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SYNOPSIS Petitioner had worked with the private respondent Seventh Day Adventists (SDA) for 28 years before

he was terminated. Prior to said termination, petitioner was asked to admit accountability for the church offerings collected by his wife in the amount of P15,078.10. Petitioner refused since it was private respondents Pastor Buhat and Eufronio Ibesate who authorized his wife to collect. Thereafter petitioner requested Pastor Buhat to convene the Executive Committee to settle the dispute between him and Pastor Rodrigo, but the latter denied the same, and heated arguments between the two ensued until petitioner banged the attaché case of Pastor Buhat on the table, scattered the books and threw the phone. Later, an Executive Committee meeting was held where the non-remittance of church collections and the events that transpired were discussed. Subsequently, petitioner received a letter of dismissal citing therein grounds for the termination of his services. Petitioner then filed a complaint for illegal dismissal and a decision was rendered in his favor. The SDA appealed the same to the NLRC and after much ado, the case was dismissed for lack of jurisdiction on the ground that the case involved an ecclessiastical affair to which the State cannot interfere. The case at bar did not concern a purely religious affair as to bar the State from taking cognizance thereof. What is involved here is the relationship of the church as an employer and the minister as an employee. There was no compliance of the requirement that there should be a written notice specifying the grounds for termination and giving the employee reasonable opportunity to explain his side. Here, petitioner was not given enough opportunity to properly prepare for his defense. At any rate, the validity of the dismissal cannot be sustained. There was no basis for the loss of confidence and breach of trust as it was petitioner’s wife who collected the money and failed to remit the same. On the ground of serious misconduct and commission of an offense against the person of the employer’s duly authorized representative, the same was unmeritorious as petitioner’s actuations cannot be considered grave enough to be considered as serious misconduct to merit the ultimate penalty of dismissal. Then also, there was no proof that petitioner committed gross and habitual neglect of duties. Hence, since petitioner was illegally dismissed, he is entitled to reinstatement with full backwages. SYLLABUS
1. POLITICAL LAW; SEPARATION OF CHURCH AND STATE; ELUCIDATED.- The rationale of principle of separation of church and state is summed up in the familiar saying, “Strong fences make good neighbors.” The idea advocated by this principle is to delineate the boundaries between the two institutions and thus avoid encroachments by one against the other because of a misunderstanding of the limits of their respective exclusive jurisdictions. The demarcation line calls on the entities to “render therefore unto Ceasar the things that are Ceasar’s and unto God the things that are God’s.” While the State is prohibited from interfering in purely ecclesiastical affairs, the Church is likewise barred from meddling in purely secular matters. 2. ID.; ID.; ECCLESIASTICAL AFFAIR; ELUCIDATED.- An ecclesiastical affair is “one that concerns doctrine, creed, or form of worship of the church, or the adoption and enforcement within a religious association of needful laws and regulations for the government of the membership, and the power of excluding from such associations those deemed unworthy of membership.” Based on this definition, an ecclesiastical affair involves the relationship between the church and its members and relate to matters of faith, religious doctrines, worship and governance of the congregation. To be concrete, examples of this socalled ecclesiastical affairs to which the State cannot meddle are proceedings for excommunication, ordinations of religious ministers, administration of sacraments and other activities with attached religious significance. 3. ID.; ID.; ID.; NOT APPRECIATED AS CASE AT BAR CONCERNS EMPLOYMENT PROBLEM.- The case at bar does not concern an ecclesiastical or purely religious affair as to bar the State from taking cognizance of the same. While the matter at hand relates to the church and its religious minister it does not ipso facto give the case a religious significance. Simply stated, what is involved here is the relationship of the church as an employer and the minister as an employee. It is purely secular and has no relation whatsoever with the practice of faith, worship or doctrines of the church. In this case, petitioner was not ex-

. findings of fact of administrative bodies like the NLRC are binding upon this Court. This ground has never been intended to afford an occasion for abuse. coupled with his failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending. the active participatio n of private respondents in the proceedings before the Labor Arbiter and the NLRC mooted the question on jurisdiction. the employee would eternally remain at the mercy of the employer. (b) a written notice of termination served on the employee indicating that upon due consideration of all the circumstances.. EVIDENCE. PROVISIONS THEREOF APPLICABLE TO RELIGIOUS CORPORATIONS. Settled is the rule that under Article 282 (c) of the Labor Code. otherwise. and donations for the church. which may be considered as the proper charge. particularly. serves to apprise the employee of the particular acts or omissions for which his dismissal is sought. be illegal. the settled rule is that the burden of proving that the termination was for a valid or authorized cause rests on the employer. 5. A breach is willful if it is done intentionally. private respondents must not merel y rely on the weaknesses of petitioner’s evidence but must stand on the merits of their own defense... in instances when the findings of the NLRC differ from those of the labor arbiter.10. REMEDIAL LAW. this Court must of necessity review the records to determine which findings should be preferred as more conformable to the evidentiary facts. When the findings of NLRC do not agree with those of the Labor Arbiter. in the eyes of the law. The second notice on the other hand seeks to inform the employee of the employer’s decision to dismiss him. whether for profit or not. EXCEPTIONS.. whims.We cannot sustain the validity of dismissal based on the ground of breach of trust. which were collected in his district. Without the concurrence of this twin requirements. the provision which governs the dismissal of employees. RAISING THE ISSUE OF LACK OF JURISDICTION FOR THE FIRST TIME ON APPEAL AFTER ACTIVE PARTICIPATION IN TRIAL BELOW. DISMISSAL OF EMPLOYEES. however. ID. categorically includes religious institutions in the coverage of the law. Hence. and. because of its subjective nature. the SDA cannot hide behind the mantle of protection of the doctrine of separation of church and state to avoid its responsibilities as an employer under the Labor Code. (b) the dismissal must be for a valid cause as provided in Article 282 of the Labor Code. and giving to said employee reasonable opportunity within which to explain his side. JURISDICTION. Book VI on the Termination of Employment and Retirement.. Article 278 of the Labor Code on post-employment states that “the provisions of this Title shall apply to all establishments or undertakings. and. namely: (a) the employee must be afforded due process. ID. Then. Thus. A review of such findings is justified. however. VALIDITY. Rule XXIII. WHEN IT DIFFERS FROM THE FINDINGS OF THE LABOR ARBITER. It should be genuine and not simulated. The stenographic notes on the witnesses’ testimony show that Pastor Austria was able to remit all his collections to the treasurer of the Negros Mission.Under the Labor Code. 6.” Obviously. to wit: (a) a written notice served on the employee specifying the ground or grounds for termination. LABOR AND SOCIAL LEGISLATION. is comprehensive enough to include religious corporations. 7. as in this case. 8. is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case and will bar said party from later on impugning the court or body’s jurisdiction.. the same must be measured against the requisites for a valid dismissal. The Court has already ruled that the active participation of a party against whom the action was brought.. BREACH OF TRUST. the cited article does not make any exception in favor of a religious corporation. ESTOPPEL. DISMISSAL BY EMPLOYER. collections. grounds have been established to justify his termination.. NOT APPRECIATED.. ID.Private respondents are estopped from raising the issue of lack of jurisdiction for the first time on appeal.In termination cases. This is in consonance with the express provision of law on the protection of labor and the broader dictates of procedural due process. which is purely secular in nature. i. despite demands. Private respondents allege that they have lost their confidence in petitioner for his failure. REQUISITES. Rule 1.. It is already too late in the day for private respondents to question the jurisdiction of the NLRC and the Labor Arbiter since the SDA had fully participated in the trials and hearings of the case from start to finish. if he so desires. CIVIL PROCEDURE... ID. EMPLOYMENT. ID. Thus. petitioner cannot be made accountable for the alleged . ID. Non-compliance therewith is fatal because these requirements are conditions sine qua nonbefore dismissal may be validly effected. It must rest on substantial grounds and not on the employer’s arbitrariness. thoughtlessly.As a general rule. heedlessly or inadvertently. Book V of the Rules Implementing the Labor Code further require the employer to furnish the employee with two (2) written notices. Indeed. DISCUSSED. LABOR AND SOCIAL LEGISLATION. is different from the ecclesiastical act of expelling a member from the religious congregation. A careful study of the voluminous records of the case reveals that there is simply no basis for the alleged loss of confidence and breach of trust. the matter of terminating an employee. The records show that there were only six (6) instances when petitioner personally collected and received from the church treasurers the tithes. 4. as distinguished from an act done carelessly. This is made more evident by the fact that the Rules Implementing the Labor Code. ID.078. NOTICE OF TERMINATION.communicated or expelled from the membership of the SDA but was terminated from employment. GROUNDS. the breach of trust must be willful. such as the SDA. This decision.. the termination would. he must be given an opportunity to be heard and to defend himself.e. caprices or suspicion. RESPECTED. in its coverage. ID. The first notice.Before the services of an employee can be validly terminated.. Article 277 (b) of the Labor Code and Section 2. without justifiable excuse. to remit the tithes and offerings amounting to P15. FACTUAL FINDINGS OF NATIONAL LABOR RELATIONS COMMISSION. must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge and ample opportunity to be heard and defend himself with the assistance of a representative. knowingly and purposely. Section 1. EMPLOYMENT. 9. ID. The issue being the legality of petitioner’s dismissal.

we believe that the act of petitioner in banging the attache case on the table.In view of the foregoing. gross and habitual neglect of duties. PROFIRIO BALACY.R. although improper. the Labor Arbiter found it difficult to see the basis for the alleged loss of confidence and breach of trust. Misconduct has been defined as improper or wrong conduct. In fact. For this reason. .. ZOSIMO KARA-AN. Suffice it to say that all private respondents had were allegations but not proof. though petitioner committed damage to property. ISACHAR GARSULA. he labored hard for the SDA. ID. EUFRONIO IBESATE. does not require an exhaustive discussion. ID. there is no basis for the allegation that petitioner’s act constituted serious misconduct or that the same was an offense against the person of the employer’s duly authorized representative.. a dereliction of duty. NOT APPRECIATED. we find the same unmeritorious and...With respect to the grounds of serious misconduct and commission of an offense against the person of the employer’s duly authorized representative. Where a penalty less punitive would suffice. do not warrant petitioner’s dismissal from the service. JOEL WALES. Private respondents’ evidence. J. ELEUTERIO LOBITANA. a forbidden act. DECISION KAPUNAN. NOT APPRECIATED. OSCAR L. the cited actuation of petitioner does not justify the ultimate penalty of dismissal from employment. ID. records show that he did not physically assault Pastor Buhat or any other pastor present during the incident.. DONATO. 12. DAVID RODRIGO.: . The Court does not find any cogent reason. and MR. the evidence on record shows otherwise. PROPER . and implies wrongful intent and not mere error in judgment. they still have separate and distinct personalities. As such. SERIOUS MISCONDUCT AND COMMISSION OF AN OFFENSE AGAINST THE PERSON OF THE EMPLOYER’S DULY AUTHORIZED REPRESENTATIVE. MR.. therefore. 1999] PASTOR DIONISIO V. to digress from the findings of the Labor Arbiter which is fully supported by the evidence on record.. ID. we believe that the minor infraction committed by petitioner does not merit the ultimate penalty of dismissal. revealed how petitioner travelled to different churches to attend to the faithful under his care. LORETO MAYPA. MR.The final ground alleged by private respondents in terminating petitioner. GIDEON BUHAT. CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTH-DAY ADVENTIST.. ID. 124382. it nevertheless urges a moderation of the sanctions that may be applied to him in light of the many disadvantages that weigh heavily on him like an albatross on his neck. but. No. HON. RUFO GASAPO. ILLEGAL DISMISSAL. ID. private respondents failed to prove culpability on the part of petitioner. Hence. CEBU CITY. ID. vs. whatever missteps may have been committed by the worker ought not be visited with a consequence so severe such as dismissal from employment. For the foregoing reasons. ID. After all. WILLIAM U. Having been illegally dismissed. as such. MR. willful in character. TESSIE BALACY. ID. Aside from merely citing the said ground. For misconduct to be considered serious it must be of such grave and aggravated character and not merely trivial or unimportant. cannot be considered as grave enough to be considered as serious misconduct. in return. [G.. REINSTATEMENT AND BACKWAGES.. throwing the telephone and scattering the books in the office of Pastor Buhat. petitioner is entitled to reinstatement to his former position without loss of seniority rights and the payment of full backwages without any deduction corresponding to the period from his illegal dismissal up to actual reinstatement. 10. petitioner. GAYARES. ELDER HECTOR V. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division).. Indeed. ALOLOR.infraction committed by his wife. Petitioner’s rise from the ranks disclose that he was actually a hard-worker. respondents. MRS. he was rewarded with dismissal from the service for a non-existent cause. ID. ELY SACAY. AUSTRIA. which consisted of petitioner’s Worker’s Reports. While the Constitution does not condone wrongdoing by the employee. It is the transgression of some established and definite rule of action. PASTORS REUBEN MORALDE. we sustain the finding of the Labor Arbiter that petitioner was terminated from service without just or lawful cause. Based on this standard. After all.. GROSS AND HABITUAL NEGLECT OF DUTIES. August 16. ELISEO DOBLE. 11.

. The records show that petitioner Pastor Dionisio V. petitioner was promoted as District Pastor of the Negros Mission of the SDA and was assigned at Sagay. was a Pastor of the SDA until 31 October 1991. the latter harbored ill-feelings against petitioner. A fact-finding committee was created to investigate petitioner. petitioner went to the office of Pastor Buhat. petitioner worked his way up the ladder and got promoted several times. and threw the phone. In January. 1991. rendered on 23 January 1996. in his district which amounted to P15. with twelve (12) churches under his jurisdiction.Subject to the instant petition for certiorari under Rule 65 of the Rules of Court is the Resolution[1] of public respondent National Labor Relations Commission (the “NLRC”). the two exchanged heated arguments. Thereafter.m. petitioner became the Assistant Publishing Director in the West Visayan Mission of the SDA. Eufronio Ibesate. The dispute between Pastor Rodrigo and petitioner arose from an incident in which petitioner assisted his friend. from October 21 and 22. V-0120-93. Austria vs. Petitioner then left the office of Pastor Buhat. During said call. [7] Fortunately. Eufronio Ibesate who authorized his wife to collect the tithes and offerings since he was very sick to do the collecting at that time. scattered the books in his office. officers of the SDA. Central Philippine Union Mission Corporation of Seventh Day Adventists. when his services were terminated. Thelma Austria. he immediately proceeded to the office of Pastor Buhat on the date abovementioned and asked the latter to convene the Executive Committee. in NLRC Case No. selling literature of the SDA over the island of Negros.078. On 17 October 1991. petitioner received several communications[3] from Mr. Negros Occidental. private respondents Pastors Yonilo Leopoldo and Claudio Montaño were around and they pacified both Pastor Buhat and petitioner. When news reached petitioner that Pastor Rodrigo was about to file a complaint against him with the Negros Mission. to collect from Pastor Rodrigo the unpaid balance for the repair of the latter’s motor vehicle which he failed to pay to Diamada. the treasurer of the Negros Mission asking him to admit accountability and responsibility for the church tithes and offerings collected by his wife. on the other hand. the president of the Negros Mission. Petitioner held the same position up to 1988. the fact-finding committee conducted an investigation of petitioner. petitioner overheard Pastor Buhat saying.[5] Due to the assistance of petitioner in collecting Pastor Rodrigo’s debt. In July. he was elevated to the position of Pastor in the West Visayan Mission covering the island of Panay.. He held the position of district pastor until his services were terminated on 31 October 1991. petitioner was transferred to Bacolod City. Thereafter. in 1989. and tried to overturn the latter’s table.” which dismissed the case for illegal dismissal filed by the petitioner against private respondents for lack of jurisdiction. While on his way out. 1972. In his written explanation dated 11 October 1991. petitioner returned to the office of Pastor Buhat. Danny Diamada. Finally. and the provinces of Romblon and Guimaras. Pastor Buhat denied the request of petitioner since some committee members were out of town and there was no quorum.[4] petitioner reasoned out that he should not be made accountable for the unremitted collections since it was private respondents Pastor Gideon Buhat and Mr. at nine in the morning. For two (2) days. al. In January. petitioner banged the attache case of Pastor Buhat on the table. 1968. Pastor David Rodrigo. on 16 October 1991. since it was heavy.[2] He began his work with the SDA on 15 July 1963 as a literature evangelist. To be discussed in the meeting were the non-remittance of church collection and the events that transpired on 16 October 1991. and to remit the same to the Negros Mission. petitioner tried to persuade Pastor Buhat to convene the Executive Committee for the purpose of settling the dispute between him and the private respondent.”[6] Irked by such remark. at around 7:30 a. On various occasions from August up to October. Private Respondent Central Philippine Union Mission Corporation of the Seventh-Day Adventists (hereinafter referred to as the “SDA”) is a religious corporation duly organized and existing under Philippine law and is represented in this case by the other private respondents. Petitioner. From then on. Thereafter. entitled “Pastor Dionisio V. et. Balintawak and Toboso. though unsuccessfully.10. 1991. petitioner received a letter[8] inviting him and his wife to attend the Executive Committee meeting at the Negros Mission Conference Room on 21 October 1991. Sensing that the result of the . Mrs. Austria worked with the SDA for twenty eight (28) years from 1963 to 1991. “Pastor daw inisog na ina iya (Pastor you are talking tough).

PREMISES CONSIDERED. the Decision appealed from is hereby VACATED and a new one ENTERED dismissing this case for want of merit. Progreso and Banago. namely: Pastor Buhat and Pastor Rodrigo. In a decision. Bacolod City.000. president of the SDA and chairman of the fact-finding committee. Exemplary Damages P21. the NLRC vacated the findings of the Labor Arbiter. B. Respondent CPUMCSDA is further ordered to pay complainant the following: A. Fourth Division. moral and exemplary damages and other labor law benefits.85 P50. petitioner filed a complaint[11] on 14 November 1991. D. only two (2) were actually excluded.00 P 4.83 P 3. on 29 October 1991. The decretal portion of the NLRC decision states: WHEREFORE.27 Attorney’s Fee SO ORDERED.00 P22.770. Taculing. the dispositive portion of which reads thus: WHEREFORE.00) without deductions and qualificatioons. gross and habitual neglect of duties. Sideño rendered a decision in favor of petitioner. dated 26 August 1994.461.830.[13] .012. respondents herein.[12] The SDA.investigation might be one-sided. Reacting against the adverse decision of the SDA. Labor Arbiter Cesar D.00 P25. serious misconduct. through its officers. On 15 February 1993. are hereby ordered to immediately reinstate complainant Pastor Dionisio Austria to his former position as Pastor of Brgy. petitioner immediately wrote Pastor Rueben Moralde.000.060. 13th month pay Allowance Service Incentive Leave Pay Moral Damages E. Subsequently. willful breach of trust. as grounds for the termination of his services. without loss of seniority and other rights and backwages in the amount of ONE HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED THIRTY PESOS (P115. C.[9] Out of the six (6) members requested to inhibit themselves from the investigation and decision-making. requesting that certain members of the fact-finding committee be excluded in the investigation and resolution of the case. Cebu City. and commission of an offense against the person of employer’s duly authorized representative. respondents CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTH-DAY ADVENTISTS (CPUMCSDA) and its officers. petitioner received a letter of dismissal[10] citing misappropriation of denominational funds. appealed the decision of the Labor Arbiter to the National Labor Relations Commission. SO ORDERED. before the Labor Arbiter for illegal dismissal against the SDA and its officers and prayed for reinstatement with backwages and benefits. F.

the SDA filed a motion for reconsideration of the above resolution.[15] Hence. 2) Whether or not the termination of the services of petitioner is an ecclesiastical affair. the OSG filed a manifestation and motion in lieu of comment[16] setting forth its stand that it cannot sustain the resolution of the NLRC. The dispositive portion of the NLRC resolution dated 23 January 1996. 1994 is VACATED and the decision of the Labor Arbiter dated February 15. 1993 is REINSTATED.”[17] The idea advocated by this principle is to delineate the boundaries between the two institutions and thus avoid encroachments by one against the other because of a misunderstanding of the limits of their respective exclusive jurisdictions. the NLRC issued a Resolution reversing its original decision. is as follows: WHEREFORE. The dispositive portion of the resolution reads: WHEREFORE. The first two issues shall be resolved jointly. “Strong fences make good neighbors. sustained the argument posed by private respondents and. in view of all the foregoing. In its manifestation. and 3) Whether or not such termination is valid. accordingly. for the first time on appeal. The NLRC. The rationale of the principle of the separation of church and state is summed up in the familiar saying. the recourse to this Court by petitioner.Petitioner filed a motion for reconsideration of the above-named decision. Our decision dated August 26. that the Labor Arbiter has no jurisdiction over the complaint filed by petitioner due to the constitutional provision on the separation of church and state since the case allegedly involved and ecclesiastical affair to which the State cannot interfere. After the submission of memoranda of all the parties. reversed itself once again.[14] In view of the reversal of the original decision of the NLRC. since they are related. and. it is to be considered a purely ecclesiastical affair to which the State has no right to interfere. involves the separation of church and state. Interestingly. The principle of separation of church and state finds no application in this case. Private respondents contend that by virtue of the doctrine of separation of church and state. Notable in the motion for reconsideration filed by private respondents is their invocation. The issues to be resolved in this petition are: 1) Whether or not the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint filed by petitioner against the SDA. the instant motion for reconsideration is hereby granted. without ruling on the merits of the case. this case is hereby DISMISSED for lack of jurisdiction. as such. SO ORDERED. dismissed the complaint of petitioner. premises considered.[18] The demarcation line calls on the . the case was submitted for decision. On 18 July 1995. not ecclesiastical. SO ORDERED. the Labor Arbiter and the NLRC have no jurisdiction to entertain the complaint filed by petitioner. After the filing of the petition. The contention of private respondents deserves scant consideration. Since the matter at bar allegedly involves the discipline of a religious minister. subject of the present petition. the OSG submits that the termination of petitioner of his employment may be questioned before the NLRC as the same is secular in nature. Accordingly. the Court ordered the Office of the Solicitor General (the “OSG”) to file its comment on behalf of public respondent NLRC.

From all of these it is clear that when the SDA terminated the services of petitioner. the grounds invoked for petitioner’s dismissal. creed. Simply stated. the provision which governs the dismissal of employees. An ecclesiastical affair is “one that concerns doctrine. It is purely secular and has no relation whatsoever with the practice of faith. as employer. Section 1. charitable and religious institutions and organizations. Book VI on the Termination of Employment and Retirement. religious doctrines. which is purely secular in nature. and the power of excluding from such associations those deemed unworthy of membership. SDA admitted in a certification[23] issued by its officer.[22] By this alone. The case at bar does not even remotely concern any of the abovecited examples. whether for profit or not. the worker’s records of petitioner have been submitted by private respondents as part of their exhibits. the matter of terminating an employee. administration of sacraments and other activities with which attached religious significance. Ibesate. Under the Labor Code. an ecclesiastical affair involves the relationship between the church and its members and relate to matters of faith. this again is an eloquent admission by private respondents that NLRC has jurisdiction over the case. – This Rule shall apply to all establishments and undertakings. Coverage. This is in consonance with the mandate of the Constitution to afford full protection to labor. the Church is likewise barred from meddling in purely secular matters. As aptly stated by the OSG. gross and habitual neglect of duties and commission of an offense against the person of his employer’s duly authorize representative. particularly. worship or doctrines of the church. it was merely exercising its management prerogative to fire an employee which it believes to be unfit for the job. to wit: Section 1. Article 278 of the Labor Code on postemployment states that “the provisions of this Title shall apply to all establishments or undertakings. in cases of regular employment with the exception of the Government and its political subdivisions including government-owned or controlled corporations. rightfully exercised its management prerogative to dismiss an employee. the cited article does not make any exception in favor of a religious corporation. As such. has the right to take cognizance of the case and to determine whether the SDA. While the matter at hand relates to the church and its religious minister it does not ipso facto give the case a religious significance. such as the SDA.” Obviously. petitioner was not excommunicated or expelled from the membership of the SDA but was terminated from employment.[24] With this clear mandate. Indeed. is different from the ecclesiastical act of expelling a member from the religious congregation. SDA even registered petitioner with the Social Security System (SSS) as its employee. what is involved here is the relationship of the church as an employer and the minister as an employee. To be concrete. namely: misappropriation of denominational funds. serious misconduct. . through the Labor Arbiter and the NLRC. are all based on Article 282 of the Labor Code which enumerates the just causes for termination of employment. examples of this so-called ecclesiastical affairs to which the State cannot meddle are proceedings for excommunication. whether operated for profit or not. This is made more evident by the fact that the Rules Implementing the Labor Code. willful breach of trust. worship and governance of the congregation. or the adoption and enforcement within a religious association of needful laws and regulations for the government of the membership. it is palpable that the reason for petitioner’s dismissal from the service is not religious in nature. In this case.”[19] While the State is prohibited from interfering in purely ecclesiastical affairs. As pointed out by the OSG in its memorandum. medical. Mr. that petitioner has been its employee for twenty-eight (28) years.[21] Based on this definition. Rule 1. including educational. categorically includes religious institutions in the coverage of the law. or form or worship of the church. the SDA cannot hide behind the mantle of protection of the doctrine of separation of church and state to avoid its responsibilities as an employer under the Labor Code. Aside from these. in its coverage. As a matter of fact. is comprehensive enough to include religious corporations. the State. Coupled with this is the act of the SDA in furnishing NLRC with a copy of petitioner’s letter of termination.[20] The case at bar does not concern an ecclesiastical or purely religious affair as to bar the State from taking cognizance of the same.entities to “render therefore unto Ceasar the things that are Ceasar’s and unto God th e things that are God’s. ordinations of religious ministers.

From the tenor of the letter. he must be given an opportunity to be heard and to defend himself.[36] dated 17 October 1991. coupled with his failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending. namely: (a) the employee must be afforded due process. as correctly pointed out by petitioner. the same must be measured against the requisites for a valid dismissal.[25] Thus. The alleged grounds for the dismissal of petitioner from the service were only revealed to him when the actual letter of dismissal was finally . serves to apprise the employee of the particular acts or omissions for which his dismissal is sought. It is already too late in the day for private respondents to question the jurisdiction of the NLRC and the Labor Arbiter since the SDA had fully participated in the trials and hearings of the case from start to finish. the letter never even mentioned that petitioner would be subject to investigation. The letter merely mentioned that petitioner and his wife were invited to a meeting wherein what would be discussed were the alleged unremitted church tithes and the events that transpired on 16 October 1991. however. grounds have been established to justify his termination. A perusal of the said letter reveals that it never categorically stated the particular acts or omissions on which petitioner’s impending termination was grounded.[31] The second notice on the other hand seeks to inform the employee of the employer’s decision to dismiss him. however. it cannot be presumed that petitioner was actually on the verge of dismissal. and. and. is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case and will bar said party from later on impugning the court or body’s jurisdiction. In fact. as in this case. we note that as a general rule. i. The first notice. Thus.[27] We turn now to the crux of the matter. findings of fact of administrative bodies like the NLRC are binding upon this Court. to wit: (a) a written notice served on the employee specifying the ground or grounds for termination. The jurisdictional question now settled. the letter. cannot be construed as the written charge required by law. Article 277 (b) of the Labor Code and Section 2.[32] This decision. In termination cases.[30] Before the services of an employee can be validly terminated. be illegal. Rule XXIII.[29] Without the concurrence of this twin requirements. The issue being the legality of petitioner’s dismissal. the active participation of private respondents in the proceedings before the Labor Arbiter and the NLRC mooted the question on jurisdiction. (b) the dismissal must be for a valid cause as provided in Article 282 of the Labor Code. in the eyes of the law. which may be considered as the proper charge. private respondents must not merely rely on the weaknesses of petitioner’s evidence but must stand on the merits of their own defense. if he so desires. private respondents are estopped from raising the issue of lack of jurisdiction for the first time on appeal. in instances when the findings of the NLRC differ from those of the labor arbiter.. must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge and ample opportunity to be heard and defend himself with the assistance of a representative. we shall now proceed to determine whether the dismissal of petitioner was valid.[28] Thus. (b) a written notice of termination served on the employee indicating that upon due consideration of all the circumstances. and giving to said employee reasonable opportunity within which to explain his side. petitioner was surprised to find out that the alleged meeting turned out to be an investigation. which notified petitioner and his wife to attend the meeting on 21 October 1991.[34] Non-compliance therewith is fatal because these requirements are conditions sine quo non before dismissal may be validly effected. the settled rule is that the burden of proving that the termination was for a valid or authorized cause rests on the employer.[33] This is in consonance with the express provision of the law on the protection to labor and the broader dictates of procedural due process. The Court has already ruled that the active participation of a party against whom the action was brought. the termination would.e.[26] When the findings of NLRC do not agree with those of the Labor Arbiter.Finally.[35] Private respondent failed to substantially comply with the above requirements. A review of such findings is justified. Book V of the Rules Implementing the Labor Code further require the employer to furnish the employee with two (2) written notices. this Court must of necessity review the records to determine which findings should be preferred as more comformable to the evidentiary facts. At the outset. With regard to the first notice.

this does not cure the initial defect of lack of the proper written charge required by law.10 which were collected by his wife. the Negros Mission Church Auditor and a witness for private respondents. We cannot sustain the validity of dismissal based on the ground of breach of trust.[38] It must rest on substantial grounds and not on the employer’s arbitrariness. as proven by convincing and substantial evidence consisting of the testimonies of the witnesses for private respondents who are church treasurers. therefore. The Court does not find any cogent reason. gross and habitual neglect of duties.issued. in the absence of conspiracy and collusion. as such. For this reason. who failed to remit the same to the treasurer of the Negros Mission. Breach of trust and misappropriation of denominational funds refer to the alleged failure of petitioner to remit to the treasurer of the Negros Mission tithes. . collections and offerings amounting to P15. The testimony of these church treasurers were corroborated and confirmed by Ms. Mrs. First of all.[40] This ground has never been intended to afford an occasion for abuse. petitioner remitted the amounts which he collected to the Negros Mission for which corresponding receipts were issued to him. the notice of termination. A breach is willful if it is done intentionally. the Labor Arbiter found it difficult to see the basis for the alleged loss of confidence and breach of trust.[42] Though private respondents were able to establish that petitioner collected and received tithes and donations several times. it cannot be said that petitioner was given enough opportunity to properly prepare for his defense. With respect to the grounds of serious misconduct and commission of an offense against the person of the employer’s duly authorized representative. and. and donations for the church. show that Pastor Austria was able to remit all his collections to the treasurer of the Negros Mission. The records show that there were only six (6) instances when petitioner personally collected and received from the church treasurers the tithes. knowingly and purposely. In the letter of termination. they still have separate and distinct personalities. and commission of an offense against the person of employer’s duly authorized representative. caprices or suspicion. as admitted by their own witness. For this reason. serious misconduct.10. willful breach of trust. namely: misappropriation of denominational funds.078. thoughtlessly.078. serious misconduct and commission of an offense against the person of the employer’s duly authorized representative pertain to the 16 October 1991 incident wherein petitioner allegedly committed an act of violence in the office of Pastor Gideon Buhat. Ibesate. private respondents try to pin on petitioner the alleged non-remittance of the tithes collected by his wife. the breach of trust must be willful. In fact. otherwise. After all. Naomi Geniebla. While admittedly. Thelma Austria. as distinguished from an act done carelessly.[41] The stenographic notes on the testimony of Naomi Geniebla. private respondents complied with the second requirement. it was Mrs. to remit the tithes and offerings amounting to P15. Hence. This argument deserves little consideration. Private respondents allege that they have lost their confidence in petitioner for his failure. which were collected in his district. we find the same unmeritorious and. heedlessly or inadvertently. to digress from the findings of the Labor Arbiter which is fully supported by the evidence on record. The final ground invoked by private respondents is gross and habitual neglect of duties allegedly committed by petitioner. A careful study of the voluminous records of the case reveals that there is simply no basis for the alleged loss of confidence and breach of trust. the allegations of private respondents that petitioner breached their trust have no leg to stand on. collections. and that he pocketed the amount and used it for his personal purpose. they were not able to establish that petitioner failed to remit the same to the Negros Mission. officers of the SDA. which private respondents failed to demonstrate. Settled is the rule that under Article 282 (c) of the Labor Code. In a vain attempt to support their claim of breach of trust. the employee would eternally remain at the mercy of the employer. Thelma Austria who actually collected the tithes and donations from them. On the other hand. without justifiable excuse. whims. private respondents enumerated the following as grounds for the dismissal of petitioner. do not warrant petitioner’s dismissal from the service. Thus. Geniebla and Mr. despite demands. in the churches under his jurisdiction. between petitioner and his wife.[37] dated 29 October 1991. petitioner cannot be made accountable for the alleged infraction committed by his wife. because of its subjective nature.[39] It should be genuine and not simulated.

in return. JR. a dereliction of duty. and implies wrongful intent and not mere error in judgment..[43] For misconduct to be considered serious it must be of such grave and aggravated character and not merely trivial or unimportant. [G. rendered on 23 January 1996.Misconduct has been defined as improper or wrong conduct. vs. Said decision reversed the June 30. although improper. J. a forbidden act. In view of the foregoing. While the Constitution does not condone wrongdoing by the employee.[45] Where a penalty less punitive would suffice. 1996 Decision[1] and the May 30. private respondents failed to prove culpability on the part of petitioner. Private respondents’ evidence. SO ORDERED. [49] WHEREFORE. As such. No. 1995 . he was rewarded with a dismissal from the service for a non-existent cause.[46] For the foregoing reasons. Petitioner’s rise from the ranks disclose that he was actually a hard-worker. does not requires an exhaustive discussion. petitioner. the petition for certiorari is GRANTED. NATIONAL LABOR RELATIONS COMMISSION. It is the transgression of some established and definite rule of action. DECISION QUISUMBING. cannot be considered as grave enough to be considered as serious misconduct.R. The challenged Resolution of public respondent National Labor Relations Commission. Indeed. 1998] SAN MIGUEL CORPORATION. revealed how petitioner travelled to different churches to attend to the faithful under his care.[44] Based on this standard. it nevertheless urges a moderation of the sanctions that may be applied to him in light of the many disadvantages that weigh heavily on him like an albatross on his neck. the alleged offense committed upon the person of the employer’s representatives was never really established or proven by private respondents. the evidence on record shows otherwise. the cited actuation of petitioner does not justify the ultimate penalty of dismissal from employment. is reinstated and hereby AFFIRMED. In fact. and FRANCISCO DE GUZMAN. we believe that the act of petitioner in banging the attache case on the table. we believe that the minor infraction committed by petitioner does not merit the ultimate penalty of dismissal. he labored hard for the SDA. there is no basis for the allegation that petitioner’s act constituted serious misconduct or that the same was an offense against the person of the employer’s duly authorized representative. THIRD DIVISION. we sustain the finding of the Labor Arbiter that petitioner was terminated from service without just or lawful cause. though petitioner committed damage to property. is NULLIFIED and SET ASIDE. Having been illegally dismissed. 1996 Resolution[2] of public respondent National Labor Relations Commission[3] in NLRC CA No. The final ground alleged by private respondents in terminating petitioner. October 7. whatever missteps may have been committed by the worker ought not be visited with a consequence so severe such as dismissal from employment. willful in character. Aside from merely citing the said ground. as correctly observed by the Labor Arbiter. dated 15 February 1993. 125606.[47] which consisted of petitioner’s Worker’s Reports.: Before us is the petition for certiorari under Rule 65 of the Revised Rules of Court seeking to set aside the April 18. he did not physically assault Pastor Buhat or any other pastor present during the incident of 16 October 1991. but. The Decision of the Labor Arbiter. In fact.respondents. After all. 009490-95. Suffice it to say that all private respondents had were allegations but not proof. petitioner is entitled to reinstatement to his former position without loss of seniority right[48] and the payment of full backwages without any deduction corresponding to the period from his illegal dismissal up to actual reinstatement. Hence. throwing the telephone and scattering the books in the office of Pastor Buhat. gross and habitual neglect of duties.

A new one is hereby entered ordering herein respondent San Miguel Corporation to reinstate complainant to his former position with full backwages from the time he was dismissed from work until he is actually reinstated without loss of seniority rights and other benefits. On June 30. private respondent’s services were terminated. Petitioner filed its opposition thereto on August 29. On May 10. the repair and upgrading of furnace C at its Manila Glass Plant. On April 30. promulgated its assailed decision. his silence for more than three (3) years without any reasonable explanation tended to weaken his claim. 08-05954-94.[7] Both parties submitted their respective position papers. or after the lapse of more than three (3) years from the completion of the last undertaking for which private respondent was hired. 1994. he rendered the decision dismissing said complaint for lack of merit. premises considered.judgment[4] of the Labor Arbiter[5] in NLRC-NCR Case No. and giving him again another contract of employment for another specific period cannot be countenanced. In his ruling Labor Arbiter Garduque sustained petitioner’s argument that private respondent was a project employee. In its ruling. The position of a helper does not fall within the classification of regular employees. the assailed decision is hereby VACATED and SET ASIDE. On August 1. his services were terminated on that same day as there was no more work to be done. 1991. On August 12.‖ [6] The facts on record show that in November 1990. 1991. if any. and ordered the reinstatement of private respondent as follows: ―WHEREFORE. 1995. docketed as NLRC NCR Case No. This is one way of doing violence to the employee’s constitutional right to security of tenure under which even employees under probationary status are amply protected. Thus. Moreover. public respondent NLRC. reply and rejoinder to Labor Arbiter Felipe Garduque II. [8] Not satisfied with the decision. 1991. 1995. complainant saw his name in a Memorandum posted at the Company’s Bulletin Board as among those who were considered dismissed. His employment contract also ended that day. Under the circumstances obtaining in the instant case we find that herein complainant was indeed illegally dismissed. public respondent made the following findings: ―Respondent’s scheme of subsequently re-hiring complainant after only ten (10) days from the last day of the expiration of his contract of employment for a specific period. Hence. private respondent was able to complete the repair and upgrading of furnace C. Respondent failed to adduce substantial evidence to prove that Francisco de . 1995. complainant never attained regular employment status. namely the draining/cooling down of furnace F and the emergency repair of furnace E. 00-08-05954-94. private respondent was again hired for a specific job or undertaking. private respondent was hired by petitioner as helper/bricklayer for a specific project. After the completion of this task. This project was for a specific period of approximately three (3) months. at the end of July 1991. His contract of employment provided that said temporary employment was for a specific period of approximately four (4) months. reversing Labor Arbiter Garduque’s decision. private respondent filed a complaint for illegal dismissal against petitioner. On April 18. less earnings elsewhere. private respondent interposed his appeal with public respondent NLRC on August 8. 1996. which involved the draining/cooling down of furnace F and the emergency repair of furnace E.

RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN RULING THAT LACHES OR SILENCE OR INACTION FOR AN UNREASONABLE LENGTH OF TIME DID NOT BAR PRIVATE RESPONDENT’S CLAIM. However. Regular and Casual Employment. it behooves this Court to scrutinize the records of the case.‖ The above mentioned provision reinforces the Constitutional mandate to protect the interest of labor as it sets the legal framework for ascertaining one’s nature of employment. based on the following grounds: 1. this petition may be resolved once the following issues are clarified: (a) What is the nature of the employment of private respondent. We. that of a project employee or a regular employee? and (b) Was he terminated legally or dismissed illegally? As a general rule. this petition. 280 of the Labor Code defines regular. and distinguishing different kinds of employees.Guzman. find this scheme. except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. or patent or palpable error. the factual findings and conclusions drawn by the National Labor Relations Commission are accorded not only great weight and respect. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN FAILING TO RULE THAT PRIVATE RESPONDENT IS A PROJECT OR A FIXED PERIOD EMPLOYEE. to arrive at a correct decision. 3. denied by public respondent on May 30. as long as they are supported by substantial evidence. whether such service is continuous or broken. was dismissed for a just or authorized cause and after due process. that would warrant the disturbance of the decision sought to be reconsidered. – The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties. 280. but even clothed with finality and deemed binding on the Court. Hence. [10] Art. 1996 as it found no cogent reason. project and casual employment as follows: ―ART. when such findings and those of the Labor Arbiter are in conflict. shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. any employee who has rendered at least one year of service. Given these grounds. This was. by virtue of lopsided agreements with the economically powerful . as discussed earlier. Jr. Its language manifests the intent to safeguard the tenurial interest of worker who may be denied the enjoyment of the rights and benefits due to an employee. 2. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided. The only reason they advanced is that his contract of employment which is for a specific period had already expired. That. an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. particularly the evidence presented. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN RULING THAT PETITIONER VIOLATED PRIVATE RESPONDENT’S RIGHT TO SECURITY OF TENURE AND THAT PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED.‖[9] Petitioner then moved for the reconsideration of said decision. however. regardless of the nature of his employment. however. not in accordance with law.

an integral component of the packaging and manufacturing business of petitioner. then it is regular employment and not just ―project‖ much less ―casual‖ employment. Nor on the procedure of hiring and the manner of designating the employee.employer who can maneuver to keep an employee on a casual or contractual status for as long as it is convenient to the employer. secondly. NLRC. the work to be undertaken is usually necessary or desirable in the usual business or trade of the employer. . Thus. Firstly. an employment is deemed regular when the activities performed by the employee are usually necessary or desirable in the usual business or trade of the employer even if the parties enter into an agreement stating otherwise. [11] Another factor that may be considered is the reasonable connection between the particular activity undertaken by the employee in relation to the usual trade or business of the employer. whether one is employed as a project employee or not would depend on whether he was hired to carry out a ―specific project or undertaking‖. considering the employer’s nature of business [12] and the duration and scope of the work to be done.[13] this Court discussed two types of projects: ―In the realm of business and industry. Nevertheless. but on the nature of the activities to be performed by the employee. which has a limited operating life. x x x‖ (Italics supplied) Public respondent NLRC’s findings that herein private respondent is a regular employee is erroneous as the latter’s employment clearly falls within the definition of ―project employees‖ under paragraph 1 of Article 280 of the Labor Code and such is a typical example of the second kind of project employment in the ALU-TUCP case discussed above. Thus. In ALU-TUCP vs. the duration and scope of which were specified at the time his services were engaged for that particular project. we note that project could refer to one or the other of at least two (2) distinguishable types of activities. with respect to the activity he performed and while such activity actually exists. Note that the plant where private respondent was employed for only seven months is engaged in the manufacture of glass. a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company. which by its nature is only for one season of the year and the employment is limited for the duration of that season. such as those connected with a particular construction project. The job or undertaking also begins and ends at determined or determinable times. but which is distinct and separate. Petitioner resorted to hiring project or fixed term employees in having said furnaces repaired since said activity is not regularly performed. from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. an exception to this exception is made: any employee who has rendered at least one (1) year of service. if without specifying the duration and scope. xxx The term project could also refer to. a particular job or undertaking that is not within the regular business of the corporation. and identifiable as such. under Article 280 of the Labor Code. whether continuous or intermittent. and (2) seasonal employment. Following Article 280. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The process of manufacturing glass requires a furnace. Said furnaces are to be repaired or overhauled only in case of need and after being used continuously for a varying period of five (5) to ten (10) years. the nature of one’s employment does not depend on the will or word of the empl oyer. must be deemed regular. such as the Christmas holiday season. But considered not regular under said Article are (1) the so-called ―project employment‖ the termination of which is more or less determinable at the time of employment.

it should not be supposed that every dispute will be automatically decided in favor of labor. are entitled to respect and enforcement in the interest of fair play. necessarily. thus. For this purpose. the instant petition is hereby GRANTED. such undertakings were also identifiably separate and distinct from the usual. NLRC:[17] ―While the Constitution is committed to the policy of social justice and the protection of the working class. as in the second undertaking. These undertakings. the necessity therefor arose only when a particular furnace reached the end of its life or operating cycle. and it was a grave abuse of discretion on public respondent's part to order his reinstatement by petitioner. It would shunt aside the rule that since a project employee’s work depends on the availability of a project. which is glass manufacturing. private respondent was hired for a specific project that was not within the regular business of the corporation. The decision of respondent NLRC is hereby REVERSED. the duration and scope of which had been determined and made known to private respondent at the time of his employment. Well to remember is the language of the Court in the case of Mamansag v. Management has also rights. such favoritism has not blinded the Court to the rule that justice is in every case for the deserving. or on April 30.In 1990. Moreover. 1991. clearly indicated the nature of his employment as a project employee. the undertakings where private respondent was hired primarily as helper/bricklayer have specified goals and purposes which are fulfilled once the designated work was completed. the duration of his employment is coterminous with the project to which he is assigned. thereafter. which would take approximately three (3) months to accomplish.[14] He was not hired a third time. Private respondent was. This was an undertaking distinct and separate from petitioner’s business of manufacturing glass.‖ Private respondent was again hired on May 10. Or. Thus. In other words. and his two engagements taken together did not total one full year in order to qualify him as an exception to the exception falling under the cited proviso in the second paragraph of Art.[15] Public respondent NLRC’s decision. For petitioner is not engaged in the business of repairing furnaces. as such. would amount to negating the distinctions made in Article 280 of the Labor Code. Although the activity was necessary to enable petitioner to continue manufacturing glass. ordinary or regular business operations of petitioner. Upon completion of the undertaking. two of petitioner’s furnaces required ―draining/cooling down‖ and ―emergency repair.[16] It would become a burden for an employer to retain an employee and pay him his corresponding wages if there was no project for him to work on. one of the furnaces of petitioner required repair and upgrading. and the judgment of the Labor Arbiter REINSTATED. which. hired by petitioner on November 28. when a particular furnace required an emergency repair. Upon completion of the second undertaking. Clearly. his services were terminated legally after the completion of the project. 280 of the Labor Code. work or undertaking. to be dispensed in the light of the established facts and the applicable law and doctrine. Although the Supreme Court has inclined more often than not toward the worker and has upheld his cause in his conflicts with the employer. private respondent’s services were likewise terminated. 1990 on a ―temporary status for a specific job‖ for a determined period of approximately four months. we find that the Labor Arbiter correctly ruled that said employment legally ended upon completion of said project. 1991 to help in the new undertaking. WHEREFORE. related to a specific project. petitioner must hire workers to undertake the said repair and upgrading.‖ Considering that private respondent was a project employee whose employment. Hence the termination of his employment was not tantamount to an illegal dismissal. if upheld. . privat e respondent’s services were terminated. the nature of which he was fully informed. A few days.

vs. EDUARDO UDOG. 1 On October 7. ISLES. respondents." 8 The petitioners were then made to sign employment contracts with durations of six months. ERISPE. Del Rosario & Associates for respondent CMC. 1986. VIOLY ESTEBAN and LYDIA ORTEGA. EDUARDO R. 1986. FERDINAND CRUZ. thirteen-month pay. Raneses. any liability for payment of money claims. Ramos for respondent Lily Victoria A. JOEL MADRIAGA. NOMER MATAGA. Inc. . 1989 DANILO B. Sy. No. LILY-VICTORIA A. ELMER ARMADA. Unlike regular California employees. . ARTHUR M. and HON. BRIONES. who received not less than P2. employees of Livi Manpower Services. the petitioners petitioned the National Labor Relations Commission for reinstatement and payment of various benefits. Miralles. AMARO BONA. TUMANON. and July 28. J.823. ROBERTO P. upon the expiration of which they signed new agreements with the same period. similar benefits. they received P38. G. BELITA. 5 that "it is hereby agreed that it is the sole responsibility of [Livi] to comply with all existing as well as future laws. 1986. SARMIENTO. It appears that the petitioners were. (Livi). Taquio and Associates for petitioners.. holiday pay. the agreement provided that California "has no control or supervisions whatsoever over [Livi's] workers with respect to how they accomplish their work or perform [Californias] obligation". PETER TIANSING. the California Manufacturing Company (California) filed a motion to dismiss as well as a position paper denying the existence of an employer-employee relation between the petitioners and the company and. V. they were notified by California that they would not be rehired. They likewise claim that pending further proceedings below. July 23. Flores. 7 It was further expressly stipulated that the assignment of workers to California shall be on a "seasonal and contractual basis". which subsequently assigned them to work as "promotional merchandisers" 3 for the former firm pursuant to a manpower supply agreement.00 in allowance daily. Mildred A. INC. EDUARDO BONDOC. . was impleaded as a party-respondent. Inc. NATIONAL LABOR RELATIONS COMMISSION. The Solicitor General for public respondent.00 a month in addition to a host of fringe benefits and bonuses. they filed an amended complaint charging California with illegal dismissal. RAMON M.: On July 21. Livi Manpower Services. against the respondent. and so on. Banzuela. 1986. including minimum wage.R. and emergency cost of living allowance pay. The petitioners now allege that they had become regular California employees and demand. TABAS. 2 On motion of the petitioners. EMERSON C. petitioners. the California Manufacturing Company. As a result. MIGUELITA QUIAMBOA. Among other things. CALIFORNIA MANUFACTURING COMPANY. consequently. AZARCON. as a consequence whereof. ESPINO. L-80680 January 26. the relationship of principal[-]agent or employer[-]employee'.E. FEDERICO A. that "[c]ost of living allowance and the 10 legal holidays will be charged directly to [California] at cost ".NO COSTS. overtime pay.56 plus P15. prior to their stint with California. and that "[p]ayroll for the preceeding [sic] week [shall] be delivered by [Livi] at [California's] premises. Azarcon. after the cases had been consolidated. rules and regulations pertinent to employment of labor" 6 and that "[California] is free and harmless from any liability arising from such laws or from any accident that may befall workers and employees of [Livi] while in the performance of their duties for [California]. 4 the Livi "is an independent contractor and nothing herein contained shall be construed as creating between [California] and [Livi] .

— Whenever an employee enters into a contract with another person for the performance of the former's work." 13 He assessed against the firm. the right-of-control test has been held to be the decisive factor. Hence. however. This Court has consistently ruled that the determination of whether or not there is an employer-employee relation depends upon four standards: (1) the manner of selection and engagement of the putative employee. he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code. 11 a decision affirmed on appeal. will not erase either party's obligations as an employer. the employees of the contractor and of the latter's sub-contractor. and the petitioners cannot be made to suffer from its adverse consequences. for any valid labor claims. it cannot be made the subject of agreement. There is 'labor-only' contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools. Contractor or sub-contractor. 12 ruled against the existence of any employeremployee relation between the petitioners and California ostensibly in the light of the manpower supply contract. (2) the mode of payment of wages. we have likewise held. The Secretary of Labor may. the Court finds the single most important issue to be: Whether the petitioners are California's or Livi's employees. The labor arbiter's decision. the former has the responsibility. 9 It appears that thereafter. to begin with. by appropriate regulations. work premises. together with the "labor-only" contractor. the petitioners' employer and that the "retrenchment" had been forced by business losses as well as expiration of contracts. since the agreement was between Livi and California. hereinbelow reproduced: ART. We reverse. if any. based on Article 106 of the Labor Code. against the latter's liability as and for the money claims demanded. 14 Of the four. restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. they alone are bound by it. At any rate. In the event that the contractor or sub-contractor fails to pay wages of his employees in accordance with this Code.California admits having refused to accept the petitioners back to work but deny liability therefor for the reason that it is not. In such cases. equipment. and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. the employer shall be jointly and severally liable with his contractor or sub-contractor to such employees to the extent of the work performed under the contract. the fact that the manpower supply agreement between Livi and California had specifically designated the former as the petitioners' employer and had absolved the latter from any liability as an employer. the labor arbiter absolved Livi from any obligation because the "retrenchment" in question was allegedly "beyond its control . so we held. The existence of an employer-employees relation is a question of law and being such. and consequently. 15 On the other hand. among others. 16 by operation of law. that notwithstanding the absence of a direct employer-employee relationship between the employer in whose favor work had been contracted out by a "labor-only" contractor. machineries. 106. separation pay and attorney's fees. and the employees. the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. shall be paid in accordance with the provisions of this Code. nevertheless. (3) the presence or absence of a power of dismissal. The reason. is . 10 Amid these factual antecedents. and (4) the presence or absence of a power to control the putative employee's conduct.supra. in the same manner and extent that he is liable to employees directly employed by him. if an employer-employee relation otherwise exists between the workers and either firm. In the same breath. to prevent any violation or circumvention of any provisions of this Code. In so prohibiting or restricting. Livi re-absorbed them into its labor pool on a "wait-in or standby" status.

the undertaking of CESI was to provide its client the bank with a certain number of persons able to carry out the work of messengers. Section 9(2) quoted above does not require for its applicability that the petitioner must be engaged in the delivery of items as a distinct and separate line of business. Livi would have been truly the employer of its employees. There appear to be many companies today which perform this discrete service. we do not agree that the petitioners had been made to perform activities 'which are not directly related to the general business of manufacturing.. In the present case. The employees would not in that event be unlike waiters. and not an employer. The fact that the petitioners have allegedly admitted being Livi's "direct employees" 26 in their complaints is nothing conclusive. but of the restaurant. in that case. As we pointed out in the Philippine Bank of Communications case: xxx xxx xxx . and California. and not by declarations of parties. will not absolve California since liability has been imposed by legal operation. We hold that it is one notwithstanding its vehement claims to the contrary. had Livi been discretely a promotions firm. Livi. 21 The bare fact that Livi maintains a separate line of business does not extinguish the equal fact that it has provided California with workers to pursue the latter's own business.. Succinctly put. it contracts out labor in favor of clients. its client. then." 17 and liability must be shouldered by either one or shared by both. who. and as we indicated. For another. 18 There is no doubt that in the case at bar. It would have been different. 27 a temporary or casual employee. The undertaking given by CESI in favor of the bank was not the performance of a specific job for instance. Orpiada utilized the premises and office equipment of the bank and not those of CESI. unless he has been contracted for a specific project. For one thing." 20 The nature of one's business is not determined by self-serving appellations one attaches thereto but by the tests provided by statute and prevailing case law. In this connection." 22 California's purported "principal operation activity. 28 . and that California had hired it to perform the latter's merchandising activities. becomes regular after service of one year. the relations of parties must be judged from case to case and the decree of law. although at the service of customers.that the "labor-only" contractor is considered "merely an agent of the employer. as a placement agency. as if Livi had served as its (California's) promotions or sales arm or agent. we believe." 24 an activity that is doubtless. rendered a piece of work it (California) could not have itself done. that is. companies with their own personnel who pick up documents and packages from the offices of a client or customer. would have been a mere patron. " 23 The petitioner's had been charged with "merchandizing [sic] promotion or sale of the products of [California] in the different sales outlets in Metro Manila including task and occational [sic] price tagging. it is a recruitment and placement corporation placing bodies. As we held in Philippine Bank of Communications v. 19 meaning to say. Messengerial work the delivery of documents to designated persons whether within or without the bank premises-is of course directly related to the day-to-day operations of the bank. Livi performs "manpower services". The client. or otherwise. . CESI is not a parcel delivery company: as its name indicates. The fact that the petitioners have been hired on a "temporary or seasonal" basis merely is no argument either. using its (California's) premises and equipment. are not the latter's employees. as it were. in different client companies for longer or shorter periods of time. under Article 218 of the Labor Code. the carriage and delivery of documents and parcels to the addresses thereof. And we cannot say that merchandising is a specific project for the obvious reason that it is an activity related to the day-today operations of California. It is not. 25 Neither Livi nor California can therefore escape liability. the fact that the petitioners were (are). NLRC... an integral part of the manufacturing business. Such undertaking of CESI was complied with when the requisite number of persons were assigned or seconded to the petitioner bank. and notwithstanding the provision of the contract that it is "an independent contractor. assuming one exists. For then. and who deliver such materials utilizing their own delivery vans or motorcycles to the addressees. had simply supplied it with the manpower necessary to carry out its (California's) merchandising activities.

or by law. Under the Labor Code. the California Manufacturing Company. hence. Judgment is hereby RENDERED: (1): SETTING ASIDE the decision. As to the second. we have. (2) ORDERING the respondent. have acquired a regular status. especially their right to security of tenure. Livi Manpower Service.. and (4) ORDERING the private respondents to PAY unto the petitioners attorney's fees equivalent to ten (10%) percent of all money claims hereby awarded. Hence. other than its bare say so. But. and (3) ORDERING the respondent. unto the petitioners: (a) backwages and differential pays effective as and from the time they had acquired a regular status under the second paragraph. It is not that by dismissing the terms and conditions of the manpower supply agreement. we are not convinced that California has shown enough evidence. We further find the attribution to the February Revolution as a cause for its alleged losses to be gratuitous and without basis in fact. in addition to those money claims. but more so.In the case at bar." 32 As to the first objection. and the resolution. dated March 20. Article 106 of the Code applies. and (b) all such other and further benefits as may be provided by existing collective bargaining agreement(s) or other relations. Paras. 1987. as we held in Philippine Bank of Communications. This brings us to the question: What is the liability of either Livi or California? The records show that the petitioners bad been given an initial six-month contract. the secondment" 30 of the employees from the true employer. renewed for another six months. . the Court will be justified in expressing its concern. beginning such time. IT IS SO ORDERED. of the Labor Code. they cannot be separated without due process of law. and for the very purpose of making possible. genuine job contracts are permissible. when such arrangements are resorted to "in anticipation of. to PAY. since by fiction of law. they had become regular employees-of-California-and had acquired a secure tenure. Padilla and Regalado. first. and the respondents. that the petitioners are not its employees. supra. on the workingman himself. provided they are genuine job contracts. we reiterate that the petitioners are its employees and who. either or both shoulder responsibility. as if such personnel had been directly hired by California. concur. the National Labor Relations Commission should have known better than to fall for such unwarranted excuses and nebulous claims. Hence. Accordingly. California should be warned that retrenchment of workers. Melencio-Herrera. under Article 281 of the Code. has serious consequences not only on the State's initiatives to maintain a stable employment record for the country. but not to exceed three (3) years. to REINSTATE the petitioners with full status and rights of regular employees. Inc. For then that would compromise the rights of the workers. the California Manufacturing Company. jointly and severally. and second. Livi is admittedly an "independent contractor providing temporary services of manpower to its client. The private respondents are likewise ORDERED to PAY the costs of this suit. considered it illegal. (Chairperson). and/or Lily-Victoria Azarcon. And. by virtue of the required one-year length-of-service. 1987. California resists reinstatement on the ground. The Court need not therefore consider whether it is Livi or California which exercises control over the petitioner vis-avis the four barometers referred to earlier. it supplied California with personnel. WHEREFORE. amid an environment that is desperately scarce in jobs. unless clearly warranted. that it had in fact suffered serious business reverses as a result alone of the prevailing political and economic climate. " 29 When it thus provided California with manpower. JJ. dated August 19. the petition is GRANTED. by reason of financial distress brought about by "unfavorable political and economic atmosphere" 31"coupled by the February Revolution. of Section 281. and as we Id.