BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners, rights and with full back wages.

ith full back wages. The Director pronounced "the ground

vs. relied upon by the respondent (Brent) in terminating the services of
RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, the complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and,
Office of the President, and DOROTEO R. ALEGRE, respondents. quite oddly, as prohibited by Circular No. 8, series of 1969, of the
Bureau of Private Schools. 7
The question presented by the proceedings at bar 1 is whether or not
the provisions of the Labor Code, 2 as amended,3 have anathematized Brent School filed a motion for reconsideration. The Regional Director
"fixed period employment" or employment for a term. denied the motion and forwarded the case to the Secretary of Labor
for review. 8 The latter sustained the Regional Director. 9 Brent
The root of the controversy at bar is an employment contract in virtue appealed to the Office of the President. Again it was rebuffed. That
of which Doroteo R. Alegre was engaged as athletic director by Brent Office dismissed its appeal for lack of merit and affirmed the Labor
School, Inc. at a yearly compensation of P20,000.00. 4 The contract Secretary's decision, ruling that Alegre was a permanent employee
fixed a specific term for its existence, five (5) years, i.e., from July 18, who could not be dismissed except for just cause, and expiration of
1971, the date of execution of the agreement, to July 17, 1976. the employment contract was not one of the just causes provided in
Subsequent subsidiary agreements dated March 15, 1973, August 28, the Labor Code for termination of services. 10
1973, and September 14, 1974 reiterated the same terms and
conditions, including the expiry date, as those contained in the original The School is now before this Court in a last attempt at vindication.
contract of July 18, 1971. 5 That it will get here.

Some three months before the expiration of the stipulated period, or The employment contract between Brent School and Alegre was
more precisely on April 20,1976, Alegre was given a copy of the executed on July 18, 1971, at a time when the Labor Code of the
report filed by Brent School with the Department of Labor advising of Philippines (P.D. 442) had not yet been promulgated. Indeed, the
the termination of his services effective on July 16, 1976. The stated Code did not come into effect until November 1, 1974, some three
ground for the termination was "completion of contract, expiration of years after the perfection of the employment contract, and rights and
the definite period of employment." And a month or so later, on May obligations thereunder had arisen and been mutually observed and
26, 1976, Alegre accepted the amount of P3,177.71, and signed a enforced.
receipt therefor containing the phrase, "in full payment of services for
the period May 16, to July 17, 1976 as full payment of contract." At that time, i.e., before the advent of the Labor Code, there was no
doubt whatever about the validity of term employment. It was impliedly
However, at the investigation conducted by a Labor Conciliator of said but nonetheless clearly recognized by the Termination Pay Law, R.A.
report of termination of his services, Alegre protested the announced 1052, 11 as amended by R.A. 1787. 12 Basically, this statute provided
termination of his employment. He argued that although his contract that—
did stipulate that the same would terminate on July 17, 1976, since his
services were necessary and desirable in the usual business of his In cases of employment, without a definite period, in a
employer, and his employment had lasted for five years, he had commercial, industrial, or agricultural establishment or
acquired the status of a regular employee and could not be removed enterprise, the employer or the employee may
except for valid cause. 6 The Regional Director considered Brent terminate at any time the employment with just cause;
School's report as an application for clearance to terminate or without just cause in the case of an employee by
employment (not a report of termination), and accepting the serving written notice on the employer at least one
recommendation of the Labor Conciliator, refused to give such month in advance, or in the case of an employer, by
clearance and instead required the reinstatement of Alegre, as a serving such notice to the employee at least one month
"permanent employee," to his former position without loss of seniority in advance or one-half month for every year of service
 of the employee, whichever is longer, a fraction of at Now, the Civil Code of the Philippines, which was approved on June
least six months being considered as one whole year. 18, 1949 and became effective on August 30,1950, itself deals with
obligations with a period in section 2, Chapter 3, Title I, Book IV; and
The employer, upon whom no such notice was served with contracts of labor and for a piece of work, in Sections 2 and 3,
in case of termination of employment without just Chapter 3, Title VIII, respectively, of Book IV. No prohibition against
cause, may hold the employee liable for damages. term-or fixed-period employment is contained in any of its articles or is
otherwise deducible therefrom.
The employee, upon whom no such notice was served
in case of termination of employment without just It is plain then that when the employment contract was signed
cause, shall be entitled to compensation from the date between Brent School and Alegre on July 18, 1971, it was perfectly
of termination of his employment in an amount legitimate for them to include in it a stipulation fixing the duration
equivalent to his salaries or wages corresponding to thereof Stipulations for a term were explicitly recognized as valid by
the required period of notice. this Court, for instance, in Biboso v. Victorias Milling Co.,Inc.,
promulgated on March 31, 1977, 13 and J. Walter Thompson Co.
There was, to repeat, clear albeit implied recognition of the licitness of (Phil.) v. NLRC, promulgated on December 29,
term employment. RA 1787 also enumerated what it considered to be 1983. 14 The Thompson case involved an executive who had been
just causes for terminating an employment without a definite period, engaged for a fixed period of three (3) years. Biboso involved
either by the employer or by the employee without incurring any teachers in a private school as regards whom, the following
liability therefor. pronouncement was made:

Prior, thereto, it was the Code of Commerce which governed What is decisive is that petitioners (teachers) were well
employment without a fixed period, and also implicitly acknowledged aware an the time that their tenure was for a limited
the propriety of employment with a fixed period. Its Article 302 duration. Upon its termination, both parties to the
provided that — employment relationship were free to renew it or to let
it lapse. (p. 254)
In cases in which the contract of employment does not
have a fixed period, any of the parties may terminate it, Under American law 15 the principle is the same. "Where a contract
notifying the other thereof one month in advance. specifies the period of its duration, it terminates on the expiration of
such period." 16 "A contract of employment for a definite period
The factor or shop clerk shall have a right, in this case, terminates by its own terms at the end of such period." 17
to the salary corresponding to said month.
The status of legitimacy continued to be enjoyed by fixed-period
The salary for the month directed to be given by the said employment contracts under the Labor Code (Presidential Decree No.
Article 302 of the Code of Commerce to the factor or shop 442), which went into effect on November 1, 1974. The Code
clerk, was known as the mesada (from mes, Spanish for contained explicit references to fixed period employment, or
"month"). When Article 302 (together with many other employment with a fixed or definite period. Nevertheless, obscuration
provisions of the Code of Commerce) was repealed by the of the principle of licitness of term employment began to take place at
Civil Code of the Philippines, Republic Act No. 1052 was about this time
enacted avowedly for the precise purpose of reinstating
the mesada. Article 320, entitled "Probationary and fixed period employment,"
originally stated that the "termination of employment of probationary
employees and those employed WITH A FIXED PERIOD shall be
subject to such regulations as the Secretary of Labor may prescribe." for the commencement and termination of their employment
The asserted objective to was "prevent the circumvention of the right relationship, a day certain being understood to be "that which must
of the employee to be secured in their employment as provided . . . (in necessarily come, although it may not be known
the Code)." when." 19 Seasonal employment, and employment for a particular
project are merely instances employment in which a period, where not
Article 321 prescribed the just causes for which an employer could expressly set down, necessarily implied.
terminate "an employment without a definite period."
Of course, the term — period has a definite and settled signification. It
And Article 319 undertook to define "employment without a fixed means, "Length of existence; duration. A point of time marking a
period" in the following manner: 18 termination as of a cause or an activity; an end, a limit, a bound;
conclusion; termination. A series of years, months or days in which
An employment shall be deemed to be without a something is completed. A time of definite length. . . . the period from
definite period for purposes of this Chapter where the one fixed date to another fixed date . . ." 20 It connotes a "space of
employee has been engaged to perform activities time which has an influence on an obligation as a result of a juridical
which are usually necessary or desirable in the usual act, and either suspends its demandableness or produces its
business or trade of the employer, except where the extinguishment." 21 It should be apparent that this settled and familiar
employment has been fixed for a specific project or notion of a period, in the context of a contract of employment, takes
undertaking the completion or termination of which has no account at all of the nature of the duties of the employee; it has
been determined at the time of the engagement of the absolutely no relevance to the character of his duties as being
employee or where the work or service to be performed "usually necessary or desirable to the usual business of the
is seasonal in nature and the employment is for the employer," or not.
duration of the season.
Subsequently, the foregoing articles regarding employment with "a
The question immediately provoked by a reading of Article 319 is definite period" and "regular" employment were amended by
whether or not a voluntary agreement on a fixed term or period would Presidential Decree No. 850, effective December 16, 1975.
be valid where the employee "has been engaged to perform activities
which are usually necessary or desirable in the usual business or Article 320, dealing with "Probationary and fixed period employment,"
trade of the employer." The definition seems a non sequitur. From the was altered by eliminating the reference to persons "employed with a
premise — that the duties of an employee entail "activities which are fixed period," and was renumbered (becoming Article 271). The
usually necessary or desirable in the usual business or trade of the article 22 now reads:
employer the" — conclusion does not necessarily follow that the
employer and employee should be forbidden to stipulate any period of . . . Probationary employment.—Probationary
time for the performance of those activities. There is nothing employment shall not exceed six months from the date
essentially contradictory between a definite period of an employment the employee started working, unless it is covered by
contract and the nature of the employee's duties set down in that an apprenticeship agreement stipulating a longer
contract as being "usually necessary or desirable in the usual period. The services of an employee who has been
business or trade of the employer." The concept of the employee's engaged in a probationary basis may be terminated for
duties as being "usually necessary or desirable in the usual business a just cause or when he fails to qualify as a regular
or trade of the employer" is not synonymous with or identical to employee in accordance with reasonable standards
employment with a fixed term. Logically, the decisive determinant in made known by the employer to the employee at the
term employment should not be the activities that the employee is time of his engagement. An employee who is allowed
called upon to perform, but the day certain agreed upon by the parties
 to work after a probationary period shall be considered Code, as amended by said PD 850, still impliedly
a regular employee. acknowledged the propriety of term employment: it listed the
"just causes" for which "an employer may
Also amended by PD 850 was Article 319 (entitled "Employment with terminate employment without a definite period," thus giving
a fixed period," supra) by (a) deletingmention of employment with a rise to the inference that if the employment be with a definite
fixed or definite period, (b) adding a general exclusion clause period, there need be no just cause for termination thereof if
declaring irrelevant written or oral agreements "to the contrary," and the ground be precisely the expiration of the term agreed upon
(c) making the provision treat exclusively of "regular" and "casual" by the parties for the duration of such employment.
employment. As revised, said article, renumbered 270, 23 now reads:
Still later, however, said Article 272 (formerly Article 321) was further
. . . Regular and Casual Employment.—The provisions amended by Batas Pambansa Bilang 130, 24 to eliminate altogether
of written agreement to the contrary notwithstanding reference to employment without a definite period. As lastly amended,
and regardless of the oral agreement of the parties, an the opening lines of the article (renumbered 283), now pertinently
employment shall be deemed to be regular where the read: "An employer may terminate an employment for any of the
employee has been engaged to perform activities following just causes: . . . " BP 130 thus completed the elimination of
which are usually necessary or desirable in the usual every reference in the Labor Code, express or implied, to employment
business or trade of the employer except where the with a fixed or definite period or term.
employment has been fixed for a specific project or
undertaking the completion or termination of which has It is in the light of the foregoing description of the development of the
been determined at the time of the engagement of the provisions of the Labor Code bearing on term or fixed-period
employee or where the work or service to be employed employment that the question posed in the opening paragraph of this
is seasonal in nature and the employment is for the opinion should now be addressed. Is it then the legislative intention to
duration of the season. outlaw stipulations in employment contracts laying down a definite
period therefor? Are such stipulations in essence contrary to public
An employment shall be deemed to he casual if it is not policy and should not on this account be accorded legitimacy?
covered by the preceding paragraph:provided, that,
any employee who has rendered at least one year of On the one hand, there is the gradual and progressive elimination of
service, whether such service is continuous or broken, references to term or fixed-period employment in the Labor Code, and
shall be considered a regular employee with respect to the specific statement of the rule 25 that—
the activity in which he is employed and his
employment shall continue while such actually exists. . . . Regular and Casual Employment.— The provisions
of written agreement to the contrary notwithstanding
The first paragraph is identical to Article 319 except that, as and regardless of the oral agreement of the parties, an
just mentioned, a clause has been added, to wit: "The employment shall be deemed to be regular where the
provisions of written agreement to the contrary notwithstanding employee has been engaged to perform activities
and regardless of the oral agreements of the parties . . ." The which are usually necessary or desirable in the usual
clause would appear to be addressed inter alia to agreements business or trade of the employer except where the
fixing a definite period for employment. There is withal no clear employment has been fixed for a specific project or
indication of the intent to deny validity to employment for a undertaking the completion or termination of which has
definite period. Indeed, not only is the concept of regular been determined at the time of the engagement of the
employment not essentially inconsistent with employment for a employee or where the work or service to be employed
fixed term, as above pointed out, Article 272 of the Labor
 is seasonal in nature and the employment is for the There can of course be no quarrel with the proposition that where
duration of the season. from the circumstances it is apparent that periods have been imposed
to preclude acquisition of tenurial security by the employee, they
An employment shall be deemed to be casual if it is not should be struck down or disregarded as contrary to public policy,
covered by the preceding paragraph:provided, that, morals, etc. But where no such intent to circumvent the law is shown,
any employee who has rendered at least one year of or stated otherwise, where the reason for the law does not exist, e.g.,
service, whether such service is continuous or broken, where it is indeed the employee himself who insists upon a period or
shall be considered a regular employee with respect to where the nature of the engagement is such that, without being
the activity in which he is employed and his seasonal or for a specific project, a definite date of termination is
employment shall continue while such actually exists. a sine qua non, would an agreement fixing a period be essentially evil
or illicit, therefore anathema? Would such an agreement come within
There is, on the other hand, the Civil Code, which has always the scope of Article 280 which admittedly was enacted "to prevent the
recognized, and continues to recognize, the validity and propriety of circumvention of the right of the employee to be secured in . . . (his)
contracts and obligations with a fixed or definite period, and imposes employment?"
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 As it is evident from even only the three examples already given that
the general admonition against stipulations contrary to law, morals, Article 280 of the Labor Code, under a narrow and literal
good customs, public order or public policy. 26 Under the Civil Code, interpretation, not only fails to exhaust the gamut of employment
therefore, and as a general proposition, fixed-term employment contracts to which the lack of a fixed period would be an anomaly, but
contracts are not limited, as they are under the present Labor Code, would also appear to restrict, without reasonable distinctions, the right
to those by nature seasonal or for specific projects with pre- of an employee to freely stipulate with his employer the duration of his
determined dates of completion; they also include those to which the engagement, it logically follows that such a literal interpretation should
parties by free choice have assigned a specific date of termination. be eschewed or avoided. The law must be given a reasonable
interpretation, to preclude absurdity in its application. Outlawing the
Some familiar examples may be cited of employment contracts which whole concept of term employment and subverting to boot the
may be neither for seasonal work nor for specific projects, but to principle of freedom of contract to remedy the evil of employer's using
which a fixed term is an essential and natural appurtenance: overseas it as a means to prevent their employees from obtaining security of
employment contracts, for one, to which, whatever the nature of the tenure is like cutting off the nose to spite the face or, more relevantly,
engagement, the concept of regular employment will all that it implies curing a headache by lopping off the head.
does not appear ever to have been applied, Article 280 of the Labor
Code not withstanding; also appointments to the positions of dean, It is a salutary principle in statutory construction that
assistant dean, college secretary, principal, and other administrative there exists a valid presumption that undesirable
offices in educational institutions, which are by practice or tradition consequences were never intended by a legislative
rotated among the faculty members, and where fixed terms are a measure, and that a construction of which the statute is
necessity, without which no reasonable rotation would be possible. fairly susceptible is favored, which will avoid all
Similarly, despite the provisions of Article 280, Policy, Instructions No. objecionable mischievous, undefensible, wrongful, evil
8 of the Minister of Labor 27implicitly recognize that certain company and injurious consequences. 28
officials may be elected for what would amount to fixed periods, at the
expiration of which they would have to stand down, in providing that Nothing is better settled than that courts are not to give
these officials," . . . may lose their jobs as president, executive vice- words a meaning which would lead to absurd or
president or vice-president, etc. because the stockholders or the unreasonable consequences. That s a principle that
board of directors for one reason or another did not re-elect them." does back to In re Allen decided oil October 27, 1903,
 where it was held that a literal interpretation is to be analogous case of a teacher being served by her school a notice of
rejected if it would be unjust or lead to absurd results. termination following the expiration of the last of three successive
That is a strong argument against its adoption. The fixed-term employment contracts, the Court held:
words of Justice Laurel are particularly apt. Thus: "The
fact that the construction placed upon the statute by Reyes (the teacher's) argument is not persuasive. It
the appellants would lead to an absurdity is another loses sight of the fact that her employment was
argument for rejecting it. . . ." 29 probationary, contractual in nature, and one with a
definitive period. At the expiration of the period
. . . We have, here, then a case where the true intent of stipulated in the contract, her appointment was
the law is clear that calls for the application of the deemed terminated and the letter informing her of the
cardinal rule of statutory construction that such intent of non-renewal of her contract is not a condition sine qua
spirit must prevail over the letter thereof, for whatever non before Reyes may be deemed to have ceased in
is within the spirit of a statute is within the statute, since the employ of petitioner UST. The notice is a mere
adherence to the letter would result in absurdity, reminder that Reyes' contract of employment was due
injustice and contradictions and would defeat the plain to expire and that the contract would no longer be
and vital purpose of the statute. 30 renewed. It is not a letter of termination. The
interpretation that the notice is only a reminder is
Accordingly, and since the entire purpose behind the development of consistent with the court's finding in Labajo supra. ...32
legislation culminating in the present Article 280 of the Labor Code
clearly appears to have been, as already observed, to prevent Paraphrasing Escudero, respondent Alegre's employment was
circumvention of the employee's right to be secure in his tenure, the terminated upon the expiration of his last contract with Brent School
clause in said article indiscriminately and completely ruling out all on July 16, 1976 without the necessity of any notice. The advance
written or oral agreements conflicting with the concept of regular written advice given the Department of Labor with copy to said
employment as defined therein should be construed to refer to the petitioner was a mere reminder of the impending expiration of his
substantive evil that the Code itself has singled out: agreements contract, not a letter of termination, nor an application for clearance to
entered into precisely to circumvent security of tenure. It should have terminate which needed the approval of the Department of Labor to
no application to instances where a fixed period of employment was make the termination of his services effective. In any case, such
agreed upon knowingly and voluntarily by the parties, without any clearance should properly have been given, not denied.
force, duress or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent, WHEREFORE, the public respondent's Decision complained of is
or where it satisfactorily appears that the employer and employee REVERSED and SET ASIDE. Respondent Alegre's contract of
dealt with each other on more or less equal terms with no moral employment with Brent School having lawfully terminated with and by
dominance whatever being exercised by the former over the latter. reason of the expiration of the agreed term of period thereof, he is
Unless thus limited in its purview, the law would be made to apply to declared not entitled to reinstatement and the other relief awarded
purposes other than those explicitly stated by its framers; it thus and confirmed on appeal in the proceedings below. No
becomes pointless and arbitrary, unjust in its effects and apt to lead to pronouncement as to costs.
absurd and unintended consequences.

Such interpretation puts the seal on Bibiso 31 upon the effect of the
expiry of an agreed period of employment as still good rule—a rule
reaffirmed in the recent case of Escudero vs. Office of the
President(G.R. No. 57822, April 26, 1989) where, in the fairly
PAKISTAN INTERNATIONAL AIRLINES consider any matter arising out of or under this
CORPORATION, petitioner, agreement.
vs
HON. BLAS F. OPLE, in his capacity as Minister of Labor; HON. Respondents then commenced training in Pakistan. After their training
VICENTE LEOGARDO, JR., in his capacity as Deputy Minister; period, they began discharging their job functions as flight attendants,
ETHELYNNE B. FARRALES and MARIA MOONYEEN with base station in Manila and flying assignments to different parts of
MAMASIG, respondents. the Middle East and Europe.

On 2 December 1978, petitioner Pakistan International Airlines On 2 August 1980, roughly one (1) year and four (4) months prior to
Corporation ("PIA"), a foreign corporation licensed to do business in the expiration of the contracts of employment, PIA through Mr. Oscar
the Philippines, executed in Manila two (2) separate contracts of Benares, counsel for and official of the local branch of PIA, sent
employment, one with private respondent Ethelynne B. Farrales and separate letters both dated 1 August 1980 to private respondents
the other with private respondent Ma. M.C. Mamasig. 1 The contracts, Farrales and Mamasig advising both that their services as flight
which became effective on 9 January 1979, provided in pertinent stewardesses would be terminated "effective 1 September 1980,
portion as follows: conformably to clause 6 (b) of the employment agreement [they had)
executed with [PIA]."2
5. DURATION OF EMPLOYMENT AND PENALTY
On 9 September 1980, private respondents Farrales and Mamasig
This agreement is for a period of three (3) years, but jointly instituted a complaint, docketed as NCR-STF-95151-80, for
can be extended by the mutual consent of the parties. illegal dismissal and non-payment of company benefits and bonuses,
against PIA with the then Ministry of Labor and Employment
xxx xxx xxx ("MOLE"). After several unfruitful attempts at conciliation, the MOLE
hearing officer Atty. Jose M. Pascual ordered the parties to submit
6. TERMINATION their position papers and evidence supporting their respective
positions. The PIA submitted its position paper, 3 but no evidence, and
xxx xxx xxx there claimed that both private respondents were habitual absentees;
that both were in the habit of bringing in from abroad sizeable
Notwithstanding anything to contrary as herein quantities of "personal effects"; and that PIA personnel at the Manila
provided, PIA reserves the right to terminate this International Airport had been discreetly warned by customs officials
agreement at any time by giving the EMPLOYEE to advise private respondents to discontinue that practice. PIA further
notice in writing in advance one month before the claimed that the services of both private respondents were terminated
intended termination or in lieu thereof, by paying the pursuant to the provisions of the employment contract.
EMPLOYEE wages equivalent to one month's salary.
In his Order dated 22 January 1981, Regional Director Francisco L.
xxx xxx xxx Estrella ordered the reinstatement of private respondents with full
backwages or, in the alternative, the payment to them of the amounts
equivalent to their salaries for the remainder of the fixed three-year
10. APPLICABLE LAW:
period of their employment contracts; the payment to private
respondent Mamasig of an amount equivalent to the value of a round
This agreement shall be construed and governed trip ticket Manila-USA Manila; and payment of a bonus to each of the
under and by the laws of Pakistan, and only the Courts private respondents equivalent to their one-month salary. 4 The Order
of Karachi, Pakistan shall have the jurisdiction to stated that private respondents had attained the status of regular
employees after they had rendered more than a year of continued (b) With or without a collective agreement, no employer
service; that the stipulation limiting the period of the employment may shut down his establishment or dismiss or
contract to three (3) years was null and void as violative of the terminate the employment of employees with at least
provisions of the Labor Code and its implementing rules and one year of service during the last two (2) years,
regulations on regular and casual employment; and that the dismissal, whether such service is continuous or broken, without
having been carried out without the requisite clearance from the prior written authority issued in accordance with such
MOLE, was illegal and entitled private respondents to reinstatement rules and regulations as the Secretary may promulgate
with full backwages. . . . (emphasis supplied)

On appeal, in an Order dated 12 August 1982, Hon. Vicente Rule XIV, Book No. 5 of the Rules and Regulations
Leogardo, Jr., Deputy Minister, MOLE, adopted the findings of fact Implementing the Labor Code, made clear that in case of a
and conclusions of the Regional Director and affirmed the latter's termination without the necessary clearance, the Regional
award save for the portion thereof giving PIA the option, in lieu of Director was authorized to order the reinstatement of the
reinstatement, "to pay each of the complainants [private respondents] employee concerned and the payment of backwages;
their salaries corresponding to the unexpired portion of the contract[s] necessarily, therefore, the Regional Director must have been
[of employment] . . .". 5 given jurisdiction over such termination cases:

In the instant Petition for Certiorari, petitioner PIA assails the award of Sec. 2. Shutdown or dismissal without clearance. —
the Regional Director and the Order of the Deputy Minister as having Any shutdown or dismissal without prior clearance shall
been rendered without jurisdiction; for having been rendered without be conclusively presumed to be termination of
support in the evidence of record since, allegedly, no hearing was employment without a just cause. The Regional
conducted by the hearing officer, Atty. Jose M. Pascual; and for Director shall, in such case order the immediate
having been issued in disregard and in violation of petitioner's rights reinstatement of the employee and the payment of his
under the employment contracts with private respondents. wages from the time of the shutdown or dismissal until
the time of reinstatement. (emphasis supplied)
1. Petitioner's first contention is that the Regional Director, MOLE, had
no jurisdiction over the subject matter of the complaint initiated by Policy Instruction No. 14 issued by the Secretary of Labor,
private respondents for illegal dismissal, jurisdiction over the same dated 23 April 1976, was similarly very explicit about the
being lodged in the Arbitration Branch of the National Labor Relations jurisdiction of the Regional Director over termination of
Commission ("NLRC") It appears to us beyond dispute, however, that employment cases:
both at the time the complaint was initiated in September 1980 and at
the time the Orders assailed were rendered on January 1981 (by Under PD 850, termination cases — with or without
Regional Director Francisco L. Estrella) and August 1982 (by Deputy CBA — are now placed under the original jurisdiction of
Minister Vicente Leogardo, Jr.), the Regional Director had jurisdiction the Regional Director. Preventive suspension cases,
over termination cases. now made cognizable for the first time, are also placed
under the Regional Director. Before PD 850,
Art. 278 of the Labor Code, as it then existed, forbade the termination termination cases where there was a CBA were under
of the services of employees with at least one (1) year of service the jurisdiction of the grievance machinery and
without prior clearance from the Department of Labor and voluntary arbitration, while termination cases where
Employment: there was no CBA were under the jurisdiction of the
Conciliation Section.
Art. 278. Miscellaneous Provisions — . . .
 In more details, the major innovations introduced by previous clearance from the Ministry of Labor is conclusively
PD 850 and its implementing rules and regulations with presumed to be without [just] cause . . . [a presumption which] cannot
respect to termination and preventive suspension be overturned by any contrary proof however strong."
cases are:
3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of
1. The Regional Director is now required to rule on its contract of employment with private respondents Farrales and
every application for clearance, whether there is Mamasig, arguing that its relationship with them was governed by the
opposition or not, within ten days from receipt thereof. provisions of its contract rather than by the general provisions of the
Labor Code. 9
xxx xxx xxx
Paragraph 5 of that contract set a term of three (3) years for that
(Emphasis supplied) relationship, extendible by agreement between the parties; while
paragraph 6 provided that, notwithstanding any other provision in the
2. The second contention of petitioner PIA is that, even if the Regional Contract, PIA had the right to terminate the employment agreement at
Director had jurisdiction, still his order was null and void because it any time by giving one-month's notice to the employee or, in lieu of
had been issued in violation of petitioner's right to procedural due such notice, one-months salary.
process .6This claim, however, cannot be given serious consideration.
Petitioner was ordered by the Regional Director to submit not only its A contract freely entered into should, of course, be respected, as PIA
position paper but also such evidence in its favor as it might have. argues, since a contract is the law between the parties. 10 The
Petitioner opted to rely solely upon its position paper; we must principle of party autonomy in contracts is not, however, an absolute
assume it had no evidence to sustain its assertions. Thus, even if no principle. The rule in Article 1306, of our Civil Code is that the
formal or oral hearing was conducted, petitioner had ample contracting parties may establish such stipulations as they may deem
opportunity to explain its side. Moreover, petitioner PIA was able to convenient, "provided they are not contrary to law, morals, good
appeal his case to the Ministry of Labor and Employment. 7 customs, public order or public policy." Thus, counter-balancing the
principle of autonomy of contracting parties is the equally general rule
There is another reason why petitioner's claim of denial of due that provisions of applicable law, especially provisions relating to
process must be rejected. At the time the complaint was filed by matters affected with public policy, are deemed written into the
private respondents on 21 September 1980 and at the time the contract. 11 Put a little differently, the governing principle is that parties
Regional Director issued his questioned order on 22 January 1981, may not contract away applicable provisions of law especially
applicable regulation, as noted above, specified that a "dismissal peremptory provisions dealing with matters heavily impressed with
without prior clearance shall be conclusively presumed to be public interest. The law relating to labor and employment is clearly
termination of employment without a cause", and the Regional such an area and parties are not at liberty to insulate themselves and
Director was required in such case to" order the immediate their relationships from the impact of labor laws and regulations by
reinstatement of the employee and the payment of his wages from the simply contracting with each other. It is thus necessary to appraise the
time of the shutdown or dismiss until . . . reinstatement." In other contractual provisions invoked by petitioner PIA in terms of their
words, under the then applicable rule, the Regional Director did not consistency with applicable Philippine law and regulations.
even have to require submission of position papers by the parties in
view of the conclusive (juris et de jure) character of the presumption As noted earlier, both the Labor Arbiter and the Deputy Minister,
created by such applicable law and regulation. In Cebu Institute of MOLE, in effect held that paragraph 5 of that employment contract
Technology v. Minister of Labor and Employment, 8 the Court pointed was inconsistent with Articles 280 and 281 of the Labor Code as they
out that "under Rule 14, Section 2, of the Implementing Rules and existed at the time the contract of employment was entered into, and
Regulations, the termination of [an employee] which was without
hence refused to give effect to said paragraph 5. These Articles read reached the conclusion that a contract providing for employment with
as follows: a fixed period was not necessarily unlawful:

Art. 280. Security of Tenure. — In cases of regular There can of course be no quarrel with the proposition
employment, the employer shall not terminate the that where from the circumstances it is apparent that
services of an employee except for a just cause or periods have been imposed to preclude acquisition of
when authorized by this Title An employee who is tenurial security by the employee, they should be
unjustly dismissed from work shall be entitled to struck down or disregarded as contrary to public policy,
reinstatement without loss of seniority rights and to his morals, etc. But where no such intent to circumvent the
backwages computed from the time his compensation law is shown, or stated otherwise, where the reason for
was withheld from him up to the time his reinstatement. the law does not exist e.g. where it is indeed the
employee himself who insists upon a period or where
Art. 281. Regular and Casual Employment. The the nature of the engagement is such that, without
provisions of written agreement to the contrary being seasonal or for a specific project, a definite date
notwithstanding and regardless of the oral agreements of termination is a sine qua non would an agreement
of the parties, an employment shall be deemed to be fixing a period be essentially evil or illicit, therefore
regular where the employee has been engaged to anathema Would such an agreement come within the
perform activities which are usually necessary or scope of Article 280 which admittedly was enacted "to
desirable in the usual business or trade of the prevent the circumvention of the right of the employee
employer, except where the employment has been to be secured in . . . (his) employment?"
fixed for a specific project or undertaking the
completion or termination of which has been As it is evident from even only the three examples
determined at the time of the engagement of the already given that Article 280 of the Labor Code, under
employee or where the work or services to be a narrow and literal interpretation, not only fails to
performed is seasonal in nature and the employment is exhaust the gamut of employment contracts to which
for the duration of the season. the lack of a fixed period would be an anomaly, but
would also appear to restrict, without reasonable
An employment shall be deemed to be casual if it is not distinctions, the right of an employee to freely stipulate
covered by the preceding paragraph: provided, with his employer the duration of his engagement, it
that, any employee who has rendered at least one year logically follows that such a literal interpretation should
of service, whether such service is continuous or be eschewed or avoided. The law must be given
broken, shall be considered as regular employee with reasonable interpretation, to preclude absurdity in its
respect to the activity in which he is employed and his application. Outlawing the whole concept of term
employment shall continue while such actually exists. employment and subverting to boot the principle of
(Emphasis supplied) freedom of contract to remedy the evil of employers"
using it as a means to prevent their employees from
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., 12 the Court obtaining security of tenure is like cutting off the nose
had occasion to examine in detail the question of whether to spite the face or, more relevantly, curing a headache
employment for a fixed term has been outlawed under the above by lopping off the head.
quoted provisions of the Labor Code. After an extensive examination
of the history and development of Articles 280 and 281, the Court xxx xxx xxx
 Accordingly, and since the entire purpose behind the the employee the fixed three (3)-year period ostensibly granted by
development of legislation culminating in the present paragraph 5 by rendering such period in effect a facultative one at the
Article 280 of the Labor Code clearly appears to have option of the employer PIA. For petitioner PIA claims to be authorized
been, as already observed, to prevent circumvention of to shorten that term, at any time and for any cause satisfactory to
the employee's right to be secure in his tenure, the itself, to a one-month period, or even less by simply paying the
clause in said article indiscriminately and completely employee a month's salary. Because the net effect of paragraphs 5
ruling out all written or oral agreements conflicting with and 6 of the agreement here involved is to render the employment of
the concept of regular employment as defined therein private respondents Farrales and Mamasig basically employment at
should be construed to refer to the substantive evil that the pleasure of petitioner PIA, the Court considers that paragraphs 5
the Code itself has singled out: agreements entered and 6 were intended to prevent any security of tenure from accruing in
into precisely to circumvent security of tenure. It should favor of private respondents even during the limited period of three (3)
have no application to instances where a fixed period years,13 and thus to escape completely the thrust of Articles 280 and
of employment was agreed upon knowingly and 281 of the Labor Code.
voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the Petitioner PIA cannot take refuge in paragraph 10 of its employment
employee and absent any other circumstances vitiating agreement which specifies, firstly, the law of Pakistan as the
his consent, or where it satisfactorily appears that the applicable law of the agreement and, secondly, lays the venue for
employer and employee dealt with each other on more settlement of any dispute arising out of or in connection with the
or less equal terms with no moral dominance whatever agreement "only [in] courts of Karachi Pakistan". The first clause of
being exercised by the former over the latter. Unless paragraph 10 cannot be invoked to prevent the application of
thus limited in its purview, the law would be made to Philippine labor laws and regulations to the subject matter of this
apply to purposes other than those explicitly stated by case, i.e., the employer-employee relationship between petitioner PIA
its framers; it thus becomes pointless and arbitrary, and private respondents. We have already pointed out that the
unjust in its effects and apt to lead to absurd and relationship is much affected with public interest and that the
unintended consequences. (emphasis supplied) otherwise applicable Philippine laws and regulations cannot be
rendered illusory by the parties agreeing upon some other law to
It is apparent from Brent School that the critical consideration govern their relationship. Neither may petitioner invoke the second
is the presence or absence of a substantial indication that the clause of paragraph 10, specifying the Karachi courts as the sole
period specified in an employment agreement was designed to venue for the settlement of dispute; between the contracting parties.
circumvent the security of tenure of regular employees which Even a cursory scrutiny of the relevant circumstances of this case will
is provided for in Articles 280 and 281 of the Labor Code. This show the multiple and substantive contacts between Philippine law
indication must ordinarily rest upon some aspect of the and Philippine courts, on the one hand, and the relationship between
agreement other than the mere specification of a fixed term of the parties, upon the other: the contract was not only executed in the
the ernployment agreement, or upon evidence aliunde of the Philippines, it was also performed here, at least partially; private
intent to evade. respondents are Philippine citizens and respondents, while petitioner,
although a foreign corporation, is licensed to do business (and
Examining the provisions of paragraphs 5 and 6 of the employment actually doing business) and hence resident in the Philippines; lastly,
agreement between petitioner PIA and private respondents, we private respondents were based in the Philippines in between their
consider that those provisions must be read together and when so assigned flights to the Middle East and Europe. All the above contacts
read, the fixed period of three (3) years specified in paragraph 5 will point to the Philippine courts and administrative agencies as a proper
be seen to have been effectively neutralized by the provisions of forum for the resolution of contractual disputes between the parties.
paragraph 6 of that agreement. Paragraph 6 in effect took back from Under these circumstances, paragraph 10 of the employment
agreement cannot be given effect so as to oust Philippine agencies
and courts of the jurisdiction vested upon them by Philippine law.
Finally, and in any event, the petitioner PIA did not undertake to plead
and prove the contents of Pakistan law on the matter; it must
therefore be presumed that the applicable provisions of the law of
Pakistan are the same as the applicable provisions of Philippine law.14

We conclude that private respondents Farrales and Mamasig were

illegally dismissed and that public respondent Deputy Minister, MOLE,
had not committed any grave abuse of discretion nor any act without
or in excess of jurisdiction in ordering their reinstatement with
backwages. Private respondents are entitled to three (3) years
backwages without qualification or deduction. Should their
reinstatement to their former or other substantially equivalent
positions not be feasible in view of the length of time which has gone
by since their services were unlawfully terminated, petitioner should
be required to pay separation pay to private respondents amounting
to one (1) month's salary for every year of service rendered by them,
including the three (3) years service putatively rendered.

ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for

lack of merit, and the Order dated 12 August 1982 of public
respondent is hereby AFFIRMED, except that (1) private respondents
are entitled to three (3) years backwages, without deduction or
qualification; and (2) should reinstatement of private respondents to
their former positions or to substantially equivalent positions not be
feasible, then petitioner shall, in lieu thereof, pay to private
respondents separation pay amounting to one (1)-month's salary for
every year of service actually rendered by them and for the three (3)
years putative service by private respondents. The Temporary
Restraining Order issued on 13 September 1982 is hereby LIFTED.
Costs against petitioner.

SO ORDERED.
ZOSIMO CIELO, petitioner, fruitless when addressed to the private respondent, which explained it
vs. could not locate the folder of the case despite diligent search. It was
THE HONORABLE NATIONAL LABOR RELATIONS only on October 15, 1990, that the records of the case, including the
COMMISSION, HENRY LEI and/or HENRY LEI subject agreement, were finally received by the Court from the NLRC,
TRUCKING respondents. which had obtained them from its Cagayan de Oro regional office.3

Francisco D. Alas for petitioner. The said agreement reads in full as follows:
Mateo G. Delegencia for private respondent.
AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

CRUZ, J.:
This Agreement made and executed by and between:
The petitioner is a truck driver who claims he was illegally dismissed
by the private respondent, the Henry Lei Trucking Company. The HENRY LEI, of legal age, Filipino citizen, married, and a resident of
Labor Arbiter found for him and ordered his reinstatement with back Digos, Davao del Sur, now and hereinafter called the FIRST PARTY,
wages.1 On appeal, the decision was reversed by the National Labor
Relations Commission, which held that the petitioner's employment —a n d —
had expired under a valid contract.2 The petitioner then came to us
on certiorariunder Rule 65 of the Rules of Court. ZOSIMO CIELO, of legal age, married, Filipino citizen, and a resident
of Agusan, Canyon, Camp Philipps, now and hereinafter called the
Required to submit a Comment (not to file a motion to dismiss), the SECOND PARTY,
private respondent nevertheless moved to dismiss on the ground that
the petition was filed sixty-eight days after service of the challenged WITNESSETH
decision on the petitioner, hence late. The motion was untenable, of
course. Petitions for certiorari under Rule 65 may be instituted within a
That the FIRST PARTY is an owner of some cargo trucks.
reasonable period, which the Court has consistently reckoned at three
months.**
WHEREAS, the SECOND PARTY desires to operate one of the said
cargo trucks which he himself shall drive for income;
In his own Comment, the Solicitor General defended the public
respondent and agreed that the contract between the petitioner and
NOW, THEREFORE, for the foregoing premises, the FIRST PARTY
the private respondent was a binding agreement not contrary to law,
does hereby assign one cargo truck of his fleet to the SECOND
morals or public policy. The petitioner's services could be legally
PARTY under the following conditions and stipulations:
terminated upon the expiration of the period agreed upon, which was
only six months. The petitioner could therefore not complain that he
had been illegally dismissed. 1. That the term of this Agreement is six (6) months
from and after the execution hereof, unless otherwise
earlier terminated at the option of either party;
As an examination of the claimed agreement was necessary to the
resolution of this case, the Court required its production by the
petitioner. But he could not comply because he said he had not been 2. That the net income of the said vehicle after fuel and
given a copy by the private respondent. A similar requirement proved oil shall be divided by and between them on ninety/ten
percent (90/10%) basis in favor of the FIRST PARTY;
 3. That there is no employer/employee relationship AFFIDAVIT
between the parties, the nature of this Agreement
being contractual; That I, ZOSIMO CIELO, Filipino, of legal age, married/single and a
resident of Agusan Canyon, Camp Philipps, after having been duly
4. In the event the SECOND PARTY needs a helper sworn to in accordance with law, hereby depose and say:
the personnel so employed by him shall be to his
personal account, who shall be considered his own That I am one of the drivers of the trucks of Mr. HENRY LEI whose
employee; hauling trucks are under contract with the Philippine Packing
Corporation;
5. That the loss of or damage to the said vehicle shall
be to account of the SECOND PARTY; he shall return That I have received my salary and allowances from Mr. HENRY LEI
the unit upon the expiration or termination of this the sum of P1,421.10 for the month of October 1984. That I have no
contract in the condition the same was received by more claim against the said Mr. Henry Lei.
him, fair wear and tear excepted.
IN WITNESS WHEREOF, I have hereunto affixed my signature this
IN WITNESS WHEREOF, the parties hereunto affixed their signature 15th day of November 1984.
on this 30th day of June, 1984, at Digos, Davao del Sur, Philippines.

(Sgd.) (Sgd.) Driver

HENRY LEI ZOSIMO CIELO
First Party Second Party The private respondent rests its case on the agreement and maintains
GNED IN THE PRESENCE OF: that the labor laws are not applicable because the relations of the
parties are governed by their voluntary stipulations. The contract
(Sgd.) (Sgd.) having expired, it was the prerogative of the trucking company to
VICTOR CHAN AMALFE M. NG renew it or not as it saw fit.

The agreement was supposed to have commenced on June 30, 1984, The writ will issue.
and to end on December 31, 1984. On December 22, 1984, however,
the petitioner was formally notified by the private respondent of the While insisting that it is the agreement that regulates its relations with
termination of his services on the ground of expiration of their the petitioner, the private respondent is ensnared by its own words.
contract. Soon thereafter, on January 22, 1985, the petitioner filed his The agreement specifically declared that there was no employer-
complaint with the Ministry of Labor and Employment. employee relationship between the parties. Yet the affidavit the
private respondent prepared required the petitioner to acknowledge
In his position paper, the petitioner claimed he started working for the that "I have received my salary and allowances from Mr. Henry Lei,"
private respondent on June 16, 1984, and having done so for more suggesting an employment relationship. According to its position
than six months had acquired the status of a regular employee. As paper, the petitioner's refusal to sign the affidavit constituted
such, he could no longer be dismissed except for lawful cause. He disrespect or insubordination, which had "some bearing on the
also contended that he had been removed because of his refusal to renewal of his contract of employment with the respondent." Of this
sign, as required by the private respondent, an affidavit reading as affidavit, the private respondent had this to say:
follows:
 . . . Since October 1984, respondent adopted a new policy to innocuousness, imported more than that. What was insidious about
require all their employees to sign an affidavit to the effect that the document was the waiver the affiant was unwarily making of the
they received their salaries. Copy of which is hereto attached statutory rights due him as an employee of the trucking company.
as Annex "C," covering the months of October and November
1984. All other employees of the respondent signed the said And employee he was despite the innocent protestations of the
affidavit, only herein complainant refused to do so for reasons private respondent. We accept the factual finding of the Labor Arbiter
known only to him. . . . that the petitioner was a regular employee of the private respondent.
The private respondent is engaged in the trucking business as a
It appears from the records that all the drivers of the private hauler of cattle, crops and other cargo for the Philippine Packing
respondent have been hired on a fixed contract basis, as evidenced Corporation. This business requires the services of drivers, and
by the mimeographed form of the agreement and of the affidavit. The continuously because the work is not seasonal, nor is it limited to a
private respondent merely filled in the blanks with the corresponding single undertaking or operation. Even if ostensibly hired for a fixed
data, such as the driver's name and address, the amount received by period, the petitioner should be considered a regular employee of the
him, and the date of the document. Each driver was paid through private respondent, conformably to Article 280 of the Labor Code
individual vouchers4 rather than a common payroll, as is usual in providing as follows:
companies with numerous employees.
Art. 280. Regular and Casual Employment. — The provisions
The private respondent's intention is obvious. It is remarkable that of written agreement to the contrary notwithstanding and
neither the NLRC nor the Solicitor General recognized it. There is no regardless of the oral agreement of the parties, an
question that the purpose behind these individual contracts was to employment shall be deemed to be regular where the
evade the application of the labor laws by making it appear that the employee has been engaged to perform activities which are
drivers of the trucking company were not its regular employees. usually necessarily or desirable in the usual business or trade
of the employer, except where the employment has been fixed
Under these arrangements, the private respondent hoped to be able for a specific project or undertaking the completion or
to terminate the services of the drivers without the inhibitions of the termination of which has been determined at the time of the
Labor Code. All it had to do was refuse to renew the agreements, engagement of the employee or where the work or services to
which, significantly, were uniformly limited to a six-month period. No be performed is seasonal in nature and the employment is for
cause had to be established because such renewal was subject to the the duration of the season.
discretion of the parties. In fact, the private respondent did not even
have to wait for the expiration of the contract as it was there provided An employment shall be deemed to be casual if it is not
that it could be "earlier terminated at the option of either party." covered by the preceding paragraph; Provided, that, any
employee who has rendered at least one year of service,
By this clever scheme, the private respondent could also prevent the whether such service is continuous or broken, shall be
drivers from becoming regular employees and thus be entitled to considered a regular employee with respect to the activity in
security of tenure and other benefits, such as a minimum wage, cost- which he is employed and his employment shall continue while
of-living allowances, vacation and sick leaves, holiday pay, and other such actually exists. (Emphasis supplied)
statutory requirements. The private respondent argues that there was
nothing wrong with the affidavit because all the affiant acknowledged In Brent School, Inc. vs. Zamora, the Court affirmed the general
therein was full payment of the amount due him under the agreement. principle that "where from the circumstances it is apparent that
Viewed in this light, such acknowledgment was indeed not necessary periods have been imposed to preclude acquisition of tenurial security
at all because this was already embodied in the vouchers signed by by the employee, they should be struck down or disregarded as
the payee-driver.1âwphi1 But the affidavit, for all its seeming contrary to public policy, morals, etc." Such circumstances have been
sufficiently established in the case at bar and justify application of the completed more than six month's service with the trucking company
following conclusions: and so had acquired the status of a regular employee at the time of
his dismissal.
Accordingly, and since the entire purpose behind the
development of legislation culminating in the present Article Even if it be assumed that the six-month period had not yet been
280 of the Labor Code clearly appears to have been, as completed, it is settled that the probationary employee cannot be
already observed, to prevent circumvention of the employee's removed except also for cause as provided by law. It is not alleged
right to be secure in his tenure, the clause in said article that the petitioner was separated for poor performance; in fact, it is
indiscriminately and completely ruling out all written or oral suggested by the private respondent that he was dismissed for
agreements conflicting with the concept of regular employment disrespect and insubordination, more specifically his refusal to sign
as defined therein should be construed to refer to the the affidavit as required by company policy. Hence, even as a
substantive evil that the Code itself has singled out: probationer, or more so as a regular employee, the petitioner could
agreements entered into precisely to circumvent security of not be validly removed under Article 282 of the Labor Code, providing
tenure. as follows:

The agreement in question had such a purpose and so was null and Art. 282. Termination by employer. — An employer may
void ab initio. terminate an employment for any of the following causes:

The private respondent's argument that the petitioner could at least be (a) Serious misconduct or willful disobedience by the
considered on probation basis only and therefore separable at will is employee of the lawful orders of his employer or
self-defeating. The Labor Code clearly provides as follows: representative in connection with his work

Art. 281. Probationary employment. — Probationary (b) Gross and habitual neglect by the employee of his duties;
employment shall not exceed six (6) months from the date the
employee started working, unless it is covered by an (c) Fraud or willful breach by the employee of the trust reposed
apprenticeship agreement stipulating a longer period. The in him by his employer or duly authorized representative;
services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when (d) Commission of a crime or offense by the employee against
he fails to qualify as a regular employee in accordance with the person of his employer or any immediate member of his
reasonable standards made known by the employer to the family or his duly authorized representative; and
employee at the time of his engagement. An employee who is
allowed to work after a probationary period shall be considered (e) Other causes analogous to the foregoing.
a regular employee.
In refusing to sign the affidavit as required by the private respondent,
There is no question that the petitioner was not engaged as an the petitioner was merely protecting his interests against an
apprentice, being already an experienced truck driver when he began unguarded waiver of the benefits due him under the Labor Code.
working for the private respondent. Neither has it been shown that he Such willful disobedience should commend rather than prejudice him
was informed at the time of his employment of the reasonable for standing up to his rights, at great risk to his material security,
standards under which he could qualify as a regular employee. It is against the very source of his livelihood.
plain that the petitioner was hired at the outset as a regular employee.
At any rate, even assuming that the original employment was
probationary, the Labor Arbiter found that the petitioner had
The Court looks with stern disapproval at the contract entered into by
the private respondent with the petitioner (and who knows with how
many other drivers). The agreement was a clear attempt to exploit the
unwitting employee and deprive him of the protection of the Labor
Code by making it appear that the stipulations of the parties were
governed by the Civil Code as in ordinary private transactions. They
were not, to be sure. The agreement was in reality a contract of
employment into which were read the provisions of the Labor Code
and the social justice policy mandated by the Constitution. It was a
deceitful agreement cloaked in the habiliments of legality to conceal
the selfish desire of the employer to reap undeserved profits at the
expense of its employees. The fact that the drivers are on the whole
practically unlettered only makes the imposition more censurable and
the avarice more execrable.

WHEREFORE, the petition is GRANTED. The decision of the National

Labor Relations Commission is SET ASIDE and that of the Labor
Arbiter REINSTATED, with costs against the private respondents.

SO ORDERED.
PHILIPPINE VILLAGE HOTEL, petitioner, separation pay as the decision of the NLRC remained unenforced as
vs. of this date.
NATIONAL LABOR RELATIONS COMMISSION (SECOND
DIVISION) AND TUPAS LOCAL CHAPTER NO. 1362, JUANITO On February 1, 1989, petitioner decided to have a one (1) month dry-
ACUIN, MAMERTA MANGUBAT, RAUL SONON, ELGAR PEMIS, run operation to ascertain the feasibility of resuming its business
ORLANDO PARAGUISON, FERDINAND VELASCO, MIKE operations. In order to carry out its dry-run operation, petitioner hired
ASTULERO, MAGNO DECALSO, NENITA OROSEA, JOSE casual workers, including private respondents, for a one (1) month
TIMING, ANTONIO MANALILI, RODELIO QUERIA and REYNALDO period, or from February 1, 1989 to March 1, 1989, as evidenced by
SANTOS, respondents. the latter's Contract of Employment.3

This is a petition for certiorari under Rule 65 of the Rules of Court with After evaluating the individual performance of all the employees and
a prayer for the issuance of a temporary restraining order to annul and upon the lapse of the contractual one-month period or on March 2,
set aside the decision1 promulgated November 7, 1991 by the 1989, petitioner terminated the services of private respondents.
National Labor Relations Commission (NLRC) of Manila reversing the
decision dated December 19, 1989 of the Labor Arbiter Cornelio L. On April 6, 1989, private respondents and Tupas Local Chapter No.
Linsangan. 1362 filed a complaint against petitioner for illegal dismissal and unfair
labor practice with the NLRC-NCR Arbitration Branch in NLRC Case
It appears on record that private respondents Juanito Acuin, Mamerta No.
Mangubat, Raul Sonon, Elgar Pemis, Orlando Paraguison, Ferdinand 00-04-01665-89.
Velasco, Mike Astulero, Magno Decalso, Nenita Orosea, Jose Timing,
Antonio Manalili, Rodelio Queria and Reynaldo Santos were On December 19, 1989, the Labor Arbiter rendered a decision, the
employees of petitioner Philippine Village Hotel. However, on May 19, dispositive portion of which reads, as follows:
1986, petitioner had to close and totally discontinue its operations due
to serious financial and business reverses resulting in the termination WHEREFORE, finding the above-entitled complaint to
of the services of its employees. be without factual and legal basis, judgment is hereby
rendered dismissing the same.4
Thereafter, the Philippine Village Hotel Employees and Workers
Union filed against petitioner a complaint for separation pay, unfair Thereafter, private respondents appealed to the public respondent
labor practice and illegal lock-out. NLRC.

On May 27, 1987, the Labor Arbiter issued and Order finding the On November 7, 1991, public NLRC reversed the decision of the
losses suffered by petitioner to be actual, genuine and of such Labor Arbiter, the dispositive portion of which reads as follows:
magnitude as to validly terminate the services of private respondents
but directed petitioner "to give priority to the complainants (herein WHEREFORE, under the premises, let the decision
private respondents) in [the] hiring of personnel should they resume appealed from be, as it is hereby reversed, and a new
their business operations in the future."2 judgment rendered, hereby ordering the respondent
Philippine Village Hotel to reinstate the above-named
On appeal, the NLRC affirmed the validity of the closure of petitioner complainants to their former or substantially equivalent
but ordered petitioner to pay private respondent separation pay at the positions without loss of seniority rights plus full
rate of 1/2 month pay every year of service. However, there is nothing backwages from the time they were actually dismissed
in the records to show that private respondents received their on 02 March 1989 up to the time of their actual
 reinstatement, but which period of time should not which something is completed. A time of definite length or the period
exceed three (3) years. from one fixed date to another fixed date.6 This ruling is only in
consonance with Article 280 of the Labor Code which provides:
The complaint for unfair labor practice is hereby
dismissed for lack of adequate factual basis.5 Art. 280. Regular and Casual Employment. — The
provisions of written agreement to the contrary
On March 5, 1992, petitioners Motion for Reconsideration was denied notwithstanding and regardless of the oral agreement
for lack of merit. of the parties, an employment shall be deemed to be
regular where the employee has been engaged to
Hence, this petition alleging grave abuse of discretion on the part of perform activities which are usually necessary or
the public respondent NLRC in finding that private respondents are desirable in the usual business or trade of the
regular employees of petitioner considering that the latter's services employer, except where the employment has been
were already previously terminated in 1986 and that their employment fixed for a specific project or undertaking the
contracts specifically provided only for a temporary one-month period completion or termination of which has been
of employment. determined at the time of the engagement of the
employee or where the work or services to be
The petition is impressed with merit. performed is seasonal in nature and the employment is
for the duration of the season.
An examination of the contents of the private respondents' contracts
of employment shows that indeed private respondents voluntarily and An employment shall be deemed to be casual if it is not
knowingly agreed to be employed only for a period of one (1) month covered by the preceding paragraph: Provided, That,
or from February 1, 1989 to March 1, 1989. any employee who has rendered at least one year of
service, whether such service is continuous or broken,
The fact that private respondents were required to render services shall be considered a regular employee with respect to
usually necessary or desirable in the operation of petitioner's business the activity in which he is employed and his
for the duration of the one (1) month dry-run operation period does not employment shall continue while such actually exists.
in any way impair the validity of the contractual nature of private
respondents' contracts of employment which specifically stipulated Inasmuch as private respondents' contracts of employment
that the employment of the private respondents was only for one (1) categorically provided a fixed period and their termination had already
month. been agreed upon at the time of their engagement, private
respondents' employment was one with a specific period or day
In upholding the validity of a contract of employment with a fixed or certain agreed upon by the parties. In Philippine National Oil
specific period, we have held that the decisive determinant in term Company-Energy Development Corporation vs. NLRC,7 we held that:
employment should not be the activities that the employee is called
upon to perform, but the day certain agreed upon by the parties for As can be gleaned from the said case (Brent School,
the commencement and termination of their employment relationship, Inc. vs. Zamora, 181 SCRA 702), the two guidelines by
a day certain being understood to be that which must necessarily which fixed contracts of employments can be said NOT
come, although it may not be known when. The term period was to circumvent security of tenure, are either:
further defined to be the length of existence; duration. A point of time
marking a termination as of a cause or an activity; an end, a limit, a 1. The fixed period of employment was knowingly and
bound; conclusion; termination. A series of years, months or days in voluntarily agreed upon by the parties, without any
force, duress or improper pressure being brought to
 bear upon the employee and absent any other joined or tacked to the new employment for purposes of security of
circumstances vitiating his consent; or tenure.

2. It satisfactorily appears that the employer and While it is true that security of tenure is a constitutionally guaranteed
employee dealt with each other on more or less equal right of the employees, it does not, however, mean perpetual
terms with no moral dominance whatever being employment for the employee because our law, while affording
exercised by the former on the latter." protection to the employee, does not authorize oppression or
destruction of an employer. It is well settled that the employer has the
In the instant case, private respondents were validly terminated by the right or is at liberty to choose who will be hired and who will be denied
petitioner when the latter had to close its business due to financial employment. The right of a laborer to sell his labor to such persons as
losses. Following the directives of the NLRC to give priority in hiring he may choose is, in its essence, the same as the right of an
private respondents should it resume its business, petitioner hired employer to purchase labor from any person whom it chooses. The
private respondents during their one (1) month dry-run operation. employer and the employee have an equality of right guaranteed by
However, this does not mean that private respondents were deemed the Constitution. If the employer can compel the employee to work
to have continued their regular employment status, which they had against the latter's will, this is servitude. If the employee can compel
enjoyed before their aforementioned termination due to petitioner's the employer to give him work against the employer's will, this is
financial losses. As stated by the Labor Arbiter in his decision: oppression.9

It should be borne in mind that when complainants Thus, public respondent NLRC had indubitably committed grave
were first terminated as a result of the company's abuse of discretion when it modified the final decision of the NLRC
cessation from operation in May, 1986 the employer- Case No. 8-3277-86 which remain unenforced as of this date. Private
employee relationship between the parties herein was respondents' remedy is to file a motion for execution, if it is still within
totally and completely severed. Such being the case, the reglementary 5-year period, or to file an action to enforce said
respondent acted well within its discretion when in decision. (Article 224(a), Labor Code)
rehiring the complainants (herein private respondents)
it made them casual and for a specific period. The WHEREFORE, this petition for certiorari is GRANTED and the
complainants are no better than the new employees of questioned of the public respondent NLRC is hereby SET ASIDE
respondent (petitioner) for the matter of what status or thereby dismissing the complaint against petitioner.
designation to be given them exclusively rests in the
discretion of management.8 SO ORDERED.

Besides, the previous decision of the public respondent NLRC in

Case No. 8-3277-86 finding the termination of private respondents'
employment to be valid has long become final and executory. Public
respondent NLRC cannot anymore argue that the temporary
cessation of the petitioner's operation due to financial reverses merely
suspended private respondents' employment. The employee-
employer relationship had come to an end when the employer had
closed its business and ceased operations. The hiring of new
employees when it re-opened after three (3) years is valid and to be
expected. The prior employment which was terminated cannot be
ISABELO VIOLETA and JOVITO BALTAZAR, petitioners, supposedly discharged private respondent from any liability arising
vs. NATIONAL LABOR RELATIONS COMMISSION, Fifth from their employment.[5]
Division, and DASMARINAS INDUSTRIAL AND
STEELWORKS CORPORATIONS, respondents. Contending that they are already regular employees who cannot
be dismissed on the ground of completion of the particular project
where they are engaged, petitioners filed two separate complaints for
DECISION illegal dismissal against private respondent, with a prayer for
REGALADO, J.: reinstatement and back wages plus damages.
Private respondent admitted that it is engaged in the
Petitioners Isabelo Violeta and Jovito Baltazar were former development and construction of infrastructure projects and
employees of private respondent Dasmarias Industrial and Steelworks maintained that Violeta was hired on June 6, 1989 to March 15, 1992
Corporation (DISC). Their records of service and employment, insofar as Handyman while Baltazar was employed on June 6, 1989 to
as the same are material to this case, are not in dispute. December 20, 1991 as Leadman II.[6] It argued that both are project
Petitioner Violeta worked in Construction and Development employees based on their declaration in their Appointments for
Corporation of the Philippines (CDCP), a sister corporation of private Project Employment that they are employed only for the period and
respondent, at its project in CDCP Mines, Basay, Negros Oriental specific works stated in their respective appointments, in addition to
from December 15, 1980 up to February 15, 1981. Private respondent their admission that they are project employees who are subject to the
then hired him as Erector II at the formers project for Philphos in provisions of Policy Instruction No. 20.[7]
Isabel, Leyte on November 10, 1982 until the termination of the Labor Arbiter Guardson A. Siao dismissed the claims of
project on December 3, 1984. On January 21, 1985, he was petitioners for lack of merit but ordered private respondent to grant
reassigned as Erector II for Five Stand TCM Project, with vacation them separation pay.[8] The labor arbiter concluded that petitioners are
and sick leaves, and was designated as a regular project employee at project employees based on their admission that they are regular
private respondents project for National Steel Corporation (NSC) in project employees. Thus, their employment was deemed coterminous
Iligan City. After receiving a salary adjustment, he was again hired on with the project for which their employer engaged them. Their
June 6, 1989 as Handyman for the civil works of a construction project separation was declared valid and their claims for reinstatement and
for NSC.[1] On February 10, 1992, he was appointed for project back wages were denied. The award of separation pay was based on
employment, again as Handyman, to NSC ETL #3 Civil Works by the findings of the labor arbiter that it is the policy of private
private respondent. Due to the completion of the particular item of respondent to pay employees who have rendered at least one year of
work he was assigned to, private respondent terminated the services continuous service.
of petitioner Violeta on March 15, 1992.[2]
Petitioners and private respondent duly appealed the ruling of the
Petitioner Baltazar started in the employ of CDCP on June 23, labor arbiter to respondent NLRC.
1980. He was hired by private respondent as Lead Carpenter for
project Agua VII on October 1, 1981. Like petitioner Violeta, he was Finding petitioners to be non-project employees in its resolution
transferred from one project to another as a regular project dated August 17, 1994,[9] the Fifth Division of the NLRC reversed the
employee.[3] On November 28, 1991, he was hired as Leadman II in decision of the labor arbiter and declared petitioners dismissal as
ETL #3 Civil Works by private respondent in its project for NSC, but illegal. Private respondent company was thereafter ordered to
he was separated from such employment on December 20, 1991 as a reinstate petitioners to their former positions without loss of seniority
result of the completion of said item of work.[4] rights and to pay them back wages operative from the date of
petitioners dismissal. In the event that reinstatement can no longer be
Upon their separation, petitioners executed a quitclaim wherein made due to any lawful supervening event, the labor tribunal directed
they declared that they have no claim against private respondent and private respondent to further give petitioners the corresponding
separation pay. Private respondent was also required to pay attorneys Upon the resolution of this query rests the validity of petitioners
fees to petitioners. dismissal.
According to the NLRC, although the appointment contracts of The source of the definition of a regular employee vis--vis a
petitioners specified fixed terms or periods of employment, the fact project employee is found in Article 280 of the Labor Code which
that they were hired and transferred from one project to another made provides:
both petitioners non-project employees who cannot be terminated by
reason alone of the completion of the project. They were hired not Art. 280. Regular and casual employment. - The
only for one particular project but different projects, one after the provisions of written agreement to the contrary
other. notwithstanding and regardless of the oral
However, on November 15, 1994,[10] the same division of the agreement of the parties, an employment shall be
NLRC reversed itself upon motion of private respondent and set aside deemed to be regular where the employee has
its earlier resolution. Reportedly, a reexamination of the same been engaged to perform activities which are
evidence before it led the labor court to conclude that the employment
usually necessary or desirable in the usual
of petitioners in ETL #3 Civil Works was allegedly for a specific or
fixed period thus making petitioners project employees. This time, it business or trade of the employer, except where
held that since the termination of petitioners employment was due to the employment has been fixed for a specific
the completion of the project, petitioners are therefore not entitled to project or undertaking the completion or
separation pay. It ruled that this would hold true even if petitioners termination of which has been determined at the
were categorized as regular project employees because their
employment was not permanent but coterminous with the projects to time of the engagement of the employee or where
which they were assigned. No other substantial reason was given for the work or service to be performed is seasonal
the adjudicative turnabout. in nature and the employment is for the duration
In this petition for certiorari, petitioners contend that public of the season.
respondent (NLRC) committed grave abuse of discretion amounting to
An employee shall be deemed to be casual if it is
lack of jurisdiction when it granted the motion for reconsideration of
private respondents in its November 15, 1994 resolution. Such not covered by the preceding paragraph:
novatory resolution, petitioners contend, was not only too abbreviated Provided, That any employee who has rendered at
but actually disregarded applicable laws and jurisprudence governing least one year of service, whether such service is
the characterization of employees in the construction industry.
continuous or broken, shall be considered a
We have held that the services of project employees are regular employee with respect to the activity in
coterminous with the project and may be terminated upon the end or which he is employed and his employment shall
completion of that project for which they were hired.Regular
employees, in contrast, are legally entitled to remain in the service of continue while such activity exists. (Emphases
their employer until their services are terminated by one or another of ours).
the recognized modes of termination of service under the Labor Article 280 was emplaced in our statute books to prevent the
Code.[11]
circumvention of the employees right to be secure in his tenure by
Foremost for our resolution then is the issue of whether indiscriminately and completely ruling out all written and oral
petitioners are regular (non-project) employees or project employees. agreements inconsistent with the concept of regular employment
defined therein.[12] Where an employee has been engaged to perform
activities which are usually necessary or desirable in the usual at the time of their engagement. An examination of said appointments
business of the employer, such employee is deemed a regular reveal that the completion or termination of the project for which
employee and is entitled to security of tenure notwithstanding the petitioners were hired was not determined at the start of their
contrary provisions of his contract of employment.[13] employment. There is no specific mention of the period or duration
when the project will be completed or terminated. In fact, the lines for
As Handyman and Erector II, respectively, petitioners services DATE OF COVERAGE in the appointments (referring to the particular
are both necessary and vital to the operation of the business of items of work for which petitioners are engaged) are left blank.
private respondent. This is not at all traversed, but is even confirmed
by the fact that they were continually and successively assigned to the While the word co-terminus was adopted in the appointments of
different projects of private respondent and its sister company, CDCP. petitioners, it cannot readily be concluded that their employment with
private respondent is for a definite duration, that is, until the
In order to properly characterize petitioners employment, we now completion of their items of work, because there are other words used
proceed to ascertain whether or not their employment falls under the in the aforesaid appointments affecting their entitlement to stay in their
exceptions provided in Article 280 of the Code. job. To be concrete, the pertinent terms of the Appointments For
The principal test for determining whether particular employees Project Employment of petitioners are quoted below, thus:
are properly characterized as project employees, as distinguished
from regular employees, is whether or not the project employees were Your herein Appointments will be co-terminus
assigned to carry out a specific project or undertaking, the duration with the need of _____________as it
(and scope) of which were specified at the time the employees were (State item of work)
engaged for that project.[14] As defined, project employees are those will necessitate personnel in such number and
workers hired (1) for a specific project or undertaking, and (2) the
duration contingent upon the progress
completion or termination of such project or undertaking has been
determined at the time of engagement of the employee.[15] accomplishment from time to time. The company
shall determine the personnel and the number as
Based on the above criteria, we find petitioners to be regular
employees of private respondent, and not project employees as work progresses.
postulated by respondent NLRC. Petitioners dismissal, therefore, An interpretation of the above provisions is important for the
could not be justified by the completion of their items of work. correct labeling of petitioners employment with private respondent.
The predetermination of the duration or period of a project Propitiously, this Court has already been confronted withcontracts of
employment is important in resolving whether one is a project employment of the same and exact tenor as above in De Jesus vs.
employee or not. On this score, the term period has been defined to Philippine National Construction Corp. and National Labor Relations
be a length of existence; duration. A point of time marking a Commission. et al.[17] The contracts involved in said case also
termination as of a cause or an activity; an end, a limit, a bound; provided as follows:
conclusion; termination. A series of years, months or days in which Your herein Appointment Employment will be co-
something is completed. A time of definite length or the period from
one fixed date to another fixed date.[16] terminus with the need of Structures [of North
Luzon Expressway (Stage) II] as it will
There is no debate that petitioners were hired for a specific
necessitate personnel in such number and
project or undertaking. Their Appointments for Project Employment
clearly state that their employment is for NSC ETL #3 Civil duration contingent upon the progress
Works. The fact of the completion of said item of work is also accomplishment from time to time. The company
undisputed. However, the records are barren of any definite period or
duration for the expiration of the assigned items of work of petitioners
 shall determine the personnel and the number as To add our own observation, the appointments of petitioners
the work progresses. herein were not coterminous with NSC ETL #3 Civil Works but with
the need for such particular items of work as were assigned to them,
On such premises, the Court declared: as distinguished from the completion of the project.
Without question, the petitioner, a carpenter, With such ambiguous and obscure words and conditions,
performs work necessary, or desirable in the petitioners employment was not co-existent with the duration of their
particular work assignments because their employer could, at any
construction business, the corporations field of stage of such work, determine whether their services were needed or
activity. The fact however that he had been not. Their services could then be terminated even before the
involved in project works will not alter his status completion of the phase of work assigned to them.
because the law requires specific project or We find this explication necessary and in accord with the principle
undertaking the completion or termination of that in controversies between a laborer and his master, doubts
which has been determined at the time of reasonably arising from the evidence, or in the interpretation of
engagement in order to make a project employee agreements and writings should be resolved in the formers favor.[18]
a true project employee. x x x we can not say To be exempted from the presumption of regularity of
that the petitioners engagement has been employment, therefore, the agreement between a project employee
and his employer must strictly conform with the requirements and
predetermined because the duration of the work
conditions provided in Article 280. It is not enough that an employee is
is contingent upon the progress accomplishment hired for a specific project or phase of work. There must also be a
and secondly, the company, under the contract, determination of or a clear agreement on the completion or
is free to determine the personnel and the termination of the project at the time the employee is engaged if the
number as the work progresses. Clearly, the objective of Article 280 is to be achieved. Since this second
requirement was not met in petitioners case, they should be
employment is subject to no term but rather, a considered as regular employees despite their admissions and
condition, that is, progress accomplishment. It declarations that they are project employees made under
can not therefore be said to be definite that will circumstances unclear to us.
therefore exempt the respondent company from Parenthetically, it is relevant to observe that the similarities in the
the effects of Article 280. stipulations of the employment/appointment contracts can be
explained by the indirect relationship of the Philippine National
Following the rule on precedents, we once again hold that the Construction Corporation (PNCC) and private respondent. CDCP was
respective employments of the present petitioners is not subject to a the predecessor of PNCC which, in turn, is an existing sister company
term but rather to a condition, that is, progress accomplishment. As of private respondent. Apparently, private respondent ignored the
we have stated in De Jesus, it cannot be said that their employment mistake committed by its said sister company. Also, if only the NLRC
had been pre-determined because, firstly, the duration of their work is had thoroughly read the De Jesus decision, it would have discovered
contingent upon the progress accomplishment and, secondly, the that the PNCC also raised as a defense the admission of therein
contract gives private respondent the liberty to determine the petitioner De Jesus that he was a project employee, but to no avail.
personnel and the number as the work progresses. It is ineluctably not
definite so as to exempt private respondent from the strictures and There is another reason why we should rule in favor of
effects of Article 280. petitioners. Nowhere in the records is there any showing that private
respondent reported the completion of its projects and the dismissal of
petitioners in its finished projects to the nearest Public Employment continuity of their work with private respondent. Their undertaking in
Office in compliance with Policy Instruction No. 20 of then Labor the Employment Terms and Conditions of their service to private
Secretary Blas F. Ople. respondent bound them to work in such place of work or project as
DISC may assign or transfer them, with the further agreement that
Jurisprudence abounds with the consistent rule that the failure of they would so work during rest day, holidays, night time and night shift
an employer to report to the nearest Public Employment Office the or during emergencies.[21]
termination of its workers services every time a project or a phase
thereof is completed indicates that said workers are not project These are self-evident refutations of private respondents theory
employees.[19] In the case at bar, only the last and final termination of and further bolster petitioners position that they were not mere
petitioners was reported to the aforementioned labor office. employees engaged for a single or particular project.They were thus
removed from the scope of project employment and considered as
Private respondent should have filed as many reports of regular employees since their employment as so-called project
termination as there were construction projects actually finished if employees was extended long after the termination of different
petitioners were indeed project employees, considering that projects.[22]
petitioners were hired and again rehired for various projects or the
phases of work therein. Its failure to submit reports of termination The fact that petitioners signed quitclaims will not bar them from
cannot but sufficiently convince us further that petitioners are truly pursuing their claims against private respondent because quitclaims
regular employees. Just as important, the fact that petitioners had executed by laborers are frowned upon as contrary to public policy,
rendered more than one year of service at the time of their dismissal and are ineffective to bar claims for the full measure of the workers
overturns private respondents allegations that petitioners were hired legal rights.[23] The so-called quitclaims signed by petitioners were
for a specific or a fixed undertaking for a limited period of time.[20] actually pro forma provisions printed in the clearance certificate they
had to get from private respondent. These were not in the nature of a
Even if we disregard the stints of petitioners with CDCP, it cannot compromise but a compulsory general release required from them, for
be disclaimed that they have rendered long years of service in private which no consideration was either given or even stated.
respondents business affairs. Beginning his service in 1982, petitioner
Violeta served in the employ of private respondent up to 1992. In the In answer to private respondents reliance on Department of
case of petitioner Baltazar, he worked for private respondent from Labor and Employment (DOLE) Order No. 19, Series of 1993, which
1981 to 1991. Private respondent repeatedly appointed petitioners to took effect on April 1, 1993, we have ruled in Samson vs. National
new projects after the completion of every project or item of work in Labor Relations Commission, et al.[24] that said administrative order
which they were previously employed, each over a span of about 10 does not have retroactive effect. Since the termination of petitioners
years. services and the filing of their complaints took place long before the
effectivity of the said regulation, it cannot be applied in favor of private
Public respondent contends that the gaps in the employment of
respondent.
petitioners, consisting of the periods in between the completion of one
project and the engagement of petitioners in the next, show that they Besides, as expounded earlier, contrary to private respondents
could not have been regular employees under the control of private insistence, the following badges of project employment are lacking in
respondent, and that petitioners could have applied for or accepted this particular case, viz.: (1) the duration of the specific/identified
employment from other employers during those periods. This is undertaking for which the worker is engaged is reasonably
puerile and speculative. determinable, and (2) such duration, as well as the specific
work/service to be performed, is defined in an employment agreement
In the first place, Article 280 of the Labor Code contemplates both and made clear to the employee at the time of hiring. Hence, even
continuous and broken services. In the second place, there is assuming for the moment that DOLE Order No. 19 is effectual in the
absolutely no evidence of petitioners having applied for or accepted case at bar, private respondent cannot successfully invoke the Order
such other or outside employment during the brief interregna in the
in its favor because the absence of the above indicia persuades us all
the more that petitioners are really regular employees of private
respondent.
WHEREFORE, the instant petition for certiorari is
GRANTED. The challenged resolution of the Fifth Division of
respondent National Labor Relations Commission dated November
15, 1994 in NLRC CA No. M-001233 is REVERSED and SET ASIDE,
and its earlier resolution therein dated August 17, 1994 is hereby
REINSTATED.
REYNALDO CANO CHUA, doing business under the name & Romeo Tapang Fine grading 1979 42/day
style PRIME MOVER CONSTRUCTION
DEVELOPMENT, petitioner, Rolando Trinidad Carpenter 1983 (Jan.) 39/day
vs.
COURT OF APPEALS, SOCIAL SECURITY COMMISSION, SOCIAL Carlos Maliwat Mason 1977 42/day
SECURITY SYSTEM, ANDRES PAGUIO, PABLO CANALE, RUEL
PANGAN, AURELIO PAGUIO, ROLANDO TRINIDAD, ROMEO Private respondents alleged that petitioner dismissed all of them
TAPANG and CARLOS MALIWAT, respondents. without justifiable grounds and without notice to them and to the then
Ministry of Labor and Employment. They further alleged that petitioner
DECISION did not report them to the SSS for compulsory coverage in flagrant
violation of the Social Security Act.7
TINGA, J.:
In his Answer,8 petitioner claimed that private respondents had no
1
This is a petition for review of the Decision of the Court of Appeals in cause of action against him, and assuming there was any, the same
CA-G.R. CV No. 38269 dated 06 March 1996, and was barred by prescription and laches. In addition, he claimed that
its Resolution dated 30 July 1996 denying petitioner’s Motion for private respondents were not regular employees, but project
Reconsideration,2affirming the Order of the Social Security employees whose work had been fixed for a specific project or
Commission (SSC) dated 1 February 19953 which held that private undertaking the completion of which was determined at the time of
respondents were regular employees of the petitioner and ordered their engagement. This being the case, he concluded that said
petitioner to pay the Social Security System (SSS) for its unpaid employees were not entitled to coverage under the Social Security
contributions, as well as penalty for the delayed remittance thereof. Act.9

On 20 August 1985, private respondents Andres Paguio, Pablo Meanwhile, the SSS filed a Petition in Intervention10 alleging that it
Canale, Ruel Pangan, Aurelio Paguio, Rolando Trinidad, Romeo has an interest in the petition filed by private respondents as it is
Tapang and Carlos Maliwat (hereinafter referred to as respondents) charged with the implementation and enforcement of the provisions of
filed a Petition4 with the SSC for SSS coverage and contributions the Social Security Act. The SSS stated that it is the mandatory
against petitioner Reynaldo Chua, owner of Prime Mover Construction obligation of every employer to report its employees to the SSS for
Development, claiming that they were all regular employees of the coverage and to remit the required contribution, including the penalty
petitioner in his construction business.5 imposed for late premium remittances.

Private respondents claimed that they were assigned by petitioner in On 01 February 1995, the SSC issued its Order11 which ruled in favor
his various construction projects continuously in the following of private respondents. The SSC, relying on NLRC Case No. RAB-III-
capacity, since the period indicated, and with the corresponding basic 8-2373-85,12 declared private respondents to be petitioner’s regular
salaries,6to wit: employees.13 It ordered petitioner to pay the SSS the unpaid SS/EC
and Medicare contributions plus penalty for the delayed remittance
thereof, without prejudice to any other penalties which may have
Andres Paguio Carpenter 1977 ₱ 42/day
accrued.14 The SSC denied the Motion for Reconsideration15 of
Pablo Canale Mason 1977 42/day petitioner for lack of merit.16

Ruel Pangan Mason 1979 39/day Petitioner elevated the matter to the Court of Appeals via a Petition for
Review.17 He claimed that private respondents were project
Aurelio Paguio Fine grading 1979 42/day
employees, whose periods of employment were terminated upon By petitioner’s own admission, the private respondents have
completion of the project. Thus, he claimed, no employer-employee been hired to work on certain special orders that as a matter of
relation existed between the parties.18 There being no employer- business policy it cannot decline. These projects are
employee relationship, private respondents are not entitled to necessary or desirable in its usual business or trade,
coverage under the Social Security Act.19 In addition, petitioner otherwise they would not have accepted …. Significantly, such
claimed that private respondents’ length of service did not change special orders are not really seasonal but more or less regular,
their status from project to regular employees.20 requiring the virtually continuous services of the "temporary
workers." The NLRC also correctly observed that "if we were
Moreover, granting that private respondents were entitled to coverage to accept respondent’s theory, it would have no regular
under the Act, petitioner claimed that the SSC erred in imposing workers because all of its orders would be special
penalties since his failure to include private respondents under SSS undertakings or projects." The petitioner could then hire all its
coverage was neither willful nor deliberate, but due to the honest workers on a contract basis only and prevent them from
belief that project employees are not regular employees.21 Likewise, attaining permanent status….
he claimed that the SSC erred in ordering payment of contributions
and penalties even for long periods between projects when private Furthermore, the NLRC has determined that the private
respondents were not working.22 respondents have worked for more than one year in the so-
called "special projects" of the petitioner and so fall under the
Petitioner also questioned the failure to apply the rules on prescription second condition specified in the above-quoted provision
of actions and of laches, claiming that the case, being one for the (Article 280, Labor Code).29
injury to the rights of the private respondents, should have been filed
within four (4) years from the time their cause of action accrued, or The Court of Appeals rejected the claim of prescription, stating that
from the time they were hired as project employees. He added that the filing of private respondents’ claims was well within the twenty
private respondents "went into a long swoon, folded their arms and (20)-year period provided by the Social Security Act.30 It found that the
closed their eyes"23 and filed their claim only in 1985, or six (6) years principle of laches could not also apply to the instant case since delay
or eight (8) years after they were taken in by petitioner.24 could not be attributed to private respondents, having filed the case
within the prescriptive period, and that there was no evidence that
In resolving the petition, the Court of Appeals synthesized the issues petitioner lacked knowledge that private respondents would assert
in the petition, to wit: (1) whether private respondents were regular their rights.31
employees of petitioner, and whether their causes of action as such
are barred by prescription or laches; (2) if so, whether petitioner is Petitioner filed a Motion for Reconsideration,32 claiming that the Court
now liable to pay the SSS contributions and penalties during the of Appeals overlooked (1) the doctrine that length of service of a
period of employment.25 project employee is not the controlling test of employment tenure, and
(2) petitioner’s failure to place private respondents under SSS
The Court of Appeals, citing Article 280 of the Labor Code,26 declared coverage was in good faith. The motion was denied for lack of merit.33
that private respondents were all regular employees of the petitioner
in relation to certain activities since they all worked either as masons, In the present Petition for Review, petitioner again insists that private
carpenters and fine graders in petitioner’s various construction respondents were not regular, but project, employees and thus not
projects for at least one year, and that their work was necessary and subject to SSS coverage. In addition, petitioner claims that assuming
desirable to petitioner’s business which involved the construction of private respondents were subject to SSS coverage, their petition was
roads and bridges.27 It cited the case of Mehitabel Furniture barred by prescription and laches. Moreover, petitioner invokes the
Company, Inc. v. NLRC,28 particularly the ruling therein which states: defense of good faith, or his honest belief that project employees are
not regular employees under Article 280 of the Labor Code.lawphil.net
Petitioner’s arguments are mere reiterations of his arguments accomplished. Suffice it to say that regardless of the nature of their
submitted before the SSC and the Court of Appeals. More importantly, employment, whether it is regular or project, private respondents are
petitioner wants this Court to review factual questions already passed subject of the compulsory coverage under the SSS Law, their
upon by the SSC and the Court of Appeals which are not cognizable employment not falling under the exceptions provided by the
by a petition for review under Rule 45. Well-entrenched is the rule that law.41 This rule is in accord with the Court’s ruling in Luzon
the Supreme Court’s jurisdiction in a petition for review is limited to Stevedoring Corp. v. SSS42 to the effect that all employees,
reviewing or revising errors of law allegedly committed by the regardless of tenure, would qualify for compulsory membership in the
appellate court, the findings of fact being generally conclusive on the SSS, except those classes of employees contemplated in Section 8(j)
Court and it is not for the Court to weigh evidence all over again.34 of the Social Security Act.43

Stripped of the lengthy, if not repetitive, disquisition of the private This Court also finds no reason to deviate from the finding of the
parties in the case, and also of the public respondents, on the nature Court of Appeals regarding the nature of employment of private
of private respondents’ employment, the controversy boils down to respondents. Despite the insistence of petitioner that they were
one issue: the entitlement of private respondents to compulsory SSS project employees, the facts show that as masons, carpenters and
coverage. fine graders in petitioner’s various construction projects, they
performed work which was usually necessary and desirable to
The Social Security Act was enacted pursuant to the policy of the petitioner’s business which involves construction of roads and
government "to develop, establish gradually and perfect a social bridges. In Violeta v. NLRC,44 this Court ruled that to be exempted
security system which shall be suitable to the needs of the laborers from the presumption of regularity of employment, the agreement
throughout the Philippines, and shall provide protection against the between a project employee and his employer must strictly conform to
hazards of disability, sickness, old age and death."35 It provides for the requirements and conditions under Article 280 of the Labor Code.
compulsory coverage of all employees not over sixty years of age and It is not enough that an employee is hired for a specific project or
their employers.36 phase of work. There must also be a determination of, or a clear
agreement on, the completion or termination of the project at the time
Well-settled is the rule that the mandatory coverage of Republic Act the employee was engaged if the objectives of Article 280 are to be
No. 1161, as amended, is premised on the existence of an employer- achieved.45 This second requirement was not met in this case.
employee relationship, the essential elements of which are: (a)
selection and engagement of the employee; (b) payment of wages; (c) Moreover, while it may be true that private respondents were initially
the power of dismissal; and (d) the power of control with regard to the hired for specific projects or undertakings, the repeated re-hiring and
means and methods by which the work is to be accomplished, with continuing need for their services over a long span of time—the
the power of control being the most determinative factor.37 shortest being two years and the longest being eight—have
undeniably made them regular employees.46This Court has held that
There is no dispute that private respondents were employees of an employment ceases to be co-terminus with specific projects when
petitioner. Petitioner himself admitted that they worked in his the employee is continuously rehired due to the demands of the
construction projects,38 although the period of their employment was employer’s business and re-engaged for many more projects without
allegedly co-terminus with their phase of work.39 Even without such interruption.47 The Court likewise takes note of the fact that, as cited
admission from petitioner, the existence of an employer-employee by the SSC, even the National Labor Relations Commission in a labor
relationship between the parties can easily be determined by the case involving the same parties, found that private respondents were
application of the "control test,"40 the elements of which are regular employees of the petitioner.48
enumerated above. It is clear that private respondents are employees
of petitioner, the latter having control over the results of the work Another cogent factor militates against the allegations of the
done, as well as the means and methods by which the same were petitioner. In the proceedings before the SSC and the Court of
Appeals, petitioner was unable to show that private respondents were imposed upon him to make such remittance.53 For the same reasons,
appraised of the project nature of their employment, the specific petitioner cannot now invoke the defense of good faith.
projects themselves or any phase thereof undertaken by petitioner
and for which private respondents were hired. He failed to show any WHEREFORE, the Petition is DENIED.
document such as private respondents’ employment contracts and The Decision and Resolution of the Court of Appeals promulgated on
employment records that would indicate the dates of hiring and 6 March 1996 and 30 July 1996 respectively, are AFFIRMED. Costs
termination in relation to the particular construction project or phases against petitioner.
in which they were employed.49Moreover, it is peculiar that petitioner
did not show proof that he submitted reports of termination after the
completion of his construction projects, considering that he alleges
that private respondents were hired and rehired for various projects or
phases of work therein.

Anent the issue of prescription, this Court rules that private

respondents’ right to file their claim had not yet prescribed at the time
of the filing of their petition, considering that a mere eight (8) years
had passed from the time delinquency was discovered or the proper
assessment was made. Republic Act No. 1161, as amended,
prescribes a period of twenty (20) years, from the time the
delinquency is known or assessment is made by the SSS, within
which to file a claim for non-remittance against employers.50

Likewise, this Court is in full accord with the findings of the Court of
Appeals that private respondents are not guilty of laches. The
principle of laches or "stale demands" ordains that the failure or
neglect, for an unreasonable and unexplained length of time, to do
that which by exercising due diligence could or should have been
done earlier, or the negligence or omission to assert a right within a
reasonable time, warrants a presumption that the party entitled to
assert it either has abandoned it or declined to assert it.51 In the
instant case, this Court finds no proof that private respondents had
failed or neglected to assert their right, considering that they filed their
claim within the period prescribed by law.1avvphi1.net

This Court finds no merit in petitioner’s protestations of good faith.

In United Christian Missionary Society v. Social Security
Commission,52 this Court ruled that good faith or bad faith is irrelevant
for purposes of assessment and collection of the penalty for delayed
remittance of premiums, since the law makes no distinction between
an employer who professes good reasons for delaying the remittance
of premiums and another who deliberately disregards the legal duty
MARIO CARTAGENAS, JESUS N. MIRABALLES, VICTOR C. State Center 3/05/81-7/13/81
MONSOD and VICENTE BARROA, petitioners,
vs. FEBTC Bldg. 7/14/81-9/21/81
ROMAGO ELECTRIC COMPANY, INC., NATIONAL LABOR
RELATIONS COMMISSION (Fifth Division), respondents. SMC Complex 9/22/81-9/10/84

Isidro G. Pasana for petitioners. PNB Finance Complex 9/11/84-7/12/86

Constantino B. de Jesus & Associates for private respondent. (Annexes 1 to 25, respondent's Position Paper)

2. Victor C. Monsod

GRINO-AQUIÑO, J.: Project Assigned Period Covered

The issue in this case is whether the petitioners are project MMRH Project 4/13/76-2/02/80
employees of the private respondent Romago Electric Company, Inc.,
as found by the National Labor Relations Commission, or regular Manila Hotel 2/03/80-7/19/81
employees as found by the Labor Arbiter.
PNB Project 7/20/81-7/16/84
The facts are recited in the decision of the NLRC as follows:
Manila Hotel 7/17/84-7/02/84
Respondent Romago is a general contractor engaged
in contracting and sub-contracting of specific building PNB Finance Center 10/3/84-7/12/86
construction projects or undertaking such as electrical,
mechanical and civil engineering aspects in the repair
(Annexes 30 to 41, Ibid)
of buildings and from other kindred services.
3. Vicente Barroa
Individual complainants are employed by the
respondent in connection with particular construction
projects and they are as follows: Project Assigned Period Covered

1. Jesus N. Miraballes Project Assigned Period SMC Hoc. Project 7/5/82-1/21/85

Covered
PNB Finance Complex 1/22/85-7/12/86
L. Towers 4/23/79-2/26/80
(Annexes 42 to 47, Ibid)
Nat'l Bookstore 2/26/80-8/28/80
4. Mario Cartagenas
PNRC-MHQ Bldg. 8/29/80-9/09/80
Project Assigned Period Covered
A. Payumo's Res. 9/10/80
 PNB Finance Complex 3/26/82-7/12/86 I hereby agree to the foregoing conditions and accept
my employment for a fixed period and from the above
(Annexes 52 to 54, Ibid) mentioned Project/Assignment only.

Effective July 12,1986, individual complainants and The conditions of employment to which the
Lawrence Deguit were temporarily laid-off by virtue of a complainant agreed are mentioned in the right upper
memorandum issued by the respondent. In said portion of the same page of said application form, an
memorandum they were also informed that a meeting example of which reads:
regarding the resumption of operation will be held on
July 16, 1986 and that they will be notified as to when Assigned to FEBTC G.P. FORMOSO
they will resume work. Project
On July 28, 1986, complainants filed the instant case Position Electrician
for illegal dismissal but before the respondent could
receive a copy of the complaint and the notification and Effectivity 7-14-81
summons issued by the NLRC National Capital Region
(actually received only on August 22, 1986, page 4, Salary P18.50/day & allowance
records) individual complainants re-applied with the
respondent and were assigned to work with its project Conditions Hired for above project
at Robinson-EDSA, specifically on the following dates, only
to wit:
Approved: Signed

1. Mirabelles and Monsod August 2/86

Personnel Manager
2. Barroa August 11/86
7/14/81
3. Cartagenas August 4/86
Date
(Annexes 26 to 29-B; '39-4l'; 48 to 51 -B; '55 to 58-
A', Ibid) (Employment Application Form of MIRABALLES
JESUS NIEVA dated July 14,1981, Annex 16; 16-A
and 16-B, Ibid)
In hiring the herein complainants to be assigned to a
particular project they have to fill up an employment
application form and are subjected to a pre-hiring Thereafter the hired employee is given by the
examination. If evaluated to be qualified they sign at respondent an assignment slip, an example of which
the end portion of their employment application form reads:
that:
ASSIGNMENT SLIP
AGREEMENT
DATE: July 14, 1981
 Engr. C.A. Castro The fact that the complainants worked for the
respondent under different project employment
Project In-Charge contracts for so many years could not be made a basis
to consider them as regular employees for they remain
FEFTC project employees regardless of the number of projects
in which they have worked. (p. 22, Rollo.)
Name of Project
Article 280 of the Labor Code provides:
The bearer, Mr. Jesus N. Miraballes will work under
you as electrician effective 14 July 81. His employment ART. 280. Regular and Casual Employment.- The
will terminate upon completion/stoppage of the project provisions of written agreement to the contrary
or terminated earlier for cause. notwithstanding and regardless of the oral agreements
of the parties, an employment shall be deemed to be
Signed regular where the employee has been engaged to
perform activities which are usually necessary or
GUDIOSO PLATA desirable in the usual business or trade of the
employer, except where the employment has been
fixed for a specific project or undertaking the
Chief Engineer
completion or termination of which has been
determined at the time of the engagement of the
CONFORME: employee or where the work or services to be
performed is seasonal in nature and the employment is
SGD. JESUS N. MIRABALLES for the duration of the season.

(Assignment slip of Jesus N. Miraballes, Annex 17, An employment shall be deemed to be casual if it is not
Ibid.) covered by the preceding paragraph: Provided, That,
any employee who has rendered at least one year of
xxx xxx xxx service, whether such service is continuous or broken,
shall be considered a regular employee with respect to
... Respondent introduced documentary exhibits that the activity in which he is employed and his
the complainant have invariably been issued employment shall continue while such actually exists
appointment from project to projects and were issued (Emphasis supplied). (p. 46, Rollo.)
notice of temporary lay-off when the PNB Finance
Center project was suspended due to lack of funds and As an electrical contractor, the private respondent depends for its
that when work was available particularly respondent's business on the contracts it is able to obtain from real estate
project at Robinson-EDSA they were rehired and developers and builders of buildings. Since its work depends on the
assigned to this project. (pp. 16-19; 21-22, Rollo.) availability of such contracts or "projects," necessarily the duration of
the employment of its work force is not permanent but co-terminus
The NLRC held that the complainants were project employees with the projects to which they are assigned and from whose payrolls
because their appointments were "co-terminus with the phase or item they are paid. It would be extremely burdensome for their employer
of work assigned to them in said project," It held further: who, like them, depends on the availability of projects, if it would have
to carry them as permanent employees and pay them wages even if
there are no projects for them to work on. We hold, therefore, that the on March 13, 1988 (pp. 62-63, Rollo). That supervening fact,
NLRC did not abuse its discretion in finding, based on substantial however, has no relevance to this case.
evidence in the records, that the petitioners are only project workers
of the private respondent. We find no reason to depart from the well-settled rule that findings of
fact of labor officials are generally conclusive and binding upon this
This case is similar to Sandoval Shipyards, Inc. vs. NLRC, 136 SCRA Court when supported by substantial evidence, as in this case (Edi-
675 (1985), where we held: Staff Builders International, Inc. vs, Leogardo, Jr., 152 SCRA 453;
Asiaworld Publishing House, Inc. vs. Ople, 152 SCRA 219; National
We feel that there is merit in the contention of the Federation of Labor Union vs. Ople, 143 SCRA 124; Dangan vs.
applicant corporation. To our mind, the employment of NLRC, 127 SCRA 706; Special Events & Central Shipping Office
the employees concerned were fixed for a specific Workers Union vs. San Miguel Corp., 122 SCRA 557; Mamerto vs.
project or undertaking. For the nature of the business Inciong, 118 SCRA 265; Phil. Labor Alliance Council vs. Bureau of
the corporation is engaged into is one which will not Labor Relations, 75 SCRA 162).
allow it to employ workers for an indefinite period. "It is
significant to note that the corporation does not WHEREFORE, the petition for certiorari is dismissed for lack of merit.
construct vessels for sale or otherwise which will No costs.
demand continuous productions of ships and will need
permanent or regular workers. It merely accepts
contracts for ship-building or for repair of vessels from
third parties and, only, on occasion when it has work
contract of this nature that it hires workers to do the job
which, needless to say, lasts only for less than a year
or longer.

The completion of their work or project automatically

terminates their employment, in which case, the
employer is, under the law, only obliged to render a
report on the termination of the employment. (P. 48,
Rollo.)

Petitioners' invocation of the resolution of this Court in Romago

Electric Company, Inc, vs. Romago Electric United Workers Union-
Christian Labor Organization, (REWU-CLOP), et al., G.R. No. 79774,
February 1, 1988, where this Court dismissed the petition, is not well
taken. As pointed out by the public respondent, the issue in that case
was whether the members of the union may properly participate in the
holding of a certification election. Since the petitioners in their
complaint for illegal dismissal dated July 28, 1986 (Annex A of
petition) averred that they do not belong to any union, the ruling
in Romago vs, REWU-CLOP may not apply to them. In their Reply to
the public respondents' Comment in this case, they disclosed that
they are members and officers of a new union which they organized
RICARDO FERNANDEZ, petitioner, declared illegal. Consequently, respondent is ordered
vs. to reinstate the complainants, who have not yet
NATIONAL LABOR RELATIONS COMMISSION and D. M. reached the retirement age, to their former positions
CONSUNJI, INC., respondents. plus backwages of one (1) year.

Gaston V. Taquio for petitioner. Anent complainants who have already reach the
retirement age of sixty (60) years as of the date of this
Marcos S. Pagaspas for private respondent. decision, respondent is thereby ordered to pay said
complainants their retirement/separation benefits
equivalent to one half (1/2) month salary for every year
of service, a fraction of at least six (6) months being
considered as one (1) whole year.
NOCON, J.:
Moreover, respondent is ordered to pay all
Forming the crux of the matter in this petition for certiorari is the complainants their service incentive leave for the past
question of whether or not the National Labor Relations Commission three (3) years; and to pay complainants Ricardo
acted with grave abuse of discretion in reversing the Labor Arbiter's Fernandez, Gaudencio Merhan and Rolando Serona
decision by dismissing the complaints for illegal dismissal, one of their 13th month pay likewise for the past three (3)
which is petitioner's, on the finding that they were project employees. years.

Petitioner was hired as a laborer at the D.M. Consunji, Inc., a The complaints of Amador Borromeo, Jesus Espiritu
construction firm, on November 5, 1974. He became a skilled welder and Ramon Celestial are hereby dismissed in view of
and worked for private respondent until March 23, 1986 when his their receipt of Separation pay and their execution of
employment was terminated on the ground that the project petitioner quitclaims in favor of herein respondent.
had been assigned to was already completed and there was no more
work for him to do. The other claims are likewise dismissed for lack of
merit.
Skeptic of private respondent's reason, petitioner brought his plight
before the Labor Arbiter who consolidated the same with three (3) SO ORDERED.
other separate complaints for illegal dismissal and various money
claims against private respondent. After filing their respective position Metro Manila, Philippines. 12 May 1988.1
papers and other documents pertinent to their causes/defenses, the
parties agreed to submit the case for decision based on record. Private respondent questioned on appeal the aforesaid decision of the
Labor Arbiter on the ground that the complainants were all project
On May 12, 1988, Labor Arbiter Fernando V. Cinco rendered a employees who were hired on a project-to-project basis, depending
decision, finding that complainants worked continuously in various on the availability of projects that the former was able to close with its
projects ranging from five (5) to twenty (20) years and belonged to a clients. Respondent pointed to the gaps in complainants' respective
work pool, the dispositive portion of which states as follows: employment histories to show that they were indeed hired on an "off-
and-on" basis.
WHEREFORE, premises considered, the terminations
by respondent of herein complainants are hereby
In view of the lack of evidence on record to prove the continuous has in the meantime rendered the questioned decision final and no
employment of complainants-appellees, and that on the contrary, longer assailable.
what was proven was the intermittent nature of their work as shown
by the different project contracts, the respondent Commission Even if we were to dispense with the requirement that the petition
concluded that complainants-appellees were project employees. The should be filed within a reasonable time, the petition would still have
dispositive portion of the decision dated September 29, 1989 of to be dismissed on the merits. Private respondent presented material
respondent Commission reads: documents showing that petitioner was hired as a project employee
with the specific dates of hiring, the duration of hiring, the dates of his
WHEREFORE, the decision of the Labor Arbiter is lay-offs, including the lay-off reports and the termination reports
hereby set aside and a new one entered dismissing the submitted to the then Ministry of Labor and Employment. Such data
complaints filed by complainants-appellees for lack of covered the period from November 5, 1974 to March 23, 1986.
merit.2
Inasmuch as the documentary evidence clearly showed gaps of a
From said decision, the complainants-appellees interposed a motion month or months between the hiring of petitioner in the numerous
for reconsideration which was denied for lack of merit on July 19, projects wherein he was assigned, the ineluctable conclusion is that
1991. Respondent Commission affirmed its finding that complainants- petitioner has not continuously worked with private respondent but
appellees were project employees. As such, the nature of their only intermittently as he was hired solely for specific projects. As
employment did not change by the number of projects in which they such, he is governed by Policy Instruction No. 20, the pertinent
have rendered service. Respondent Commission also noted that the portions of which read as follows:
motion for reconsideration was filed only on January 29, 1990 which
was beyond the ten-day reglementary period from date of receipt of Generally, there are two types of employees in the
the decision on November 13, 1989. construction industry, namely 1) Project Employees
and 2) Non-project Employees.
Without any mention of the denial of said motion for reconsideration,
petitioner alone comes before this Court on a petition filed on July 21, Project employees are those employed in connection
1992 and assails the decision dated September 29, 1989 of with a particular construction project. Non-project
respondent Commission contending that it is more in keeping with the employees are those employed by a construction
intent and spirit of the law to consider him and the thirteen (13) other company without reference to a particular project.
complainants in the consolidated cases as regular employees.
Project employees are not entitled to termination pay if
At the outset, it is obvious that the petition was not filed within a they are terminated as a result of the completion of the
reasonable time from receipt of the questioned decision on November project or any phase thereof in which they are
13, 1989 as the petition was filed only on July 21, 1992. Neither does employed, regardless of the number of projects in
the filing of the petition appear to be reasonable from the date of which they have been employed by a particular
receipt of the denial of the motion for reconsideration on August 2, construction company.
1991. Reckoned from this later date, petitioner waited for almost one
year before he availed of this extraordinary remedy of certiorari. We Petitioner cites Article 280 of the Labor Code as legal basis for the
have consistently stated that "the yardstick to measure the timeliness decision of the Labor Arbiter in his favor. The text of Article 280 states
of a petition for certiorari is the reasonableness of the duration of time as follows:
that had expired from the commission of the acts complained of up to
the institution of the proceedings to annul the same."3 Without doubt,
petitioner's negligence or indifference for such a long period of time
 Art. 280. Regular and Casual Employment. — The provision to which it is attached, and not to the statute
provisions of written agreement to the contrary itself or to other sections thereof. (Chinese Flour
notwithstanding and regardless of the oral agreement Importers Association v. Price Stabilization Board, 89
of the parties, an employment shall be deemed to be Phil. 469 (1951); Arenas v. City of San Carlos, G.R.
regular where the employee has been engaged to No. 24024, April 5, 1978, 82 SCRA 318 (1978). The
perform activities which are usually necessary or only exception to the rule is where the clear legislative
desirable in the usual business or trade of the intent is to restrain or qualify not only the phrase
employer, except where the employment has been immediately preceding it (theproviso) but also earlier
fixed for a specific project or undertaking the provisions of the statute or even the statute itself as a
completion or termination of which has been whole. (Commissioner of Internal Revenue v. Filipinas
determined at the time of the engagement of the Compania de Seguros, 107 Phil. 1055 (1960)
employee or where the work or services to be
performed is seasonal in nature and the employment is Indeed, a careful reading of the proviso readily discloses that the
for the duration of the season. same relates to employment where the employee is engaged to
perform activities that are usually necessary or desirable in the usual
An employment shall be deemed to be casual if it is not business or trade of the employer but hastens to qualify that project
covered by the preceding paragraph: Provided, That, employment is specifically exempted therefrom.
any employee who has rendered at least one year of
service whether such service is continuous or broken, Finally, petitioner relies on Policy Instruction No. 20 which was issued
shall be considered a regular employee with respect to by then Secretary Blas F. Ople to stabilize employer-employee
the activity in which he is employed and his relations in the construction industry to support his contention that
employment shall continue while such actually exists. workers in the construction industry may now be considered regular
employees after their long years of service with private respondent.
Petitioner claims that the above-quoted proviso in Article 280 of the The pertinent provision of Policy Instruction No. 20 reads:
Labor Code supports his claim that he should be regarded as a
regular employee. Members of a work pool from which a construction
company draws its project employees, if considered
We disagree. The proviso in the second paragraph of Article 280 of employees of the construction company while in the
the Labor Code has recently been explained in Mercado v. work pool, are non-project employees or employees for
NLRC,4 where it was held that said proviso deems as regular an indefinite period. If they are employed in a particular
employees only those "casual" employees who have rendered at least project, the completion of the project or of any phase
one year of service regardless of the fact that such service may be thereof will not mean severance of employer-employee
continuous or broken. It is not applicable to "project" employees, who relationship.
are specifically excepted therefrom. Thus, the Court therein said:
Respondent Commission correctly observed in its decision that
The general rule is that the office of a proviso is to complainants, one of whom petitioner, failed to consider the
qualify or modify only the phrase immediately requirement in Policy Instruction No. 20 that to qualify as member of a
preceding it or restrain or limit the generality of the work pool, the worker must still be considered an employee of the
clause that it immediately follows. (Statutory construction company while in the work pool. In other words, there
Construction by Ruben Agpalo, 1986 ed., p. 173). must be proof to the effect that petitioner was under an obligation to
Thus, it has been held that a proviso is to be construed be always available on call of private respondent and that he was not
with reference to the immediately preceding part of the free to offer his services to other employees. Unfortunately, petitioner
miserably failed to introduce any evidence of such nature during the
times when there were no project.

Noteworthy in this case is the fact that herein private respondent's lay-
off reports and the termination reports were duly submitted to the then
Ministry of Labor and Employment everytime a project was completed
in accordance with Policy Instruction No. 20, which provides:

Project employees are not entitled to termination pay if

they are terminated as a result of the completion of the
project or any phase thereof in which they are
employed, regardless of the number of projects in
which they have been employed by a particular
construction company. Moreover, the company is not
required to obtain a clearance from the Secretary of
Labor in connection with such termination. What is
required of the company is a report to the nearest
Public Employment Office for statistical purposes.

The presence of this factor makes this case different from the cases
decided by the Court where the employees were deemed regular
employees. The cases of Ochoco v. National Labor Relations
Commission,5 Philippine National Construction Corporation v. National
Labor Relations Commission,6Magante v. National Labor Relations
Commission,7 and Philippine National Construction Corporation v.
National Labor Relations, et al.,8 uniformly held that the failure of the
employer to report to the nearest employment office the termination of
workers everytime a project is completed proves that the employees
are not project employees. Contrariwise, the faithful and regular effort
of private respondent in reporting every completion of its project and
submitting the lay-off list of its employees proves the nature of
employment of the workers involved therein as project employees.
Given this added circumstance behind petitioner's employment, it is
clear that he does not belong to the work pool from which the private
respondent would draw workers for assignment to other projects at its
discretion.

WHEREFORE, the instant petition for certiorari is hereby DISMISSED

in view of the foregoing reasons.
ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91
others, namely: ENGR. ALAN G. BARINQUE, ENGR. DARRELL 7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
LEE ELTAGONDE, EDUARD H. FOOKSON, JR., ROMEO R. 8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO 9. Russell Gacus 1-30-85 Engineer 1 6-30-92
MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR S. 10. Jose Garguena 3-02-81 Warehouseman to present
BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B. DANDASAN, 11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
and GERRY I. FETALVERO, petitioners, 12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992
vs. 13. Romeo Sarona 2-26-83 Machine Operator 8-31-912
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL
STEEL CORPORATION (NSC), respondents. On 5 July 1990, petitioners filed separate complaints for unfair labor
practice, regularization and monetary benefits with the NLRC, Sub-
Leonard U. Sawal for petitioners. Regional Arbitration Branch XII, Iligan City.

Saturnino Mejorada for private respondent. The complaints were consolidated and after hearing, the Labor Arbiter
in a Decision dated 7 June 1991, declared petitioners "regular project
employees who shall continue their employment as such for as long
as such [project] activity exists," but entitled to the salary of a regular
employee pursuant to the provisions in the collective bargaining
FELICIANO, J.: agreement. It also ordered payment of salary differentials. 3

In this Petition for Certiorari, petitioners assail the Resolution of the Both parties appealed to the NLRC from that decision. Petitioners
National Labor Relations Commission ("NLRC") dated 8 January 1993 argued that they were regular, not project, employees. Private
which declared petitioners to be project employees of private respondent, on the other hand, claimed that petitioners are project
respondent National Steel Corporation ("NSC"), and the NLRC's employees as they were employed to undertake a specific project —
subsequent Resolution of 15 February 1993, denying petitioners' NSC's Five Year Expansion Program (FAYEP I & II).
motion for reconsideration.
The NLRC in its questioned resolutions modified the Labor Arbiter's
Petitioners plead that they had been employed by respondent NSC in decision. It affirmed the Labor Arbiter's holding that petitioners
connection with its Five Year Expansion Program (FAYEP I & II) 1 for were project employees since they were hired to perform work in a
varying lengths of time when they were separated from NSC's specific undertaking — the Five Years Expansion Program, the
service: completion of which had been determined at the time of their
engagement and which operation was not directly related to the
Employee Date Nature of Separated business of steel manufacturing. The NLRC, however, set aside the
award to petitioners of the same benefits enjoyed
Employed Employment by regular employees for lack of legal and factual basis.

1. Alan Barinque 5-14-82 Engineer 1 8-31-91 Deliberating on the present Petition for Certiorari, the Court considers
2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92 that petitioners have failed to show any grave abuse of discretion or
3. Edgar Bontuyan 11-03-82 Chairman to present any act without or in excess of jurisdiction on the part of the NLRC in
4. Osias Dandasan 9-21-82 Utilityman 1991 rendering its questioned resolutions of 8 January 1993 and 15
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92 February 1993.
The law on the matter is Article 280 of the Labor Code which reads in It is evidently important to become clear about the meaning and scope
full: of the term "project" in the present context. The "project" for the
carrying out of which "project employees" are hired would ordinarily
Art. 280. Regular and Casual Employment — The have some relationship to the usual business of the employer.
provisions of the written agreement to the contrary Exceptionally, the "project" undertaking might not have an ordinary or
notwithstanding and regardless of the oral agreement normal relationship to the usual business of the employer. In this latter
of the parties, and employment shall be deemed to be case, the determination of the scope and parameeters of the "project"
regular where the employee has been engaged to becomes fairly easy. It is unusual (but still conceivable) for a company
perform activities which are usually necessary or to undertake a project which has absolutely no relationship to the
desirable in the usual business or trade of the usual business of the company; thus, for instance, it would be an
employer, except where the employment has been unusual steel-making company which would undertake the breeding
fixed for a specific project or undertaking and production of fish or the cultivation of vegetables. From the
the completion or termination of which has been viewpoint, however, of the legal characterization problem here
determined at the time of the engagement of the presented to the Court, there should be no difficulty in designating the
employee or where the work or services to be employees who are retained or hired for the purpose of undertaking
performed is seasonal in nature and the employment is fish culture or the production of vegetables as "project employees," as
for the duration of the season. distinguished from ordinary or "regular employees," so long as the
duration and scope of the project were determined or specified at the
An employment shall be deemed to be casual if it is not time of engagement of the "project employees." 7 For, as is evident
covered by the preceding paragraph: Provided, That, from the provisions of Article 280 of the Labor Code, quoted earlier,
any employee who has rendered at least one year the principal test for determining whether particular employees are
service, whether such service is continuous or broken, properly characterized as "project employees" as distinguished from
shall be considered a regular employee with respect to "regular employees," is whether or not the "project employees" were
the activity in which he is employed and his assigned to carry out a "specific project or undertaking," the duration
employment shall continue while such actually exists. (and scope) of which were specified at the time the employees were
(Emphasis supplied) engaged for that project.

Petitioners argue that they are "regular" employees of NSC because: In the realm of business and industry, we note that "project" could
(i) their jobs are "necessary, desirable and work-related to private refer to one or the other of at least two (2) distinguishable types of
respondent's main business, steel-making"; and (ii) they have activities. Firstly, a project could refer to a particular job or undertaking
rendered service for six (6) or more years to private respondent that is within the regular or usual business of the employer company,
NSC. 4 but which is distinct and separate, and identifiable as such, from the
other undertakings of the company. Such job or undertaking begins
The basic issue is thus whether or not petitioners are properly and ends at determined or determinable times. The typical example of
characterized as "project employees" rather than "regular employees" this first type of project is a particular construction job or project of a
of NSC. This issue relates, of course, to an important consequence: construction company. A construction company ordinarily carries out
the services of project employees are co-terminous with the project two or more discrete identifiable construction projects: e.g., a twenty-
and may be terminated upon the end or completion of the project for five- storey hotel in Makati; a residential condominium building in
which they were hired. 5 Regular employees, in contract, are legally Baguio City; and a domestic air terminal in Iloilo City. Employees who
entitled to remain in the service of their employer until that service is are hired for the carrying out of one of these separate projects, the
terminated by one or another of the recognized modes of termination scope and duration of which has been determined and made known
of service under the Labor Code. 6 to the employees at the time of employment, are properly treated as
"project employees," and their services may be lawfully terminated at effected and implemented in good faith, and not merely as a means of
completion of the project. evading otherwise applicable requirements of labor laws.

The term "project" could also refer to, secondly, a particular job or Thus, the particular component projects embraced in the Five Year
undertaking that is not within the regular business of the corporation. Expansion Program, to which petitioners were assigned, were
Such a job or undertaking must also be identifiably separate and distinguishable from the regular or ordinary business of NSC which, of
distinct from the ordinary or regular business operations of the course, is the production or making and marketing of steel products.
employer. The job or undertaking also begins and ends at determined During the time petitioners rendered services to NSC, their work was
or determinable times. The case at bar presents what appears to our limited to one or another of the specific component projects which
mind as a typical example of this kind of "project." made up the FAYEP I and II. There is nothing in the record to show
that petitioners were hired for, or in fact assigned to, other purposes,
NSC undertook the ambitious Five Year Expansion Program I and II e.g., for operating or maintaining the old, or previously installed and
with the ultimate end in view of expanding the volume and increasing commissioned, steel-making machinery and equipment, or for selling
the kinds of products that it may offer for sale to the public. The Five the finished steel products.
Year Expansion Program had a number of component projects: e.g.,
(a) the setting up of a "Cold Rolling Mill Expansion Project"; (b) the We, therefore, agree with the basic finding of the NLRC (and the
establishment of a "Billet Steel-Making Plant" (BSP); (c) the Labor Arbiter) that the petitioners were indeed "project employees:"
acquisition and installation of a "Five Stand TDM"; and (d) the "Cold
Mill Peripherals Project." 8 Instead of contracting out to an outside or It is well established by the facts and evidence on
independent contractor the tasks of constructing the buildings with record that herein 13 complainants were hired and
related civil and electrical works that would house the new machinery engaged for specific activities or undertaking the period
and equipment, the installation of the newly acquired mill or plant of which has been determined at time of hiring or
machinery and equipment and the commissioning of such machinery engagement. It is of public knowledge and which this
and equipment, NSC opted to execute and carry out its Five Yeear Commission can safely take judicial notice that the
Expansion Projects "in house," as it were, by administration. The expansion program (FAYEP) of respondent NSC
carrying out of the Five Year Expansion Program (or more precisely, consist of various phases [of] project components
each of its component projects) constitutes a distinct undertaking which are being executed or implemented
identifiable from the ordinary business and activity of NSC. Each independently or simultaneously from each other . . .
component project, of course, begins and ends at specified times,
which had already been determined by the time petitioners were In other words, the employment of each "project
engaged. We also note that NSC did the work here involved — the worker" is dependent and co-terminous with the
construction of buildings and civil and electrical works, installation of completion or termination of the specific activity or
machinery and equipment and the commissioning of such machinery undertaking [for which] he was hired which has been
— only for itself. Private respondent NSC was not in the business of pre-determined at the time of engagement. Since,
constructing buildings and installing plant machinery for the general there is no showing that they (13 complainants) were
business community, i.e., for unrelated, third party, corporations. NSC engaged to perform work-related activities to the
did not hold itself out to the public as a construction company or as an business of respondent which is steel-making, there is
engineering corporation. no logical and legal sense of applying to them the
proviso under the second paragraph of Article 280 of
Which ever type of project employment is found in a particular case, a the Labor Code, as amended.
common basic requisite is that the designation of named employees
as "project employees" and their assignment to a specific project, are xxx xxx xxx
 The present case therefore strictly falls under the
definition of "project employees" on paragraph one of
Article 280 of the Labor Code, as amended. Moreover,
it has been held that the length of service of a project
employee is not the controlling test of employment
tenure but whether or not "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". (See Hilario Rada v. NLRC, G.R. No.
96078, January 9, 1992; and Sandoval Shipping, Inc.
v. NLRC, 136 SCRA 674 (1985). 9

Petitioners next claim that their service to NSC of more than six (6)
years should qualify them as regular employees. We believe this
claim is without legal basis. The simple fact that the employment of
petitioners as project employees had gone beyond one (1) year, does
not detract from, or legally dissolve, their status as project
employees. 10 The second paragraph of Article 280 of the Labor
Code, quoted above, providing that an employee who has served for
at least one (1) year, shall be considered a regular employee, relates
to casual employees, not to project employees.

In the case of Mercado, Sr. vs. National Labor Relations

Commission, 11 this Court ruled that the proviso in the second
paragraph of Article 280 relates only to casual employees and is not
applicable to those who fall within the definition of said Article's first
paragraph, i.e., project employees. The familiar grammatical rule is
that a proviso is to be construed with reference to the immediately
preceding part of the provision to which it is attached, and not to other
sections thereof, unless the clear legislative intent is to restrict or
qualify not only the phrase immediately preceding the proviso but also
earlier provisions of the statute or even the statute itself as a whole.
No such intent is observable in Article 280 of the Labor Code, which
has been quoted earlier.

ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is

hereby DISMISSED for lack of merit. The Resolutions of the NLRC
dated 8 January 1993 and 15 February 1993 are hereby AFFIRMED.
No pronouncement as to costs.
FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO Mercado, Jr. and Antonio Mercado since 1972 and the rest of the
MERCADO, JR., ANTONIO MERCADO, JOSE CABRAL, LUCIA petitioners since 1960 up to April 1979, when they were all allegedly
MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA dismissed from their employment; and that, during the period of their
MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO, BRIGIDA employment, petitioners received the following daily wages:
ALCANTARA, EMERLITA MERCADO, ROMEO GUEVARA,
ROMEO MERCADO and LEON SANTILLAN, petitioners, From 1962-1963 — P1.50
vs. 1963-1965 — P2.00
NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD 1965-1967 — P3.00
DIVISION; LABOR ARBITER LUCIANO AQUINO, RAB-III; 1967-1970 — P4.00
AURORA L. CRUZ; SPOUSES FRANCISCO DE BORJA and 1970-1973 — P5.00
LETICIA DE BORJA; and STO. NIÑO REALTY, 1973-1975 — P5.00
INCORPORATED, respondents. 1975-1978 — P6.00
1978-1979 — P7.00
Servillano S. Santillan for petitioners.
Luis R. Mauricio for private respondents. Private respondent Aurora Cruz in her answer to petitioners'
complaint denied that said petitioners were her regular employees
and instead averred that she engaged their services, through
Spouses Fortunato Mercado, Sr. and Rosa Mercado, their
"mandarols", that is, persons who take charge in supplying the
PADILLA, J.: number of workers needed by owners of various farms, but only to do
a particular phase of agricultural work necessary in rice production
Assailed in this petition for certiorari is the decision * of the respondent and/or sugar cane production, after which they would be free to
national Labor Relations Commission (NLRC) dated 8 August 1984 render services to other farm owners who need their services.2
which affirmed the decision of respondent Labor Arbiter Luciano P.
Aquino with the slight modification of deleting the award of financial The other private respondents denied having any relationship
assistance to petitioners, and the resolution of the respondent NLRC whatsoever with the petitioners and state that they were merely
dated 17 August 1987, denying petitioners' motion for reconsideration. registered owners of the land in question included as corespondents
in this case.3
This petition originated from a complaint for illegal dismissal,
underpayment of wages, non-payment of overtime pay, holiday pay, The dispute in this case revolves around the issue of whether or not
service incentive leave benefits, emergency cost of living allowances petitioners are regular and permanent farm workers and therefore
and 13th month pay, filed by above-named petitioners against private entitled to the benefits which they pray for. And corollary to this,
respondents Aurora L. Cruz, Francisco Borja, Leticia C. Borja and whether or not said petitioners were illegally dismissed by private
Sto. Niño Realty Incorporated, with Regional Arbitration Branch No. respondents.
III, National Labor Relations Commission in San Fernando,
Pampanga.1 Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private
respondents and held that petitioners were not regular and permanent
Petitioners alleged in their complaint that they were agricultural workers of the private respondents, for the nature of the terms and
workers utilized by private respondents in all the agricultural phases of conditions of their hiring reveal that they were required to perform
work on the 7 1/2 hectares of ace land and 10 hectares of sugar land phases of agricultural work for a definite period of time after which
owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan their services would be available to any other farm
worked in the farm of private respondents since 1949, Fortunato owner.4 Respondent Labor Arbiter deemed petitioners' contention of
working twelve (12) hours a day the whole year round in the farm, an The NLRC ruled in favor of private respondents affirming the decision
exaggeration, for the reason that the planting of lice and sugar cane of the respondent Labor Arbiter, with the modification of the deletion
does not entail a whole year as reported in the findings of the Chief of of the award for financial assistance to petitioners. The dispositive
the NLRC Special Task Force.5 Even the sworn statement of one of portion of the decision of the NLRC reads:
the petitioners, Fortunato Mercado, Jr., the son of spouses Fortunato
Mercado, Sr. and Rosa Mercado, indubitably show that said WHEREFORE, the Decision of Labor Arbiter Luciano P.
petitioners were hired only as casuals, on an "on and off" basis, thus, Aquino dated March 3, 1983 is hereby modified in that the
it was within the prerogative of private respondent Aurora Cruz either award of P10,000.00 financial assistance should be deleted.
to take in the petitioners to do further work or not after any single The said Decision is affirmed in all other aspects.
phase of agricultural work had been completed by them.6
SO ORDERED.11
Respondent Labor Arbiter was also of the opinion that the real cause
which triggered the filing of the complaint by the petitioners who are Petitioners filed a motion for reconsideration of the Decision of the
related to one another, either by consanguinity or affinity, was the Third Division of the NLRC dated 8 August 1984; however, the NLRC
filing of a criminal complaint for theft against Reynaldo Mercado, son denied tills motion in a resolution dated 17 August 1987.12
of spouses Fortunate Mercado, Sr. and Rosa Mercado, for they even
asked the help of Jesus David, Zone Chairman of the locality to talk to In the present Petition for certiorari, petitioners seek the reversal of
private respondent, Aurora Cruz regarding said criminal case.7 In his the above-mentioned rulings. Petitioners contend that respondent
affidavit, Jesus David stated under oath that petitioners were never Labor Arbiter and respondent NLRC erred when both ruled that
regularly employed by private respondent Aurora Cruz but were, on- petitioners are not regular and permanent employees of private
and-off hired to work and render services when needed, thus adding respondents based on the terms and conditions of their hiring, for said
further support to the conclusion that petitioners were not regular and findings are contrary to the provisions of Article 280 of the Labor
permanent employees of private respondent Aurora Cruz.8 Code.13 They submit that petitioners' employment, even assuming
said employment were seasonal, continued for so many years such
Respondent Labor Arbiter further held that only money claims from that, by express provision of Article 280 of the Labor Code as
years 1976-1977, 1977-1978 and 1978-1979 may be properly amended, petitioners have become regular and permanent
considered since all the other money claims have prescribed for employees.14
having accrued beyond the three (3) year period prescribed by
law.9 On grounds of equity, however, respondent Labor Arbiter Moreover, they argue that Policy Instruction No. 1215 of the
awarded petitioners financial assistance by private respondent Aurora Department of Labor and Employment clearly lends support to this
Cruz, in the amount of Ten Thousand Pesos (P10,000.00) to be contention, when it states:
equitably divided among an the petitioners except petitioner Fortunato
Mercado, Jr. who had manifested his disinterest in the further PD 830 has defined the concept of regular and casual
prosecution of his complaint against private respondent.10 employment. What determines regularity or casualness is not
the employment contract, written or otherwise, but the nature
Both parties filed their appeal with the National Labor Relations of the job. If the job is usually necessary or desirable to the
Commissions (NLRC). Petitioners questioned respondent Labor main business of the employer, then employment is regular. If
Arbiter's finding that they were not regular and permanent employees not, then the employment is casual. Employment for a definite
of private respondent Aurora Cruz while private respondents period which exceeds one (1) year shall be considered re for
questioned the award of financial assistance granted by respondent the duration of the definite period.
Labor Arbiter.
 This concept of re and casual employment is designed to put trade of the employer, except where the employment has been
an end to casual employment in regular jobs which has been fixed for a specific project or undertaking the completion or
abused by many employers to prevent so-called casuals from termination of which has been determined at the time of the
enjoying the benefits of regular employees or to prevent engagement of the employee or where the work or services to
casuals from joining unions. be performed is seasonal in nature and the employment is for
the duration of the season.21 (emphasis supplied)
This new concept should be strictly enforced to give meaning
to the constitutional guarantee of employment tenure.16 The Court resolved to give due course to the petition and required the
parties to submit their respective memoranda after which the case
Tested under the laws invoked, petitioners submit that it would be was deemed submitted for decision.
unjust, if not unlawful, to consider them as casual workers since they
have been doing all phases of agricultural work for so many years, The petition is not impressed with merit.
activities which are undeniably necessary, desirable and
indispensable in the rice and sugar cane production business of the The invariable rule set by the Court in reviewing administrative
private respondents.17 decisions of the Executive Branch of the Government is that the
findings of fact made therein are respected, so long as they are
In the Comment filed by private respondents, they submit that the supported by substantial evidence, even if not overwhelming or
decision of the Labor Arbiter, as aimed by respondent NLRC, that preponderant;22 that it is not for the reviewing court to weigh the
petitioners were only hired as casuals, is based on solid evidence conflicting evidence, determine the credibility of the witnesses or
presented by the parties and also by the Chief of the Special Task otherwise substitute its own judgment for that of the administrative
Force of the NLRC Regional Office and, therefore, in accordance with agency on the sufficiency of the evidence;23 that the administrative
the rule on findings of fact of administrative agencies, the decision decision in matters within the executive's jurisdiction can only be set
should be given great weight.18 Furthermore, they contend that the aside upon proof of gross abuse of discretion, fraud, or error of law.24
arguments used by petitioners in questioning the decision of the Labor
Arbiter were based on matters which were not offered as evidence in The questioned decision of the Labor Arbiter reads:
the case heard before the regional office of the then Ministry of Labor
but rather in the case before the Social Security Commission, also Focusing the spotlight of judicious scrutiny on the evidence on
between the same parties.19 record and the arguments of both parties, it is our well-
discerned opinion that the petitioners are not regular and
Public respondent NLRC filed a separate comment prepared by the permanent workers of the respondents. The very nature of the
Solicitor General. It submits that it has long been settled that findings terms and conditions of their hiring reveal that the petitioners
of fact of administrative agencies if supported by substantial evidence were required to perform p of cultural work for a definite
are entitled to great weight.20 Moreover, it argues that petitioners period, after which their services are available to any farm
cannot be deemed to be permanent and regular employees since they owner. We cannot share the arguments of the petitioners that
fall under the exception stated in Article 280 of the Labor Code, which they worked continuously the whole year round for twelve
reads: hours a day. This, we feel, is an exaggeration which does not
deserve any serious consideration inasmuch as the plan of
The provisions of written agreements to the contrary rice and sugar cane does not entail a whole year operation,
notwithstanding and regardless of the oral agreements of the the area in question being comparatively small. It is
parties, an employment shall be deemed to be regular where noteworthy that the findings of the Chief of the Special Task
the employee has been engaged to perform activities which Force of the Regional Office are similar to this.
are usually necessary or desirable in the usual business or
 In fact, the sworn statement of one of the petitioners Fortunato usually necessary or desirable in the usual business or trade
Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and of the employer, except where the employment has been fixed
Rosa Mercado, indubitably shows that said petitioners were for a specific project or undertaking the completion or
only hired as casuals, on-and-off basis. With this kind of termination of which has been determined at the time of the
relationship between the petitioners and the respondent engagement of the employee or where the work or services to
Aurora Cruz, we feel that there is no basis in law upon which be performed is seasonal in nature and the employment is for
the claims of the petitioners should be sustained, more the duration of the season.
specially their complaint for illegal dismissal. It is within the
prerogative of respondent Aurora Cruz either to take in the An employment shall be deemed to be casual if it is not
petitioners to do further work or not after any single phase of covered by the preceding paragraph: Provided, That, any
agricultural work has been completed by them. We are of the employee who has rendered at least one year of service
opinion that the real cause which triggered the filing of this whether such service is continuous or broken, shall be
complaint by the petitioners who are related to one another, considered a regular employee with respect to the activity in
either by consanguinity or affinity was due to the filing of a which he is employed and his employment shall continue while
criminal complaint by the respondent Aurora Cruz against such actually exists.
Reynaldo Mercado, son of spouses Fortunato Mercado, Sr.
and Rosa Mercado. In April 1979, according to Jesus David, The first paragraph answers the question of who are employees. It
Zone Chairman of the locality where the petitioners and states that, regardless of any written or oral agreement to the
respondent reside, petitioner Fortunato Mercado, Sr. asked for contrary, an employee is deemed regular where he is engaged in
help regarding the case of his son, Reynaldo, to talk with necessary or desirable activities in the usual business or trade of the
respondent Aurora Cruz and the said Zone Chairman also employer, except for project employees.
stated under oath that the petitioners were never regularly
employed by respondent Aurora Cruz but were on-and-off A project employee has been defined to be one whose employment
hired to work to render services when needed.25 has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the
A careful examination of the foregoing statements reveals that the engagement of the employee, or where the work or service to be
findings of the Labor Arbiter in the case are ably supported by performed is seasonal in nature and the employment is for the
evidence. There is, therefore, no circumstance that would warrant a duration of the season26 as in the present case.
reversal of the questioned decision of the Labor Arbiter as affirmed by
the National Labor Relations Commission. The second paragraph of Art. 280 demarcates as "casual" employees,
all other employees who do not fan under the definition of the
The contention of petitioners that the second paragraph of Article 280 preceding paragraph. The proviso, in said second paragraph, deems
of the Labor Code should have been applied in their case presents an as regular employees those "casual" employees who have rendered
opportunity to clarify the afore-mentioned provision of law. at least one year of service regardless of the fact that such service
may be continuous or broken.
Article 280 of the Labor Code reads in full:
Petitioners, in effect, contend that the proviso in the second paragraph
Article 280. Regular and Casual Employment. — The of Art. 280 is applicable to their case and that the Labor Arbiter should
provisions of written agreement to the contrary notwithstanding have considered them regular by virtue of said proviso. The
and regardless of the oral agreement of the parties, an contention is without merit.
employment shall be deemed to be regular where the
employee has been engaged to perform activities which are
The general rule is that the office of a proviso is to qualify or modify
only the phrase immediately preceding it or restrain or limit the
generality of the clause that it immediately follows.27 Thus, it has been
held that a proviso is to be construed with reference to the
immediately preceding part of the provision to which it is attached,
and not to the statute itself or to other sections thereof.28 The only
exception to this rule is where the clear legislative intent is to restrain
or qualify not only the phrase immediately preceding it (the proviso)
but also earlier provisions of the statute or even the statute itself as a
whole.29

Policy Instruction No. 12 of the Department of Labor and Employment

discloses that the concept of regular and casual employees was
designed to put an end to casual employment in regular jobs, which
has been abused by many employers to prevent called casuals from
enjoying the benefits of regular employees or to prevent casuals from
joining unions. The same instructions show that the proviso in the
second paragraph of Art. 280 was not designed to stifle small-scale
businesses nor to oppress agricultural land owners to further the
interests of laborers, whether agricultural or industrial. What it seeks
to eliminate are abuses of employers against their employees and not,
as petitioners would have us believe, to prevent small-scale
businesses from engaging in legitimate methods to realize profit.
Hence, the proviso is applicable only to the employees who are
deemed "casuals" but not to the "project" employees nor the regular
employees treated in paragraph one of Art. 280.

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

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

WHEREFORE, the petition is DISMISSED. The decision of the

National Labor Relations Commission affirming that of the Labor
Arbiter, under review, is AFFIRMED. No pronouncement as to costs.
HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO practice are further ordered to pay complainant union
VILLEGAS and CRISTINE SEGURA, petitioners, the sum of P10,000.00 as moral damages and P5,000.00
vs. NATIONAL FEDERATION OF SUGARCANE
WORKERS-FOOD AND GENERAL TRADE, respondents. as exemplary damages.[4]

DECISION
The Facts
PANGANIBAN, J.:

Although the employers have shown that respondents performed The facts are summarized in the NLRC Decision as follows:
work that was seasonal in nature, they failed to prove that the latter
worked only for the duration of one particular season. In fact, Contrary to the findings of the Labor Arbiter that
petitioners do not deny that these workers have served them for complainants [herein respondents] refused to work
several years already. Hence, they are regular -- not seasonal --
and/or were choosy in the kind of jobs they wanted to
employees.
perform, the records is replete with complainants
persistence and dogged determination in going back to
The Case work.

Before the Court is a Petition for Review under Rule 45 of the Indeed, it would appear that respondents did not look
Rules of Court, seeking to set aside the February 20, 2001 Decision with favor workers having organized themselves into a
of the Court of Appeals[1] (CA) in CA-GR SP No. 51033. The union. Thus, when complainant union was certified as
dispositive part of the Decision reads: the collective bargaining representative in the
certification elections, respondents under the pretext
WHEREFORE, premises considered, the instant special
that the result was on appeal, refused to sit down with
civil action for certiorari is hereby DENIED. [2] the union for the purpose of entering into a collective
bargaining agreement. Moreover, the workers including
On the other hand, the National Labor Relations Commission
(NLRC) Decision,[3] upheld by the CA, disposed in this wise: complainants herein were not given work for more than
one month. In protest, complainants staged a strike
WHEREFORE, premises considered, the decision of the which was however settled upon the signing of a
Labor Arbiter is hereby SET ASIDE and VACATED and a Memorandum of Agreement which stipulated among
new one entered declaring complainants to have been others that:
illegally dismissed. Respondents are
hereby ORDERED to reinstate complainants except a) The parties will initially meet for CBA negotiations on
Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy the 11th day of January 1991 and will endeavor to
Silva to their previous position and to pay full conclude the same within thirty (30) days.
backwages from September 1991 until
reinstated. Respondents being guilty of unfair labor
b) The management will give priority to the women Whereas the union staged a strike against management
workers who are members of the union in case work on January 2, 1992 grounded on the dismissal of the
relative x x x or amount[ing] to gahit and [dipol] arises. union officials and members;

c) Ariston Eruela Jr. will be given back his normal work Whereas parties to the present dispute agree to settle
load which is six (6) days in a week. the case amicably once and for all;

d) The management will provide fifteen (15) wagons for Now therefore, in the interest of both labor and
the workers and that existing workforce prior to the management, parties herein agree as follows:
actual strike will be given priority. However, in case the
said workforce would not be enough, the management 1. That the list of the names of affected union members
can hire additional workers to supplement them. hereto attached and made part of this agreement shall
be referred to the Hacienda payroll of 1990 and
e) The management will not anymore allow the scabs, determine whether or not this concerned Union
numbering about eighteen (18) workers[,] to work in the members are hacienda workers;
hacienda; and
2. That in addition to the payroll of 1990 as reference,
f) The union will immediately lift the picket upon signing herein parties will use as guide the subjects of a
of this agreement. Memorandum of Agreement entered into by and
between the parties last January 4, 1990;
However, alleging that complainants failed to load the
fifteen wagons, respondents reneged on its commitment 3. That herein parties can use other employment
to sit down and bargain collectively. Instead, references in support of their respective claims whether
respondent employed all means including the use of or not any or all of the listed 36 union members are
private armed guards to prevent the organizers from employees or hacienda workers or not as the case may
entering the premises. be;

Moreover, starting September 1991, respondents did not 4. That in case conflict or disagreement arises in the
any more give work assignments to the complainants determination of the status of the particular hacienda
forcing the union to stage a strike on January 2, workers subject of this agreement herein parties further
1992. But due to the conciliation efforts by the DOLE, agree to submit the same to voluntary arbitration;
another Memorandum of Agreement was signed by the
complainants and respondents which provides: 5. To effect the above, a Committee to be chaired by
Rose Mengaling is hereby created to be composed of
three representatives each and is given five working
days starting Jan. 23, 1992 to resolve the status of the 6. Ernesto Tejares 12. Ariston Eruela Jr.
subject 36 hacienda workers. (Union
representatives: Bernardo Torres, Martin Alas-as, When respondents again reneged on its commitment,
Ariston Arulea Jr.) complainants filed the present complaint.

Pursuant thereto, the parties subsequently met and the But for all their persistence, the risk they had to
Minutes of the Conciliation Meeting showed as follows: undergo in conducting a strike in the face of
overwhelming odds, complainants in an ironic twist of
The meeting started at 10:00 A.M. A list of employees fate now find themselves being accused of refusing to
was submitted by Atty. Tayko based on who received work and being choosy in the kind of work they have to
their 13th month pay. The following are deemed not perform.[5] (Citations omitted)
considered employees:

1. Luisa Rombo Ruling of the Court of Appeals

2. Ramona Rombo The CA affirmed that while the work of respondents was seasonal
in nature, they were considered to be merely on leave during the off-
3. Bobong Abrega season and were therefore still employed by petitioners. Moreover,
the workers enjoyed security of tenure. Any infringement upon this
right was deemed by the CA to be tantamount to illegal dismissal.
4. Boboy Silva
The appellate court found neither rhyme nor reason in petitioners
The name Orencio Rombo shall be verified in the 1990 argument that it was the workers themselves who refused to or were
choosy in their work. As found by the NLRC, the record of this case is
payroll.
replete with complainants persistence and dogged determination in
going back to work.[6]
The following employees shall be reinstated
The CA likewise concurred with the NLRCs finding that
immediately upon availability of work:
petitioners were guilty of unfair labor practice.

1. Jose Dagle 7. Alejandro Tejares Hence this Petition.[7]

2. Rico Dagle 8. Gaudioso Rombo

Issues
3. Ricardo Dagle 9. Martin Alas-as Jr.
Petitioners raise the following issues for the Courts consideration:
4. Jesus Silva 10. Cresensio Abrega A. Whether or not the Court of Appeals erred in holding that
respondents, admittedly seasonal workers, were regular
5. Fernando Silva 11. Ariston Eruela Sr. employees, contrary to the clear provisions of Article 280
 of the Labor Code, which categorically state that seasonal Art. 280. Regular and Casual Employment. - The
employees are not covered by the definition of regular provisions of written agreement to the contrary
employees under paragraph 1, nor covered under
paragraph 2 which refers exclusively to casual employees notwithstanding and regardless of the oral agreement of
who have served for at least one year. the parties, an employment shall be deemed to be
regular where the employee has been engaged to
B. Whether or not the Court of Appeals erred in rejecting the
ruling in Mercado, xxx, and relying instead on rulings perform activities which are usually necessary or
which are not directly applicable to the case at bench, desirable in the usual business or trade of the employer,
viz, Philippine Tobacco, Bacolod-Murcia, and Gaco, xxx. except where the employment has been fixed for a
C. Whether or not the Court of Appeals committed grave specific project or undertaking the completion or
abuse of discretion in upholding the NLRCs conclusion termination of which has been determined at the time of
that private respondents were illegally dismissed, that the engagement of the employee or where the work or
petitioner[s were] guilty of unfair labor practice, and that
services to be performed is seasonal in nature and the
the union be awarded moral and exemplary damages.[8]
employment is for the duration of the season.
Consistent with the discussion in petitioners Memorandum, we
shall take up Items A and B as the first issue and Item C as the
An employment shall be deemed to be casual if it is not
second.
covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service,
The Courts Ruling whether such service is continuous or broken, shall be
considered a regular employee with respect to the
The Petition has no merit. activity in which he is employed and his employment
shall continue while such activity exist. (Italics
supplied)
First Issue:
Regular Employment For respondents to be excluded from those classified as regular
employees, it is not enough that they perform work or services that
are seasonal in nature. They must have also been employed only for
At the outset, we must stress that only errors of law are generally the duration of one season. The evidence proves the existence of the
reviewed by this Court in petitions for review on certiorari of CA first, but not of the second, condition. The fact that respondents -- with
decisions.[9] Questions of fact are not entertained.[10]The Court is not a the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and
trier of facts and, in labor cases, this doctrine applies with greater Boboy Silva -- repeatedly worked as sugarcane workers for petitioners
force.[11] Factual questions are for labor tribunals to resolve.[12] In the for several years is not denied by the latter. Evidently, petitioners
present case, these have already been threshed out by the NLRC. Its employed respondents for more than one season. Therefore, the
findings were affirmed by the appellate court. general rule of regular employment is applicable.
Contrary to petitioners contention, the CA did not err when it held In Abasolo v. National Labor Relations Commission,[13] the Court
that respondents were regular employees. issued this clarification:
Article 280 of the Labor Code, as amended, states:
[T]he test of whether or not an employee is a regular The CA did not err when it ruled that Mercado v. NLRC[15] was not
employee has been laid down in De Leon v. NLRC, in applicable to the case at bar. In the earlier case, the workers were
required to perform phases of agricultural work for a definite period of
which this Court held: time, after which their services would be available to any other farm
owner. They were not hired regularly and repeatedly for the same
The primary standard, therefore, of determining regular phase/s of agricultural work, but on and off for any single phase
employment is the reasonable connection between the thereof. On the other hand, herein respondents, having performed the
particular activity performed by the employee in relation same tasks for petitioners every season for several years, are
considered the latters regular employees for their respective
to the usual trade or business of the employer. The test tasks. Petitioners eventual refusal to use their services -- even if they
is whether the former is usually necessary or desirable were ready, able and willing to perform their usual duties whenever
in the usual trade or business of the employer. The these were available -- and hiring of other workers to perform the
connection can be determined by considering the nature tasks originally assigned to respondents amounted to illegal dismissal
of the latter.
of the work performed and its relation to the scheme of
the particular business or trade in its entirety. Also if The Court finds no reason to disturb the CAs dismissal of what
the employee has been performing the job for at least a petitioners claim was their valid exercise of a management
prerogative. The sudden changes in work assignments reeked of bad
year, even if the performance is not continuous and faith. These changes were implemented immediately after
merely intermittent, the law deems repeated and respondents had organized themselves into a union and started
continuing need for its performance as sufficient demanding collective bargaining. Those who were union members
evidence of the necessity if not indispensability of that were effectively deprived of their jobs. Petitioners move actually
amounted to unjustified dismissal of respondents, in violation of the
activity to the business. Hence, the employment is
Labor Code.
considered regular, but only with respect to such
activity and while such activity exists. Where there is no showing of clear, valid and legal cause for the
termination of employment, the law considers the matter a case of
illegal dismissal and the burden is on the employer to prove that the
xxxxxxxxx termination was for a valid and authorized cause.[16] In the case at bar,
petitioners failed to prove any such cause for the dismissal of
x x x [T]he fact that [respondents] do not work respondents who, as discussed above, are regular employees.
continuously for one whole year but only for the duration
of the x x x season does not detract from considering
them in regular employment since in a litany of cases Second Issue:
Unfair Labor Practice
this Court has already settled that seasonal workers
who are called to work from time to time and are
temporarily laid off during off-season are not separated The NLRC also found herein petitioners guilty of unfair labor
practice. It ruled as follows:
from service in said period, but merely considered on
leave until re-employed.[14]
Indeed, from respondents refusal to bargain, to their
acts of economic inducements resulting in the
promotion of those who withdrew from the union, the
use of armed guards to prevent the organizers to come
in, and the dismissal of union officials and members,
one cannot but conclude that respondents did not want
a union in their haciendaa clear interference in the right
of the workers to self-organization.[17]

We uphold the CAs affirmation of the above findings. Indeed,

factual findings of labor officials, who are deemed to have acquired
expertise in matters within their respective jurisdictions, are generally
accorded not only respect but even finality. Their findings are binding
on the Supreme Court.[18] Verily, their conclusions are accorded great
weight upon appeal, especially when supported by substantial
evidence.[19] Consequently, the Court is not duty-bound to delve into
the accuracy of their factual findings, in the absence of a clear
showing that these were arbitrary and bereft of any rational basis.[20]
The finding of unfair labor practice done in bad faith carries with it
the sanction of moral and exemplary damages.[21]
WHEREFORE, the Petition is hereby DENIED and the assailed
Decision AFFIRMED. Costs against petitioners.