[G.R. No.

187320 : January 26, 2011]

ATLANTA INDUSTRIES, INC. AND/OR ROBERT CHAN, PETITIONERS, VS.

APRILITO R. SEBOLINO, KHIM V. COSTALES, ALVIN V. ALMOITE, AND
JOSEPH S. SAGUN, RESPONDENTS.

DECISION

BRION, J.:

For resolution is the petition for review on certiorari[1] assailing the decision[2] and
the resolution[3] of the Court of Appeals (CA) rendered on November 4, 2008 and
March 25, 2009, respectively, in CA-G.R. SP. No. 99340.[4] cra la w

The Antecedents

The facts are summarized below.

In the months of February and March 2005, complainants Aprilito R. Sebolino, Khim
V. Costales, Alvin V. Almoite, Joseph S. Sagun, Agosto D. Zaño, Domingo S.
Alegria, Jr., Ronie Ramos, Edgar Villagomez, Melvin Pedregoza, Teofanes B. Chiong,
Jr., Leonardo L. dela Cruz, Arnold A. Magalang, and Saturnino M. Mabanag filed
several complaints for illegal dismissal, regularization, underpayment, nonpayment
of wages and other money claims, as well as claims for moral and exemplary
damages and attorney's fees against the petitioners Atlanta Industries, Inc.
(Atlanta) and its President and Chief Operating Officer Robert Chan. Atlanta is a
domestic corporation engaged in the manufacture of steel pipes.

The complaints were consolidated and were raffled to Labor Arbiter Daniel Cajilig,
but were later transferred to Labor Arbiter Dominador B. Medroso, Jr.

The complainants alleged that they had attained regular status as they were
allowed to work with Atlanta for more than six (6) months from the start of a
purported apprenticeship agreement between them and the company. They claimed
that they were illegally dismissed when the apprenticeship agreement expired.

In defense, Atlanta and Chan argued that the workers were not entitled to
regularization and to their money claims because they were engaged as apprentices
under a government-approved apprenticeship program. The company offered to
hire them as regular employees in the event vacancies for regular positions occur in
the section of the plant where they had trained. They also claimed that their names
did not appear in the list of employees (Master List)[5] prior to their engagement as
apprentices.

On May 24, 2005, dela Cruz, Magalang, Zaño and Chiong executed a Pagtalikod at
Pagwawalang Saysay before Labor Arbiter Cajilig.

The Compulsory Arbitration Rulings

On April 24, 2006, Labor Arbiter Medroso dismissed the complaint with respect to
dela Cruz, Magalang, Zaño and Chiong, but found the termination of service of
the remaining nine to be illegal.[6] Consequently, the arbiter awarded the dismissed
workers backwages, wage differentials, holiday pay and service incentive leave pay
amounting to P1,389,044.57 in the aggregate.

Atlanta appealed to the National Labor Relations Commission (NLRC). In the

meantime, or on October 10, 2006, Ramos, Alegria, Villagomez, Costales and
Almoite allegedly entered into a compromise agreement with Atlanta. [7] The
agreement provided that except for Ramos, Atlanta agreed to pay the workers a
specified amount as settlement, and to acknowledge them at the same time as
regular employees.

On December 29, 2006,[8] the NLRC rendered a decision, on appeal, modifying the
ruling of the labor arbiter, as follows: (1) withdrawing the illegal dismissal finding
with respect to Sagun, Mabanag, Sebolino and Pedregoza; (2) affirming the
dismissal of the complaints of dela Cruz, Zaño, Magalang and Chiong; (3)
approving the compromise agreement entered into by Costales, Ramos, Villagomez,
Almoite and Alegria, and (4) denying all other claims.

Sebolino, Costales, Almoite and Sagun moved for the reconsideration of the
decision, but the NLRC denied the motion in its March 30, 2007[9] resolution. The
four then sought relief from the CA through a petition for certiorari under Rule 65 of
the Rules of Court. They charged that the NLRC committed grave abuse of
discretion in: (1) failing to recognize their prior employment with Atlanta; (2)
declaring the second apprenticeship agreement valid; (3) holding that the dismissal
of Sagun, Mabanag, Sebolino and Melvin Pedregoza is legal; and (4) upholding the
compromise agreement involving Costales, Ramos, Villagomez, Almoite and Alegria.

The CA Decision

The CA granted the petition based on the following findings:[10]

1. The respondents were already employees of the company before they entered
into the first and second apprenticeship agreements - Almoite and Costales were
employed as early as December 2003 and, subsequently, entered into a first
apprenticeship agreement from May 13, 2004 to October 12, 2004; before this first
agreement expired, a second apprenticeship agreement, from October 9, 2004 to
March 8, 2005 was executed. The same is true with Sebolino and Sagun, who were
employed by Atlanta as early as March 3, 2004. Sebolino entered into his first
apprenticeship agreement with the company from March 20, 2004 to August 19,
2004, and his second apprenticeship agreement from August 20, 2004 to January
19, 2005. Sagun, on the other hand, entered into his first agreement from May 28,
2004 to October 8, 2004, and the second agreement from October 9, 2004 to
March 8, 2005.

2. The first and second apprenticeship agreements were defective as they were
executed in violation of the law and the rules.[11] The agreements did not indicate
the trade or occupation in which the apprentice would be trained; neither was the
apprenticeship program approved by the Technical Education and Skills
Development Authority (TESDA).

3. The positions occupied by the respondents - machine operator, extruder operator

and scaleman - are usually necessary and desirable in the manufacture of plastic
building materials, the company's main business. Costales, Almoite, Sebolino and
Sagun were, therefore, regular employees whose dismissals were illegal for lack of
a just or authorized cause and notice.

4. The compromise agreement entered into by Costales and Almoite, together with
Ramos, Villagomez and Alegria, was not binding on Costales and Almoite because
they did not sign the agreement.

The petitioners themselves admitted that Costales and Almoite were initially
planned to be a part of the compromise agreement, but their employment has been
regularized as early as January 11, 2006; hence, the company did not pursue their
inclusion in the compromise agreement.[12]

The CA faulted the NLRC for failing to appreciate the evidence regarding the
respondents' prior employment with Atlanta. The NLRC recognized the prior
employment of Costales and Almoite on Atlanta's monthly report for December
2003 for the CPS Department/Section dated January 6, 2004.[13] This record shows
that Costales and Almoite were assigned to the company's first shift from 7:00 a.m.
to 3:00 p.m. The NLRC ignored Sebolino and Sagun's prior employment under the
company's Production and Work Schedule for March 7 to 12, 2005 dated March 3,
2004,[14] as they had been Atlanta's employees as early as March 3, 2004, with
Sebolino scheduled to work on March 7-12, 2005 at 7:00 a.m. to 7:00 p.m., while
Sagun was scheduled to work for the same period but from 7:00 p.m. to 7:00 a.m.
The CA noted that Atlanta failed to challenge the authenticity of the two documents
before it and the labor authorities.

Atlanta and Chan moved for reconsideration, but the CA denied the motion in a
resolution rendered on March 25, 2009.[15] Hence, the present petition.

The Petition

Atlanta seeks a reversal of the CA decision, contending that the appellate court
erred in (1) concluding that Costales, Almoite, Sebolino and Sagun were employed
by Atlanta before they were engaged as apprentices; (2) ruling that a second
apprenticeship agreement is invalid; (3) declaring that the respondents were
illegally dismissed; and (4) disregarding the compromise agreement executed by
Costales and Almoite. It submits the following arguments:

First. The CA's conclusion that the respondent workers were company employees
before they were engaged as apprentices was primarily based on the Monthly
Report[16] and the Production and Work Schedule for March 7-12, 2005,[17] in total
disregard of the Master List[18] prepared by the company accountant, Emelita M.
Bernardo. The names of Costales, Almoite, Sebolino and Sagun do not appear as
employees in the Master List which "contained the names of all the persons who
were employed by and at petitioner."[19]

Atlanta faults the CA for relying on the Production and Work Schedule and the
Monthly Report which were not sworn to, and in disregarding the Master List whose
veracity was sworn to by Bernardo and by Alex Go who headed the company's
accounting division. It maintains that the CA should have given more credence to
the Master List.

Second. In declaring invalid the apprenticeship agreements it entered into with the
respondent workers, the CA failed to recognize the rationale behind the law on
apprenticeship. It submits that under the law,[20] apprenticeship agreements are
valid, provided they do not exceed six (6) months and the apprentices are paid the
appropriate wages of at least 75% of the applicable minimum wage.

The respondents initially executed a five-month apprenticeship program with

Atlanta, at the end of which, they "voluntarily and willingly entered into another
apprenticeship agreement with the petitioner for the training of a second
skill"[21] for five months; thus, the petitioners committed no violation of the
apprenticeship period laid down by the law.

Further, the apprenticeship agreements, entered into by the parties, complied with
the requisites under Article 62 of the Labor Code; the company's authorized
representative and the respondents signed the agreements and these were ratified
by the company's apprenticeship committee. The apprenticeship program itself was
approved and certified by the TESDA.[22] The CA, thus, erred in overturning the
NLRC's finding that the apprenticeship agreements were valid.

Third. There was no illegal dismissal as the respondent workers' tenure ended with
the expiration of the apprenticeship agreement they entered into. There was,
therefore, no regular employer-employee relationship between Atlanta and the
respondent workers.

The Case for Costales, Almoite, Sebolino and Sagun

In a Comment filed on August 6, 2009,[23] Costales, Almoite, Sebolino and Sagun

pray for a denial of the petition for being procedurally defective and for lack of
merit.

The respondent workers contend that the petition failed to comply with Section 4,
Rule 45 of the Rules of Court which requires that the petition be accompanied by
supporting material portions of the records. The petitioners failed to attach to the
petition a copy of the Production and Work Schedule despite their submission that
the CA relied heavily on the document in finding the respondent workers' prior
employment with Atlanta. They also did not attach a copy of the compromise
agreement purportedly executed by Costales and Almoite. For this reason, the
respondent workers submit that the petition should be dismissed.

The respondents posit that the CA committed no error in holding that they were
already Atlanta's employees before they were engaged as apprentices, as confirmed
by the company's Production and Work Schedule.[24] They maintain that the
Production and Work Schedule meets the requirement of substantial evidence as
the petitioners failed to question its authenticity. They point out that the schedule
was prepared by Rose A. Quirit and approved by Adolfo R. Lope, head of the
company's PE/Spiral Section. They argue that it was highly unlikely that the head of
a production section of the company would prepare and assign work to the
complainants if the latter had not been company employees.

The respondent workers reiterate their mistrust of the Master List[25] as evidence
that they were not employees of the company at the time they became apprentices.
They label the Master List as "self-serving, dubious and even if considered as
authentic, its content contradicts a lot of petitioner's claim and allegations,"[26] thus
-

1. Aside from the fact that the Master List is not legible, it contains only the names
of inactive employees. Even those found by the NLRC to have been employed in the
company (such as Almoite, Costales and Sagun) do not appear in the list. If
Costales and Almoite had been employed with Atlanta since January 11, 2006, as
the company claimed,[27] their names would have been in the list, considering that
the Master List accounts for all employees "as of May 2006" - the notation carried
on top of each page of the document.

2. There were no entries of employees hired or resigned in the years 2005 and
2006 despite the "as of May 2006" notation; several pages making up the Master
List contain names of employees for the years 1999 - 2004.

3. The fact that Atlanta presented the purported Master List instead of the payroll
raised serious doubts on the authenticity of the list.

In sum, the respondent workers posit that the presentation of the Master List
revealed the "intention of the herein petitioner[s] to perpetually hide the fact of
[their] prior employment."[28]

On the supposed apprenticeship agreements they entered into, Costales, Almoite,

Sebolino and Sagun refuse to accept the agreements' validity, contending that the
company's apprenticeship program is merely a ploy "to continually deprive [them]
of their rightful wages and benefits which are due them as regular
employees."[29] They submit the following "indubitable facts and ratiocinations:"[30]

1. The apprenticeship agreements were submitted to TESDA only in 2005 (with

dates of receipt on "1/4/05" & "2/22/05"[31]), when the agreements were supposed
to have been executed in April or May 2004. Thus, the submission was made long
after the starting date of the workers' apprenticeship or even beyond the
agreement's completion/termination date, in violation of Section 23, Rule VI, Book
II of the Labor Code.

2. The respondent workers were made to undergo apprenticeship for occupations

different from those allegedly approved by TESDA. TESDA approved Atlanta's
apprenticeship program on "Plastic Molder"[32] and not for extrusion molding
process, engineering, pelletizing process and mixing process.

3. The respondents were already skilled workers prior to the apprenticeship

program as they had been employed and made to work in the different job
positions where they had undergone training. Sagun and Sebolino, together with
Mabanag, Pedregoza, dela Cruz, Chiong, Magalang and Alegria were even given
production assignments and work schedule at the PE/Spiral Section from May 11,
2004 to March 23, 2005, and some of them were even assigned to the 3:00 p.m. -
11:00 p.m. and graveyard shifts (11:00 p.m. - 7:00 a.m.) during the period.[33]

4. The respondent workers were required to continue as apprentices beyond six

months. The TESDA certificate of completion indicates that the workers'
apprenticeship had been completed after six months. Yet, they were suffered to
work as apprentices beyond that period.

Costales, Almoite, Sebolino and Sagun resolutely maintain that they were illegally
dismissed, as the reason for the termination of their employment - notice of the
completion of the second apprenticeship agreement - did not constitute either a
just or authorized cause under Articles 282 and 283 of the Labor Code.

Finally, Costales and Almoite refuse to be bound by the compromise

agreement[34] that Atlanta presented to defeat the two workers' cause of action.
They claim that the supposed agreement is invalid as against them, principally
because they did not sign it.

The Court's Ruling

The procedural issue

The respondent workers ask that the petition be dismissed outright for the
petitioners' failure to attach to the petition a copy of the Production and Work
Schedule and a copy of the compromise agreement Costales and Almoite allegedly
entered into -- material portions of the record that should accompany and support
the petition, pursuant to Section 4, Rule 45 of the Rules of Court.

In Mariners Polytechnic Colleges Foundation, Inc. v. Arturo J.

Garchitorena[35] where the Court addressed essentially the same issue arising from
Section 2(d), Rule 42 of the Rules of Court,[36] we held that the phrase "of the
pleadings and other material portions of the record xxx as would support the
allegation of the petition clearly contemplates the exercise of discretion on the part
of the petitioner in the selection of documents that are deemed to be relevant to
the petition. The crucial issue to consider then is whether or not the documents
accompanying the petition sufficiently supported the allegations therein."[37]
As in Mariners, we find that the documents attached to the petition sufficiently
support the petitioners' allegations. The accompanying CA decision[38] and
resolution,[39] as well as those of the labor arbiter[40] and the NLRC,[41] referred to
the parties' position papers and even to their replies and rejoinders. Significantly,
the CA decision narrates the factual antecedents, defines the complainants' cause
of action, and cites the arguments, including the evidence the parties adduced. If
any, the defect in the petition lies in the petitioners' failure to provide legible copies
of some of the material documents mentioned, especially several pages in the
decisions of the labor arbiter and of the NLRC. This defect, however, is not fatal as
the challenged CA decision clearly summarized the labor tribunal's rulings. We,
thus, find no procedural obstacle in resolving the petition on the merits.

The merits of the case

We find no merit in the petition. The CA committed no reversible error in

nullifying the NLRC decision[42] and in affirming the labor arbiter's ruling,[43] as it
applies to Costales, Almoite, Sebolino and Sagun. Specifically, the CA correctly
ruled that the four were illegally dismissed because (1) they were already
employees when they were required to undergo apprenticeship and (2)
apprenticeship agreements were invalid.

The following considerations support the CA ruling.

First. Based on company operations at the time material to the case, Costales,
Almoite, Sebolino and Sagun were already rendering service to the company as
employees before they were made to undergo apprenticeship. The company itself
recognized the respondents' status through relevant operational records - in the
case of Costales and Almoite, the CPS monthly report for December 2003[44] which
the NLRC relied upon and, for Sebolino and Sagun, the production and work
schedule for March 7 to 12, 2005[45] cited by the CA.

Under the CPS monthly report, Atlanta assigned Costales and Almoite to the first
shift (7:00 a.m. to 3:00 p.m.) of the Section's work. The Production and Work
Schedules, in addition to the one noted by the CA, showed that Sebolino and Sagun
were scheduled on different shifts vis-Ã -vis the production and work of the
company's PE/Spiral Section for the periods July 5-10, 2004;[46] October 25-31,
2004;[47] November 8-14, 2004;[48] November 16-22, 2004;[49] January 3-9,
2005;[50] January 10-15, 2005;[51] March 7-12, 2005[52] and March 17-23, 2005.[53]

We stress that the CA correctly recognized the authenticity of

the operational documents, for the failure of Atlanta to raise a challenge against
these documents before the labor arbiter, the NLRC and the CA itself.
The appellate court, thus, found the said documents sufficient to establish the
employment of the respondents before their engagement as apprentices.

Second. The Master List[54] (of employees) that the petitioners heavily rely upon as
proof of their position that the respondents were not Atlanta's employees, at the
time they were engaged as apprentices, is unreliable and does not inspire belief.

The list, consisting of several pages, is hardly legible. It requires extreme effort to
sort out the names of the employees listed, as well as the other data contained in
the list. For this reason alone, the list deserves little or no consideration. As the
respondents also pointed out, the list itself contradicts a lot of Atlanta's claims and
allegations, thus: it lists only the names of inactive employees; even the names of
those the NLRC found to have been employed by Atlanta, like Costales and Almoite,
and those who even Atlanta claims attained regular status on January 11,
2006,[55] do not appear in the list when it was supposed to account for
all employees "as of May 6, 2006." Despite the "May 6, 2006" cut off date, the list
contains no entries of employees who were hired or who resigned in 2005 and
2006. We note that the list contains the names of employees from 1999 to 2004.

We cannot fault the CA for ignoring the Master List even if Bernardo, its head office
accountant, swore to its correctness and authenticity.[56] Its substantive unreliability
gives it very minimal probative value. Atlanta would have been better served, in
terms of reliable evidence, if true copies of the payroll (on which the list was based,
among others, as Bernardo claimed in her affidavit) were presented instead.

Third. The fact that Costales, Almoite, Sebolino and Sagun were already rendering
service to the company when they were made to undergo apprenticeship (as
established by the evidence) renders the apprenticeship agreements irrelevant as
far as the four are concerned. This reality is highlighted by the CA finding that the
respondents occupied positions such as machine operator, scaleman and extruder
operator - tasks that are usually necessary and desirable in Atlanta's usual business
or trade as manufacturer of plastic building materials.[57] These tasks and their
nature characterized the four as regular employees under Article 280 of the Labor
Code. Thus, when they were dismissed without just or authorized cause, without
notice, and without the opportunity to be heard, their dismissal was illegal under
the law.[58]

Even if we recognize the company's need to train its employees through

apprenticeship, we can only consider the first apprenticeship agreement for the
purpose. With the expiration of the first agreement and the retention of the
employees, Atlanta had, to all intents and purposes, recognized the completion of
their training and their acquisition of a regular employee status. To foist upon them
the second apprenticeship agreement for a second skill which was not even
mentioned in the agreement itself,[59] is a violation of the Labor Code's
implementing rules[60] and is an act manifestly unfair to the employees, to say the
least. This we cannot allow.

Fourth. The compromise agreement[61] allegedly entered into by Costales and

Almoite, together with Ramos, Villagomez and Alegria, purportedly in settlement of
the case before the NLRC, is not binding on Costales and Almoite because they did
not sign it. The company itself admitted[62] that while Costales and Almoite were
initially intended to be a part of the agreement, it did not pursue their inclusion
"due to their regularization as early as January 11, 2006."[63]cr ala w
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit.
The assailed decision and resolution of the Court of Appeals are AFFIRMED. Costs
against the petitioner Atlanta Industries, Inc.

SO ORDERED.
 THIRD DIVISION

[G.R. No. 122917. July 12, 1999]

MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E.

DAVID, DAVID P. PASCUAL, RAQUEL ESTILLER, ALBERT
HALLARE, EDMUND M. CORTEZ, JOSELITO O. AGDON GEORGE
P. LIGUTAN JR., CELSO M. YAZAR, ALEX G. CORPUZ, RONALD
M. DELFIN, ROWENA M. TABAQUERO, CORAZON C. DELOS
REYES, ROBERT G. NOORA, MILAGROS O. LEQUIGAN,
ADRIANA F. TATLONGHARI, IKE CABANDUCOS, COCOY
NOBELLO, DORENDA CANTIMBUHAN, ROBERT MARCELO,
LILIBETH Q. MARMOLEJO, JOSE E. SALES, ISABEL MAMAUAG,
VIOLETA G. MONTES, ALBINO TECSON, MELODY V. GRUELA,
BERNADETH D. AGERO, CYNTHIA DE VERA, LANI R. CORTEZ,
MA. ISABEL B. CONCEPCION, DINDO VALERIO, ZENAIDA
MATA, ARIEL DEL PILAR, MARGARET CECILIA CANOZA,
THELMA SEBASTIAN, MA. JEANETTE CERVANTES, JEANNIE
RAMIL, ROZAIDA PASCUAL, PINKY BALOLOA, ELIZABETH
VENTURA, GRACE S. PARDO & RICO
TIMOSA, Petitioners v. NATIONAL LABOR RELATIONS
COMMISSION & FAR EAST BANK AND TRUST
COMPANY, Respondents.

DECISION

PANGANIBAN, J.:

The Magna Carta for Disabled Persons mandates that qualified

disabled persons be granted the same terms and conditions of
employment as qualified able-bodied employees. Once they have
attained the status of regular workers, they should be accorded all
the benefits granted by law, notwithstanding written or verbal
contracts to the contrary. This treatment is rooted not merely on
charity or accommodation, but on justice for all.
The Case

Challenged in the Petition for Certiorari1 before us is the June 20,

1995 Decision2 of the National Labor Relations Commission
(NLRC),3 which affirmed the August, 22 1994 ruling of Labor Arbiter
Cornelio L. Linsangan. The labor arbiters Decision disposed as
follows:4
cräl äw virt u alib räry

WHEREFORE, judgment is hereby rendered dismissing the above-

mentioned complaint for lack of merit.

Also assailed is the August 4, 1995 Resolution5 of the NLRC, which

denied the Motion for Reconsideration.
The Facts

The facts were summarized by the NLRC in this wise:6

Complainants numbering 43 (p. 176, Records) are deaf-mutes who

were hired on various periods from 1988 to 1993 by respondent Far
East Bank and Trust Co. as Money Sorters and Counters through a
uniformly worded agreement called Employment Contract for
Handicapped Workers. (pp. 68 & 69, Records) The full text of said
agreement is quoted below:

EMPLOYMENT CONTRACT FOR HANDICAPPED WORKERS

This Contract, entered into by and between:

FAR EAST BANK AND TRUST COMPANY, a universal banking

corporation duly organized and existing under and by virtue of the
laws of the Philippines, with business address at FEBTC Building,
Muralla, Intramuros, Manila, represented herein by its Assistant Vice
President, MR. FLORENDO G. MARANAN, (hereinafter referred to as
the BANK);

- and -

________________, ________________ years old, of legal age,

_____________, and residing at __________________ (hereinafter
referred to as the (EMPLOYEE).

WITNESSETH: That
WHEREAS, the BANK, cognizant of its social responsibility, realizes
that there is a need to provide disabled and handicapped persons
gainful employment and opportunities to realize their potentials,
uplift their socio-economic well being and welfare and make them
productive, self-reliant and useful citizens to enable them to fully
integrate in the mainstream of society;

WHEREAS, there are certain positions in the BANK which may be

filled-up by disabled and handicapped persons, particularly deaf-
mutes, and the BANK ha[s] been approached by some civic-minded
citizens and authorized government agencies [regarding] the
possibility of hiring handicapped workers for these positions;

WHEREAS, the EMPLOYEE is one of those handicapped workers who

[were] recommended for possible employment with the BANK;

NOW, THEREFORE, for and in consideration of the foregoing

premises and in compliance with Article 80 of the Labor Code of the
Philippines as amended, the BANK and the EMPLOYEE have entered
into this Employment Contract as follows:

1. The BANK agrees to employ and train the EMPLOYEE, and the
EMPLOYEE agrees to diligently and faithfully work with the BANK,
as Money Sorter and Counter.

2. The EMPLOYEE shall perform among others, the following duties

and responsibilities:

i Sort out bills according to color;

ii. Count each denomination per hundred, either manually or with

the aid of a counting machine;

iii. Wrap and label bills per hundred;

iv. Put the wrapped bills into bundles; and

v. Submit bundled bills to the bank teller for verification.

3. The EMPLOYEE shall undergo a training period of one (1) month,
after which the BANK shall determine whether or not he/she should
be allowed to finish the remaining term of this Contract.

4. The EMPLOYEE shall be entitled to an initial compensation

of P118.00 per day, subject to adjustment in the sole judgment of
the BANK, payable every 15 and end of the month.
th

5. The regular work schedule of the EMPLOYEE shall be five (5) days
per week, from Mondays thru Fridays, at eight (8) hours a day. The
EMPLOYEE may be required to perform overtime work as
circumstance may warrant, for which overtime work he/she [shall]
be paid an additional compensation of 125% of his daily rate if
performed during ordinary days and 130% if performed during
Saturday or [a] rest day.

6. The EMPLOYEE shall likewise be entitled to the following benefits:

i. Proportionate 13 month pay based on his basic daily wage.

th

ii. Five (5) days incentive leave.

iii. SSS premium payment.

7. The EMPLOYEE binds himself/herself to abide [by] and comply

with all the BANK Rules and Regulations and Policies, and to
conduct himself/herself in a manner expected of all employees of
the BANK.

8. The EMPLOYEE acknowledges the fact that he/she had been

employed under a special employment program of the BANK, for
which reason the standard hiring requirements of the BANK were
not applied in his/her case. Consequently, the EMPLOYEE
acknowledges and accepts the fact that the terms and conditions of
the employment generally observed by the BANK with respect to the
BANKs regular employee are not applicable to the EMPLOYEE, and
that therefore, the terms and conditions of the EMPLOYEEs
employment with the BANK shall be governed solely and exclusively
by this Contract and by the applicable rules and regulations that the
Department of Labor and Employment may issue in connection with
the employment of disabled and handicapped workers. More
specifically, the EMPLOYEE hereby acknowledges that the provisions
of Book Six of the Labor Code of the Philippines as amended,
particularly on regulation of employment and separation pay are not
applicable to him/her.

9. The Employment Contract shall be for a period of six (6) months

or from ____ to ____ unless earlier terminated by the BANK for any
just or reasonable cause. Any continuation or extension of this
Contract shall be in writing and therefore this Contract will
automatically expire at the end of its terms unless renewed in
writing by the BANK.

IN WITNESS WHEREOF, the parties, have hereunto affixed their

signature[s] this ____ day of _________________, ____________
at Intramuros, Manila, Philippines.

In 1988, two (2) deaf-mutes were hired under this Agreement; in

1989 another two (2); in 1990, nineteen (19); in 1991 six (6); in
1992, six (6) and in 1993, twenty-one (21). Their employment[s]
were renewed every six months such that by the time this case
arose, there were fifty-six (56) deaf-mutes who were employed by
respondent under the said employment agreement. The last one
was Thelma Malindoy who was employed in 1992 and whose
contract expired on July 1993.

xxx

Disclaiming that complainants were regular employees, respondent

Far East Bank and Trust Company maintained that complainants
who are a special class of workers the hearing impaired employees
were hired temporarily under [a] special employment arrangement
which was a result of overtures made by some civic and political
personalities to the respondent Bank; that complainant[s] were
hired due to pakiusap which must be considered in the light of the
context of the respondent Banks corporate philosophy as well as its
career and working environment which is to maintain and
strengthen a corps of professionals trained and qualified officers and
regular employees who are baccalaureate degree holders from
excellent schools which is an unbending policy in the hiring of
regular employees; that in addition to this, training continues so
that the regular employee grows in the corporate ladder; that the
idea of hiring handicapped workers was acceptable to them only on
a special arrangement basis; that it adopted the special program to
help tide over a group of handicapped workers such as deaf-mutes
like the complainants who could do manual work for the respondent
Bank; that the task of counting and sorting of bills which was being
performed by tellers could be assigned to deaf-mutes; that the
counting and sorting of money are tellering works which were
always logically and naturally part and parcel of the tellers normal
functions; that from the beginning there have been no separate
items in the respondent Bank plantilla for sorters or counters; that
the tellers themselves already did the sorting and counting chore as
a regular feature and integral part of their duties (p. 97, Records);
that through the pakiusap of Arturo Borjal, the tellers were relieved
of this task of counting and sorting bills in favor of deaf-mutes
without creating new positions as there is no position either in the
respondent or in any other bank in the Philippines which deals with
purely counting and sorting of bills in banking operations.

Petitioners specified when each of them was hired and dismissed,

viz:7
cräl äw virt u alib räry

NAME OF PETITIONER WORKPLACE Date Hired Date

Dismissed

1. MARITES BERNARDO Intramuros 12 NOV 90 17 NOV 93

2. ELVIRA GO DIAMANTE Intramuros 24 JAN 90 11 JAN 94

3. REBECCA E. DAVID Intramuros 16 APR 90 23 OCT 93

4. DAVID P. PASCUAL Bel-Air 15 OCT 88 21 NOV 94

5. RAQUEL ESTILLER Intramuros 2 JUL 92 4 JAN 94

6. ALBERT HALLARE West 4 JAN 91 9 JAN 94

7. EDMUND M. CORTEZ Bel-Air 15 JAN 91 3 DEC 93

8. JOSELITO O. AGDON Intramuros 5 NOV 90 17 NOV 93

9. GEORGE P. LIGUTAN, JR. Intramuros 6 SEPT 89 19 JAN 94

10. CELSO M. YAZAR Intramuros 8 FEB 93 8 AUG 93

11. ALEX G. CORPUZ Intramuros 15 FEB 93 15 AUG 93

12. RONALD M. DELFIN Intramuros 22 FEB 93 22 AUG 93

13. ROWENA M. TABAQUERO Intramuros 22 FEB 93 22 AUG 93

14. CORAZON C. DELOS REYES Intramuros 8 FEB 93 8 AUG 93

15. ROBERT G. NOORA Intramuros 15 FEB 93 15 AUG 93

16. MILAGROS O. LEQUIGAN Intramuros 1 FEB 93 1 AUG 93

17. ADRIANA F. TATLONGHARI Intramuros 22 JAN 93 22 JUL 93

18. IKE CABANDUCOS Intramuros 24 FEB 93 24 AUG 93

19. COCOY NOBELLO Intramuros 22 FEB 93 22 AUG 93

20. DORENDA CATIMBUHAN Intramuros 15 FEB 93 15 AUG 93

21. ROBERT MARCELO West 31 JUL 938 1 AUG 93

22. LILIBETH Q. MARMOLEJO West 15 JUN 90 21 NOV 93

23. JOSE E. SALES West 6 AUG 92 12 OCT 93

24. ISABEL MAMAUAG West 8 MAY 92 10 NOV 93

25. VIOLETA G. MONTES Intramuros 2 FEB 90 15 JAN 94

26. ALBINO TECSON Intramuros 7 NOV 91 10 NOV 93

27. MELODY V. GRUELA West 28 OCT 91 3 NOV 93

28. BERNADETH D. AGERO West 19 DEC 90 27 DEC 93

29. CYNTHIA DE VERA Bel-Air 26 JUN 90 3 DEC 93

30. LANI R. CORTEZ Bel-Air 15 OCT 88 10 DEC 93

31. MA. ISABEL B. CONCEPCION West 6 SEPT 90 6 FEB 94

32. DINDO VALERIO Intramuros 30 MAY 93 30 NOV 93

33. ZENAIDA MATA Intramuros 10 FEB 93 10 AUG 93

34. ARIEL DEL PILAR Intramuros 24 FEB 93 24 AUG 93

35. MARGARET CECILIA CANOZA Intramuros 27 JUL 90 4 FEB 94

36. THELMA SEBASTIAN Intramuros 12 NOV 90 17 NOV 93

37. MA. JEANETTE CERVANTES West 6 JUN 92 7 DEC 93

38. JEANNIE RAMIL Intramuros 23 APR 90 12 OCT 93

39. ROZAIDA PASCUAL Bel-Air 20 APR 89 29 OCT 93

40. PINKY BALOLOA West 3 JUN 91 2 DEC 93

41. ELIZABETH VENTURA West 12 MAR 90 FEB 94 [SIC]

42. GRACE S. PARDO West 4 APR 90 13 MAR 94

43. RICO TIMOSA Intramuros 28 APR 93 28 OCT 93

As earlier noted, the labor arbiter and, on appeal, the NLRC ruled
against herein petitioners. Hence, this recourse to this Court. 9
The Ruling of the NLRC

In affirming the ruling of the labor arbiter that herein petitioners

could not be deemed regular employees under Article 280 of the
Labor Code, as amended, Respondent Commission ratiocinated as
follows:

We agree that Art. 280 is not controlling herein. We give due

credence to the conclusion that complainants were hired as an
accommodation to [the] recommendation of civic oriented
personalities whose employment[s] were covered by xxx
Employment Contract[s] with special provisions on duration of
contract as specified under Art. 80. Hence, as correctly held by the
Labor Arbiter a quo, the terms of the contract shall be the law
between the parties.10

The NLRC also declared that the Magna Carta for Disabled Persons
was not applicable, considering the prevailing circumstances/milieu
of the case.
Issues

In their Memorandum, petitioners cite the following grounds in

support of their cause:

I. The Honorable Commission committed grave abuse of discretion

in holding that the petitioners - money sorters and counters working
in a bank - were not regular employees.

II. The Honorable Commission committed grave abuse of discretion

in holding that the employment contracts signed and renewed by
the petitioners - which provide for a period of six (6) months - were
valid.

III. The Honorable Commission committed grave abuse of discretion

in not applying the provisions of the Magna Carta for the Disabled
(Republic Act No. 7277), on proscription against discrimination
against disabled persons.11

In the main, the Court will resolve whether petitioners have become
regular employees.
This Courts Ruling

The petition is meritorious. However, only the employees, who

worked for more than six months and whose contracts were
renewed are deemed regular. Hence, their dismissal from
employment was illegal.
 Preliminary Matter: Propriety of Certiorari

Respondent Far East Bank and Trust Company argues that a review
of the findings of facts of the NLRC is not allowed in a petition for
certiorari. Specifically, it maintains that the Court cannot pass upon
the findings of public respondents that petitioners were not regular
employees.

True, the Court, as a rule, does not review the factual findings of
public respondents in a certiorari proceeding. In resolving whether
the petitioners have become regular employees, we shall not
change the facts found by the public respondent. Our task is merely
to determine whether the NLRC committed grave abuse of
discretion in applying the law to the established facts, as above-
quoted from the assailed Decision.
Main Issue: Are Petitioners Regular Employees?

Petitioners maintain that they should be considered regular

employees, because their task as money sorters and counters was
necessary and desirable to the business of respondent bank. They
further allege that their contracts served merely to preclude the
application of Article 280 and to bar them from becoming regular
employees.

Private respondent, on the other hand, submits that petitioners

were hired only as special workers and should not in any way be
considered as part of the regular complement of the Bank.12 Rather,
they were special workers under Article 80 of the Labor Code.
Private respondent contends that it never solicited the services of
petitioners, whose employment was merely an accommodation in
response to the requests of government officials and civic-minded
citizens. They were told from the start, with the assistance of
government representatives, that they could not become regular
employees because there were no plantilla positions for money
sorters, whose task used to be performed by tellers. Their contracts
were renewed several times, not because of need but merely for
humanitarian reasons. Respondent submits that as of the present,
the special position that was created for the petitioners no longer
exist[s] in private respondent [bank], after the latter had decided
not to renew anymore their special employment contracts.

At the outset, let it be known that this Court appreciates the nobility
of private respondents effort to provide employment to physically
impaired individuals and to make them more productive members of
society. However, we cannot allow it to elude the legal
consequences of that effort, simply because it now deems their
employment irrelevant. The facts, viewed in light of the Labor Code
and the Magna Carta for Disabled Persons, indubitably show that
the petitioners, except sixteen of them, should be deemed regular
employees. As such, they have acquired legal rights that this Court
is duty-bound to protect and uphold, not as a matter of compassion
but as a consequence of law and justice.

The uniform employment contracts of the petitioners stipulated that

they shall be trained for a period of one month, after which the
employer shall determine whether or not they should be allowed to
finish the 6-month term of the contract. Furthermore, the employer
may terminate the contract at any time for a just and reasonable
cause. Unless renewed in writing by the employer, the contract shall
automatically expire at the end of the term.

According to private respondent, the employment contracts were

prepared in accordance with Article 80 of the Labor Code, which
provides:

ART. 80. Employment agreement. Any employer who employs

handicapped workers shall enter into an employment agreement
with them, which agreement shall include:

(a) The names and addresses of the handicapped workers to be

employed;

(b) The rate to be paid the handicapped workers which shall be not
less than seventy five (75%) per cent of the applicable legal
minimum wage;

(c) The duration of employment period; and

(d) The work to be performed by handicapped workers.

The employment agreement shall be subject to inspection by the

Secretary of Labor or his duly authorized representatives.

The stipulations in the employment contracts indubitably conform

with the aforecited provision. Succeeding events and the enactment
of RA No. 7277 (the Magna Carta for Disabled Persons), 13 however,
justify the application of Article 280 of the Labor Code.

Respondent bank entered into the aforesaid contract with a total of

56 handicapped workers and renewed the contracts of 37 of them.
In fact, two of them worked from 1988 to 1993. Verily, the renewal
of the contracts of the handicapped workers and the hiring of others
lead to the conclusion that their tasks were beneficial and necessary
to the bank. More important, these facts show that they
were qualified to perform the responsibilities of their positions. In
other words, their disability did not render them unqualified or unfit
for the tasks assigned to them.

In this light, the Magna Carta for Disabled Persons mandates that
a qualified disabled employee should be given the same terms and
conditions of employment as a qualified able-bodied person. Section
5 of the Magna Carta provides:

Section 5. Equal Opportunity for Employment.No disabled person

shall be denied access to opportunities for suitable employment. A
qualified disabled employee shall be subject to the same terms and
conditions of employment and the same compensation, privileges,
benefits, fringe benefits, incentives or allowances as a qualified able
bodied person.

The fact that the employees were qualified disabled persons

necessarily removes the employment contracts from the ambit of
Article 80. Since the Magna Carta accords them the rights of
qualified able-bodied persons, they are thus covered by Article 280
of the Labor Code, which provides:

ART. 280. Regular and Casual Employment. -- The provisions of

written agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific 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 as regular employee with
respect to the activity in which he is employed and his employment
shall continue while such activity exists.

The test of whether an employee is regular was laid down in De

Leon v. NLRC,14 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 business or trade 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 one 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.

Without a doubt, the task of counting and sorting bills is necessary

and desirable to the business of respondent bank. With the
exception of sixteen of them, petitioners performed these tasks for
more than six months. Thus, the following twenty-seven petitioners
should be deemed regular employees: Marites Bernardo, Elvira Go
Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller,
Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George P.
Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag,
Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D.
Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B. Concepcion,
Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette
Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth
Ventura and Grace S. Pardo.

As held by the Court, Articles 280 and 281 of the Labor Code put an
end to the pernicious practice of making permanent casuals of our
lowly employees by the simple expedient of extending to them
probationary appointments, ad infinitum.15 The contract signed by
petitioners is akin to a probationary employment, during which the
bank determined the employees fitness for the job. When the bank
renewed the contract after the lapse of the six-month probationary
period, the employees thereby became regular employees.16 No
employer is allowed to determine indefinitely the fitness of its
employees.

As regular employees, the twenty-seven petitioners are entitled to

security of tenure; that is, their services may be terminated only for
a just or authorized cause. Because respondent failed to show such
cause,17 these twenty-seven petitioners are deemed illegally
dismissed and therefore entitled to back wages and reinstatement
without loss of seniority rights and other privileges.18 Considering
the allegation of respondent that the job of money sorting is no
longer available because it has been assigned back to the tellers to
whom it originally belonged,19 petitioners are hereby awarded
separation pay in lieu of reinstatement.20 crälä wv irt u alib räry

Because the other sixteen worked only for six months, they are not
deemed regular employees and hence not entitled to the same
benefits.
Applicability of the Brent Ruling

Respondent bank, citing Brent School v. Zamora21 in which the

Court upheld the validity of an employment contract with a fixed
term, argues that the parties entered into the contract on equal
footing. It adds that the petitioners had in fact an advantage,
because they were backed by then DSWD Secretary Mita Pardo de
Tavera and Representative Arturo Borjal.

We are not persuaded. The term limit in the contract was premised
on the fact that the petitioners were disabled, and that the bank
had to determine their fitness for the position. Indeed, its validity is
based on Article 80 of the Labor Code. But as noted earlier,
petitioners proved themselves to be qualified disabled persons who,
under the Magna Carta for Disabled Persons, are entitled to terms
and conditions of employment enjoyed by qualified able-bodied
individuals; hence, Article 80 does not apply because petitioners
are qualified for their positions. The validation of the limit imposed
on their contracts, imposed by reason of their disability, was a
glaring instance of the very mischief sought to be addressed by the
new law.

Moreover, it must be emphasized that a contract of employment is

impressed with public interest.22 Provisions of applicable statutes
are deemed written into the contract, and the parties are not at
liberty to insulate themselves and their relationships from the
impact of labor laws and regulations by simply contracting with each
other.23 Clearly, the agreement of the parties regarding the period
of employment cannot prevail over the provisions of the Magna
Carta for Disabled Persons, which mandate that petitioners must be
treated as qualified able-bodied employees.

Respondents reason for terminating the employment of petitioners

is instructive. Because the Bangko Sentral ng Pilipinas (BSP)
required that cash in the bank be turned over to the BSP during
business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to
nighttime sorting and counting of money. Thus, it reasons that this
task could not be done by deaf mutes because of their physical
limitations as it is very risky for them to travel at night.24 We find
no basis for this argument. Travelling at night involves risks to
handicapped and able-bodied persons alike. This excuse cannot
justify the termination of their employment.
Other Grounds Cited by Respondent
Respondent argues that petitioners were merely accommodated
employees. This fact does not change the nature of their
employment. As earlier noted, an employee is regular because of
the nature of work and the length of service, not because of the
mode or even the reason for hiring them.

Equally unavailing are private respondents arguments that it did not

go out of its way to recruit petitioners, and that its plantilla did not
contain their positions. In L. T. Datu v. NLRC,25 the Court held that
the determination of whether employment is casual or regular does
not depend on the will or word of the employer, and the procedure
of hiring x x x but on the nature of the activities performed by the
employee, and to some extent, the length of performance and its
continued existence.

Private respondent argues that the petitioners were informed from

the start that they could not become regular employees. In fact, the
bank adds, they agreed with the stipulation in the contract
regarding this point. Still, we are not persuaded. The well-settled
rule is that the character of employment is determined not by
stipulations in the contract, but by the nature of the work
performed.26 Otherwise, no employee can become regular by the
simple expedient of incorporating this condition in the contract of
employment.

In this light, we iterate our ruling in Romares v. NLRC:27 cräl äwv irt u alib räry

Article 280 was emplaced in our statute books to prevent the

circumvention of the employees right to be secure in his tenure by
indiscriminately and completely ruling out all written and oral
agreements inconsistent with the concept of regular employment
defined therein. Where an employee has been engaged to perform
activities which are usually necessary or desirable in the usual
business of the employer, such employee is deemed a regular
employee and is entitled to security of tenure notwithstanding the
contrary provisions of his contract of employment.

xxx
At this juncture, the leading case of Brent School, Inc. v.
Zamora proves instructive. As reaffirmed in subsequent cases, this
Court has upheld the legality of fixed-term employment. It ruled
that 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 the parties for the commencement and
termination of their employment relationship. But this Court went
on to say that where from the circumstances it is apparent that the
periods have been imposed to preclude acquisition of tenurial
security by the employee, they should be struck down or
disregarded as contrary to public policy and morals.

In rendering this Decision, the Court emphasizes not only the

constitutional bias in favor of the working class, but also the
concern of the State for the plight of the disabled. The noble
objectives of Magna Carta for Disabled Persons are not based
merely on charity or accommodation, but on justice and the equal
treatment of qualified persons, disabled or not. In the present case,
the handicap of petitioners (deaf-mutes) is not a hindrance to their
work. The eloquent proof of this statement is the repeated renewal
of their employment contracts. Why then should they be dismissed,
simply because they are physically impaired? The Court believes,
that, after showing their fitness for the work assigned to them, they
should be treated and granted the same rights like any other
regular employees.

In this light, we note the Office of the Solicitor Generals prayer

joining the petitioners cause.28crä lä wvirt u alib räry

WHEREFORE, premises considered, the Petition is

hereby GRANTED. The June 20, 1995 Decision and the August 4,
1995 Resolution of the NLRC are REVERSEDand SETASIDE.
Respondent Far East Bank and Trust Company is
hereby ORDEREDto pay back wages and separation pay to each of
the following twenty-seven (27) petitioners, namely, Marites
Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual,
Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon,
George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel
Mamauag, Violeta G. Montes, Albino Tecson, Melody V. Gruela,
Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B.
Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma.
Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa,
Elizabeth Ventura and Grace S. Pardo. The NLRC is hereby directed
to compute the exact amount due each of said employees, pursuant
to existing laws and regulations, within fifteen days from the finality
of this Decision. No costs.

SO ORDERED.
G.R. Nos. 169295-96 November 20, 2006

REMINGTON INDUSTRIAL SALES CORPORATION, Petitioner,

vs.
ERLINDA CASTANEDA, Respondent.

DECISION

PUNO, J.:

Before this Court is the Petition for Review on Certiorari 1 filed by Remington Industrial Sales
Corporation to reverse and set aside the Decision2 of the Fourth Division of the Court of Appeals in
CA-G.R. SP Nos. 64577 and 68477, dated January 31, 2005, which dismissed petitioner’s
consolidated petitions for certiorari, and its subsequent Resolution,3 dated August 11, 2005, which
denied petitioner’s motion for reconsideration.

The antecedent facts of the case, as narrated by the Court of Appeals, are as follows:

The present controversy began when private respondent, Erlinda Castaneda ("Erlinda") instituted on
March 2, 1998 a complaint for illegal dismissal, underpayment of wages, non-payment of overtime
services, non-payment of service incentive leave pay and non-payment of 13th month pay against
Remington before the NLRC, National Capital Region, Quezon City. The complaint impleaded Mr.
Antonio Tan in his capacity as the Managing Director of Remington.

Erlinda alleged that she started working in August 1983 as company cook with a salary of Php
4,000.00 for Remington, a corporation engaged in the trading business; that she worked for six (6)
days a week, starting as early as 6:00 a.m. because she had to do the marketing and would end at
around 5:30 p.m., or even later, after most of the employees, if not all, had left the company
premises; that she continuously worked with Remington until she was unceremoniously prevented
from reporting for work when Remington transferred to a new site in Edsa, Caloocan City. She
averred that she reported for work at the new site in Caloocan City on January 15, 1998, only to be
informed that Remington no longer needed her services. Erlinda believed that her dismissal was
illegal because she was not given the notices required by law; hence, she filed her complaint for
reinstatement without loss of seniority rights, salary differentials, service incentive leave pay, 13th
month pay and 10% attorney’s fees.

Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a domestic helper,
not a regular employee; Erlinda worked as a cook and this job had nothing to do with Remington’s
business of trading in construction or hardware materials, steel plates and wire rope products. It also
contended that contrary to Erlinda’s allegations that the (sic) she worked for eight (8) hours a day,
Erlinda’s duty was merely to cook lunch and "merienda", after which her time was hers to spend as
she pleased. Remington also maintained that it did not exercise any degree of control and/or
supervision over Erlinda’s work as her only concern was to ensure that the employees’ lunch and
"merienda" were available and served at the designated time. Remington likewise belied Erlinda’s
assertion that her work extended beyond 5:00 p.m. as she could only leave after all the employees
had gone. The truth, according to Remington, is that Erlinda did not have to punch any time card in
the way that other employees of Remington did; she was free to roam around the company
premises, read magazines, and to even nap when not doing her assigned chores. Remington
averred that the illegal dismissal complaint lacked factual and legal bases. Allegedly, it was Erlinda
who refused to report for work when Remington moved to a new location in Caloocan City.
In a Decision4 dated January 19, 1999, the labor arbiter dismissed the complaint and ruled that the
respondent was a domestic helper under the personal service of Antonio Tan, finding that her work
as a cook was not usually necessary and desirable in the ordinary course of trade and business of
the petitioner corporation, which operated as a trading company, and that the latter did not exercise
control over her functions. On the issue of illegal dismissal, the labor arbiter found that it was the
respondent who refused to go with the family of Antonio Tan when the corporation transferred office
and that, therefore, respondent could not have been illegally dismissed.

Upon appeal, the National Labor Relations Commission (NLRC) rendered a Decision, 5 dated
November 23, 2000, reversing the labor arbiter, ruling, viz:

We are not inclined to uphold the declaration below that complainant is a domestic helper of the
family of Antonio Tan. There was no allegation by respondent that complainant had ever worked in
the residence of Mr. Tan. What is clear from the facts narrated by the parties is that complainant
continuously did her job as a cook in the office of respondent serving the needed food for lunch and
merienda of the employees. Thus, her work as cook inured not for the benefit of the family members
of Mr. Tan but solely for the individual employees of respondent.

Complainant as an employee of respondent company is even bolstered by no less than the

certification dated May 23, 1997 issued by the corporate secretary of the company certifying that
complainant is their bonafide employee. This is a solid evidence which the Labor Arbiter simply
brushed aside. But, such error would not be committed here as it would be at the height of injustice if
we are to declare that complainant is a domestic helper.

Complainant’s work schedule and being paid a monthly salary of ₱4,000.00 are clear indication that
she is a company employee who had been employed to cater to the food needed by the employees
which were being provided by respondent to form part of the benefit granted them.

With regard to the issue of illegal dismissal, we believe that there is more reason to believe that
complainant was not dismissed because allegedly she was the one who refused to work in the new
office of respondent. However, complainant’s refusal to join the workforce due to poor eyesight could
not be considered abandonment of work or voluntary resignation from employment.

Under the Labor Code as amended, an employee who reaches the age of sixty years old (60 years)
has the option to retire or to separate from the service with payment of separation pay/retirement
benefit.

In this case, we notice that complainant was already 60 years old at the time she filed the complaint
praying for separation pay or retirement benefit and some money claims.

Based on Article 287 of the Labor Code as amended, complainant is entitled to be paid her
separation pay/retirement benefit equivalent to one-half (1/2) month for every year of service. The
amount of separation pay would be based on the prescribed minimum wage at the time of dismissal
since she was then underpaid. In as much as complainant is underpaid of her wages, it behooves
that she should be paid her salary differential for the last three years prior to separation/retirement.

xxx xxx xxx

WHEREFORE, premises considered, the assailed decision is hereby, SET ASIDE, and a new one is
hereby entered ordering respondents to pay complainant the following:
1. Salary differential - ₱12,021.12 2. Service Incentive Leave Pay - 2,650.00 3. 13th Month Pay
differential - 1,001.76 4. Separation Pay/retirement benefit - 36,075.00

Total - ₱51,747.88

SO ORDERED.

Petitioner moved to reconsider this decision but the NLRC denied the motion. This denial of its
motion prompted petitioner to file a Petition for Certiorari 6 with the Court of Appeals, docketed as CA-
G.R. SP No. 64577, on May 4, 2001, imputing grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of the NLRC in (1) reversing in toto the decision of the labor arbiter, and (2)
awarding in favor of respondent salary differential, service incentive leave pay, 13th month pay
differential and separation benefits in the total sum of ₱51,747.88.

While the petition was pending with the Court of Appeals, the NLRC rendered another Decision 7 in
the same case on August 29, 2001. How and why another decision was rendered is explained in that
decision as follows:

On May 17, 2001, complainant filed a Manifestation praying for a resolution of her Motion for
Reconsideration and, in support thereof, alleges that, sometime December 18, 2000, she mailed her
Manifestation and Motion for Reconsideration registered as Registered Certificate No. 188844; and
that the said mail was received by the NLRC, through a certain Roland Hernandez, on December
26, 2000. Certifications to this effect was issued by the Postmaster of the Sta. Mesa Post Office
bearing the date May 11, 2001 (Annexes A and B, Complainant’s Manifestation).

Evidence in support of complainant’s having actually filed a Motion for Reconsideration within the
reglementary period having been sufficiently established, a determination of its merits is thus, in
order.

On the merits, the NLRC found respondent’s motion for reconsideration meritorious leading to the
issuance of its second decision with the following dispositive portion:

WHEREFORE, premises considered, the decision dated November 23, 2000, is MODIFIED by
increasing the award of retirement pay due the complainant in the total amount of SIXTY TWO
THOUSAND FOUR HUNDRED THIRTY-SEVEN and 50/100 (₱62,437.50). All other monetary relief
so adjudged therein are maintained and likewise made payable to the complainant.

SO ORDERED.

Petitioner challenged the second decision of the NLRC, including the resolution denying its motion
for reconsideration, through a second Petition for Certiorari 8 filed with the Court of Appeals, docketed
as CA-G.R. SP No. 68477 and dated January 8, 2002, this time imputing grave abuse of discretion
amounting to lack of or excess of jurisdiction on the part of the NLRC in (1) issuing the second
decision despite losing its jurisdiction due to the pendency of the first petition for certiorari with the
Court of Appeals, and (2) assuming it still had jurisdiction to issue the second decision
notwithstanding the pendency of the first petition for certiorari with the Court of Appeals, that its
second decision has no basis in law since respondent’s motion for reconsideration, which was made
the basis of the second decision, was not filed under oath in violation of Section 14, Rule VII 9 of the
New Rules of Procedure of the NLRC and that it contained no certification as to why respondent’s
motion for reconsideration was not decided on time as also required by Section 10, Rule VI 10 and
Section 15, Rule VII11 of the aforementioned rules.
Upon petitioner’s motion, the Court of Appeals ordered the consolidation of the two (2) petitions, on
January 24, 2002, pursuant to Section 7, par. b(3), Rule 3 of the Revised Rules of the Court of
Appeals. It summarized the principal issues raised in the consolidated petitions as follows:

1. Whether respondent is petitioner’s regular employee or a domestic helper;

2. Whether respondent was illegally dismissed; and

3. Whether the second NLRC decision promulgated during the pendency of the first petition
for certiorari has basis in law.

On January 31, 2005, the Court of Appeals dismissed the consolidated petitions for lack of merit,
finding no grave abuse of discretion on the part of the NLRC in issuing the assailed decisions.

On the first issue, it upheld the ruling of the NLRC that respondent was a regular employee of the
petitioner since the former worked at the company premises and catered not only to the personal
comfort and enjoyment of Mr. Tan and his family, but also to that of the employees of the latter. It
agreed that petitioner enjoys the prerogative to control respondent’s conduct in undertaking her
assigned work, particularly the nature and situs of her work in relation to the petitioner’s workforce,
thereby establishing the existence of an employer-employee relationship between them.

On the issue of illegal dismissal, it ruled that respondent has attained the status of a regular
employee in her service with the company. It noted that the NLRC found that no less than the
company’s corporate secretary certified that respondent is a bonafide company employee and that
she had a fixed schedule and routine of work and was paid a monthly salary of ₱4,000.00; that she
served with petitioner for 15 years starting in 1983, buying and cooking food served to company
employees at lunch and merienda; and that this work was usually necessary and desirable in the
regular business of the petitioner. It held that as a regular employee, she enjoys the constitutionally
guaranteed right to security of tenure and that petitioner failed to discharge the burden of proving
that her dismissal on January 15, 1998 was for a just or authorized cause and that the manner of
dismissal complied with the requirements under the law.

Finally, on petitioner’s other arguments relating to the alleged irregularity of the second NLRC
decision, i.e., the fact that respondent’s motion for reconsideration was not under oath and had no
certification explaining why it was not resolved within the prescribed period, it held that such
violations relate to procedural and non-jurisdictional matters that cannot assume primacy over the
substantive merits of the case and that they do not constitute grave abuse of discretion amounting to
lack or excess of jurisdiction that would nullify the second NLRC decision.

The Court of Appeals denied petitioner’s contention that the NLRC lost its jurisdiction to issue the
second decision when it received the order indicating the Court of Appeals’ initial action on the first
petition for certiorari that it filed. It ruled that the NLRC’s action of issuing a decision in installments
was not prohibited by its own rules and that the need for a second decision was justified by the fact
that respondent’s own motion for reconsideration remained unresolved in the first decision.
Furthermore, it held that under Section 7, Rule 65 of the Revised Rules of Court,12 the filing of a
petition for certiorari does not interrupt the course of the principal case unless a temporary
restraining order or a writ of preliminary injunction has been issued against the public respondent
from further proceeding with the case.

From this decision, petitioner filed a motion for reconsideration on February 22, 2005, which the
Court of Appeals denied through a resolution dated August 11, 2005.
Hence, the present petition for review.

The petitioner raises the following errors of law: (1) the Court of Appeals erred in affirming the
NLRC’s ruling that the respondent was petitioner’s regular employee and not a domestic helper; (2)
the Court of Appeals erred in holding that petitioner was guilty of illegal dismissal; and (3) the Court
of Appeals erred when it held that the issuance of the second NLRC decision is proper.

The petition must fail. We affirm that respondent was a regular employee of the petitioner and that
the latter was guilty of illegal dismissal.

Before going into the substantive merits of the present controversy, we shall first resolve the
propriety of the issuance of the second NLRC decision.

The petitioner contends that the respondent’s motion for reconsideration, upon which the second
NLRC decision was based, was not under oath and did not contain a certification as to why it was
not decided on time as required under the New Rules of Procedure of the NLRC. 13 Furthermore, the
former also raises for the first time the contention that respondent’s motion was filed beyond the ten
(10)-calendar day period required under the same Rules,14 since the latter received a copy of the first
NLRC decision on December 6, 2000, and respondent filed her motion only on December 18, 2000.
Thus, according to petitioner, the respondent’s motion for reconsideration was a mere scrap of paper
and the second NLRC decision has no basis in law.

We do not agree.

It is well-settled that the application of technical rules of procedure may be relaxed to serve the
demands of substantial justice, particularly in labor cases. 15 Labor cases must be decided according
to justice and equity and the substantial merits of the controversy.16 Rules of procedure are but mere
tools designed to facilitate the attainment of justice.17 Their strict and rigid application, which would
result in technicalities that tend to frustrate rather than promote substantial justice, must always be
avoided.18

This Court has consistently held that the requirement of verification is formal, and not jurisdictional.
Such requirement is merely a condition affecting the form of the pleading, non-compliance with
which does not necessarily render it fatally defective. Verification is simply intended to secure an
assurance that the allegations in the pleading are true and correct and not the product of the
imagination or a matter of speculation, and that the pleading is filed in good faith. 19 The court may
order the correction of the pleading if verification is lacking or act on the pleading although it is not
verified, if the attending circumstances are such that strict compliance with the rules may be
dispensed with in order that the ends of justice may thereby be served. 20

Anent the argument that respondent’s motion for reconsideration, on which the NLRC’s second
decision was based, was filed out of time, such issue was only brought up for the first time in the
instant petition where no new issues may be raised by a party in his pleadings without offending the
right to due process of the opposing party.

Nonetheless, the petitioner asserts that the respondent received a copy of the NLRC’s first decision
on December 6, 2000, and the motion for reconsideration was filed only on December 18, 2000, or
two (2) days beyond the ten (10)-calendar day period requirement under the New Rules of
Procedure of the NLRC and should not be allowed.21

This contention must fail.

Under Article 22322 of the Labor Code, the decision of the NLRC shall be final and executory after
ten (10) calendar days from the receipt thereof by the parties.

While it is an established rule that the perfection of an appeal in the manner and within the period
prescribed by law is not only mandatory but jurisdictional, and failure to perfect an appeal has the
effect of rendering the judgment final and executory, it is equally settled that the NLRC may
disregard the procedural lapse where there is an acceptable reason to excuse tardiness in the taking
of the appeal.23 Among the acceptable reasons recognized by this Court are (a) counsel's reliance
on the footnote of the notice of the decision of the Labor Arbiter that "the aggrieved party may
appeal. . . within ten (10) working days";24 (b) fundamental consideration of substantial justice;25 (c)
prevention of miscarriage of justice or of unjust enrichment, as where the tardy appeal is from a
decision granting separation pay which was already granted in an earlier final decision;26 and (d)
special circumstances of the case combined with its legal merits 27 or the amount and the issue
involved.28

We hold that the particular circumstances in the case at bar, in accordance with substantial justice,
call for a liberalization of the application of this rule. Notably, respondent’s last day for filing her
motion for reconsideration fell on December 16, 2000, which was a Saturday. In a number of
cases,29 we have ruled that if the tenth day for perfecting an appeal fell on a Saturday, the appeal
shall be made on the next working day. The reason for this ruling is that on Saturdays, the office of
the NLRC and certain post offices are closed. With all the more reason should this doctrine apply to
respondent’s filing of the motion for reconsideration of her cause, which the NLRC itself found to be
impressed with merit. Indeed, technicality should not be permitted to stand in the way of equitably
and completely resolving the rights and obligations of the parties for the ends of justice are reached
not only through the speedy disposal of cases but, more importantly, through a meticulous and
comprehensive evaluation of the merits of a case.

Finally, as to petitioner’s argument that the NLRC had already lost its jurisdiction to decide the case
when it filed its petition for certiorari with the Court of Appeals upon the denial of its motion for
reconsideration, suffice it to state that under Section 7 of Rule 6530 of the Revised Rules of Court,
the petition shall not interrupt the course of the principal case unless a temporary restraining order or
a writ of preliminary injunction has been issued against the public respondent from further
proceeding with the case. Thus, the mere pendency of a special civil action for certiorari, in
connection with a pending case in a lower court, does not interrupt the course of the latter if there is
no writ of injunction.31 Clearly, there was no grave abuse of discretion on the part of the NLRC in
issuing its second decision which modified the first, especially since it failed to consider the
respondent’s motion for reconsideration when it issued its first decision.

Having resolved the procedural matters, we shall now delve into the merits of the petition to
determine whether respondent is a domestic helper or a regular employee of the petitioner, and
whether the latter is guilty of illegal dismissal.

Petitioner relies heavily on the affidavit of a certain Mr. Antonio Tan and contends that respondent is
the latter’s domestic helper and not a regular employee of the company since Mr. Tan has a
separate and distinct personality from the petitioner. It maintains that it did not exercise control and
supervision over her functions; and that it operates as a trading company and does not engage in
the restaurant business, and therefore respondent’s work as a cook, which was not usually
necessary or desirable to its usual line of business or trade, could not make her its regular
employee.

This contention fails to impress.

In Apex Mining Company, Inc. v. NLRC,32 this Court held that a househelper in the staff houses of an
industrial company was a regular employee of the said firm. We ratiocinated that:

Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms "househelper" or
"domestic servant" are defined as follows:

"The term ‘househelper’ as used herein is synonymous to the term ‘domestic servant’ and shall refer
to any person, whether male or female, who renders services in and about the employer’s home and
which services are usually necessary or desirable for the maintenance and enjoyment thereof, and
ministers exclusively to the personal comfort and enjoyment of the employer’s family."

The foregoing definition clearly contemplates such househelper or domestic servant who is
employed in the employer’s home to minister exclusively to the personal comfort and enjoyment of
the employer’s family. Such definition covers family drivers, domestic servants, laundry women,
yayas, gardeners, houseboys and similar househelps.

xxx xxx xxx

The criteria is the personal comfort and enjoyment of the family of the employer in the home of said
employer. While it may be true that the nature of the work of a househelper, domestic servant or
laundrywoman in a home or in a company staffhouse may be similar in nature, the difference in their
circumstances is that in the former instance they are actually serving the family while in the latter
case, whether it is a corporation or a single proprietorship engaged in business or industry or any
other agricultural or similar pursuit, service is being rendered in the staffhouses or within the
premises of the business of the employer. In such instance, they are employees of the company or
employer in the business concerned entitled to the privileges of a regular employee.

Petitioner contends that it is only when the househelper or domestic servant is assigned to certain
aspects of the business of the employer that such househelper or domestic servant may be
considered as such an employee. The Court finds no merit in making any such distinction. The mere
fact that the househelper or domestic servant is working within the premises of the business of the
employer and in relation to or in connection with its business, as in its staffhouses for its guest or
even for its officers and employees, warrants the conclusion that such househelper or domestic
servant is and should be considered as a regular employee of the employer and not as a mere
family househelper or domestic servant as contemplated in Rule XIII, Section 1(b), Book 3 of the
Labor Code, as amended.

In the case at bar, the petitioner itself admits in its position paper33 that respondent worked at the
company premises and her duty was to cook and prepare its employees’ lunch and merienda.
Clearly, the situs, as well as the nature of respondent’s work as a cook, who caters not only to the
needs of Mr. Tan and his family but also to that of the petitioner’s employees, makes her fall
squarely within the definition of a regular employee under the doctrine enunciated in the Apex Mining
case. That she works within company premises, and that she does not cater exclusively to the
personal comfort of Mr. Tan and his family, is reflective of the existence of the petitioner’s right of
control over her functions, which is the primary indicator of the existence of an employer-employee
relationship.

Moreover, it is wrong to say that if the work is not directly related to the employer's business, then
the person performing such work could not be considered an employee of the latter. The
determination of the existence of an employer-employee relationship is defined by law according to
the facts of each case, regardless of the nature of the activities involved. 34 Indeed, it would be the
height of injustice if we were to hold that despite the fact that respondent was made to cook lunch
and merienda for the petitioner’s employees, which work ultimately redounded to the benefit of the
petitioner corporation, she was merely a domestic worker of the family of Mr. Tan.

We note the findings of the NLRC, affirmed by the Court of Appeals, that no less than the company’s
corporate secretary has certified that respondent is a bonafide company employee;35 she had a fixed
schedule and routine of work and was paid a monthly salary of ₱4,000.00; 36 she served with the
company for 15 years starting in 1983, buying and cooking food served to company employees at
lunch and merienda, and that this service was a regular feature of employment with the company. 37

Indubitably, the Court of Appeals, as well as the NLRC, correctly held that based on the given
circumstances, the respondent is a regular employee of the petitioner.1 âwphi 1

Having determined that the respondent is petitioner’s regular employee, we now proceed to
ascertain the legality of her dismissal from employment.

Petitioner contends that there was abandonment on respondent’s part when she refused to report for
work when the corporation transferred to a new location in Caloocan City, claiming that her poor
eyesight would make long distance travel a problem. Thus, it cannot be held guilty of illegal
dismissal.

On the other hand, the respondent claims that when the petitioner relocated, she was no longer
called for duty and that when she tried to report for work, she was told that her services were no
longer needed. She contends that the petitioner dismissed her without a just or authorized cause
and that she was not given prior notice, hence rendering the dismissal illegal.

We rule for the respondent.

As a regular employee, respondent enjoys the right to security of tenure under Article 279 38 of the
Labor Code and may only be dismissed for a just39 or authorized40 cause, otherwise the dismissal
becomes illegal and the employee becomes entitled to reinstatement and full backwages computed
from the time compensation was withheld up to the time of actual reinstatement.

Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. 41 It
is a form of neglect of duty; hence, a just cause for termination of employment by the employer
under Article 282 of the Labor Code, which enumerates the just causes for termination by the
employer.42 For a valid finding of abandonment, these two factors should be present: (1) the failure
to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever
employer-employee relationship, with the second as the more determinative factor which is
manifested by overt acts from which it may be deduced that the employee has no more intention to
work.43 The intent to discontinue the employment must be shown by clear proof that it was deliberate
and unjustified.44 This, the petitioner failed to do in the case at bar.

Alongside the petitioner’s contention that it was the respondent who quit her employment and
refused to return to work, greater stock may be taken of the respondent’s immediate filing of her
complaint with the NLRC. Indeed, an employee who loses no time in protesting her layoff cannot by
any reasoning be said to have abandoned her work, for it is well-settled that the filing of an
employee of a complaint for illegal dismissal with a prayer for reinstatement is proof enough of her
desire to return to work, thus, negating the employer’s charge of abandonment.45

In termination cases, the burden of proof rests upon the employer to show that the dismissal is for a
just and valid cause; failure to do so would necessarily mean that the dismissal was illegal. 46 The
employer’s case succeeds or fails on the strength of its evidence and not on the weakness of the
employee’s defense.47 If doubt exists between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter.48

IN VIEW WHEREOF, the petition is DENIED for lack of merit. The assailed Decision dated January
31, 2005, and the Resolution dated August 11, 2005, of the Court of Appeals in CA-G.R. SP Nos.
64577 and 68477 are AFFIRMED. Costs against petitioner.

SO ORDERED.
 SECOND DIVISION

[G.R. No. 118978. May 23, 1997.]

PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, *, Petitioner, v.

NATIONAL LABOR RELATIONS COMMISSION and GRACE DE
GUZMAN, Respondents.

D. P. Mercado & Associates for Petitioner.

AC Estrada & Partner for Private Respondent.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT; EMPLOYER’S

POLICY OF NOT ACCEPTING FOR WORK ANY WOMAN WORKER WHO CONTRACTS
MARRIAGE, CONTRARY TO LAW, GOOD MORALS AND PUBLIC POLICY. — In the
case at bar, petitioner’s policy of not accepting or considering as disqualified from
work any woman worker who contracts marriage runs afoul of the test of, and the
right against, discrimination, afforded all women workers by our labor laws and by
no less than the Constitution. Petitioner’s policy is not only in derogation of the
provisions of Article 136 of the Labor Code on the right of a woman to be free from
any kind of stipulation against marriage in connection with her employment, but it
likewise assaults good morals and public policy, tending as it does to deprive a
woman of the freedom to choose her status, a privilege that by all accounts inheres
in the individual as an intangible and inalienable right. Hence, while it is true that
the parties to a contract may establish any agreements, terms, and conditions that
they may deem convenient the same should not be contrary to law, morals, good
customs, public order, or public policy. Carried to its logical consequences, it may
even be said that petitioner’s policy against legitimate marital bonds would
encourage illicit or common-law relations and subvert the sacrament of marriage.

2. ID.; ID.; ID.; DISMISSAL; LOSS OF CONFIDENCE, VALID GROUND. — While loss
of confidence is a just cause of termination of employment, it should not be
simulated. It must rest on an actual breach of duty committed by the employee and
not on the employer’s caprices. Furthermore, it should never be used as a
subterfuge for causes which are improper, illegal, or unjustified.

3. ID.; ID.; ID.; ID.; ID.; CONCEALMENT OF FEMALE EMPLOYEE OF TRUE NATURE
OF STATUS FOR FEAR OF BEING DISQUALIFIED FROM WORK, NOT SUFFICIENT
BASIS. — Contrary to petitioner’s assertion that it dismissed private respondent
from employment on account of her dishonesty, the record discloses clearly that
her ties with the company were dissolved principally because of the company’s
policy that married women are not qualified for employment in PT & T, and not
merely because of her supposed acts of dishonesty. Private respondent’s act of
concealing the true nature of her status from PT & T could not be properly
characterized as willful or in bad faith as she was moved to act the way she did
mainly because she wanted to retain a permanent job in a stable company. In other
words, she was practically forced by that very same illegal company policy into
misrepresenting her civil status for fear of being disqualified from work.

4. ID.; ID.; ID.; ID.; FAILURE TO REMIT COMPANY FUNDS, NOT AN ADDITIONAL
GROUND; CASE AT BAR. — Finally, petitioner’s collateral insistence on the
admission of private respondent that she supposedly misappropriated company
funds, as an additional ground to dismiss her from employment, is somewhat
insincere and self-serving. Concededly, private respondent admitted in the course
of the proceedings that she failed to remit some of her collections, but that is an
altogether different story. The fact is that she was dismissed solely because of her
concealment of her marital status, and not on the basis of that supposed
defalcation of company funds. That the labor arbiter would thus consider
petitioner’s submissions on this a mere afterthought, just too bolster its supposed
dishonesty as case for dismissal, is a perceptive conclusion born of experience in
labor cases. For, there was no showing that private respondent deliberately
misappropriated the amount or whether her failure to remit the same was through
negligence and, if so, whether the negligence was in nature simple or grave. In
fact, it was merely agreed that private respondent execute a promissory note to
refund the same, which she did, and the matter was deemed settled as a peripheral
issue in the labor case.

5. ID.; ID.; ID., EMPLOYEE ILLEGALLY DISMISSED A FEW DAYS BEFORE

COMPLETION OF HER PROBATIONARY EMPLOYMENT AND WHO WAS PREVIOUSLY
HIRED RELIEVER FOR SEVERAL TIMES GAINED REGULAR STATUS. — Private
respondent, it must be observed, had gained regular status at the time of her
dismissal. When she was served her walking papers on January 29, 1992, she was
about to complete the probationary period of 150 days as she was contracted as a
probationary employee on September 2, 1991. That her dismissal would be effected
just when her probationary period was winding down clearly raises the plausible
conclusion that it was done in order to prevent her from earning security of tenure.
On the other hand, her earlier stints with the company as reliever were
undoubtedly those of a regular employee, even if the same were for fixed periods,
as she performed activities which were essential or necessary in the usual trade
and business of PT & T. The primary standard of determining regular employment is
the reasonable connection between the activity performed by the employee in
relation to the business or trade of the employer.

6. ID.; ID.; ID.; ID.; ENTITLED TO REINSTATEMENT WITHOUT LOSS OF SENIORITY

RIGHTS AND OTHER PRIVILEGES. — As an employee who had therefore gained
regular status, and as she had been dismissed without just cause, she is entitled to
reinstatement without loss of seniority rights and other privileges and to full back
wages, inclusive of allowances and other benefits or their monetary equivalent.

7. ID.; ID.; ID.; ID.; ID; PERIOD OF SUSPENSION FOR DISHONESTY DEDUCTED
FROM AMOUNT RECOVERABLE FOR ILLEGAL DISMISSAL. — However, as she had
undeniably committed an act of dishonesty, in concealing her status, albeit under
the compulsion of an unlawful imposition of petitioner, the three-month suspension
imposed by respondent NLRC must be upheld to obviate the impression or inference
that such act should be condoned. It would be unfair to the employer if she were to
return to its fold without any sanction whatsoever for her act which was not totally,
justified. Thus, her entitlement to back wages, which shall be computed from the
time her compensation was withheld up to the time of her actual reinstatement,
shall be reduced by, deducting therefrom the amount corresponding to her three
months suspension.

8. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT OF LABOR; IMPRESSED

WITH PUBLIC POLICY SHOULD NOT CONTAIN OPPRESSIVE PROVISIONS NOR
IMPAIR THE INTEREST OR CONVENIENCE OF THE PUBLIC; POLICY AGAINST
MARRIAGE, A PROHIBITED PROVISION. — Parenthetically, the Civil Code provisions
on the contract of labor state that the relations between the parties, that is, of
capital and labor, are not merely, contractual, impressed as they are with so much
public interest that the same should yield to the common good. It goes on to intone
dust neither capital nor labor should visit acts of oppression against the other, nor
impair the interest or convenience of the public. In the final reckoning, the danger
of just such a policy against marriage followed by petitioner PT & T is that it strikes
at the very essence, ideals and purpose of marriage as an inviolable social
institution and. ultimately, of the family as the foundation of the nation. That it
must be effectively interdicted here in all its indirect, disguised or dissembled forms
as discriminatory conduct derogatory of the laws of the land is not only in order but
imperatively required.

DECISION

REGALADO, J.:

Seeking relief through the extraordinary writ of certiorari, petitioner Philippine

Telegraph and Telephone Company (hereafter, PT&T) invokes the alleged
concealment of civil status and defalcation of company funds as grounds to
terminate the services of an employee. That employee, herein private respondent
Grace de Guzman, contrarily argues that what really motivated PT&T to terminate
her services was her having contracted marriage during her employment, which is
prohibited by petitioner in its company policies. She thus claims that she was
discriminated against in gross violation of law, such a proscription by an employer
being outlawed by Article 136 of the Labor Code.

Grace de Guzman was initially hired by petitioner as a reliever, specifically as a

"Supernumerary Project Worker," for a fixed period from November 21, 1990 until
April 20, 1991 vice one C.F. Tenorio who went on maternity leave. 1 Under the
Reliever Agreement which she signed with petitioner company, her employment
was to be immediately terminated upon expiration of the agreed period. Thereafter,
from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991,
private respondent’ s services as reliever were again engaged by petitioner, this
time in replacement of one Erlinda F. Dizon who went on leave during both periods.
2 After August 8, 1991, and pursuant to their Reliever Agreement, her services
were terminated. ch an rob les.com:cral aw:red

On September 2, 1991, private respondent was once more asked to join petitioner
company as a probationary employee, the probationary period to cover 150 days.
In the job application form that was furnished her to be filled up for the purpose,
she indicated in the portion for civil status therein that she was single although she
had contracted marriage a few months earlier, that is, on May 26, 1991. 3

It now appears that private respondent had made the same representation- in the
two successive reliever agreements which she signed on June 10, 1991 and July 8,
1991. When petitioner supposedly learned about the same later, its branch
supervisor in Baguio City, Delia M. Oficial, sent to private respondent a
memorandum dated January 15, 1992 requiring her to explain the discrepancy. In
that memorandum, she was reminded about the company’s policy of not accepting
married women for employment. 4

In her reply letter dated January 17, 1992, private respondent stated that she was
not aware of PT&T’s policy regarding married women at the time, and that all along
she had not deliberately hidden her true civil status. 5 Petitioner nonetheless
remained unconvinced by her explanations. Private respondent was dismissed from
the company effective January 29, 1992, 6 which she readily contested by initiating
a complaint for illegal dismissal, coupled with a claim for non-payment of cost of
living allowances (COLA), before the Regional Arbitration Branch of the National
Labor Relations Commission in Baguio City.

At the preliminary conference conducted in connection therewith, private

respondent volunteered the information, and this was incorporated in the
stipulation of facts between the parties, that she had failed to remit the amount of
P2,380.75 of her collections. She then executed a promissory note for that amount
in favor of petitioner. 7 All of these took place in a formal proceeding and with the
agreement of the parties and/or their counsel.

On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a decision
declaring that private respondent, who had already gained the status of a regular
employee, was illegally dismissed by petitioner. Her reinstatement, plus payment of
the corresponding back wages and COLA, was correspondingly ordered, the labor
arbiter being of the firmly expressed view that the ground relied upon by petitioner
in dismissing private respondent was clearly insufficient, and that it was apparent
that she had been discriminated against on account of her having contracted
marriage in violation of company rules.

On appeal to the National Labor Relations Commission (NLRC), said public

respondent upheld the labor arbiter and, in its decision dated April 29, 1994, it
ruled that private respondent had indeed been the subject of an unjust and
unlawful discrimination by her employer, PT&T. However, the decision of the labor
arbiter was modified with the qualification that Grace de Guzman deserved to be
suspended for three months in view of the dishonest nature of her acts which
should not be condoned. In all other respects, the NLRC affirmed the decision of the
labor arbiter, including the order for the reinstatement of private respondent in her
employment with PT&T.

The subsequent motion for reconsideration filed by petitioner was rebuffed by

respondent NLRC in its resolution of November 9, 1994, hence this special civil
action assailing the aforestated decisions. of the labor arbiter and respondent NLRC,
as well as the denial resolution of the latter.

1. Decreed in the Bible itself is the universal norm that women should be regarded
with love and respect but, through the ages, men have responded to that injunction
with indifference, on the hubristic conceit that women constitute the inferior sex.
Nowhere has that prejudice against womankind been so pervasive as in the field of
labor, especially on the matter of equal employment opportunities and standards.
In the Philippine setting, women have traditionally been considered as falling within
the vulnerable groups or types of workers who must be safeguarded with
preventive and remedial social legislation against discriminatory and exploitative
practices in hiring, training, benefits, promotion and retention.

The Constitution, cognizant of the disparity in rights between men and women in
almost all phases of social and political life, provides a gamut of protective
provisions. To cite a few of the primordial ones, Section 14, Article II 8 on the
Declaration of Principles and State Policies, expressly recognizes the role of women
in nation-building and commands the State to ensure, at all times, the fundamental
equality before the law of women and men. Corollary thereto, Section 3 of Article
XIII 9 (the progenitor whereof dates back to both the 1935 and 1973 Constitution)
pointedly requires the State to afford full protection to labor and to promote full
employment and equality of employment opportunities for all, including an
assurance of entitlement to tenurial security of all workers. Similarly, Section 14 of
Article XIII 10 mandates that the State shall protect working women through
provisions for opportunities that would enable them to reach their full potential.

2. Corrective labor and social laws on gender inequality have emerged with more
frequency in the years since the Labor Code was enacted on May 1, 1974 as
Presidential Decree No. 442, largely due to our country’s commitment as a
signatory to the United Nations Convention on the Elimination of All Forms of
Discrimination Against Women (CEDAW). 11

Principal among these laws are Republic Act No. 6727 12 which explicitly prohibits
discrimination against women with respect to terms and conditions of employment,
promotion, and training opportunities, Republic Act No. 6955 13 which bans the
"mail-order-bride" practice for a fee and the export of female labor to countries that
cannot guarantee protection to the rights of women workers; Republic Act No.
7192, 14 also known as the "Women in Development and Nation Building Act,"
which affords women equal opportunities with men to act and to enter into
contracts, and for appointment, admission, training, graduation, and commissioning
in all military or similar schools of the Armed Forces of the Philippines and the
Philippine National Police; Republic Act No. 7322 15 increasing the maternity
benefits granted to women in the private sector; Republic Act No. 7877 16 which
outlaws and punishes sexual harassment in the workplace and in the education and
training environment; and Republic Act No. 8042, 17 or the "Migrant Workers and
Overseas Filipinos Act of 1995," which prescribes as a matter of policy, inter alia,
the deployment of migrant workers, with emphasis on women, only in countries
where their rights are secure. Likewise, it would not be amiss to point out that in
the Family Code, 18 women’s rights in the field of civil law have been greatly
enhanced and expanded.

In the Labor Code, provisions governing the rights of women workers are found in
Articles 130 to 138 thereof. Article 130 involves the right against particular kinds of
night work while Article 132 ensures the right of women to be provided with
facilities and standards which the Secretary of Labor may establish to ensure their
health and safety. For purposes of labor and social legislation, a woman working in
a nightclub, cocktail lounge, massage clinic, bar or other similar establishments
shall be considered as an employee under Article 138. Article 135, on the other
hand, recognizes a woman’ s right against discrimination with respect to terms and
conditions of employment on account simply of sex. Finally, and this brings us to
the issue at hand, Article 136 explicitly prohibits discrimination merely by reason of
the marriage of a female employee.

3. Acknowledged as paramount in the due process scheme is the constitutional

guarantee of protection to labor and security of tenure. Thus, an employer is
required, as a condition sine qua non prior to severance of the employment ties of
an individual under his employ, to convincingly establish, through substantial
evidence, the existence of a valid and just cause in dispensing with the services of
such employee, one’ s labor being regarded as constitutionally protected property.

On the other hand, it is recognized that regulation of manpower by the company

falls within the so-called management prerogatives, which prescriptions encompass
the matter of hiring, supervision of workers, work assignments, working methods
and assignments, as well as regulations on the transfer of employees, lay-off of
workers, and the discipline, dismissal, and recall of employees. 19 As put in a case,
an employer is free to regulate, according to his discretion and best business
judgment, all aspects of employment, "from hiring to firing," except in cases of
unlawful discrimination or those which may be provided by law. 20

In the case at bar, petitioner’s policy of not accepting or considering as disqualified

from work any woman worker who contracts marriage runs afoul of the test of, and
the right against, discrimination, afforded all women workers by our labor laws and
by no less than the Constitution. Contrary to petitioner’s assertion that it dismissed
private respondent from employment on account of her dishonesty, the record
discloses clearly that her ties with the company were dissolved principally because
of the company’s policy that married women are not qualified for employment in
PT&T, and not merely because of her supposed acts of dishonesty.
That it was so can easily be seen from the memorandum sent to private respondent
by Delia M. Oficial, the branch supervisor of the company, with the reminder, in the
words of the latter, that "you’re fully aware that the company is not accepting
married women employee (sic), as it was verbally instructed to you." 21 Again, in
the termination notice sent to her by the same branch supervisor, private
respondent was made to understand that her severance from the service was not
only by reason of her concealment of her married status but, over and on top of
that, was her violation of the company’ s policy against marriage ("and even told
you that married women employees are not applicable [sic] or accepted in our
company.") 22 Parenthetically, this seems to be the curious reason why it was
made to appear in the initiatory pleadings that petitioner was represented in this
case only by its said supervisor and not by its highest ranking officers who would
otherwise be solidarily liable with the corporation. 23

Verily, private respondent’s act of concealing the true nature of her status from
PT&T could not be properly characterized as willful or in bad faith as she was moved
to act the way she did mainly because she wanted to retain a permanent job in a
stable company. In other words, she was practically forced by that very same illegal
company policy into misrepresenting her civil status for fear of being disqualified
from work. While loss of confidence is a just cause for termination of employment,
it should not be simulated. 24 It must rest on an actual breach of duty committed
by the employee and not on the employer’s caprices. 25 Furthermore, it should
never be used as a subterfuge for causes which are improper, illegal, or unjustified.
26ch an rob les law lib rary

In the present controversy, petitioner’s expostulations that it dismissed private

respondent, not because the latter got married but because she concealed that fact,
does have a hollow ring. Her concealment, so it is claimed, bespeaks dishonesty
hence the consequent loss of confidence in her which justified her dismissal.
Petitioner would asseverate, therefore, that while it has nothing against marriage, it
nonetheless takes umbrage over the concealment of that fact. This improbable
reasoning, with interstitial distinctions, perturbs the Court since private respondent
may well be minded to claim that the imputation of dishonesty should be the other
way around.

Petitioner would have the Court believe that although private respondent defied its
policy against its female employees contracting marriage, what could be an act of
insubordination was inconsequential. What it submits as unforgivable is her
concealment of that marriage yet, at the same time, declaring that marriage as a
trivial matter to which it supposedly has no objection. In other words, PT&T says it
gives its blessings to its female employees contracting marriage, despite the
maternity leaves and other benefits it would consequently respond for and which
obviously it would have wanted to avoid. If that employee confesses such fact of
marriage, there will be no sanction; but if such employee conceals the same instead
of proceeding to the confessional, she will be dismissed. This line of reasoning does
not impress us as reflecting its true management policy or that we are being
regaled with responsible advocacy.
This Court should be spared the ennui of strained reasoning and the tedium of
propositions which confuse through less than candid arguments. Indeed, petitioner
glosses over the fact that it was its unlawful policy against married women, both on
the aspects of qualification and retention, which compelled private respondent to
conceal her supervenient marriage. It was, however, that very policy alone which
was the cause of private respondent’s secretive conduct now complained of. It is
then apropos to recall the familiar saying that he who is the cause of the cause is
the cause of the evil caused.

Finally, petitioner’s collateral insistence on the admission of private respondent that

she supposedly misappropriated company funds, as an additional ground to dismiss
her from employment, is somewhat insincere and self-serving. Concededly, private
respondent admitted in the course of the proceedings that she failed to remit some
of her collections, but that is an altogether different story. The fact is that she was
dismissed solely because of her concealment of her marital status, and not on the
basis of that supposed defalcation of company funds. That the labor arbiter would
thus consider petitioner’s submissions on this supposed dishonesty as a mere
afterthought, just to bolster its case for dismissal, is a perceptive conclusion born of
experience in labor cases. For, there was no showing that private respondent
deliberately misappropriated the amount or whether her failure to remit the same
was through negligence and, if so, whether the negligence was in nature simple or
grave. In fact, it was merely agreed that private respondent execute a promissory
note to refund the same, which she did, and the matter was deemed settled as a
peripheral issue in the labor case.

Private respondent, it must be observed, had gained regular status at the time of
her dismissal. When she was served her walking papers on January 29, 1992, she
was about to complete the probationary period of 150 days as she was contracted
as a probationary employee on September 2, 1991. That her dismissal would be
effected just when her probationary period was winding down clearly raises the
plausible conclusion that it was done in order to prevent her from earning security
of tenure. 27 On the other hand, her earlier stints with the company as reliever
were undoubtedly those of a regular employee, even if the same were for fixed
periods, as she performed activities which were essential or necessary in the usual
trade and business of PT&T. 28 The primary standard of determining regular
employment is the reasonable connection between the activity performed by the
employee in relation to the business or trade of the employer. 29

As an employee who had therefore gained regular status, and as she had been
dismissed without just cause, she is entitled to reinstatement without loss of
seniority rights and other privileges and to full back wages, inclusive of allowances
and other benefits or their monetary equivalent. 30 However, as she had
undeniably committed an act of dishonesty in concealing her status, albeit under
the compulsion of an unlawful imposition of petitioner, the three-month suspension
imposed by respondent NLRC must be upheld to obviate the impression or inference
that such act should be condoned. It would be unfair to the employer if she were to
return to its fold without any sanction whatsoever for her act which was not totally
justified. Thus, her entitlement to back wages, which shall be computed from the
time her compensation was withheld up to the time of her actual reinstatement,
shall be reduced by deducting therefrom the amount corresponding to her three
months suspension.

4. The government, to repeat, abhors any stipulation or policy in the nature of that
adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as
follows:
jg c:ch an rob les.c om .p h

"ART. 136. Stipulation against marriage. — It shall be unlawful for an employer to

require as a condition of employment or continuation of employment that a woman
shall not get married, or to stipulate expressly or tacitly that upon getting married,
a woman employee shall be deemed resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by reason
of marriage." cralaw virt u a1 a w lib rary

This provision had a studied history for its origin can be traced to Section 8 of
Presidential Decree No. 148, 31 better known as the "Women and Child Labor Law,"
which amended paragraph (c), Section 12 of Republic Act No. 679, 32 entitled "An
Act to Regulate the Employment of Women and Children, to Provide Penalties for
Violations Thereof, and for Other Purposes." The forerunner to Republic Act No.
679, on the other hand, was Act No. 3071 which became law on March 16, 1923
and which regulated the employment of women and children in shops, factories,
industrial, agricultural, and mercantile establishments and other places of labor in
the then Philippine Islands.

It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita,
Et. Al. v. Philippine Air Lines, 33 a decision that emanated from the Office of the
President. There, a policy of Philippine Air Lines requiring that prospective flight
attendants must be single and that they will be automatically separated from the
service once they marry was declared void, it being violative of the clear mandate
in Article 136 of the Labor Code with regard to discrimination against married
women. Thus: jg c:ch an rob les.com.p h

"Of first impression is the incompatibility of the respondent’s policy or regulation

with the codal provision of law. Respondent is resolute in its contention that Article
136 of the Labor Code applies only to women employed in ordinary occupations and
that the prohibition against marriage of women engaged in extraordinary
occupations, like flight attendants, is fair and reasonable, considering the
peculiarities of their chosen profession.

We cannot subscribe to the line of reasoning pursued by Respondent. All along, it

knew that the controverted policy has already met its doom as early as March 13,
1973 when Presidential Decree No. 148, otherwise known as the Women and Child
Labor Law, was promulgated. But for the timidity of those affected or their labor
unions in challenging the validity of the policy, the same was able to obtain a
momentary reprieve. A close look at Section 8 of said decree, which amended
paragraph (c) of Section 12 of Republic Act No. 679, reveals that it is exactly the
same provision reproduced verbatim in Article 136 of the Labor Code, which was
promulgated on May 1, 1974 to take effect six (6) months later, or on November 1,
1974.

It cannot be gainsaid that, with the reiteration of the same provision in the new
Labor Code, all policies and acts against it are deemed illegal and therefore
abrogated. True, Article 132 enjoins the Secretary of Labor to establish standards
that will ensure the safety and health of women employees and in appropriate
cases shall by regulation require employers to determine appropriate minimum
standards for termination in special occupations, such as those of flight attendants,
but that is precisely the factor that militates against the policy of Respondent. The
standards have not yet been established as set forth in the first paragraph, nor has
the Secretary of Labor issued any regulation affecting flight attendants.

It is logical to presume that, in the absence of said standards or regulations which

are as yet to be established, the policy of respondent against marriage is patently
illegal. This finds support in Section 9 of the New Constitution, which provides: jg c:ch an rob les. com .p h

"Sec. 9. The State shall afford protection to labor, promote full employment and
equality in employment, ensure equal work opportunities regardless of sex, race, or
creed, and regulate the relations between workers and employees. The State shall
assure the rights of workers to self-organization, collective bargaining, security of
tenure, and just and humane conditions of work . . ." cralaw virt u a1 aw lib rary

Moreover, we cannot agree to the respondent’s proposition that termination from

employment of flight attendants on account of marriage is a fair and reasonable
standard designed for their own health, safety, protection and welfare, as no basis
has been laid therefor. Actually, respondent claims that its concern is not so much
against the continued employment of the flight attendant merely by reason of
marriage as observed by the Secretary of Labor, but rather on the consequence of
marriage-pregnancy. Respondent discussed at length in the instant appeal the
supposed ill effects of pregnancy on flight attendants in the course of their
employment. We feel that this needs no further discussion as it had been
adequately explained by the Secretary of Labor in his decision of May 2, 1976. ch an rob les virt u alawl ib rary

In a vain attempt to give meaning to its position, respondent went as far as

invoking the provisions of Articles 52 and 216 of the New Civil Code on the
preservation of marriage as an inviolable social institution and the family as a basic
social institution, respectively, as bases for its policy of non-marriage. In both
instances, respondent predicates absence of a flight attendant from her home for
long periods of time as contributory to an unhappy married life. This is pure
conjecture not based on actual conditions, considering that, in this modern world,
sophisticated technology has narrowed the distance from one place to another.
Moreover, respondent overlooked the fact that married flight attendants can
program their lives to adapt to prevailing circumstances and events.

Article 136 is not intended to apply only to women employed in ordinary

occupations, or it should have categorically expressed so. The sweeping intendment
of the law, be it on special or ordinary occupations, is reflected in the whole text
and supported by Article 135 that speaks of non-discrimination on the employment
of women.

The judgment of the Court of Appeals in Gualberto, Et. Al. v. Marinduque Mining &
Industrial Corporation 34 considered as void a policy of the same nature. In said
case, respondent, in dismissing from the service the complainant, invoked a policy
of the firm to consider female employees in the project it was undertaking as
separated the moment they get married due to lack of facilities for married women.
Respondent further claimed that complainant was employed in the project with an
oral understanding that her services would be terminated when she gets married.
Branding the policy of the employer as an example of "discriminatory chauvinism
tantamount to denying equal employment opportunities to women simply on
account of their sex, the appellate court struck down said employer policy as
unlawful in view of its repugnance to the Civil Code, Presidential Decree No. 148
and the Constitution.

Under American jurisprudence, job requirements which establish employer

preference or conditions relating to the marital status of an employee are
categorized as a "sex-plus" discrimination where it is imposed on one sex and not
on the other. Further, the same should be evenly applied and must not inflict
adverse effects on a racial or sexual group which is protected by federal job
discrimination laws. Employment rules that forbid or restrict the employment of
married women, but do not apply to married men, have been held to violate Title
VII of the United States Civil Rights Act of 1964, the main federal statute
prohibiting job discrimination against employees and applicants on the basis of,
among other things, sex. 35

Further, it is not relevant that the rule is not directed against all women but just
against married women. And, where the employer discriminates against married
women, but not against married men, the variable is sex and the discrimination is
unlawful. 36 Upon the other hand, a requirement that a woman employee must
remain unmarried could be justified as a "bona fide occupational qualification," or
BFOQ, where the particular requirements of the job would justify the same, but not
on the ground of a general principle, such as the desirability of spreading work in
the workplace. A requirement of that nature would be valid provided it reflects an
inherent quality reasonably necessary for satisfactory job performance. Thus, in
one case, a no-marriage rule applicable to both male and female flight attendants,
was regarded as unlawful since the restriction was not related to the job
performance of the flight attendants. 37

5. Petitioner’s policy is not only in derogation of the provisions of Article 136 of the
Labor Code on the right of a woman to be free from any kind of stipulation against
marriage in connection with her employment, but it likewise assaults good morals
and public policy, tending as it does to deprive a woman of the freedom to choose
her status, a privilege that by all accounts inheres in the individual as an intangible
and inalienable right. 38 Hence, while it is true that the parties to a contract may
establish any agreements, terms, and conditions that they may deem convenient,
the same should not be contrary to law, morals, good customs, public order, or
public policy. 39 Carried to its logical consequences, it may even be said that
petitioner’s policy against legitimate marital bonds would encourage illicit or
common-law relations and subvert the sacrament of marriage.

Parenthetically, the Civil Code provisions on the contract of labor state that the
relations between the parties, that is, of capital and labor, are not merely
contractual, impressed as they are with so much public interest that the same
should yield to the common good. 40 It goes on to intone that neither capital nor
labor should visit acts of oppression against the other, nor impair the interest or
convenience of the public. 41 In the final reckoning, the danger of just such a policy
against marriage followed by petitioner PT&T is that it strikes at the very essence,
ideals and purpose of marriage as an inviolable social institution and, ultimately, of
the family as the foundation of the nation. 42 That it must be effectively interdicted
here in all its indirect, disguised or dissembled forms as discriminatory conduct
derogatory of the laws of the land is not only in order but imperatively required.

ON THE FOREGOING PREMISES, the petition of Philippine Telegraph and Telephone

Company is hereby DISMISSED for lack of merit, with double costs against
petitioner.
ch an rob les la wlib rary : red n ad

SO ORDERED.
G.R. No. 164774 April 12, 2006

STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN CHUA, Petitioners,

vs.
RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E. ESTRELLA, Respondents.

DECISION

PUNO, J.:

We are called to decide an issue of first impression: whether the policy of the employer banning
spouses from working in the same company violates the rights of the employee under the
Constitution and the Labor Code or is a valid exercise of management prerogative.

At bar is a Petition for Review on Certiorari of the Decision of the Court of Appeals dated August 3,
2004 in CA-G.R. SP No. 73477 reversing the decision of the National Labor Relations Commission
(NLRC) which affirmed the ruling of the Labor Arbiter.

Petitioner Star Paper Corporation (the company) is a corporation engaged in trading – principally of
paper products. Josephine Ongsitco is its Manager of the Personnel and Administration Department
while Sebastian Chua is its Managing Director.

The evidence for the petitioners show that respondents Ronaldo D. Simbol (Simbol), Wilfreda N.
Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company. 1

Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also an employee
of the company, whom he married on June 27, 1998. Prior to the marriage, Ongsitco advised the
couple that should they decide to get married, one of them should resign pursuant to a company
policy promulgated in 1995,2 viz.:

1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the]
3rd degree of relationship, already employed by the company.

2. In case of two of our employees (both singles [sic], one male and another female)
developed a friendly relationship during the course of their employment and then decided to
get married, one of them should resign to preserve the policy stated above. 3

Simbol resigned on June 20, 1998 pursuant to the company policy. 4

Comia was hired by the company on February 5, 1997. She met Howard Comia, a co-employee,
whom she married on June 1, 2000. Ongsitco likewise reminded them that pursuant to company
policy, one must resign should they decide to get married. Comia resigned on June 30, 2000. 5

Estrella was hired on July 29, 1994. She met Luisito Zuñiga (Zuñiga), also a co-worker. Petitioners
stated that Zuñiga, a married man, got Estrella pregnant. The company allegedly could have
terminated her services due to immorality but she opted to resign on December 21, 1999.6

The respondents each signed a Release and Confirmation Agreement. They stated therein that they
have no money and property accountabilities in the company and that they release the latter of any
claim or demand of whatever nature.7
Respondents offer a different version of their dismissal. Simbol and Comia allege that they did not
resign voluntarily; they were compelled to resign in view of an illegal company policy. As to
respondent Estrella, she alleges that she had a relationship with co-worker Zuñiga who
misrepresented himself as a married but separated man. After he got her pregnant, she discovered
that he was not separated. Thus, she severed her relationship with him to avoid dismissal due to the
company policy. On November 30, 1999, she met an accident and was advised by the doctor at the
Orthopedic Hospital to recuperate for twenty-one (21) days. She returned to work on December 21,
1999 but she found out that her name was on-hold at the gate. She was denied entry. She was
directed to proceed to the personnel office where one of the staff handed her a memorandum. The
memorandum stated that she was being dismissed for immoral conduct. She refused to sign the
memorandum because she was on leave for twenty-one (21) days and has not been given a chance
to explain. The management asked her to write an explanation. However, after submission of the
explanation, she was nonetheless dismissed by the company. Due to her urgent need for money,
she later submitted a letter of resignation in exchange for her thirteenth month pay. 8

Respondents later filed a complaint for unfair labor practice, constructive dismissal, separation pay
and attorney’s fees. They averred that the aforementioned company policy is illegal and contravenes
Article 136 of the Labor Code. They also contended that they were dismissed due to their union
membership.

On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the complaint for lack of
merit, viz.:

[T]his company policy was decreed pursuant to what the respondent corporation perceived as
management prerogative. This management prerogative is quite broad and encompassing for it
covers hiring, work assignment, working method, time, place and manner of work, tools to be used,
processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of workers. Except as provided
for or limited by special law, an employer is free to regulate, according to his own discretion and
judgment all the aspects of employment.9 (Citations omitted.)

On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter on January 11,
2002. 10

Respondents filed a Motion for Reconsideration but was denied by the NLRC in a Resolution 11 dated
August 8, 2002. They appealed to respondent court via Petition for Certiorari.

In its assailed Decision dated August 3, 2004, the Court of Appeals reversed the NLRC
decision, viz.:

WHEREFORE, premises considered, the May 31, 2002 (sic)12 Decision of the National Labor
Relations Commission is hereby REVERSED and SET ASIDE and a new one is entered as follows:

(1) Declaring illegal, the petitioners’ dismissal from employment and ordering private
respondents to reinstate petitioners to their former positions without loss of seniority rights
with full backwages from the time of their dismissal until actual reinstatement; and

(2) Ordering private respondents to pay petitioners attorney’s fees amounting to 10% of the
award and the cost of this suit.13

On appeal to this Court, petitioners contend that the Court of Appeals erred in holding that:
 1. x x x the subject 1995 policy/regulation is violative of the constitutional rights towards
marriage and the family of employees and of Article 136 of the Labor Code; and

2. x x x respondents’ resignations were far from voluntary.14

We affirm.

The 1987 Constitution15 states our policy towards the protection of labor under the following
provisions, viz.:

Article II, Section 18. The State affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare.

xxx

Article XIII, Sec. 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.

The State shall promote the principle of shared responsibility between workers and employers,
recognizing the right of labor to its just share in the fruits of production and the right of enterprises to
reasonable returns on investments, and to expansion and growth.

The Civil Code likewise protects labor with the following provisions:

Art. 1700. The relation between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good. Therefore, such contracts
are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of labor and similar subjects.

Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of
the safety and decent living for the laborer.

The Labor Code is the most comprehensive piece of legislation protecting labor. The case at bar
involves Article 136 of the Labor Code which provides:

Art. 136. It shall be unlawful for an employer to require as a condition of employment or continuation
of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that
upon getting married a woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her
marriage.

Respondents submit that their dismissal violates the above provision. Petitioners allege that its
policy "may appear to be contrary to Article 136 of the Labor Code" but it assumes a new meaning if
read together with the first paragraph of the rule. The rule does not require the woman employee to
resign. The employee spouses have the right to choose who between them should resign. Further,
they are free to marry persons other than co-employees. Hence, it is not the marital status of the
employee, per se, that is being discriminated. It is only intended to carry out its no-employment-for-
relatives-within-the-third-degree-policy which is within the ambit of the prerogatives of
management.16

It is true that the policy of petitioners prohibiting close relatives from working in the same company
takes the nature of an anti-nepotism employment policy. Companies adopt these policies to prevent
the hiring of unqualified persons based on their status as a relative, rather than upon their
ability.17 These policies focus upon the potential employment problems arising from the perception of
favoritism exhibited towards relatives.

With more women entering the workforce, employers are also enacting employment policies
specifically prohibiting spouses from working for the same company. We note that two types of
employment policies involve spouses: policies banning only spouses from working in the same
company (no-spouse employment policies), and those banning all immediate family members,
including spouses, from working in the same company (anti-nepotism employment policies).18

Unlike in our jurisdiction where there is no express prohibition on marital discrimination, 19 there are
twenty state statutes20 in the United States prohibiting marital discrimination. Some state
courts21 have been confronted with the issue of whether no-spouse policies violate their laws
prohibiting both marital status and sex discrimination.

In challenging the anti-nepotism employment policies in the United States, complainants utilize two
theories of employment discrimination: the disparate treatment and the disparate impact. Under
the disparate treatment analysis, the plaintiff must prove that an employment policy is
discriminatory on its face. No-spouse employment policies requiring an employee of a particular
sex to either quit, transfer, or be fired are facially discriminatory. For example, an employment policy
prohibiting the employer from hiring wives of male employees, but not husbands of female
employees, is discriminatory on its face.22

On the other hand, to establish disparate impact, the complainants must prove that a facially
neutral policy has a disproportionate effect on a particular class. For example, although most
employment policies do not expressly indicate which spouse will be required to transfer or leave the
company, the policy often disproportionately affects one sex.23

The state courts’ rulings on the issue depend on their interpretation of the scope of marital status
discrimination within the meaning of their respective civil rights acts. Though they agree that the term
"marital status" encompasses discrimination based on a person's status as either married, single,
divorced, or widowed, they are divided on whether the term has a broader meaning. Thus, their
decisions vary.24

The courts narrowly25 interpreting marital status to refer only to a person's status as married, single,
divorced, or widowed reason that if the legislature intended a broader definition it would have either
chosen different language or specified its intent. They hold that the relevant inquiry is if one is
married rather than to whom one is married. They construe marital status discrimination to include
only whether a person is single, married, divorced, or widowed and not the "identity, occupation, and
place of employment of one's spouse." These courts have upheld the questioned policies and ruled
that they did not violate the marital status discrimination provision of their respective state statutes.

The courts that have broadly26 construed the term "marital status" rule that it encompassed the
identity, occupation and employment of one's spouse. They strike down the no-spouse employment
policies based on the broad legislative intent of the state statute. They reason that the no-spouse
employment policy violate the marital status provision because it arbitrarily discriminates against all
spouses of present employees without regard to the actual effect on the individual's qualifications or
work performance.27 These courts also find the no-spouse employment policy invalid for failure of the
employer to present any evidence of business necessity other than the general perception that
spouses in the same workplace might adversely affect the business.28 They hold that the absence of
such a bona fide occupational qualification29 invalidates a rule denying employment to one
spouse due to the current employment of the other spouse in the same office. 30 Thus, they rule that
unless the employer can prove that the reasonable demands of the business require a distinction
based on marital status and there is no better available or acceptable policy which would better
accomplish the business purpose, an employer may not discriminate against an employee based on
the identity of the employee’s spouse.31 This is known as the bona fide occupational qualification
exception.

We note that since the finding of a bona fide occupational qualification justifies an employer’s no-
spouse rule, the exception is interpreted strictly and narrowly by these state courts. There must be a
compelling business necessity for which no alternative exists other than the discriminatory
practice.32 To justify a bona fide occupational qualification, the employer must prove two factors: (1)
that the employment qualification is reasonably related to the essential operation of the job involved;
and, (2) that there is a factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job. 33

The concept of a bona fide occupational qualification is not foreign in our jurisdiction. We employ the
standard of reasonableness of the company policy which is parallel to the bona fide occupational
qualification requirement. In the recent case of Duncan Association of Detailman-PTGWO and
Pedro Tecson v. Glaxo Wellcome Philippines, Inc.,34 we passed on the validity of the policy of a
pharmaceutical company prohibiting its employees from marrying employees of any competitor company. We
held that Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other
confidential programs and information from competitors. We considered the prohibition against personal or
marital relationships with employees of competitor companies upon Glaxo’s employees reasonable under the
circumstances because relationships of that nature might compromise the interests of Glaxo. In laying down
the assailed company policy, we recognized that Glaxo only aims to protect its interests against the possibility
that a competitor company will gain access to its secrets and procedures.35

The requirement that a company policy must be reasonable under the circumstances to qualify as a
valid exercise of management prerogative was also at issue in the 1997 case of Philippine
Telegraph and Telephone Company v. NLRC.36 In said case, the employee was dismissed in
violation of petitioner’s policy of disqualifying from work any woman worker who contracts marriage.
We held that the company policy violates the right against discrimination afforded all women workers
under Article 136 of the Labor Code, but established a permissible exception, viz.:

[A] requirement that a woman employee must remain unmarried could be justified as a "bona fide
occupational qualification," or BFOQ, where the particular requirements of the job would justify the
same, but not on the ground of a general principle, such as the desirability of spreading work in the
workplace. A requirement of that nature would be valid provided it reflects an inherent
quality reasonably necessary for satisfactory job performance.37 (Emphases supplied.)

The cases of Duncan and PT&T instruct us that the requirement of reasonableness must
be clearly established to uphold the questioned employment policy. The employer has the burden to
prove the existence of a reasonable business necessity. The burden was successfully discharged in
Duncan but not in PT&T.

We do not find a reasonable business necessity in the case at bar.

Petitioners’ sole contention that "the company did not just want to have two (2) or more of its
employees related between the third degree by affinity and/or consanguinity" 38 is lame. That the
second paragraph was meant to give teeth to the first paragraph of the questioned rule 39 is evidently
not the valid reasonable business necessity required by the law.

It is significant to note that in the case at bar, respondents were hired after they were found fit for the
job, but were asked to resign when they married a co-employee. Petitioners failed to show how the
marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the
Repacking Section, could be detrimental to its business operations. Neither did petitioners explain
how this detriment will happen in the case of Wilfreda Comia, then a Production Helper in the
Selecting Department, who married Howard Comia, then a helper in the cutter-machine. The policy
is premised on the mere fear that employees married to each other will be less efficient. If we uphold
the questioned rule without valid justification, the employer can create policies based on an
unproven presumption of a perceived danger at the expense of an employee’s right to security of
tenure.

Petitioners contend that their policy will apply only when one employee marries a co-employee, but
they are free to marry persons other than co-employees. The questioned policy may not facially
violate Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate
impact theory, the only way it could pass judicial scrutiny is a showing that it is reasonable despite
the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate
business concern in imposing the questioned policy cannot prejudice the employee’s right to be free
from arbitrary discrimination based upon stereotypes of married persons working together in one
company.40

Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot
benefit the petitioners. The protection given to labor in our jurisdiction is vast and extensive that we
cannot prudently draw inferences from the legislature’s silence41 that married persons are not
protected under our Constitution and declare valid a policy based on a prejudice or stereotype. Thus,
for failure of petitioners to present undisputed proof of a reasonable business necessity, we rule that
the questioned policy is an invalid exercise of management prerogative. Corollarily, the issue as to
whether respondents Simbol and Comia resigned voluntarily has become moot and academic.

As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling on the singular fact that
her resignation letter was written in her own handwriting. Both ruled that her resignation was
voluntary and thus valid. The respondent court failed to categorically rule whether Estrella voluntarily
resigned but ordered that she be reinstated along with Simbol and Comia.

Estrella claims that she was pressured to submit a resignation letter because she was in dire need of
money. We examined the records of the case and find Estrella’s contention to be more in accord
with the evidence. While findings of fact by administrative tribunals like the NLRC are generally given
not only respect but, at times, finality, this rule admits of exceptions, 42 as in the case at bar.

Estrella avers that she went back to work on December 21, 1999 but was dismissed due to her
alleged immoral conduct. At first, she did not want to sign the termination papers but she was forced
to tender her resignation letter in exchange for her thirteenth month pay.

The contention of petitioners that Estrella was pressured to resign because she got impregnated by
a married man and she could not stand being looked upon or talked about as immoral 43 is
incredulous. If she really wanted to avoid embarrassment and humiliation, she would not have gone
back to work at all. Nor would she have filed a suit for illegal dismissal and pleaded for
reinstatement. We have held that in voluntary resignation, the employee is compelled by personal
reason(s) to dissociate himself from employment. It is done with the intention of relinquishing an
office, accompanied by the act of abandonment. 44 Thus, it is illogical for Estrella to resign and then
file a complaint for illegal dismissal. Given the lack of sufficient evidence on the part of petitioners
that the resignation was voluntary, Estrella’s dismissal is declared illegal.

IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. SP No. 73477 dated August
3, 2004 is AFFIRMED. 1avv phi l.n et

SO ORDERED.
G.R. No. 187417

CHRISTINE JOY CAPIN-CADIZ, Petitioner,

vs.
BRENT HOSPITAL AND COLLEGES, INC., Respondent.

DECISION

REYES, J.:

This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing the
Resolutions dated July 22, 20082 and February 24, 20093 of the Court of Appeals (CA) in CA-GR. SP
No. 02373-MIN, which dismissed the petition filed by petitioner Christine Joy Capin-Cadiz (Cadiz) on
the following grounds: (1) incomplete statement of material dates; (2) failure to attach registry
receipts; and (3) failure to indicate the place of issue of counsel's Professional Tax Receipt (PTR)
and Integrated Bar of the Philippines (IBP) official receipts.

Antecedent Facts

Cadiz was the Human Resource Officer of respondent Brent Hospital and Colleges, Inc. (Brent) at
the time of her indefinite suspension from employment in 2006. The cause of suspension was
Cadiz's Unprofessionalism and Unethical Behavior Resulting to Unwed Pregnancy. It appears that
Cadiz became pregnant out of wedlock, and Brent imposed the suspension until such time that she
marries her boyfriend in accordance with law.

Cadiz then filed with the Labor Arbiter (LA) a complaint for Unfair Labor Practice, Constructive
Dismissal, Non-Payment of Wages and Damages with prayer for Reinstatement.4

Ruling of the Labor Tribunals

In its Decision5 dated April 12, 2007, the LA found that Cadiz's indefinite suspension amounted to a
constructive dismissal; nevertheless, the LA ruled that Cadiz was not illegally dismissed as there
was just cause for her dismissal, that is, she engaged in premarital sexual relations with her
boyfriend resulting in a pregnancy out of wedlock. 6 The LA further stated that her "immoral conduct x
x x [was] magnified as serious misconduct not only by her getting pregnant as a result thereof before
and without marriage, but more than that, also by the fact that Brent is an institution of the Episcopal
Church in the Philippines operating both a hospital and college where [Cadiz] was employed." 7 The
LA also ruled that she was not entitled to reinstatement "at least until she marries her boyfriend," to
backwages and vacation/sick leave pay. Brent, however, manifested that it was willing to pay her
13th month pay. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered, ordering [Brent] to pay [Cadiz] 13th month pay in the
sum of Seven Thousand Nine Hundred Seventy & 11/100 Pesos (P7,970.11).

All other charges and claims are hereby dismissed for lack of merit.

SO ORDERED.8

Cadiz appealed to the National Labor Relations Commission (NLRC), which affirmed the LA decision
in its Resolution9 dated December 10, 2007. Her motion for reconsideration having been denied by
the NLRC in its Resolution10 dated February 29, 2008, Cadiz elevated her case to the CA on petition
for certiorari under Rule 65.

Ruling of the CA

The CA, however, dismissed her petition outright due to technical defects in the petition: (1)
incomplete statement of material dates; (2) failure to attach registry receipts; and (3) failure to
indicate the place of issue of counsel's PTR and IBP official receipts. 11 Cadiz sought reconsideration
of the assailed CA Resolution dated July 22, 2008 but it was denied in the assailed Resolution dated
February 24, 2009. 12 The CA further ruled that "a perusal of the petition will reveal that public
respondent NLRC committed no grave abuse of discretion amounting to lack or excess of jurisdiction
x x x holding [Cadiz's] dismissal from employment valid." 13

Hence, the present petition.

Cadiz argues that -

THE HONORABLE [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT HELD THAT
[CADIZ'S] IMPREGNATION OUTSIDE OF WEDLOCK IS A GROUND FOR THE TERMINATION OF
[CADIZ'S] EMPLOYMENT14

II

THE [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT UPHELD THE DISMISSAL
OF [CADIZ] ON THE GROUND THAT THE INDEFINITE SUSPENSION WAS VALID AND
REQUIRED [CADIZ] TO FIRST ENTER INTO MARRIAGE BEFORE SHE CAN BE ADMITTED
BACK TO HER EMPLOYMENT15

III

RESPONDENT [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT DENIED [CADIZ'S]

CLAIM FOR BACKWAGES, ALLOWANCES, SICK LEAVE PAY, MATERNITY PAY AND MORAL
AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES 16

IV

THE [CA] MISPLACED APPLICATION OF THE MATERIAL DATA RULE RESULTING TO GRAVE
ABUSE OF DISCRETION WHEN IT DISMISSED THE APPEAL17

Cadiz contends, among others, that getting pregnant outside of wedlock is not grossly immoral,
especially when both partners do not have any legal impediment to marry. Cadiz surmises that the
reason for her suspension was not because of her relationship with her then boyfriend but because
of the resulting pregnancy. Cadiz also lambasts Brent's condition for her reinstatement - that she
gets married to her boyfriend - saying that this violates the stipulation against marriage under Article
136 of the Labor Code. Finally, Cadiz contends that there was substantial compliance with the rules
of procedure, and the CA should not have dismissed the petition. 18

Brent, meanwhile, adopts and reiterates its position before the LA and the NLRC that Cadiz's
arguments are irrational and out of context. Brent argues, among others, that for Cadiz to limit acts
of immorality only to extra-marital affairs is to "change the norms, beliefs, teachings and practices of
BRENT as a Church institution of the x x x Episcopal Church in the Philippines." 19

Ruling of the Court

Ordinarily, the Court will simply gloss over the arguments raised by Cadiz, given that the main matter
dealt with by the CA were the infirmities found in the petition and which caused the dismissal of her
case before it. In view, however, of the significance of the issues involved in Cadiz's dismissal from
employment, the Court will resolve the petition including the substantial grounds raised herein.

The issue to be resolved is whether the CA committed a reversible error in ruling that: (1) Cadiz's
petition is dismissible on ground of technical deficiencies; and (2) the NLRC did not commit grave
abuse of discretion in upholding her dismissal from employment.

Rules of procedure are mere tools

designed to facilitate the attainment
of justice

In dismissing outright Cadiz's petition, the CA found the following defects: (1) incomplete statement
of material dates; (2) failure to attach registry receipts; and (3) failure to indicate the place of issue of
counsel's PTR and IBP official receipts.

Rule 46, Section 3 of the Rules of Court states the contents of a petition filed with the CA under Rule
65, viz, "the petition shall x x x indicate the material dates showing when notice of the judgment or
final order or resolution subject thereof was received, when a motion for new trial or reconsideration,
if any, was filed and when notice of the denial thereof was received." The rationale for this is to
enable the CA to determine whether the petition was filed within the period fixed in the
rules. 20 Cadiz's failure to state the date of receipt of the copy of the NLRC decision, however, is not
fatal to her case since the more important material date which must be duly alleged in a petition is
the date of receipt of the resolution of denial of the motion for reconsideration, 21 which she has duly
complied with. 22

The CA also dismissed the petition for failure to attach the registry receipt in the affidavit of
service.23 Cadiz points out, on the other hand, that the registry receipt number was indicated in the
petition and this constitutes substantial compliance with the requirement. What the rule requires,
however, is that the registry receipt must be appended to the paper being served.24 Clearly, mere
indication of the registry receipt numbers will not suffice. In fact, the absence of the registry receipts
amounts to lack of proof of service.25 Nevertheless, despite this defect, the Court finds that the ends
of substantial justice would be better served by relaxing the application of technical rules of
procedure. 26 With regard to counsel's failure to indicate the place where the IBP and PTR receipts
were issued, there was substantial compliance with the requirement since it was indicated in the
verification and certification of non-forum shopping, as correctly argued by Cadiz's lawyer. 27

Time and again, the Court has emphasized that rules of procedure are designed to secure
substantial justice. These are mere tools to expedite the decision or resolution of cases and if their
strict and rigid application would frustrate rather than promote substantial justice, then it must be
avoided.28

Immorality as a just cause for

termination of employment
Both the LA and the NLRC upheld Cadiz's dismissal as one attended with just cause. The LA, while
ruling that Cadiz's indefinite suspension was tantamount to a constructive dismissal, nevertheless
found that there was just cause for her dismissal. According to the LA, "there was just cause
therefor, consisting in her engaging in premarital sexual relations with Carl Cadiz, allegedly her
boyfriend, resulting in her becoming pregnant out of wedlock."29 The LA deemed said act to be
immoral, which was punishable by dismissal under Brent's rules and which likewise constituted
serious misconduct under Article 282(a) of the Labor Code. The LA also opined that since Cadiz was
Brent's Human Resource Officer in charge of implementing its rules against immoral conduct, she
should have been the "epitome of proper conduct." 30 The LA ruled:

[Cadiz's] immoral conduct by having premarital sexual relations with her alleged boy friend, a former
Brent worker and her co-employee, is magnified as serious misconduct not only by her getting
pregnant as a result thereof before and without marriage, but more than that, also by the fact that
Brent is an institution of the Episcopal Church in the Philippines x x x committed to "developing
competent and dedicated professionals x x x and in providing excellent medical and other health
services to the community for the Glory of God and Service to Humanity." x x x As if these were not
enough, [Cadiz] was Brent's Human Resource Officer charged with, among others, implementing the
rules of Brent against immoral conduct, including premarital sexual relations, or fornication x x x. She
should have been the epitome of proper conduct, but miserably failed. She herself engaged in
premarital sexual relations, which surely scandalized the Brent community.xx x. 31

The NLRC, for its part, sustained the LA's conclusion.

The Court, however, cannot subscribe to the labor tribunals' conclusions.

Admittedly, one of the grounds for disciplinary action under Brent's policies is immorality, which is
punishable by dismissal at first offense.32 Brent's Policy Manual provides:

CATEGORY IV

In accordance with Republic Act No. 1052,33 the following are just cause for terminating an
employment of an employee without a definite period:

xxxx

2. Serious misconduct or willful disobedience by the employee of the orders of his employer or
representative in connection with his work, such as, but not limited to the following:

xxxx

b. Commission of immoral conduct or indecency within the company premises, such as an act of
lasciviousness or any act which is sinful and vulgar in nature.

c. Immora1ity, concubinage, bigamy. 34

Its Employee's Manual of Policies, meanwhile, enumerates "[a]cts of immorality such as scandalous
behaviour, acts of lasciviousness against any person (patient, visitors, co-workers) within hospital
premises"35 as a ground for discipline and discharge. Brent also relied on Section 94 of the Manual of
Regulations for Private Schools (MRPS), which lists "disgraceful or immoral conduct" as a cause for
terminating employment. 36
Thus, the question that must be resolved is whether Cadiz's premarital relations with her boyfriend
and the resulting pregnancy out of wedlock constitute immorality. To resolve this, the Court makes
reference to the recently promulgated case of Cheryll Santos Leus v. St. Scholastica’s College
Westgrove and/or Sr. Edna Quiambao, OSB.37

Leus involved the same personal circumstances as the case at bench, albeit the employer was a
Catholic and sectarian educational institution and the petitioner, Cheryll Santos Leus (Leus ), worked
as an assistant to the school's Director of the Lay Apostolate and Community Outreach Directorate.
Leus was dismissed from employment by the school for having borne a child out of wedlock. The
Court ruled in Leus that the determination of whether a conduct is disgraceful or immoral involves a
two-step process: first, a consideration of the totality of the circumstances surrounding the conduct;
and second, an assessment of the said circumstances vis-a-vis the prevailing norms of
conduct, i.e., what the society generally considers moral and respectable.

In this case, the surrounding facts leading to Cadiz's dismissal are straightforward - she was
employed as a human resources officer in an educational and medical institution of the Episcopal
Church of the Philippines; she and her boyfriend at that time were both single; they engaged in
premarital sexual relations, which resulted into pregnancy. The labor tribunals characterized these
as constituting disgraceful or immoral conduct. They also sweepingly concluded that as Human
Resource Officer, Cadiz should have been the epitome of proper conduct and her indiscretion
"surely scandalized the Brent community." 38

The foregoing circumstances, however, do not readily equate to disgraceful and immoral conduct.
Brent's Policy Manual and Employee's Manual of Policies do not define what constitutes immorality;
it simply stated immorality as a ground for disciplinary action. Instead, Brent erroneously relied on
the standard dictionary definition of fornication as a form of illicit relation and proceeded to conclude
that Cadiz's acts fell under such classification, thus constituting immorality. 39

Jurisprudence has already set the standard of morality with which an act should be gauged - it is
public and secular, not religious. 40 Whether a conduct is considered disgraceful or immoral should
be made in accordance with the prevailing norms of conduct, which, as stated in Leus, refer to those
conducts which are proscribed because they are detrimental to conditions upon which depend
the existence and progress of human society. The fact that a particular act does not conform to
the traditional moral views of a certain sectarian institution is not sufficient reason to qualify such act
as immoral unless it, likewise, does not conform to public and secular standards. More importantly,
there must be substantial evidence to establish that premarital sexual relations and pregnancy out
of wedlock is considered disgraceful or immoral.41

The totality of the circumstances of this case does not justify the conclusion that Cadiz committed
acts of immorality. Similar to Leus, Cadiz and her boyfriend were both single and had no legal
impediment to marry at the time she committed the alleged immoral conduct. In fact, they eventually
married on April 15, 2008.42 Aside from these, the labor tribunals' respective conclusion that Cadiz's
"indiscretion" "scandalized the Brent community" is speculative, at most, and there is no proof
adduced by Brent to support such sweeping conclusion. Even Brent admitted that it came to know of
Cadiz's "situation" only when her pregnancy became manifest.43 Brent also conceded that "[a]t the
time [Cadiz] and Carl R. Cadiz were just carrying on their boyfriend-girlfriend relationship, there was
no knowledge or evidence by [Brent] that they were engaged also in premarital sex." 44 This only goes
to show that Cadiz did not flaunt her premarital relations with her boyfriend and it was not carried on
under scandalous or disgraceful circumstances. As declared in Leus, "there is no law which
penalizes an unmarried mother by reason of her sexual conduct or proscribes the consensual sexual
activity between two unmarried persons; that neither does such situation contravene[s] any
fundamental state policy enshrined in the Constitution. " 45 The fact that Brent is a sectarian institution
does not automatically subject Cadiz to its religious standard of morality absent an express
statement in its manual of personnel policy and regulations, prescribing such religious standard as
gauge as these regulations create the obligation on both the employee and the employer to abide by
the same. 46

Brent, likewise, cannot resort to the MRPS because the Court already stressed in Leus that
"premarital sexual relations between two consenting adults who have no impediment to marry each
other, and, consequently, conceiving a child out of wedlock, gauged from a purely public and secular
view of morality, does not amount to a disgraceful or immoral conduct under Section 94(e) of the
1992 MRPS."47

Marriage as a condition for

reinstatement

The doctrine of management prerogative gives an employer the right to "regulate, according to his
own discretion and judgment, all aspects of employment, including hiring, work assignments,
working methods, the time, place and manner of work, work supervision, transfer of employees, lay-
off of workers, and discipline, dismissal, and recall of employees." 48 In this case, Brent imposed on
Cadiz the condition that she subsequently contract marriage with her then boyfriend for her to be
reinstated. According to Brent, this is "in consonance with the policy against encouraging illicit or
common-law relations that would subvert the sacrament of marriage."49

Statutory law is replete with legislation protecting labor and promoting equal opportunity in
employment. No less than the 1987 Constitution mandates that the "State shall afford full protection
to labor, local and overseas, organized and unorganized, and promote full employment and equality
of employment opportunities for all." 50 The Labor Code of the Philippines, meanwhile, provides:

Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.

With particular regard to women, Republic Act No. 9710 or the Magna Carta of Women51 protects
women against discrimination in all matters relating to marriage and family relations, including
the right to choose freely a spouse and to enter into marriage only with their free and full
consent.52

Weighed against these safeguards, it becomes apparent that Brent's condition is coercive,
oppressive and discriminatory. There is no rhyme or reason for it. It forces Cadiz to marry for
1âwphi 1

economic reasons and deprives her of the freedom to choose her status, which is a privilege that
inheres in her as an intangible and inalienable right. 53 While a marriage or no-marriage qualification
may be justified as a "bona fide occupational qualification," Brent must prove two factors
necessitating its imposition, viz: (1) that the employment qualification is reasonably related to the
essential operation of the job involved; and (2) that there is a factual basis for believing that all or
substantially all persons meeting the qualification would be unable to properly perform the duties of
the job.54 Brent has not shown the presence of neither of these factors. Perforce, the Court cannot
uphold the validity of said condition.

Given the foregoing, Cadiz, therefore, is entitled to reinstatement without loss of seniority rights, and
payment of backwages computed from the time compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as an option, separation pay should be
awarded as an alternative and as a form of financial assistance. 55 In the computation of separation
pay, the Court stresses that it should not go beyond the date an employee was deemed to
have been actually separated from employment, or beyond the date when reinstatement was
rendered impossible.56 In this case, the records do not show whether Cadiz already severed her
employment with Brent or whether she is gainfully employed elsewhere; thus, the computation of
separation pay shall be pegged based on the findings that she was employed on August 16, 2002,
on her own admission in her complaint that she was dismissed on November 17, 2006, and that she
was earning a salary of P9,108.70 per month,57 which shall then be computed at a rate of one (1)
month salary for every year of service,58 as follows:

Monthly salary P9,108.70

multiplied by number of years x
in service (Aug 02 to Nov 06) 4

P36,434.80

The Court also finds that Cadiz is only entitled to limited backwages. Generally, the computation of
backwages is reckoned from the date of illegal dismissal until actual reinstatement. 59 In case
separation pay is ordered in lieu of reinstatement or reinstatement is waived by the employee,
backwages is computed from the time of dismissal until the finality of the decision ordering
separation pay. 60 Jurisprudence further clarified that the period for computing the backwages during
the period of appeal should end on the date that a higher court reversed the labor arbitration ruling of
illegal dismissal. 61 If applied in Cadiz's case, then the computation of backwages should be from
November 17, 2006, which was the time of her illegal dismissal, until the date of promulgation of this
decision. Nevertheless, the Court has also recognized that the constitutional policy of providing full
protection to labor is not intended to oppress or destroy management. 62 The Court notes that at the
time of Cadiz's indefinite suspension from employment, Leus was yet to be decided by the Court.
Moreover, Brent was acting in good faith and on its honest belief that Cadiz's pregnancy out of
wedlock constituted immorality. Thus, fairness and equity dictate that the award of backwages shall
only be equivalent to one (1) year or P109,304.40, computed as follows:

Monthly salary P9,108.70

multiplied by one year x
or 12 months 12

P109,304.40

Finally, with regard to Cadiz's prayer for moral and exemplary damages, the Court finds the same
without merit. A finding of illegal dismissal, by itself, does not establish bad faith to entitle an
employee to moral damages. 63 Absent clear and convincing evidence showing that Cadiz's dismissal
from Brent's employ had been carried out in an arbitrary, capricious and malicious manner, moral
and exemplary damages cannot be awarded. The Court nevertheless grants the award of attorney's
fees in the amount of ten percent (10%) of the total monetary award, Cadiz having been forced to
litigate in order to seek redress of her grievances.64

WHEREFORE, the petition is GRANTED. The Resolutions dated July 22, 2008 and February 24,
2009 of the Court of Appeals in CA-G.R. SP No. 02373-MIN are REVERSED and SET ASIDE, and
a NEW ONE ENTERED finding petitioner Christine Joy Capin-Cadiz to have been dismissed without
just cause.

Respondent Brent Hospital and Colleges, Inc. is hereby ORDERED TO PAY petitioner Christine Joy
Capin-Cadiz:

(1) One Hundred Nine Thousand Three Hundred Four Pesos and 40/100 (Pl 09,304.40) as
backwages;

(2) Thirty-Six Thousand Four Hundred Thirty-Four Pesos and 80/100 (P36,434.80) as
separation pay; and

(3) Attorney's fees equivalent to ten percent (10%) of the total award.

The monetary awards granted shall earn legal interest at the rate of six percent (6%) per
annum from the date of the finality of this Decision until fully paid.

SO ORDERED.
 SECOND DIVISION

[G.R. No. 186243, April 11 : 2011]

HACIENDA PRIMERA DEVELOPMENT CORPORATION and ANNA KATRINA E.

HERNANDEZ, Petitioners, vs. MICHAEL S. VILLEGAS, Respondent.

RESOLUTION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court,
seeking the reversal of the Court of Appeals (CA) Decision[1] dated November 27,
2008 and Resolution[2] dated February 3, 2009 in CA-G.R. SP No. 104847. The facts
of the case are as follows: Petitioner Hacienda Primera Development Corporation
(petitioner Hacienda) hired respondent Michael S. Villegas as General Manager of
Amorita Resort. He was hired as a probationary employee for three (3) months. The
employment contract contained the following terms and conditions:

1. Salary of P60,000.00 net per month for the first three (3) months and upon
his regularization, P70,000.00 net per month.

2. Six (6) round trip tickets (TAG-MLA-TAG) per annum.

3. P2,500.00 cell phone bill allowance.

4. Fifteen (15) days vacation leave and fifteen (15) days sick leave upon
permanency.

5. Pro-rated 13th month pay starting December 2006.

6. A 3-month probationary period starting January 200[7].

7. Board and lodging in the resort.

8. Medical Insurance.[3]

Respondent started working for petitioner on January 1, 2007. On March 14, 2007,
he received a call from Paramount Consultancy and Management telling him to
report back to Manila. There, he learned that his services were terminated. He,
thus, asked for a written notice of termination, but did not receive any. [4] Hence,
the complaint for illegal dismissal. Petitioner Hacienda, on the other hand, stated
that respondent was hired as probationary employee. It explained that
respondent’s services were terminated because he failed to qualify for regular
employment. Specifically, it claimed that respondent failed to conceptualize and
complete financial budgets, sales projection, room rates, website development, and
marketing plan in coordination with the Sales and Marketing Manager. [5] On
November 22, 2007, Labor Arbiter (LA) Herminio V. Suelo rendered a decision [6] in
favor of respondent, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered finding
complainant illegally dismissed. Accordingly, respondents are hereby ordered as
follows:

1. To reinstate complainant to his former position without loss of

seniority rights and other benefits;

2. To pay complainant his backwages from the time he was dismissed on

March 15, 2007, until his actual reinstatement either physically or by
payroll;

3. To pay complainant moral damages in the amount of Fifty Thousand

Pesos (P50,000.00), and exemplary damages also in the amount of
Fifty Thousand Pesos (P50,000.00);

4. To pay complainant attorney’s fees equivalent to ten (10) percent

of the total monetary award.

The reinstatement aspect of this Decision is immediately executory pursuant to

Article 223 of the Labor Code, as amended. Respondents are therefore directed to
submit a report of compliance thereof before this Office within ten (10) calendar
days from receipt of this Decision. The Fiscal Examiner or the computation and
examination unit of this Office is directed to compute the monetary aspect of the
above-judgment awards which shall form part of this Decision. SO ORDERED. [7]
Aggrieved, petitioner Hacienda elevated the case to the National Labor Relations
Commission (NLRC), which partially granted8 the appeal, worded in this wise:
WHEREFORE, the foregoing premises considered, the instant appeal is PARTIALLY
GRANTED. The charge of illegal dismissal is DISMISSED for lack of merit.
Accordingly, the Decision is MODIFIED to order the respondents-appellants to pay
his salary corresponding to the unexpired portion of his contract of employment
(March 16-31, 2007) in the amount of P30,000.00. SO ORDERED.[9]
In a Decision[10] dated November 27, 2008, the CA set aside the above NLRC
decision and reinstated that of the LA. The dispositive portion of the assailed CA
Decision is quoted below for easy reference:
WHEREFORE, the instant Petition is hereby GRANTED. The Decision of the NLRC is
hereby SET ASIDE. Accordingly, the Decision of the Labor Arbiter is REINSTATED
with the MODIFICATION that since reinstatement is no longer possible due to
strained relations between the parties, a separation pay of one month for every
year of service is hereby decreed. In this connection, the instant case is hereby
remanded to the Labor Arbiter for the computation of the said monetary award. SO
ORDERED.[11]
Petitioner Hacienda’s motion for reconsideration was denied in a Resolution12
dated February 3, 2009. Hence, the instant petition with the following assigned
errors:
(A) THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF JUDGMENT WHEN
IT RULED THAT RESPONDENT WAS ILLEGALLY DISMISSED;
(B) THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF JUDGMENT IN
REINSTATING THE DECISION OF THE LABOR ARBITER AWARDING UNLIMITED
BACKWAGES BEYOND THE RESPONDENT’S PROBATIONARY EMPLOYMENT;

(C) THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF JUDGMENT WHEN

IT RULED THAT RESPONDENT IS ENTITLED TO MORAL AND EXEMPLARY DAMAGES;

(D) THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF JUDGMENT WHEN

IT RULED THAT RESPONDENT IS ENTITLED TO ATTORNEY’S FEES;

(E) THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF JUDGMENT WHEN

IT ORDERED THE PAYMENT OF SEPARATION PAY; AND

(F) THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF JUDGMENT WHEN

IT DECIDED THE PETITION OF RESPONDENT ALTHOUGH THE NLRC’S
RSOLUTION DATED 22 APRIL 2008 IS ALREADY FINAL AND EXECUTORY SINCE
RESPONDENT’S MOTION FOR RECONSIDERATION, CONTRARY TO THE RULES
OF PROCEDURE OF THE NLRC, IS UNVERIFIED.[13]
The petition is unmeritorious. The Labor Code and its Implementing Rules govern
probationary employment.14
LABOR CODE

Art. 281. Probationary Employment.—Probationary employment shall not exceed

six (6) months from the date the employee started working, unless it is covered by
an apprenticeship agreement stipulating a longer period. The services of an
employee who has been engaged on a probationary basis may be terminated for a
just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of
his engagement. An employee who is allowed to work after a probationary period
shall be considered a regular employee.

LABOR CODE, Implementing Rules of Book VI, Rule I, Section 6

Sec. 6. Probationary employment. There is probationary employment where the

employee, upon his engagement, is made to undergo a trial period during which the
employer determines his fitness to qualify for regular employment, based on
reasonable standards made known to him at the time of engagement.

Probationary employment shall be governed by the following rules:

xxxx

(c) The services of an employee who has been engaged on probationary basis may
be terminated only for a just or authorized cause, when he fails to qualify as a
regular employee in accordance with the reasonable standards prescribed by the
employer.

(d) In all cases of probationary employment, the employer shall make known to the
employee the standards under which he will qualify as a regular employee at the
time of his engagement. Where no standards are made known to the employee at
that time, he shall be deemed a regular employee.
In Magis Young Achievers’ Learning Center v. Manalo,15 the Court described
probationary employment in this wise:
A probationary employee or probationer is one who is on trial for an employer,
during which the latter determines whether or not he is qualified for permanent
employment. The probationary employment is intended to afford the employer an
opportunity to observe the fitness of a probationary employee while at work, and to
ascertain whether he will become an efficient and productive employee. While the
employer observes the fitness, propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment, the probationer, on the other
hand, seeks to prove to the employer that he has the qualifications to meet the
reasonable standards for permanent employment. Thus, the word probationary, as
used to describe the period of employment, implies the purpose of the term or
period, not its length.[16]
It can be gleaned from the foregoing provisions of law and jurisprudential
pronouncement that there are two grounds to legally terminate a probationary
employee. It may be done either: a) for a just cause; or b) when the employee fails
to qualify as a regular employee in accordance with reasonable standards made
known by the employer to the employee at the start of the employment.[17]

In this case, petitioner Hacienda fails to specify the reasonable standards by which
respondent’s alleged poor performance was evaluated, much less to prove that
such standards were made known to him at the start of his employment. [18] Thus,
he is deemed to have been hired from day one as a regular employee. [19] Due
process dictates that an employee be apprised beforehand of the condition of his
employment and of the terms of advancement therein.[20]

We quote with approval the CA’s observation in this wise:

Verily, a cursory examination of the employment contract readily shows the
absence of any standard to which [respondent] should comply. Neither was there
any indicia that [respondent] was ever informed of the said standards if there
[were] any. What [petitioners] merely claim, as mentioned above, is that
[respondent] was presumed to know the standard required of him as General
Manager in charge [of] the pre-opening of the resort.[21 ]
In Secon Philippines, Ltd. v. NLRC,22 Orient Express Placement Phils. v.
NLRC,23 and Davao Contractors Development Cooperative (DACODECO) v.
Pasawa,[24] we did not sustain the employees’ dismissal for failure of the
employer to apprise them of the reasonable standards they needed to comply with
for their continued employment.

We find no reason to depart from the above conclusion.

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals

Decision dated November 27, 2008 and Resolution dated February 3, 2009 in CA-
G.R. SP No. 104847 are AFFIRMED.ORDERED.
 [G.R. NO. 186169 - August 1, 2012]

MYLENE CARVAJAL, Petitioner, v. LUZON DEVELOPMENT BANK AND/OR

OSCAR Z. RAMIREZ, Respondents.

DECISION

PEREZ, J.:

In this Petition for Review on Certiorari, petitioner Mylene Carvajal assails the
Decision1 of the Court of Appeals, Second Division, dated 20 August 2008 which
dismissed her complaint for illegal dismissal. The Court or Appeals reversed and set
aside the Resolution2 of the National Labor Relations Commission (NLRC) affirming
with modification the Labor Arbiter s Decision3 finding petitioner s dismissal as
illegal and ordering reinstatement or payment of backwages and attorney s
fees. ςηαñrοb lε š νιr†υαl lαω lιb rαrÿ

The facts are as follows:

ch an rob les virt u al l aw lib rary

Petitioner Mylene Carvajal was employed as a trainee-teller by respondent Luzon

Development Bank (Bank) on 28 October 2003 under a six-month probationary
employment contract, with a monthly salary of P5,175.00. Respondent Oscar
Ramirez is the President and Chief Executive Officer of the Bank.

On 10 December 2003, the Bank sent petitioner a Memorandum 4 directing her to

explain in writing why she should not be subjected to disciplinary action for "chronic
tardiness" on November 3, 5, 6, 14, 18, 20, 21 and 28 2003 or for a total of eight
(8) times. Petitioner apologized in writing and explained that she was in the process
of making adjustments regarding her work and house chores.5 She was thus
reprimanded in writing and reminded of her status as a probationary
employee.6 Still, on 6 January 2004, a second Memorandum was sent to petitioner
directing her to explain why she should not be suspended for "chronic tardiness" on
13 occasions or on December 2, 3, 4, 5, 8, 10, 11, 12, 15, 16, 18, 22, and 23
2003. On 7 January 2004, petitioner submitted her written explanation and
manifested her acceptance of the consequences of her actions.7 On 12 January
2004, petitioner was informed, through a Memorandum,8 of her suspension for
three (3) working days without pay effective 21 January 2004. Finally, in a
Memorandum dated 22 January 2004, petitioner s suspension was lifted but in the
same breath, her employment was terminated effective 23 January 2004. 9 ςrνll

Hence, petitioner s filing of the Complaint for illegal dismissal before the Labor
Arbiter. Petitioner alleged, in her position paper, that the following were the
reasons for her termination: 1) she is not an effective frontliner; 2) she has
mistakenly cleared a check; 3) tardiness; 4) absenteeism; and 5) shortage. 10 ςrνll
In their position paper, respondents averred that petitioner was terminated as a
probationary employee on three grounds, namely: 1) chronic tardiness; 2)
unauthorized absence; and 3) failure to perform satisfactorily as a probationary
employee. Respondents explained that petitioner was a chronic violator of the bank
s rules and regulations on tardiness and absenteeism. Aside from her numerous
tardiness, petitioner was absent without leave for 2 days. She also cleared a check
which later turned out to be a bounced check. Finally, petitioner garnered only a
rating of 2.17, with 4 being the highest and 1 the lowest, in her performance
evaluation.

On 9 June 2005, the Labor Arbiter ruled that petitioner was illegally dismissed.
Respondents were held solidarily liable for payment of money claims. The
dispositive portion of the Decision reads:ςηαñrοb lε š νιr†υαl lα ω lιb rαrÿ

WHEREFORE, premises considered, judgment is rendered declaring that

complainant as probationary employee was illegally dismissed. Respondents are
ordered to immediately reinstate complainant to her former position, without loss of
any seniority rights and other monetary benefits. However, if reinstatement is no
longer feasible due to strained relationship between the parties, respondents are
further ordered to pay complainant, jointly and severally the amount of
P20,070.38, representing full backwages of complainant from the time of her illegal
dismissal up to the end of her probationary contract of employment with
respondent bank. Plus, 10% of the monetary award as attorney s fee.11 ςrνll

ch an rob les virt u al l aw lib rary

The Labor Arbiter found that petitioner was dismissed without due process because
"she was not afforded the notice in writing informing her of what respondent (the
Bank) would like to bring out to her for the latter to answer in writing." The Labor
Arbiter also did not consider "unsatisfactory performance" as a valid ground to
shorten the six-month contract of petitioner with the Bank.12 ςrνll

The decision of the Labor Arbiter was partially appealed to the NLRC by petitioner.
Petitioner contended that she should be considered a regular employee and that the
computation by the Labor Arbiter of backwages up to the end of her probationary
contract is without basis. In its Comment, respondent argued against the illegality
of petitioner s dismissal and their joint and solidary liability to pay complainant s
monetary claims. On 31 May 2006, the NLRC affirmed with modification the Labor
Arbiter s Decision and ordered for petitioner s reinstatement, to wit: ςηαñrοb lε š νιr†υαl lαω lιb rαrÿ

WHEREFORE, premises considered, the assailed decision is hereby affirmed with

MODIFICATION ordering the respondents to reinstate the complainant to her former
position, without loss of any seniority rights and other monetary benefits and to pay
her full backwages from the date of her dismissal to the date of her reinstatement,
actual or in payroll.

All other aspects of the assailed decision stands.13 ςrνll

ch an rob les virt u al l aw lib rary

Respondents filed a motion for reconsideration but the NLRC denied the same in a
Resolution14 dated 20 July 2006.

In a Petition for Certiorari filed by respondents, the Court of Appeals rendered the
20 August 2008 Decision reversing the NLRC ruling, thus: ςηαñrοb lε š νιr†υαl lαω lιb rαrÿ

IN VIEW OF ALL THE FOREGOING, the instant petition is GRANTED. The assailed
NLRC Resolution in NLRC CA No. 046866-05 dated May 31, 2006 which affirmed
with modification the Decision of the Labor Arbiter in NLRC Case No. RAB IV-2-
18910-04-L dated June 9, 2005 is hereby REVERSED and SET ASIDE. All monetary
liabilities decreed in the Labor Arbiter s Decision against petitioners are hereby SET
ASIDE. The Complaint for illegal dismissal, money claims and damages is ORDERED
DISMISSED.15 ςrνll

ch an rob les virt u al l aw lib rary

The Court of Appeals found that petitioner is not entitled to backwages because she
was rightfully dismissed for failure to meet the employment standards.

The motion for reconsideration filed by petitioner was likewise dismissed.

Petitioner elevated the case to this Court via Petition for Review on Certiorari,
raising the following errors allegedly committed by the Court of Appeals: ςηαñrοb lε š νιr†υαl lαω lιb rαrÿ

THE HON. COURT OF APPEALS COMMITTED ERRORS IN LAW IN DECIDING THE

ISSUE ON PETITIONER S VALIDITY OF DISMISSAL DESPITE SUCH ISSUE HAD
LONG BECOME FINAL AND EXECUTORY FOR FAILURE OF PRIVATE RESPONDENT
LUZON DEVELOPMENT BANK TO APPEAL THE DECISION OF THE LABOR ARBITER
FINDING PETITIONER S DISMISSAL ILLEGAL.

THE HON. COURT OF APPEALS COMMITTED ERROR IN LAW IN DECIDING ISSUES

WHICH WERE NOT RAISED BEFORE THE NLRC ON APPEAL.16 ςrνll

ch an rob les virt u al l aw lib rary

Petitioner harps on the finality of the Labor Arbiter s ruling on illegal dismissal and
questions the judgment of the Court of Appeals in discussing and upholding the
validity of her dismissal.

Indeed, respondents did not assail the ruling of the Labor Arbiter. It was in fact
petitioner who partially appealed the Labor Arbiter s computation of backwages.
Provided with the opportunity, respondents assailed the Labor Arbiter s Decision in
their Comment to the Partial

Appeal. Upon affirmance of the Labor Arbiter s Decision by the NLRC, respondent
filed a petition for certiorari with the Court of Appeals insisting on the validity of the
dismissal.
Petitioner seeks to limit the issues to her employment status and backwages, her
basis being that the illegality of her dismissal has already been finally determined
by the Labor Arbiter.

We disagree. As We noted, the facts show that the illegality of petitioner s dismissal
was an issue that was squarely before the NLRC. When the NLRC decision was
reversed by the Court of Appeals, from which the issue was elevated to us, we had
a situation where "the findings of facts are conflicting." Thus, we find applicable the
rule that while generally, only questions of law can be raised in a Petition for
Review on Certiorari under Rule 45 of the Rules of Court, the rule admits of certain
exceptions, namely: (1) when the findings are grounded entirely on speculations,
surmises, or conjectures; (2) when the inference made is manifestly mistaken,
absurd, or impossible; (3) when there is a grave abuse of discretion; (4) when the
judgment is based on misappreciation of facts; (5) when the findings of fact are
conflicting; (6) when in making its findings, the same are contrary to the
admissions of both appellant and appellee; (7) when the findings are contrary to
those of the trial court; (8) when the findings are conclusions without citation of
specific evidence on which they are based; (9) when the facts set forth in the
petition as well as in the petitioner s main and reply briefs are not disputed by the
respondent; and (10) when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on record. 17 ςrνll

The petition comes within the purview of exception (5) and by analogy, exception
(7). Hence, the Court resolves to scour the records of this case.

Truly, it is axiomatic that an appeal, once accepted by this Court, throws the entire
case open to review, and that this Court has the authority to review matters not
specifically raised or assigned as error by the parties, if their consideration is
necessary in arriving at a just resolution of the case.18 ςrνll

Petitioner premised her appeal on Article 279 of the Labor Code which
provides: ςηαñrοb lε š νιr†υαl lαω lιb rαrÿ

Art. 279. Security of Tenure In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or other monetary
equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement.
ch an rob les virt u al l aw lib rary

Petitioner maintained that she became a regular employee by virtue of Book VI,
Rule 1, Section 6(d) of the Implementing Rules of the Labor Code which
states: ςηαñrοb lε Å¡ νιr†υαl lÎ±Ï ‰ lιb rαrÿ

(d) In all cases of probationary employment, the employer shall make known to the
employee the standards under which he will qualify as a regular employee at the
time of his engagement. Where no standards are made known to the employee at
that time, he shall be deemed a regular employee.
ch an rob les virt u al l aw lib rary

It is beyond dispute that petitioner was hired as a probationary employee. Whether

her employment status ripened into a regular one is the point of contention.

Under the very provision cited by petitioner, we cannot, by any hermeneutics, see
petitioner s employment status as regular. At the time of her engagement and as
mandated by law, petitioner was informed in writing of the standards necessary to
qualify her as a regular employee. Her appointment letter 19 reads: ςηαñrοb lε š νιr†υαl lαω lιb rαrÿ

Dear Ms. Carvajal: ςηαñrοb lε Å¡ νιr†υαl lÎ±Ï ‰ lιb rαrÿ

We are pleased to confirm your appointment as follows:

ch an rob les virt u al l aw lib rary

Position : Trainee- Teller

Assignment : Main Branch
Status : Probationary (6 months)
Effectivity : October 28, 2003
Remuneration : P5,175.00 (262)

Possible extension of this contract will depend on the job requirements of the Bank
and your overall performance. Performance review will be conducted before
possible renewal can take effect.

The Bank reserves the right to immediately terminate this contract in the event of a
below satisfactory performance, serious disregard of company rules and policies
and other reasons critical to its interests.

Kindly sign below if the above conditions are acceptable. We look forward to a
performance commensurate to your presented capabilities.

Very truly yours,

[sgd]
Oscar S. Ramirez
Vice President

CONFORME: ςrαlαω

[sgd]
Mylene T. Carvajal [Emphasis Supplied]
ch an rob les virt u al l aw lib rary
Petitioner knew, at the time of her engagement, that she must comply with the
standards set forth by respondent and perform satisfactorily in order to attain
regular status. She was apprised of her functions and duties as a trainee-teller.
Respondent released to petitioner its evaluation20 of her performance. Petitioner
was found wanting. Even the NLRC upheld petitioner s probationary status, thus: ςrαlαω

During the time that the complainant was dismissed by respondents, she was
holding the position of a trainee-teller on probationary status. Thus, with the Labor
Arbiter s finding of illegal dismissal, which the respondent left unchallenged, the
complainant is entitled to be reinstated to resume the functions of a trainee-teller,
no more no less. Reinstatement is not synonymous with regularization. The
determination of whether the complainant can qualify to become one of respondent
bank s regular employees is still within the well recognized management s
prerogative.21 [Emphasis Supplied]

A probationary employee, like a regular employee, enjoys security of tenure.

However, in cases of probationary employment, aside from just or authorized
causes of termination, an additional ground is provided under Article 281 of the
Labor Code, i.e., the probationary employee may also be terminated for failure to
qualify as a regular employee in accordance with reasonable standards made known
by the employer to the employee at the time of the engagement. Thus, the services
of an employee who has been engaged on probationary basis may be terminated
for any of the following: (1) a just or (2) an authorized cause and (3) when he fails
to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.22 ςrνll

It is evident that the primary cause of respondent s dismissal from her probationary
employment was her "chronic tardiness." At the very start of her employment,
petitioner already exhibited poor working habits. Even during her first month on the
job, she already incurred eight (8) tardiness. In a Memorandum dated 11 December
2003, petitioner was warned that her tardiness might affect her opportunity to
become a permanent or regular employee. And petitioner did not provide a
satisfactory explanation for the cause of her tardiness.

Punctuality is a reasonable standard imposed on every employee, whether in

government or private sector. As a matter of fact, habitual tardiness is a serious
offense that may very well constitute gross or habitual neglect of duty, a just cause
to dismiss a regular employee. Assuming that petitioner was not apprised of the
standards concomitant to her job, it is but common sense that she must abide by
the work hours imposed by the bank. As we have aptly stated in Aberdeen Court,
Inc. v. Agustin, Jr.,23 the rule on reasonable standards made known to the
employee prior to engagement should not be used to exculpate a probationary
employee who acts in a manner contrary to basic knowledge and common sense, in
regard to which there is no need to spell out a policy or standard to be met.

Respondent also cited other infractions such as unauthorized leaves of absence,

mistake in clearing of a check, and underperformance. All of these infractions were
not refuted by petitioner. The Labor Arbiter failed to discuss the veracity of these
grounds. It focused on unsatisfactory performance and concluded that such is not a
sufficient ground to terminate the probationary employment. The Labor Arbiter
relied on its own misappreciation of facts for a finding that, resultingly, is
contradicted by the evidence on record.

More importantly, satisfactory performance is and should be one of the basic

standards for regularization. Naturally, before an employer hires an employee, the
former can require the employee, upon his engagement, to undergo a trial period
during which the employer determines his fitness to qualify for regular employment
based on reasonable standards made known to him at the time of engagement.
This is the concept of probationary employment which is intended to afford the
employer an opportunity to observe the fitness of a probationary employee while at
work, and to ascertain whether he will become an efficient and productive
employee. While the employer observes the fitness, propriety and efficiency of a
probationer to ascertain whether he is qualified for permanent employment, the
probationer, on the other hand, seeks to prove to the satisfaction of the employer
that he has the qualifications to meet the reasonable standards for permanent
employment.24 ςrνll

Moreover, in the letter of appointment, respondents reserved the right to

"immediately terminate this contract in the event of a below satisfactory
performance, serious disregard of company rules and policies and other reasons
critical to its interests."

In finding for illegal dismissal, the Labor Arbiter held that the dismissal was without
due process. We hold otherwise. As elucidated by this Court in Philippine Daily
Inquirer, Inc. v. Magtibay, Jr.:25 ςηαñrοb lε š νιr†υαl lαω lιb rαrÿ

Unlike under the first ground for the valid termination of probationary employment
which is for just cause, the second ground failure to qualify in accordance with the
standards prescribed by employer does not require notice and hearing. Due process
of law for this second ground consists of making the reasonable standards expected
of the employee during his probationary period known to him at the time of his
probationary employment. By the very nature of a probationary employment, the
employee knows from the very start that he will be under close observation and his
performance of his assigned duties and functions would be under continuous
scrutiny by his superiors. It is in apprising him of the standards against which his
performance shall be continuously assessed where due process regarding the
second ground lies, and not in notice and hearing as in the case of the first
ground.26 ςrνll

ch an rob les virt u al l aw lib rary

As we have underscored, respondent complied with the basic requirements of due

process as defined in Magtibay, Jr. Petitioner had more than sufficient knowledge of
the standards her job entails. Respondent had not been remiss in reminding
petitioner, through memoranda, of the standards that should be observed in
aspiring for regularization.
Petitioner was even notified in two (2) memoranda regarding the bank s displeasure
over her chronic tardiness. Every memorandum directed petitioner to explain in
writing why she should not be subjected to disciplinary action. Each time, petitioner
acknowledged her fault and assured the bank that she would, in her daily
schedules, make adjustments to make amends. This certainly is compliance with
due process. Taken together with her low performance rating and other infractions,
petitioner was called by the head of Human Resources who discussed with her the
reasons for the discontinuance of her probationary appointment before she was
formally served the termination letter on that very same day. There was, in this
case, full accordance to petitioner of the opportunity to be heard.

In sum, petitioner was validly dismissed from probationary employment before the
expiration of her 6-montb probationary employment contract. If the termination is
for cause, it may be done anytime during the probation; the employer docs not
have to wait until the probation period is over.27
ςrνll

With a valid reason for petitioner's dismissal coupled with the proper observance of
due process, the claim for back wages must necessarily fail.

In view of the foregoing, we find no reason to disturb the findings and conclusions
of the Court of Appeals.

WHEREFORE, the petition is DENIED.

SO ORDERED.
 [G.R. No. 128682. March 18, 1999]

JOAQUIN T. SERVIDAD, Petitioner, v. NATIONAL LABOR

RELATIONS COMMISSION, INNODATA PHILIPPINES, INC./
INNODATA CORPORATION, TODD SOLOMON, Respondents.

DECISION

PURISIMA, J.:

Commodum ex injuria sua nemo habere debet. No one should

obtain an advantage from his own wrong. Schemes which preclude
acquisition of tenurial security should be condemned as contrary to
public policy. No member of the work force of this country should be
allowed to be taken advantage of by the employer.1 crä läw virt u alib räry

In this special civil action for Certiorari petitioner seeks to annul the
decision2 of the National Labor Relations
Commission (NLRC) reversing the Labor Arbiters disposition3 that he
was illegally dismissed.

The facts of the case are as follows:

Petitioner Joaquin T. Servidad was employed on May 9, 1994 by

respondent INNODATA as a Data Control Clerk, under a contract of
employment Section 2 of which, reads:

Section 2. This Contract shall be effective for a period of 1 years

commencing on May 10, 1994, until May 10, 1995 unless sooner
terminated pursuant to the provisions hereof.

From May 10, 1994 to November 10, 1994, or for a period of six (6)
months, the EMPLOYEE shall be contractual during which the
EMPLOYER can terminate the EMPLOYEEs services by serving
written notice to that effect. Such termination shall be immediate,
or at whatever date within the six-month period, as the EMPLOYER
may determine. Should the EMPLOYEE continue his employment
beyond November 10, 1994, he shall become a regular employee
upon demonstration of sufficient skill in the terms of his ability to
meet the standards set by the EMPLOYER. If the EMPLOYEE fails to
demonstrate the ability to master his task during the first six
months he can be placed on probation for another six (6) months
after which he will be evaluated for promotion as a regular
employee.4

On November 9, 1995, or after working for six (6) months, he was

made to sign a three-month probationary employment and later, an
extended three-month probationary employment good until May 9,
1995.5cräläwvirt u alib räry

On July 7, 1994, the petitioner was given an overall rating of 100%

and 98% in the work evaluations conducted by the company. In
another evaluation, petitioner received a rating of 98.5% given by
the private respondent.6 cr älä wvirt u alib räry

On May 9, 1995, petitioner was dismissed from the service on the

ground of alleged termination of contract of employment.

Such happening prompted petitioner to institute a case for illegal

dismissal against the private respondent. In ruling for petitioner, the
Labor Arbiter disposed as follows:

"WHEREFORE, premises considered judgment is hereby rendered

finding Respondent guilty of illegal dismissal and concomitantly,
Respondent is ordered to pay complainant full backwages from the
time of his dismissal till actual or payroll reinstatement, in the
amount of P53,826.50 (computed till promulgation only).

Respondent is hereby further ordered to reinstate complainant to

his former position or equivalent position without loss of seniority
rights, privileges and benefits as a regular employee immediately
upon receipt of this decision.

SO ORDERED.7

On appeal thereto by INNODATA, the NLRC reversed the aforesaid

judgment of the Labor Arbiter. It declared that the contract between
petitioner and private respondent was for a fixed term and
therefore, the dismissal of petitioner Joaquin T. Servidad, at the end
of his one year term agreed upon, was valid. The decretal portion of
the decision of NLRC is to the following effect:

All said the judgment dated August 20, 1996 is hereby, REVERSED.

WHEREFORE, premises considered, the instant case is hereby

DISMISSED for lack of merit.

SO ORDERED.8

Undaunted, petitioner found his way to this Court via the present
faulting NLRC for acting with grave abuse of discretion in adjudging
subject contract of employment of petitioner to be for a definite or
fixed period.

The petition is impressed with merit.

At bar is just another scheme to defeat the constitutionally

guaranteed right of employees to security of tenure. The issue
posited centers on the validity and enforceability of the contract of
employment entered into by the parties.

The NLRC found that the contract in question is for a fixed term. It
is worthy to note, however, that the said contract provides for two
periods. The first period was for six months terminable at the option
of private respondent, while the second period was also for six
months but probationary in character. In both cases, the private
respondent did not specify the criteria for the termination or
retention of the services of petitioner. Such a wide leeway for the
determination of the tenure of an employee during a one year
period of employment is violative of the right of the employee
against unwarranted dismissal.

Decisively in point is Article 1377 of the Civil Code, which provides:

Art. 1377. The interpretation of obscure words or stipulations in a

contract shall not favor the party who caused the obscurity.
Certainly, favorable interpretation of the contract in the case under
scrutiny should be for petitioner and not for the private respondent
which caused the preparation of said contract.

If the contract was really for a fixed term, the private respondent
should not have been given the discretion to dismiss the petitioner
during the one year period of employment for reasons other than
the just and authorized causes under the Labor Code. Settled is the
rule that an employer can terminate the services of an employee
only for valid and just causes which must be shown by clear and
convincing evidence.9 crä läw virt u alib räry

According to the private respondent, the one-year period stipulated

in subject contract was to enable petitioner to acquire the skill
necessary for the job. In effect, what respondent employer
theorized upon is that the one-year term of employment is
probationary. If the nature of the job did actually necessitate at
least one year for the employee to acquire the requisite training and
experience, still, the same could not be a valid probationary
employment as it falls short of the requirement of Article 281 10 of
the Labor Code. It was not brought to light that the petitioner was
duly informed at the start of his employment, of the reasonable
standards under which he could qualify as a regular employee. The
rudiments of due process demand that an employee should be
apprised before hand of the conditions of his employment and the
basis for his advancement.11 cräl äw virt u alib räry

The language of the contract in dispute is truly a double-bladed

scheme to block the acquisition of the employee of tenurial security.
Thereunder, private respondent has two options. It can terminate
the employee by reason of expiration of contract, or it may use
failure to meet work standards as the ground for the employees
dismissal. In either case, the tenor of the contract jeopardizes the
right of the worker to security of tenure guaranteed by the
Constitution.12
cr älä wvirt u alib räry

In the case of Brent School, Inc. vs. Zamora, et al.13, the Court
upheld the principle 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 disregarded for
being contrary to public policy.

Such circumstance has been indubitably shown here to justify the

application of the following conclusion:

Accordingly, and since the entire purpose behind the development

of the legislation culminating in the present Article 280 of the Labor
Code clearly appears to have been, as already observed, to prevent
circumvention of the employees 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. x x x 14

The agreement in the case under consideration has such an

objective and consequently, is a complete nullity.15 crälä wvirt u alib räry

It is abundantly clear that the petitioner was hired as a regular

employee, at the outset. He worked as a Data Control Clerk. His job
was directly related to the data processing and data encoding
business of Innodata. His work was therefore necessary and
important to the business of his employer. Such being the scenario
involved under Article 28016 of the Labor Code petitioner is
considered a regular employee of private respondent. At any rate,
even assuming that his original employment was probationary,
petitioner was anyway permitted to work beyond the first six-month
period and under Article 28117 an employee allowed to work beyond
the probationary period is deemed a regular employee.

Reliance by NLRC on the ruling in Mariwasa Manufacturing, Inc., et

al. vs. Hon. V. Leogardo Jr., et al.18 is misplaced. Pertinent portion
of the disquisition therein was as follows:

By voluntary agreeing to an extension of the probationary period,

Dequila in effect waived any benefit attaching to the completion of
said period if he still failed to make the grade during the period of
extension. The Court finds nothing in the law which by any fair
interpretation prohibits such waiver. And no public policy protecting
the employee and the security of tenure is served by proscribing
voluntary agreements which, by reasonably extending the period of
probation, actually improve and further a probationary employees
prospects of demonstrating his fitness for regular employment.19

The above-described situation, however, is not the same as what

obtained in this case. In the Mariwasa case, the employment was
expressly agreed upon as probationary. Here, no such specific
designation is stipulated in the contract. The private respondent
sought to alternatively avail of probationary employment and
employment for a fixed term so as to preclude the regularization of
the status of petitioner. The utter disregard of public policy by the
contract in question negates the ruling of NLRC that said contract is
the law between the parties. The private agreement of the parties
cannot prevail over Article 1700 of the Civil Code, which provides:

Art. 1700. The relation between capital and labor are not merely
contractual. They are so impressed with public interest that labor
contracts must yield to the common good. Therefore, such contracts
are subject to special laws on labor unions, collective bargaining,
strikes and lockouts, closed shops, wages, working conditions,
hours of labor and similar subjects.

Similarly telling is the case of Pakistan Airlines Corporation vs. Pole,

et al.20 There, it was said:

x x x provisions of applicable law, especially provisions relating to

matters affected with public policy, are deemed written into the
contract. Put a little differently, the governing principle is that the
parties may not contract away applicable provisions of law
especially peremptory provisions dealing with matters heavily
impressed with public interest. The law relating to labor and
employment is clearly such an area and parties are not at liberty to
insulate themselves and their relationships from the impact of labor
laws and regulations by simply contracting with each other. x x x21

On the averment that NLRC gravely abused its discretion in finding

that petitioner failed to meet the standards of the company, we find
for petitioner. The decision of NLRC on the matter simply stated that
the petitioner fell short of the expectations of the company without
specifying factual basis therefor.22 The public respondent overlooked
the undisputed satisfactory ratings of the performance of petitioner
in the two job evaluations conducted by the respondent company.
Even granting, therefore, that the contract litigated upon is valid;
still, the petitioner, who was permitted to work beyond six months
could not be dismissed on the ground of failure to meet the
standards of Innodata. By the provisions of the very contract itself,
petitioner has become a regular employee of private respondent.
Therein, it is stipulated that: xxx Should the EMPLOYEE continue
employment beyond November 10, 1994, he shall become a regular
employee upon demonstration of sufficient skill in the terms of his
ability to meet the standards set by the EMPLOYER. x x x 23cräl äw virt u alib räry

Then too, the case at bar is on all fours with the recent case
of Villanueva vs. NLRC, et al.24 where the same standard form of
employment contract prepared by INNODATA was at issue. In
deciding that the said contract violated the employees right to
security of tenure, the court ratiocinated:

The termination of petitioners employment contract on 21

February 1995, as well as the subsequent issuance on 13
March 1995 of a new contract for five months as data
encoder, was a devious, but crude, attempt to circumvent
petitioners right to security of tenure as a regular employee
guaranteed by Article 279 of the Labor Code.25 Hence, the so
called end of contract on 21 February 1995 amounted to a
dismissal without any valid cause.

Indeed, the NLRC gravely abused its discretion in construing the

contract sued upon as one with a fixed term. To uphold such a
finding would be to concede to the private respondent an advantage
arising from its own mistake.

On the matter of moral damages, however, we rule for the private

respondent. Mere allegations of besmirched reputation,
embarrassment and sleepless nights are insufficient to warrant an
award for moral damages. It must be shown that the proximate
cause thereof was the unlawful act or omission of the private
respondent.26 However, the petitioner herein predicated his claim
for such damages on mere allegations of sleepless nights,
embarrassment, etc., without detailing out what was responsible
therefor or the cause thereof.

As regards the backwages to be granted to petitioner, the amount

thereof should be computed from the time he was illegally
dismissed to the time of his actual or payroll reinstatement, without
any deduction.27crälä wvirt u alib räry

WHEREFORE, the petition is GRANTED, the questioned decision of

NLRC is SET ASIDE, and the decision of the Labor Arbiter, dated
August 20, 1996, in NLRC-NCR-00-055-03471-95 REINSTATED,
with the modification that the award of backwages be computed
from the time of the dismissal of petitioner to his actual or payroll
reinstatement. Costs against the private respondent.

SO ORDERED.