casual employment

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CASUAL EMPLOYMENT

91. KIMBERLY INDEP>. UNION vs. DRILON

KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY,

ACTIVISM AND NATIONALISM-ORGANIZED LABORASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE(KILUSAN-OLALIA), ROQUE JIMENEZ, MARIO C. RONGALEROSand OTHERS, petitioners,vs.HON. FRANKLIN M. DRILON, KIMBERLY-CLARK PHILIPPINES,INC., RODOLFO POLOTAN, doing business under the firm name"Rank Manpower Co." and UNITED KIMBERLY-CLARKEMPLOYEES UNION-PHILLIPPINE TRANSPORT AND GENERAL

WORKERS ORGANIZATION (UKCEU-PTGWO), respondents.

KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY,ACTIVITISM AND NATIONALISM-OLALIA (KILUSAN-OLALIA), petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION, MANUELAGUILAR, MA. ESTRELLA ALDA, CAPT. REY L. LANADA, COL.VIVENCIO MANAIG and KIMBERLY-CLARK PHILIPPINES,

INC., respondents.

REGALADO, J.:

Before us are two consolidated petitions for certiorari filed by theabove-named petitioner union (hereinafter referred to as KILUSAN-OLALIA, for conciseness) and individual complainants therein, to wit(a) G.R. 77629, which seeks to reverse and set aside the decision,dated November 13, 1986, 1

and the resolution, dated January 9, 1987,2respectively

handed down by the two former Ministers of Labor, both rendered in BLR Case No. NS-5-164-86; and (b)G.R. No. 78791, which prays for the reversal of the resolutions of the National Labor Relations

Commission, dated May 25, 19873and June 19,1987

4 issued in Injunction Case No. 1442 thereof.

Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed athree-year collective bargaining agreement (CBA) with United



Kimberly-Clark Employees Union-Philippine Transport and GeneralWorkers' Organization (UKCEU-PTGWO) which expired on June 30,1986.

Within the 60-day freedom period prior to the expiration of and duringthe negotiations for the renewal of the aforementioned CBA, somemembers of the bargaining unit formed another union called "KimberlyIndependent Labor Union for Solidarity, Activism and Nationalism-Organized Labor Association in Line Industries and Agriculture(KILUSAN-OLALIA)."

On April 21, 1986, KILUSAN-OLALIA filed a petition for certificationelection in Regional Office No. IV, Ministry of Labor and Employment

(MOLE), docketed as Case No. RO4-OD-M-415-86.

5

KIMBERLY and(UKCEU-PTGWO) did not object to the holding of a certification election but objected to the inclusion ofthe so-called contractual workers whose employment with KIMBERLY was coursed through anindependent contractor, Rank Manpower Company (RANK for short), as among the qualified voters.

Pending resolution of the petition for certification election by the med-arbiter, KILUSAN-OLALIA filed a notice of strike on May 7, 1986 withthe Bureau of Labor Relations, docketed as BLR Case No. NS-5-164-86, 6

charging KIMBERLY with unfair labor practices based on the following alleged acts: (1) dismissal

of union members (KILUSAN-OLALIA); (2) non-regularization of casuals/contractuals with over sixmonths service; (3) non-implementation of appreciation bonus for 1982 and 1983; (4) non-payment of

minimum wages; (5) coercion of employees; and (6) engaging in CBA negotiations despite the pendencyof a petition for certification election. This was later amended to withdraw the charge of coercion but toadd, as new charges, the dismissal of Roque Jimenez and the non-payment of backwages of the

reinstated Emerito Fuentes . 7

Conciliation proceedings conducted by the bureau proved futile, andKILUSAN-OLALIA declared a strike at KIMBERLY's premises in SanPedro, Laguna on May 23, 1986.

On May 26, 1986, KIMBERLY petitioned MOLE to assume jurisdictionover the labor dispute. On May 30, 1986, finding that the labor disputewould adversely affect national interest, then Minister Augusto S.Sanchez issued an assumption order, the dispositive portion whereofreads:

Wherefore, premises considered, immediately upon receiptof this order, the striking union and its members are hereby



enjoined to lift the picket and remove all obstacles to thefree ingress to and egress from the company premises andto return to work, including the 28 contractual workers whowere dismissed; likewise, the company is directed to

resume its operations immediately thereafter and to acceptall the employees back under the same terms andconditions of employment prevailing prior to the industrialaction. Further, all issues in the notice of strike, asamended, are hereby assumed in this assumption order,except for the representation issue pending in Region IV inwhich the Med-Arbiter is also enjoined to decide the samethe soonest possible time. 8

In obedience to said assumption order, KILUSAN-OLALIA terminatedits strike and picketing activities effective June 1, 1986 after acompliance agreement was entered into by it with KIMBERLY. 9

On June 2, 1986, Med-Arbiter Bonifacio 1. Marasigan, who washandling the certification election case (RO4-OD-M-4-1586), issued anorder 10

declaring the following as eligible to vote in the certification election, thus:

1. The regular rank-and-file laborers/employees of the

respondent company consisting of 537 as of May 14, 1986should be considered qualified to vote;

2. Those casuals who have worked at least six (6) monthsas appearing in the payroll months prior to the filing of theinstant petition on April 21, 1986; and

3. Those contractual employees who are allegedly in theemploy of an independent contractor and who have alsoworked for at least six (6) months as appearing in thepayroll month prior to the filing of the instant petition on

April 21, 1986.

During the pre-election conference, 64 casual workers werechallenged by KIMBERLY and (UKCEU-PTGWO) on the ground thatthey are not employees, of KIMBERLY but of RANK. It was agreed by



all the parties that the 64 voters shall be allowed to cast their votes butthat their ballots shall be segregated and subject to challengeproceedings. The certification election was conducted on July I., 1986,with the following results: 11

1. KILUSAN-OLALIA = 246 votes

2. (UKCEU-PTGWO) = 266 votes

3. NO UNION = 1 vote

4. SPOILED BALLOTS = 4 votes

5. CHALLENGED BALLOTS = 64 votes

————

TOTAL 581 votes

On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a"Protest and Motion to Open and Count Challenged Votes" 12

on the

ground that the 64 workers are employees of KIMBERLY within the meaning of Article 212(e) of the LaborCode. On July 7, 1986, KIMBERLY filed an opposition to the protest and motion, asserting that there is noemployer-employee relationship between the casual workers and the company, and that the med-arbiterhas no jurisdiction to rule on the issue of the status of the challenged workers which is one of the issues

covered by the assumption order. The med-arbiter opted not to rule on the protest until the issue ofregularization has been resolved by

MOLE.13

On November 13, 1986, then Minister Sanchez rendered a decision inBLR Case No. NS-5-164-86, 14

the disposition wherein is summarized as follows:

1. The service contract for janitorial and yard maintenanceservice between KIMBERLY and RANK was declaredlegal;

2. The other casual employees not performing janitorial andyard maintenance services were deemed labor-onlycontractual and since labor-only contracting is prohibited,such employees were held to have attained the status of



regular employees, the regularization being effective as ofthe date of the decision;

3. UKCEU-PTGWO having garnered more votes than

KILUSAN-OLALIA was certified as the exclusive bargainingrepresentative of KIMBERLY's employees;

4. The reinstatement of 28 dismissed KILUSAN-OLALIAmembers was ordered;

5. Roque Jimenez was ordered reinstated withoutbackwages, the period when he was out of work beingconsidered as penalty for his misdemeanor;

6. The decision of the voluntary arbitrator ordering thereinstatement of Ermilo Fuentes with backwages wasdeclared as already final and unappealable; and

7. KIMBERLY was ordered to pay appreciation bonus for1982 and 1983.

On November 25, 1986, KIMBERLY flied a motion for reconsiderationwith respect to the regularization of contractual workers, the

appreciation bonus and the reinstatement of Roque Jimenez. 15 In a letterdated November 24, 1986, counsel for KILUSAN-OLALIA demanded from KIMBERLY the implementation

of the November 13, 1986 decision but only with respect to the regularization of the casual workers.16

On December 11, 1986, KILUSAN-OLALIA filed a motion forreconsideration questioning the authority of the Minister of Labor toassume jurisdiction over the representation issue. In the meantime,KIMBERLY and UKCEU-PTGWO continued with the negotiations onthe new collective bargaining agreement (CBA), no restraining orderor junctive writ having been issued, and on December 18, 1986, a newCBA was concluded and ratified by 440 out of 517 members of thebargaining unit. 17

In an order dated January 9, 1987, former Labor Minister FranklinDrilon denied both motions for reconsideration filed by KIMBERLY and



KILUSAN-OLALIA. 18 On March 10, 1987, the new CBA executed between KIMBERLY and

UKCEU-PTGWO was signed.

On March 16, 1987, KILUSAN-OLALIA filed a petition for certiorari inthis Court docketed as G.R. No. 77629, seeking to set aside theaforesaid decision, dated November 13, 1986, and the order, datedJanuary 9, 1987, rendered by the aforesaid labor ministers.

On March 25, 1987, this Court issued in G.R. No. 77629 a temporaryrestraining order, enjoining respondents from enforcing and/orcarrying out the decision and order above stated, particularly thatportion (1) recognizing respondent UKCEU-PTGWO as the exclusivebargaining representative of all regular rank-and-file employees in theestablishment of respondent company, (2) enforcing and/or

implementing the alleged CBA which is detrimental to the interests ofthe members of the petitioner union, and (3) stopping respondentcompany from deducting monthly dues and other union assessmentsfrom the wages of all regular rank-and-file employees of respondentcompany and from remitting the said collection to respondent UKCEU-PTGWO issued in BLR Case No. NS-5-164-86, entitled, "In Re: LaborDispute at Kimberly-Clark Philippines, Inc.," of the Department ofLabor and Employment, Manila, 19

In its comment, 20 respondent company pointed out certain events which took place prior to the

filing of the petition in G.R. No. 77629, to wit:

1. The company and UKCEU-PTGWO have concluded anew collective bargaining agreement which had beenratified by 440 out of 517 members of the bargaining unit;

2. The company has already granted the new benefitsunder the new CBA to all its regular employees, including

members of petitioner union who, while refusing to ratifythe CBA nevertheless readily accepted the benefits arisingtherefrom;

3. The company has been complying with the check-offprovision of the CBA and has been remitting the uniondues to UKCEU-PTGWO



4. The company has already implement the decision ofNovember 13, 1986 insofar as the regularization ofcontractual employees who have rendered more than one(1) year of service as of the filing of the Notice of Strike on

May 7, 1986 and are not engaged in janitorial and yardmaintenance work, are concerned

5. Rank Manpower Company had already pulled out,reassigned or replaced the contractual employees engagedin janitorial and yard maintenance work, as well as thosewith less than one year service; and

6. The company has reinstated Roque Jimenez as of

January 11, 1987.In G.R. No. 78791, the records 21

disclose that on May 4, 1987, KILUSAN-OLALIA filed

another notice of strike with the Bureau of Labor Relations charging respondent company with unfairlabor practices. On May 8, 1987, the bureau dismissed and considered the said notice as not filed byreason of the pendency of the representation issue before this Court in G.R. No. 77629. KILUSAN-OLALIA moved to reconsider said order, but before the bureau could act on said motion, KILUSAN-OLALIA declared a strike and established a picket on respondent company's premises in San Pedro,Laguna on May 17, 1987.

On May 18, 1987, KIMBERLY filed a petition for injunction with theNational Labor Relations Commission (NLRC), docketed as InjunctionCase No. 1442. A supplement to said petition was filed on May 19,1987. On May 26, 1987, the commission en banc issued a temporaryrestraining order (TRO) on the basis of the ocular inspection reportsubmitted by the commission's agent, the testimonies of KIMBERLY'switnesses, and pictures of the barricade. KILUSAN-OLALIA moved todissolve the TRO on the ground of lack of jurisdiction.

Immediately after the expiration of the first TRO on June 9, 1987, thestriking employees returned to their picket lines and reestablishedtheir barricades at the gate. On June 19, 1987, the commission enbanc issued a second TRO.

On June 25, 1987, KILUSAN-OLALIA filed another petitionfor certiorari and prohibition with this Court, docketed as G.R. No.78791, questioning the validity of the temporary restraining orders



issued by the NLRC on May 26, 1987 and June 19, 1987. On June 29,1987, KILUSAN-OLALIA filed in said case an urgent motion for a TROto restrain NLRC from implementing the questioned orders. Anopposition, as well as a reply thereto, were filed by the parties.

Meanwhile, on July 3, 1987, KIMBERLY filed in the NLRC an urgentmotion for the issuance of a writ of preliminary injunction when thestrikers returned to the strike area after the second TRO expired. Afterdue hearing, the commission issued a writ of preliminary injunction onJuly 14, 1987, after requiring KIMBERLY to post a bond in the amountof P20,000.00.

Consequently, on July 17, 1987, KILUSAN-OLALIA filed in G.R. No.

78791 a second urgent motion for the issuance of a TRO by reason ofthe issuance of said writ of preliminary injunction, which motion wasopposed by KIMBERLY.

Thereafter, in its memorandum 22 filed on December 28, 1989 and in its motion for early

resolution23

filed on February 28, 1990, both in G.R. No. 78791, KILUSAN-OLALIA alleged that it hadterminated its strike and picketing activities and that the striking employees had unconditionally offered toreturn to work, although they were refused admission by KIMBERLY. By reason of this superveningdevelopment, the petition in G.R. No. 78791, questioning the propriety of the issuance of the twotemporary restraining orders and the writ of injunction therein, has been rendered moot and academic.

In G.R. No. 77629, the petition of KILUSAN-OLALIA avers that therespondent Secretary of Labor and/or the former Minister of Laborhave acted with grave abuse of discretion and/or without jurisdiction in(1) ruling on the issue of bargaining representation and declaringrespondent UKCEU-PTGWO as the collective bargainingrepresentative of all regular rank-and-file employees of the respondentcompany; (2) holding that petitioners are not entitled to vote in thecertification election; (3) considering the regularization of petitioners(who are not janitors and maintenance employees) to be effective only

on the date of the disputed decision; (4) declaring petitioners who areassigned janitorial and yard maintenance work to be employees ofrespondent RANK and not entitled to be regularized; (5) not awardingto petitioners differential pay arising out of such illegal work scheme;and (6) ordering the mere reinstatement of petitioner Jimenez.



The issue of jurisdiction actually involves a question of whether or notformer Minister Sanchez committed a grave abuse of discretionamounting to lack of jurisdiction in declaring respondent UKCEU-PTGWO as the certified bargaining representative of the regular

employees of KIMBERLY, after ruling that the 64 casual workers,whose votes are being challenged, were not entitled to vote in thecertification election.

KILUSAN-OLALIA contends that after finding that the 64 workers areregular employees of KIMBERLY, Minister Sanchez should haveremanded the representation case to the med-arbiter instead ofdeclaring UKCEU-PTGWO as the winner in the certification electionand setting aside the med-arbiter's order which allowed the 64 casual

workers to cast their votes.

Respondents argue that since the issues of regularization andrepresentation are closely interrelated and that a resolution of theformer inevitably affects the latter, it was necessary for the formerlabor minister to take cognizance of the representation issue; that notimely motion for reconsideration or appeal was made from hisdecision of November 13, 1986 which has become final andexecutory; and that the aforesaid decision was impliedly accepted by

KILUSAN-OLALIA when it demanded from KIMBERLY the issuance ofregular appointments to its affected members in compliance with saiddecision, hence petitioner employees are now stopped fromquestioning the legality thereof.

We uphold the authority of former Minister Sanchez to assume jurisdiction over the issue of the regularization of the 64 casualworkers, which fact is not even disputed by KILUSAN-OLALIA as maybe gleaned from its request for an interim order in the notice of strike

case (BLR-NS-5-164-86), asking that the regularization issue beimmediately resolved. Furthermore, even the med-arbiter who orderedthe holding of the certification election refused to resolve the proteston the ground that the issue raised therein correctly pertains to the

jurisdiction of the then labor minister. No opposition was offered byKILUSAN-OLALIA. We hold that the issue of regularization wasproperly addressed to the discretion of said former minister.



However, the matter of the controverted pronouncement by formerMinister Sanchez, as reaffirmed by respondent secretary, regardingthe winner in the certification election presents a different situation.

It will be recalled that in the certification election, UKCEU-PTGWOcame out as the winner, by garnering a majority of the votes casttherein with the exception of 64 ballots which were subject tochallenge. In the protest filed for the opening and counting of thechallenged ballots, KILUSAN-OLALIA raised the main and solequestion of regularization of the 64 casual workers. The med-arbiterrefused to act on the protest on the ground that the issue involved iswithin the jurisdiction of the then Minister of Labor. KILUSAN-OLALIAthen sought an interim order for an early resolution on the employment

status of the casual workers, which was one of the issues included inthe notice of strike filed by KILUSAN-OLALIA in BLR Case No. NS-5-164-86. Consequently, Minister Sanchez rendered the questioneddecision finding that the workers not engaged in janitorial and yardmaintenance service are regular employees but that they becameregular only on the date of his decision, that is, on November 13,1986, and, therefore, they were not entitled to vote in the certificationelection. On the basis of the results obtained in the certificationelection, Minister Sanchez declared UKCEU-PTGWO as the winner.

The pivotal issue, therefore, is when said workers, not performing janitorial or yard maintenance service, became regular employees ofKIMBERLY.

We find and so hold that the former labor minister gravely abused hisdiscretion in holding that those workers not engaged in janitorial oryard maintenance service attained the status of regular employeesonly on November 13, 1986, which thus deprived them of their

constitutionally protected right to vote in the certification election andchoose their rightful bargaining representative.

The Labor Code defines who are regular employees, as follows:

Art. 280. Regular and Casual Employment . — Theprovisions of written agreement to the contrary not



withstanding and regardless of the oral agreements of theparties, an employment shall be deemed to be regularwhere the employee has been engaged to performactivities which are usually necessary or desirable in the

usual business or trade of the employer, except where theemployment has been fixed for a specific project or underthe completion or termination of which has beendetermined at the time of the engagement of the employeeor where the work or services to be performed is seasonalin nature and the employment is for the duration of theseason.

An employment shall be deemed to be casual if it is not

covered by the preceding paragraph:Provided , That anyemployee who has rendered at least one year of service,whether such service is continuous or broken, shall beconsidered a regular employee with respect to the activityin which he is employed and his employment shall continuewhile such activity exists.

The law thus provides for two. kinds of regular employees, namely: (1)those who are engaged to perform activities which are usually

necessary or desirable in the usual business or trade of the employer;and (2) those who have rendered at least one year of service, whethercontinuous or broken, with respect to the activity in which they areemployed. The individual petitioners herein who have been adjudgedto be regular employees fall under the second category. These are themechanics, electricians, machinists machine shop helpers, warehousehelpers, painters, carpenters, pipefitters and masons It is not disputedthat these workers have been in the employ of KIMBERLY for morethan one year at the time of the filing of the Petition for certification

election by KILUSAN-OLALIA.

Owing to their length of service with the company, these workersbecame regular employees, by operation of law, one year after theywere employed by KIMBERLY through RANK. While the actualregularization of these employees entails the mechanical act ofissuing regular appointment papers and compliance with such other



operating procedures as may be adopted by the employer, it is morein keeping with the intent and spirit of the law to rule that the status ofregular employment attaches to the casual worker on the dayimmediately after the end of his first year of service. To rule otherwise,

and to instead make their regularization dependent on the happeningof some contingency or the fulfillment of certain requirements, is toimpose a burden on the employee which is not sanctioned by law.

That the first stated position is the situation contemplated andsanctioned by law is further enhanced by the absence of a statutorylimitation before regular status can be acquired by a casual employee.The law is explicit. As long as the employee has rendered at least oneyear of service, he becomes a regular employee with respect to the

activity in which he is employed. The law does not provide thequalification that the employee must first be issued a regularappointment or must first be formally declared as such before he canacquire a regular status. Obviously, where the law does notdistinguish, no distinction should be drawn.

The submission that the decision of November 13, 1986 has becomefinal and executory, on the grounds that no timely appeal has beenmade therefrom and that KILUSAN-OLALIA has impliedly acceded

thereto, is untenable.

Rule 65 of the Rules of Court allows original petitionsfor certiorari from decisions or orders of public respondents providedthey are filed within a reasonable time. We believe that the periodfrom January 9, 1987, when the motions for reconsiderationseparately filed by KILUSAN-OLALIA and KIMBERLY were denied, toMarch 16, 1987, when the petition in G.R. No. 77629 was filed,constitutes a reasonable time for availing of such recourse.

We likewise do not subscribe to the claim of respondents thatKILUSAN-OLALIA has impliedly accepted the questioned decision bydemanding compliance therewith. In the letter of KILUSAN-OLALIAdated November 24, 1986 24

addressed to the legal counsel of KIMBERLY, it is thereexpressly and specifically pointed out that KILUSAN-OLALIA intends to file a motion for reconsiderationof the questioned decision but that, in the meantime, it was demanding the issuance of regularappointments to the casual workers who had been declared to be regular employees. The filing of said



motion for reconsideration of the questioned decision by KILUSAN-OLALIA, which was later denied,sustains our position on this issue and denies the theory of estoppel postulated by respondents.

On the basis of the foregoing circumstances, and as a consequenceof their status as regular employees, those workers not perforce

janitorial and yard maintenance service were performance entitled tothe payment of salary differential, cost of living allowance, 13th monthpay, and such other benefits extended to regular employees under theCBA, from the day immediately following their first year of service inthe company. These regular employees are likewise entitled to vote inthe certification election held in July 1, 1986. Consequently, the votescast by those employees not performing janitorial and yardmaintenance service, which form part of the 64 challenged votes,should be opened, counted and considered for the purpose of

determining the certified bargaining representative.

We do not find it necessary to disturb the finding of then MinisterSanchez holding as legal the service contract executed betweenKIMBERLY and RANK, with respect to the workers performing

janitorial and yard maintenance service, which is supported bysubstantial and convincing evidence. Besides, we take judicial noticeof the general practice adopted in several government and privateinstitutions and industries of hiring a janitorial service on an

independent contractor basis. Furthermore, the occasional directivesand suggestions of KIMBERLY are insufficient to erode primary andcontinuous control over the employees of the independentcontractor. 25

Lastly, the duties performed by these workers are not independent and integral steps

in or aspects of the essential operations of KIMBERLY which is engaged in the manufacture of consumerpaper products and cigarette paper, hence said workers cannot be considered regular employees.

The reinstatement of Roque Jimenez without backwages involves aquestion of fact best addressed to the discretion of respondentsecretary whose finding thereon is binding and conclusive upon thisCourt, absent a showing that he committed a grave abuse in theexercise thereof.

WHEREFORE, judgment is hereby rendered in G.R. No. 77629:



1. Ordering the med-arbiter in Case No. R04-OD-M-4-15-86 to openand count the 64 challenged votes, and that the union with the highestnumber of votes be thereafter declared as the duly elected certifiedbargaining representative of the regular employees of KIMBERLY;

2. Ordering KIMBERLY to pay the workers who have been regularizedtheir differential pay with respect to minimum wage, cost of livingallowance, 13th month pay, and benefits provided for under theapplicable collective bargaining agreement from the time they becameregular employees.

All other aspects of the decision appealed from, which are not somodified or affected thereby, are hereby AFFIRMED. The temporary

restraining order issued in G.R. No. 77629 is hereby made permanent.The petition filed in G.R. No. 78791 is hereby DISMISSED.

SO ORDERED.

Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.

90. De Leon vs NLRC

PUNO, J .:

This case stemmed from a complaint for illegal dismissal, unfair labor practiceand refund of cash bond filed by petitioners against respondents before the ArbitrationBranch of the National Labor Relations Commission (NLRC). The petition at barseeks the annulment of the resolution of the NLRC dated July 5, 1993 reversing thedecision of the Labor Arbiter finding respondents liable for the charges, and itsresolution dated August 10, 1993 denying petitioners' motion for reconsideration.

The undisputed facts are as follows:On August 23, 1980, Fortune Tobacco Corporation (FTC) and Fortune Integrated

Services, Inc. (FISI) entered into a contract for security services where the latterundertook to provide security guards for the protection and security of theformer. The petitioners were among those engaged as security guards pursuant to thecontract.



On February 1, 1991, the incorporators and stockholders of FISI sold out lock,stock and barrel to a group of new stockholders by executing for the purpose a "Deedof Sale of Shares of Stock". On the same date, the Articles of Incorporation of FISIwas amended changing its corporate name to Magnum Integrated Services, Inc.(MISI). A new by-laws was likewise adopted and approved by the Securities and

Exchange Commission on June 4, 1993.

On October 15, 1991, FTC terminated the contract for security services whichresulted in the displacement of some five hundred eighty two (582) security guardsassigned by FISI/MISI to FTC, including the petitioners in this case. FTC engagedthe services of two (2) other security agencies, Asian Security Agency and LigaligSecurity Services, whose security guards were posted on October 15, 1991 to replaceFISI's security guards.

Sometime in October 1991, the Fortune Tobacco Labor Union, an affiliate of the National Federation of Labor Unions (NAFLU), and claiming to be the bargainingagent of the security guards, sent a Notice of Strike to FISI/MISI. On November 14,1991, the members of the union which include petitioners picketed the premises ofFTC. The Regional Trial Court of Pasig, however, issued a writ of injunction toenjoin the picket.

On November 29, 1991, Simeon de Leon, together with sixteen (16) othercomplainants instituted the instant case before the Arbitration Branch of the NLRC. The complaint was later amended to allow the inclusion of othercomplainants.

The parties submitted the following issues for resolution:

(1) Whether petitioners were illegally dismissed;

(2) Whether respondents are guilty of unfair labor practice; and

(3) Whether petitioners are entitled to the refund of their cash bond deposited with respondentFISI.

Petitioners alleged that they were regular employees of FTC which was also usingthe corporate names Fortune Integrated Services, Inc. and Magnum IntegratedServices, Inc. They were assigned to work as security guards at the company's mainfactory plant, its tobacco redrying plant and warehouse. They averred that they

performed their duties under the control and supervision of FTC's securitysupervisors. Their services, however, were severed in October 1991 without validcause and without due process. Petitioners claimed that their dismissal was part ofrespondents' design to bust their newly-organized union which sought to enforce theirrights under the Labor Standards law.[1]

Respondent FTC, on the other hand, maintained that there was no employer-employee relationship between FTC and petitioners. It said that at the time of the

http://sc.judiciary.gov.ph/jurisprudence/2001/may2001/112661.htm#_edn1






termination of their services, petitioners were the employees of MISI which was aseparate and distinct corporation from FTC. Hence, petitioners had no cause of actionagainst FTC.[2]

Respondent FISI, meanwhile, denied the charge of illegal dismissal and unfair

labor practice. It argued that petitioners were not dismissed from service but weremerely placed on floating status pending re-assignment to other posts. It alleged thatthe temporary displacement of petitioners was not due to its fault but was the result ofthe pretermination by FTC of the contract for security services.[3]

The Labor Arbiter found respondents liable for the charges. Rejecting FTC'sargument that there was no employer-employee relationship between FTC and petitioners, he ruled that FISI and FTC should be considered as a single employer. Heobserved that the two corporations have common stockholders and they share thesame business address. In addition, FISI had no client other than FTC and othercorporations belonging to the group of companies owned by Lucio Tan. The LaborArbiter thus found respondents guilty of union busting and illegal dismissal. Heobserved that not long after the stockholders of FISI sold all their stocks to a new setof stockholders, FTC terminated the contract of security services and engaged theservices of two other security agencies. FTC did not give any reason for thetermination of the contract. The Labor Arbiter gave credence to petitioners' theorythat respondents' precipitate termination of their employment was intended to busttheir union. Consequently, the Labor Arbiter ordered respondents to pay petitionerstheir backwages and separation pay, to refund their cash bond deposit, and to payattorney's fees.[4]

On appeal, the NLRC reversed and set aside the decision of the LaborArbiter. First, it held that the Labor Arbiter erred in applying the "single employer" principle and concluding that there was an employer-employee relationship betweenFTC and FISI on one hand, and petitioners on the other hand. It found that at the timeof the termination of the contract of security services on October 15, 1991, FISIwhich, at that time, had been renamed Magnum Integrated Services, Inc. had adifferent set of stockholders and officers from that of FTC. They also had separateoffices. The NLRC held that the principle of "single employer" and the doctrine of piercing the corporate veil could not apply under the circumstances. It further ruledthat the proximate cause for the displacement of petitioners was the termination of the

contract for security services by FTC on October 15, 1991. FISI could not be faultedfor the severance of petitioners' assignment at the premises of FTC. Consequently,the NLRC held that the charge of illegal dismissal had no basis. As regards thecharge of unfair labor practice, the NLRC found that petitioners who had the burdenof proof failed to adduce any evidence to support their charge of unfair labor practiceagainst respondents. Hence, it ordered the dismissal of petitioners' complaint.[5]



















We are not persuaded by the argument of respondent FTC denying the presence ofan employer-employee relationship. We find that the Labor Arbiter correctly appliedthe doctrine of piercing the corporate veil to hold all respondents liable for unfairlabor practice and illegal termination of petitioners' employment. It is a fundamental principle in corporation law that a corporation is an entity separate and distinct from

its stockholders and from other corporations to which it is connected. However, whenthe concept of separate legal entity is used to defeat public convenience, justifywrong, protect fraud or defend crime, the law will regard the corporation as anassociation of persons, or in case of two corporations, merge them into one. Theseparate juridical personality of a corporation may also be disregarded when suchcorporation is a mere alter ego or business conduit of another person.[12] In the case at bar, it was shown that FISI was a mere adjunct of FTC. FISI, by virtue of a contractfor security services, provided FTC with security guards to safeguard its premises. However, records show that FISI and FTC have the same owners and business address, and FISI provided security services only to FTC and othercompanies belonging to the Lucio Tan group of companies. The purported sale of theshares of the former stockholders to a new set of stockholders who changed the nameof the corporation to Magnum Integrated Services, Inc. appears to be part of a schemeto terminate the services of FISI's security guards posted at the premises of FTC and bust their newly-organized union which was then beginning to become active indemanding the company's compliance with Labor Standards laws. Under thesecircumstances, the Court cannot allow FTC to use its separate corporate personality toshield itself from liability for illegal acts committed against its employees.

Thus, we find that the termination of petitioners' services was without basis and

therefore illegal. Under Article 279 of the Labor Code, an employee who is unjustlydismissed from work is entitled to reinstatement without loss of seniority rights andother privileges, and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation waswitheld from him up to the time of his actual reinstatement. However, ifreinstatement is no longer possible, the employer has the alternative of paying theemployee his separation pay in lieu of reinstatement.[13]

IN VIEW WHEREOF, the petition is GRANTED. The assailed resolutions ofthe NLRC are SET ASIDE. Respondents are hereby ordered to pay petitioners their

full backwages, and to reinstate them to their former position without loss of seniorityrights and privileges, or to award them separation pay in case reinstatement is nolonger feasible.

SO ORDERED.

Davide, Jr., C.J. (Chairman) , Pardo and Ynares-Santiago, JJ., concur. Kapunan J., on leave.











94. MARCIAL GU-MIRO, pet i t ioner, vs . ROLANDO C. ADORABLE andBERGESEN D.Y. MANILA, respondents .

D E C I S I O N

YNARES-SANTIAGO,J .:

Before us is a petition for review on certiorari of the decision of the Courtof Appeals in CA-G.R. SP No. 66131 dated May 29, 2003,[1] which modifiedthe decision of the National Labor Relations Commission (NLRC) byincreasing the incentive bonus awarded to petitioner from US$594.56 toUS$1189.12.

Petitioner Marcial Gu-Miro was formerly employed as a Radio Officer ofrespondent Bergesen D.Y. Philippines, which acted for and in behalf of itsprincipal Bergesen D.Y. ASA, on board its different vessels. A Certification

dated April 14, 1998 was issued by Bergesen D.Y. Philippines, Inc.’sPresident and General Manager Rolando C. Adorable showing that petitionerserved in the company on board its vessels starting 1988.[2] The case beforeus involves an employment contract signed by petitioner to commence serviceon board the M/V HEROS, which stipulated a monthly salary of US$929.00 fora period of eight (8) months. It also provided for overtime pay of US$495.00per month and vacation leave with pay in the amount of US$201.00 per monthequivalent to six and a half days.[3] The contract of employment was signed onMarch 18, 1996 and petitioner commenced work on April 15, 1996.

Record shows that respondent company traditionally gives an incentivebonus termed as Re-employment Bonus to employees who decide to rejointhe company after the expiration of their employment contracts. After theexpiration of petitioner’s contract in December 1996, the same was renewedby respondent company until September 9, 1997, as stated in the Certificationissued by Bergesen D.Y. Philippines, Inc. In September 1997, petitioner’sservices were terminated due to the installation of labor saving devices whichmade his services redundant. Upon his forced separation from the company,petitioner requested that he be given the incentive bonus plus the additionalallowances he was entitled to. Respondent company, however, refused to

accede to his request.Thus, in June 1999 petitioner filed a complaint with the NLRC, Regional

Arbitration Branch of Cebu, for payment of the incentive bonus from April 15,1996 to September 15, 1997, 10% of the basic wage, unclaimed payment forincentive bonus from September 1993 to June 1994, non-remittance ofprovident fund from July 1992 to June 1994, moral and exemplary damagesas well as attorney’s fees. On December 29, 1999, the complaint was

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provisionally dismissed by the NLRC due to the failure of petitioner to file therequired position paper. Petitioner re-filed the complaint on March 2, 2000accordingly.

In a Decision dated June 6, 2000, the Labor Arbiter dismissed the case for

lack of merit,[4]

based on the following findings:

x x x. “Incentive bonus” or reemployment bonus are benefits not found in the POEA

approved contract. These are benefits which are specifically granted pursuant to aninternal memorandum entitled “Employment Conditions for Filipino Seafarers serving

on board vessels of Bergesen D.Y. ASA”. As stated in the said internalmemorandum, entitlement to the benefits therein (is) not automatic but (is) subject tosome conditions. As clearly stated in the said memorandum, the reemployment bonusis an “incentive bonus system for reemployment upon signing for a subsequent

period.” x x x. In order that a seafarer, like the complainant, be entitled to

reemployment/incentive bonus, he must satisfy all of the following requirements, towit:

1) He must be employed in a vessel under a principal who is a member of thereemployment bonus scheme;

2) He must have been an officer of the principal member’s vessel subject to the

additional conditions stated in page 2 of the aforementioned internal memorandum;and

3) After serving in a principal-member’s vessel, he must be reemployed inanother or the same principal-member’s vessel.

To avail of the benefits under this scheme, seafarers like the complainant has to provethat he met all the foregoing conditions. It is, thus, his burden to prove that he isentitled to the said benefit. Complainant, however, miserably failed to adduceevidence that he met all the foregoing conditions for entitlement to the benefit. Herelied on his unsubstantiated allegation that a certain Captain D. Ramirez received anincentive bonus even if he did not sign up with the Company. x x x.

x x x x x x x x x

For obvious reasons, complainant’s claims for moral and exemplary damages as wellas attorney’s fees are denied. x x x.[5]

Petitioner appealed to the NLRC, which set aside the Labor Arbiter’sdecision and ordered respondents to pay petitioner the amount of US$594.56











in a Decision dated March 5, 2001. The pertinent portion of the NLRC’sdecision states:

The Contract of Employment entered into between the complainant and therespondents specifically set a term of eight (8) months which was supposed to be from

April 15, 1996 up to December 14, 1996. The complainant’s length of service fromDecember 15, 1996 to September 9, 1997, or a period of nine (9) months, more orless, was an extended term of employment. A closer look at the facts shows that theextended term was even longer than the original term of the contract.

x x x x x x x x x

[W]e construe that the extended term of the contract of employment from December15, 1996 up to September 9, 1997 was considered as re-employment of thecomplainant. And when there was re-employment, it is presumed that all the

conditions set forth by the respondents in their established company written policyentitled “Employment Conditions for Filipino Seafarers Serving Onboard Vessels ofBergesen D.Y. ASA” are deemed complied with. The pertinent portion of the saidcompany policy states:

2. Re-employment bonus

The company has established an incentive bonus system for re-employment uponsigning for a subsequent period.

The conditions are as follows:

x x x x x x x x x

Radio Officers/Electricians – Serving onboard bulk carriers- 8% of basic wage permonth of actual service.

To do otherwise, we would allow the respondent to circumvent its own established policy to merely extending the original contract of employment.[6]

Petitioner and respondents filed separate Motions for Reconsiderationwhich were both denied by the NLRC in its Resolution dated April 24, 2001.

Not satisfied with the monetary award, petitioner filed a petition for reviewwith the Court of Appeals claiming that there was an error in computing theamount of the incentive bonus he is entitled to. Petitioner argued that heshould be considered as a regular employee of respondent company andthus, entitled to backwages or, at the very least, separation pay.







The Court of Appeals, on May 29, 2003, rendered the assailed Decisionwhere it ruled:

WHEREFORE, the petition is GRANTED. The assailed Decision dated March 5,2001 is hereby MODIFIED increasing the award of incentive bonus from US$594.56

to US$1189.12.

SO ORDERED.[7]

In arriving at its decision, the appellate court made the following findings:

It is uncontroverted that the company grants incentive bonus for re-employment uponsigning for a subsequent period. For radio officers onboard bulk carriers, it shall be8% of the basic wage per month of actual service. In this case, we find nothing in therecord to show that the classification of the vessel to which the petitioner was

deployed is a Gas/LPG Tanker, which would make him entitled to 10% instead of 8%of the basic wage as incentive bonus. Thus, the public respondent correctly appliedthe rate of 8% of the basic wage per month of actual service, the basic wage in thiscase being the amount stipulated in the contract of employment, i.e., US$929.00, anddoes not include the stipulated rate for overtime pay.

The question now is the application of the provision of the memorandum with respectto the length of actual service. Record shows that after the expiration of the originaleight-month employment contract on December 15, 1996, the petitioner was in factre-employed when his service was extended for another nine (9) months or up to

September 1997. This unquestionably entitled him to the incentive bonus for the 8-month period covered by the contract and which was correctly awarded to him by the public respondent NLRC. However, as to the succeeding period, although it was notcovered by a written contract, it is unrebutted that the petitioner was actually made tosuffer work during that period. Hence, there was a monthly re-employment of the petitioner for the succeeding 9 months. Conformably, since the incentive bonus isgiven for re-employment upon signing for a subsequent period, for purposes ofcomputing the same, the petitioner is deemed to have been re-employed not only forthe 8 months covered by the contract but also for the succeeding 8 months precedingthe last month when he was terminated. x x x.

x x x x x x x x x

As for the claim for backwages or separation pay, we note that these claims wereneither raised in the petitioner’s position paper nor in the motion for reconsideration

filed before the NLRC; hence, they can no longer be raised for the first time in this petition. x x x.[8]











Hence, the instant petition for certiorari based on the following grounds:

I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT PLACED THEBURDEN UPON PETITIONER TO PROVE THAT M/V HEROS IS AN LPG/GASTANKER.

II. CONSIDERING THAT PETITIONER HAD WORKED FOR BERGESEN D.Y.PHILIPPINES FOR AND IN BEHALF OF ITS PRINCIPAL BERGESEN D.Y. ASAFOR TEN (10) LONG YEARS ABOARD ITS DIFFERENT VESSELS, PETITIONERSHOULD HAVE BEEN CONSIDERED AS A REGULAR EMPLOYEE BY THECOURT OF APPEALS.

III. THE HONORABLE COURT OF APPEALS LIKEWISE ERRED WHEN IT SAID INITS DECISION THAT PETITIONER FAILED TO RAISE THE ISSUE OFBACKWAGES AND SEPARATION PAY IN THE MOTION FORRECONSIDERATION FILED WITH THE NLRC.[9]

In this petition, we are called upon to resolve two basic issues: Thefirst concerns what percentage to use in computing the incentive bonus which

petitioner is entitled to. In the memorandum entitledEmployment Conditionsfor Filipino Seafarers Serving Onboard Vessels of Bergesen D.Y.

ASA (Employment Conditions Memorandum), Radio Officers are entitled tore-employment bonus equivalent to a certain percentage of their basic wageper month of actual service. If the employee served onboard a bulk carrier, heis entitled to 8% of his basic wage per month of actual service. Alternatively, ifservice was done onboard a gas carrier tanker, the employee is entitled to10% of his basic wage per month of actual service.

The NLRC and the Court of Appeals both agree that petitioner failed to

adduce concrete proof to show that M/V HEROS is a Gas/LPG Tanker andnot a bulk carrier. Hence, the Court of Appeals upheld the use of 8% by theNLRC as multiplier to compute the incentive bonus. Respondent companyargues that petitioner failed to allege the nature of M/V HEROS at the earliestopportunity, belatedly alleging this information in the Motion forReconsideration with the NLRC. Petitioner insists that M/V HEROS is aGas/LPG Tanker which entitles him to 10% of his basic wage as incentivebonus; and that the Court of Appeals erred in ruling that it was petitioner’sburden to prove the classification of M/V HEROS.

We rule in petitioner’s favor. The registration papers, which contain thevessel classification of M/V HEROS, are the conclusive evidence thatpetitioner needs to prove his allegation. However, these are in the custody ofrespondent company or its mother company, Bergesen D.Y. ASA.Interestingly, respondent company never presented the registration papers inevidence.







We find that respondent company’s failure to controvert the a llegation,when it had the opportunity and resources to do so, works in favor ofpetitioner. Time and again we have held that should doubts exist between theevidence presented by the employer and the employee, the scales of justicemust be tilted in favor of the latter .[10] Moreover, the law creates the

presumption that evidence willfully suppressed would be adverse ifproduced.[11]

Consequently, the amount of incentive bonus termed as re-employmentbonus which petitioner is entitled to should be computed as follows:

Salary per month = US$929.00

No. of months of actual service = 16 months

Rate = 10% of basic wage

US$929.00/month x 16 months x 10% = US$1,486.40

The second and third grounds raised in this petition are related, based onpetitioner’s allegation that he should be considered a regular employee ofrespondent company, having been employed onboard the latter’s differentvessels for the span of 10 years. Hence, petitioner claims that he is entitled tobackwages or at the very least separation pay, invoking our decisionin Millares, et al. v. NLRC [12]where it was held that the repeated re-hiring of a

Chief Engineer of a shipping company for 20 years is sufficient evidence ofthe necessity and indispensability of the employee’s service to the employer’sbusiness or trade. Hence, applying the express provision of Article 280 of theLabor Code,[13] such an employee should be considered as a regularemployee.

Petitioner’s argument is not well-taken. The decision of Millares, et al. v.NLRC was reconsidered and set aside in a Resolution[14] where it was held:

[I]t is clear that seafarers are considered contractual employees. They can not beconsidered as regular employees under Article 280 of Labor Code. Their employment

is governed by the contracts they sign every time they are rehired and theiremployment is terminated when the contract expires. Their employment iscontractually fixed for a certain period of time. They fall under the exception ofArticle 280 whose employment has been fixed for a specific project or undertakingthe completion or termination of which has been determined at the time of theengagement of the employee or where the nature of the work or services to be performed is seasonal in nature and employment is for the duration of the season.







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x x x x x x x x x

Moreover, it is an accepted maritime industry practice that employment of seafarers(is) for a fixed period only. Constrained by the nature of their employment which isquite peculiar and unique in itself, it is for the mutual interest of both the seafarer and

the employer why employment status must be contractual only or for a certain periodof time. Seafarers spend most of their time at sea and understandably, they cannotstay for a long and an indefinite period of time at sea. Limited access to shore societyduring the employment will have an adverse impact on the seafarer. The national,cultural and lingual diversity among the crew during the [Contract of Enlistment] is areality that necessitates the limitation of its period.[15]

Clearly, petitioner cannot be considered as a regular employeenotwithstanding that the work he performs is necessary and desirable in thebusiness of respondent company. As expounded in the above-

mentioned Millares Resolution, an exception is made in the situation ofseafarers. The exigencies of their work necessitates that they be employedon a contractual basis.

Thus, even with the continued re-hiring by respondent company ofpetitioner to serve as Radio Officer onboard Bergesen’s different vessels, thisshould be interpreted not as a basis for regularization but rather a series ofcontract renewals sanctioned under the doctrine set down by thesecond Millares case. If at all, petitioner was preferred because of practicalconsiderations—namely, his experience and qualifications. However, this

does not alter the status of his employment from being contractual.With respect to the claim for backwages and separation pay, it is now well-

settled that the award of backwages and separation pay in lieu ofreinstatement are reliefs that are awarded to an employee who is unjustlydismissed.[16] In the instant case, petitioner was separated from hisemployment due to the termination of an impliedly renewed contract withrespondent company. Hence, there is no illegal or unjust dismissal.

WHEREFORE, premises considered, the petition is GRANTED IN PART.The Decision of the Court of Appeals in CA-G.R. SP No. 66131 dated May 29,

2003 is MODIFIED in that the award of incentive bonus is increased fromUS$1189.12 to US$1,486.40. Petitioner’s claim that he be declared a regularemployee and awarded backwages and separation pay is DENIED for lack ofmerit.

SO ORDERED.











Davide, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna,JJ., concur .

95. ROBERTO RAVAGO, pet i t ioner, vs . ESSO EASTERN MARINE, LTD.

and TRANS-GLOBAL MARITIME AGENCY, INC., respondents .

D E C I S I O N

CALLEJO, SR., J .:

Before us is a petition for review on certiorari under Rule 45 of the 1997Rules of Court, as amended, of the Decision[1] of the Court of Appeals (CA) aswell as its Resolution in CA-G.R. SP No. 66234 which denied the motion forreconsideration thereof.

The Factual Antecedents

The Esso Eastern Marine Ltd. (EEM), now the Petroleum Shipping Ltd., isa foreign company based in Singapore and engaged in maritime commerce.It is represented in the Philippines by its manning agent and co-respondentTrans-Global Maritime Agency, Inc. (Trans-Global), a corporation organizedunder the Philippine laws.

Roberto Ravago was hired by Trans-Global to work as a seaman on board

various Esso vessels. On February 13, 1970, Ravago commenced his dutyas S/N wiper on board the Esso Bataan under a contract that lasted untilFebruary 10, 1971. Thereafter, he was assigned to work in different Essovessels where he was designated diverse tasks, such as oiler, then assistantengineer. He was employed under a total of 34 separate and unconnectedcontracts, each for a fixed period, by three different companies, namely, EssoTankers, Inc. (ETI), EEM and Esso International Shipping (Bahamas) Co., Ltd.(EIS), Singapore Branch. Ravago worked with Esso vessels until August 22,1992, a period spanning more than 22 years, thus:

CONTRACTFROM DURATIONTO POSITION VESSEL COMPANY

13 Feb 70 10 Feb 71 SN/Wiper Esso Bataan ETI[2]

07 May 71 27 May 72 Wiper EssoYokohama

EEM[3]

07 Aug 72 02 Jul 73 Oiler Esso Kure EEM

03 Oct 73 30 Jun 74 Oiler Esso Bangkok ETI

18 Sep 74 26 July 75 Oiler Esso EEM

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Yokohama

23 Oct 75 22 Jun 76 Oiler Esso PortDickson

EEM

10 Sep 76 26 Dec 76 Oiler Esso Bangkok ETI

27 Dec 76 29 Apr 77 Temporary Jr.

3AE

Esso Bangkok ETI

08 Jul 77 15 Mar 78 Jr. 3AE Esso Bombay ETI

03 Jun 78 03 Feb 79 Temporary3AE

Esso Hongkong ETI

04 Apr 79 24 Jun 79 3AE Esso Orient EEM

25 Jun 79 16 Jul 79 3AE EssoYokohama

EEM

17 Jul 79 05 Dec 79 3AE Esso Orient EEM

10 Feb 80 25 Oct 80 3AE Esso Orient EEM

19 Jan 81 03 Jun 81 3AE Esso PortDickson

EEM

04 Jun 81 11 Sep 81 3AE Esso Orient EEM

06 Dec 81 20 Apr 82 3AE Esso Chawan EEM

21 Apr 82 01 Aug 82 Temporary2AE

Esso Chawan EEM*

03 Nov 82 06 Feb 83 2AE Esso Jurong EEM

07 Feb 83 10 Jul 83 2AE EssoYokohama

EEM

31 Aug 83 13 Mar 84 2AE Esso Tumasik EEM

04 May 84 08 Jan 85 2AE Esso PortDickson

EEM

13 Mar 85 31 Oct 85 2AE Esso Castellon EEM29 Dec 85 22 Jul 86 2AE Esso Jurong EIS[4]

13 Sep 86 09 Jan 87 2AE Esso Orient EIS

21 Mar 87 15 Oct 87 2AE Esso PortDickson

EIS

20 Nov 87 18 Dec 87Temporary

1AE Esso Chawan EIS

19 Dec 87 25 Jun 88 2AE EssoMelbourne

EIS

04 Aug 88 19 Mar 89 Temporary1AE

Esso PortDickson

EIS

20 Mar 89 19 May 89 1AE Esso PortDickson

EIS*

28 Jul 89 17 Feb 90 1AE EssoMelbourne

EIS

16 Apr 90 11 Dec 90 1AE Esso Orient EIS

09 Feb 91 06 Oct 91 1AE EssoMelbourne

EIS






16 Dec 91 22 Aug 92 1AE Esso Orient EIS

* Upgraded/Confirmed on regular rank on board.[5]

On August 24, 1992, or shortly after completing his latest contract withEIS, Ravago was granted a vacation leave with pay from August 23, 1992

until October 28, 1992. Preparatory to his embarkation under a new contract,he was ordered to report, on September 28, 1992, for a Medical Pre-Employment Examination.[6] The Pre-Employment Physical ExaminationRecord shows that Ravago passed the medical examination conducted by theO.P. Jacinto Medical Clinic, Inc. on October 6, 1992.[7] He, likewise, attendeda Pre-Departure Orientation Seminar conducted by the Capt. I.P. EstanielTraining Center, a division of Trans-Global, on October 7, 1992.[8]

On the night of October 12, 1992, a stray bullet hit Ravago on the left legwhile he was waiting for a bus ride in Cubao, Quezon City. He fractured hisleft proximal tibia and was hospitalized at the Philippine Orthopedic Hospital.Ravago’s wife, Lolita, informed Trans-Global and EIS of the incident onOctober 13, 1992 for purposes of availing medical benefits. As a result of hisinjury, Ravago’s doctor opined that he would not be able to cope with the jobof a seaman and suggested that he be given a desk job.[9] Ravago’s left leghad become apparently shorter, making him walk with a limp. For this reason,the company physician, Dr. Virginia G. Manzo, found him to have lost hisdexterity, making him unfit to work once again as a seaman.[10] Citing theopinion of Ravago’s doctor, Dr. Manzo wrote:

… Because of his unsteady gait, pronounced limp, and loss of normal dexterity of his

leg and foot, we doubted whether Mr. Ravago can physically tackle the usualactivities of a seaman in the course of his work without any added risk over and abovethe ordinary or standard risk inherent to his job. These activities include climbing upand down the engine room through a long flight of iron stairs with narrow steps whichcould be slippery at times due to grease or oil, jumping from an unsteady and floatingmotor launch or boat to board or alight a tanker through a flight of steps or climbingup and down a pilot ladder, wearing of heavy safety shoes, etc.

Mr. Ravago’s doctor replied that, after being informed about the nature of the job, he

believes that Mr. Ravago would not be able to cope with these kinds of activities. Ineffect, the Orthopedic doctor said Mr. Ravago is not fit to go back to his work as aseaman.

We concur with the opinion of the doctor that Mr. Ravago is not fit to go back to his job as a seaman in view of the risk of physical injury to himself as result of thedeformity and loss of dexterity of his injured leg.



























As a seaman, we consider his inability partial permanent. His injury corresponds toGrade 13 in the Schedule of Disability of the Standard Employment Contract. … [11]

Consequently, instead of rehiring Ravago, EIS paid him his CareerEmployment Incentive Plan (CEIP)[12] as of March 1, 1993 and his final tax

refund for 1992. After deducting his Social Security System and medicalcontributions from November 1992 to February 1993, EIS remitted the netamount of P162,232.65, following Ravago’s execution of a Deed of Quitclaimand/or Release.[13]

However, on March 22, 1993, Ravago filed a complaint[14] for illegaldismissal with prayer for reinstatement, backwages, damages and attorney’sfees against Trans-Global and EIS with the Philippine Overseas Employment

Administration Adjudication Office.

In their Answer dated April 14, 1993, respondents denied that Ravago was

dismissed without notice and just cause. Rather, his services were no longerengaged in view of the disability he suffered which rendered him unfit to workas a seafarer. This fact was further validated by the company doctor andRavago’s attending physician. They averred that Ravago was a contractualemployee and was hired under 34 separate contracts by different companies.

In his position paper, Ravago insisted that he was fit to resume pre-injuryactivities as evidenced by the certification[15] issued by Dr. Marciano ForondaM.D., one of his attending physicians at the Philippine Orthopedic Hospital,that “at present, fracture of tibia has completely healed and patient is fit to

resume pre-injury activities anytime.”[16]

Ravago, likewise, asserted that hewas not a mere contractual employee because the respondents regularly andcontinuously rehired him for 23 years and, for his continuous service, wasawarded a CEIP payment upon his termination from employment.

On December 15, 1996, Labor Arbiter Ramon Valentin C. Reyes rendereda decision in favor of Ravago, the complainant. He ruled that Ravago was aregular employee because he was engaged to perform activities which wereusually necessary or desirable in the usual trade or business of the employer.The Labor Arbiter noted that Ravago’s services were repeatedly contracted;

he was even given several promotions and was paid a monthly serviceexperience bonus. This was in keeping with the increasing number of longterm careers established with the respondents. Finally, the Labor Arbiterresolved that an employer cannot terminate a worker’s employment on theground of disease unless there is a certification by a competent public healthauthority that the said disease is of such nature or at such a stage that itcannot be cured within a period of six months even with proper medical

























treatment. He concluded that Ravago was illegally dismissed. The decretalportion of the Labor Arbiter’s decision reads:

WHEREFORE, premises considered, judgment is hereby rendered finding thedismissal illegal and ordering respondents to reinstate complainant to his former

position without loss of seniority rights and other benefits. Further, the respondentsare jointly and severally liable to pay complainant backwages from the time of hisdismissal up to the promulgation of this decision. Such backwages is provisionallyfixed at US$96,285.00 less the P162,285.83 ( sic) paid to the complainant as CareerEmployment Incentive Plan. And ordering respondents to pay complainant 10% of thetotal monetary award as attorney’s fees.

All other claims are dismissed for lack of merit.

SO ORDERED.[17]

Aggrieved, the respondents appealed the decision to the National LaborRelations Commission (NLRC) on July 3, 1997, raising the following grounds:

THE DECISION IS VITIATED BY SERIOUS ERRORS IN THE FINDINGS OFFACT WHICH, IF NOT CORRECTED, WOULD CAUSE GRAVE ORIRREPARABLE DAMAGE OR INJURY TO THE RESPONDENTS. THESEFINDINGS ARE:

(A) THAT COMPLAINANT WAS A REGULAR EMPLOYEE BECAUSE HE WAS

HIRED AND REHIRED IN VARIOUS CAPACITIES ON BOARD ESSOVESSELS IN A SPAN OF 23 YEARS;

(B) THAT COMPLAINANT WAS A REGULAR EMPLOYEE BECAUSE HE WASENGAGED IN THE SERVICES INDISPENSABLE IN THE OPERATION OFTHE VARIOUS VESSELS OF RESPONDENTS;

(C) THAT COMPLAINANT WAS FIT TO RESUME PRE-INJURY ACTIVITIES AND HIS FRACTURE COMPLETELY HEALED NOTWITHSTANDING ACONTRARY MEDICAL OPINION OF COMPLAINANT’S OWN PHYSICIAN

AND RESPONDENTS’ COMPANY PHYSICIAN; AND

(D) THAT COMPLAINANT WAS ILLEGALLY DISMISSED BYRESPONDENTS.[18]

On April 26, 2001, the NLRC rendered a decision affirming that of theLabor Arbiter. The NLRC based its decision in the case of Millares v. NationalLabor Relations Commission,[19] wherein it was held that:

It is, likewise, clear that petitioners had been in the employ of the private respondentsfor 20 years. The records reveal that petitioners were repeatedly re-hired by private




















respondents even after the expiration of their respective eight-month contracts. Suchrepeated re-hiring which continued for 20 years, cannot but be appreciated assufficient evidence of the necessity and indispensability of petitioners’ service to the

private respondents’ business or trade.

Verily, as petitioners had rendered 20 years of service, performing activities whichwere necessary and desirable in the business or trade of private respondents, they are, by express provision of Article 280 of the Labor Code, considered regularemployees.[20]

The NLRC, likewise, declared that Ravago was illegally dismissed andthat the quitclaim executed by him could not be considered as a waiver of hisright to question the validity of his dismissal and seek reinstatement and otherreliefs. According to the NLRC, such quitclaim is against public policy,considering the economic disadvantage of the employee and the inevitable

pressure brought about by financial capacity.

The respondents filed a motion for reconsideration of the decision,claiming that the ruling of the Court in Millares v. NLRC [21] had not yet becomefinal and executory. However, the NLRC denied the motion.

Thereafter, the respondents filed a petition for certiorari before the CA onthe following grounds: (a) the ruling in Millares v. NLRC had not yet acquiredfinality, nor has it become a law of the case or stare decisis because the Courtwas still resolving the pending motion for reconsideration; (b) Ravago was notillegally dismissed because after the expiration of his contract, there was noobligation on the part of the respondents to rehire him; and (c) the quitclaimsigned by Ravago was voluntarily entered into and represented a reasonablesettlement of the account due him.

On August 29, 2001, the respondents filed an Urgent Application for theIssuance of a Temporary Restraining Order and Writ of Preliminary Injunctionto enjoin and restrain the Labor Arbiter from enforcing his decision. OnSeptember 5, 2001, the CA issued a Resolution[22] temporarily restrainingNLRC Sheriff Manolito Manuel from enforcing and/or implementing thedecision of the Labor Arbiter as affirmed by the NLRC.

On November 14, 2001, the CA granted the application for preliminaryinjunction upon filing by the respondents of a bond in the amountof P500,000.00. Thus, the respondents filed the surety bond as directed bythe appellate court. Before the approval thereof, however, Ravago filed amotion to set aside the Resolution dated November 14, 2001, principallyarguing that the instant case was a labor dispute, wherein an injunction isproscribed under Article 254[23] of the Labor Code of the Philippines.
















In their comment on Ravago’s motion, the respondents professed that thecase before the CA did not involve a labor dispute within the meaning of

Article 212(l)[24] of the Labor Code of the Philippines, but a money claimagainst the employer as a result of termination of employment.

On August 28, 2002, the CA rendered a decision in favor therespondents. The fallo of the decision reads:

WHEREFORE, the petition is GRANTED. The assailed decisions of the NLRC arehereby REVERSED and SET ASIDE and the injunctive writ issued on November14, 2001, is hereby made PERMANENT.

SO ORDERED.[25]

The CA ratiocinated as follows:

The employment, deployment, rights and obligation of Filipino seafarers are particularly set forth under the rules and regulations governing overseas employment promulgated by the POEA. Section C, Part I of the Standard Employment ContractGoverning the Employment of All Filipino Seamen on Board Ocean-Going Vesselsemphatically provides the following:

“SECTION C. DURATION OF CONTRACT

The period of employment shall be for a fix ( sic) period but in no case to exceed 12months and shall be stated in the Crew Contract. Any extension of the Contract periodshall be subject to the mutual consent of the parties.”

It is clear from the foregoing that seafarers are contractual employees whose terms ofemployment are fixed for a certain period of time. A fixed term is an essential andnatural appurtenance of seamen’s employment contracts to which, whatever the nature

of the engagement, the concept of regular employment under Article 280 of the LaborCode does not find application. The contract entered into by a seafarer with hisemployer sets in detail the nature of his job, the amount of his wage and, foremost, theduration of his employment. Only a satisfactory showing that both parties dealt with

each other on more or less equal terms with no dominance exercised by the employerover the seafarer is necessary to sustain the validity of the employment contract. In theabsence of duress, as it is in this case, the contract constitutes the law between the parties.[26]

The CA noted that the employment status of seafarers has beenestablished with finality by the Court’s reconsideration of its decisionin Millares v. National Labor Relations Commission,[27] wherein it was ruled










http://sc.judiciary.gov.ph/jurisprudence/2002/jul2002/110524.htm












that seamen are contractual employees. According to the CA, the fact thatRavago was not rehired upon the completion of his contract did not result inhis illegal dismissal; hence, he was not entitled to reinstatement or payment ofseparation pay. The CA, likewise, affirmed the writ of preliminary injunction itearlier issued, declaring that an injunction is a preservative remedy issued for

the protection of a substantive right or interest, an antidote resorted to onlywhen there is a pressing necessity to avoid injurious consequences whichcannot be rendered under any standard compensation.

Hence, the present recourse.

Ravago, now the petitioner, has raised the following issues:

I.

[WHETHER OR NOT] THE COURT OF APPLEALS GRAVELY ERRED AND

VIOLATED THE LABOR CODE WHEN IT ISSUED A RESTRAINING ORDERAND THEREAFTER A WRIT OF PRELIMINARY INJUNCTION IN CA-G.R. SP NO. 66234.

II.

[WHETHER OR NOT] THE COURT OF APPEALS GRAVELY ERRED, [AND]BLATANTLY DISREGARDED THE CONSTITUTIONAL MANDATE ONPROTECTION TO FILIPINO OVERSEAS WORKERS, AND COUNTENANCEDUNWARRANTED DISCRIMINATION WHEN IT RULED THAT PETITIONERCANNOT BECOME A REGULAR EMPLOYEE.[28]

On the first issue, the petitioner asserts that the CA violated Article 254 ofthe Labor Code when it issued a temporary restraining order, and thereafter awrit of preliminary injunction, to derail the enforcement of the final andexecutory judgment of the Labor Arbiter as affirmed by the NLRC. On theother hand, the respondents contend that the issue has become academicsince the CA had already decided the case on its merits.

The contention of the petitioner does not persuade.

The petitioner’s reliance on Article 254[29] of the Labor Code is misplaced.The law proscribes the issuance of injunctive relief only in those casesinvolving or growing out of a labor dispute. The case before the NLRC neitherinvolves nor grows out of a labor dispute. It did not involve the fixing of termsor conditions of employment or representation of persons with respectthereto. In fact, the petitioner’s complaint revolves ar ound the issue of hisalleged dismissal from service and his claim for backwages, damages and










attorney’s fees. Moreover, Article 254 of the Labor Code specifically providesthat the NLRC may grant injunctive relief under Article 218 thereof.

Besides, the anti-injunction policy of the Labor Code, basically, is freedomat the workplace. It is more appropriate in the promotion of the primacy of

free collective bargaining and negotiations, including voluntary arbitration,mediation and conciliation, as modes of settling labor and industrialdisputes.[30]

Generally, an injunction is a preservative remedy for the protection of aperson’s substantive rights or inter ests. It is not a cause of action in itself buta mere provisional remedy, an appendage to the main suit. Pressingnecessity requires that it should be resorted to only to avoid injuriousconsequences which cannot be remedied under any measure ofconsideration. The application of an injunctive writ rests upon the presence ofan exigency or of an exceptional reason before the main case can beregularly heard. The indispensable conditions for granting such temporaryinjunctive relief are: (a) that the complaint alleges facts which appear to besatisfactory to establish a proper basis for injunction, and (b) that on the entireshowing from the contending parties, the injunction is reasonably necessary toprotect the legal rights of the plaintiff pending the litigation.[31]

It bears stressing that in the present case, the respondents’ petitioncontains facts sufficient to warrant the issuance of an injunction under Article218, paragraph (e) of the Labor Code of the Philippines.[32] Further,respondents had already posted a surety bond more than adequate to cover

the judgment award.On the second issue, the petitioner earnestly urges this Court to re-

examine its Resolution dated July 29, 2002 in Millares v. National LaborRelations Commission[33] and reinstate the doctrine laid down in its originaldecision rendered on March 14, 2000, wherein it was initially determined thata seafarer is a regular employee. The petitioner asserts that the decision ofthe CA and, indirectly, that of the Resolution of this Court dated July 29, 2002,are violative of the constitutional mandate of full protection to labor ,[34] whetherlocal or overseas, because it deprives overseas Filipino workers, such as

seafarers, an opportunity to become regular employees without valid andserious reasons. The petitioner maintains that the decision is discriminatoryand violates the constitutional provision on equal protection of the laws, inaddition to being partial to and overly protective of foreign employers.

The respondents, on the other hand, asseverate that there is no law oradministrative rule or regulation imposing an obligation to rehire a seafarerupon the completion of his contract. Their refusal to secure the services of






















the petitioner after the expiration of his contract can never be tantamount to atermination. The respondents aver that the petitioner is not entitled tobackwages, not only because it is without factual justification but also becauseit is not warranted under the law. Furthermore, the respondents assert thatthe rulings in the Coyoca v. NLRC ,[35] and the latest Millares case remain good

and valid precedents that need to be reaffirmed. The respondents cited theruling of the Court in Coyoca case where the Court ruled that a Filipinoseaman’s contract does not provide for separation or termination pay becauseit is governed by the Rules and Regulations Governing OverseasEmployment.

The contention of the respondents is correct.

In a catena of cases, this Court has consistently ruled that seafarers arecontractual, not regular, employees.

In Brent School, Inc. v. Zamora,[36]

the Court ruled that seamen andoverseas contract workers are not covered by the term “regular employment”as defined in Article 280 of the Labor Code. The Court said in that case:

The question immediately provoked ... is whether or not a voluntary agreement on afixed term or period would be valid where the employee “has been engaged to

perform activities which are usually necessary or desirable in the usual business ortrade of the employer.” The definition seems non sequitur . From the premise – that

the duties of an employee entail ―activities which are usually necessary or desirable

in the usual business or trade of the employer‖ — the conclusion does not necessarily

follow that the employer and employee should be forbidden to stipulate any period oftime for the performance of those activities. There is nothing essentially

contradictory between a definite period of an employment contract and the nature of

the employee’s duties set down in that contract as being ―usually necessary or

desirable in the usual business or trade of the employer.‖ The concept of the

employee’s duties as being ―usually necessary or desirable in the usual business or

trade of the employer‖ is not synonymous with or identical to employment with a fixed

term. Logically, the decisive determinant in term employment should not be theactivities that the employee is called upon to perform, but the day certain agreed upon by the parties for the commencement and termination of their employment

relationship, a day certain being understood to be “that which must necessarily come,although it may not be known when.” Seasonal employment, and employment for a

particular project are merely instances of employment in which a period, were notexpressly set down, is necessarily implied.[37]

...















Some familiar examples may be cited of employment contracts which may be neitherfor seasonal work nor for specific projects, but to which a fixed term is an essentialand natural appurtenance: overseas employment contracts , for one, to which,

whatever the nature of the engagement, the concept of regular employment with all

that it implies does not appear ever to have been applied, Article 280 of the Labor

Code notwithstanding; also appointments to the positions of dean, assistant dean,college secretary, principal, and other administrative offices in educationalinstitutions, which are by practice or tradition rotated among the faculty members, andwhere fixed terms are a necessity without which no reasonable rotation would be possible. ... [38]

...

Accordingly, and since the entire purpose behind the development of legislationculminating in the present Article 280 of the Labor Code clearly appears to have been,

as already observed, to prevent circumvention of the employee’s right to be secure inhis tenure, the clause in said article indiscriminately and completely ruling out allwritten or oral agreements conflicting with the concept of regular employment asdefined therein should be construed to refer to the substantive evil that the Code itselfhas singled out: agreements entered into precisely to circumvent security of tenure. It

should have no application to instances where a fixed period of employment was

agreed upon knowingly and voluntarily by the parties, without any force, duress or

improper pressure being brought to bear upon the employee and absent any other

circumstances vitiating his consent, or where it satisfactorily appears that the

employer and employee dealt with each other on more or less equal terms with no

moral dominance whatever being exercised by the former over the latter. Unless,thus, limited in its purview, the law would be made to apply to purposes other thanthose explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust inits effects and apt to lead to absurd and unintended consequences.[39]

The Court made the same ruling in Coyoca v. National Labor RelationsCommission[40] and declared that a seafarer, not being a regular employee, isnot entitled to separation or termination pay.

Furthermore, petitioner’s contract did not provide for separation benefits. In this

connection, it is important to note that neither does the POEA standard employment

contract for Filipino seamen provide for such benefits.

As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing

Overseas Employment and the said Rules do not provide for separation or termination

pay. ...














...

Therefore, although petitioner may not be a regular employee of private respondent,the latter would still have been liable for payment of the benefits had the principalfailed to pay the same. …[41]

In the July 29, 2002 Resolution of this Court in Millares v. National LaborRelations Commission,[42] it reiterated its ruling that seafarers are contractualemployees and, as such, are not covered by Article 280 of the Labor Code ofthe Philippines:

From the foregoing cases, it is clear that seafarers are considered contractualemployees. They cannot be considered as regular employees under Article 280 of theLabor Code. Their employment is governed by the contracts they sign every time they

are rehired and their employment is terminated when the contract expires. Their

employment is contractually fixed for a certain period of time. They fall underthe exception of Article 280 whose employment has been fixed for a specific projector undertaking the completion or termination of which has been determined at thetime of engagement of the employee or where the work or services to be performed isseasonal in nature and the employment is for the duration of the season. We need notdepart from the rulings of the Court in the two aforementioned cases which indeedconstitute stare decisis with respect to the employment status of seafarers.

...

... The Standard Employment Contract governing the Employment of All FilipinoSeamen on Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C,specifically provides that the contract of seamen shall be for a fixed period. And in nocase should the contract of seamen be longer than 12 months. It reads:

Section C. Duration of Contract

The period of employment shall be for a fixed period but in no case to exceed 12

months and shall be stated in the Crew Contract. Any extension of the Contract periodshall be subject to the mutual consent of the parties.

…

Petitioners make much of the fact that they have been continually re-hired or theircontracts renewed before the contracts expired (which has admittedly been going onfor twenty [20] years). By such circumstance they claim to have acquired regularstatus with all the rights and benefits appurtenant to it.










Such contention is untenable. Undeniably, this circumstance of continuous re-hiring

was dictated by practical considerations that experienced crew members are more

preferred. Petitioners were only given priority or preference because of theirexperience and qualifications but this does not detract the fact that herein petitionersare contractual employees. They can not be considered regular employees. We quote

with favor the explanation of the NLRC in this wise:

xxx The reference to “permanent” and “probationary” masters and employees in these

papers is a misnomer and does not alter the fact that the contracts for enlistment between complainants-appellants and respondent-appellee Esso International were fora definite periods of time, ranging from 8 to 12 months. Although the use of the terms“permanent” and “probationary” is unfortunate, what is really meant is “eligible for -re-hire.” This is the only logical conclusion possible because the parties cannot andshould not violate POEA’s requirement that a contract of enlistment shall be for a

limited period only; not exceeding twelve (12) months.

From all the foregoing, we hereby state that petitioners are not considered regular or permanent employees under Article 280 of the Labor Code. Petitioners’ employment

have automatically ceased upon the expiration of their contracts of enlistment

(COE). Since there was no dismissal to speak of, it follows that petitioners are notentitled to reinstatement or payment of separation pay or backwages, as provided bylaw. …[43]

The Court ruled that the employment of seafarers for a fixed period is notdiscriminatory against seafarers and in favor of foreign employers. Asexplained by this Court in its July 29, 2002 Resolution inMillares:

Moreover, it is an accepted maritime industry practice that employment of seafarersare for a fixed period only. Constrained by the nature of their employment which isquite peculiar and unique in itself, it is for the mutual interest of both the seafarer and

the employer why the employment status must be contractual only or for a certain

period of time. Seafarers spend most of their time at sea and understandably, they cannot stay for a long and an indefinite period of time at sea. Limited access to shoresociety during the employment will have an adverse impact on the seafarer. Thenational, cultural and lingual diversity among the crew during the COE is a reality thatnecessitates the limitation of its period.[44]

In Pentagon International Shipping, Inc. v. William B. Adelantar ,[45] theCourt cited its rulings in Millares and Coyoca and reiterated that a seafarer isnot a regular employee entitled to backwages and separation pay:

















Therefore, Adelantar, a seafarer, is not a regular employee as defined in Article 280 ofthe Labor Code. Hence, he is not entitled to full backwages and separation pay in lieuof reinstatement as provided in Article 279 of the Labor Code. As we heldin Millares, Adelantar is a contractual employee whose rights and obligations aregoverned primarily by [the] Rules and Regulations of the POEA and, more

importantly, by R.A. 8042, or the Migrant Workers and Overseas Filipinos Act of1995.

The latest ruling of the Court in Marcial Gu-Miro v. Rolando C. Adorableand Bergesen D.Y. Manila[46] reaffirmed yet again its rulings that a seafarer isemployed only on a contractual basis:

Clearly, petitioner cannot be considered as a regular employee notwithstanding that

the work he performs is necessary and desirable in the business of respondent

company. As expounded in the above-mentioned MillaresResolution, an exception is

made in the situation of seafarers. The exigencies of their work necessitates that theybe employed on a contractual basis.

Thus, even with the continued re-hiring by respondent company of petitioner to serveas Radio Officer onboard Bergesen’s different vessels, this should be interpreted notas a basis for regularization but rather a series of contract renewals sanctioned underthe doctrine set down by the second Millares case. If at all, petitioner was preferred

because of practical considerations – namely, his experience and qualifications.

However, this does not alter the status of his employment from being contractual .

The petitioner failed to convince the Court why it should restate itsdecision in Millares and reverse its July 29, 2002 Resolution in the same case.

IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED.The assailed Decision dated August 28, 2002 of the Court of Appeals ishereby AFFIRMED. No pronouncement as to costs.

SO ORDERED.

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

96. PAKISTAN INTERNATIONAL AIRLINESCORPORATION, petitioner,vsHON. BLAS F. OPLE, in his capacity as Minister of Labor; HON.VICENTE LEOGARDO, JR., in his capacity as Deputy Minister;






ETHELYNNE B. FARRALES and MARIA MOONYEENMAMASIG, respondents.

Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for

petitioner.

Ledesma, Saludo & Associates for private respondents.

FELICIANO, J .:

On 2 December 1978, petitioner Pakistan International AirlinesCorporation ("PIA"), a foreign corporation licensed to do business in

the Philippines, executed in Manila two (2) separate contracts ofemployment, one with private respondent Ethelynne B. Farrales andthe other with private respondent Ma. M.C. Mamasig. 1

The contracts, which

became effective on 9 January 1979, provided in pertinent portion as follows:

5. DURATION OF EMPLOYMENT AND PENALTY

This agreement is for a period of three (3) years, but canbe extended by the mutual consent of the parties.

xxx xxx xxx

6. TERMINATION

xxx xxx xxx

Notwithstanding anything to contrary as herein provided,

PIAreserves the right to terminate this agreement at any time by giving the EMPLOYEE

notice in writing in advance one month before the intended termination or in lieu thereof,by paying the EMPLOYEE wages equivalent to one month's salary.

xxx xxx xxx

10. APPLICABLE LAW:



This agreement shall be construed and governed underand by the laws of Pakistan, and only the Courts ofKarachi, Pakistan shall have the jurisdiction to consider anymatter arising out of or under this agreement.

Respondents then commenced training in Pakistan. After their trainingperiod, they began discharging their job functions as flight attendants,with base station in Manila and flying assignments to different parts ofthe Middle East and Europe.

On 2 August 1980, roughly one (1) year and four (4) months prior tothe expiration of the contracts of employment, PIA through Mr. OscarBenares, counsel for and official of the local branch of PIA, sent

separate letters both dated 1 August 1980 to private respondentsFarrales and Mamasig advising both that their services as flightstewardesses would be terminated "effective 1 September 1980,conformably to clause 6 (b) of the employment agreement [they had)executed with [PIA]." 2

On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a complaint, docketed as NCR-STF-95151-80, forillegal dismissal and non-payment of company benefits and bonuses,

against PIA with the then Ministry of Labor and Employment("MOLE"). After several unfruitful attempts at conciliation, the MOLEhearing officer Atty. Jose M. Pascual ordered the parties to submittheir position papers and evidence supporting their respectivepositions. The PIA submitted its position paper, 3

but no evidence, and there

claimed that both private respondents were habitual absentees; that both were in the habit of bringing infrom abroad sizeable quantities of "personal effects"; and that PIA personnel at the Manila International Airport had been discreetly warned by customs officials to advise private respondents to discontinue thatpractice. PIA further claimed that the services of both private respondents were terminated pursuant tothe provisions of the employment contract.

In his Order dated 22 January 1981, Regional Director Francisco L.Estrella ordered the reinstatement of private respondents with fullbackwages or, in the alternative, the payment to them of the amountsequivalent to their salaries for the remainder of the fixed three-yearperiod of their employment contracts; the payment to privaterespondent Mamasig of an amount equivalent to the value of a round



Art. 278. Miscellaneous Provisions— . . .

(b) With or without a collective agreement, no employermay shut down his establishment or dismiss or terminate

the employment of employees with at least one year ofservice during the last two (2) years, whether such serviceis continuous or broken, without prior written authorityissued in accordance with such rules and regulations asthe Secretary may promulgate . . . (emphasis supplied)

Rule XIV, Book No. 5 of the Rules and RegulationsImplementing the Labor Code, made clear that in case of atermination without the necessary clearance, the Regional

Director was authorized to order the reinstatement of theemployee concerned and the payment of backwages;necessarily, therefore, the Regional Director must have beengiven jurisdiction over such termination cases:

Sec. 2. Shutdown or dismissal without clearance. — Anyshutdown or dismissal without prior clearance shall beconclusively presumed to be termination of employmentwithout a just cause. The Regional Director shall, in such

case order the immediate reinstatement of the employeeand the payment of his wages from the time of theshutdown or dismissal until the time of reinstatement.(emphasis supplied)

Policy Instruction No. 14 issued by the Secretary of Labor, dated23 April 1976, was similarly very explicit about the jurisdiction ofthe Regional Director over termination of employment cases:

Under PD 850, termination cases — with or without CBA — are now placed under the original jurisdiction of theRegional Director. Preventive suspension cases, nowmade cognizable for the first time, are also placed underthe Regional Director. Before PD 850, termination caseswhere there was a CBA were under the jurisdiction of thegrievance machinery and voluntary arbitration, while



termination cases where there was no CBA were under the jurisdiction of the Conciliation Section.

In more details, the major innovations introduced by PD

850 and its implementing rules and regulations with respectto termination and preventive suspension cases are:

1. The Regional Director is now required to rule on everyapplication for clearance, whether there is opposition ornot, within ten days from receipt thereof.

xxx xxx xxx

(Emphasis supplied)

2. The second contention of petitioner PIA is that, even if the RegionalDirector had jurisdiction, still his order was null and void because ithad been issued in violation of petitioner's right to procedural dueprocess . 6

This claim, however, cannot be given serious consideration. Petitioner was ordered by

the Regional Director to submit not only its position paper but also such evidence in its favor as it mighthave. Petitioner opted to rely solely upon its position paper; we must assume it had no evidence tosustain its assertions. Thus, even if no formal or oral hearing was conducted, petitioner had ampleopportunity to explain its side. Moreover, petitioner PIA was able to appeal his case to the Ministry of

Labor and Employment.7

There is another reason why petitioner's claim of denial of dueprocess must be rejected. At the time the complaint was filed byprivate respondents on 21 September 1980 and at the time theRegional Director issued his questioned order on 22 January 1981,applicable regulation, as noted above, specified that a "dismissalwithout prior clearance shall be conclusively presumed to betermination of employment without a cause", and the RegionalDirector was required in such case to" order the immediate

reinstatement of the employee and the payment of his wages from thetime of the shutdown or dismiss until . . . reinstatement." In otherwords, under the then applicable rule, the Regional Director did noteven have to require submission of position papers by the parties inview of the conclusive (juris et de jure) character of the presumptioncreated by such applicable law and regulation. In Cebu Institute ofTechnology v. Minister of Labor and Employment , 8

the Court pointed out that



"under Rule 14, Section 2, of the Implementing Rules and Regulations, the termination of [an employee]which was without previous clearance from the Ministry of Labor is conclusively presumed to be without[just] cause . . . [a presumption which] cannot be overturned by any contrary proof however strong."

3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of

its contract of employment with private respondents Farrales andMamasig, arguing that its relationship with them was governed by theprovisions of its contract rather than by the general provisions of theLabor Code. 9

Paragraph 5 of that contract set a term of three (3) years for thatrelationship, extendible by agreement between the parties; whileparagraph 6 provided that, notwithstanding any other provision in theContract, PIA had the right to terminate the employment agreement at

any time by giving one-month's notice to the employee or, in lieu ofsuch notice, one-months salary.

A contract freely entered into should, of course, be respected, as PIAargues, since a contract is the law between the parties. 10

The principle of

party autonomy in contracts is not, however, an absolute principle. The rule in Article 1306, of our CivilCode is that the contracting parties may establish such stipulations as they may deemconvenient, "provided they are not contrary to law, morals, good customs, public order or public policy."Thus, counter-balancing the principle of autonomy of contracting parties is the equally general rule thatprovisions of applicable law, especially provisions relating to matters affected with public policy, are

deemed written into the contract.11

Put a little differently, the governing principle is that parties may notcontract away applicable provisions of law especially peremptory provisions dealing with matters heavilyimpressed with public interest. The law relating to labor and employment is clearly such an area andparties are not at liberty to insulate themselves and their relationships from the impact of labor laws andregulations by simply contracting with each other. It is thus necessary to appraise the contractualprovisions invoked by petitioner PIA in terms of their consistency with applicable Philippine law andregulations.

As noted earlier, both the Labor Arbiter and the Deputy Minister,MOLE, in effect held that paragraph 5 of that employment contractwas inconsistent with Articles 280 and 281 of the Labor Code as theyexisted at the time the contract of employment was entered into, and

hence refused to give effect to said paragraph 5. These Articles readas follows:

Art. 280. Security of Tenure. — In cases of regularemployment, the employer shall not terminate the servicesof an employee except for a just cause or when authorizedby this Title An employee who is unjustly dismissed from



work shall be entitled to reinstatement without loss ofseniority rights and to his backwages computed from thetime his compensation was withheld from him up to thetime his reinstatement.

Art. 281. Regular and Casual Employment . The provisionsof written agreement to the contrary notwithstanding andregardless of the oral agreements of the parties, anemployment shall be deemed to be regular where theemployee has been engaged to perform activities whichare usually necessary or desirable in the usual business ortrade of the employer, except where the employment hasbeen fixed for a specific project or undertaking the

completion or termination of which has been determined atthe time of the engagement of the employee or where thework or services to be performed is seasonal in nature andthe employment is for the duration of the season.

An employment shall be deemed to be casual if it is notcovered by the preceding paragraph: provided, that, anyemployee who has rendered at least one year of service,whether such service is continuous or broken, shall be

considered as regular employee with respect to the activityin which he is employed and his employment shall continuewhile such actually exists. (Emphasis supplied)

In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., 12 the Court had

occasion to examine in detail the question of whether employment for a fixed term has been outlawedunder the above quoted provisions of the Labor Code. After an extensive examination of the history anddevelopment of Articles 280 and 281, the Court reached the conclusion that a contract providing foremployment with a fixed period was not necessarily unlawful:

There can of course be no quarrel with the proposition

that where from the circumstances it is apparent that periods have been imposed to preclude acquisition oftenurial security by the employee, they should be struckdown or disregarded as contrary to public policy, morals,etc . But where no such intent to circumvent the law isshown, or stated otherwise, where the reason for the law



does not exist e.g. where it is indeed the employee himselfwho insists upon a period or where the nature of theengagement is such that, without being seasonal or for aspecific project, a definite date of termination is a sine qua

non would an agreement fixing a period be essentially evilor illicit, therefore anathema Would such an agreementcome within the scope of Article 280 which admittedly wasenacted "to prevent the circumvention of the right of theemployee to be secured in . . . (his) employment?"

As it is evident from even only the three examples alreadygiven that Article 280 of the Labor Code, under a narrowand literal interpretation, not only fails to exhaust the gamut

of employment contracts to which the lack of a fixed periodwould be an anomaly, but would also appear to restrict,without reasonable distinctions, the right of an employee tofreely stipulate with his employer the duration of hisengagement, it logically follows that such a literalinterpretation should be eschewed or avoided . The lawmust be given reasonable interpretation, to precludeabsurdity in its application. Outlawing the whole concept ofterm employment and subverting to boot the principle of

freedom of contract to remedy the evil of employers" usingit as a means to prevent their employees from obtainingsecurity of tenure is like cutting off the nose to spite theface or, more relevantly, curing a headache by lopping offthe head.

xxx xxx xxx

Accordingly, and since the entire purpose behind the

development of legislation culminating in the present Article280 of the Labor Code clearly appears to have been, asalready observed, to prevent circumvention of theemployee's right to be secure in his tenure, the clause insaid article indiscriminately and completely ruling out allwritten or oral agreements conflicting with the concept ofregular employment as defined therein should be construed



to refer to the substantive evil that the Code itself hassingled out: agreements entered into precisely tocircumvent security of tenure. It should have no applicationto instances where a fixed period of employment was

agreed upon knowingly and voluntarily by the parties,without any force, duress or improper pressure beingbrought to bear upon the employee and absent any othercircumstances vitiating his consent, or where it satisfactorilyappears that the employer and employee dealt with eachother on more or less equal terms with no moral dominancewhatever being exercised by the former over thelatter. Unless thus limited in its purview, the law would bemade to apply to purposes other than those explicitly stated

by its framers; it thus becomes pointless and arbitrary,unjust in its effects and apt to lead to absurd andunintended consequences. (emphasis supplied)

It is apparent from Brent School that the critical consideration isthe presence or absence of a substantial indication that theperiod specified in an employment agreement was designed tocircumvent the security of tenure of regular employees which isprovided for in Articles 280 and 281 of the Labor Code. This

indication must ordinarily rest upon some aspect of theagreement other than the mere specification of a fixed term ofthe ernployment agreement, or upon evidence aliunde of theintent to evade.

Examining the provisions of paragraphs 5 and 6 of the employmentagreement between petitioner PIA and private respondents, weconsider that those provisions must be read together and when soread, the fixed period of three (3) years specified in paragraph 5 will

be seen to have been effectively neutralized by the provisions ofparagraph 6 of that agreement. Paragraph 6 in effect took back fromthe employee the fixed three (3)-year period ostensibly granted byparagraph 5 by rendering such period in effect a facultative one at theoption of the employer PIA. For petitioner PIA claims to be authorizedto shorten that term, at any time and for any cause satisfactory to



itself, to a one-month period, or even less by simply paying theemployee a month's salary. Because the net effect of paragraphs 5and 6 of the agreement here involved is to render the employment ofprivate respondents Farrales and Mamasig basically employment at

the pleasure of petitioner PIA, the Court considers that paragraphs 5and 6 were intended to prevent any security of tenure from accruing infavor of private respondents even during the limited period of three (3)years, 13

and thus to escape completely the thrust of Articles 280 and 281 of the Labor Code.

Petitioner PIA cannot take refuge in paragraph 10 of its employmentagreement which specifies, firstly, the law of Pakistan as theapplicable law of the agreement and, secondly, lays the venue forsettlement of any dispute arising out of or in connection with the

agreement "only [in] courts of Karachi Pakistan". The first clause ofparagraph 10 cannot be invoked to prevent the application ofPhilippine labor laws and regulations to the subject matter of thiscase, i.e., the employer-employee relationship between petitioner PIAand private respondents. We have already pointed out that therelationship is much affected with public interest and that theotherwise applicable Philippine laws and regulations cannot berendered illusory by the parties agreeing upon some other law togovern their relationship. Neither may petitioner invoke the second

clause of paragraph 10, specifying the Karachi courts as the solevenue for the settlement of dispute; between the contracting parties.Even a cursory scrutiny of the relevant circumstances of this case willshow the multiple and substantive contacts between Philippine lawand Philippine courts, on the one hand, and the relationship betweenthe parties, upon the other: the contract was not only executed in thePhilippines, it was also performed here, at least partially; privaterespondents are Philippine citizens and respondents, while petitioner,although a foreign corporation, is licensed to do business (and actually

doing business) and hence resident in the Philippines; lastly, privaterespondents were based in the Philippines in between their assignedflights to the Middle East and Europe. All the above contacts point tothe Philippine courts and administrative agencies as a proper forumfor the resolution of contractual disputes between the parties. Underthese circumstances, paragraph 10 of the employment agreement



97. BRENT SCHOOL vs. ZAMORA

BRENT SCHOOL, INC.DIMACHE vs. RONALDO ZAMORA andDOROTEO R. ALEGREG.R. No. L-48494 February 5, 1990 en banc

FACTS:

Private respondent Doroteo R. Alegre was engaged as athleticdirector by petitioner Brent School, Inc. at a yearly compensationof P20,000.00. The contract fixed a specific term for its existence,five (5) years, i.e., from July 18, 1971, the date of execution of theagreement, to July 17, 1976. Subsequent subsidiary agreements

dated March 15, 1973, August 28, 1973, and September 14, 1974reiterated the same terms and conditions, including the expirydate, as those contained in the original contract of July 18, 1971.

On April 20,1976, Alegre was given a copy of the report filed byBrent School with the Department of Labor advising of thetermination of his services effective on July 16, 1976. The statedground for the termination was "completion of contract, expiration

of the definite period of employment." Although protesting theannounced termination stating that his services were necessaryand desirable in the usual business of his employer, and hisemployment lasted for 5 years - therefore he had acquired thestatus of regular employee - Alegre accepted the amount ofP3,177.71, and signed a receipt therefor containing the phrase,"in full payment of services for the period May 16, to July 17, 1976as full payment of contract."

The Regional Director considered Brent School's report as anapplication for clearance to terminate employment (not a report oftermination), and accepting the recommendation of the LaborConciliator, refused to give such clearance and instead requiredthe reinstatement of Alegre, as a "permanent employee," to hisformer position without loss of seniority rights and with full back



wages.

ISSUE:

Whether or not the provisions of the Labor Code, as amended,have anathematized "fixed period employment" or employment fora term.

RULING:

Respondent Alegre's contract of employment with Brent Schoolhaving lawfully terminated with and by reason of the expiration of

the agreed term of period thereof, he is declared not entitled toreinstatement.

The employment contract between Brent School and Alegre wasexecuted on July 18, 1971, at a time when the Labor Code of thePhilippines (P.D. 442) had not yet been promulgated. At that time,the validity of term employment was impliedly recognized by theTermination Pay Law, R.A. 1052, as amended by R.A. 1787.Prior, thereto, it was the Code of Commerce (Article 302) whichgoverned employment without a fixed period, and also implicitlyacknowledged the propriety of employment with a fixed period.The Civil Code of the Philippines, which was approved on June18, 1949 and became effective on August 30,1950, itself dealswith obligations with a period. No prohibition against term-or fixed-period employment is contained in any of its articles or isotherwise deducible therefrom.

It is plain then that when the employment contract was signedbetween Brent School and Alegre, it was perfectly legitimate forthem to include in it a stipulation fixing the duration thereofStipulations for a term were explicitly recognized as valid by thisCourt.



The status of legitimacy continued to be enjoyed by fixed-periodemployment contracts under the Labor Code (PD 442), whichwent into effect on November 1, 1974. The Code containedexplicit references to fixed period employment, or employment

with a fixed or definite period. Nevertheless, obscuration of theprinciple of licitness of term employment began to take place atabout this time.

Article 320 originally stated that the "termination of employment ofprobationary employees and those employed WITH A FIXEDPERIOD shall be subject to such regulations as the Secretary ofLabor may prescribe." Article 321 prescribed the just causes for

which an employer could terminate "an employment without adefinite period." And Article 319 undertook to define "employmentwithout a fixed period" in the following manner: …where theemployee has been engaged to perform activities which areusually necessary or desirable in the usual business or trade ofthe employer, except where the employment has been fixed for aspecific project or undertaking the completion or termination ofwhich has been determined at the time of the engagement of theemployee or where the work or service to be performed isseasonal in nature and the employment is for the duration of theseason.

Subsequently, the foregoing articles regarding employment with"a definite period" and "regular" employment were amended byPresidential Decree No. 850, effective December 16, 1975.

Article 320, dealing with "Probationary and fixed period

employment," was altered by eliminating the reference to persons"employed with a fixed period," and was renumbered (becoming

Article 271).

As it is evident that Article 280 of the Labor Code, under a narrowand literal interpretation, not only fails to exhaust the gamut of



employment contracts to which the lack of a fixed period would bean anomaly, but would also appear to restrict, without reasonabledistinctions, the right of an employee to freely stipulate with hisemployer the duration of his engagement, it logically follows that

such a literal interpretation should be eschewed or avoided. Thelaw must be given a reasonable interpretation, to precludeabsurdity in its application. Outlawing the whole concept of termemployment and subverting to boot the principle of freedom ofcontract to remedy the evil of employer's using it as a means toprevent their employees from obtaining security of tenure is likecutting off the nose to spite the face or, more relevantly, curing aheadache by lopping off the head.

Such interpretation puts the seal on Bibiso upon the effect of theexpiry of an agreed period of employment as still good rule—arule reaffirmed in the recent case of Escudero vs. Office of thePresident (G.R. No. 57822, April 26, 1989) where, in the fairlyanalogous case of a teacher being served by her school a noticeof termination following the expiration of the last of threesuccessive fixed-term employment contracts, the Court held:Reyes (the teacher's) argument is not persuasive. It loses sight ofthe fact that her employment was probationary, contractual innature, and one with a definitive period. At the expiration of theperiod stipulated in the contract, her appointment was deemedterminated and the letter informing her of the non-renewal of hercontract is not a condition sine qua non before Reyes may bedeemed to have ceased in the employ of petitioner UST. Thenotice is a mere reminder that Reyes' contract of employmentwas due to expire and that the contract would no longer be

renewed. It is not a letter of termination.

Paraphrasing Escudero, respondent Alegre's employment wasterminated upon theexpiration of his last contract with Brent School on July 16, 1976without the necessity of any notice. The advance written advice



given the Department of Labor with copy to said petitioner was amere reminder of the impending expiration of his contract, not aletter of termination, nor an application for clearance to terminatewhich needed the approval of the Department of Labor to make

the termination of his services effective. In any case, suchclearance should properly have been given, not denied.

99. PURE FOODS CORPORATON, pet i t ioner , vs . NATIONAL LABORRELATIONS COMMISSION, RODOLFO CORDOVA, VIOLETACRUSIS, ET AL ., * r espondents .

D E C I S I O N

DAVIDE, JR., J .:

The crux of this petition for certiorari is the issue of whether employeeshired for a definite period and whose services are necessary and desirable inthe usual business or trade of the employer are regular employees.

The private respondents (numbering 906) were hired by petitioner PureFoods Corporation to work for a fixed period of five months at its tuna canneryplant in Tambler, General Santos City. After the expiration of their respectivecontracts of employment in June and July 1991, their services wereterminated. They forthwith executed a “Release and Quitclaim” stating that

they had no claim whatsoever against the petitioner.

On 29 July 1991, the private respondents filed before the National LaborRelations Commission (NLRC) Sub-Regional Arbitration Branch No. XI,General Santos City, a complaint for illegal dismissal against the petitionerand its plant manager, Marciano Aganon. [1] This case was docketed as RAB-11-08-50284-91.

On 23 December 1992, Labor Arbiter Arturo P. Aponesto handed down adecision [2] dismissing the complaint on the ground that the private respondentswere mere contractual workers, and not regular employees; hence, they could

not avail of the law on security of tenure. The termination of their services byreason of the expiration of their contracts of employment was, therefore,

justified. He pointed out that earlier he had dismissed a case entitled “Lakasng Anak-Pawis- NOWM v. Pure Foods Corp.” (Case No. RAB-11-02-00088-88) because the complainants therein were not regular employees of PureFoods, as their contracts of employment were for a fixed period of fivemonths. Moreover, in another case involving the same contractual workers of

http://sc.judiciary.gov.ph/jurisprudence/1997/dec1997/122653.htm#_edn1














Pure Foods (Case No. R-196-ROXI- MED- UR-55-89), then Secretary ofLabor Ruben Torres held, in a Resolution dated 30 April 1990, that the saidcontractual workers were not regular employees.

The Labor Arbiter also observed that an order for private respondents’

reinstatement would result in the reemployment of more than 10,000former contractual employees of the petitioner. Besides, by executing a“Release and Quitclaim,” the private respondents had waived andrelinquished whatever right they might have against the petitioner.

The private respondents appealed from the decision to the National LaborRelations Commission (NLRC), Fifth Division, in Cagayan de Oro City, whichdocketed the case as NLRC CA No. M-001323-93.

On 28 October 1994, the NLRC affirmed the Labor Arbiter'sdecision. [3] However, on private respondents’ motion for reconsideration, the

NLRC rendered another decision on 30 January 1995 [4]

vacating and settingaside its decision of 28 October 1994 and holding that the private respondentsand their co-complainants were regular employees. It declared that thecontract of employment for five months was a “clandestine scheme employedby [the petitioner] to stifle [private respondents’] right to security of tenure” andshould therefore be struck down and disregarded for being contrary to law,public policy, and morals. Hence, their dismissal on account of the expirationof their respective contracts was illegal.

Accordingly, the NLRC ordered the petitioner to reinstate the privaterespondents to their former position without loss of seniority rights and otherprivileges, with full back wages; and in case their reinstatement would nolonger be feasible, the petitioner should pay them separation pay equivalent toone-month pay or one-half-month pay for every year of service, whichever ishigher, with back wages and 10% of the monetary award as attorney’s fees.

Its motion for reconsideration having been denied,[5] the petitioner came tothis Court contending that respondent NLRC committed grave abuse ofdiscretion amounting to lack of jurisdiction in reversing the decision of theLabor Arbiter.

The petitioner submits that the private respondents are now estopped fromquestioning their separation from petitioner’s employ in view of their expressconformity with the five-month duration of their employment contracts.Besides, they fell within the exception provided in Article 280 of the LaborCode which reads: “[E]xcept where the employment has been fixed for aspecific project or undertaking the completion or termination of which hasbeen determined at the time of the engagement of the employee.”














Moreover, the first paragraph of the said article must be read andinterpreted in conjunction with the proviso in the second paragraph, whichreads: “Provided that any employee who has rendered at least one year ofservice, whether such service is continuous or broken, shall be considered aregular employee with respect to the activity in which he is employed....” In

the instant case, the private respondents were employed for a period of fivemonths only. In any event, private respondents' prayer for reinstatement iswell within the purview of the “Release and Quitclaim” they had executedwherein they unconditionally released the petitioner from any and all otherclaims which might have arisen from their past employment with the petitioner.

In its Comment, the Office of the Solicitor General (OSG) advances theargument that the private respondents were regular employees, since theyperformed activities necessary and desirable in the business or trade of thepetitioner. The period of employment stipulated in the contracts of

employment was null and void for being contrary to law and public policy, asits purpose was to circumvent the law on security of tenure. The expiration ofthe contract did not, therefore, justify the termination of their employment.

The OSG further maintains that the ruling of the then Secretary of Laborand Employment in LAP-NOWM v. Pure Foods Corporation is not binding onthis Court; neither is that ruling controlling, as the said case involvedcertification election and not the issue of the nature of private respondents’employment. It also considers private respondents’ quitclaim as ineffective tobar the enforcement for the full measure of their legal rights.

The private respondents, on the other hand, argue that contracts with aspecific period of employment may be given legal effect provided, however,that they are not intended to circumvent the constitutional guarantee onsecurity of tenure. They submit that the practice of the petitioner in hiringworkers to work for a fixed duration of five months only to replace them withother workers of the same employment duration was apparently to prevent theregularization of these so-called “casuals,” which is a clear circumvention ofthe law on security of tenure.

We find the petition devoid of merit.

Article 280 of the Labor Code defines regular and casual employment asfollows:

ART. 280. Regular and Casual Employment .-- The provisions of written agreement tothe contrary notwithstanding and regardless of the oral argument of the parties, anemployment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or



been imposed to preclude acquisition of tenurial security by the employee,they should be struck down or disregarded as contrary to public policy andmorals.

Brent also laid down the criteria under which term employment cannot be

said to be in circumvention of the law on security of tenure:

1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon theemployee and absent any other circumstances vitiating his consent; or

2) It satisfactorily appears that the employer and the employee dealt with each otheron more or less equal terms with no moral dominance exercised by the former or thelatter.

None of these criteria had been met in the present case. As pointed out bythe private respondents:

[I]t could not be supposed that private respondents and all other so-called “casual”

workers of [the petitioner] KNOWINGLY and VOLUNTARILY agreed to the 5-month employment contract. Cannery workers are never on equal terms with theiremployers. Almost always, they agree to any terms of an employment contract just toget employed considering that it is difficult to find work given their ordinaryqualifications. Their freedom to contract is empty and hollow because theirs is thefreedom to starve if they refuse to work as casual or contractual workers. Indeed, to

the unemployed, security of tenure has no value. It could not then be said that petitioner and private respondents "dealt with each other on more or less equal termswith no moral dominance whatever being exercised by the former over the latter. [10]

The petitioner does not deny or rebut private respondents' averments (1)that the main bulk of its workforce consisted of its so-called “casual”employees; (2) that as of July 1991, “casual” workers numbered 1,835; andregular employees, 263; (3) that the company hired “casual” every month forthe duration of five months, after which their services were terminated andthey were replaced by other “casual” employees on the same five-month

duration; and (4) that these “casual” employees were actually doing work thatwere necessary and desirable in petitioner’s usual business.

As a matter of fact, the petitioner even stated in its position papersubmitted to the Labor Arbiter that, according to its records, the previousemployees of the company hired on a five-month basis numbered about10,000 as of July 1990. This confirms private respondents’ allegation that itwas really the practice of the company to hire workers on a uniformly fixed







contract basis and replace them upon the expiration of their contracts withother workers on the same employment duration.

This scheme of the petitioner was apparently designed to prevent theprivate respondents and the other “casual” employees from attaining the

status of a regular employee. It was a clear circumvention of the employees’right to security of tenure and to other benefits like minimum wage, cost-of-living allowance, sick leave, holiday pay, and 13th month pay. [11] Indeed, thepetitioner succeeded in evading the application of labor laws. Also, it saveditself from the trouble or burden of establishing a just cause for terminatingemployees by the simple expedient of refusing to renew the employmentcontracts.

The five-month period specified in private respondents’ employmentcontracts having been imposed precisely to circumvent the constitutionalguarantee on security of tenure should, therefore, be struck down ordisregarded as contrary to public policy or morals. [12] To uphold the contractualarrangement between the petitioner and the private respondents would, ineffect, permit the former to avoid hiring permanent or regular employees bysimply hiring them on a temporary or casual basis, thereby violating theemployees’ security of tenure in their jobs.[13]

The execution by the private respondents of a “Release and Quitclaim” didnot preclude them from questioning the termination of theirservices. Generally, quitclaims by laborers are frowned upon as contrary topublic policy and are held to be ineffective to bar recovery for the full measure

of the workers’ rights. [14]

The reason for the rule is that the employer and theemployee do not stand on the same footing.[15]

Notably, the private respondents lost no time in filing a complaint for illegaldismissal. This act is hardly expected from employees who voluntarily andfreely consented to their dismissal.[16]

The NLRC was, thus, correct in finding that the private respondents wereregular employees and that they were illegally dismissed from their

jobs. Under Article 279 of the Labor Code and the recent jurisprudence, [17] thelegal consequence of illegal dismissal is reinstatement without loss of seniority

rights and other privileges, with full back wages computed from the time ofdismissal up to the time of actual reinstatement, without deducting theearnings derived elsewhere pending the resolution of the case.

However, since reinstatement is no longer possible because thepetitioner's tuna cannery plant had, admittedly, been closed in November1994,[18] the proper award is separation pay equivalent to one month pay or



































one-half month pay for every year of service, whichever is higher, to becomputed from the commencement of their employment up to the closure ofthe tuna cannery plant. The amount of back wages must be computed fromthe time the private respondents were dismissed until the time petitioner'scannery plant ceased operation.[19]

WHEREFORE, for lack of merit, the instant petition is DISMISSED and thechallenged decision of 30 January 1995 of the National Labor RelationsCommission in NLRC CA No. M-001323-93 is hereby AFFIRMED subject tothe above modification on the computation of the separation pay and backwages.

SO ORDERED.

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





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