G.R. No.

151227               July 14, 2008 awarded the monetary claims of respondents. The
dispositive portion of the Resolution reads:
GREGORIO S. SABEROLA, Petitioner,
vs. WHEREFORE, foregoing considered, the decision on
RONALD SUAREZ and RAYMUNDO LIRASAN, appeal is hereby MODIFIED declaring complainant
JR., Respondents. RONALD SUAREZ illegally dismissed and directing
respondent to pay the following
DECISION
A. RONALD SUAREZ
NACHURA, J.:
1. Separation Pay
Before the Court is a petition for review on certiorari
under Rule 45 of the Rules of Court assailing the 2. Wage Differential
Decision1 dated March 30, 2001 and the
Resolution2 dated November 23, 2001 of the Court of 3. 13th Month pay
Appeals (CA) in CA-G.R. SP No. 56503.
4. Service Incentive Leave Pay
The Facts
B. RAYMUNDO LIRASAN, JR.
The case stemmed from a Complaint3 for illegal
dismissal with money claims filed on November 10, 1997 1. Wage Differential
by respondents against petitioner before the Regional
Arbitration Branch of Davao City. Petitioner is the owner
and manager of G.S. Saberola Electrical Services, a firm 2. 13th Month Pay
engaged in the construction business specializing in
installing electrical devices in subdivision homes and in 3. Service Incentive Leave Pay
commercial and non-commercial buildings. Respondents
were employed by petitioner as electricians. They C. Attorney’s fees equivalent to 10% of the total
worked from Monday to Saturday and, occasionally, on award.
Sundays, with a daily wage of ₱110.00.
SO ORDERED.9
Respondent Ronald Suarez (Suarez) was employed by
petitioner from February 1995 until October 1997; while Petitioner filed a motion for reconsideration. On October
respondent Raymundo Lirasan, Jr. (Lirasan) worked 29, 1999, the NLRC issued a Resolution10 denying the
from February 1995 until September 1997.4 Respondent same. A detailed computation of the money claims
Lirasan alleged that he was dismissed without cause and awarded to respondents was incorporated in the
due process. He was merely informed by petitioner that Resolution, summarized as follows:
his services were no longer needed without any
explanation why he was terminated. Both respondents
1) Ronald Suarez:
claimed that they received compensation below the
minimum wage. They were given a fixed rate of ₱110.00
while the mandated minimum wage was ₱135.00, per 1 Separation Pay = ₱10,530.00
Wage Order No. 5 issued by the Regional Tripartite and .
Productivity Board of Region XI. They also alleged that
they did not receive 13th month pay for the entire period 2 Wage Differential = ₱ 8,268.00
of their employment.5 Both likewise claimed payment of .
overtime and service incentive leave. 3 13th Month Pay = ₱ 8,790.16
.
In his defense, petitioner averred that respondents were
part-time project employees and were employed only 4 SILP = ₱ 1,350.00
when there were electrical jobs to be done in a particular .
housing unit contracted by petitioner. He maintained that
the services of respondents as project employees were
coterminous with each project. As project employees,   TOTAL = ₱28,938.16
the time of rendition of their services was not fixed. Thus,
there was no practical way of determining the
appropriate compensation of the value of respondents’ 2) Raymundo Lirasan, Jr.
accomplishment, as their work assignment varied
depending on the needs of a specific project.6
1 Wage Differential = ₱ 7,878.00
On September 24, 1998, the Labor Arbiter rendered a .
Decision7 dismissing the complaint for lack of merit. The 2 13th Month Pay = ₱ 8,497.66
Labor Arbiter ruled that respondents were project .
employees and were not entitled to their monetary
claims. 3 SILP = ₱ 1,350.00
.
On appeal, the National Labor Relations Commission
(NLRC) affirmed with modification the findings of the 4
Labor Arbiter in a Resolution8 dated July 9, 1999. It TOTAL = ₱17,725.66
.
maintained that respondents were project employees of
petitioner. However, it declared that respondent Suarez        
was illegally dismissed from employment. It also
   Attorney’s fees = ₱ 4,666.3811
Petitioner filed a petition for certiorari under Rule 65 of
the Rules of Court before the CA. Petitioner asserted
that the NLRC committed grave abuse of discretion
when it declared him guilty of illegally terminating
respondent Suarez and in awarding both respondents
their monetary claims.
On March 30, 2001, the CA rendered a
Decision12 dismissing the petition for lack of merit.
Petitioner filed a motion for reconsideration which,
however, was denied in a Resolution13 dated November
23, 2001. Hence, this petition.
The Issues
Petitioner submits the following issues for resolution: (1)
whether respondent Suarez was illegally terminated, and
(2) whether respondents are entitled to their monetary
claims.
The Ruling of the Court
Petitioner’s business, specializing in installing electrical
devices, needs electricians only when there are electrical
devices to be installed in subdivision homes or buildings
covered by an appropriate contract. Petitioner, as an
electrical contractor, depends for his business on the
contracts that he is able to obtain from real estate
developers and builders of buildings. Thus, the work
provided by petitioner depends on the availability of such
contracts or projects. The duration of the employment of
his work force is not permanent but coterminous with the
projects to which the workers are assigned. Viewed in
this context, the respondents are considered as project
employees of petitioner. Indeed, the status of
respondents as project employees was upheld by the
Court of Appeals based on the findings of facts of the
Labor Arbiter and the NLRC.
A project employee is one whose "employment has been
fixed for a specific project or undertaking, the completion
or termination of which has been determined at the time
of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the
employment is for the duration of the season."14
However, respondents, even if working as project
employees, enjoy security of tenure. Section 3, Article
XIII, of the Constitution guarantees the right of workers
to security of tenure, and because of this, an employee
may only be terminated for just15 or authorized16 causes
that must comply with the due process
requirements17 mandated by law.
In Archbuild Masters and Construction, Inc. v.
NLRC,18 we held that the employment of a project worker
hired for a specific phase of a construction project is
understood to be coterminous with the completion of
such phase and not upon the accomplishment of the
whole project. A worker hired for a particular phase of a
construction project can be dismissed upon the
completion of such phase. Project workers in the
construction industry may also be terminated as the
phase of a construction project draws nearer to
completion when their services are no longer needed,
provided they are not replaced.19
Nonetheless, when a project employee is dismissed,
such dismissal must still comply with the substantive and
procedural requirements of due process. Termination of
his employment must be for a lawful cause and must be
done in a manner which affords him the proper notice
and hearing.20
In this regard, we hold that respondent Suarez was
illegally terminated by petitioner. A project employee
must be furnished a written notice of his impending
dismissal and must be given the opportunity to dispute
the legality of his removal.21 In termination cases, the
burden of proof rests on the employer to show that the
dismissal was for a just or authorized cause. Employers
who hire project employees are mandated to state and
prove the actual basis for the employee’s dismissal once
its veracity is challenged.22
Petitioner failed to present any evidence to disprove the
claim of illegal dismissal. It was uncontested that the last
work of the respondents with petitioner’s company was
the electrical installation in some housing units at the
Ciudad Esperanza Housing Project. No evidence was
presented by petitioner to show the termination of the
project which would justify the cessation of the work of
respondents. Neither was there proof that petitioner
complied with the substantive and procedural
requirements of due process.
As to respondents’ monetary claims, we uphold the
findings of the NLRC. As employer, the petitioner has the
burden of proving that the rate of pay given to the
respondents is in accordance with the minimum fixed by
the law and that he paid thirteenth month pay, service
incentive leave pay and other monetary claims.
We have consistently held that as a rule, one who pleads
payment has the burden of proving it. Even when the
plaintiff alleges non-payment, still the general rule is that
the burden rests on the defendant to prove payment,
rather than on the plaintiff to prove non-payment. The
debtor has the burden of showing with legal certainty
that the obligation has been discharged by payment.
When the existence of a debt is fully established by the
evidence contained in the record, the burden of proving
that it has been extinguished by payment devolves upon
the debtor who invokes such a defense against the claim
of the creditor. When the debtor introduces some
evidence of payment, the burden of going forward with
the evidence — as distinct from the general burden of
proof — shifts to the creditor, who is then under a duty of
producing some evidence to show non-payment.23
In the instant case, the burden of proving payment of the
monetary claims rests on petitioner, being the employer
of respondents. This is because the pertinent personnel
files, payrolls, records, remittances and other similar
documents that would show that the claims have been
paid are not in the possession of the worker but in the
custody and absolute control of the employer.24 Sadly,
the petitioner failed to do so.
WHEREFORE, in lieu of the foregoing, the instant
petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals in CA-G.R. SP No.
56503 are hereby AFFIRMED.
SO ORDERED.
 (c) Plugging of station promo;

(d) Logging of transmitter reading; and

(e) In case of power failure, start up

generator set to resume program;

3) Acting as Maintenance staff;

(a) Checking of equipment;

G.R. No. 176419               November 27, 2013
(b) Warming up of generator;
GMA NETWORK, INC., Petitioner,
vs. (c) Filling of oil, fuel, and water in
CARLOS P. PABRIGA, GEOFFREY F. ARIAS, KIRBY radiator; and
N. CAMPO, ARNOLD L. LAGAHIT, and ARMANDO A.
CATUBIG, Respondents. 4) Acting as Cameramen

DECISION On 4 August 1999, petitioner received a notice of

hearing of the complaint. The following day, petitioner’s
LEONARDO-DE CASTRO, J.: Engineering Manager, Roy Villacastin, confronted the
private respondents about the said complaint.
This is a Petition for Review on Certiorari filed by
petitioner GMA Network Inc. assailing the Decision1 of On 9 August 1999, private respondents were summoned
the Court of Appeals dated September 8, 2006 and the to the office of petitioner’s Area Manager, Mrs. Susan
subsequent Resolution2 dated January 22 2007 denying Aliño, and they were made to explain why they filed the
reconsideration in CA-G.R. SP No. 73652. complaint. The next day, private respondents were
barred from entering and reporting for work without any
The Court of Appeals summarized the facts of the case notice stating the reasons therefor.
as follows:
On 13 August 1999, private respondents, through their
On July 19 1999 due to the miserable working conditions counsel, wrote a letter to Mrs. Susan Aliño requesting
private respondents were forced to file a complaint that they be recalled back to work.
against petitioner before the National Labor Relations
Commission Regional Arbitration Branch No. VII Cebu On 23 August 1999, a reply letter from Mr. Bienvenido
City assailing their respective employment Bustria, petitioner’s head of Personnel and Labor
circumstances as follows: Relations Division, admitted the non-payment of benefits
but did not mention the request of private respondents to
be allowed to return to work.
NAME DATE POSITION
HIRED
On 15 September 1999, private respondents sent
Carlos Pabriga 2 May 1997 Television another letter to Mr. Bustria reiterating their request to
Technicians work but the same was totally ignored. On 8 October
1999, private respondents filed an amended complaint
Geoffrey Arias 2 May 1997 Television raising the following additional issues: 1) Unfair Labor
Technicians Practice; 2) Illegal dismissal; and 3) Damages and
Kirby Campo 1 Dec. 1993 Television Attorney’s fees.
Technicians
On 23 September 1999, a mandatory conference was
Arnold Laganit 11 Feb. 1996 Television set to amicably settle the dispute between the parties,
Technicians however, the same proved to be futile. As a result, both
Armand 2 March Television of them were directed to file their respective position
Catubig 1997 Technicians papers.

On 10 November 1999, private respondents filed their

Private respondents were engaged by petitioner to position paper and on 2 March 2000, they received a
perform the following activities, to wit: copy of petitioner’s position paper. The following day, the
Labor Arbiter issued an order considering the case
1) Manning of Technical Operations Center: submitted for decision.3

(a) Responsible for the airing of local In his Decision dated August 24, 2000, the Labor Arbiter
commercials; and dismissed the complaint of respondents for illegal
dismissal and unfair labor practice, but held petitioner
(b) Logging/monitoring of national liable for 13th month pay. The dispositive portion of the
commercials (satellite) Labor Arbiter’s Decision reads:

2) Acting as Transmitter/VTR men: WHEREFORE, the foregoing premises considered,

judgment is hereby rendered dismissing the complaints
(a) Prepare tapes for local airing; for illegal dismissal and unfair labor practice.

(b) Actual airing of commercials;

Respondents are, however, directed to pay the following
complainants their proportionate 13th month pay, to wit:
1. Kirby Campo P 7,716.04
2. Arnold Lagahit 7,925.98
3. Armand Catubig 4,233.68
4. Carlos Pabriga 4,388.19
5. Geoffrey Arias 4,562.01
₱28,826.14
10% Attorney’s fees 2,882.61
GRAND TOTAL ₱31,708.75
All other claims are, hereby, dismissed for failure to
substantiate the same.4
Respondents appealed to the National Labor Relations
Commission (NLRC). The NLRC reversed the Decision
of the Labor Arbiter, and held thus:
WHEREFORE, we make the following findings:
a) All complainants are regular employees with respect
to the particular activity to which they were assigned,
until it ceased to exist. As such, they are entitled to
payment of separation pay computed at one (1) month
salary for every year of service;
b) They are not entitled to overtime pay and holiday pay;
and
c) They are entitled to 13th month pay, night shift
differential and service incentive leave pay.
For purposes of accurate computation, the entire records
are REMANDED to the Regional Arbitration Branch of
origin which is hereby directed to require from
respondent the production of additional documents
where necessary.
Respondent is also assessed the attorney’s fees of ten
percent (10%) of all the above awards.5
Petitioner elevated the case to the Court of Appeals via a
Petition for Certiorari. On September 8, 2006, the
appellate court rendered its Decision denying the petition
for lack of merit.
Petitioner filed the present Petition for Review on
Certiorari, based on the following grounds:
I.
THE COURT OF APPEALS GRAVELY ERRED
FINDING RESPONDENTS ARE REGULAR
EMPLOYEES OF THE PETITIONER AND ARE
NOT PROJECT EMPLOYEES.
II.
THE COURT OF APPEALS GRAVELY ERRED
IN AWARDING SEPARATION PAY TO
RESPONDENTS ABSENT A FINDING THAT
RESPONDENTS WERE ILLEGALLY
DISMISSED.
III.
THE COURT OF APPEALS GRAVELY ERRED
IN AWARDING NIGHT SHIFT DIFFERENTIAL
PAY CONSIDERING THE ABSENCE OF
EVIDENCE WHICH WOULD ENTITLE THEM
TO SUCH AN AWARD.
IV.
THE COURT OF APPEALS GRAVELY ERRED
IN AWARDING ATTORNEY’S FEES TO
RESPONDENTS.6
The parties having extensively elaborated on their
positions in their respective memoranda, we proceed to
dispose of the issues raised.
Five Classifications of Employment
At the outset, we should note that the nature of the
employment is determined by law, regardless of any
contract expressing otherwise. The supremacy of the law
over the nomenclature of the contract and the
stipulations contained therein is to bring to life the policy
enshrined in the Constitution to afford full protection to
labor. Labor contracts, being imbued with public interest,
are placed on a higher plane than ordinary contracts and
are subject to the police power of the State.7
Respondents claim that they are regular employees of
petitioner GMA Network, Inc. The latter, on the other
hand, interchangeably characterize respondents’
employment as project and fixed period/fixed term
employment. There is thus the need to clarify the
foregoing terms.
The terms regular employment and project employment
are taken from Article 280 of the Labor Code, which also
speaks of casual and seasonal employment:
ARTICLE 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
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That,
any employee who has rendered at least one year of
service, whether such service is continuous or broken,
shall be considered a regular employee with respect to
the activity in which he is employed and his employment
shall continue while such activity actually exist.
A fifth classification, that of a fixed term employment, is
not expressly mentioned in the Labor Code.
Nevertheless, this Court ruled in Brent School, Inc. v.
Zamora,8 that such a contract, which specifies that
employment will last only for a definite period, is not per
se illegal or against public policy.
Whether respondents are regular or project employees
Pursuant to the above-quoted Article 280 of the Labor
Code, employees performing activities which are usually
necessary or desirable in the employer’s usual business
or trade can either be regular, project or seasonal
employees, while, as a general rule, those performing
activities not usually necessary or desirable in the
employer’s usual business or trade are casual
employees. The reason for this distinction may not be
readily comprehensible to those who have not carefully
studied these provisions: only employers who constantly
need the specified tasks to be performed can be
justifiably charged to uphold the constitutionally
protected security of tenure of the corresponding
workers. The consequence of the distinction is found in
Article 279 of the Labor Code, which provides:
ARTICLE 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 their monetary equivalent computed
from the time his compensation was withheld from him
up to the time of his actual reinstatement.
On the other hand, the activities of project employees
may or may not be usually necessary or desirable in the
usual business or trade of the employer, as we have
discussed in ALU-TUCP v. National Labor Relations
Commission,9 and recently reiterated in Leyte
Geothermal Power Progressive Employees Union-ALU-
TUCP v. Philippine National Oil Company-Energy
Development Corporation.10 In said cases, we clarified
the term "project" in the test for determining whether an
employee is a regular or project employee:
It is evidently important to become clear about the
meaning and scope of the term "project" in the present
context. The "project" for the carrying out of which
"project employees" are hired would ordinarily have
some relationship to the usual business of the employer.
Exceptionally, the "project" undertaking might not have
an ordinary or normal relationship to the usual business
of the employer. In this latter case, the determination of
the scope and parameters of the "project" becomes fairly
easy. It is unusual (but still conceivable) for a company
to undertake a project which has absolutely no
relationship to the usual business of the company; thus,
for instance, it would be an unusual steel-making
company which would undertake the breeding and
production of fish or the cultivation of vegetables. From
the viewpoint, however, of the legal characterization
problem here presented to the Court, there should be no
difficulty in designating the employees who are retained
or hired for the purpose of undertaking fish culture or the
production of vegetables as "project employees," as
distinguished from ordinary or "regular employees," so
long as the duration and scope of the project were
determined or specified at the time of engagement of the
"project employees." For, as is evident from the
provisions of Article 280 of the Labor Code, quoted
earlier, the principal test for determining whether
particular employees are properly characterized as
"project employees" as distinguished from "regular
employees," is whether or not the "project employees"
were assigned to carry out a "specific project or
undertaking," the duration (and scope) of which were
specified at the time the employees were engaged for
that project.
In the realm of business and industry, we note that
"project" could refer to one or the other of at least two (2)
distinguishable types of activities. Firstly, a project could
refer to a particular job or undertaking that is within the
regular or usual business of the employer company, but
which is distinct and separate, and identifiable as such,
from the other undertakings of the company. Such job or
undertaking begins and ends at determined or
determinable times. The typical example of this first type
of project is a particular construction job or project of a
construction company. A construction company
ordinarily carries out two or more [distinct] identifiable
construction projects: e.g., a twenty-five-storey hotel in
Makati; a residential condominium building in Baguio
City; and a domestic air terminal in Iloilo City. Employees
who are hired for the carrying out of one of these
separate projects, the scope and duration of which has
been determined and made known to the employees at
the time of employment, are properly treated as "project
employees," and their services may be lawfully
terminated at completion of the project.
The term "project" could also refer to, secondly, a
particular job or undertaking that is not within the regular
business of the corporation. Such a job or undertaking
must also be identifiably separate and distinct from the
ordinary or regular business operations of the employer.
The job or undertaking also begins and ends at
determined or determinable times. x x x.11 (Emphases
supplied, citation omitted.)
Thus, in order to safeguard the rights of workers against
the arbitrary use of the word "project" to prevent
employees from attaining the status of regular
employees, employers claiming that their workers are
project employees should not only prove that the
duration and scope of the employment was specified at
the time they were engaged, but also that there was
indeed a project. As discussed above, the project could
either be (1) a particular job or undertaking that is within
the regular or usual business of the employer company,
but which is distinct and separate, and identifiable as
such, from the other undertakings of the company; or (2)
a particular job or undertaking that is not within the
regular business of the corporation. As it was with regard
to the distinction between a regular and casual
employee, the purpose of this requirement is to delineate
whether or not the employer is in constant need of the
services of the specified employee. If the particular job or
undertaking is within the regular or usual business of the
employer company and it is not identifiably distinct or
separate from the other undertakings of the company,
there is clearly a constant necessity for the performance
of the task in question, and therefore said job or
undertaking should not be considered a project.
Brief examples of what may or may not be considered
identifiably distinct from the business of the employer are
in order. In Philippine Long Distance Telephone
Company v. Ylagan,12 this Court held that accounting
duties were not shown as distinct, separate and
identifiable from the usual undertakings of therein
petitioner PLDT. Although essentially a telephone
company, PLDT maintains its own accounting
department to which respondent was assigned. This was
one of the reasons why the Court held that respondent in
said case was not a project employee. On the other
hand, in San Miguel Corporation v. National Labor
Relations Commission,13 respondent was hired to repair
furnaces, which are needed by San Miguel Corporation
to manufacture glass, an integral component of its
packaging and manufacturing business. The Court,
finding that respondent is a project employee, explained
that San Miguel Corporation is not engaged in the
business of repairing furnaces. Although the activity was
necessary to enable petitioner to continue manufacturing
glass, the necessity for such repairs arose only when a
particular furnace reached the end of its life or operating
cycle. Respondent therein was therefore considered a
project employee.
In the case at bar, as discussed in the statement of facts,
respondents were assigned to the following tasks:
1) Manning of Technical Operations Center:
(a) Responsible for the airing of local
commercials; and
(b) Logging/monitoring of national
commercials (satellite)
2) Acting as Transmitter/VTR men:
(a) Prepare tapes for local airing;
(b) Actual airing of commercials;
(c) Plugging of station promo;
(d) Logging of transmitter reading; and
(e) In case of power failure, start up
generator set to resume program;
3) Acting as Maintenance staff;
(a) Checking of equipment;
(b) Warming up of generator;
(c) Filling of oil, fuel, and water in
radiator; and
4) Acting as Cameramen14
These jobs and undertakings are clearly within the
regular or usual business of the employer company and
are not identifiably distinct or separate from the other
undertakings of the company. There is no denying that
the manning of the operations center to air commercials,
acting as transmitter/VTR men, maintaining the
equipment, and acting as cameramen are not
undertakings separate or distinct from the business of a
broadcasting company.
Petitioner’s allegation that respondents were merely
substitutes or what they call pinch-hitters (which means
that they were employed to take the place of regular
employees of petitioner who were absent or on leave)
does not change the fact that their jobs cannot be
considered projects within the purview of the law. Every
industry, even public offices, has to deal with securing
substitutes for employees who are absent or on leave.
Such tasks, whether performed by the usual employee
or by a substitute, cannot be considered separate and
distinct from the other undertakings of the company.
While it is management’s prerogative to device a method
to deal with this issue, such prerogative is not absolute
and is limited to systems wherein employees are not
ingeniously and methodically deprived of their
constitutionally protected right to security of tenure. We
are not convinced that a big corporation such as
petitioner cannot device a system wherein a sufficient
number of technicians can be hired with a regular status
who can take over when their colleagues are absent or
on leave, especially when it appears from the records
that petitioner hires so-called pinch-hitters regularly
every month.
In affirming the Decision of the NLRC, the Court of
Appeals furthermore noted that if respondents were
indeed project employees, petitioner should have
reported the completion of its projects and the dismissal
of respondents in its finished projects:
There is another reason why we should rule in favor of
private respondents. Nowhere in the records is there any
showing that petitioner reported the completion of its
projects and the dismissal of private respondents in its
finished projects to the nearest Public Employment
Office as per Policy Instruction No. 2015 of the
Department of Labor and Employment [DOLE].
Jurisprudence abounds with the consistent rule that the
failure of an employer to report to the nearest Public
Employment Office the termination of its workers’
services everytime a project or a phase thereof is
completed indicates that said workers are not project
employees.
In the extant case, petitioner should have filed as many
reports of termination as there were projects actually
finished if private respondents were indeed project
employees, considering that the latter were hired and
again rehired from 1996 up to 1999. Its failure to submit
reports of termination cannot but sufficiently convince us
further that private respondents are truly regular
employees. Important to note is the fact that private
respondents had rendered more than one (1) year of
service at the time of their dismissal which overturns
petitioner’s allegations that private respondents were
hired for a specific or fixed undertaking for a limited
period of time.16 (Citations omitted.)
We are not unaware of the decisions of the Court in
Philippine Long Distance Telephone Company v.
Ylagan17 and ABS-CBN Broadcasting Corporation v.
Nazareno18 which held that the employer’s failure to
report the termination of employees upon project
completion to the DOLE Regional Office having
jurisdiction over the workplace within the period
prescribed militates against the employer’s claim of
project employment, even outside the construction
industry. We have also previously stated in another case
that the Court should not allow circumvention of labor
laws in industries not falling within the ambit of Policy
Instruction No. 20/Department Order No. 19, thereby
allowing the prevention of acquisition of tenurial security
by project employees who have already gained the
status of regular employees by the employer’s conduct.19
While it may not be proper to revisit such past
pronouncements in this case, we nonetheless find that
petitioner’s theory of project employment fails the
principal test of demonstrating that the alleged project
employee was assigned to carry out a specific project or
undertaking, the duration and scope of which were
specified at the time the employee is engaged for the
project.20
The Court of Appeals also ruled that even if it is
assumed that respondents are project employees, they
would nevertheless have attained regular employment
status because of their continuous rehiring:
Be that as it may, a project employee may also attain the
status of a regular employee if there is a continuous
rehiring of project employees after the stoppage of a
project; and the activities performed are usual [and]
customary to the business or trade of the employer. The
Supreme Court ruled that a project employee or a
member of a work pool may acquire the status of a
regular employee when the following concur:
 1) There is a continuous rehiring of project
employees even after cessation of a project; and
2) The tasks performed by the alleged project
employee are vital, necessary and indispensable
to the usual business or trade of the employer.
The circumstances set forth by law and the
jurisprudence is present in this case. In fine, even if
private respondents are to be considered as project
employees, they attained regular employment status,
just the same.21 (Citation omitted.)
Anent this issue of attainment of regular status due to
continuous rehiring, petitioner advert to the fixed period
allegedly designated in employment contracts and
reflected in vouchers. Petitioner cites
pronouncements in Brent, St. Theresa’s School of
Novaliches Foundation v. National Labor Relations
Commission,22 and Fabela v. San Miguel
Corporation,23 and argues that respondents were fully
aware and freely entered into agreements to undertake a
particular activity for a specific length of time.24 Petitioner
apparently confuses project employment from fixed term
employment. The discussions cited by petitioner in
Brent, St. Theresa’s and Fabela all refer to fixed term
employment, which is subject to a different set of
requirements.
Whether the requisites of a valid fixed term employment
are met
As stated above, petitioner interchangeably
characterizes respondents’ service as project and fixed
term employment. These types of employment, however,
are not the same. While the former requires a project as
restrictively defined above, the duration of a fixed-term
employment agreed upon by the parties may be any day
certain, which is understood to be "that which must
necessarily come although it may not be known
when."25 The decisive determinant in fixed-term
employment is not the activity that the employee is called
upon to perform but the day certain agreed upon by the
parties for the commencement and termination of the
employment relationship.26
Cognizant of the possibility of abuse in the utilization of
fixed-term employment contracts, we emphasized in
Brent 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 as contrary to public policy or
morals.27 We thus laid down indications or criteria under
which "term employment" cannot be said to be in
circumvention of the law on security of tenure, namely:
1) The fixed period of employment was
knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper
pressure being brought to bear upon the
employee and absent any other circumstances
vitiating his consent; or
2) It satisfactorily appears that the employer and
the employee dealt with each other on more or
less equal terms with no moral dominance
exercised by the former or the latter.28 (Citation
omitted.)
These indications, which must be read together, make
the Brent doctrine applicable only in a few special cases
wherein the employer and employee are on more or less
in equal footing in entering into the contract. The reason
for this is evident: when a prospective employee, on
account of special skills or market forces, is in a position
to make demands upon the prospective employer, such
prospective employee needs less protection than the
ordinary worker. Lesser limitations on the parties’
freedom of contract are thus required for the protection
of the employee. These indications were applied in Pure
Foods Corporation v. National Labor Relations
Commission,29 where we discussed the patent inequality
between the employer and employees therein:
[I]t could not be supposed that private respondents and
all other so-called "casual" workers of [the petitioner]
KNOWINGLY and VOLUNTARILY agreed to the 5-
month employment contract. Cannery workers are never
on equal terms with their employers. Almost always, they
agree to any terms of an employment contract just to get
our
employed considering that it is difficult to find work given
their ordinary qualifications. Their freedom to contract is
empty and hollow because theirs is the freedom to
starve if they refuse to work as casual or contractual
workers. Indeed, to the unemployed, security of tenure
has no value. It could not then be said that petitioner and
private respondents "dealt with each other on more or
less equal terms with no moral dominance whatever
being exercised by the former over the latter.
To recall, it is doctrinally entrenched that in illegal
dismissal cases, the employer has the burden of proving
with clear, accurate, consistent, and convincing evidence
that the dismissal was valid.30 It is therefore the employer
which must satisfactorily show that it was not in a
dominant position of advantage in dealing with its
prospective employee. Thus, in Philips Semiconductors
(Phils.), Inc. v. Fadriquela,31 this Court rejected the
employer’s insistence on the application of the Brent
doctrine when the sole justification of the fixed terms is
to respond to temporary albeit frequent need of such
workers:
We reject the petitioner’s submission that it resorted to
hiring employees for fixed terms to augment or
supplement its regular employment "for the duration of
peak loads" during short-term surges to respond to
cyclical demands; hence, it may hire and retire workers
on fixed terms, ad infinitum, depending upon the needs
of its customers, domestic and international. Under the
petitioner's submission, any worker hired by it for fixed
terms of months or years can never attain regular
employment status. x x x.
Similarly, in the case at bar, we find it unjustifiable to
allow petitioner to hire and rehire workers on fixed terms,
ad infinitum, depending upon its needs, never attaining
regular employment status. To recall, respondents were
repeatedly rehired in several fixed term contracts from
1996 to 1999. To prove the alleged contracts, petitioner
presented cash disbursement vouchers signed by
respondents, stating that they were merely hired as
pinch-hitters. It is apparent that respondents were in no
position to refuse to sign these vouchers, as such refusal
would entail not getting paid for their services. Plainly,
respondents as "pinch-hitters" cannot be considered to
be in equal footing as petitioner corporation in the
negotiation of their employment contract.
In sum, we affirm the findings of the NLRC and the Court
of Appeals that respondents are regular employees of
petitioner.1âwphi1 As regular employees, they are
entitled to security of tenure and therefore their services
may be terminated only for just or authorized causes.
Since petitioner failed to prove any just or authorized
cause for their termination, we are constrained to affirm
the findings of the NLRC and the Court of Appeals that failure to present such evidence must be taken against
they were illegally dismissed. them.

Separation Pay, Night Shift Differential and Attorney’s Petitioner, however, is correct that the award of
Fees attorney's fees is contrary to jurisprudence. In De las
Santos v. Jebsen Maritime Inc.,36 we held:
Petitioner admits that respondents were not given
separation pay and night shift differential. Petitioner, Likewise legally correct is the deletion of the award of
however, claims that respondents were not illegally attorney's fees, the NLRC having failed to explain
dismissed and were therefore not entitled to separation petitioner's entitlement thereto. As a matter of sound
pay. As regards night shift differential, petitioner claims policy, an award of attorney's fees remains the exception
that its admission in its August 23, 1999 letter as to the rather than the rule. It must be stressed, as aptly
nonpayment thereof is qualified by its allegation that observed by the appellate court, that it is necessary for
respondents are not entitled thereto. Petitioner points out the trial court, the NLRC in this case, to make express
that respondents failed to specify the period when such findings of facts and law that would bring the case within
benefits are due, and did not present additional evidence the exception. In fine, the factual, legal or equitable
before the NLRC and the Court of Appeals.32 justification for the award must be set forth in the text of
the decision. The matter of attorney's fees cannot be
In light, however, of our ruling that respondents were touched once and only in the fallo of the decision, else,
illegally dismissed, we affirm the findings of the NLRC the award should be thrown out for being speculative
and the Court of Appeals that respondents are entitled to and conjectural. In the absence of a stipulation,
separation pay in lieu of reinstatement. We quote with attorney's fees are ordinarily not recoverable; otherwise
approval the discussion of the Court of Appeals: a premium shall be placed on the right to litigate. They
are not awarded every time a party wins a suit. (Citations
omitted.)
However, since petitioner refused to accept private
respondents back to work, reinstatement is no longer
practicable. Allowing private respondents to return to In the case at bar, the factual basis for the award of
their work might only subject them to further attorney's fees was not discussed in the text of NLRC
embarrassment, humiliation, or even harassment. Decision. We are therefore constrained to delete the
same.
Thus, in lieu of reinstatement, the grant of separation
pay equivalent to one (1) month pay for every year of WHEREFORE the Decision of the Court of Appeals
service is proper which public respondent actually did. dated September 8, 2006 and the subsequent
Where the relationship between private respondents and Resolution denying reconsideration dated January 22,
petitioner has been severely strained by reason of their 2007 in CA-G.R. SP No. 73652, are hereby AFFIRMED
respective imputations of accusations against each with the MODIFICATION that the award of attorney's
other, to order reinstatement would no longer serve any fees in the affirmed Decision of the National Labor
purpose. In such situation, payment of separation pay Relations Commission is hereby DELETED.
instead of reinstatement is in order.33 (Citations omitted.)
SO ORDERED.
As regards night shift differential, the Labor Code
provides that every employee shall be paid not less than
ten percent (10%) of his regular wage for each hour of
work performed between ten o’clock in the evening and
six o’clock in the morning.34 As employees of petitioner,
respondents are entitled to the payment of this benefit in
accordance with the number of hours they worked from
10:00 p.m. to 6:00 a.m., if any. In the Decision of the
NLRC affirmed by the Court of Appeals, the records
were remanded to the Regional Arbitration Branch of
origin for the computation of the night shift differential
and the separation pay. The Regional Arbitration Branch
of origin was likewise directed to require herein petitioner
to produce additional documents where necessary.
Therefore, while we are affirming that respondents are
entitled to night shift differential in accordance with the
number of hours they worked from 10:00 p.m. to 6:00
a.m., it is the Regional Arbitration Branch of origin which
should determine the computation thereof for each of the
respondents, and award no night shift differential to
those of them who never worked from 10:00 p.m. to 6:00
a.m.

It is also worthwhile to note that in the NLRC Decision, it

was herein petitioner GMA Network, Inc. (respondent
therein) which was tasked to produce additional
documents necessary for the computation of the night
shift differential. This is in accordance with our ruling in
Dansart Security Force & Allied Services Company v.
Bagoy,35 where we held that it is entirely within the
employer's power to present such employment records
that should necessarily be in their possession, and that

G.R. No. 109902 August 2, 1994
ALU-TUCP, Representing Members: ALAN
BARINQUE, with 13 others, namely: ENGR. ALAN G.
BARINQUE, ENGR. DARRELL LEE ELTAGONDE,
EDUARD H. FOOKSON, JR., ROMEO R. SARONA,
RUSSELL GACUS, JERRY BONTILAO, EUSEBIO
MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO
MEJOS, EDGAR S. BONTUYAN, JOSE G.
GARGUENA, JR., OSIAS B. DANDASAN, and GERRY
I. FETALVERO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
NATIONAL STEEL CORPORATION
(NSC), respondents.
FELICIANO, J.:
In this Petition for Certiorari, petitioners assail the
Resolution of the National Labor Relations Commission
("NLRC") dated 8 January 1993 which declared
petitioners to be project employees of private respondent
National Steel Corporation ("NSC"), and the NLRC's
subsequent Resolution of 15 February 1993, denying
petitioners' motion for reconsideration.
Petitioners plead that they had been employed by
respondent NSC in connection with its Five Year
Expansion Program (FAYEP I & II) 1 for varying lengths
of time when they were separated from NSC's service:
Employee Date Nature of Separated
Employed Employment
1. Alan Barinque 5-14-82 Engineer 1 8-31-91
2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92
3. Edgar Bontuyan 11-03-82 Chairman to present
4. Osias Dandasan 9-21-82 Utilityman 1991
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92
6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91
7. Gerry Fetalvero 4-08-85 Mat. Expediter
regularized
8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
9. Russell Gacus 1-30-85 Engineer 1 6-30-92
10. Jose Garguena 3-02-81 Warehouseman to
present
11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
12. Bonifacio Mejos 11-17-82 Surv. Party Head
1992
13. Romeo Sarona 2-26-83 Machine Operator 8-31-
912
On 5 July 1990, petitioners filed separate complaints for
unfair labor practice, regularization and monetary
benefits with the NLRC, Sub-Regional Arbitration Branch
XII, Iligan City.
The complaints were consolidated and after hearing, the
Labor Arbiter in a Decision dated 7 June 1991, declared
petitioners "regular project employees who shall
continue their employment as such for as long as such
[project] activity exists," but entitled to the salary of
a regular employee  pursuant to the provisions in the
collective bargaining agreement. It also ordered payment
of salary differentials. 3
Both parties appealed to the NLRC from that decision.
Petitioners argued that they were regular, not project,
employees. Private respondent, on the other hand,
claimed that petitioners are project employees as they
were employed to undertake a specific project — NSC's
Five Year Expansion Program (FAYEP I & II).
The NLRC in its questioned resolutions modified the
Labor Arbiter's decision. It affirmed the Labor Arbiter's
holding that petitioners were  project employees  since
they were hired to perform work in a specific undertaking
— the Five Years Expansion Program, the completion of
which had been determined at the time of their
engagement and which operation was not directly
related to the business of steel manufacturing. The
NLRC, however, set aside the award to petitioners of the
same benefits enjoyed by regular  employees for lack of
legal and factual basis.
Deliberating on the present Petition for Certiorari, the
Court considers that petitioners have failed to show any
grave abuse of discretion or any act without or in excess
of jurisdiction on the part of the NLRC in rendering its
questioned resolutions of 8 January 1993 and 15
February 1993.
The law on the matter is Article 280 of the Labor Code
which reads in full:
Art. 280. Regular and Casual
Employment — The provisions of the
written agreement to the contrary
notwithstanding and regardless of the
oral agreement of the parties, and
employment shall be deemed to be
regular where the employee has been
engaged to perform activities which are
usually necessary or desirable in the
usual business or trade of the
employer, except where the
employment has been fixed for a
specific project  or undertaking
the completion or termination of which
has been determined at the time of the
engagement of the employee or where
the work or services to be performed is
seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be
casual if it is not covered by the
preceding paragraph: Provided, That,
any employee who has rendered at least
one year service, whether such service
is continuous or broken, shall be
considered a regular employee with
respect to the activity in which he is
employed and his employment shall
continue while such actually exists.
(Emphasis supplied)
Petitioners argue that they are "regular" employees of
NSC because: (i) their jobs are "necessary, desirable
and work-related to private respondent's main business,
steel-making"; and (ii) they have rendered service for six
(6) or more years to private respondent NSC. 4
The basic issue is thus whether or not petitioners are
properly characterized as "project employees" rather
than "regular employees" of NSC. This issue relates, of
course, to an important consequence: the services of
project employees are co-terminous with the project and
may be terminated upon the end or completion of the
project for which they were hired. 5 Regular employees,
in contract, are legally entitled to remain in the service of
their employer until that service is terminated by one or
another of the recognized modes of termination of
service under the Labor Code. 6
It is evidently important to become clear about the
meaning and scope of the term "project" in the present
context. The "project" for the carrying out of which
"project employees" are hired would ordinarily have
some relationship to the usual business of the employer.
Exceptionally, the "project" undertaking might not have
an ordinary or normal relationship to the usual business
of the employer. In this latter case, the determination of
the scope and parameeters of the "project" becomes
fairly easy. It is unusual (but still conceivable) for a
company to undertake a project which has absolutely no
relationship to the usual business of the company; thus,
for instance, it would be an unusual steel-making
company which would undertake the breeding and
production of fish or the cultivation of vegetables. From
the viewpoint, however, of the legal characterization
problem here presented to the Court, there should be no
difficulty in designating the employees who are retained
or hired for the purpose of undertaking fish culture or the
production of vegetables as "project employees," as
distinguished from ordinary or "regular employees," so
long as the duration and scope of the project were
determined or specified at the time of engagement of the
"project employees." 7 For, as is evident from the
provisions of Article 280 of the Labor Code, quoted
earlier, the principal test for determining whether
particular employees are properly characterized as
"project employees" as distinguished from "regular
employees," is whether or not the "project employees"
were assigned to carry out a "specific project or
undertaking," the duration (and scope) of which were
specified at the time the employees were engaged for
that project.
In the realm of business and industry, we note that
"project" could refer to one or the other of at least two (2)
distinguishable types of activities. Firstly, a project could
refer to a particular job or undertaking that is within the
regular or usual business of the employer company, but
which is distinct and separate, and identifiable as such,
from the other undertakings of the company. Such job or
undertaking begins and ends at determined or
determinable times. The typical example of this first type
of project is a particular construction job or project of a
construction company. A construction company
ordinarily carries out two or more discrete identifiable
construction projects: e.g., a twenty-five- storey hotel in
Makati; a residential condominium building in Baguio
City; and a domestic air terminal in Iloilo City. Employees
who are hired for the carrying out of one of these
separate projects, the scope and duration of which has
been determined and made known to the employees at
the time of employment, are properly treated as "project
employees," and their services may be lawfully
terminated at completion of the project.
The term "project" could also refer to, secondly, a
particular job or undertaking that is not within the regular
business of the corporation. Such a job or undertaking
must also be identifiably separate and distinct from the
ordinary or regular business operations of the employer.
The job or undertaking also begins and ends at
determined or determinable times. The case at bar
presents what appears to our mind as a typical example
of this kind of "project."
NSC undertook the ambitious Five Year Expansion
Program I and II with the ultimate end in view of
expanding the volume and increasing the kinds of
products that it may offer for sale to the public. The Five
Year Expansion Program had a number of component
projects: e.g., (a) the setting up of a "Cold Rolling Mill
Expansion Project"; (b) the establishment of a "Billet
Steel-Making Plant" (BSP); (c) the acquisition and
installation of a "Five Stand TDM"; and (d) the "Cold Mill
Peripherals Project." 8 Instead of contracting out to an
outside or independent contractor the tasks
of constructing the buildings with related civil and
electrical works that would house the new machinery
and equipment, the installation of the newly acquired mill
or plant machinery and equipment and
the commissioning of such machinery and equipment,
NSC opted to execute and carry out its Five Yeear
Expansion Projects "in house," as it were, by
administration. The carrying out of the Five Year
Expansion Program (or more precisely, each of its
component projects) constitutes a distinct undertaking
identifiable from the ordinary business and activity of
NSC. Each component project, of course, begins and
ends at specified times, which had already been
determined by the time petitioners were engaged. We
also note that NSC did the work here involved — the
construction of buildings and civil and electrical works,
installation of machinery and equipment and the
commissioning of such machinery — only for
itself. Private respondent NSC was not  in the business
of constructing buildings and installing plant machinery
for the general business community, i.e., for unrelated,
third party, corporations. NSC did not hold itself out to
the public as a construction company or as an
engineering corporation.
Which ever type of project employment is found in a
particular case, a common basic requisite is that the
designation of named employees as "project employees"
and their assignment to a specific project, are effected
and implemented in good faith, and not merely as a
means of evading otherwise applicable requirements of
labor laws.
Thus, the particular component projects embraced in the
Five Year Expansion Program, to which petitioners were
assigned, were distinguishable from the regular or
ordinary business of NSC which, of course, is the
production or making and marketing of steel products.
During the time petitioners rendered services to NSC,
their work was limited to one or another of the specific
component projects which made up the FAYEP I and II.
There is nothing in the record to show that petitioners
were hired for, or in fact assigned to, other purposes,
e.g., for operating or maintaining the old, or previously
installed and commissioned, steel-making machinery
and equipment, or for selling the finished steel products.
We, therefore, agree with the basic finding of the NLRC
(and the Labor Arbiter) that the petitioners were indeed
"project employees:"
It is well established by the facts and
evidence on record that herein 13
complainants were hired and engaged
for specific activities or undertaking the
period of which has been determined at
time of hiring or engagement. It is of
public knowledge and which this
Commission can safely take judicial
 notice that the expansion program
(FAYEP) of respondent NSC consist of
various phases [of] project components
which are being executed or
implemented independently or
simultaneously from each other . . .

In other words, the employment of each

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

xxx xxx xxx

The present case therefore strictly falls under

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

Petitioners next claim that their service to NSC of more

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

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

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

ACCORDINGLY, in view of the foregoing, the Petition

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

SO ORDERED.

G.R. NO. 159862 : October 17, 2006]
HERMONIAS L. LIGANZA, Petitioner, v. RBL
SHIPYARD CORPORATION and ENGR. BEN LIM,
JR., Respondents.
DECISION
TINGA, J.:
This is a petition for certiorari to review the Decision of
the Court of Appeals in CA-G.R. SP No. 71459 affirming
the ruling of the National Labor Relations Commission
(NLRC) that petitioner is a project employee.
After working as a carpenter for respondent since August
1991, petitioner's employment was terminated on 30
October 1999. This prompted petitioner to file a
complaint for illegal dismissal, alleging that on said date
he was verbally informed that he was already terminated
from employment and barred from entering the
premises. On the same occasion, he was told to look for
another job. Thus, he claimed that he was
unceremoniously terminated from employment without
any valid or authorized cause. On the other hand,
respondent insisted that petitioner was a mere project
employee who was terminated upon completion of the
project for which he was hired.
In a Decision dated 22 February 2001, the Labor Arbiter
ruled that petitioner is a regular, not a project employee,
since respondent failed to present the alleged project
employment contracts.1 Furthermore, the ruling went on,
as petitioner's dismissal was not done in accordance
with the due process requirement of twin notices, said
dismissal is illegal. The Labor Arbiter thus ordered the
reinstatement of petitioner, and the payment of
backwages, as well as moral and exemplary damages.2
On appeal to the NLRC, respondent presented the other
project employment contracts with petitioner and the
termination reports3 submitted to the Department of
Labor and Employment (DOLE). Convinced, and finding
sufficient proof that petitioner's employment
was covered by contracts with specific duration
identifying the project and nature of activity, the
Commission set aside the Labor Arbiter's
Decision.4 According to the NLRC, petitioner's service of
eight (8) years is not the controlling factor in determining
the nature of his employment, it appearing that the
employment contracts he entered into were renewed
every six (6) months and that from the contracts he knew
beforehand when his engagement was supposed to
end.5 Finding that petitioner's termination was not
attended by bad faith or malice, but was merely brought
about by the completion of the phase of work for which
he was hired, the NLRC ruled that the award of damages
was not warranted.6 Petitioner sought reconsideration of
the Resolution but to no avail, as the NLRC stood pat on
its stand issuing the Resolution of 8 May 2002.7
Petitioner went up to the Court of Appeals via a Petition
for Review on Certiorari, positing that the NLRC
committed grave abuse of discretion in coming out with
the challenged issuances which reversed the factual
findings and the decision of the Labor Arbiter. The Court
of Appeals dismissed the petition. According to the
appellate court, while it is true that petitioner has worked
for more than a year for respondent and that his work as
a carpenter is necessary and desirable to respondent's
usual trade or business, still he cannot be considered a
regular employee. It noted that (i) petitioner's
appointment papers provided for the specific project to
be undertaken and the duration of such project; (ii) that
he was issued an accountability clearance; and (iii) that
respondent submitted the requisite employment
termination reports.8 Petitioner filed a motion for
reconsideration which was, however, denied for lack of
merit.9
Feeling aggrieved by the resolutions of the Court of
Appeals, petitioner has come to this Court via the
present Petition for Review raising the following errors:
1. The Court of Appeals seriously erred in concluding
that "petitioner is a project employee, not a regular
employee;"
2. The Court of Appeals erred in declaring that "all of
petitioner's appointment papers with private respondent
corporation specially provided for the project to be
undertaken and the duration of such project;"
3. The Court of Appeals erred in declaring that " after the
completion of each project, petitioner was issued an
accountability clearance, even as private respondent
submitted a report of the said termination to the
regional/district office of the Department of Labor and
Employment (DOLE) as required by Policy Instruction
No. 20 of the Department of Labor and Employment;"
4. The Court of Appeals erred in finding that "the
evidence presented by petitioner himself showed that the
service rendered with private respondent corporation
was to end at a specific date, i.e. in the year 1999;" and
5. The Court of Appeals erred in holding that it is
"unnecessary to discuss the collateral issue of illegal
dismissal."10
The issue boils down to whether petitioner is a project
employee and whether his termination was illegal.
The petition must be granted.
A project employee is one whose "employment has been
fixed for a specific project or undertaking, the completion
or termination of which has been determined at the time
of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the
employment is for the duration of the season."11 Before
an employee hired on a per project basis can be
dismissed, a report must be made to the nearest
employment office of the termination of the services of
the workers every time it completed a project, pursuant
to Policy Instruction No. 20.12
Petitioner claims he is a regular employee since he
worked for respondent continuously and without
interruption from 13 August 1991 up to 30 October 1999
and that his work as a carpenter was necessary and
desirable to the latter's usual business of shipbuilding
and repair. He asserts that when he was hired by
respondent in 1991, there was no employment contract
fixing a definite period or duration of his engagement,
and save for the contract covering the period 20
September 1999 to 19 March 2000, respondent had
been unable to show the other project employment
contracts ever since petitioner started working for the
company. Furthermore, respondent failed to file as many
termination reports as there are completed projects
involving petitioner, he adds.
On the other hand, respondent insists that petitioner is a
project employee as evidenced by the project
employment contracts it signed with him and employee
termination reports it submitted to the DOLE.
In finding that petitioner was a project employee, both
the NLRC and the Court of Appeals relied greatly on the
aforementioned contracts. While administrative findings
of fact are accorded great respect and even finality when
supported by substantial evidence, nevertheless, when it
can be shown that administrative bodies grossly
misappreciated evidence of such nature as to compel a
contrary conclusion, this Court will not hesitate to
reverse their factual findings.13
While the appropriate evidence to show that a person is
a project employee is the employment contract
specifying the project and the duration of such project,
the existence of such contract is not always conclusive
of the nature of one's employment. In the instant case,
respondent seeks to prove the status of petitioner's
employment through four (4) employment contracts
covering a period of only two (2) years to declare
petitioner as a project employee.
All that respondent submitted were four (4) contracts
covering the periods 29 July 1997 to 28 January 1998,
24 August 1998 to 25 February 1999, 3 March 1999 to 2
September 1999, and 20 September 1999 to 19 March
2000, as well as the employment termination reports for
January 1998, August 1998, February 1999 and October
1999.14 Respondent failed to present the contracts
purportedly covering petitioner's employment from 1991
to July 1997, spanning six (6) years of the total eight (8)
years of his employment. To explain its failure in this
regard, respondent claims that the records and contracts
covering said period were destroyed by rains and
flashfloods that hit the company's office.15 We are not
convinced.
To begin with, respondent has been unable to refute
petitioner's allegation that he did not sign any contract
when he started working for the company. The four
employment contracts are not sufficient to reach the
conclusion that petitioner was, and has been, a project
employee earlier since 1991. The Court is not satisfied
with the explanation that the other employment contracts
were destroyed by floods and rains. Respondent could
have used other evidence to prove project employment,
but it did not do so, seemingly content with the
convenient excuse of "destroyed documents."
The Court takes exception to the Court of Appeals'
finding that "after every completion of the project,
petitioner was free to seek other employments outside
the private respondent's company."16 This conclusion is
not supported by the record. As respondent has
affirmed, it executes three (3)-month or six (6) - month
contracts with its so-called project employees.17 Except
for respondent's claim that petitioner and its other project
employees are free to seek work after the termination of
their contracts, no other proof was shown to this effect.
In fact, from the very scant record of petitioner's
employment, it may be inferred that the contracts
entered into by petitioner could not have been spaced so
far apart as to allow petitioner seek lucrative employment
elsewhere. For example, there was an interval of only
four (4) days between petitioner's contracts for the
periods 24 August 1998 to 25 February 1999 and 3
March 1999 to 2 September 1999, and only 17 days
between the contracts for 3 March 1999 to 2 September
1999 and 20 September 1999 to 19 March 2000. Thus,
from these facts alone, it would be difficult to conclude
that petitioner indeed was allowed to seek other
employment in between contracts.
Even assuming that petitioner is a project employee,
respondent failed to prove that his termination was for a
just and valid cause. While it is true that the employment
contract states that the contract ends upon a specific
date, or upon completion of the project, respondent
failed to prove that the last project was indeed completed
so as to justify petitioner's termination from employment.
In termination cases, the burden of proof rests on the
employer to show that the dismissal is for a just
cause.18 Thus, employers who hire project employees
are mandated to state and, once its veracity is
challenged, to prove the actual basis for the latter's
dismissal.19 Respondent could have easily proved that
the project or phase for which petitioner was hired has
already been completed. A certificate from the owner of
the vessel serviced by the company, pictures perhaps, of
the work accomplished, and other proof of completion
could have been procured by respondent. However, all
that we have is respondent's self-serving assertion that
the project has been completed.
This Court has held that an employment ceases to be
co-terminous with specific projects when the employee is
continuously rehired due to the demands of employer's
business and re-engaged for many more projects without
interruption.20 In Maraguinot, Jr. v. NLRC (Second
Division),21 the Court ruled that "once a project or work
pool employee has been: (1) continuously, as opposed
to intermittently, rehired by the same employer for the
same tasks or nature of tasks; and (2) these tasks are
vital, necessary and indispensable to the usual business
or trade of the employer, then the employee must be
deemed a regular employee, pursuant to Article 280 of
the Labor Code and jurisprudence."22
Contrary to the Court of Appeals' observation,23 the
situation obtaining in this case is not at all in pari
materia with that of Sandoval Shipyards, Inc. v.
NLRC.  24 In the cited case, a company engaged in the
building and repair of vessels hired welders, helpers and
construction workers to work in the repair or construction
of a specified vessel. Upon completion of only one
particular project, several workers were terminated from
work, and the termination was reported to the then
Ministry of Labor and Employment. The employees filed
complaints for illegal dismissal. This Court found the
complaining employees to be project employees whose
work were co-terminous with the project for which they
were hired.
As in Sandoval, respondent is an establishment
engaged in the repair, rebuilding and/or renovation of
cargo and fishing vessels, including the component
activities of carpentry, welding, painting, civil and
nautical engineering works and refrigeration as well as
repair and reconditioning power installations and
improvement of electrical services and facilities in the
vessel.25 Petitioner, as carpenter, was tasked to "make
and repair cabinet, flooring, quarters, ceiling, windows,
doors, kitchen and other parts of the vessel that needs to
be repaired."26 As such, petitioner's work was necessary
or desirable to respondent's business. However, unlike
in Sandoval where the complaining employees were
hired for only one project lasting for three (3) months at
most, petitioner in this case was employed by
respondent continuously from 1991 to 1999. Assuming,
without granting that petitioner was initially hired for
specific projects or undertakings, the repeated re-hiring
and continuing need for his services for over eight (8)
years have undeniably made him a regular employee.
Respondent capitalizes on our ruling in D.M. Consunji,
Inc. v. NLRC27 which reiterates the rule that the length of
service of a project employee is not the controlling test of
employment tenure but whether or not "the employment
has been fixed for a specific project or undertaking the
completion or termination of which has been determined
at the time of the engagement of the employee."28
project for which he was hired. The import of this
decision is not to impose a positive and sweeping
obligation upon the employer to re-hire project
employees. What this decision merely accomplishes is a
judicial recognition of the employment status of a project
or work pool employee in accordance with what is fait
accompli, i.e., the continuous re-hiring by the employer
of project or work pool employees who perform tasks
necessary or desirable to the employer's usual business
or trade. x x x 34
WHEREFORE, the petition is GRANTED and the
challenged decision of the Court of Appeals is
REVERSED and SET ASIDE. The 22 February 2001
Decision of the Labor Arbiter is REINSTATED.
No pronouncement as to costs. SO ORDERED.

Surely, length of time is not the controlling test for project

employment. Nevertheless, it is vital in determining if the
employee was hired for a specific undertaking or tasked
to perform functions vital, necessary and indispensable
to the usual business or trade of the employer.29 Here,
respondent had been a project employee several times
over. His employment ceased to be coterminous with
specific projects when he was repeatedly re-hired due to
the demands of petitioner's business. Where from the
circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security
by the employee, they should be struck down as contrary
to public policy, morals, good customs or public order.30

The Court observes that respondent has changed its

defense twice during the lifetime of this case. In the
earlier stages of the proceedings before the NLRC,
respondent claimed that petitioner was separated from
work because of project completion. However, in the
Court of Appeals, it claimed that petitioner was not
terminated from work, but that he in fact resigned from
the company.31 In the present proceedings before this
Court, respondent discarded the defense of resignation
and re-used the defense of project completion. Whatever
the truth may be, this unabashed vacillation only shows
that respondent does not have a strong defense on its
side and that respondent itself is not sure of its position
on the issue of illegal dismissal.

All considered, there are serious doubts in the evidence

on record that petitioner is a project employee, or that he
was terminated for just cause. These doubts shall be
resolved in favor of petitioner, in line with the policy of
the law to afford protection to labor and construe doubts
in favor of labor.

It is well-settled that the employer must affirmatively

show rationally adequate evidence that the dismissal
was for a justifiable cause.32 When there is no showing
of a clear, valid and legal cause for the termination of
employment, the law considers the matter a case of
illegal dismissal and the burden is on the employer to
prove that the termination was for a valid or authorized
cause.33 For failure to prove otherwise, the Court has no
recourse but to grant the petition.

Finally, the Court reiterates that:

At this time, we wish to allay any fears that this decision

unduly burdens an employer by imposing a duty to re-
hire a project employee even after completion of the

G.R. No. 176748 : September 1, 2010
JUDY O. DACUITAL,1cralaw EUGENIO L. MONDANO,
JR., JOSEPH GALER,2cralaw MARIANO MORALES,
ROBERTO RUANCE, JOSEPH PORCADILLA,
RAULITO PALAD, RICARDO DIGAMON, NONITO
PRISCO , EULOGIO M. TUTOR, MELVIN PEPITO,
HELYTO N. REYES,3cralaw RANDOLF C. BALUDO,
ALBERTO EPONDOL, RODELO A.
SUSPER,4cralaw EVARISTO
VIGORI, 5cralaw JONATHAN P. AYAAY, FELIPE
ERILLA, ARIS A. GARCIA, ROY A. GARCIA, and
RESTITUTO TAPANAN, Petitioners, v. L.M. CAMUS
ENGINEERING CORPORATION and/or LUIS M.
CAMUS, Respondents.
DECISION
NACHURA, J.:
This is a Petition for Review on Certiorari under Rule 45
of the Rules of Court, assailing the Court of Appeals
(CA) Decision6cralaw dated September 25, 2006 and
Resolution7cralaw dated February 14, 2007 in CA-G.R.
SP No. 90377.
The case stemmed from the following factual and
procedural antecedents:chanroblesvirtuallawlibrar
Respondent L.M. Camus Engineering Corporation
(LMCEC) is a domestic corporation duly organized and
existing under and by virtue of Philippine laws, engaged
in construction, engineering, and air-conditioning
business; while respondent Luis M. Camus (Camus) is
the company president.
Petitioners Judy O. Dacuital (Dacuital), Eugenio L.
Mondano, Jr., Joseph Galer (Galer), Mariano Morales,
Roberto Ruance (Ruance), Joseph Porcadilla, Raulito
Palad (Palad), Ricardo Digamon (Digamon), Nonito
Prisco, Eulogio M. Tutor, Melvin Pepito, Helyto N. Reyes
(Reyes), Randolf C. Baludo (Baludo), Alberto Epondol,
Rodelo A. Susper, Evaristo Vigori, Jonathan P. Ayaay,
Felipe Erilla, Aris A. Garcia (Aris), Roy A. Garcia (Roy),
and Restituto Tapanan (Tapanan) were hired by LMCEC
as welder, tinsmith, pipefitter, and mechanical
employees.8cralaw
During the months of January, February and March
2001, petitioners were required by LMCEC to surrender
their identification cards and ATM cards and were
ordered to execute contracts of employment. Most of the
petitioners did not comply with the directive as they
believed that it was only respondents' strategy to get rid
of petitioners' regular status since they would become
new employees disregarding their length of service.
Petitioners were later dismissed from
employment.9cralaw
Hence, the complaint for illegal dismissal and non-
payment of monetary benefits filed by petitioners and
other LMCEC employees who were similarly situated,
namely: Guillermo S. Lucas (Lucas), Alvin Bontugay,
Rector Palajos, and Hermes B. Pacatang (Pacatang),
against respondents before the National Labor Relations
Commission (NLRC).nad The employees alleged that
they were illegally dismissed from employment and that
their employer failed to pay them their holiday pay,
premium pay for holiday, rest day, service incentive
leave pay, and 13th month pay during the existence and
duration of their employment. They also averred that
they were not provided with sick and vacation
leaves.10cralaw
Respondents denied that petitioners were illegally
dismissed from employment. They claimed that
petitioners were project employees and, upon the
completion of each project, they were served notices of
project completion.11cralaw They clarified that the
termination of petitioners' employment was due to the
completion of the projects for which they were
hired.12cralaw
Petitioners, however, countered that they were regular
employees as they had been engaged to perform
activities which are usually necessary or desirable in the
usual business or trade of LMCEC. They denied that
they were project or contractual employees because
their employment was continuous and uninterrupted for
more than one (1) year. Finally, they maintained that
they were part of a work pool from which LMCEC drew
its workers for its various projects.13cralaw
On July 24, 2002, Labor Arbiter (LA) Lilia S. Savari
rendered a decision,14cralaw the dispositive portion of
which reads:chanroblesvirtuallawlibrar
WHEREFORE, a Decision is hereby rendered declaring
the dismissal of the complainants illegal. Corollarily,
except for complainant Helyto N. Reyes, who has
voluntarily withdrawn his case against the respondents,
all the other complainants are hereby ordered to report
to respondents for reinstatement but without backwages.
All other claims are dismissed for lack of merit.
SO ORDERED.15cralaw
The LA did not give credence to respondents' claim that
petitioners were project employees because of the
former's failure to present evidence showing that
petitioners' contracts of employment reflected the
duration of each project for which they were employed
and that respondents duly reported to the Department of
Labor and Employment every termination of employment
and project. As petitioners' dismissal was without just
and valid cause, the LA ruled that their termination from
employment was illegal. However, the LA refused to
award backwages and other monetary claims on the
ground that petitioners' employment was not continuous
as they belonged to the regular work pool of
LMCEC.16cralaw
The employees jointly filed a partial appeal to the NLRC,
except Pacatang and Lucas who filed their separate
appeal. On the other hand, the Administrative Officer of
LMCEC issued individual communications to petitioners
directing their reinstatement pursuant to the LA
decision.17cralaw
On June 9, 2004, the NLRC modified18cralaw the LA
decision, the dispositive portion of which
reads:chanroblesvirtuallawlibrar
WHEREFORE, the employees enumerated above are
hereby ordered reinstated with limited backwages,
without loss of seniority rights and other privileges.
The computation division of the RAB-NCR is hereby
ordered to compute the award as herein established.
SO ORDERED.19cralaw
The NLRC agreed with the LA that petitioners were
illegally dismissed from employment. As a consequence
of this pronouncement, the tribunal deemed it proper not
only to reinstate them to their original position but also to
give them their backwages. However, in view of the
delayed resolution of the case that could not be
attributed to respondents, the NLRC limited the award of
backwages from the date of dismissal up to six (6)
months after the case was elevated on appeal on
September 23, 2002.20cralaw The appeal filed by
Pacatang and Lucas was dismissed for having been filed
out of time.
Respondents and complainants Pacatang and Lucas
moved for the reconsideration of the NLRC decision. In a
Resolution21cralaw dated April 11, 2005, the NLRC
denied the motion for reconsideration filed by
respondents, but granted that of Pacatang and Lucas,
thereby entitling the latter to receive backwages.
Petitioners subsequently moved for the execution of the
NLRC decision. Respondents, however, filed a
Clarificatory Motion and Opposition to the Motion for
Issuance of Entry of Judgment and Writ of Execution and
for Recomputation of the Monetary Award22cralaw in
view of respondents' petition before the CA and the
reinstatement of some of the employees.
In an Order23cralaw dated August 23, 2005, the NLRC
granted the motion. The NLRC took into consideration
the fact that some of the employees who were earlier
dismissed from employment had actually been
reinstated. Hence, it limited the award of backwages
from illegal dismissal up to the date of actual
reinstatement. These employees who were actually
reinstated were Galer, Ruance, Palad, Digamon, Aris,
Roy, and Baludo.24cralaw
In the meantime, in their petition before the CA,
respondents obtained a favorable decision when the
appellate court declared petitioners' termination from
employment valid and legal and consequently set aside
the award of backwages.25cralaw The pertinent portion of
the decision reads:chanroblesvirtuallawlibrar
IN VIEW WHEREOF, the Petition is GRANTED. The
assailed Decision (dated June 9, 2004) of the National
Labor Relations Commission is hereby MODIFIED. The
termination from employment of the public respondents
herein are declared valid and legal. Their award of
backwages computed from the date of their termination
are (sic) SET ASIDE.
SO ORDERED.26cralaw
Contrary to the conclusions of the LA and the NLRC, the
CA held that petitioners were project employees as their
employment contracts provided that their respective
tenures of employment were dependent on the duration
of the construction projects. As such employees, their
employment could lawfully be terminated upon the
completion of the project for which they were hired.
Consequently, there was no illegal
dismissal.27cralaw Petitioners' motion for reconsideration
was denied on February 14, 2007.28cralaw
Aggrieved, petitioners come to us seeking a review of
the CA Decision, anchored on the following
issues:chanroblesvirtuallawlibrar
I. Whether or not the Findings of the Honorable Labor
Arbiter as affirmed by the Honorable National Labor
Relations Commission should be accorded high respect
and finality.
II. Whether or not Petitioners were regular employees of
respondent Corporation.
III. Whether or not Complainants were illegally dismissed
from their employment.29cralaw
Petitioners aver that the CA erred in completely
disregarding the findings of the LA, as affirmed by the
NLRC, in view of the settled rule that findings of fact and
conclusions of law of quasi-judicial agencies like the
NLRC are generally entitled to great respect and even
finality. They also insist that they were regular
employees, considering that the services they rendered
were not only necessary but also indispensable to
LMCEC's business. They likewise claim that they had
been in the service for a continuous period and a
considerable length of time, and are in fact members of a
work pool from which LMCEC draws its workers for its
projects. Hence, even if they were initially hired as
project employees, they eventually attained the status of
regular employees. Petitioners also insist that they were
illegally dismissed as their employment was terminated
without just and valid cause, and without affording them
due process of law. Lastly, petitioners claim that the
NLRC had previously rendered decisions in favor of
LMCEC employees who were similarly situated, hence,
their case should also be decided in favor of
labor.30cralaw
The petition is meritorious.
We discuss first the procedural issues.
Respondents point out that the decision of the LA had
attained finality, except as to Palad, because of their
failure to appeal. They explain that the Memorandum on
Appeal filed with the NLRC was verified only by Palad
without stating therein that he did it in representation of
the other petitioners. In view of the finality of the NLRC
decision, the instant petition should not prosper.
We do not agree.
Our pronouncement in Pacquing v. Coca-Cola
Philippines, Inc.31cralaw is instructive.
As to the defective verification in the appeal
memorandum before the NLRC, the same liberality
applies. After all, the requirement regarding verification
of a pleading is formal, not jurisdictional. Such
requirement is simply a condition affecting the form of
pleading, the non-compliance of which does not
necessarily render the pleading 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.
The court or tribunal 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.
Moreover, no less than the Labor Code directs labor
officials to use reasonable means to ascertain the facts
speedily and objectively, with little regard to technicalities
or formalities; while Section 10, Rule VII of the New
Rules of Procedure of the NLRC provides that technical
rules are not binding. Indeed, the application of technical
rules of procedure may be relaxed in labor cases to
serve the demand of substantial justice. Thus, the
execution of the verification in the appeal memorandum
by only two complainants in behalf of the other
complainants also constitute substantial
compliance.32cralaw
Clearly, the NLRC properly took cognizance of the
appeal of all the named complainants even though it was
signed by only one of them. While the right to appeal is a
statutory and not a natural right, it is nonetheless an
essential part of our judicial system. Courts are,
therefore, advised to proceed with caution, so as not to
deprive a party of the right to appeal. Litigants should
have the amplest opportunity for the proper and just
disposition of their cause - free, as much as possible,
from the constraints of procedural
technicalities.33cralaw Thus, contrary to respondents'
claim, the decision had not attained finality even as to
those who did not sign the appeal memorandum.
Now on the substantive aspect.
The issues boil down to whether the CA was correct in
concluding that petitioners were project employees and
that their dismissal from employment was legal.
We answer in the negative.
Even if the questions that need to be settled are factual
in nature, this Court nevertheless feels obliged to resolve
them due to the incongruent findings of the NLRC and
the LA and those of the CA.34cralaw
Article 280 of the Labor Code distinguishes a "project
employee" from a "regular employee" in this
wise:chanroblesvirtuallawlibrar
Article 280. Regular and casual employment.-The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be
regular where the employee has been engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of the employer,
except where the employment has been fixed for a
specific project or undertaking the completion or
termination of which has been determined at the time of
the engagement of the employee or where the work or
services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That,
any employee who has rendered at least one year of
service, whether such service is continuous or broken,
shall be considered a regular employee with respect to
the activity in which he is employed and his employment
shall continue while such activity exists.35cralaw
A project employee is assigned to a project which begins
and ends at determined or determinable
times.36cralaw Employees who work under different
project employment contracts for several years do not
automatically become regular employees; they can
remain as project employees regardless of the number
of years they work. Length of service is not a controlling
factor in determining the nature of one's
employment.37cralaw Their rehiring is only a natural
consequence of the fact that experienced construction
workers are preferred.38cralaw In fact, employees who
are members of a "work pool" from which a company
draws workers for deployment to its different projects do
not become regular employees by reason of that fact
alone. The Court has consistently held that members of
a "work pool" can either be project employees or regular
employees.39cralaw
The principal test used to determine whether employees
are project employees is whether or not the employees
were assigned to carry out a specific project or
undertaking, the duration or scope of which was
specified at the time the employees were engaged for
that project.40cralaw
Admittedly, respondents did not present the employment
contracts of petitioners except that of Dacuital. They
explained that it was no longer necessary to present the
other contracts since petitioners were similarly situated.
Having presented one contract, respondents believed
that they sufficiently established petitioners' status as
project employees.
Even though the absence of a written contract does not
by itself grant regular status to petitioners, such a
contract is evidence that petitioners were informed of the
duration and scope of their work and their status as
project employees.41cralaw In this case, where no other
evidence was offered, the absence of the employment
contracts raises a serious question of whether the
employees were properly informed at the onset of their
employment of their status as project
employees.42cralaw
While it is true that respondents presented the
employment contract of Dacuital, the contract does not
show that he was informed of the nature, as well as the
duration of his employment. In fact, the duration of the
project for which he was allegedly hired was not
specified in the contract. The pertinent provision thereof
is quoted hereunder for easy
reference:chanroblesvirtuallawlibrar
3. In accordance with Policy No. 20 of the Labor Code of
the Philippines, parties agree that the effective date of
this employment is 4-5-00 up to the duration of the
DUCTWORK/ELECTRICAL/MECHANICAL phase of the
project estimated to be finished in the month of _______,
19______ or earlier.43cralaw
Even if we assume that under the above provision of the
contract, Dacuital was informed of the nature of his
employment and the duration of the project, that same
contract is not sufficient evidence to show that the other
employees were so informed. It is undisputed that
petitioners had individual employment contracts, yet
respondents opted not to present them on the lame
excuse that they were similarly situated as Dacuital. The
non-presentation of these contracts gives rise to the
presumption that the employees were not informed of
the nature and duration of their employment. It is
doctrinally entrenched that in illegal dismissal cases, the
employer has the burden of proving with clear, accurate,
consistent, and convincing evidence that the dismissal
was valid. Absent any other proof that the project
employees were informed of their status as such, it will
be presumed that they are regular employees.44cralaw
Moreover, Department Order No. 19 (as well as the old
Policy Instructions No. 20) requires employers to submit
a report of an employee's termination to the nearest
public employment office everytime the employment is
terminated due to the completion of a project.45cralaw In
this case, there was no evidence that there was indeed
such a report. LMCEC's failure to file termination reports
upon the cessation of petitioners' employment was an
indication that petitioners were not project but regular
employees.
Well-established is the rule that regular employees enjoy
security of tenure and they can only be dismissed for just
or valid cause and upon compliance with due process,
i.e., after notice and hearing. In cases involving an
employee's dismissal, the burden is on the employer to
prove that the dismissal was legal.46cralaw This burden
was not amply discharged by LMCEC in this case. Being
regular employees, petitioners were entitled to security
of tenure, and their services may not be terminated
except for causes provided by law.47cralaw
Finally, records failed to show that LMCEC afforded
petitioners, as regular employees, due process prior to
their dismissal, through the twin requirements of notice
and hearing. Petitioners were not served notices
informing them of the particular acts for which their
dismissal was sought. Nor were they required to give
their side regarding the charges made against them, if
any. Certainly, petitioners' dismissal was not carried out
in accordance with law and was, therefore,
illegal.48cralaw
Article 279 of the Labor Code, as amended, provides
that an illegally dismissed employee shall be entitled to
reinstatement, full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent
from the time his compensation was withheld from him
up to the time of his actual reinstatement.49cralaw
Contrary to the conclusion of the NLRC, the backwages
due petitioners must be computed from the time they
were unjustly dismissed until actual reinstatement to
their former positions. Thus, until LMCEC implements
the reinstatement aspect, its obligation to petitioners,
insofar as accrued backwages and other benefits are
concerned, continues to accumulate.50cralaw
The fact that petitioners did not appeal the NLRC
decision on this matter does not bar this Court from
ordering its modification. As held in Cocomangas Hotel
Beach Resort v. Visca51cralaw
While as a general rule, a party who has not appealed is
not entitled to affirmative relief other than the ones
granted in the decision of the court below, this Court is
imbued with sufficient authority and discretion to review
matters, not otherwise assigned as errors on appeal, if it
finds that their consideration is necessary in arriving at a
complete and just resolution of the case or to serve the
interests of justice or to avoid dispensing piecemeal
justice.
Besides, substantive rights like the award of backwages
resulting from illegal dismissal must not be prejudiced by
a rigid and technical application of the rules. The
computation of the award for backwages from the time
compensation was withheld up to the time of actual
reinstatement is a mere legal consequence of the finding
that respondents [petitioners] were illegally dismissed by
petitioners [respondents].52cralaw
As to respondent Camus' liability as LMCEC president, it
is settled that in the absence of malice, bad faith, or
specific provision of law, a director or officer of a
corporation cannot be made personally liable for
corporate liabilities.53cralaw
As held in Lowe, Inc. v. Court of Appeals,54cralaw citing
McLeod v. NLRC:55cralaw
Personal liability of corporate directors, trustees or
officers attaches only when (1) they assent to a patently
unlawful act of the corporation, or when they are guilty of
bad faith or gross negligence in directing its affairs, or
when there is a conflict of interest resulting in damages
to the corporation, its stockholders or other persons; (2)
they consent to the issuance of watered down stocks or
when, having knowledge of such issuance, do not
forthwith file with the corporate secretary their written
objection; (3) they agree to hold themselves personally
and solidarily liable with the corporation; or (4) they are
made by specific provision of law personally answerable
for their corporate action.56cralaw
To be sure, Camus has a personality which is distinct
and separate from that of LMCEC. There was no proof
that Camus acted in bad faith in dismissing petitioners
from employment. The mere fact that he is the president
of the company does not make him personally liable for
the payment of backwages.
Finally, the Court notes that although Tapanan was
named as petitioner, he was never included as a
complainant before the NLRC. As such, he is not a party
to this case. Moreover, as clearly stated in the LA
decision, Reyes has voluntarily withdrawn his case
against respondents. Thus, although he is one of the
petitioners here, he is not covered by this Decision.
Lastly, some of the petitioners had already been actually
reinstated by LMCEC. We emphasize that the
computation of their backwages should be up to the date
of actual reinstatement.
WHEREFORE, premises considered, the petition is
GRANTED. The Court of Appeals Decision dated
September 25, 2006 and Resolution dated February 14,
2007 in CA-G.R. SP No. 90377 are REVERSED and
SET ASIDE. Petitioners' dismissal from employment is
declared illegal and, except Helyto N. Reyes and
Restituto Tapanan, they are entitled to full backwages
from the time of illegal dismissal until actual
reinstatement.
SO ORDERED.

G.R. NO. 147566 : December 6, 2006]
SAN MIGUEL
CORPORATION, Petitioner, v. NATIONAL LABOR
RELATIONS COMMISSION and RAFAEL
MALIKSI, Respondents.
DECISION
GARCIA, J.:
In this Petition for Review under Rule 45 of the Rules of
Court, petitioner San Miguel Corporation (SMC) seeks
the reversal and setting aside of the Decision1 dated
September 30, 1999 of the Court of Appeals (CA) in CA-
G.R. SP No. 50321, as reiterated in its Resolution2 of
March 20, 2001, affirming in toto an earlier decision of
the National Labor Relations Commission (NLRC) in
NLRC NCR CA No. 005478-93, entitled "Rafael C.
Maliksi v. San Miguel Corporation and/or Philippine
Software Services & Education Center." The affirmed
NLRC decision overturned that of the Labor Arbiter and
declared the herein private respondent Rafael Maliksi
(Maliksi) a regular employee of the petitioner and
ordered the latter to reinstate him with benefits.
As found by the NLRC and subsequently adopted by the
CA, the facts are as follows:
On 16 October 1990, Rafael M. Maliksi filed a complaint
against the San Miguel Corporation-Magnolia Division,
herein referred to as SMC and Philippine Software
Services and Education Center herein referred to as
PHILSSEC to compel the said respondents to recognize
him as a regular employee. He amended the complaint
on 12 November 1990 to include the charge of illegal
dismissal because his services were terminated on 31
October 1990.
The complainant's employment record indicates that he
rendered service with Lipercon Services from 1 April
1981 to February 1982 as budget head assigned to
SMC-Beer Division, then from July 1983 to April 1985
with Skillpower, Inc., as accounting clerk assigned to
SMC-Magnolia Division, then from October 1988 to 1989
also with Skillpower, Inc. as acting clerk assigned to
SMC-Magnolia Finance, and from October 1989 to 31
October 1990 with PHILSSEC assigned to Magnolia
Finance as accounting clerk. The complainant
considered himself as an employee of SMC-Magnolia.
Lipercon Services, Skillpower, Inc. and PHILSSEC are
labor-only contractors and any one of which had never
been his employer. His dismissal, according to him, was
in retaliation for his filing of the complaint for
regularization in service. His dismissal was illegal there
being no just cause for the action. He was not accorded
due process neither was his dismissal reported to the
Department of Labor and Employment.
PHILSSEC disclaimed liability. As an entity catering (sic)
computer systems and program for business enterprises,
it has contracted with SMC-Magnolia to computerize the
latter's manual accounting reporting systems of its
provincial sales. PHILSSEC then conducted a three
phase analysis of SMC Magnolia set up: first the
computer needs of the firm was (sic) determined; then,
the development of computer systems or program
suitable; and, finally, set up the systems and train the
employees to operate the same. In all these phases,
PHILSSEC uses its computer system and technology
and provided the necessary manpower to compliment
the transfer of the technology to SMC-Magnolia.
Complainant Maliksi was one of those employed by
PHILSSEC whose principal function was the manual
control of data needed during the computerization. Like
all assigned to the project, the complainant's work was
controlled by PHILSSEC supervisors, his salary paid by
the agency and he reported directly to PHILSSEC. The
computerization project was completed on 31 October
1990, and so, the complainant was terminated on the
said date.
SMC, on the other hand, submitted its position. In the
contract SMC entered with PHILSSEC, the latter
undertook to set up the computerization of the provincial
sales reporting system of Magnolia Division. To carry out
the task, PHILSSEC utilized 3 computer programmers
and the rest were data encoders. The complainant being
one of the compliments (sic) performed the following
functions:
xxx xxx xxx
SMC likewise contends that PHILSSEC exercised
exclusive managerial prerogative over the complainant
as to hiring, payment of salary, dismissal and most
importantly, the control over his work. SMC was
interested only in the result of the work specified in the
contract but not as to the means and methods of
accomplishing the same. Moreover, PHILSSEC has
substantial capital of its own. It has an IBM system, 3
computers, 17 IBM or IBM-compatible computers; it has
a building where the computer training center and main
office are located. What it markets to clients are
computer programs and training systems on computer
technology and not the usual labor or manpower supply
to establishment concerns. Moreover, what PHILSSEC
set up employing the complainant, among others, has no
relation to the principal business of SMC, which is food
and beverage. It was a single relationship between the
people utilized by PHILSSEC and SMC' '3
The Labor Arbiter declared Maliksi a regular employee of
PHILSSEC and absolved SMC from liability.
Dispositively, the Labor Arbiter's decision reads:
WHEREFORE, the complainant, Rafael Maliksi, is
recognized as a regular employee of Philippine Software
Services and Education Center which respondent is
ordered to reinstate him to a job of the same level as his
previous position in any of the projects where there is a
vacancy and without loss of seniority rights. A five
months backwages is awarded because the prolonged
suspension from his work was brought about by his
refusal to take any job offered by PHILSSEC earlier in
the proceedings of this case. The respondent, SMC-
Magnolia Division, is exempted from any liability as the
complaint against the said corporation is dismissed for
lack of merit.
SO ORDERED.4
Maliksi appealed to the NLRC. In turn, in a decision
dated January 26, 1998, the NLRC reversed that of the
Labor Arbiter by declaring Maliksi
a regular employee of the petitioner and ordering the
latter to reinstate him without loss of seniority rights and
with full benefits, to wit:
WHEREFORE, as recommended, the decision below is
hereby SET ASIDE. Accordingly, judgment is hereby
rendered directing respondent SMC-Magnolia Division to
reinstate complainant as a regular employee without loss
of seniority rights and other privileges and to pay
complainant full backwages, inclusive of allowances and
other benefits or their monetary equivalent, computed
from the time his compensation was withheld from him
up to time of his actual reinstatement, plus 10% of the
total money award for and attorney's fees.
SO ORDERED.5
From the aforementioned decision of the NLRC, SMC
went on certiorari to the CA in CA-G.R. SP No. 50321.
As stated at the outset, the CA, in the herein assailed
Decision6 dated September 30, 1999, affirmed in
toto that of the NLRC. In so doing, the CA found SMC to
have utilized PHILSSEC, Lipercon Services, Inc.
(Lipercon) and Skillpower, Inc. (Skillpower) as conduits
to circumvent Article 280 of the Labor Code, employing
Maliksi as contractual or project employee through these
entities, thereby undermining his right to gain regular
employment status under the law. The appellate court
echoed the NLRC's assessment that Maliksi's work was
necessary or desirable in the business of SMC in its
Magnolia Division, for more than the required one-year
period. It affirmed the NLRC's finding that the three (3)
conduit entities adverted to, Lipercon and Skillpower, are
labor-only contractors such that Maliksi's previous
employment contracts with SMC, through these two
entities, are deemed to have been entered into in
violation of labor laws. Consequently, Maliksi's
employment with SMC became permanent and regular
after the statutory period of one year of service through
these entities. The CA concluded that on account of his
past employment contracts with SMC under Lipercon
and Skillpower, Maliksi was already a regular employee
of SMC when he entered into SMC's computerization
project as part of the PHILSSEC project complement.
With its motion for reconsideration having been denied
by the CA in its Resolution of March 20, 2001, SMC is
now with this Court via the present recourse on the
following assigned errors:
I
The Court of Appeals gravely erred in declaring private
respondent a regular employee of petitioner SMC
despite its findings that PHILSSEC, the contractor that
employed private respondent, is an independent job
contractor.
Corollarily, the declaration of the Honorable Court of
Appeals that private respondent is a regular employee of
petitioner SMC proceeds from the erroneous premise
that private respondent was already a regular employee
of SMC when he was hired by the independent
contractor PHILSSEC. Having been placed in petitioner
SMC by a supposed labor-only contractor, for just five
months and for a different job, three years after his last
assignment therein, private respondent had not thereby
become a regular employee of petitioner SMC.
II
The Court of Appeals gravely erred in ultimately
resolving the case upon the principle that "all doubts
must be resolved in favor of labor"; certainly, protection
to labor does not imply sanctioning a plain injustice to
the employer, particularly where private respondent was
shown to have stated falsehoods and committed
malicious intercalations and misrepresentations.
III
The Court of Appeals gravely erred in declaring that
private respondent was not part of the of the personnel
group in the computerization program of petitioner SMC
under PHILSSEC.
We DENY.
SMC concedes that Maliksi, before his employment with
PHILSSEC, worked in SMC from November 1988 to
April 1990, but as employee of Skillpower7 and that he
was previously assigned to SMC between 1981 up to
February 1985, "for periods spread apart."8 The Labor
Arbiter found, as earlier stated, that Maliksi rendered
service with Lipercon from 1 April 1981 to February
1982 as budget head assigned to SMC-Beer
Division; from July 1983 to April 1985 with
Skillpower as accounting clerk assigned to SMC-
Magnolia Division, then from October 1988 to
19899 also with Skillpower as acting clerk assigned to
SMC-Magnolia Finance, and from October 1989 to 31
October 1990 with PHILSSEC assigned to Magnolia
Finance as accounting clerk. In all, it appears that,
while under the employ of either Lipercon or Skillpower,
Maliksi has undisputedly rendered service with SMC
for at least three years and seven months.10
The Court takes judicial notice of the fact that Lipercon
and Skillpower were declared to be labor-only
contractors,11 providing as they do manpower services to
the public for a fee. The existence of an employer-
employee relationship is factual and we give due
deference to the factual findings of both the NLRC and
the CA that an employer-employee relationship existed
between SMC (or its subsidiaries) and Maliksi. Indeed,
having served SMC for an aggregate period of more
than three (3) years through employment contracts with
these two labor contractors, Maliksi should be
considered as SMC's regular employee. The hard fact is
that he was hired and re-hired by SMC to perform
administrative and clerical work that was necessary to
SMC's business on a daily basis. In Bustamante v.
National Labor Relations Commission, 12 we ruled:
In the case at bar, petitioners were employed at
various periods from 1985 to 1989 for the same kind
of work they were hired to perform in September
1989. Both the labor arbiter and the respondent
NLRC agree that petitioners were employees
engaged to perform activities necessary in the usual
business of the employer. As laborers, harvesters or
sprayers in an agricultural establishment which produces
high grade bananas, petitioners' tasks are indispensable
to the year-round operations of respondent company.
This belies the theory of respondent company that the
employment of petitioners was terminated due to the
expiration of their probationary period in June 1990. If at
all significant, the contract for probationary employment
was utilized by respondent company as a chicanery to
deny petitioners their status as regular employees and to
evade paying them the benefits attached to such status.
Some of the petitioners were hired as far back as 1985,
although the hiring was not continuous. They were
hired and re-hired in a span of from two to four years
to do the same type of work which conclusively
shows the necessity of petitioners' service to the
respondent company's business. Petitioners have,
therefore, become regular employees after performing
activities which are necessary in the usual business of
their employer. But, even assuming that the activities of
petitioners in respondent company's plantation were not
necessary or desirable to its business, we affirm the
public respondent's finding that all of the complainants
(petitioners) have rendered non-continuous or broken
service for more than one (1) year and are consequently
considered regular employees.
We do not sustain public respondent's theory that private
respondent should not be made to compensate
petitioners for backwages because its termination of their
employment was not made in bad faith. The act of
hiring and re-hiring the petitioners over a period of
time without considering them as regular employees
evidences bad faith on the part of private
respondent. The public respondent made a finding to
this effect when it stated that the subsequent re-hiring of
petitioners on a probationary status "clearly appears to
be a convenient subterfuge on the part of management
to prevent complainants (petitioners) from becoming
regular employees." (Emphasis supplied)cralawlibrary
It is worth noting that, except for the computerization
project of PHILSSEC, petitioner did not make any
insinuation at all that the services of Maliksi with SMC
was project-related such that an employment contract
with Lipercon and Skillpower was necessary.
In Madriaga v. Court of Appeals,13 the Court, confronted
with the same issue now being addressed, declared that
regularization of employment
in SMC should extend to those whose situation is similar
to the complainants in said case. We wrote:
This is the third time that the parties have invoked the
power of this Court to decide the labor dispute involved
in this case. The generative facts of the case are as
follows:
On 04 March 1988, the NOWM and a number of
workers-complainants filed with the Arbitration Branch of
the NCR, NLRC, Manila, against San Miguel
Corporation, Philippine Dairy Products Corporation,
Magnolia Dairy Products, Skillpower
Corporation and Lipercon Services, Inc. for illegal
dismissal.
xxx xxx xxx
The Voluntary Arbitrator rendered a decision on 29 July
1988, the dispositive of which states:
WHEREFORE, it is hereby declared that complainants
are regular employees of SMC and PDPC. Accordingly,
SMC and PDPC are hereby ordered to reinstate the
dismissed 85 complainants to their former positions as
their regular employees effective from the date of the
filing of their complaints with full backwages less the
daily financial assistance of P30.00 per day each,
extended to them by Lipercon and Skillpower.
Aggrieved by the said decision of the Voluntary
Arbitrator, SMC and PDPC filed a petition
for certiorari before the Supreme Court.
It was upon the filing of the said petition for certiorari that
the Court had the first opportunity to pass upon the
controversies involved in this case. In a Resolution dated
30 August 1989, the Court dismissed G.R. No. 85577
entitled, "Philippine Dairy Products Corporation and San
Miguel Corporation - Magnolia Dairy Products Division v.
Voluntary Arbitrator Tito F. Genilo of the Department of
Labor and Employment (DOLE) and the National
Organization of Workingmen (NOWM)" for lack of merit.
The Court held in full:
Individual private respondents are xxx [SMC, et al.]
laborers supplied to petitioners by Skillpower
Corporation and Lipercon Services, Inc., on the basis
of contracts of services. Upon expiration of the said
contracts, individual private respondents were denied
entry to petitioners' premises. Individual private
respondents and respondent union thus filed separate
complaints for illegal dismissal against petitioners San
Miguel Corp., Skillpower Corporation and Lipercon
Services, Inc., in the [NLRC, NCR] After consolidation
and voluntary arbitration, respondent Labor Arbiter Tito
F. Genilo rendered a decision xxx declaring individual
private respondents regular employees of petitioners and
ordering the latter to reinstate the former and to pay
them backwages. On motion for execution filed by
private respondents, Labor Arbiter Genilo issued on
October 20, 1988 an order directing, among others, the
regularization of "all the complainants which include
those still working and those already terminated." Hence,
this petition for certiorari with injunction.
Petitioners contend that prior to reinstatement, individual
private respondents should first comply with certain
requirements, like submission of NBI and police
clearances and submission to physical and medical
examinations, since petitioners are deemed to be direct
employers and have the right to ascertain the physical
fitness and moral uprightness of its employees by
requiring the latter to undergo periodic
examinations, and that petitioners may not be
ordered to employ on regular basis the other
workers rendering services to petitioners by virtue
of a similar contract of services between petitioners
and Skillpower Corporation and Lipercon Services,
Inc. because such other workers were not parties to
or were not impleaded in the voluntary arbitration
case.
Considering that the clearances and examinations
sought by petitioners from private respondents are not
'periodic' in nature but are made preconditions for
reinstatement, as in fact the petition filed alleged that
reinstatement shall be effective upon compliance with
such requirements, (pp. 5-6 thereof) which should not be
the case because this is not a case of initial hiring, the
workers concerned having rendered years of service
to petitioners who are considered direct employers,
and that regularization is a labor benefit that should
apply to all qualified employees similarly situated
and may not be denied merely because some
employees were allegedly not parties to or were not
impleaded in the voluntary arbitration case, even as
the finding of Labor Arbiter Genilo is to the contrary,
this Court finds no grave abuse of discretion
committed by Labor Arbiter Genilo in issuing the
questioned order of October 20, 1988.
ACCORDINGLY, the Court Resolved to Dismiss the
petition for lack of merit.
In fine, the Court affirmed the ruling of the Voluntary
Arbitrator and declared that therein complainants are
regular employees of San Miguel Corporation (SMC) and
PDPC. It must be noted that in the abovequoted
Resolution, the Court extended the benefit of
regularization not only to the original complainants
but also to those workers who are "similarly
situated" to therein complainants. Herein petitioners
are among those who are "similarly
situated."14 (Emphasis supplied)cralawlibrary
We find respondent Maliksi to be similarly situated with
those of the complainants in Madriaga. Indeed, Lipercon
and Skillpower have figured in not just a few of our
decisions,15 so much so that we are inclined to believe
that these two were involved in labor-only contracting
with respect to Maliksi. We hold that the finding of the
NLRC and the CA as to SMC's resorting to labor-only
contracting is entitled to consideration in its full weight.
With respect to PHILSSEC, there was no need for
Maliksi to be employed under the former's
computerization program to be considered a regular
employee of SMC at the time. Moreover, SMC itself
admits that Maliksi's work under the computerization
program did "not require the operation of a computer
system, such as the software program being developed
by PHILSSEC."16 Given this admission, we are simply at
a loss to understand why Maliksi should be included in
the computerization project as a project employee. Not
being a computer expert, Maliksi's inclusion in the
project was uncalled for. To our mind, his placement in
the project was for the purpose of circumventing labor
laws. The evidence shows that immediately before he
entered the PHILSSEC project in October 1989, Maliksi
was fresh out of his employment with SMC (through
Skillpower) as acting clerk assigned to SMC-Magnolia
Finance (from October 1988 to 1989).
Maliksi's work under the PHILSSEC project was mainly
administrative in nature and necessary to the
development of SMC's business. These were:
a. posting manually the daily account balances in the
workset;
b. fitting the daily totals into the monthly totals;
c. comparing the manual totals with the computer
generated totals;
d. locating the differences between the totals; and,
e. adjusting and correcting errors.
Simply put, the data gathered by SMC on a daily basis
through Maliksi's work would be submitted for analysis
and evaluation, thereby allowing SMC to make the
necessary business decisions that would enable it to
market its products better, or monitor its sales and
collection with efficiency. Without the data gatherer or
encoder, no analysis could occur. SMC would then, for
the most part, be kept in the dark.
As to the petitioner's second assigned error, we hold that
there is no need to resolve the present case under the principle
that all doubts should be resolved in favor of the workingman.
The perceived doubt does not obtain in the first place.
We understand Maliksi's desperation in making his point clear
to SMC, which unduly refuses to acknowledge his status as a
regular employee. Instead, he was juggled from one
employment contract to another in a continuous bid to
circumvent labor laws. The act of hiring and re-hiring workers
over a period of time without considering them as regular
employees evidences bad faith on the part of the
employer.17 Where, from the circumstances, it is apparent that
periods have been imposed to preclude the acquisition of
tenurial security by the employee, the policy, agreement or
practice should be struck down as contrary to public policy,
morals, good customs or public order.18 In point of law, any
person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public
policy shall be liable for the damage.19
Ways and means contrived by employers to countermand labor
laws granting regular employment status to their workers are
numerous and long. For instance, they toss the poor workers
from one job contractor to another, make them go through
endless applications, lining up, paperwork,
documentation, and physical examinations; make them
sign five - or ten-month-only job contracts, yet re-hire
them after brief "rest periods," but not after requiring
them to go through the whole application and selection
process once again; prepare and have them sign
waivers, quitclaims, and the like; refuse to issue them
identification cards, receipts or any other concrete proof
of employment or documentary proof of payment of their
salaries; fail to enroll them for entitlement to social
security and other benefits; give them positions, titles or
designations that connote short-term employment.
Others are more creative: they set up "distributors" or
"dealers" which are, in reality, shell or dummy
companies. In this manner, the mother company avoids
the employer-employee relations, and is thus shielded
from liability from employee claims in case of illegal
dismissal, closure, unfair labor practices and the like. In
those instances, the poor employees, finding the shell or
dummy company to be without assets, often end up
confused and without recourse as to whom to run after.
They sue the mother company which conveniently sets
up the defense of absence of employer-employee
relations. In San Miguel Corporation v. MAERC
Integrated Services, Inc.,20 we took note of the practice
of hiring employees through labor contractors that
catered exclusively to the employment needs of SMC or
its divisions or other specific business interests, such
that after the specific SMC business or division ceases
to do business, the labor contractor likewise ceases its
operations.
The contrivances may be many and the schemes
ingenious and imaginative. But this Court will not
hesitate to put pen to a line and defend the worker's right
to be secure in his (or her) proprietary right to regular
employment and his right to a secure employment, viz,
one that is free from fear and doubt, that anytime he
could be removed, retrenched, his contract not renewed
or he might not be re-hired. The ramifications may seem
trivial, but we cannot allow the ordinary Filipino worker's
right to tenurial security to be put in jeopardy by
recurrent but abhorrent practices that threaten the very
lives of those that depend on him.

Considering, however, the supervening event that SMC's

Magnolia Division has been acquired by another entity, it
appears that private respondent's reinstatement is no longer
feasible. Instead, he should be awarded separation pay as an
alternative.21 Likewise, owing to petitioner's bad faith, it should
be held liable to pay damages for causing undue injury and
inconvenience to the private respondent in its contractual
hiring-firing-rehiring scheme.

WHEREFORE, the instant petition is DENIED and the assailed

CA decision dated September 30, 1999 is AFFIRMED, with
the MODIFICATION that if the reinstatement of private
respondent is no longer practicable or feasible, then petitioner
SMC is ordered to pay him, in addition to the other monetary
awards, separation pay for the period from October 31, 1990
when he was dismissed until he shall have been actually paid
at the rate of one (1) month salary for every year of his
employment, with a fraction of at least six (6) months being
considered as one (1) year, or the rate of separation pay
awarded by petitioner to its other regular employees as
provided by written agreement, policy or practice, whichever is
higher or most beneficial to private respondent.

In addition, petitioner is hereby suffered to indemnify private

respondent the amount of P50,000.00 as nominal damages for
its bad faith in juggling the latter from one labor contractor to
another and causing him unnecessary injury and
inconvenience, and for denying him his proprietary right to
regular employment.

Let this case be REMANDED to the Labor Arbiter for the

computation of private respondent's backwages, proportionate
13th month pay, separation pay, attorneys' fees and other
monetary awards; and for immediate execution.

Costs against the petitioner.

SO ORDERED.