrobleslaw
The petitioners argue, first, that the service of summons was defective leaving the proceedings
before the LA and the NLRC, and the decisions they rendered, void; that neither Miraña nor Ampel
was authorized to receive the summons for Oyster Plaza/MDC because they were not its president,
manager, secretary, cashier, agent, director, corporate secretary, or in-house counsel; that Ampel
did not receive any summons; that Go never received any summons in the New Bilibid Prisons in
Muntinlupa City, where he was serving his sentence; that Oyster Plaza, being a mere name and
business style, could not be sued because it had no legal personality; and that the summons and
notices addressed to Oyster Plaza could not bind MDC.
Second, on the assumption that the summons was validly served, the petitioners argue that Melivo
was not illegally dismissed because he was not a regular employee but merely a fixed-term
employee. Lastly, assuming that Oyster Plaza was liable, Go could not be made solidarity liable
because he was no longer connected with the hotel Neither could Ampel be held solidarity liable as
there was no proof that she acted in bad faith.
In his Comment,24 dated October 23, 2015, Melivo refuted the petitioners' arguments. He countered
that in quasi-judicial proceedings before the NLRC and its arbitration branch, procedural rules
governing service of summons were not strictly construed; that the service of summons and notices
substantially complied with the requirements of the 2005 Revised NLRC Rules of Procedure; that the
non-inclusion of the corporate name of MDC was a mere procedural error which did not affect the
jurisdiction of the labor tribunals; that Go and Ampel were responsible officers of Oyster Plaza; and
that Melivo's dismissal was done in bad faith because he was verbally and arbitrarily dismissed.
In their Reply,25 dated March 23, 2016, the petitioners merely reiterated the arguments they raised in
their petition.
The Court's Ruling
The petition is partly meritorious.
Petitioners were Not Deprived of their
Right to Due Process
In quasi-judicial proceedings before the NLRC and its arbitration branch, procedural rules governing
service of summons are not strictly construed. Substantial compliance thereof is sufficient. The
constitutional requirement of due process with respect to service of summons only exacts that the
service of summons be such as may reasonably be expected to give the notice desired. Once the
service provided by the rules reasonably accomplishes that end, the requirement of justice is
answered, the traditional notion of fair play is satisfied, and due process is served.26
In Scenarios, Inc. vs. Vinluan,27 the Court considered as substantial compliance the service of
summons by registered mail at the respondent's place of business. The Court explained therein that
technical rules of procedure were not strictly applied in quasi-judicial proceedings and only
substantial compliance was required; and that the notation in the registry receipt that "a registered
article must not be delivered to anyone but the addressee, or upon the addressee's written order"
creates the presumption that the persons who received the summons and notice were presumably
able to present a written authorization to receive them and, therefore, the notices were presumed
to be duly received in the ordinary course of events.
Similarly, in this case, the summons and notices were served by registered mail at the petitioners'
place of business. Thus, the person who received the same was presumed authorized to do so.
Consequently, the summons and notices were presumed to be duly served. The burden of proving
the irregularity in the service of summons and notices, if any, is on the part of the petitioners. In this
case, the petitioners clearly failed to discharge that burden.
The Court concurs with the CA that the failure to implead MDC in the proceedings before the LA
and the NLRC was merely a procedural error which did not divest the labor tribunals of their
jurisdiction. In Pison-Arceo Agricultural Development Corp. vs. NLRC (Pison-Arceo),28 which involved
the resolution of substantially the same issue, the Court held that:chanRoblesvirtualLawlibrary
X x x. There is no dispute that Hacienda Lanutan, which was owned SOLELY by petitioner, was
impleaded and was heard. If at all, the non-inclusion of the corporate name of petitioner in the case
before the executive labor arbiter was a mere procedural error which did not at all affect the
jurisdiction of the labor tribunals.29 [Emphasis supplied]
chanrobleslaw
By the petitioners' own admission, Oyster Plaza was owned and operated by MDC. This was further
underscored in the petitioners' Verification/Certification,30 dated December 8, 2011, attached to
their petition before the CA. It was stated therein that "Elsa Go is the authorized representative of
petitioner Oyster Plaza Hotel/Martyniuk Development Corporation." Applying the pronouncement
in Pison-Arceo, the failure to include MDC's corporate name in the complaint did not necessarily
result in the loss of the labor tribunals' jurisdiction over the former. The said failure was but a
procedural blunder which did not render the labor proceedings void, so long as the dictates of
justice were substantially complied with.
Further, the essence of due process is simply an opportunity to be heard or, as applied to
administrative proceedings, an opportunity to explain one's side or to seek a reconsideration of the
action or ruling complained of. What the law prohibits is the absolute absence of the opportunity to
be heard; hence, a party cannot feign denial of due process where he had been afforded the
opportunity to present his side.31
The Court notes that even though the petitioners failed to participate in the proceedings before the
LA, they were able to argue their case before the NLRC. The petitioners, through their pleadings,
were able to argue their position and submit evidence in support of their position that they did not
receive the summons and notices from the LA; and that Melivo was not illegally dismissed.
Evidently, the petitioners' contention that they were denied due process is devoid of any merit.
Melivo was Illegally Dismissed
Anent the issue of illegal dismissal, the CA correctly affirmed the ruling of the NLRC.
Probation is the period during which the employer may determine if the employee is qualified for
possible inclusion in the regular force.32 The employer has the right or is at liberty to choose who will
be hired and who will be denied employment. In that sense, it is within the exercise of the right to
select his employees that the employer may set or fix a probationary period within which the latter
may test and observe the conduct of the former before hiring him permanently.33 An employee
allowed to work beyond the probationary period is deemed a regular employee.34
In Holiday Inn Manila vs. NLRC (Holiday Inn),35 the Court considered therein complainant's 3-week
on-the-job training (OJT) period as her probationary employment period. The Court explained that
the complainant was certainly under observation during her 3-week OJT such that if her services
proved unsatisfactory, she could have been dropped anytime during said period. On the other
hand, when her services were continued after her training, the employer in effect recognized that
she had passed probation and was qualified to be a regular employee. Thus, the Court ruled that
the complainant therein attained regular employment status when she was formally placed under
probation after her OJT.
The present case involves substantially the same factual considerations as that of Holiday Inn. In this
case, Melivo was first hired as a trainee in August 2008. His training lasted for three (3) months. As a
room boy, his performance was certainly under observation. Thus, it can be reasonably deduced
that Melivo's probationary employment actually started in August 2008, at the same time he started
working as a trainee. Therefore, when he was re-hired as room boy after his training period sometime
in November 2008 he attained regular employment status.
Assuming arguendo that the 3-month training period could be considered a probationary period,
the conclusion would still be the same. It should be remembered that Melivo was again employed
as a room boy in November 2008 under probationary status for five (5) months or until March 2009.
Records would show that Melivo had completed his probationary employment. Thus, when Oyster
Plaza re-hired him for the third time on April 7, 2009, he became its regular employee thereof.
The petitioners' contention that Melivo was hired as a project employee is untenable. Under Article
280 of the Labor Code, as amended, a project employee is one whose employment has been fixed
for a specific project or undertaking, the completion or termination of which has been determined
at the time of the engagement of the employee. Here, the contract of employment failed to
indicate the specific project or undertaking for which Oyster Plaza sought Melivo's services.
Moreover, as correctly noted by the NLRC, the petitioners failed to submit a report of Melivo's
termination to the nearest public employment office, as required under Section 2 of D.O. No. 19.
WHEREFORE, the petition is PARTIALLY GRANTED. The April 30, 2014 Decision of the Court of Appeals in
CA-G.R. SP No. 122767 is AFFIRMED with MODIFICATION in that only Oyster Plaza Hotel/Martyniuk
Development Corporation is ORDERED to reinstate Melivo to his former position without loss of
seniority rights; and to pay Melivo his backwages, proportionate 13th month pay, and attorney's fees
equivalent to 10% of the monetary awards.
The total monetary awards shall earn interest at the rate of 12% per annum from the date that
Melivo was illegally terminated from work until June 30, 2013, and 6% per annum from July 1, 2013
until their full satisfaction.
G.R. Nos. 174365-66 February 4, 2015

As a regular employee, Melivo could only be dismissed for just or authorized causes after affording
him the procedural requirement of notice and hearing. The petitioners failed to adduce evidence ROMEO BASAN, DANILO DIZON, JAIME L. TUMABIAO, JR., ROBERTO DELA RAMA, JR., RICKY S.
that Melivo's dismissal was for a just or authorized cause, or that he was sufficiently notified and given NICOLAS, CRISPULO D. DONOR, GALO FALGUERA, and NATIONAL LABOR RELATIONS
opportunity to be heard why his employment should not be terminated. Hence, Melivo's dismissal COMMISSION, Petitioners,
was illegal. vs.
COCA-COLA BOTTLERS PHILIPPINES,* Respondent.
Go and Ampel cannot be held Solidarity
Liable with Oyster Plaza/MDC DECISION

A corporation, being a juridical entity, may act only through its directors, officers and employees. PERALTA, J.:
Obligations incurred by them, acting as such corporate agents, are not theirs but the direct
accountabilities of the corporation they represent.36 Pursuant to this principle, a director, officer or
employee of a corporation is generally not held personally liable for obligations incurred by the Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
corporation; it is only in exceptional circumstances that solidary liability will attach to them.37 Thus, in reverse and set aside the Decision1 dated August 31, 2005 and Resolution2 dated August 24, 2006 of
labor cases, corporate directors and officers are held solidarity liable with the corporation for the the Court of Appeals (CA) in CA-G.R. SP Nos. 80977 & 87071, which reversed the Resolutions dated
employee's termination only when the same is done with malice or in bad faith. 38 January 30, 20033 and September 24, 20034 of the National Labor Relations Commission (NLRC) in
NLRC 00-02-01419-97.
In the present case, there is nothing substantial on record which can justify Go and Ampel's solidary
liability with Oyster Plaza or MDC. As to Ampel, records reveal that her participation in the illegal The factual antecedents are as follows.
dismissal was her verbally informing Melivo that his services were being terminated; and the said act
could hardly be considered malicious enough to make Ampel solidarity liable with Oyster Plaza or On February 18, 1997, petitioners Romeo Basan, Danilo Dizon, Jaime L. Tumabiao, Jr., Roberto Dela
MDC. Rama,Jr., Ricky S. Nicolas, Crispulo D. Donor, Galo Falguera filed a complaint for illegal dismissal with
money claims against respondent Coca-Cola Bottlers Philippines, alleging that respondent dismissed
With regard to Go, aside from the assertion that he was the owner of Oyster Plaza, no other act,
them without just cause and prior written notice required by law. In their position paper, petitioners
relating to Melivo's illegal dismissal, was ever averred against him. Besides, Go's relation with Oyster provided for the following material dates:5
Plaza or MDC was only based from the bare allegations of Melivo who failed to provide substantial
evidence to prove them. It is of no moment that Go failed to produce evidence to show that he Name of Petitioner Date of Hiring Date of Dismissal
was no longer connected with MDC or Oyster Plaza. Melivo should have relied on the strength of his Dela Rama November 16, 1995 February 13, 1997
evidence and not on the weakness of the defense offered by the petitioners.39 Clearly, without any
participation in the illegal dismissal of Melivo, no malice or bad faith can be attributed to Go to Dizon October 1988 December 15, 1996
justify his solidary liability with Oyster Plaza. In fine, the petition must be partially granted to the effect
Tumabiao February 2, 1992 February 13, 1997
that only Oyster Plaza/MDC should be adjudged liable to Melivo.
Basan July 13, 1996 January 31, 1997
Finally, pursuant to Nacar v. Gallery Frames,40 this Court finds that the award of the CA should be
Donor September 16, 1995 February 13, 1997
modified in that the total monetary awards shall earn interest at the rate of 12% per annum from the
date Melivo was terminated from work until June 30, 2013, and 6% per annum from July 1, 2013 until Nicolas May 10, 1996 January 30, 1997
their full satisfaction.
Falguera January 15, 1991 April 1996
Respondent corporation, however, countered that it hired petitioners as temporary route helpers to
act as substitutes for its absent regular route helpers merely for a fixed period in anticipation of the
high volume of work in its plants or sales offices.6 As such, petitioners’ claims have no basis for they
knew that their assignment as route helpers was temporary in duration.
On August 21, 1998, the Labor Arbiter ruled in favor of petitioners and found that since they were
performing activities necessary and desirable to the usual business of petitioner for more than the
period for regularization, petitioners are considered as regular employees, and thus, their dismissal
was done contrary to law in the absence of just cause and prior written notice. 7 Thus, it ordered
respondent to reinstate petitioners with full backwages from the time their salaries were withheld until
their actual reinstatement and to pay their lump sum increase extended to them in their collective
bargaining agreement, their accrued vacation and sick leave benefits, as well as monetary awards
and attorney’s fees.8
On January 30, 2003, the NLRC affirmed the Labor Arbiter’s decision and rejected respondent’s
contention that petitioners were merely employed for a specific project or undertaking the
completion or termination of which has been determined at the time of their engagement. It
stressed that nowhere in the records of the case was it shown that petitioners were hired as project
or seasonal employees, respondent having failed to submit any contract of project or other similar
proof thereof.9 It also noted that neither can petitioners be considered as probationary employees
for the fact that they had performed their services for more than six (6) months. In addition, the NLRC
upheld the Labor Arbiter’s ruling that petitioners, as route helpers, performed work directly
connected or necessary and desirable in respondent’s ordinary business of manufacturing and
distributing its softdrink products. Thus, respondent failed to overcome petitioners’ assertion that they
were regular employees. As such, their employment could only be terminated with just cause and
after the observance of the required due process. Thereafter, the subsequent motion for
reconsideration filed by respondent was further denied by the NLRC on September 24, 2003.
On December 9, 2003, respondent filed a petition for certiorari10 with the CA alleging grave abuse of
discretion on the part of the NLRC in finding that petitioners were regular employees. In the
meantime, petitioners filed before the Labor Arbiter a Motion for Issuance of a Writ of
Execution11 dated December 15, 2003, to which respondent filed a Manifestation and Motion with
attached Opposition.12 On March 25, 2004, the Labor Arbiter ordered that the Writ of Execution be
issued, which was affirmed by the NLRC on June 21, 2004. Consequently, respondent filed another
petition for Certiorari13 on October 22, 2004, claiming that the NLRC committed grave abuse of
discretion in directing the execution of a judgment, the propriety and validity of which was still under
determination of the appellate court.
In its Decision dated August 31, 2005, the CA consolidated respondent’s two (2) petitions for
certiorari and reversed the rulings of the NLRC and the Labor Arbiter in the following wise:
That the respondents "performed duties which are necessary or desirable in the usual trade or
business of Coca-Cola," is of no moment. This is not the only standard for determining the status of
one’s employment. Such fact does not prevent them from being considered as fixed term
employees of Coca-Cola whose engagement was "fixed" for a specific period. The respondent’s
repeated hiring for various periods (ranging from more than six months for private respondent Basan
to eight years in the case of private respondent Dizon) would not automatically categorize them as
REGULAR EMPLOYEES.
xxxx
It being supported by facts on record and there being no showing that the employment terms were
foisted on the employees through circumstances vitiating or diminishing their consent, following
Brent School, Inc. vs. Zamora(G.R. No. 48494, Feb. 5, 1990), the respondents must be considered as
fixed term employees whose "seasonal employment" or employment for a "period" have been "set
down." After all, as conceded by Brent, fixed term employment continues to be allowed and
enforceable in this jurisdiction. Not being permanent regular employees, it must be held that the
respondents are not entitled to reinstatement and payment of full backwages. 14
Petitioners sought a reconsideration of the CA’s Decision on procedural and substantive grounds.
On the procedural, they alleged that respondent, in filing its appeal of the Labor Arbiter’s August 21,
1998 decision with the NLRC only on December 20, 1998, rendered the Decision of the Labor Arbiter
final and executory, and thus, deprived the CA of jurisdiction to alter the final judgment.15 They also
claimed that the Resolutions of the NLRC have become final and executory in view of the Entries of
Judgment dated December 16, 2003 and September 16, 2004 issued by the NLRC. As to the
substantial matter, petitioners assert that they are regular employees entitled to security of tenure.
On August 24, 2006, the CA denied petitioners’ motion for reconsideration in saying that it is no
longer necessary to discuss whether respondent was able to timely appeal the Labor Arbiter’s
decision to the NLRC, in view of the fact that the latter had already given due course to said appeal
by deciding the case on the merits and, more importantly, petitioners’ failure to raise the alleged
infirmity before the NLRC in opposition to respondent’s appeal.
Hence, the instant petition invoking the following grounds:
I.
THE HONORABLE COURT OF APPEALS SERIOUSLY AND PATENTLY ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO THE LACK OR EXCESS OF JURISDICTION IN
RULING THAT THE PETITIONERS WERE NOT REGULAR EMPLOYEES.
II.
THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN THE CHALLENGED
DECISIONS AS TO WARRANT THE EXERCISE OF THE COURT’S DISCRETIONARY APPELLATE
JURISDICTION.
Petitioners essentially maintain that contrary to the findings of the CA, they were continuously hired
by respondent company to perform duties necessary and desirable in the usual trade or business
and are, therefore, regular employees. They allege that if their services had really been engaged for
fixed specific periods, respondent should have at least provided the contracts of employment
evidencing the same.
For its part, respondent contends that the petition should be denied due course for its verification
and certification of non-forum shopping was signed by only one of the petitioners. It alleges that
even assuming the validity of the same, it should still be dismissed for the appellate court aptly found
that petitioners were fixed-term employees who were hired intermittently. Respondent also asserts
 that petitioners failed to completely substantiate their claims, for during the hearing conducted petitioners’ procedural lapses.18 Indeed, the application of technical rules of procedure may be
before the Labor Arbiter on March 11, 1998, the payslips presented by petitioners merely established relaxed in labor cases to serve the demand of justice.19
the following employment terms:
Name of Petitioner Length of Service Dates As for the primordial issue in this case, it must be noted that the same has already been resolved in
Magsalin v. National Organization of Working Men,20 wherein this Court has categorically declared
Dela Rama 5 months, 4 months Between November 30, 1995
that the nature of work of route helpers hired by Coca Cola Bottlers Philippines, Inc. is necessary and
And March 31, 1996
desirable in its usual business or trade thereby qualifying them as regular employees, to wit:
Dizon 4 months In 1993
2 months In 1994 Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinks in the
9 months In 1996 country. Respondent workers have long been in the service of petitioner company. Respondent
Tumabiao 3 months From November 15, 1996 workers, when hired, would go with route salesmen on board delivery trucks and undertake the
To January 31, 1997 laborious task of loading and unloading softdrink products of petitioner company to its various
delivery points.
Basan 6.5 months From May 15, 1996
1 month To December 31, 1996
Even while the language of law might have been more definitive, the clarity of its spirit and intent,
From January 15, 1997
i.e., to ensure a "regular" worker's security of tenure, however, can hardly be doubted. In
To January 31, 1997
determining whether an employment should be considered regular or non-regular, the applicable
Donor 1 month From February 15, 1996 test is the reasonable connection between the particular activity performed by the employee in
To March 15, 1996 relation to the usual business or trade of the employer. The standard, supplied by the law itself, is
From December 15, 1996 whether the work undertaken is necessary or desirable in the usual business or trade of the employer,
1 month
To January 15, 1997 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
Nicolas 8.5 months In 1996 and 1997 distinguished from a specific undertaking that is divorced from the normal activities required in
Falguera 6 months From 1992 carrying on the particular business or trade. But, although the work to be performed is only for a
To 1997 specific projector 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
Considering that the evidence presented showed that petitioners merely rendered their services for desirability of that activity to the business or trade of the employer. The employment of such person
periods of less than a year, respondent claims that petitioners could not have attained regular is also then deemed to be regular with respect to such activity and while such activity exists.
employment status. It added that its failure to present petitioners’ employment contracts was due to
a fire that destroyed its Manila Plant where said contracts were kept. Nevertheless, respondent
The argument of petitioner that its usual business or trade is softdrink manufacturing and that the
persistently asserts that where a fixed period of employment was agreed upon knowingly and
work assigned to respondent workers as sales route helpers so involves merely "postproduction
voluntarily by the petitioners, the duration of which was made known to them at the time of their
activities," one which is not indispensable in the manufacture of its products, scarcely can be
engagement, petitioners cannot now claim otherwise. In addition, it disagrees with the contention
persuasive. If, as so argued by petitioner company, only those whose work are directly involved in
that petitioners, as route helpers, were performing functions necessary or desirable to its business.
the production of softdrinks may be held performing functions necessary and desirable in its usual
business or trade, there would have then been no need for it to even maintain regular truck sales
The petition is impressed with merit. route helpers.1âwphi1 The nature of the work performed must be viewed from a perspective of the
business or trade in its entirety and not on a confined scope.
On the procedural issue, We hold that while the general rule is that the verification and certification
of non-forum shopping must be signed by all the petitioners in a case, the signature of only one of The repeated rehiring of respondent workers and the continuing need for their services clearly attest
them, petitioner Basan in this case, appearing thereon may be deemed substantial compliance to the necessity or desirability of their services in the regular conduct of the business or trade of
with the procedural requirement. Jurisprudence is replete with rulings that the rule on verification is petitioner company. The Court of Appeals has found each of respondents to have worked for at
deemed substantially complied with when one who has ample knowledge to swear to the truth of least one year with petitioner company. While this Court, in Brent School, Inc. vs. Zamora, has upheld
the allegations in the complaint or petition signs the verification, and when matters alleged in the the legality of a fixed-term employment, it has done so, however, with a stern admonition that
petition have been made in good faith or are true and correct.16 Similarly, this Court has consistently where from the circumstances it is apparent that the period has been imposed to preclude the
held that when under reasonable or justifiable circumstances, as when all the petitioners share a acquisition of tenurial security by the employee, then it should be struck down as being contrary to
common interest and invoke a common cause of action or defense, as in this case, the signature of law, morals, good customs, public order and public policy. The pernicious practice of having
only one of them in the certification against forum shopping substantially complies with the employees, workers and laborers, engaged for a fixed period of few months, short of the normal six-
certification requirement.17 Thus, the fact that the petition was signed only by petitioner Basan does month probationary period of employment, and, thereafter, to be hired on a day-to-day basis,
not necessarily result in its outright dismissal for it is more in accord with substantial justice to overlook mocks the law. Any obvious circumvention of the law cannot be countenanced. The fact that
respondent workers have agreed to be employed on such basis and to forego the protection given
to them on their security of tenure, demonstrate nothing more than the serious problem of
impoverishment of so many of our people and the resulting unevenness between labor and capital.
A contract of employment is impressed with public interest. The provisions of applicable statutes are
deemed written into the contract, and "the parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting with each other."21
In fact, in Pacquing, et. al. v. Coca-Cola Philippines, Inc.,22 this Court applied the ruling cited above
under the principle of stare decisis et non quieta movere (follow past precedents and do not disturb
what has been settled). It was held therein that since petitioners, as route helpers, were performing
the same functions as the employees in Magsalin, which are necessary and desirable in the usual
business or trade of Coca Cola Philippines, Inc., they are considered as regular employees entitled
to security of tenure.
Here, respondent, in its position paper, expressly admitted that petitioners were employed as route
helpers in anticipation of the high volume of work in its plants and sales offices. 23 As such,
respondent’s contention that petitioners could not have attained regular employment status for
they merely rendered services for periods of less than a year cannot be sustained in view of the
Magsalin doctrine previously cited. Indeed, the "pernicious practice" of engaging employees for a
fixed period short of the six-month probationary period of employment, and again, on a day-to-day
basis thereafter, mocks the law.
At this point, it is worth recalling that Article 280 of the Labor Code, as amended, 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 projector undertaking, the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity exists. Thus, pursuant to the
Article quoted above, there are two kinds of regular employees, namely: (1) those who are
engaged to perform activities which are usually necessary or desirable in the usual business or trade
of the employer; and (2) those who have rendered at least one year of service, whether continuous
or broken, with respect to the activities in which they are employed.24 Simply stated, regular
employees are classified into: (1) regular employees by nature of work; and (2) regular employees
by years of service. The former refers to those employees who perform a particular activity which is
necessary or desirable in the usual business or trade of the employer, regardless of their length of
service; while the latter refers to those employees who have been performing the job, regardless of
the nature thereof, for at least a year.25
Petitioners, in this case, fall under the first kind of regular employee above. As route helpers who are
engaged in the service of loading and unloading softdrink products of respondent company to its
various delivery points, which is necessary or desirable in its usual business or trade, petitioners are
considered as regular employees. That they merely rendered services for periods of less than a year
is of no moment since for as long as they were performing activities necessary to the business of
respondent, they are deemed as regular employees under the Labor Code, irrespective of the
length of their service.
Nevertheless, respondent, as in Magsalin, also asserts that even assuming that petitioners were
performing activities which are usually necessary or desirable in its usual business or trade, they were
employed not as regular employees but only for a fixed period, which is well within the boundaries of
the law, as ruled in Brent School, Inc. v. Zamora,26 viz.:
There is, on the other hand, the Civil Code, which has always recognized, and continues to
recognize, the validity and propriety of contracts and obligations with a fixed or definite period, and
imposes no restraints on the freedom of the parties to fix the duration of a contract, whatever its
object, be it specie, goods or services, except the general admonition against stipulations contrary
to law, morals, good customs, public order or public policy. Under the Civil Code, therefore, and as
a general proposition, fixed-term employment contracts are not limited, as they are under the
present Labor Code, to those by nature seasonal or for specific projects with pre-determined dates
of completion; they also include those to which the parties by free choice have assigned a specific
date of termination.
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.
Unless thus limited in its purview, the law would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to
lead to absurd and unintended consequences.27
Thus, under the above Brent doctrine, while it was not expressly mentioned in the Labor Code, this
Court has recognized a fixed-term type of employment embodied in a contract specifying that the
services of the employee shall be engaged only for a definite period, the termination of which
occurs upon the expiration of said period irrespective of the existence of just cause and regardless
of the activity the employee is called upon to perform.28 Considering, however, the possibility of
abuse by employers in the utilization of fixed-term employment contracts, this Court, in Brent, laid
down the following criteria to prevent the circumvention of the employee’s security of tenure:
1) The fixed period of employment was knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent; or
 2) It satisfactorily appears that the employer and the employee dealt with each other on
more or less equal terms with no moral dominance exercised by the former or the
latter.29 Unfortunately, however, the records of this case is bereft of any proof which will
show that petitioners freely entered into agreements with respondent to perform services for
a specified length of time. In fact, there is nothing in the records to show that there was any
agreement at all, the contracts of employment not having been presented. While
respondent company persistently asserted that petitioners knowingly agreed upon a fixed
period of employment and repeatedly made reference to their contracts of employment,
the expiration thereof being made known to petitioners at the time of their engagement,
respondent failed to present the same in spite of all the opportunities to do so. Notably, it
was only at the stage of its appeal to the CA that respondent provided an explanation as
to why it failed to submit the contracts they repeatedly spoke of.30 Even granting that the
contracts of employment were destroyed by fire, respondent could have easily submitted
other pertinent files, records, remittances, and other similar documents which would show
the fixed period of employment voluntarily agreed upon by the parties. They did not,
however, aid this Court with any kind of proof which might tend to show that petitioners
were truly engaged for specified periods, seemingly content with the convenient excuse
that the contracts were destroyed by fire. Indeed, respondent’s failure to submit the
necessary documents, which as employers are in their possession, gives rise to the
presumption that their presentation is prejudicial to its cause.31
While fixed term employment is not per se illegal or against public policy, the criteria above must first
be established to the satisfaction of this Court. Yet, the records of this case reveal that for years,
petitioners were repeatedly engaged to perform functions necessary to respondent’s business for
fixed periods short of the six-month probationary period of employment. If there was really no intent
to circumvent security of tenure, respondent should have made it clear to petitioners that they were
being hired only for fixed periods in an agreement freely entered into by the parties. To this Court,
respondent’s act of hiring and re-hiring petitioners for periods short of the legal probationary period
evidences its intent to thwart petitioner’s security of tenure, especially in view of an awareness that
ordinary workers, such as petitioners herein, are never on equal terms with their employers. 32 It is
rather unjustifiable to allow respondent to hire and rehire petitioners on fixed terms, never attaining
regular status.33 Hence, in the absence of proof showing that petitioners knowingly agreed upon a
fixed term of employment, We uphold the findings of the Labor Arbiter and the NLRC and so rule
that petitioners are, indeed, regular employees, entitled to security of tenure. Consequently, for lack
of any clear, valid, and just or authorized cause in terminating petitioners' employment, We find
respondent guilty of illegal dismissal.
WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Decision dated
August 31, 2005 and Resolution dated August 24, 2006 of the Court of Appeals in CA-G.R. SP Nos.
80977 & 87071 are SET ASIDE. The Resolutions dated January 30, 2003 and September 24, 2003 of the
NLRC in NLRC 00-02-01419-97, affirming in toto the Decision dated August 21, 1998 of the Labor
Arbiter are REINSTATED with MODIFICATION. Taking into account petitioners' reinstatement in
199934 and petitioner Falguera's receipt of ₱792,815.64 separation pay,35 respondent is hereby
ORDERED to pay petitioners the following: (1) backwages computed from the date their salaries
were withheld from them until their actual reinstatement; (2) allowances and other benefits, or their
monetary equivalent, at the time of their dismissal; (3) attorney's fees equivalent to ten percent (
10%) of the monetary awards; and (4) interest at six percent ( 6%) per annum of the total monetary
awards, computed from the finality of this Decision until their full satisfaction. For this purpose, the
records of this case are hereby REMANDED to the Labor Arbiter for proper computation of said
awards, deducting amounts already received. Costs against petitioner.
G.R. No. 192282, October 05, 2016
A. NATE CASKET MAKER AND/OR ARMANDO AND ANELY NATE, Petitioners, v. ELIAS V. ARANGO,
EDWIN M. MAPUSAO, JORGE C. CARIÑO, JERMIE MAPUSAO, WILSON A. NATE, EDGAR A. NATE,
MICHAEL A. MONTALES, CELSO A. NATE, BENJES A. LLONA AND ALLAN A. MONTALES, Respondent.
DECISION
PERALTA, J.:
Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court which seeks the
reversal of the Decision2 dated January 6, 2010, and Resolution3 dated May 13, 2010 of the Court of
Appeals (CA) in CA-G.R. SP No. 106965. The CA reversed and set aside the Decision4 of the National
Labor Relations Commission (NLRC), Sixth Division, in NLRC NCR Case No. 00-02-01233-07 which
affirmed the Decision5 of the Labor Arbiter dismissing the complaint for illegal dismissal,
underpayment of wages, and non-fayment of overtime pay, holiday pay, service incentive leave
pay and 13th month pay filed by respondents.
The factual antecedents are as follows:
chanRoblesvirtualLawlibraryPetitioners Armando and Anely Nate are the owners/proprietors of A.
Nate Casket Maker. They employed respondents on various dates as carpenters, mascilladors and
painters in their casket-making business from 1998 until their alleged termination in March 2007.
Petitioners alleged in their Position Paper6 that respondents are pakyaw workers who are paid per
job order.7 Respondents are "stay-in" workers with free board and lodging, but they would "always"
drink, quarrel with each other on petty things such that they could not accomplish the job orders on
time. Hence, petitioners would then be compelled to "contract out" to other workers for the job to
be finished. On February 3, 2007, they met with respondents in order to present a proposed
employment agreement which would change the existing pakyaw system to "contractual basis" and
would provide for vacation leave and sick leave pay and other benefits given to regular
employees. Petitioners alleged that the proposed employment agreement would be more
beneficial to respondents.8chanrobleslaw
On the other hand, respondents alleged in their Position Paper,9 that they worked from Monday to
Saturday, from 7:00a.m. to 10:00 p.m., with no overtime pay and any monetary benefits despite
having claimed for such. On March 15, 2007, they were called by petitioners and were made to sign
a Contract of Employment10 with the following terms and conditions: (1) they shall be working on
contractual basis for a period of five months; (2) renewal of employment contract after such period
shall be on a case-to-case basis or subject to respondents' efficiency and performance; (3)
petitioners shall reserve the right to terminate their employment should their performance fall below
expectations or if the conditions under which they were employed no longer exist; (4) their wages
shall be on a piece-rate basis; (5) in the performance of their tasks, they shall be obliged to strictly
follow their work schedules; (6) they shall not be eligible to avail of sick leave or vacation leave, nor
receive 13th month pay and/or bonuses, or any other benefits given to a regular employee.
Respondents then alleged that when they were adamant and eventually refused to sign the
contract, petitioners told them to go home because their employment has been terminated.
On February 8, 2007, respondents filed a Complaint for illegal dismissal and non-payment of
separation pay against petitioners. On March 15, 2007, they amended the complaint to include
claims for underpayment of wages, non-payment of overtime pay, holiday pay, 5-day service
incentive leave pay and 13th month pay.
On August 15, 2007, Labor Arbiter (LA) Eduardo J. Carpio, issued a Decision dismissing the complaint
for lack of merit. While the LA acknowledged that respondents being pakyaw workers are
considered regular employees, he ruled that petitioners did not terminate the services of
respondents and believed in the denial of petitioners that respondents were called to their office on
March 15, 2007 since respondents already initiated the present case on February 8, 2007. On the
issue of underpayment, the LA held that respondents were earning more than the minimum wage
per day; and as pakyaw workers, though they are deemed regular workers, they are not entitled to
overtime pay, holiday pay, service incentive leave pay and 13th month pay citing the case of field
personnel and those paid on purely commission basis.
Thereafter, respondents elevated the case before the NLRC, Sixth Division. On July 29, 2008, the
NLRC affirmed the Decision of the LA and held that no substantial evidence was presented to show
that petitioners terminated the employment of respondents. It stated that pakyaw workers are not
entitled to money claims because their work depends on the availability of job orders from
petitioners' clients. Also, there was no proof that overtime work was rendered by respondents. A
motion for reconsideration was filed by respondents but the same was denied.
Aggrieved, respondents filed a petition for certiorari before the CA. In a Decision dated January 6,
2010, the CA reversed and set aside the decision ofthe NLRC. The fallo states:
chanRoblesvirtualLawlibrary
WHEREFORE, the petition for certiorari is GRANTED. Public Respondent's Decision dated July 29, 2008
and Resolution dated November 7, 2008 in NLRC LAC No. 12-003252-07 (NCR Case No. 00-02-01233-
07) are REVERSED AND SET ASIDE, and in lieu thereof, a new one is ENTERED, declaring petitioners to
have been illegally dismissed and ordering private respondents to pay them backwages, separation
pay and other monetary benefits as required by law. Upon the finality of this decision and for the
enforcement of the same, the Labor Arbiter of origin is directed to conduct further proceedings for
the purpose of determining the amount of backwages and separation pay due petitioners.
SO ORDERED.11
A motion for reconsideration was filed by petitioners but the same was denied by the Court of
Appeals on May 13, 2010.
Hence, this petition, raising the following issues for resolution:
chanRoblesvirtualLawlibrary
1. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DECLARING THAT
COMPLAINANTS WERE ILLEGALLY DISMISSED; [and]
2. THERE ARE SERIOUS ERRORS IN THE FINDINGS OF FACTS WHICH, IF NOT CORRECTED,
WOULD CAUSE GRAVE AND IRREPARABLE DAMAGE TO THE PRIVATE
RESPONDENTS.12
Petitioners emphasized in their petition that they had always agreed and admitted13 from the
beginning of the case the regular employment status of respondents. According to petitioners, what
they are insisting, contrary to the findings of the CA, is the alleged fact that they never dismissed the
respondents from their employment. They argued that since petitioners' business depended on the
availability of job orders, necessarily the duration of respondents' employment is not permanent but
coterminous with the completion of such job orders. They further argued that since respondents arc
"pakyaw " workers or "paid by result," they are not entitled to their money claims.
In their Comment to the Petition, respondents countered that only questions of law may be raised in
a petition for review on certiorari and that the errors being raised by petitioners arc questions of fact.
A petition for review on certiorari under Rule 45 is a mode of appeal where the issue is limited to
questions of law. In labor cases, a Rule 45 petition is limited to reviewing whether the Court of
Appeals correctly determined the presence or absence of grave abuse of discretion and deciding
other jurisdictional errors of the National Labor Relations Commission.14chanrobleslaw
The case of Career Philippines Shipmanagement, Inc., et al. v. Serna, 15 citing Montoya v. Transmed
Manila Corp./Mr. Ellena, et al.,16 is instructive on the parameters of judicial review under Rule 45:
chanRoblesvirtualLawlibrary
As a rule, only questions of law may be raised in a Rule 45 petition. In one case, we discussed the
particular parameters of a Rule 45 appeal from the CA's Rule 65 decision on a labor case, as
follows:ChanRoblesVirtualawlibrary
In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the
review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the
review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we
have to view the CA decision in the same context that the petition for certiorari it ruled upon was
presented to it; we have to examine the CA decision from the prism of whether it correctly
determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not
on the basis of whether the NLRC decision on the merits of the case was correct. In other words, we
have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the
NLRC decision challenged before it.17
Therefore, in this kind of petition, the proper question to be raised is, "Did the CA correctly determine
whether the NLRC committed grave abuse of discretion in ruling on the case?" In other words, did
the CA correctly determine whether the NLRC ruling had basis in. fact and in law? In Our Rule 45
review, this Court must deny the petition if it finds that the CA correctly acted. These parameters
shall be used in resolving the substantive issues in this petition.18chanrobleslaw
To resolve the issue of whether petitioners are guilty of illegal dismissal, We necessarily have to
determine the veracity of the parties' allegations, a function we are ordinarily barred from
performing when deciding a Rule 45 petition. However, due to the conflicting factual findings of the
NLRC and the CA, we find the review of the evidence on record compelling and
proper.19chanrobleslaw
The crux of the dispute boils down to two issues, namely, (a) whether respondents' employment was
terminated, and (b) whether respondents who are pakyaw workers and considered regular workers
are entitled to overtime pay, holiday pay, service incentive leave pay and 13th month pay. Both
issues are clearly factual in nature as they involved appreciation of evidence presented before the
NLRC.
There is no doubt that respondents have been under the employ of petitioners for some years. The
conflict arose when petitioners presented to respondents an employment contract hereunder
reproduced:

chanRoblesvirtualLawlibrary
A. NATE CASKET MAKER
30 Espirito St. Pangulo
Malabon, Metro Manila
CONTRACT OF EMPLOYMENT
DATE: February 3, 2007
You arc hereby assigned as worker/laborer at A. NATE CASKET MAKER. The following constitute the
terms and conditions under which the management of NATE CASKET MAKER governs.
You will be working a 5-month contract basis. Your contract will be renewed on a case-to-case basis
or based upon the efficiency of your performance. The company also reserves the right to
discontinue or terminate your employment anytime if your performance does not come to
expectations or if the conditions under which you have been employed no longer exist.
You will be receiving remuneration on a per item/piece basis [i.e., per casket made]. You are
obliged to follow strictly your schedules to work or perform your duty. During the period of your
employment, you will not [be] eligible to earn or receive any sick leave pay, [vacation] leave pay,
or any other benefits given to regular employees such as 13th month pay and bonuses.
This contract and other conditions of your employment arc governed further by existing company
policies and regulations, of which you have already been oriented into, and by future company
policies which may be issued from time to time.
Mr. and Mrs. Armando and Anely NATE
Proprietor Proprietress
I hereby accept this employment contract knowing and understanding fully well the terms and
conditions under which it shall be governed. I hereby acknowledge that I have been thoroughly
oriented and I fully understand the whole company policies, rules and regulations and thereby
agree to abide by them when employed.
DATE: February 3, 2007 EMPLOYEE/WORKER20
The said contract with a short term of five (5) months, renewable upon the terms set by petitioners,
was presented to respondents on February 3, 200721 (not February 8, 2007). Naturally, respondents
who had been continuously reporting to the petitioners sine 1998 without any interruption would
have second thoughts on signing the said contract. Feeling disgruntled, they filed a Complaint with
the NLRC on February 8, 2016 for money claims. To their minds, it was a way to protect their status of
employment. It was explained in the Rejoinder they presented to the LA that it was purely money
claims but, not being learned nor assisted by a lawyer, they also checked the box for "illegal
dismissal."22chanrobleslaw
When the petitioners received the summons on March 15, 2007 in connection with the complaint,
respondents were ordered by petitioners to go to the latter's office.23 Because there was no dismissal
yet, and thinking perhaps that it was for an amicable settlement of their claims, respondents went to
the office of petitioners. However, respondents were presented with the same contract. According
to respondents, their refusal to sign the contract irated petitioners who then told them to go home
and not to report for work anymore.24 This prompted respondents to file an amended complaint for
illegal dismissal and money claims.
The meeting on March 15, 2007 was denied by petitioners as well as the dismissal of respondents. It is
worth noting, however, that in the Position Paper of petitioners, they alleged that their offer of the
said employment contract to respondents was caused by the alleged refusal/failure of the latter to
report for work as a result of the alleged drinking and petty quarrels:
chanRoblesvirtualLawlibrary
8. Considering that the complainants refuse to do their work, a meeting was held on February 8,
2007, to have a proposal for a change of [pakyaw] system to that of contractual basis, giving them
the sample employment agreement for them to study. The herein respondents explained to
them that the change of work system to that of a contract basis which is beneficial to the
complainants, the employees will receive a vacation and sick leave, or any other benefits given to a
regular [employee] x x x.25cralawred
Clearly, the aforequoted allegation in the Position Paper of petitioners is contrary to the terms and
conditions stated in the employment contract. It is specifically stated in the employment agreement
that during the period of employment, respondents would not be eligible to earn or receive any sick
leave pay, vacation leave pay, or any other benefits given to regular employees such as 13th month
pay and bonuses. Hence, the key to understanding petitioners' motive in severing respondents'
employment lies in the tenor of the contract itself which is the opposite to what is alleged by
petitioners in their position paper. Moreover, as correctly observed by the CA, there was the
absence of proof to show that petitioners conducted an investigation on the alleged drinking and
petty quarrelling of respondents nor did the petitioners provide respondents with an opportunity to
explain their side with respect to charges against them. The validity of the charge must be
established in a manner consistent with due process. These circumstances, taken together, lead Us
to conclude that petitioners indeed terminated respondents' employment. The positive assertion of
respondents that they were dismissed by petitioners is more convincing than the mere denial of
petitioners.
In termination cases, the burden of proving just and valid cause for dismissing an employee from his
employment rests upon the employer, and the latter's failure to do so would result in a finding that
the dismissal IS unjustified. Petitioners failed to discharge this burden. 26chanrobleslaw
It must be emphasized that employers cannot seek refuge under whatever terms of the agreement
they had entered into with their employees. The law, in defining their contractual relationship, does
so, not necessarily or exclusively upon the terms of their written or oral contract, but also on the basis
of the nature of the work of employees who had been called upon to perform. The law affords
protection to an employee, and it will not countenance any attempt to subvert its spirit and intent. A
stipulation 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.27chanrobleslaw
Furthermore, petitioners agreed that respondents arc regular employees. Article 280 of the Labor
Code provides:
chanRoblesvirtualLawlibrary
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph;
Provided, That, any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity exist.
This provision classifies employees into regular, project, seasonal, and casual. It further classifies
regular employees into two kinds: (I) those "engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer"; and (2) casual employees
who have "rendered at least one year of service, whether such service is continuous or broken."
A regular employment, whether it is one or not, is aptly gauged from the concurrence, or the non-
concurrence, of the following factors (a) the manner of selection and engagement of the putative
employee; (b) the mode of payment of wages; (c) the presence or absence of the power of
dismissal; and (d) the presence or absence of the power to control the conduct of the putative
employee or the power to control the employee with respect to the means or methods by which his
work is to be accomplished. The "control test" assumes primacy in the overall consideration. Under
this test, an employment relation obtains where work is performed or services are rendered under
the control and supervision of the party contracting for the service, not only as to the result of the
work but also as to the manner and details of the performance desired.28chanrobleslaw
There is no dispute that the tasks performed by respondents as carpenters, painters,
and mascilladors were necessary and desirable in the usual business of petitioners who are engaged
in the manufacture and selling of caskets. We have to also consider the length of time that
respondents worked for petitioners, commencing on various dates from 1998 to 2007. In addition, the
power of control of petitioners over respondents is clearly present in this case. Respondents follow
the steps in making a casket, as instructed by the petitioners, like carpentry, mascilla, rubbing and
painting. They had their own notebooks where they listed the work completed with their signature
and the date finished. The same would be checked by petitioners as basis for the compensation for
the day. Thus, petitioners wielded control over the respondents in the discharge of their work.
It should be remembered that the control test merely calls for the existence of the right to control,
and not necessarily the exercise thereof. It is not essential that the employer actually supervises the
performance of duties by the employee. It is enough that the former has a right to wield the
power.29 Hence, pakyaw workers are considered regular employees for as long as their employers
exercise control over them. Thus, while respondents' mode of compensation was on a per-piece
basis, the status and nature of their employment was that of regular employees. 30chanrobleslaw
As regular employees, respondents were entitled to security of tenure and could be dismissed only
for just or authorized causes and after the observance of due process. The right to security of tenure
is guaranteed under Article XIII, Section 3 of the 1987 Constitution:
chanRoblesvirtualLawlibrary
Article XIII. Social Justice and Human Rights
Labor
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with
law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They
shall also participate in policy and decision-making processes affecting their rights and benefits as
may be provided by law.31
Likewise, Article 279 of the Labor Code also provides for the right to security of tenure, thus:
chanRoblesvirtualLawlibraryArt. 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.32chanrobleslaw
Therefore, on the right to security of tenure, no employee shall be dismissed, unless there are just or
authorized causes and only after compliance with procedural and substantive due process. Section
2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code provides:
chanRoblesvirtualLawlibrary
SEC. 2. Notice of Dismissal. - Any employer who seeks to dismiss a worker shall furnish him a written
notice stating the particular acts or omission constituting the grounds for his dismissal. In cases of
abandonment of work, the notice shall be served at the workers' last known address.
Petitioners violated respondents' rights to security of tenure and constitutional right to due process in
not even serving them with a written notice of termination which would recite any valid or just cause
for their dismissal. Respondents were merely told that their services are terminated. Thus, the Court of
Appeals correctly ruled that private respondents were illegally dismissed.
Under Article 279 of the Labor Code as aforestated, an employee unjustly dismissed from work is
entitled to reinstatement and backwages, among others. Reinstatement restores the employee who
was unjustly dismissed to the position from which he was removed, that is, to his status quo ante
dismissal, while the grant of backwages allows the same employee to recover from the employer
that which he had lost by way of wages as a result of his dismissal. These twin remedies -
reinstatement and payment of ackwages - make the dismissed employee whole who can then look
forward to continued employment. Thus, do these two remedies give meaning and substance to the
constitutional right of labor to security of tenure.33 Respondents are, therefore, entitled to
reinstatement with full backwages pursuant to Article 279 of the Labor Code, as amended by R.A.
No. 6715.
On reinstatement, the CA ordered payment of separation pay in lieu of reinstatement. The
accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no
longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may
likewise be awarded if the employee decides not to be reinstated. We defer to the findings of the
Court of Appeals and authorized under jurisprudence, that separation pay in lieu of reinstatement is
warranted in this case.34 Respondents filed their complaint in 2007. Nine (9) years are a substantial
period35 to bar reinstatement. The dispositive portion of the CA Decision is consistent with the
premise that the respondents were entitled to reinstatement by reason of their illegal dismissal, but
they could receive instead separation pay in lieu of reinstatement if reinstatement is no longer
practicable.
That being said, the amount of backwages to which each respondent is entitled, however, cannot
be fully settled at this time. As respondents are piece-rate workers being paid by the piece, there is
need to determine the varying degrees of production and days worked by each worker. Clearly, this
issue is best left to the NLRC. In Labor Congress of the Philippines v. NLRC,36 the Court was confronted
with a situation wherein several workers paid on a piece-rate basis were entitled to backwages by
reason of illegal dismissal. The Court noted that as the piece-rate workers had been paid by the
piece, "there [was] a need to determine the varying degrees of production and days worked by
each worker," and that "this issue is best left to the [NLRC]." We believe the same result should obtain
in this case, and the NLRC be tasked to conduct the proper determination of the appropriate
amount of backwages due to each of the respondents.37chanrobleslaw
Nonetheless, even as the case should be remanded to the NLRC for the proper determination of
backwages, nothing in this decision should be construed in a manner that would impede the award
of separation pay to the respondents as previously rendered by the CA. In lieu of reinstatement
then, separation pay at the rate of one month for every year of service, with a fraction of at least six
(6) months of service considered as one (1) year, is in order.38chanrobleslaw
Regulations Implementing PD No. 851 exempts employees "paid on task basis" without any reference
to "field personnel." This could only mean that insofar as payment of the 13th month pay is
concerned, the law did not intend to qualify the exemption from its coverage with the requirement
that the task worker be a "field personnel" at the same time.46
All told, We need to stress that the Constitution affords full protection to labor, and that in light of this
Constitutional mandate, We must be vigilant in striking down any attempt of the management to
exploit or oppress the working class. The law, in protecting the rights of the employees, authorizes
neither oppression nor self-destruction of the employer. It should be made clear that when the law
tilts the scales of justice in favor of labor, it is in recognition of the inherent economic inequality
between labor and management. The intent is to balance the scales of justice; to put the two
parties on relatively equal positions.47chanrobleslaw
WHEREFORE, the Petition is PARTIALLY GRANTED in so far as the payment of 13th month pay to
respondents is concerned. In all other aspects, the Court AFFIRMS the Decision dated January 6,
2010 and the Resolution dated May 13, 2010 of the Court of Appeals in CA-G.R. SP No. 106965.

As to the other benefits, namely, holiday pay, 13th month pay, service incentive leave pay and
overtime pay which respondents prayed for in their complaint, We affirm the ruling of the CA that
respondents are so entitled to these benefits.

In the case of David v. Macasio,39 We held that workers engaged on pakyaw or "task basis" are
entitled to holiday and service incentive leave pay (SIL) provided they are not field personnel:

chanRoblesvirtualLawlibrary
In short, in determining whether workers engaged on "pakyaw" or task basis" is entitled to holiday
and SIL pay, the presence (or absence) of employer supervision as regards the worker's time and
performance is the key: if the worker is simply engaged on "pakyaw" or task basis, then the general
rule is that he is entitled to a holiday pay and SIL pay unless exempted from the exceptions
specifically provided under Article 94 (holiday pay)40 and Article 95 (SIL pay)41 of the Labor
Code. However, if the worker engaged on pakyaw or task basis also falls within the meaning of "field
personnel" under the law, then he is not entitled to these monetary benefits.42

Based on the definition of field personnel under Article 82,43 respondents do not fall under the
definition of "field personnel." First, respondents regularly performed their duties at petitioners' place
of business; second, their actual hours of work could be determined with reasonable certainty;
and, third, petitioners supervised their time and performance of their duties. Since respondents
cannot be considered as "field personnel," then they are not exempted from the grant of holiday
and SIL pay even as they were engaged on pakyaw or task basis.

With respect to the payment of 13th month pay, however, We find that respondents are not entitled
to such benefit. Again, as We ruled in the case of David v. Macasio:44chanrobleslaw
The governing law on 13th month pay is Presidential Decree No. 851.45 As with holiday and SIL pay,
13th month pay benefits generally cover all employees; an employee must be one of those
expressly enumerated to be exempted. Section 3 of the Rules and Regulations Implementing P.D.
No. 851 enumerates the exemptions from the coverage of 13th month pay benefits. Under Section
3(e), "employers of those who are paid on xxx task basis, and those who are paid a fixed amount for
performing a specific work, irrespective of the time consumed in the performance thereof' are
exempted.

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and