LABOR WEEK 1 CASES CONT.

ALU-TUCP vs NLRC

In this Petition for Certiorari, petitioners assail the Resolution of the National Labor Relations
Commission ("NLRC") dated 8 January 1993 which declared petitioners to be project employees of
private respondent National Steel Corporation ("NSC"), and the NLRC's subsequent Resolution of 15
February 1993, denying petitioners' motion for reconsideration.

Petitioners plead that they had been employed by respondent NSC in connection with its Five Year
Expansion Program (FAYEP I & II) 1 for varying lengths of time when they were separated from NSC's
service:

Employee Date Nature of Separated

Employed Employment

1. Alan Barinque 5-14-82 Engineer 1 8-31-91

2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92
3. Edgar Bontuyan 11-03-82 Chairman to present
4. Osias Dandasan 9-21-82 Utilityman 1991
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92
6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91
7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
9. Russell Gacus 1-30-85 Engineer 1 6-30-92
10. Jose Garguena 3-02-81 Warehouseman to present
11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992
13. Romeo Sarona 2-26-83 Machine Operator 8-31-91 2

On 5 July 1990, petitioners filed separate complaints for unfair labor practice, regularization and
monetary benefits with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.

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

Both parties appealed to the NLRC from that decision. Petitioners argued that they were regular, not
project, employees. Private respondent, on the other hand, claimed that petitioners are project
employees as they were employed to undertake a specific project — NSC's Five Year Expansion Program
(FAYEP I & II).

The NLRC in its questioned resolutions modified the Labor Arbiter's decision. It affirmed the Labor
Arbiter's holding that petitioners were  project employees  since they were hired to perform work in a
specific undertaking — the Five Years Expansion Program, the completion of which had been
determined at the time of their engagement and which operation was not directly related to the
business of steel manufacturing. The NLRC, however, set aside the award to petitioners of the same
benefits enjoyed by regular  employees for lack of legal and factual basis.

Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed to
show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of the NLRC
in rendering its questioned resolutions of 8 January 1993 and 15 February 1993.

The law on the matter is Article 280 of the Labor Code which reads in full:

Art. 280. Regular and Casual Employment — The provisions of the written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, and
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project  or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee  or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such actually exists. (Emphasis supplied)

Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are "necessary,
desirable and work-related to private respondent's main business, steel-making"; and (ii) they have
rendered service for six (6) or more years to private respondent NSC. 4

The basic issue is thus whether or not petitioners are properly characterized as "project employees"
rather than "regular employees" of NSC. This issue relates, of course, to an important consequence: the
services of project employees are co-terminous with the project and may be terminated upon the end
or completion of the project for which they were hired. 5 Regular employees, in contract, are legally
entitled to remain in the service of their employer until that service is terminated by one or another of
the recognized modes of termination of service under the Labor Code. 6

It is evidently important to become clear about the meaning and scope of the term "project" in the
present context. The "project" for the carrying out of which "project employees" are hired would
ordinarily have some relationship to the usual business of the employer. Exceptionally, the "project"
undertaking might not have an ordinary or normal relationship to the usual business of the employer. In
this latter case, the determination of the scope and parameeters of the "project" becomes fairly easy. It
is unusual (but still conceivable) for a company to undertake a project which has absolutely no
relationship to the usual business of the company; thus, for instance, it would be an unusual steel-
making company which would undertake the breeding and production of fish or the cultivation of
vegetables. From the viewpoint, however, of the legal characterization problem here presented to the
Court, there should be no difficulty in designating the employees who are retained or hired for the
purpose of undertaking fish culture or the production of vegetables as "project employees," as
distinguished from ordinary or "regular employees," so long as the duration and scope of the project
were determined or specified at the time of engagement of the "project employees." 7 For, as is evident
from the provisions of Article 280 of the Labor Code, quoted earlier, the principal test for determining
whether particular employees are properly characterized as "project employees" as distinguished from
"regular employees," is whether or not the "project employees" were assigned to carry out a "specific
project or undertaking," the duration (and scope) of which were specified at the time the employees
were engaged for that project.

In the realm of business and industry, we note that "project" could refer to one or the other of at least
two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking
that is within the regular or usual business of the employer company, but which is distinct and separate,
and identifiable as such, from the other undertakings of the company. Such job or undertaking begins
and ends at determined or determinable times. The typical example of this first type of project is a
particular construction job or project of a construction company. A construction company ordinarily
carries out two or more discrete identifiable construction projects: e.g., a twenty-five- storey hotel in
Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City.
Employees who are hired for the carrying out of one of these separate projects, the scope and duration
of which has been determined and made known to the employees at the time of employment, are
properly treated as "project employees," and their services may be lawfully terminated at completion of
the project.

The term "project" could also refer to, secondly, a particular job or undertaking that is not within the
regular business of the corporation. Such a job or undertaking must also be identifiably separate and
distinct from the ordinary or regular business operations of the employer. The job or undertaking also
begins and ends at determined or determinable times. The case at bar presents what appears to our
mind as a typical example of this kind of "project."

NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate end in view of
expanding the volume and increasing the kinds of products that it may offer for sale to the public. The
Five Year Expansion Program had a number of component projects: e.g., (a) the setting up of a "Cold
Rolling Mill Expansion Project"; (b) the establishment of a "Billet Steel-Making Plant" (BSP); (c) the
acquisition and installation of a "Five Stand TDM"; and (d) the "Cold Mill Peripherals Project." 8 Instead
of contracting out to an outside or independent contractor the tasks of constructing  the buildings with
related civil and electrical works that would house the new machinery and equipment,
the installation  of the newly acquired mill or plant machinery and equipment and the commissioning of
such machinery and equipment, NSC opted to execute and carry out its Five Yeear Expansion Projects
"in house," as it were, by administration. The carrying out of the Five Year Expansion Program (or more
precisely, each of its component projects) constitutes a distinct undertaking identifiable from the
ordinary business and activity of NSC. Each component project, of course, begins and ends at specified
times, which had already been determined by the time petitioners were engaged. We also note that NSC
did the work here involved — the construction of buildings and civil and electrical works, installation of
machinery and equipment and the commissioning of such machinery — only for itself.  Private
respondent NSC was not  in the business of constructing buildings and installing plant machinery for the
general business community, i.e., for unrelated, third party, corporations. NSC did not hold itself out to
the public as a construction company or as an engineering corporation.
Which ever type of project employment is found in a particular case, a common basic requisite is that
the designation of named employees as "project employees" and their assignment to a specific project,
are effected and implemented in good faith, and not merely as a means of evading otherwise applicable
requirements of labor laws.

Thus, the particular component projects embraced in the Five Year Expansion Program, to which
petitioners were assigned, were distinguishable from the regular or ordinary business of NSC which, of
course, is the production or making and marketing of steel products. During the time petitioners
rendered services to NSC, their work was limited to one or another of the specific component projects
which made up the FAYEP I and II. There is nothing in the record to show that petitioners were hired for,
or in fact assigned to, other purposes, e.g., for operating or maintaining the old, or previously installed
and commissioned, steel-making machinery and equipment, or for selling the finished steel products.

We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the petitioners were
indeed "project employees:"

It is well established by the facts and evidence on record that herein 13 complainants
were hired and engaged for specific activities or undertaking the period of which has
been determined at time of hiring or engagement. It is of public knowledge and which
this Commission can safely take judicial notice that the expansion program (FAYEP) of
respondent NSC consist of various phases [of] project components which are being
executed or implemented independently or simultaneously from each other . . .

In other words, the employment of each "project worker" is dependent and co-
terminous with the completion or termination of the specific activity or undertaking [for
which] he was hired which has been pre-determined at the time of engagement. Since,
there is no showing that they (13 complainants) were engaged to perform work-related
activities to the business of respondent which is steel-making, there is no logical and
legal sense of applying to them the proviso under the second paragraph of Article 280 of
the Labor Code, as amended.

xxx xxx xxx

The present case therefore strictly falls under the definition of "project employees" on
paragraph one of Article 280 of the Labor Code, as amended. Moreover, it has been held
that the length of service of a project employee is not the controlling test of
employment tenure but whether or not "the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee". (See Hilario Rada v. NLRC, G.R. No.
96078, January 9, 1992; and Sandoval Shipping, Inc. v. NLRC, 136 SCRA 674 (1985). 9

Petitioners next claim that their service to NSC of more than six (6) years should qualify them as regular
employees. We believe this claim is without legal basis. The simple fact that the employment of
petitioners as project employees had gone beyond one (1) year, does not detract from, or legally
dissolve, their status as project employees. 10 The second paragraph of Article 280 of the Labor Code,
quoted above, providing that an employee who has served for at least one (1) year, shall be considered
a regular employee, relates to casual employees, not to project employees.
In the case of Mercado, Sr. vs. National Labor Relations Commission,  11 this Court ruled that the proviso
in the second paragraph of Article 280 relates only to casual employees  and is not applicable to those
who fall within the definition of said Article's first paragraph, i.e.,  project employees. The familiar
grammatical rule is that a proviso is to be construed with reference to the immediately preceding part of
the provision to which it is attached, and not to other sections thereof, unless the clear legislative intent
is to restrict or qualify not only the phrase immediately preceding the proviso but also earlier provisions
of the statute or even the statute itself as a whole. No such intent is observable in Article 280 of the
Labor Code, which has been quoted earlier.

ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby DISMISSED for lack of merit.
The Resolutions of the NLRC dated 8 January 1993 and 15 February 1993 are hereby AFFIRMED. No
pronouncement as to costs.

SO ORDERED.

E. GANZON INC. vs ANADO

This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure (Rules) seeks to
reverse the February 28, 2014 Decision 1 and September 4, 2014 Resolution2  of the Court of Appeals (CA)
in CA G.R. SP No. 126624, which annulled the Resolutions dated May 25, 2012 3  and July 17, 20124  of
the National Labor Relations Commission (NLRC) which affirmed in toto the December 29, 2011
Decision5  of the Labor Arbiter.

On May 16, 2011, respondent Fortunato B. Ando, Jr. (Ando) filed a complaint 6  against petitioner E.
Ganzon, Inc. (EGI) and its President, Eulalio Ganzon, for illegal dismissal and money claims for:
underpayment of salary, overtime pay, and 13 th month pay; non-payment of holiday pay and service
incentive leave; illegal deduction; and attorneys fees. He alleged that he was a regular employee
working as a finishing carpenter in the construction business of EGI; he was repeatedly hired from
January 21, 2010 until April 30, 2011 when he was terminated without prior notice and hearing; his daily
salary of  292.00 was below the amount required  by law; and wage deductions were made without his
consent, such as rent for the barracks located in the job site and payment for insurance premium.

EGI countered that, as proven by the three (3) project employment contract, Ando was engaged as a
project worker (Formworker-2) in Bahay Pamulinawen Project in Laoag, Ilocos Norte from June 1, 2010
to September 30,20107  and from January 3, 2011 to February 28,2011 8  as well as in EGI West Insula
Project in Quezon City, Metro Manila from February 22, 2011 to March 31, 2011; 9 he was paid the
correct salary based on the Wage Order applicable in the region; he already received the 13 th month pay
for 2010 but the claim for 2011 was not yet processed at the time the complaint was filed; and he
voluntarily agreed to pay 500.00 monthly for the cost of the barracks, beds, water, electricity, and other
expenses of his stay at the job site.

The Labor Arbiter declared Ando a project employee of EGI but granted some of his money claims. The
dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered Dismissing the complaint for illegal
dismissal for lack of merit.

However, respondents are ordered to pay jointly and severally complainant Fortunato Ando, Jr.

a.) underpayment of salary:

From 2/22/11- 4/30/11

b.) Holiday pay:

From 1/21/10 – 4/30/11

c.) Service incentive leave pay:

From 1/21/10 – 4/30/11

d.) Proportionate 13th month pay

  From 1/1/11 – 4/30/11

The computation of the Computation and Examination Unit of this Office is made part of this Decision.

SO ORDERED.10

Both parties elevated the case to the NLRC,which dismissed the appeals filed and affirmed in toto the
Decision of the Labor Arbiter. Ando filed a motion for reconsideration,but it was denied. Still aggrieved,
he filed a Rule 65 petition before the CA, which granted the same. The fallo of the Decision ordered:

WHEREFORE, finding the petition to be impressed with merit, the same is hereby GRANTED. The assailed
NLRC resolutions dated May 25, 2012 and July 17, 2012, are hereby ANNULLED insofar as the matter of
illegal dismissal is concerned and a new judgment is hereby ENTERED declaring petitioner Fortunato
Ando, Jr. illegally dismissed from work. Private respondent E. Ganzon, Inc. (EGI) is hereby ORDERED to
pay petitioner Ando, Jr. his full backwages inclusive of his allowances and other benefits computed from
April 30, 2011 (the date of his dismissal) until finality of this decision. EGI is further ordered to pay
petitioner Ando, Jr. separation pay equivalent to one month salary.

The award of petitioner Ando, Jr.’s money claims granted by the Labor Arbiter and affirmed by the NLRC
is SUSTAINED.

SO ORDERED.14

EGI’s motion for reconsideration15  was denied; hence, this case. The petition is meritorious.

In labor cases, Our power of review is limited to the determination of whether the CA correctly resolved
the presence or absence of grave abuse of discretion on the part of the NLRC. The Court explained this
in Montoya v. Transmed Manila Corporation:16

x x x In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the
review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the
review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we
have to view the CA decision in the same context that the petition for certiorari  it ruled upon was
presented to it; we have to examine  the CA decision from  the prism  of whether  it correctly 
determined the presence or absence  of grave abuse of discretion in the NLRC decision before it, not on
the basis of whether the NLRC decision on the merits of the case was correct. In other words, we have
to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC
decision challenged before it This is the approach that should be basic in a Rule 45 review of a CA ruling
in a labor case. In question form, the question to ask is: Did the CA correctly determine whether the
NLRC committed grave abuse of discretion in ruling on the case? 17

Errors of judgment are not within the province of a special civil action for certiorari under Rule 65,
which  is merely  confined  to issues of jurisdiction  or grave  abuse of discretion.18 Grave  abuse of
discretion connotes judgment exercised in a capricious and whimsical manner that is tantamount to lack
of jurisdiction.19  To be considered “grave,” discretion must be exercised in a despotic manner by reason
of passion or personal hostility, and must be so patent and gross as to amount to an evasion of positive
duty or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation of law. 20]  In
labor disputes, grave abuse of discretion may be ascribed to the NLRC when its findings and conclusions
reached are not supported by substantial evidence or are in total disregard of evidence material to or
even decisive of the controversy; when it is necessary to prevent a substantial wrong or to do
substantial justice; when the findings of the NLRC contradict those of the LA; and when necessary to
arrive at a just decision of the case.21

In the case at bar, We hold that the CA erred in ruling that the NLRC gravely abused its discretion when
it sustained the Labor Arbiter’s finding that Ando is not a regular employee but a project employee of
EGI.

The terms regular, project, seasonal and casual employment are taken from Article 28022  of the Labor
Code, as amended. In addition,  Brent School, Inc. v. Zamora23 ruled that fixed-term employment
contract is not per se  illegal or against public policy?24  Under Art. 280, project employment is one which
“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.” To be considered  as project-based, the
employer has the burden of proof to show that: (a) the employee was assigned to carry out a specific
project or undertaking and (b) the duration and scope of which were specified at the time the employee
was engaged for such  project  or  undertaking.25  It must be  proved  that the  particular work/service to
be performed as well as its duration are defined in the employment agreement and made clear to the
employee who was informed thereof at the time of hiring. 26

The activities of project employees may or may not be usually necessary or desirable in the usual
business or trade of the employer. In ALU-TUCP v. National Labor Relations Commission,two (2)
categories of project employees were distinguished.

In the realm of business and industry, we note that “project” could refer to one or the other of at least
two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking
that is within the regular or usual business of the employer company, but which is distinct and separate,
and identifiable as such, from the other undertakings of the company. Such job or undertaking begins
and ends at determined or determinable times. The typical example of this first type of project  is a
particular  construction  job or project  of a construction company. X x x. Employees who are hired for
the carrying out of one of these separate  projects,  the scope  and duration  of  which  has been
determined and made known to the employees at the time of employment, are properly treated as
“project employees,” and their services may be lawfully terminated at completion of the project.

The term “project” could also refer to, secondly, a particular job or undertaking that is not  within the
regular business of the corporation. Such a job or undertaking must also be identifiably separate and
distinct from the ordinary or regular business operations of the employer. The job or undertaking also
begins and ends at determined or determinable times. X x x 28

As the assigned project or phase begins and ends at determined or determinable times, the services of
the project employee may be lawfully terminated at its completion. 29

In this case, the three project employment contracts signed by Ando explicitly stipulated the agreement
“to engage [his] services as a Project Worker” 30  and that:

5. [His] services with the Project will end upon completion of the phase of work for which [he was] hired
for and is tentatively set on (written date). However, this could be extended or shortened depending on
the work phasing.31

The CA opined that Ando’s contracts do not bear the essential element of a project employment
because while his contracts stated the period by which he was engaged, his tenure remained indefinite.
The appellate court ruled that the stipulation that his services “could be extended or shortened
depending on the work phasing” runs counter to the very essence of project employment since the
certainty of the completion or termination of the projects is in question. It was noted that, based on
Ando’s payslips, his services were still engaged by EGI even after his contracts expired. These extensions
as well as his repeated rehiring manifested that the work he rendered are necessary and desirable to
EGI’s construction business, thereby removing him from the scope of project employment contemplated
under Article 280.

We do not agree.

Records show that Ando’s contracts for Bahay Pamulinawen Project were extended until December 31,
201032  (from the original stated date of September 30, 2010) and shortened to February 15,2011 33 
(from the original stated date of February 28, 2011) while his services in West Insula Project was
extended until April 30, 201134  (from the original stated date of March 31, 2011). These
notwithstanding, he is still considered as a project, not regular, employee of EGI.
A project employment contract is valid under the law.

x x x By entering into such a contract, an employee is deemed to understand that his employment is
coterminous with the project. He may not expect to be employed continuously beyond the completion
of the project. It is of judicial notice that project employees engaged for manual services or those for
special skills like those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is
not a valid reason for bestowing special treatment on them or for invalidating a contract of
employment. Project employment contracts are not lopsided agreements in favor of only one party
thereto. The employer’s interest is equally important as that of the employee’s for theirs is the interest
that propels economic activity. While it may be true that it is the employer who drafts project
employment contracts with its business interest as overriding consideration, such contracts do not, of
necessity, prejudice the employee. Neither is the employee left helpless by a prejudicial employment
contract. After all, under the law, the interest of the worker is paramount. 35

The Court has upheld the validity of a project-based contract of employment provided that the period
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; and it is apparent from the circumstances that the period was not imposed to preclude the
acquisition of tenurial security by the employee. 36 Otherwise, such contract should be struck down as
contrary to public policy, morals, good custom or public order. 37

Here, Ando was adequately notified of his employment status at the time his services were engaged by
EGI for the Bahay Pamulinawen and the West Insula Projects. The contracts he signed consistently
stipulated that his services as a project worker were being sought. There was an informed consent to be
engaged as such. His consent was not vitiated. As a matter of fact, Ando did not even allege that force,
duress or improper pressure were used against him in order to agree. His being a carpenter does not
suffice.

There was no attempt to frustrate Ando’s security of tenure. His employment was for a specific project
or undertaking because the nature of EGI’s business is one which will not allow it to employ workers for
an indefinite period. As a corporation engaged in construction and residential projects, EGI depends for
its business on the contracts it is able to obtain. Since work depends on the availability of such contracts,
necessarily the duration of the employment of its work force is not permanent but coterminous with the
projects to which they are assigned and from whose payrolls they are paid. 38 It would be extremely
burdensome for EGI as an employer if it would have to carry them as permanent employees and pay
them wages even if there are no projects for them to work on. 39

Project employment should not be confused and interchanged with fixed-term employment:

x x x While the former requires a project as restrictively defined above, the duration of a fixed-term
employment agreed upon by the parties may be any day certain. Which is understood to be “that which
must necessarily come although it may not be known when.” The decisive determinant  in  fixed-term 
employment  is not  the  activity  that  the employee is called upon to perform but the day certain
agreed upon by the parties  for  the  commencement  and  termination  of  the employment
relationship.40

The decisive determinant in project employment is the activity that the employee is called upon to
perform and not the day certain agreed upon by the parties for the commencement and termination of
the employment relationship. Indeed, in Filsystems, Inc. v. Puente,41  We even ruled that an employment
contract that does not mention particular dates that establish the specific duration of the project does
not preclude one’s classification as a project employee.

In this case, the duration of the specific/identified  undertaking for which Ando was engaged was
reasonably determinable. Although the employment contract provided that the stated date may be
“extended or shortened depending on the work phasing,” it specified the termination of the parties’
employment relationship on a “day certain,” which is “upon completion of the phase of work for which
[he was] hired for.”42

A “day” x x x is understood to be that which must necessarily come, although is may not be known
exactly when. This means that where the final completion of a project or phase thereof is in fact
determinable and the expected completion is made known to the employee, such project employee
may not be considered regular, notwithstanding the one-year duration of employment in the project or
phase thereof or the one-year duration of two or more employments in the same project or phase of
the project.

The completion of the project or any phase thereof is determined on the date originally agreed upon or
the date indicated in the contract, or if the same is extended, the date of termination of project
extension.43

Ando’s tenure as a project employee remained definite because there was certainty of completion or
termination of the Bahay Pamulinawen and the West Insula Projects. The project employment  contracts
sufficiently apprised him that his security of tenure with EGI would only last as long as the specific
projects he was assigned to were subsisting. When the projects were completed, he was validly
terminated from employment since his engagement was coterminous thereto.

The fact that Ando was required to render services necessary or desirable in the operation of EGI’s
business for more than a year does not in any way impair the validity of his project employment
contracts. Time and again, We have held that the length of service through  repeated and successive
rehiring is not the controlling determinant of the employment tenure of a project employee. 44   The
rehiring of construction workers on a project-to-project  basis does not confer upon them regular
employment status as it is only dictated by the practical consideration that experienced construction
workers are more preferred.45  In Ando’s case, he was rehired precisely because of his previous
experience working with the other phases of the project. EGI took into account similarity of working
environment. Moreover-

x x x It is widely known that in the construction industry, a project employee’s work depends on the
availability of projects, necessarily the. Duration of his employment. It is not permanent but
coterminous with the work to which he is assigned. It would be extremely burdensome for the
employer, who depends on the availability of projects, to carry him as a permanent employee and pay
him wages even if there are no projects for him to work on. The rationale behind this is that once the
project is completed it would be unjust to require the employer to maintain these employees in their
payroll. To do so would make the employee a privileged retainer who collects payment from his
employer for work not done. This is extremely unfair to the employers and amounts to labor coddling at
the expense of management.46

Finally, the second paragraph of Article 280, stating that an employee who has rendered service for at
least one (1) year shall be considered a regular employee, is applicable only to a casual employee and
not to a project or a regular employee referred to in paragraph one thereof. 47

The foregoing considered, EGI did not violate any requirement of procedural due process by failing to
give Ando advance notice of his termination. Prior notice of termination is not part of procedural due
process if the termination is brought about by the completion of the contract or phase thereof for which
the project employee was engaged.48 Such completion automatically terminates the employment and
the employer is, under the law, only required to render a report to the Department of Labor and
Employment (DOLE) on the termination of employment.49In this case, it is undisputed that EGI submitted
the required Establishment Employment Reports to DOLE-NCR  Makati/Pasay  Field  Office  regarding 
Ando’s “temporary  lay-off’ effective February 16, 2011 and “permanent termination” effective May 2,
2011. 50

WHEREFORE, premises considered, the petition is GRANTED. The February 28, 2014 Decision and
September 4, 2014 Resolution of the Court of Appeals in CA-G.R.  SP No.  126624,  which  annulled  the
Resolutions dated May 25, 2012 and July 17, 2012 of the National Labor Relations Commission  which
affirmed in toto the December  29, 2011 Decision of the Labor Arbiter, are REVERSED AND SET ASIDE.
The Decision of the Labor Arbiter is REINSTATED.

SO ORDERED.

COCOMANGOS HOTEL RESORT vs VISCA

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
Decision1 dated July 30, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 78620 which reversed and
set aside the Resolution dated February 27, 2003 of the National Labor Relations Commission (NLRC) in
NLRC Case No. V-000714-2000; and the CA Resolution 2 dated February 2, 2005 which denied petitioners’
Motion for Reconsideration.
The present controversy stemmed from five individual complaints 3 for illegal

dismissal filed on June 15, 1999 by Federico F. Visca (Visca), Johnny G. Barredo, Ronald Q. Tibus, Richard
G. Visca and Raffie G. Visca (respondents) against Cocomangas Hotel Beach Resort and/or its owner-
manager, Susan Munro (petitioners) before Sub-Regional Arbitration Branch No. VI of the National Labor
Relations Commission (NLRC) in Kalibo, Aklan.

In their consolidated Position Paper,4 respondents alleged that they were regular employees of
petitioners, with designations and dates of employment as follows:

Name Designation Date Employed

Federico F. Visca Foreman October 1, 1987

Johnny G. Barredo Carpenter April 23, 1993

Ronald Q. Tibus Mason November 9, 1996

Richard G. Visca Carpenter April 1988

Raffie G. Visca Mason/Carpenter March 27, 1993

tasked with the maintenance and repair of the resort facilities; on May 8, 1999, Maria Nida Iñigo-Tañala,
the Front Desk Officer/Sales Manager, informed them not to report for work since the ongoing
constructions and repairs would be temporarily suspended because they caused irritation and
annoyance to the resort’s guests; as instructed, they did not report for work the succeeding days; John
Munro, husband of petitioner Susan Munro, subsequently visited respondent foreman Visca and
informed him that the work suspension was due to budgetary constraints; when respondent Visca later
discovered that four new workers were hired to do respondents’ tasks, he confronted petitioner Munro
who explained that respondents’ resumption of work was not possible due to budgetary constraints;
when not less than ten workers were subsequently hired by petitioners to do repairs in two cottages of
the resort and two workers were retained after the completion without respondents being allowed to
resume work, they filed their individual complaints for illegal dismissal. In addition to reinstatement with
payment of full backwages, respondents prayed for payment of premium pay for rest day, service
incentive leave pay, 13th month pay, and cost-of-living allowance, plus moral and exemplary damages
and attorney’s fees.

In their Position Paper,5 petitioners denied any employer-employee relationship with respondents and
countered that respondent Visca was an independent contractor who was called upon from time to time
when some repairs in the resort facilities were needed and the other respondents were selected and
hired by him.

On June 30, 2000, the Labor Arbiter (LA) rendered a Decision 6 dismissing the complaint, holding that
respondent Visca was an independent contractor and the other respondents were hired by him to help
him with his contracted works at the resort; that there was no illegal dismissal but completion of
projects; that respondents were project workers, not regular employees.
On August 9, 2000, respondents filed a Memorandum of Appeal 7 with the NLRC. No comment thereon
was filed by the petitioners.

On August 29, 2002, the NLRC rendered a Decision, 8 setting aside the Decision of the LA and ordering
the payment to respondents of backwages computed from May 8, 1999 to July 31, 2002, 13 th month pay
and service incentive leave pay for three years, in addition to 10% attorney’s fees. The dispositive
portion of the NLRC Decision reads:

WHEREFORE, the decision dated June 30, 2000 of the Labor Arbiter is VACATED and SET ASIDE and a
new decision rendered declaring the Illegal Dismissal of the complainant (sic) and ordering respondent
Susan Munro to pay the complainants the following:

1. Federico F. Visca P 288,816.53

2. Johnny G. Barredo P 211,058.47

3. Ronald Q. Tibus P 175,774.00

4. Richard C. Visca P 200,977.85

5. Raffie C. Visca P 211,058.47

P1,087,685.32

6. Attorney’s fees (10%) P 108,768.53

Total Award P1,196,453.859

Petitioners failed to convince the NLRC that respondent Visca was not an independent contractor and
the other respondents were selected and hired by him. The NLRC held that respondents were regular
employees of petitioners since all the factors determinative of employer-employee relationship were
present and the work done by respondents was clearly related to petitioners’ resort business. It took
into account the following: (a) respondent Visca was reported by petitioners as an employee in the
Quarterly Social Security System (SSS) report; (b) all of the respondents were certified to by petitioner
Munro as workers and even commended for their satisfactory performance; (c) respondents were paid
their holiday and overtime pay; and (d) respondents had been continuously in petitioners’ employ from
three to twelve years and were all paid by daily wage given weekly.

On November 18, 2002, petitioners filed a Motion for Reconsideration, arguing that respondents were
project employees.10 Petitioners also filed a Supplemental to their Motion for Reconsideration. 11 No
opposition or answer to petitioners’ motion for reconsideration and supplement was filed by
respondents despite due notice.12

On February 27, 2003, the NLRC made a complete turnabout from its original decision and issued a
Resolution13 dismissing the complaint, holding that respondents were not regular employees but project
employees, hired for a short period of time to do some repair jobs in petitioners’ resort business.
Nonetheless, it ordered payment of P10,000.00 to each complainant as financial assistance.
Respondents then filed a Petition for Certiorari14 with the CA raising three issues for resolution: (a)
whether or not the respondents were project employees of petitioners; (b) whether or not the
respondents’ dismissal from work was based on valid grounds; (c) whether or not the NLRC had
sufficient basis to overturn its own decision despite its overwhelming findings that respondents were
illegally dismissed.

On July 30, 2004, the CA rendered its assailed Decision, 15 the dispositve portion of which reads:

WHEREFORE, in view of the foregoing, judgment is hereby rendered by us REVERSING and SETTING
ASIDE the NLRC Resolution dated February 28, 2003, REINSTATING the NLRC Decision dated August 29,
2000 [sic], and ORDERING the private respondents to pay damages in the amount of P50,000.00. The
instant case is hereby REMANDED to the 4 th Division NLRC, Cebu City for the purpose of UPDATING the
award promulgated in its Decision dated August 29, 2000 [sic].

SO ORDERED.16

The CA held respondents were regular employees, not project workers, since in the years that
petitioners repeatedly hired respondents’ services, the former failed to set, even once, specific periods
when the employment relationship would be terminated; that the repeated hiring of respondents
established that the services rendered by them were necessary and desirable to petitioners’ resort
business; at the least, respondents were regular seasonal employees, hired depending on the tourist
season and when the need arose in maintaining petitioners’ resort for the benefit of guests.

In addition to the amounts granted by the NLRC in its August 29, 2002 Decision, the CA awarded
respondents P50,000.00 as damages, since their termination was attended by bad faith, in that
petitioners not only gave respondents the run-around but also blatantly hired others to take
respondents’ place despite their claim that the so-called temporary stoppage of work was due to
budgetary constraints.

On August 18, 2004, petitioners filed a Motion for Reconsideration, 17 but it was denied by the CA in a
Resolution18 dated February 2, 2005.

Petitioners then filed the present petition19 on the following grounds:

THE HONORABLE COURT OF APPEALS ERRED IN GIVING DUE COURSE TO THE SPECIAL CIVIL ACTION
UNDER RULE 65 NOTWITHSTANDING THE FACT THAT RESPONDENTS HAVE FAILED TO PROVE THE
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION THAT WOULD ALLOW
THE NULLIFICATION OF THE ASSAILED RESOLUTION OF THE NATIONAL LABOR RELATIONS COMMISSION.

II

THE HONORABLE COURT OF APPEALS ERRED IN REVERSING AND SETTING ASIDE THE RESOLUTION
DATED FEBRUARY 27, 2003 AND REINSTATING THE DECISION DATED AUGUST 29, 2002 RENDERED BY
THE NATIONAL LABOR RELATIONS COMMISSION.20

Petitioners argue that the CA erred in giving due course to respondents’ petition, since respondents
failed to recite specifically how the NLRC abused its discretion, an allegation essentially required in a
petition for certiorari  under Rule 45 of the Rules of Court;  the three issues raised by respondents in
their petition before the CA required appreciation of the evidence presented below and are therefore
errors of judgment, not of jurisdiction; that the factual findings of the LA and the NLRC on the lack of
employer-employee relationship between petitioners and respondents should be accorded not only
respect but finality.

On the other hand, respondents contend that the issues raised by the petitioners call for reevaluation of
the evidence presented by the parties, which is not proper in petitions for review under Rule 45 of the
Rules of Court; in any case, they argue that they have amply established that they are regular employees
of petitioners, since their jobs as carpenters, which include the repairs of furniture, motor boats,
cottages and windbreakers, are not at all foreign to the business of maintaining a beach resort.

The petition is bereft of merit.

The extent of judicial review by certiorari of decisions or resolutions of the NLRC, as exercised previously
by this Court and now by the CA, is described in Zarate, Jr. v. Olegario,21 thus:

The rule is settled that the original and exclusive jurisdiction of this Court to review a decision of
respondent NLRC (or Executive Labor Arbiter as in this case) in a petition for certiorari under Rule 65
does not normally include an inquiry into the correctness of its evaluation of the evidence. Errors of
judgment, as distinguished from errors of jurisdiction, are not within the province of a special civil action
for certiorari, which is merely confined to issues of jurisdiction or grave abuse of discretion. It is thus
incumbent upon petitioner to satisfactorily establish that respondent Commission or executive labor
arbiter acted capriciously and whimsically in total disregard of evidence material to or even decisive of
the controversy, in order that the extraordinary writ of certiorari will lie. By grave abuse of discretion is
meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, and it
must be shown that the discretion was exercised arbitrarily or despotically. For certiorari to lie, there
must be capricious, arbitrary and whimsical exercise of power, the very antithesis of the judicial
prerogative in accordance with centuries of both civil law and common law traditions. 22 (Emphasis
supplied)

The CA, therefore, can take cognizance of a petition for certiorari if it finds that the NLRC, in its assailed
decision or resolution, committed grave abuse of discretion by capriciously, whimsically, or arbitrarily
disregarding evidence which is material to or decisive of the controversy. The CA cannot make this
determination without looking into the evidence presented by the parties. The appellate court needs to
evaluate the materiality or significance of the evidence, which is alleged to have been capriciously,
whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence on record. 23

In Garcia v. National Labor Relations Commission, 24 the Court elucidated on when certiorari can be

properly resorted to, thus:

[I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual findings
complained of are not supported by the evidence on record. Earlier, in Gutib v. Court of Appeals, we
emphasized thus:

[I]t has been said that a wide breadth of discretion is granted a court of justice in certiorari proceedings.
The cases in which certiorari will issue cannot be defined, because to do so would be to destroy its
comprehensiveness and usefulness. So wide is the discretion of the court that authority is not wanting
to show that certiorari is more discretionary than either prohibition or mandamus. In the exercise of our
superintending control over inferior courts, we are to be guided by all the circumstances of each
particular case “as the ends of justice may require.” So it is that the writ will be granted where necessary
to prevent a substantial wrong or to do substantial justice.

And in another case of recent vintage, we further held:

In the review of an NLRC decision through a special civil action for certiorari, resolution is confined only
to issues of jurisdiction and grave abuse of discretion on the part of the labor tribunal. Hence, the Court
refrains from reviewing factual assessments of lower courts and agencies exercising adjudicative
functions, such as the NLRC. Occasionally, however, the Court is constrained to delve into factual
matters where, as in the instant case, the findings of the NLRC contradict those of the Labor Arbiter.

In this instance, the Court in the exercise of its equity jurisdiction may look into the records of the case
and re-examine the questioned findings. As a corollary, this Court is clothed with ample authority to
review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration
is necessary to arrive at a just decision of the case. The same principles are now necessarily adhered to
and are applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated through a
petition for certiorari; thus, we see no error on its part when it made anew a factual determination of
the matters and on that basis reversed the ruling of the NLRC. 25 (Emphasis supplied)

Thus, pursuant to Garcia, the appellate court can grant a petition for certiorari when the factual findings
complained of are not supported by the evidence on record; when it is necessary to prevent a
substantial wrong or to do substantial justice; when the findings of the NLRC contradict those of the LA;
and when necessary to arrive at a just decision of the case. 26

In the present case, respondents alleged in its petition with the CA that the NLRC’s conclusions had no
basis in fact and in law, in that “it totally disregarded the evidence of the [respondents] and gave
credence to the [petitioners’] asseverations which were in themselves insufficient to overturn duly
established facts and conclusions.”27 Consequently, the CA was correct in giving due course to the
Petition for Certiorari, since respondents drew attention to the absence of substantial evidence to
support the NLRC’s complete turnabout from its original Decision dated August 29, 2002 finding that
respondents were regular employees, to its subsequent Resolution dated February 27, 2003 classifying
respondents as project employees.

The next issue before the Court is whether the CA committed an error in reversing the NLRC Resolution
dated February 27, 2003. The resolution of this issue principally hinges on the determination of the
question whether respondents are regular or project employees.

Generally, the existence of an employer-employee relationship is a factual matter that will not be delved
into by this Court, since only questions of law may be raised in petitions for review. 28 However, the Court
is constrained to resolve the issue of whether respondents are regular or permanent employees due to
the conflicting findings of fact of the LA, the NLRC and the CA, thus, necessitating a review of the
evidence on record.29

The petitioners were ambivalent in categorizing respondents. In their Position Paper 30 filed before the
LA, petitioners classified respondent Visca as an independent contractor and the other respondents as
his employees; while in their Motion for Reconsideration 31 before the NLRC, petitioners treated
respondents as project employees.
Further, petitioners’ position in their Motion for Reconsideration before the NLRC runs contrary to their
earlier submission in their Position Paper before the LA. While initially advancing the absence of an
employer-employee relationship, petitioners on appeal, sang a different tune, so to speak, essentially
invoking the termination of the period of their employer-employee relationship.

The NLRC should not have considered the new theory offered by the petitioners in their Motion for
Reconsideration. As the object of the pleadings is to draw the lines of battle, so to speak, between the
litigants and to indicate fairly the nature of the claims or defenses of both parties, a party cannot
subsequently take a position contrary to, or inconsistent, with his pleadings. 32 It is a matter of law that
when a party adopts a particular theory and the case is tried and decided upon that theory in the court
below, he will not be permitted to change his theory on appeal. The case will be reviewed and decided
on that theory and not approached and resolved from a different point of view. To permit a party to
change his theory on appeal will be unfair to the adverse party. 33

At any rate, after a careful examination of the records, the Court finds that the CA did not err in finding
that respondents were regular employees, not project employees. A project employee is one whose
“employment has been fixed for a specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of the
season.”34 Before an employee hired on a per-project basis can be dismissed, a report must be made to
the nearest employment office, of the termination of the services of the workers every time completes a
project, pursuant to Policy Instruction No. 20. 35

In the present case, respondents cannot be classified as project employees, since they worked
continuously for petitioners from three to twelve years without any mention of a “project” to which
they were specifically assigned. While they had designations as “foreman,” “carpenter” and “mason,”
they performed work other than carpentry or masonry. They were tasked with the maintenance and
repair of the furniture, motor boats, cottages, and windbreakers and other resort facilities. There is
likewise no evidence of the project employment contracts covering respondents’ alleged periods of
employment. More importantly, there is no evidence that petitioners reported the termination of
respondents’ supposed project employment to the DOLE as project employees. Department Order No.
19, as well as the old Policy Instructions No. 20, requires employers to submit a report of an employee’s
termination to the nearest public employment office every time his employment is terminated due to a
completion of a project. Petitioners’ failure to file termination reports is an indication that the
respondents were not project employees but regular employees. 36

This Court has held that an employment ceases to be coterminous with specific projects when the
employee is continuously rehired due to the demands of employer’s business and re-engaged for many
more projects without interruption.37

The Court is not persuaded by petitioners’ submission that respondents’ services are not necessary or
desirable to the usual trade or business of the resort. The repeated and continuing need for their
services is sufficient evidence of the necessity, if not indispensability, of their services to petitioners’
resort business.38

In Maraguinot, Jr. v. National Labor Relations Commission,39 the Court ruled that “once a project or work
pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same employer
for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the
usual business or trade of the employer, then the employee must be deemed a regular employee,
pursuant to Article 280 of the Labor Code and jurisprudence.” 40

That respondents were regular employees is further bolstered by the following evidence: (a) the SSS
Quarterly Summary of Contribution Payments 41 listing respondents as employees of petitioners; (b) the
Service Record Certificates stating that respondents were employees of petitioners for periods ranging
from three to twelve years and all have given “very satisfactory performance”; 42 (c) petty cash
vouchers43 showing payment of respondents’ salaries and holiday and overtime pays.

Thus, substantial evidence supported the CA finding that respondents were regular employees. Being
regular employees, they were entitled to security of tenure, and their services may not be terminated
except for causes provided by law.

Article 27944 of the Labor Code, as amended, provides that an illegally dismissed employee shall be
entitled to reinstatement, full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement.

The Court notes that the NLRC, in its earlier Decision dated August 29, 2002 which was affirmed by the
CA, computed the award for backwages from May 8, 1999 to July 31, 2002 only. It is evident that
respondents’ backwages should not be limited to said period. The backwages due respondents must be
computed from the time they were unjustly dismissed until actual reinstatement to their former
positions. Thus, until petitioners implement the reinstatement aspect, its obligation to respondents,
insofar as accrued backwages and other benefits are concerned, continues to accumulate.

The fact that the CA failed to consider this when it affirmed the August 29, 2002 decision of the NLRC or
that respondents themselves did not appeal the CA Decision on this matter, does not bar this Court from
ordering its modification. While as a general rule, a party who has not appealed is not entitled to
affirmative relief other than the ones granted in the decision of the court below, this Court is imbued
with sufficient authority and discretion to review matters, not otherwise assigned as errors on appeal, if
it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to
serve the interests of justice or to avoid dispensing piecemeal justice. 45

Besides, substantive rights like the award of backwages resulting from illegal dismissal must not be
prejudiced by a rigid and technical application of the rules. 46 The computation of the award for
backwages from the time compensation was withheld up to the time of actual reinstatement is a mere
legal consequence of the finding that respondents were illegally dismissed by petitioners.

WHEREFORE, the petition is DENIED. The assailed Decision dated July 30, 2004 and Resolution dated
February 2, 2005 of the Court of Appeals in CA-G.R. SP No. 78620
are AFFIRMED with MODIFICATION that the award for backwages should be computed from the time
compensation was withheld up to the time of actual reinstatement.

Double costs against petitioners.

SO ORDERED.
HACIENDA FATIMA vs NATIONAL FEDERATION OF SUGARCANE

Although the employers have shown that respondents performed work that was seasonal in nature,
they failed to prove that the latter worked only for the duration of one particular season. In fact,
petitioners do not deny that these workers have served them for several years already. Hence, they are
regular not seasonal employees.

The Case

Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the
February 20, 2001 Decision of the Court of Appeals 1 (CA) in CA-GR SP No. 51033. The dispositive part of
the Decision reads:

“WHEREFORE, premises considered, the instant special civil action for certiorari is hereby DENIED.” 2

On the other hand, the National Labor Relations Commission (NLRC) Decision, 3 upheld by the CA,
disposed in this wise:

“WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED
and a new one entered declaring complainants to have been illegally dismissed. Respondents are hereby
ORDERED to reinstate complainants except Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy
Silva to their previous position and to pay full backwages from September 1991 until reinstated.
Respondents being guilty of unfair labor practice are further ordered to pay complainant union the sum
of P10,000.00 as moral damages and P5,000.00 as exemplary damages.” 4

The Facts

The facts are summarized in the NLRC Decision as follows:

"Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused to
work and/or were choosy in the kind of jobs they wanted to perform, the records is replete with
complainants' persistence and dogged determination in going back to work.

"Indeed, it would appear that respondents did not look with favor workers' having organized
themselves into a union. Thus, when complainant union was certified as the collective
bargaining representative in the certification elections, respondents under the pretext that the
result was on appeal, refused to sit down with the union for the purpose of entering into a
collective bargaining agreement. Moreover, the workers including complainants herein were not
given work for more than one month. In protest, complainants staged a strike which was
however settled upon the signing of a Memorandum of Agreement which stipulated among
others that:

'a) The parties will initially meet for CBA negotiations on the 11th day of January 1991
and will endeavor to conclude the same within thirty (30) days.

'b) The management will give priority to the women workers who are members of the
union in case work relative . . . or amount[ing] to gahit and [dipol] arises.
 'c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a
week.

'd) The management will provide fifteen (15) wagons for the workers and that existing
workforce prior to the actual strike will be given priority. However, in case the said
workforce would not be enough, the management can hire additional workers to
supplement them.

'e) The management will not anymore allow the scabs, numbering about eighteen (18)
workers[,] to work in the hacienda; and

'f) The union will immediately lift the picket upon signing of this agreement.'

"However, alleging that complainants failed to load the fifteen wagons, respondents reneged on
its commitment to sit down and bargain collectively. Instead, respondent employed all means
including the use of private armed guards to prevent the organizers from entering the premises.

"Moreover, starting September 1991, respondents did not any more give work assignments to
the complainants forcing the union to stage a strike on January 2, 1992. But due to the
conciliation efforts by the DOLE, another Memorandum of Agreement was signed by the
complainants and respondents which provides:

'Whereas the union staged a strike against management on January 2, 1992 grounded on the
dismissal of the union officials and members;

'Whereas parties to the present dispute agree to settle the case amicably once and for all;

'Now therefore, in the interest of both labor and management, parties herein agree as follows:

'1. That the list of the names of affected union members hereto attached and made part
of this agreement shall be referred to the Hacienda payroll of 1990 and determine
whether or not this concerned Union members are hacienda workers;

'2. That in addition to the payroll of 1990 as reference, herein parties will use as guide
the subjects of a Memorandum of Agreement entered into by and between the parties
last January 4, 1990;

'3. That herein parties can use other employment references in support of their
respective claims whether or not any or all of the listed 36 union members are
employees or hacienda workers or not as the case may be;

'4. That in case conflict or disagreement arises in the determination of the status of the
particular hacienda workers subject of this agreement herein parties further agree to
submit the same to voluntary arbitration;

'5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby created
to be composed of three representatives each and is given five working days starting
Jan. 23, 1992 to resolve the status of the subject 36 hacienda workers. (Union
representatives: Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.)"
 "Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting
showed as follows:

'The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko based on
who received their 13th month pay. The following are deemed not considered employees:

1. Luisa Rombo

2. Ramona Rombo

3. Bobong Abrega

4. Boboy Silva

'The name Orencio Rombo shall be verified in the 1990 payroll.

'The following employees shall be reinstated immediately upon availability of work:

1. Jose Dagle 7. Alejandro Tejares

2. Rico Dagle 8. Gaudioso Rombo

3. Ricardo Dagle 9. Martin Alas-as Jr.

4. Jesus Silva 10. Cresensio Abrega

5. Fernando Silva 11. Ariston Eruela Sr.

6. Ernesto Tejares 12. Ariston Eruela Jr.'

"When respondents again reneged on its commitment; complainants filed the present complaint.

"But for all their persistence, the risk they had to undergo in conducting a strike in the face of
overwhelming odds, complainants in an ironic twist of fate now find themselves being accused of
'refusing to work and being choosy in the kind of work they have to perform'." 5 (Citations omitted)

Ruling of the Court of Appeals

The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be
merely on leave during the off-season and were therefore still employed by petitioners. Moreover, the
workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be
tantamount to illegal dismissal.

The appellate court found neither "rhyme nor reason in petitioner's argument that it was the workers
themselves who refused to or were choosy in their work." As found by the NLRC, the record of this case
is "replete with complainants' persistence and dogged determination in going back to work." 6

The CA likewise concurred with the NLRC's finding that petitioners were guilty of unfair labor practice.

Hence this Petition. 7

 Issues

Petitioners raise the following issues for the Court's consideration:

"A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal
workers, were regular employees, contrary to the clear provisions of Article 280 of the Labor Code,
which categorically state that seasonal employees are not covered by the definition of regular
employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual
employees who have served for at least one year.

"B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, . . . and relying instead
on rulings which are not directly applicable to the case at bench, viz, Philippine Tobacco, Bacolod-
Murcia, and Gaco, . . .

"C Whether or not the Court of Appeals committed grave abuse of discretion in upholding the NLRC's
conclusion that private respondents were illegally dismissed, that petitioner[s were] guilty of unfair
labor practice, and that the union be awarded moral and exemplary damages." 8

Consistent with the discussion in petitioners' Memorandum, we shall take up Items A and B as the first
issue and Item C as the second.

The Court's Ruling

The Petition has no merit.

First Issue:

Regular Employment

At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for
review on certiorari of CA decisions. 9 Questions of fact are not entertained. 10 The Court is not a trier of
facts and, in labor cases, this doctrine applies with greater force. 11 Factual questions are for labor
tribunals to resolve. 12 In the present case, these have already been threshed out by the NLRC. Its
findings were affirmed by the appellate court.

Contrary to petitioners' contention, the CA did not err when it held that respondents were regular
employees.

Article 280 of the Labor Code, as amended, states:

"Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed
for a specific project or undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.
"An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity exist." (Italics supplied)

For respondents to be excluded from those classified as regular employees, it is not enough that they
perform work or services that are seasonal in nature. They must have also been employed only for the
duration of one season. The evidence proves the existence of the first, but not of the second, condition.
The fact that respondents with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and
Boboy Silva repeatedly worked as sugarcane workers for petitioners for several years is not denied by
the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the
general rule of regular employment is applicable.

In Abasolo v. National Labor Relations Commission, 13 the Court issued this clarification:

"[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC,
in which this Court held:

"The primary standard, therefore, of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or business of
the employer. The test is whether the former is usually necessary or desirable in the usual trade or
business of the employer. The connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its entirety. Also if the
employee has been performing the job for at least a year, even if the performance is not continuous and
merely intermittent, the law deems repeated and continuing need for its performance as sufficient
evidence of the necessity if not indispensability of that activity to the business. Hence, the employment
is considered regular, but only with respect to such activity and while such activity exists.

xxx - xxx - xxx

". . . [T]he fact that [respondents] do not work continuously for one whole year but only for the duration
of the . . . season does not detract from considering them in regular employment since in a litany of
cases this Court has already settled that seasonal workers who are called to work from time to time and
are temporarily laid off during off-season are not separated from service in said period, but merely
considered on leave until re-employed." 14

The CA did not err when it ruled that Mercado v. NLRC 15 was not applicable to the case at bar. In the
earlier case, the workers were required to perform phases of agricultural work for a definite period of
time, after which their services would be available to any other farm owner. They were not hired
regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase
thereof. On the other hand, herein respondents, having performed the same tasks for petitioners every
season for several years, are considered the latter's regular employees for their respective tasks.
Petitioners' eventual refusal to use their services even if they were ready, able and willing to perform
their usual duties whenever these were available and hiring of other workers to perform the tasks
originally assigned to respondents amounted to illegal dismissal of the latter.

The Court finds no reason to disturb the CA's dismissal of what petitioners claim was their valid exercise
of a management prerogative. The sudden changes in work assignments reeked of bad faith. These
changes were implemented immediately after respondents had organized themselves into a union and
started demanding collective bargaining. Those who were union members were effectively deprived of
their jobs. Petitioners' move actually amounted to unjustified dismissal of respondents, in violation of
the Labor Code.

"Where there is no showing of clear, valid and legal cause for the termination of employment, the law
considers the matter a case of illegal dismissal and the burden is on the employer to prove that the
termination was for a valid and authorized cause." 16 In the case at bar, petitioners failed to prove any
such cause for the dismissal of respondents who, as discussed above, are regular employees.

Second Issue:

Unfair Labor Practice

The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows:

"Indeed, from respondents' refusal to bargain, to their acts of economic inducements resulting in the
promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to
come in, and the dismissal of union officials and members, one cannot but conclude that respondents
did not want a union in their hacienda clear interference in the right of the workers to self-
organization." 17

We uphold the CA's affirmation of the above findings. Indeed, factual findings of labor officials, who are
deemed to have acquired expertise in matters within their respective jurisdictions, are generally
accorded not only respect but even finality. Their findings are binding on the Supreme Court. 18 Verily,
their conclusions are accorded great weight upon appeal, especially when supported by substantial
evidence. 19 Consequently, the Court is not duty-bound to delve into the accuracy of their factual
findings, in the absence of a clear showing that these were arbitrary and bereft of any rational basis." 20

The finding of unfair labor practice done in bad faith carries with it the sanction of moral and exemplary
damages." 21

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against

petitioners.

SO ORDERED.

UNIVERSAL ROBINA vs ACIBO

We resolve in this petition for review on certiorari 1 the challenge to the November 29, 2007
decision2 and the January 22, 2009 resolution3 of the Court of Appeals (CA) in CA-G.R. CEB-SP No. 02028.
This CA decision affirmed with modification the July 22, 2005 decision 4 and the April 28, 2006
resolution5 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-00006-03 which, in
turn, reversed the October 9, 2002 decision 6 of the Labor Arbiter (LA). The LA’s decision dismissed the
complaint filed by complainants Ferdinand Acibo, et al. 7 against petitioners Universal Robina Sugar
Milling Corporation (URSUMCO) and Rene Cabati.
 The Factual Antecedents

URSUMCO is a domestic corporation engaged in the sugar cane milling business; Cabati is URSUMCO’s
Business Unit General Manager.

The complainants were employees of URSUMCO. They were hired on various dates (between February
1988 and April 1996) and on different capacities, 8 i.e., drivers, crane operators, bucket hookers, welders,
mechanics, laboratory attendants and aides, steel workers, laborers, carpenters and masons, among
others. At the start of their respective engagements, the complainants signed contracts of employment
for a period of one (1) month or for a given season. URSUMCO repeatedly hired the complainants to
perform the same duties and, for every engagement, required the latter to sign new employment
contracts for the same duration of one month or a given season.

On August 23, 2002,9 the complainants filed before the LA complaints for regularization, entitlement to
the benefits under the existing Collective Bargaining Agreement (CBA),and attorney’s fees.

In the decision10 dated October 9, 2002, the LA dismissed the complaint for lack of merit. The LA held
that the complainants were seasonal or project workers and not regular employees of URSUMCO. The
LA pointed out that the complainants were required to perform, for a definite period, phases of
URSUMCO’s several projects that were not at all directly related to the latter’s main operations. As the
complainants were project employees, they could not be regularized since their respective
employments were coterminous with the phase of the work or special project to which they were
assigned and which employments end upon the completion of each project. Accordingly, the
complainants were not entitled to the benefits granted under the CBA that, as provided, covered only
the regular employees of URSUMCO.

Of the twenty-two original complainants before the LA, seven appealed the LA’s ruling before the NLRC,
namely: respondents Ferdinand Acibo, Eddie Baldoza, Andy Banjao, Dionisio Bendijo, Jr., Rodger
Ramirez, Diocito Palagtiw, Danny Kadusale and Allyrobyl Olpus.

The Ruling of the NLRC

In its decision11 of July 22, 2005, the NLRC reversed the LA’s ruling; it declared the complainants as
regular URSUMCO employees and granted their monetary claims under the CBA. The NLRC pointed out
that the complainants performed activities which were usually necessary and desirable in the usual
trade or business of URSUMCO, and had been repeatedly hired for the same undertaking every season.
Thus, pursuant to Article 280 of the Labor Code, the NLRC declared that the complainants were regular
employees. As regular employees, the NLRC held that the complainants were entitled to the benefits
granted, under the CBA, to the regular URSUMCO employees.

The petitioners moved to reconsider this NLRC ruling which the NLRC denied in its April 28, 2006
resolution.12 The petitioners elevated the case to the CA via a petition for certiorari. 13

The Ruling of the CA

In its November 29, 2007 decision,14 the CA granted in part the petition; it affirmed the NLRC’s ruling
finding the complainants to be regular employees of URSUMCO, but deleted the grant of monetary
benefits under the CBA.
The CA pointed out that the primary standard for determining regular employment is the reasonable
connection between a particular activity performed by the employee vis-à-vis the usual trade or
business of the employer. This connection, in turn, can be determined by considering the nature of the
work performed and the relation of this work to the business or trade of the employer in its entirety.

In this regard, the CA held that the various activities that the complainants were tasked to do were
necessary, if not indispensable, to the nature of URSUMCO’s business. As the complainants had been
performing their respective tasks for at least one year, the CA held that this repeated and continuing
need for the complainants’ performance of these same tasks, regardless of whether the performance
was continuous or intermittent, constitutes sufficient evidence of the necessity, if not indispensability, of
the activity to URSUMCO’s business.

Further, the CA noted that the petitioners failed to prove that they gave the complainants opportunity
to work elsewhere during the off-season, which opportunity could have qualified the latter as seasonal
workers. Still, the CA pointed out that even during this off-season period, seasonal workers are not
separated from the service but are simply considered on leave until they are re-employed. Thus, the CA
concluded that the complainants were regular employees with respect to the activity that they had been
performing and while the activity continued.

On the claim for CBA benefits, the CA, however, ruled that the complainants were not entitled to receive
them. The CA pointed out that while the complainants were considered regular, albeit seasonal,
workers, the CBA-covered regular employees of URSUMCO were performing tasks needed by the latter
for the entire year with no regard to the changing sugar milling season. Hence, the complainants did not
belong to and could not be grouped together with the regular employees of URSUMCO, for collective
bargaining purposes; they constitute a bargaining unit separate and distinct from the regular employees.
Consequently, the CA declared that the complainants could not be covered by the CBA.

The petitioners filed the present petition after the CA denied their motion for partial reconsideration 15 in
the CA’s January 22, 2009 resolution.16

The Issues

The petition essentially presents the following issues for the Court’s resolution: (1) whether the
respondents are regular employees of URSUMCO; and (2) whether affirmative relief can be given to the
fifteen (15) of the complainants who did not appeal the LA’s decision. 17

The Court’s Ruling

We resolve to partially GRANT the petition.

On the issue of the status of the respondents’ employment

The petitioners maintain that the respondents are contractual or project/seasonal workers and not
regular employees of URSUMCO. They thus argue that the CA erred in applying the legal parameters and
guidelines for regular employment to the respondents’ case. They contend that the legal standards –
length of the employee’s engagement and the desirability or necessity of the employee’s work in the
usual trade or business of the employer – apply only to regular employees under paragraph 1, Article
280 of the Labor Code, and, under paragraph 2 of the same article, to casual employees who are
deemed regular by their length of service.
The respondents, the petitioners point out, were specifically engaged for a fixed and predetermined
duration of, on the average, one (1) month at a time that coincides with a particular phase of the
company’s business operations or sugar milling season. By the nature of their engagement, the
respondents’ employment legally ends upon the end of the predetermined period; thus, URSUMCO was
under no legal obligation to rehire the respondents.

In their comment,18 the respondents maintain that they are regular employees of URSUMCO. Relying on
the NLRC and the CA rulings, they point out that they have been continuously working for URSUMCO for
more than one year, performing tasks which were necessary and desirable to URSUMCO’s business.
Hence, under the above-stated legal parameters, they are regular employees.

We disagree with the petitioners’ position. We find the respondents to be regular seasonal employees
of URSUMCO.

As the CA has explained in its challenged decision, Article 280 of the Labor Code provides for three kinds
of employment arrangements, namely: regular, project/seasonal and casual. Regular employment refers
to that arrangement whereby the employee "has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer[.]" 19 Under the definition, the
primary standard that determines regular employment is the reasonable connection between the
particular activity performed by the employee and the usual business or trade of the employer; 20 the
emphasis is on the necessity or desirability of the employee’s activity. Thus, when the employee
performs activities considered necessary and desirable to the overall business scheme of the employer,
the law regards the employee as regular.

By way of an exception, paragraph 2, Article 280 of the Labor Code also considers regular a casual
employment arrangement when the casual employee’s engagement has lasted for at least one year,
regardless of the engagement’s continuity. The controlling test in this arrangement is the length of time
during which the employee is engaged.

A project employment, on the other hand, contemplates on arrangement whereby "the employment
has been fixed for a specific project or undertaking whose completion or termination has been
determined at the time of the engagement of the employee[.]" 21 Two requirements, therefore, clearly
need to be satisfied to remove the engagement from the presumption of regularity of employment,
namely: (1) designation of a specific project or undertaking for which the employee is hired; and (2)
clear determination of the completion or termination of the project at the time of the employee’s
engagement.22 The services of the project employees are legally and automatically terminated upon the
end or completion of the project as the employee’s services are coterminous with the project.

Unlike in a regular employment under Article 280 of the Labor Code, however, the length of time of the
asserted "project" employee’s engagement is not controlling as the employment may, in fact, last for
more than a year, depending on the needs or circumstances of the project. Nevertheless, this length of
time (or the continuous rehiring of the employee even after the cessation of the project) may serve as a
badge of regular employment when the activities performed by the purported "project" employee are
necessary and indispensable to the usual business or trade of the employer. 23 In this latter case, the law
will regard the arrangement as regular employment. 24
Seasonal employment operates much in the same way as project employment, albeit it involves work or
service that is seasonal in nature or lasting for the duration of the season. 25 As with project employment,
although the seasonal employment arrangement involves work that is seasonal or periodic in nature,
the employment itself is not automatically considered seasonal so as to prevent the employee from
attaining regular status. To exclude the asserted "seasonal" employee from those classified as regular
employees, the employer must show that: (1) the employee must be performing work or services that
are seasonal in nature; and (2) he had been employed for the duration of the season. 26 Hence, when the
"seasonal" workers are continuously and repeatedly hired to perform the same tasks or activities for
several seasons or even after the cessation of the season, this length of time may likewise serve as
badge of regular employment.27 In fact, even though denominated as "seasonal workers," if these
workers are called to work from time to time and are only temporarily laid off during the off-season, the
law does not consider them separated from the service during the off-season period. The law simply
considers these seasonal workers on leave until re-employed. 28

Casual employment, the third kind of employment arrangement, refers to any other employment
arrangement that does not fall under any of the first two categories, i.e., regular or project/seasonal.

Interestingly, the Labor Code does not mention another employment arrangement – contractual or fixed
term employment (or employment for a term) – which, if not for the fixed term, should fall under the
category of regular employment in view of the nature of the employee’s engagement, which is to
perform an activity usually necessary or desirable in the employer’s business.

In Brent School, Inc. v. Zamora,29 the Court, for the first time, recognized and resolved the anomaly
created by a narrow and literal interpretation of Article 280 of the Labor Code that appears to restrict
the employee’s right to freely stipulate with his employer on the duration of his engagement. In this
case, the Court upheld the validity of the fixed-term employment agreed upon by the employer, Brent
School, Inc., and the employee, Dorotio Alegre, declaring that the restrictive clause in Article 280
"should be construed to refer to the substantive evil that the Code itself x x x singled out: agreements
entered into precisely to circumvent security of tenure. It should have no application to instances where
[the] fixed period of employment was agreed upon knowingly and voluntarily by the parties x x x absent
any x x x circumstances vitiating [the employee’s] consent, or where [the facts satisfactorily show] that
the employer and [the] employee dealt with each other on more or less equal terms[.]" 30 The
indispensability or desirability of the activity performed by the employee will not preclude the parties
from entering into an otherwise valid fixed term employment agreement; a definite period of
employment does not essentially contradict the nature of the employees duties 31 as necessary and
desirable to the usual business or trade of the employer.

Nevertheless, "where the circumstances evidently show that the employer imposed the period precisely
to preclude the employee from acquiring tenurial security, the law and this Court will not hesitate to
strike down or disregard the period as contrary to public policy, morals, etc." 32 In such a case, the
general restrictive rule under Article 280 of the Labor Code will apply and the employee shall be deemed
regular.

Clearly, therefore, the nature of the employment does not depend solely on the will or word of the
employer or on the procedure for hiring and the manner of designating the employee. Rather, the
nature of the employment depends on the nature of the activities to be performed by the employee,
considering the nature of the employer’s business, the duration and scope to be done, 33 and, in some
cases, even the length of time of the performance and its continued existence.

In light of the above legal parameters laid down by the law and applicable jurisprudence, the
respondents are neither project, seasonal nor fixed-term employees, but regular seasonal workers of
URSUMCO. The following factual considerations from the records support this conclusion:

First, the respondents were made to perform various tasks that did not at all pertain to any specific
phase of URSUMCO’s strict milling operations that would ultimately cease upon completion of a
particular phase in the milling of sugar; rather, they were tasked to perform duties regularly and
habitually needed in URSUMCO’s operations during the milling season. The respondents’ duties as
loader operators, hookers, crane operators and drivers were necessary to haul and transport the
sugarcane from the plantation to the mill; laboratory attendants, workers and laborers to mill the sugar;
and welders, carpenters and utility workers to ensure the smooth and continuous operation of the mill
for the duration of the milling season, as distinguished from the production of the sugarcane which
involves the planting and raising of the sugarcane until it ripens for milling. The production of sugarcane,
it must be emphasized, requires a different set of workers who are experienced in farm or agricultural
work. Needless to say, they perform the activities that are necessary and desirable in sugarcane
production. As in the milling of sugarcane, the plantation workers perform their duties only during the
planting season.

Second, the respondents were regularly and repeatedly hired to perform the same tasks year after year.
This regular and repeated hiring of the same workers (two different sets) for two separate seasons has
put in place, principally through jurisprudence, the system of regular seasonal employment in the sugar
industry and other industries with a similar nature of operations.

Under the system, the plantation workers or the mill employees do not work continuously for one whole
year but only for the duration of the growing of the sugarcane or the milling season. Their seasonal
work, however, does not detract from considering them in regular employment since in a litany of cases,
this Court has already settled that seasonal workers who are called to work from time to time and are
temporarily laid off during the off-season are not separated from the service in said period, but are
merely considered on leave until re-employment. 34 Be this as it may, regular seasonal employees, like
the respondents in this case, should not be confused with the regular employees of the sugar mill such
as the administrative or office personnel who perform their tasks for the entire year regardless of the
season. The NLRC, therefore, gravely erred when it declared the respondents regular employees of
URSUMCO without qualification and that they were entitled to the benefits granted, under the CBA, to
URSUMCO’S regular employees.

Third, while the petitioners assert that the respondents were free to work elsewhere during the off-
season, the records do not support this assertion. There is no evidence on record showing that after the
completion of their tasks at URSUMCO, the respondents sought and obtained employment elsewhere.

Contrary to the petitioners’ position, Mercado, Sr. v. NLRC, 3rd Div. 35 is not applicable to the
respondents as this case was resolved based on different factual considerations. In Mercado, the
workers were hired to perform phases of the agricultural work in their employer’s farm for a definite
period of time; afterwards, they were free to offer their services to any other farm owner. The workers
were not hired regularly and repeatedly for the same phase(s) of agricultural work, but only
intermittently for any single phase. And, more importantly, the employer in Mercado sufficiently proved
these factual circumstances. The Court reiterated these same observations in Hda. Fatima v. Nat’l Fed.
of Sugarcane Workers-Food and Gen. Trade 36 and Hacienda Bino/Hortencia Starke, Inc. v. Cuenca. 37

At this point, we reiterate the settled rule that in this jurisdiction, only questions of law are allowed in a
petition for review on certiorari.38 This Court’s power of review in a Rule 45 petition is limited to
resolving matters pertaining to any perceived legal errors, which the CA may have committed in issuing
the assailed decision.39 In reviewing the legal correctness of the CA’s Rule 65 decision in a labor case, we
examine the CA decision in the context that it determined, i.e., the presence or absence of grave abuse
of discretion in the NLRC decision before it and not on the basis of whether the NLRC decision on the
merits of the case was correct.40 In other words, we have to be keenly aware that the CA undertook a
Rule 65 review, not a review on appeal, of the NLRC decision challenged before it. 41

Viewed in this light, we find the need to place the CA’s affirmation, albeit with modification, of the NLRC
decision of July 22, 2005 in perspective. To recall, the NLRC declared the respondents as regular
employees of URSUMCO.42 With such a declaration, the NLRC in effect granted the respondents’ prayer
for regularization and, concomitantly, their prayer for the grant of monetary benefits under the CBA for
URSUMCO’s regular employees. In its challenged ruling, the CA concurred with the NLRC finding, but
with the respondents characterized as regular seasonal employees of URSUMCO.

The CA misappreciated the real import of the NLRC ruling. The labor agency did not declare the
respondents as regular seasonal employees, but as regular employees. This is the only conclusion that
can be drawn from the NLRC decision’s dispositive portion, thus:

WHEREFORE, premises considered, the appeal is hereby GRANTED. Complainants are declared regular
employees of respondent.1âwphi1 As such, they are entitled to the monetary benefits granted to
regular employees of respondent company based on the CBA, reckoned three (3) years back from the
filing of the above-entitled case on 23 August 2002 up to the present or to their entire service with
respondent after the date of filing of the said complaint if they are no longer connected with respondent
company.43

It is, therefore, clear that the issue brought to the CA for resolution is whether the NLRC gravely abused
its discretion in declaring the respondents regular employees of URSUMCO and, as such, entitled to the
benefits under the CBA for the regular employees.

Based on the established facts, we find that the CA grossly misread the NLRC ruling and missed the
implications of the respondents’ regularization. To reiterate, the respondents are regular seasonal
employees, as the CA itself opined when it declared that "private respondents who are regular workers
with respect to their seasonal tasks or activities and while such activities exist, cannot automatically be
governed by the CBA between petitioner URSUMCO and the authorized bargaining representative of the
regular and permanent employees."44 Citing jurisprudential standards,45 it then proceeded to explain
that the respondents cannot be lumped with the regular employees due to the differences in the nature
of their duties and the duration of their work vis-a-vis the operations of the company.

The NLRC was well aware of these distinctions as it acknowledged that the respondents worked only
during the milling season, yet it ignored the distinctions and declared them regular employees, a marked
departure from existing jurisprudence. This, to us, is grave abuse of discretion, as it gave no reason for
disturbing the system of regular seasonal employment already in place in the sugar industry and other
industries with similar seasonal operations. For upholding the NLRC’s flawed decision on the
respondents’ employment status, the CA committed a reversible error of judgment.

In sum, we find the complaint to be devoid of merit. The issue of granting affirmative relief to the
complainants who did not appeal the CA ruling has become academic.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. Except for the denial of the
respondents' claim for CBA benefits, the November 29, 2007 decision and the January 22, 2009
resolution of the Court of Appeals are SET ASIDE. The complaint is DISMISSED for lack of merit.

SO ORDERED.

KIMBERLY INDEPENDENT UNION vs DRILON

Before us are two consolidated petitions for certiorari filed by the above-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, 2 respectively 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, 1987 3 and June 19,1987 4 issued
in Injunction Case No. 1442 thereof.

Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed a three-year collective bargaining
agreement (CBA) with United Kimberly-Clark Employees Union-Philippine Transport and General
Workers' Organization (UKCEU-PTGWO) which expired on June 30, 1986.

Within the 60-day freedom period prior to the expiration of and during the negotiations for the renewal
of the aforementioned CBA, some members of the bargaining unit formed another union called
"Kimberly Independent 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 certification election 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 of
the so-called contractual workers whose employment with KIMBERLY was coursed through an
independent 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 with the 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 six months
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 pendency of a
petition for certification election. This was later amended to withdraw the charge of coercion but to add,
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, and KILUSAN-OLALIA declared a strike
at KIMBERLY's premises in San Pedro, Laguna on May 23, 1986.

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

Wherefore, premises considered, immediately upon receipt of this order, the striking
union and its members are hereby enjoined to lift the picket and remove all obstacles to
the free ingress to and egress from the company premises and to return to work,
including the 28 contractual workers who were dismissed; likewise, the company is
directed to resume its operations immediately thereafter and to accept all the
employees back under the same terms and conditions of employment prevailing prior to
the industrial action. Further, all issues in the notice of strike, as amended, are hereby
assumed in this assumption order, except for the representation issue pending in Region
IV in which the Med-Arbiter is also enjoined to decide the same the soonest possible
time. 8

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

On June 2, 1986, Med-Arbiter Bonifacio 1. Marasigan, who was handling the certification election case
(RO4-OD-M-4-1586), issued an order 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, 1986 should be considered qualified to vote;

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

3. Those contractual employees who are allegedly in the employ of an independent

contractor and who have also worked for at least six (6) months as appearing in the
payroll month prior to the filing of the instant petition on April 21, 1986.

During the pre-election conference, 64 casual workers were challenged by KIMBERLY and (UKCEU-
PTGWO) on the ground that they 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 but that their ballots shall be segregated
and subject to challenge proceedings. 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 Labor Code. On July 7, 1986, KIMBERLY filed an opposition to the protest and
motion, asserting that there is no employer-employee relationship between the casual workers and the
company, and that the med-arbiter has 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 of regularization has been resolved by
MOLE. 13

On November 13, 1986, then Minister Sanchez rendered a decision in BLR Case No. NS-5-164-86, 14 the
disposition wherein is summarized as follows:

1. The service contract for janitorial and yard maintenance service between KIMBERLY
and RANK was declared legal;

2. The other casual employees not performing janitorial and yard maintenance services
were deemed labor-only contractual and since labor-only contracting is prohibited, such
employees were held to have attained the status of regular employees, the
regularization being effective as of the date of the decision;

3. UKCEU-PTGWO having garnered more votes than KILUSAN-OLALIA was certified as

the exclusive bargaining representative of KIMBERLY's employees;

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

5. Roque Jimenez was ordered reinstated without backwages, the period when he was
out of work being considered as penalty for his misdemeanor;

6. The decision of the voluntary arbitrator ordering the reinstatement of Ermilo Fuentes
with backwages was declared as already final and unappealable; and

7. KIMBERLY was ordered to pay appreciation bonus for 1982 and 1983.

On November 25, 1986, KIMBERLY flied a motion for reconsideration with respect to the regularization
of contractual workers, the appreciation bonus and the reinstatement of Roque Jimenez. 15 In a letter
dated 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 for reconsideration questioning the authority of
the Minister of Labor to assume jurisdiction over the representation issue. In the meantime, KIMBERLY
and UKCEU-PTGWO continued with the negotiations on the new collective bargaining agreement (CBA),
no restraining order or junctive writ having been issued, and on December 18, 1986, a new CBA was
concluded and ratified by 440 out of 517 members of the bargaining unit. 17

In an order dated January 9, 1987, former Labor Minister Franklin Drilon 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 in this Court docketed as G.R. No.
77629, seeking to set aside the aforesaid decision, dated November 13, 1986, and the order, dated
January 9, 1987, rendered by the aforesaid labor ministers.

On March 25, 1987, this Court issued in G.R. No. 77629 a temporary restraining order, enjoining
respondents from enforcing and/or carrying out the decision and order above stated, particularly that
portion (1) recognizing respondent UKCEU-PTGWO as the exclusive bargaining representative of all
regular rank-and-file employees in the establishment of respondent company, (2) enforcing and/or
implementing the alleged CBA which is detrimental to the interests of the members of the petitioner
union, and (3) stopping respondent company from deducting monthly dues and other union
assessments from the wages of all regular rank-and-file employees of respondent company and from
remitting the said collection to respondent UKCEU-PTGWO issued in BLR Case No. NS-5-164-86, entitled,
"In Re: Labor Dispute at Kimberly-Clark Philippines, Inc.," of the Department of Labor 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 a new collective bargaining

agreement which had been ratified by 440 out of 517 members of the bargaining unit;

2. The company has already granted the new benefits under the new CBA to all its
regular employees, including members of petitioner union who, while refusing to ratify
the CBA nevertheless readily accepted the benefits arising therefrom;

3. The company has been complying with the check-off provision of the CBA and has
been remitting the union dues to UKCEU-PTGWO

4. The company has already implement the decision of November 13, 1986 insofar as
the regularization of contractual 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 yard maintenance work, are concerned

5. Rank Manpower Company had already pulled out, reassigned or replaced the
contractual employees engaged in janitorial and yard maintenance work, as well as
those with 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 unfair labor practices. On
May 8, 1987, the bureau dismissed and considered the said notice as not filed by reason 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 the National Labor Relations Commission
(NLRC), docketed as Injunction Case No. 1442. A supplement to said petition was filed on May 19, 1987.
On May 26, 1987, the commission en banc  issued a temporary restraining order (TRO) on the basis of
the ocular inspection report submitted by the commission's agent, the testimonies of KIMBERLY's
witnesses, and pictures of the barricade. KILUSAN-OLALIA moved to dissolve the TRO on the ground of
lack of jurisdiction.

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

On June 25, 1987, KILUSAN-OLALIA filed another petition for 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 TRO to restrain NLRC from implementing the questioned orders. An opposition, as well as a
reply thereto, were filed by the parties.

Meanwhile, on July 3, 1987, KIMBERLY filed in the NLRC an urgent motion for the issuance of a writ of
preliminary injunction when the strikers returned to the strike area after the second TRO expired. After
due hearing, the commission issued a writ of preliminary injunction on July 14, 1987, after requiring
KIMBERLY to post a bond in the amount of 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 of the issuance of said writ of preliminary injunction, which motion was
opposed by KIMBERLY.

Thereafter, in its memorandum 22 filed on December 28, 1989 and in its motion for early
resolution 23 filed on February 28, 1990, both in G.R. No. 78791, KILUSAN-OLALIA alleged that it had
terminated its strike and picketing activities and that the striking employees had unconditionally offered
to return to work, although they were refused admission by KIMBERLY. By reason of this supervening
development, the petition in G.R. No. 78791, questioning the propriety of the issuance of the two
temporary 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 the respondent Secretary of Labor and/or
the former Minister of Labor have acted with grave abuse of discretion and/or without jurisdiction in (1)
ruling on the issue of bargaining representation and declaring respondent UKCEU-PTGWO as the
collective bargaining representative of all regular rank-and-file employees of the respondent company;
(2) holding that petitioners are not entitled to vote in the certification 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 are assigned janitorial and yard
maintenance work to be employees of respondent RANK and not entitled to be regularized; (5) not
awarding to 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 not former Minister Sanchez
committed a grave abuse of discretion amounting 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 the
certification election.

KILUSAN-OLALIA contends that after finding that the 64 workers are regular employees of KIMBERLY,
Minister Sanchez should have remanded the representation case to the med-arbiter instead of declaring
UKCEU-PTGWO as the winner in the certification election and 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 and representation are closely interrelated
and that a resolution of the former inevitably affects the latter, it was necessary for the former labor
minister to take cognizance of the representation issue; that no timely motion for reconsideration or
appeal was made from his decision of November 13, 1986 which has become final and executory; and
that the aforesaid decision was impliedly accepted by KILUSAN-OLALIA when it demanded from
KIMBERLY the issuance of regular appointments to its affected members in compliance with said
decision, hence petitioner employees are now stopped from questioning the legality thereof.

We uphold the authority of former Minister Sanchez to assume jurisdiction over the issue of the
regularization of the 64 casual workers, which fact is not even disputed by KILUSAN-OLALIA as may be
gleaned from its request for an interim order in the notice of strike case (BLR-NS-5-164-86), asking that
the regularization issue be immediately resolved. Furthermore, even the med-arbiter who ordered the
holding of the certification election refused to resolve the protest on the ground that the issue raised
therein correctly pertains to the jurisdiction of the then labor minister. No opposition was offered by
KILUSAN-OLALIA. We hold that the issue of regularization was properly addressed to the discretion of
said former minister.

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

It will be recalled that in the certification election, UKCEU-PTGWO came out as the winner, by garnering
a majority of the votes cast therein with the exception of 64 ballots which were subject to challenge. In
the protest filed for the opening and counting of the challenged ballots, KILUSAN-OLALIA raised the
main and sole question of regularization of the 64 casual workers. The med-arbiter refused to act on the
protest on the ground that the issue involved is within the jurisdiction of the then Minister of Labor.
KILUSAN-OLALIA then sought an interim order for an early resolution on the employment status of the
casual workers, which was one of the issues included in the notice of strike filed by KILUSAN-OLALIA in
BLR Case No. NS-5-164-86. Consequently, Minister Sanchez rendered the questioned decision finding
that the workers not engaged in janitorial and yard maintenance service are regular employees but that
they became regular only on the date of his decision, that is, on November 13, 1986, and, therefore,
they were not entitled to vote in the certification election. On the basis of the results obtained in the
certification election, 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 of KIMBERLY.

We find and so hold that the former labor minister gravely abused his discretion in holding that those
workers not engaged in janitorial or yard maintenance service attained the status of regular employees
only on November 13, 1986, which thus deprived them of their constitutionally protected right to vote
in the certification election and choose their rightful bargaining representative.

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

Art. 280. Regular and Casual Employment. — The provisions of written agreement to the
contrary not withstanding and regardless of the oral agreements of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or
under the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be performed is seasonal
in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists.

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, whether continuous or broken,
with respect to the activity in which they are employed. The individual petitioners herein who have been
adjudged to be regular employees fall under the second category. These are the mechanics, electricians,
machinists machine shop helpers, warehouse helpers, painters, carpenters, pipefitters and masons It is
not disputed that these workers have been in the employ of KIMBERLY for more than 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 workers became regular employees, by
operation of law, one year after they were employed by KIMBERLY through RANK. While the actual
regularization of these employees entails the mechanical act of issuing regular appointment papers and
compliance with such other operating procedures as may be adopted by the employer, it is more in
keeping with the intent and spirit of the law to rule that the status of regular employment attaches to
the casual worker on the day immediately after the end of his first year of service. To rule otherwise,
and to instead make their regularization dependent on the happening of some contingency or the
fulfillment of certain requirements, is to impose a burden on the employee which is not sanctioned by
law.
That the first stated position is the situation contemplated and sanctioned by law is further enhanced by
the absence of a statutory limitation before regular status can be acquired by a casual employee. The
law is explicit. As long as the employee has rendered at least one year of service, he becomes a regular
employee with respect to the activity in which he is employed. The law does not provide the
qualification that the employee must first be issued a regular appointment or must first be formally
declared as such before he can acquire a regular status. Obviously, where the law does not distinguish,
no distinction should be drawn.

The submission that the decision of November 13, 1986 has become final and executory, on the grounds
that no timely appeal has been made therefrom and that KILUSAN-OLALIA has impliedly acceded
thereto, is untenable.

Rule 65 of the Rules of Court allows original petitions for certiorari from decisions or orders of public
respondents provided they are filed within a reasonable time. We believe that the period from January
9, 1987, when the motions for reconsideration separately filed by KILUSAN-OLALIA and KIMBERLY were
denied, to March 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 that KILUSAN-OLALIA has impliedly accepted
the questioned decision by demanding compliance therewith. In the letter of KILUSAN-OLALIA dated
November 24, 1986 24 addressed to the legal counsel of KIMBERLY, it is there expressly and specifically
pointed out that KILUSAN-OLALIA intends to file a motion for reconsideration of the questioned decision
but that, in the meantime, it was demanding the issuance of regular appointments 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 consequence of their status as regular employees,
those workers not perforce janitorial and yard maintenance service were performance entitled to the
payment of salary differential, cost of living allowance, 13th month pay, and such other benefits
extended to regular employees under the CBA, from the day immediately following their first year of
service in the company. These regular employees are likewise entitled to vote in the certification
election held in July 1, 1986. Consequently, the votes cast by those employees not performing janitorial
and yard maintenance 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 Minister Sanchez holding as legal the service
contract executed between KIMBERLY and RANK, with respect to the workers performing janitorial and
yard maintenance service, which is supported by substantial and convincing evidence. Besides, we take
judicial notice of the general practice adopted in several government and private institutions and
industries of hiring a janitorial service on an independent contractor basis. Furthermore, the occasional
directives and suggestions of KIMBERLY are insufficient to erode primary and continuous control over
the employees of the independent contractor. 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 consumer paper products and cigarette paper, hence said workers cannot be
considered regular employees.
The reinstatement of Roque Jimenez without backwages involves a question of fact best addressed to
the discretion of respondent secretary whose finding thereon is binding and conclusive upon this Court,
absent a showing that he committed a grave abuse in the exercise 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 open and count the 64 challenged votes,
and that the union with the highest number of votes be thereafter declared as the duly elected certified
bargaining representative of the regular employees of KIMBERLY;

2. Ordering KIMBERLY to pay the workers who have been regularized their differential pay with respect
to minimum wage, cost of living allowance, 13th month pay, and benefits provided for under the
applicable collective bargaining agreement from the time they became regular employees.

All other aspects of the decision appealed from, which are not so modified 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.

BRENT SCHOOL vs ZAMORA

The question presented by the proceedings at bar 1 is whether or not the provisions of the Labor
Code, 2 as amended,3 have anathematized "fixed period employment" or employment for a term.

The root of the controversy at bar is an employment contract in virtue of which Doroteo R. Alegre was
engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. 4 The contract
fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the
agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973,
and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those
contained in the original contract of July 18, 1971. 5

Some three months before the expiration of the stipulated period, or more precisely on April 20,1976,
Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the
termination of his services effective on July 16, 1976. The stated ground for the termination was
"completion of contract, expiration of the definite period of employment." And a month or so later, on
May 26, 1976, Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the
phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of contract."

However, at the investigation conducted by a Labor Conciliator of said report of termination of his
services, Alegre protested the announced termination of his employment. He argued that although his
contract did stipulate that the same would terminate on July 17, 1976, since  his services were necessary
and desirable in the usual business of his employer, and his employment had lasted for five years, he had
acquired the status of a regular employee and could not be removed except for valid cause. 6 The
Regional Director considered Brent School's report as an application for clearance to terminate
employment (not a report of termination), and accepting the recommendation of the Labor Conciliator,
refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent
employee," to his former position without loss of seniority rights and with full back wages. The Director
pronounced "the ground relied upon by the respondent (Brent) in terminating the services of the
complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite oddly, as prohibited by Circular No.
8, series of 1969, of the Bureau of Private Schools. 7

Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded
the case to the Secretary of Labor for review. 8 The latter sustained the Regional Director. 9 Brent
appealed to the Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack of
merit and affirmed the Labor Secretary's decision, ruling that Alegre was a permanent employee who
could not be dismissed except for just cause, and expiration of the employment contract was not one of
the just causes provided in the Labor Code for termination of services. 10

The School is now before this Court in a last attempt at vindication. That it will get here.

The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time
when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. Indeed, the Code did
not come into effect until November 1, 1974, some three years after the perfection of the employment
contract, and rights and obligations thereunder had arisen and been mutually observed and enforced.

At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity
of term employment. It was impliedly but nonetheless clearly recognized by the Termination Pay Law,
R.A. 1052, 11 as amended by R.A. 1787. 12 Basically, this statute provided that—

In cases of employment, without a definite period, in a commercial, industrial, or

agricultural establishment or enterprise, the employer or the employee may terminate
at any time the employment with just cause; or without just cause in the case of an
employee by serving written notice on the employer at least one month in advance, or
in the case of an employer, by serving such notice to the employee at least one month
in advance or one-half month for every year of service of the employee, whichever is
longer, a fraction of at least six months being considered as one whole year.

The employer, upon whom no such notice was served in case of termination of
employment without just cause, may hold the employee liable for damages.

The employee, upon whom no such notice was served in case of termination of
employment without just cause, shall be entitled to compensation from the date of
termination of his employment in an amount equivalent to his salaries or wages
corresponding to the required period of notice.

There was, to repeat, clear albeit implied recognition of the licitness of term employment. RA 1787 also
enumerated what it considered to be just causes for terminating an employment without a definite
period, either by the employer or by the employee without incurring any liability therefor.
Prior, thereto, it was the Code of Commerce which governed employment without a fixed period, and
also implicitly acknowledged the propriety of employment with a fixed period. Its Article 302 provided
that —

In cases in which the contract of employment does not have a fixed period, any of the
parties may terminate it, notifying the other thereof one month in advance.

The factor or shop clerk shall have a right, in this case, to the salary corresponding to
said month.

The salary for the month directed to be given by the said Article 302 of the Code of Commerce
to the factor or shop clerk, was known as the mesada (from  mes, Spanish for "month"). When
Article 302 (together with many other provisions of the Code of Commerce) was repealed by the
Civil Code of the Philippines, Republic Act No. 1052 was enacted avowedly for the precise
purpose of reinstating the mesada.

Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on
August 30,1950, itself deals with obligations with a period in section 2, Chapter 3, Title I, Book IV; and
with contracts of labor and for a piece of work, in Sections 2 and 3, Chapter 3, Title VIII, respectively, of
Book IV. No prohibition against term-or fixed-period employment is contained in any of its articles or is
otherwise deducible therefrom.

It is plain then that when the employment contract was signed between Brent School and Alegre on July
18, 1971, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof
Stipulations for a term were explicitly recognized as valid by this Court, for instance, in Biboso
v.  Victorias Milling Co.,  Inc., promulgated on March 31, 1977, 13 and J. Walter Thompson Co.
(Phil.) v. NLRC, promulgated on December 29, 1983. 14 The Thompson case involved an executive who
had been engaged for a fixed period of three (3) years. Biboso involved teachers in a private school as
regards whom, the following pronouncement was made:

What is decisive is that petitioners (teachers) were well aware an the time that their
tenure was for a limited duration. Upon its termination, both parties to the employment
relationship were free to renew it or to let it lapse. (p. 254)

Under American law 15 the principle is the same. "Where a contract specifies the period of its duration, it
terminates on the expiration of such period." 16 "A contract of employment for a definite period
terminates by its own terms at the end of such period." 17

The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor
Code (Presidential Decree No. 442), which went into effect on November 1, 1974. The Code contained
explicit references to  fixed period employment,  or employment with a fixed or definite period.
Nevertheless, obscuration of the principle of licitness of term employment began to take place at about
this time

Article 320, entitled "Probationary and fixed period employment," originally stated that the "termination
of employment of probationary employees and  those employed WITH A FIXED PERIOD shall be subject
to such regulations as the Secretary of Labor may prescribe." The asserted objective  to  was "prevent the
circumvention of the right of the employee to be secured in their employment  as provided . . . (in the
Code)."

Article 321 prescribed the just causes for which an employer could terminate "an employment without a
definite period."

And Article 319 undertook to define "employment without a fixed period" in the following manner: 18

An employment shall be deemed to be without a definite period for purposes of this

Chapter where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.

The question immediately provoked by a reading of Article 319 is whether or not a voluntary agreement
on a fixed 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 or trade of the employer." The definition
seems a 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 of time
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 the activities 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." 19 Seasonal employment, and employment  for a particular
project are merely instances employment in which a period, where not expressly set down, necessarily
implied.

Of course, the term —  period  has a definite and settled signification. It means, "Length of existence;
duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a bound;
conclusion; termination. A series of years, months or days in which something is completed. A time of
definite length. . . . the period from one fixed date to another fixed date . . ." 20 It connotes a "space of
time which has an influence on an obligation as a result of a juridical act, and either suspends its
demandableness or produces its extinguishment." 21 It should be apparent that this settled and familiar
notion of a period, in the context of a contract of employment, takes no account at all of the nature of
the duties of the employee; it has absolutely no relevance to the character of his duties as being "usually
necessary or desirable to the usual business of the employer," or not.

Subsequently, the foregoing articles regarding employment with "a definite period" and "regular"
employment were amended by Presidential 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). The
article 22 now reads:

. . . Probationary employment.—Probationary employment shall not exceed six months

from the date the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been
engaged in a probationary basis may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with reasonable standards made known by
the employer to the employee at the time of his engagement. An employee who is
allowed to work after a probationary period shall be considered a regular employee.

Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra) by
(a) deleting mention of employment with a fixed or definite period, (b) adding a general exclusion clause
declaring irrelevant written or oral agreements "to the contrary," and (c) making the provision treat
exclusively of "regular" and "casual" employment. As revised, said article, renumbered 270, 23 now
reads:

. . . Regular and Casual Employment.—The provisions of written agreement to the

contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be employed is
seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to he casual if it is not covered by the preceding

paragraph:  provided,  that, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such actually exists.

The first paragraph is identical to Article 319 except that, as just mentioned, a clause has been
added, to wit: "The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreements of the parties . . ." The clause would appear to be
addressed inter alia to agreements fixing a definite period for employment. There is withal no
clear indication of the intent to deny validity to employment for a definite period. Indeed, not
only is the concept of regular employment not essentially inconsistent with employment for a
fixed term, as above pointed out, Article 272 of the Labor Code, as amended by said PD 850, still
impliedly acknowledged the propriety of term employment: it listed the "just causes" for which
"an employer may terminate employment without a definite period," thus giving rise to the
inference that if the employment be with a definite period, there need be no just cause for
termination thereof if the ground be precisely the expiration of the term agreed upon by the
parties for the duration of such employment.
Still later, however, said Article 272 (formerly Article 321) was further amended by Batas Pambansa
Bilang  130, 24 to eliminate altogether reference to employment without a definite period. As lastly
amended, the opening lines of the article (renumbered 283), now pertinently read: "An employer may
terminate an employment for any of the following just causes: . . . " BP 130 thus completed the
elimination of every reference in the Labor Code, express or implied, to employment with a fixed or
definite period or term.

It is in the light of the foregoing description of the development of the provisions of the Labor Code
bearing on term or fixed-period employment that the question posed in the opening paragraph of this
opinion should now be addressed. Is it then the legislative intention to outlaw stipulations in
employment contracts laying down a definite period therefor? Are such stipulations in essence contrary
to public policy and should not on this account be accorded legitimacy?

On the one hand, there is the gradual and progressive elimination of references to term or fixed-period
employment in the Labor Code, and the specific statement of the rule 25 that—

. . . Regular and Casual Employment.— The provisions of written agreement to

the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be employed is
seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph:  provided,  that, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such actually exists.

There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the
validity and propriety of contracts and obligations with a fixed or definite period, and imposes no
restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it
specie, goods or services, except the general admonition against stipulations contrary to law, morals,
good customs, public order or public policy. 26 Under the Civil Code, therefore, and as a general
proposition, fixed-term employment contracts are not limited, as they are under the present Labor
Code, to those by nature seasonal or for specific projects with pre-determined dates of completion; they
also include those to which the parties by free choice have assigned a specific date of termination.

Some familiar examples may be cited of employment contracts which may be neither for seasonal work
nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas
employment contracts, for one, to which, whatever the nature of the engagement, the concept of
regular employment will all that it implies does not appear ever to have been applied, Article 280 of the
Labor Code not withstanding; also appointments to the positions of dean, assistant dean, college
secretary, principal, and other administrative offices in educational institutions, which are by practice or
tradition rotated among the faculty members, and where fixed terms are a necessity, without which no
reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy,
Instructions No. 8 of the Minister of Labor 27 implicitly recognize that certain company officials may be
elected for what would amount to fixed periods, at the expiration of which they would have to stand
down, in providing that these officials," . . . may lose their jobs as president, executive vice-president or
vice-president, etc. because the stockholders or the board of directors for one reason or another did not
re-elect them."

There can of course be no quarrel with the proposition that where from the circumstances it is apparent
that periods have been imposed to preclude acquisition of tenurial security by the employee, they
should be struck down or disregarded as contrary to public policy, morals, etc. But where no such intent
to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist, e.g.,
where it is indeed the employee himself who insists upon a period or where the nature of the
engagement is such that, without being seasonal or for a specific project, a definite date of termination
is a sine qua non, would an agreement fixing a period be essentially evil or illicit, therefore anathema?
Would such an agreement come within the scope of Article 280 which admittedly was enacted "to
prevent the circumvention of the right of the employee to be secured in . . . (his) employment?"

As it is evident from even only the three examples already given that Article 280 of the Labor Code,
under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts
to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without
reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his
engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The
law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the
whole concept of term employment and subverting to boot the principle of freedom of contract to
remedy the evil of employer's using it as a means to prevent their employees from obtaining security of
tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off
the head.

It is a salutary principle in statutory construction that there exists a valid presumption

that undesirable consequences were never intended by a legislative measure, and that a
construction of which the statute is fairly susceptible is favored, which will avoid all
objecionable mischievous, undefensible, wrongful, evil and injurious consequences. 28

Nothing is better settled than that courts are not to give words a meaning which would
lead to absurd or unreasonable consequences. That s a principle that does back to In re
Allen decided oil October 27, 1903, where it was held that a literal interpretation is to be
rejected if it would be unjust or lead to absurd results. That is a strong argument against
its adoption. The words of Justice Laurel are particularly apt. Thus: "The fact that the
construction placed upon the statute by the appellants would lead to an absurdity is
another argument for rejecting it. . . ." 29

. . . We have, here, then a case where the true intent of the law is clear that calls for the
application of the cardinal rule of statutory construction that such intent of spirit must
prevail over the letter thereof, for whatever is within the spirit of a statute is within the
statute, since adherence to the letter would result in absurdity, injustice and
contradictions and would defeat the plain and vital purpose of the statute. 30
Accordingly, and since the entire purpose behind the development of legislation culminating in the
present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent
circumvention of the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of
regular employment as defined therein should be construed to refer to the substantive evil that the
Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should
have no application to instances where a fixed period of employment was agreed upon knowingly and
voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent, or where it satisfactorily
appears that the employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter. Unless thus limited in its
purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it
thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended
consequences.

Such interpretation puts the seal on Bibiso 31 upon the effect of the expiry of an agreed period of
employment as still good rule—a rule reaffirmed in the recent case of Escudero vs.  Office of the
President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served
by her school a notice of termination following the expiration of the last of three successive fixed-term
employment contracts, the Court held:

Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her
employment was probationary, contractual in nature, and one with a definitive period.
At the expiration of the period stipulated in the contract, her appointment was deemed
terminated and the letter informing her of the non-renewal of her contract is not a
condition sine qua non before Reyes may be deemed to have ceased in the employ of
petitioner UST. The notice is a mere reminder that Reyes' contract of employment was
due to expire and that the contract would no longer be renewed. It is not a letter of
termination. The interpretation that the notice is only a reminder is consistent with the
court's finding in Labajo supra. ...32

Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last
contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written
advice given the Department of Labor with copy to said petitioner was a mere reminder of the
impending expiration of his contract, not a letter of termination, nor an application for clearance to
terminate which needed the approval of the Department of Labor to make the termination of his
services effective. In any case, such clearance should properly have been given, not denied.

WHEREFORE, the public respondent's Decision complained of is REVERSED and SET ASIDE. Respondent
Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the
expiration of the agreed term of period thereof, he is declared not entitled to reinstatement and the
other relief awarded and confirmed on appeal in the proceedings below. No pronouncement as to costs.

SO ORDERED.