Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 113166             February 1, 1996

ISMAEL SAMSON, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION and ATLANTIC GULF AND PACIFIC CO., MANILA, INC.,respondents.

D E C I S I O N

REGALADO, J.:

In the present petition for review on certiorari, which should properly have been initiated as and is hereby considered a special civil action for certiorari under Rule 65, herein petitioner Ismael Samson assails the decision of public respondent National Labor Relations Commission (NLRC) dated November 29, 19931 which declared that he was a project employee, in effect reversing the earlier finding of labor arbiter Felipe T. Garduque II that he is actually a regular employee.

Petitioner has been employed with private respondent Atlantic Gulf and Pacific Co., Manila, Inc. (AG & P) in the latter's various construction projects since April, 1965, in the course of which employment he worked essentially as a rigger, from laborer to rigger foreman. From 1977 up to 1985, he was assigned to overseas projects of AG & P, particularly in Kuwait and Saudi Arabia.

On November 5, 1989, petitioner filed a complaint for the conversion of his employment status from project employee to regular employee, which complaint was later amended to include claims for underpayment, non-payment of premium pay for holiday and rest day, refund of reserve fund, and 10% thereof as attorney's fees. Petitioner alleged therein that on the basis of his considerable and continuous length of service with AG & P, he should already be considered a regular employee and, therefore, entitled to the benefits and privileges appurtenant thereto.

The labor arbiter, in a decision dated June 30, 1993,2 declared that petitioner should be considered a regular employee on the ground that it has not been shown that AG & P had made the corresponding report to the nearest Public Employment Office every time a project wherein petitioner was assigned had been completed and his employment contract terminated, as required under DOLE Policy Instruction No. 20. Furthermore, pursuant to the same policy instruction, the labor arbiter found that since petitioner was not free to leave anytime and to offer his services to other employers, he should be considered an employee for an indefinite period because he is a member of a work pool from which AG & P draws its project employees and is considered an employee thereof during his membership therein, hence the completion of the project does not mean termination of the employer-employee relationship.

In refutation of the allusion of AG & P to the maxims of "no work, no pay" and "a fair day's wage for a fair day's labor," the labor arbiter held that there is no evidence that at one point in time the respondent has not secured any contract and, further, that complainant has been continuously rendering service in the corporation since 1965 up to the date of his aforesaid decision. Consequently, the labor arbiter ordered that petitioner's employment status be changed from project to regular employee effective November 5, 1989 and that he be given other benefits accorded regular employees plus 10% thereof as attorney's fees. The claim against petitioner's reserve fund was denied on the ground of prescription.

On appeal, public respondent NLRC reversed the decision of the labor arbiter and dismissed the complaint for lack of merit. It ruled that the evidence shows that petitioner was engaged for a fixed and determinable period, which thereby made him a project employee; that there was no evidence presented nor any allegation made by petitioner to support the labor arbiter's finding that the former was not free to leave and offer his services to other employers; that Policy Instruction No. 20 has been superseded by Department Order No. 19, Series of 1993, which provides that non-compliance with the required report to the nearest Public Employment Office no longer affixes a prescription of regular employment; and that the repeated or constant re-hiring of project workers for subsequent projects is permitted without such workers being considered regular employees.

Finally, it ratiocinated that "[l]ength of service, while such may be used as a yardstick for other types of employees in other endeavor(s), does not apply to workers in the construction industry, particularly to project employees. In the case at bar, the characteristics peculiar to the construction business make it imperative for construction companies to hire workers for a particular project as the need arises and it would be financially disadvantageous to owners of construction companies to retain in its payrolls employees and/or workers whose services are no longer required in the particular project to which they have been assigned."3

Hence this petition, which presents for resolution the sole issue of whether petitioner is a project or regular employee.

Petitioner principally argues that respondent commission gravely erred in declaring that he is merely a project employee, invoking in support thereof the ruling enunciated in the case of  Caramol vs. National Labor Relations Commission, et al.4 His being a regular employee is allegedly supported by evidence, such as his project employment contracts with private respondent, which show that petitioner performed the same kind of work as rigger throughout his period of employment and that, as such, his task was necessary and desirable to private respondent's usual trade or business.

The Solicitor General5 fully agrees with petitioner, with the observation that the evidence indubitably shows that after a particular project has been accomplished, petitioner would be re-hired immediately the following day save for a gap of one (l) day to one (1) week from the last project to the succeeding one; and that between 1965 to 1977, there were at least fifty (50) occasions wherein petitioner was hired by private respondent for a continuous period of time. He hastens to add that Department Order No. 19, which purportedly superseded Policy Instruction No. 20, cannot be given retroactive effect because at the time petitioner's complaint was filed, the latter issuance was still in force.

On the other hand, private respondent preliminarily avers that the present petition for review under Rule 45 filed by petitioner is not the proper remedy from a decision of the NLRC. Even assuming that the same may be treated as a special civil action under Rule 65, the petition must still fail for failure of petitioner to exhaust administrative remedies in not filing a motion for reconsideration from the questioned decision of respondent commission as required under Section 14, Rule VII of the Implementing Rules. Besides, the judgment under review supposedly became final and executory on January 13, 1994 pursuant to the Entry of Judgment dated February 9, 1994.

Respondent AG & P then insists that petitioner is merely a project employee for several reasons. First, the factual findings of respondent commission, which is supported by substantial evidence, is already conclusive and binding and, therefore, entitled to respect by this Court. Second, Department Order No. 19 amended Policy Instruction No. 20 by doing away with the required notice of termination upon completion of the project. Hence, non-compliance with the required report, which is only one of the "indicators" for project employment, no longer affixes a prescription of regular employment, by reason of which the doctrine laid down in the Caramol case no longer applies to the case at bar. In addition, Department Order No. 19 allows the re-hiring of employees without making them regular employees, aside from the fact that the word "rehiring" connotes new employment. Third, on the basis of petitioner's project employment contracts, his services were engaged for a fixed and determinable period which thus makes each employment for every project separate and distinct from one another. Consequently, the labor arbiter supposedly erred in taking into account petitioner's various employments in the past in determining his length of service, considering that upon completion of a project, the services of the project employee are deemed terminated, his employment being coterminous with each project or phase of the project to which he is assigned.

Finally, so it is claimed, petitioner should be considered a project employee since he falls under the exception provided for in Article 280 of the Labor Code to the effect that "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 . . . ."

The bulk of the problem appears to hinge on the determination of whether or not Department Order No. 19 should be given retroactive effect in order that the notice of termination requirement may be dispensed with in this case for a correlative ruling on the presumption of regularity of employment which normally arises in case of non-compliance therewith. Both the petitioner and the Solicitor General submit that said order can only have prospective application. Private respondent believes otherwise. We find for petitioner.

When the present action for regularization was filed on November 5, 19896 and during the entire period of petitioner's employment with private respondent prior to said date, the rule in force then was Policy Instruction No. 20 which, in the fourth paragraph thereof, required the employer company to report to the nearest Public Employment Office the fact of termination of a project employee as a result of the completion of the project or any phase thereof in which he is employed. Furthermore, contrary to private respondent's asseveration, Department Order No. 19, which was issued on April 1, 1993, did not totally dispense with the notice requirement but, instead, made provisions therefor and considered it as one of the "indicators" that a worker is a project employee.

This is evident in Section 2.2 thereof which provides that:

2.2 Indicators of project employment. Either one or more of the following circumstances, among others, may be considered as indicators that an employee is a project employee.

(a) The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable.

(b) Such duration, as well as the specific work/service to be performed, is defined in an employment agreement and is made clear to the employee at the time of hiring.

(c) The work/service performed by the employee is in connection with the particular project/undertaking for which he is engaged.

(d) The employee, while not employed and awaiting engagement, is free to offer his services to any other employer.

(e) The termination of his employment in the particular project/undertaking is reported to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work, using the prescribed form on employees' terminations dismissals suspensions.

(f) An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies. (Emphasis supplied)

More importantly, it must be emphasized that the notice of termination requirement has been retained by express provision of Department Order No. 19 under Section 6.1 thereof, to wit:

6.1. Requirements of labor and social legislations. (a) The construction company and the general contractor and/or subcontractor referred to in Sec. 2.5 shall be responsible for the workers in its employ on matters of compliance with the requirements of existing laws and regulations on hours of work, wages, wage related benefits, health, safety and social welfare benefits, including submission to the DOLE-Regional Office of

Work Accident/Illness Report, Monthly Report on Employees' Terminations/Dismissals/Suspensions and other reports. . . . (Emphasis ours.)

Perforce, we agree with the labor arbiter that private respondent's failure to report the termination of petitioner's services to the nearest Public Employment Office, after completion of every project or a phase thereof to which he is assigned, is a clear indication that petitioner was not and is not a project employee.

On the bases of the foregoing, the retroactivity or prospectivity of Department Order No. 19 would normally be of no moment. At any rate, even if the new issuance has expressly superseded Policy Instruction No. 20, the same cannot be given retroactive effect as such an application would be prejudicial to the employees and would run counter to the constitutional mandate on social justice and protection to labor. Furthermore, this view that we take is more in accord with the avowed purpose of Department Order No. 19 "to ensure the protection and welfare of workers employed" in the construction industry, and which interpretation may likewise be inferred from a reading of Section 7 thereof, applied corollarily to this case, which provides that "nothing herein shall be construed to authorize the diminution or reduction of benefits being enjoyed by employees at the time of issuance hereof."

It is a basic and irrefragable rule that in carrying out and interpreting the provisions of the Labor Code and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. The interpretation herein handed down gives meaning and substance to the liberal and compassionate spirit of the law enunciated in Article 4 of the Labor Code that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor."7

The mandate in Article 281 of the Labor Code, which pertinently prescribes that "the provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer" and that "any employee who has rendered at least one year of service, whether such service is continuous or broken shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists," should apply in the case of herein petitioner.

It is not disputed that petitioner had been working for private respondent for approximately twenty-eight (28) years as of the adjudication of his plaint by respondent NLRC, and that his "project-to-project" employment was renewed several times. With the successive contracts of employment wherein petitioner continued to perform virtually the same kind of work, i.e., as rigger, throughout his period of employment, it is manifest that petitioner's assigned tasks were usually necessary or desirable in the usual business or trade of private respondent. 8 The repeated re-hiring and continuing need for his services are sufficient evidence of the necessity and indispensability of such services to private respondent's business or trade.9

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. 10 As observed by the Solicitor General, the record of this case discloses, as part of petitioner's position paper, a certification 11 duly issued by private respondent clearly showing that the former's services were engaged by private respondent on a continuing basis since 1965. The certification indubitably indicates that after a particular project has been accomplished, petitioner would be re-hired immediately the following day save for a gap of one (1) day to one (1) week from the last project to the succeeding one. 12 There can, therefore, be no escape from the conclusion that petitioner is a regular employee of private respondent.

Anent the issue on non-exhaustion of administrative remedies, we hold that the failure of the petitioner to file a motion for reconsideration of the NLRC decision before coming to this Court was not a fatal omission. The exhaustion of administrative remedies doctrine is not a hard and fast rule and does not apply where the issue is purely a legal one. 13 A motion for reconsideration as a prerequisite for the filing of an action under Rule 65 may be dispensed with where the issue is purely of law, as in the present case. 14 At all events and in the interest of substantial justice, especially in cases involving the rights of workers, procedural lapses, if any, may be disregarded to enable the Court to examine and resolve the conflicting rights and responsibilities of the parties. This liberality is

warranted in the case at bar, especially since it has been shown that the intervention of the Court is necessary for the protection of herein petitioner. 15

WHEREFORE, the questioned decision of respondent National Labor Relations Commission, dated November 29, 1993, is hereby REVERSED AND SET ASIDE, and the decision of Labor Arbiter Felipe T. Garduque II in NCR Case No. 00-116255-92, dated June 30, 1993, is hereby ordered REINSTATED.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 141717             April 14, 2004

PHILIPS SEMICONDUCTORS (PHILS.), INC., petitioner, vs.ELOISA FADRIQUELA, respondent.

D E C I S I O N

Before us is a petition for review of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 52149 and its Resolution dated January 26, 2000 denying the motion for reconsideration therefrom.

The Case for the Petitioner

The petitioner Philips Semiconductors (Phils.), Inc. is a domestic corporation engaged in the production and assembly of semiconductors such as power devices, RF modules, CATV modules, RF and metal transistors and glass diods. It caters to domestic and foreign corporations that manufacture computers, telecommunications equipment and cars.

Aside from contractual employees, the petitioner employed 1,029 regular workers. The employees were subjected to periodic performance appraisal based on output, quality, attendance and work attitude.2 One was required to obtain a performance rating of at least 3.0 for the period covered by the performance appraisal to maintain good standing as an employee.

On May 8, 1992, respondent Eloisa Fadriquela executed a Contract of Employment with the petitioner in which she was hired as a production operator with a daily salary of P118. Her initial contract was for a period of three months up to August 8, 1992,3 but was extended for two months when she garnered a performance rating of 3.15.4 Her contract was again renewed for two months or up to December 16, 1992,5 when she received a performance rating of 3.8.6 After the expiration of her third contract, it was extended anew, for three months,7 that is, from January 4, 1993 to April 4, 1993.

After garnering a performance rating of 3.4,8 the respondent’s contract was extended for another three months, that is, from April 5, 1993 to June 4, 1993.9 She, however, incurred five absences in the month of April, three absences in the month of May and four absences in the month of June.10 Line supervisor Shirley F. Velayo asked the respondent why she incurred the said absences, but the latter failed to explain her side. The respondent was warned that if she offered no valid justification for her absences, Velayo would have no other recourse but to recommend the non-renewal of her contract. The respondent still failed to respond, as a consequence of which her performance rating declined to 2.8. Velayo recommended to the petitioner that the respondent’s employment be terminated due to

habitual absenteeism,11 in accordance with the Company Rules and Regulations.12 Thus, the respondent’s contract of employment was no longer renewed.

The Complaint of the Respondent

The respondent filed a complaint before the National Capital Region Arbitration Branch of the National Labor Relations Commission (NLRC) for illegal dismissal against the petitioner, docketed as NLRC Case No. NCR-07-04263-93. She alleged, inter alia, that she was illegally dismissed, as there was no valid cause for the termination of her employment. She was not notified of any infractions she allegedly committed; neither was she accorded a chance to be heard. According to the respondent, the petitioner did not conduct any formal investigation before her employment was terminated. Furthermore, considering that she had rendered more than six months of service to the petitioner, she was already a regular employee and could not be terminated without any justifiable cause. Moreover, her absences were covered by the proper authorizations.13

On the other hand, the petitioner contended that the respondent had not been dismissed, but that her contract of employment for the period of April 4, 1993 to June 4, 1993 merely expired and was no longer renewed because of her low performance rating. Hence, there was no need for a notice or investigation. Furthermore, the respondent had already accumulated five unauthorized absences which led to the deterioration of her performance, and ultimately caused the non-renewal of her contract.14

The Ruling of the Labor Arbiter and the NLRC

On June 26, 1997, the Labor Arbiter rendered a decision dismissing the complaint for lack of merit, thus:

IN THE LIGHT OF ALL THE FOREGOING, the complaint is hereby dismissed for lack of merit. The respondent is, however, ordered to extend to the complainant a send off award or financial assistance in the amount equivalent to one-month salary on ground of equity.15

The Labor Arbiter declared that the respondent, who had rendered less than seventeen months of service to the petitioner, cannot be said to have acquired regular status. The petitioner and the Philips Semiconductor Phils., Inc., Workers Union had agreed in their Collective Bargaining Agreement (CBA) that a contractual employee would acquire a regular employment status only upon completion of seventeen months of service. This was also reflected in the minutes of the meeting of April 6, 1993 between the petitioner and the union. Further, a contractual employee was required to receive a performance rating of at least 3.0, based on output, quality of work, attendance and work attitude, to qualify for contract renewal. In the respondent’s case, she had worked for the petitioner for only twelve months. In the last extension of her employment contract, she garnered only 2.8 points, below the 3.0 required average, which disqualified her for contract renewal, and regularization of employment. The Labor Arbiter also ruled that the respondent cannot justifiably complain that she was deprived of her right to notice and hearing because her line supervisor had asked her to explain her unauthorized absences. Accordingly, these dialogues between the respondent and her line supervisor can be deemed as substantial compliance of the required notice and investigation.

The Labor Arbiter declared, however, that the respondent had rendered satisfactory service for a period of one year, and since her infraction did not involve moral turpitude, she was entitled to one month’s salary.

Aggrieved, the respondent appealed to the NLRC, which, on September 16, 1998, issued a Resolution affirming the decision of the Labor Arbiter and dismissing the appeal. The NLRC explained that the respondent was a contractual employee whose period of employment was fixed in the successive contracts of employment she had executed with the petitioner. Thus, upon the expiration of her contract, the respondent’s employment automatically ceased. The respondent’s employment was not terminated; neither was she dismissed.

The NLRC further ruled that as a contractual employee, the respondent was bound by the stipulations in her contract of employment which, among others, was to maintain a performance rating of at least 3.0 as a condition for her

continued employment. Since she failed to meet the said requirement, the petitioner was justified in not renewing her contract.

The respondent filed a motion for reconsideration of the resolution, but on January 12, 1999, the NLRC resolved to deny the same.

The Case Before the Court of Appeals

Dissatisfied, the respondent filed a petition for certiorari under Rule 65 before the Court of Appeals, docketed as CA-G.R. SP No. 52149, for the reversal of the resolutions of the NLRC.

On October 11, 1999, the appellate court rendered a decision reversing the decisions of the NLRC and the Labor Arbiter and granting the respondent’s petition. The CA ratiocinated that the bases upon which the NLRC and the Labor Arbiter founded their decisions were inappropriate because the CBA and the Minutes of the Meeting between the union and the management showed that the CBA did not cover contractual employees like the respondent. Thus, the seventeenth-month probationary period under the CBA did not apply to her. The CA ruled that under Article 280 of the Labor Code, regardless of the written and oral agreements between an employee and her employer, an employee shall be deemed to have attained regular status when engaged to perform activities which are necessary and desirable in the usual trade or business of the employer. Even casual employees shall be deemed regular employees if they had rendered at least one year of service to the employer, whether broken or continuous.

The CA noted that the respondent had been performing activities that were usually necessary and desirable to the petitioner’s business, and that she had rendered thirteen months of service. It concluded that the respondent had attained regular status and cannot, thus, be dismissed except for just cause and only after due hearing. The appellate court further declared that the task of the respondent was hardly specific or seasonal. The periods fixed in the contracts of employment executed by the respondent were designed by the petitioner to preclude the respondent from acquiring regular employment status. The strict application of the contract of employment against the respondent placed her at the mercy of the petitioner, whose employees crafted the said contract.

According to the appellate court, the petitioner’s contention that the respondent’s employment on "as the need arises" basis was illogical. If such stance were sustained, the court ruled, then no employee would attain regular status even if employed by the petitioner for seventeen months or more. The CA held that the respondent’s sporadic absences upon which her dismissal was premised did not constitute valid justifiable grounds for the termination of her employment. The tribunal also ruled that a less punitive penalty would suffice for missteps such as absenteeism, especially considering that the respondent had performed satisfactorily for the past twelve months.

The CA further held that, contrary to the ruling of the Labor Arbiter, the dialogues between the respondent and the line supervisor cannot be considered substantial compliance with the requirement of notice and investigation. Thus, the respondent was not only dismissed without justifiable cause; she was also deprived of her right to due process.

The petitioner filed a motion for reconsideration of the decision but on January 26, 2000, the CA issued a resolution denying the same.

The Case Before the Court

The petitioner filed the instant petition and raised the following issues for the court’s resolution: (a) whether or not the respondent was still a contractual employee of the petitioner as of June 4, 1993; (b) whether or not the petitioner dismissed the respondent from her employment; (c) if so, whether or not she was accorded the requisite notice and investigation prior to her dismissal; and, (d) whether or not the respondent is entitled to reinstatement and full payment of backwages as well as attorney’s fees.

On the first issue, the petitioner contends that the policy of hiring workers for a specific and limited period on an "as needed basis," as adopted by the petitioner, is not new; neither is it prohibited. In fact, according to the petitioner,

the hiring of workers for a specific and limited period is a valid exercise of management prerogative. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual course of business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. Hence, there is nothing essentially contradictory between a definite period of employment and the nature of the employee’s duties.

According to the petitioner, it had to resort to hiring contractual employees for definite periods because it is a semiconductor company and its business is cyclical in nature. Its operation, production rate and manpower requirements are dictated by the volume of business from its clients and the availability of the basic materials. It produces the products upon order of its clients and does not allow such products to be stockpiled. Peak loads due to cyclical demands increase the need for additional manpower for short duration. Thus, the petitioner often experiences short-term surges in labor requirements. The hiring of workers for a definite period to supplement the regular work force during the unpredictable peak loads was the most efficient, just and practical solution to the petitioner’s operating needs.

The petitioner contends that the CA misapplied the law when it insisted that the respondent should be deemed a regular employee for having been employed for more than one year. The CA ignored the exception to this rule, that the parties to an employment contract may agree otherwise, particularly when the same is established by company policy or required by the nature of work to be performed. The employer has the prerogative to set reasonable standards to qualify for regular employment, as well as to set a reasonable period within which to determine such fitness for the job.

According to the petitioner, the conclusion of the CA that the policy adopted by it was intended to circumvent the respondent’s security of tenure is without basis. The petitioner merely exercised a right granted to it by law and, in the absence of any evidence of a wrongful act or omission, no wrongful intent may be attributed to it. Neither may the petitioner be penalized for agreeing to consider workers who have rendered more than seventeen months of service as regular employees, notwithstanding the fact that by the nature of its business, the petitioner may enter into specific limited contracts only for the duration of its clients’ peak demands. After all, the petitioner asserts, the union recognized the need to establish such training and probationary period for at least six months for a worker to qualify as a regular employee. Thus, under their CBA, the petitioner and the union agreed that contractual workers be hired as of December 31, 1992.

The petitioner stresses that the operation of its business as a semiconductor company requires the use of highly technical equipment which, in turn, calls for certain special skills for their use. Consequently, the petitioner, in the exercise of its best technical and business judgment, has set a standard of performance for workers as well as the level of skill, efficiency, competence and production which the workers must pass to qualify as a regular employee. In rating the performance of the worker, the following appraisal factors are considered by the respondent company as essential: (1) output (40%), (2) quality (30%), (3) attendance (15%), and (4) work attitude (15%). The rate of 3.0 was set as the passing grade. As testified to by the petitioner’s Head of Personnel Services, Ms. Cecilia C. Mallari:

A worker’s efficiency and productivity can be established only after he has rendered service using Philips’ equipment over a period of time. A worker has to undergo training, during which time the worker is taught the manufacturing process and quality control. After instructions, the worker is subjected to written and oral examinations to determine his fitness to continue with the training. The orientation and initial training lasts from three to four weeks before the worker is assigned to a specific work station. Thereafter, the worker’s efficiency and skill are monitored.

…

Among the factors considered (before a contractual employee becomes a regular employee) are output, quality, attendance, and work attitude, which includes cooperation, discipline, housekeeping and inter-office employee relationship. These factors determine the worker’s efficiency and productivity.16

The Court’s Ruling

In ruling for the respondent, the appellate court applied Article 280 of the Labor Code of the Philippines, as amended, which reads:

Art. 280. Regular and Casual Employment. – The provisions of written agreement to the contrary notwithstanding and regardless of the oral argument 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.

The appellate court held that, in light of the factual milieu, the respondent was already a regular employee on June 4, 1993. Thus:

It is apparent from the factual circumstances of this case that the period of employment has been imposed to preclude acquisition of tenurial security by petitioner. It bears stressing that petitioner’s original contract of employment, dated May 8, 1992 to August 8, 1992, had been extended through several contracts – one from October 13, 1992 to December 16, 1992, another from January 7, 1993 to April 4, 1993, and, lastly, from April 5, 1993 to June 4, 1993.

The fact that the petitioner had rendered more than one year of service at the time of his (sic) dismissal only shows that she is performing an activity which is usually necessary and desirable in private respondent’s business or trade. The work of petitioner is hardly "specific" or "seasonal." The petitioner is, therefore, a regular employee of private respondent, the provisions of their contract of employment notwithstanding. The private respondent’s prepared employment contracts placed petitioner at the mercy of those who crafted the said contract.17

We agree with the appellate court.

Article 280 of the Labor Code of the Philippines was emplaced in our statute books to prevent the circumvention by unscrupulous employers of the employee’s right to be secure in his tenure by indiscriminately and completely ruling out all written and oral agreements inconsistent with the concept of regular employment defined therein. The language of the law manifests the intent to protect the tenurial interest of the worker who may be denied the rights and benefits due a regular employee because of lopsided agreements with the economically powerful employer who can maneuver to keep an employee on a casual or temporary status for as long as it is convenient to it.18 In tandem with Article 281 of the Labor Code, Article 280 was designed to put an end to the pernicious practice of making permanent casuals of our lowly employees by the simple expedient of extending to them temporary or probationary appointments, ad infinitum.19

The two kinds of regular employees under the law are (1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which they are employed. 20 The primary standard to determine a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer.21 If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business of the employer. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists.22 The law does not provide the qualification that the employee

must first be issued a regular appointment or must be declared as such before he can acquire a regular employee status.23

In this case, the respondent was employed by the petitioner on May 8, 1992 as production operator. She was assigned to wirebuilding at the transistor division. There is no dispute that the work of the respondent was necessary or desirable in the business or trade of the petitioner.24 She remained under the employ of the petitioner without any interruption since May 8, 1992 to June 4, 1993 or for one (1) year and twenty-eight (28) days. The original contract of employment had been extended or renewed for four times, to the same position, with the same chores. Such a continuing need for the services of the respondent is sufficient evidence of the necessity and indispensability of her services to the petitioner’s business.25 By operation of law, then, the respondent had attained the regular status of her employment with the petitioner, and is thus entitled to security of tenure as provided for in Article 279 of the Labor Code which reads:

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

The respondent’s re-employment under contracts ranging from two to three months over a period of one year and twenty-eight days, with an express statement that she may be reassigned at the discretion of the petitioner and that her employment may be terminated at any time upon notice, was but a catch-all excuse to prevent her regularization. Such statement is contrary to the letter and spirit of Articles 279 and 280 of the Labor Code. We reiterate our ruling in Romares v. NLRC:26

Succinctly put, in rehiring petitioner, employment contracts ranging from two (2) to three (3) months with an express statement that his temporary job/service as mason shall be terminated at the end of the said period or upon completion of the project was obtrusively a convenient subterfuge utilized to prevent his regularization. It was a clear circumvention of the employee’s right to security of tenure and to other benefits. It, likewise, evidenced bad faith on the part of PILMICO.

The limited period specified in petitioner’s employment contract having been imposed precisely to circumvent the constitutional guarantee on security of tenure should, therefore, be struck down or disregarded as contrary to public policy or morals. To uphold the contractual arrangement between PILMICO and petitioner would, in effect, permit the former to avoid hiring permanent or regular employees by simply hiring them on a temporary or casual basis, thereby violating the employee’s security of tenure in their jobs.27

Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of security of tenure and free them from the bondage of uncertainty of tenure woven by some employers into their contracts of employment. The guarantee is an act of social justice. When a person has no property, his job may possibly be his only possession or means of livelihood and those of his dependents. When a person loses his job, his dependents suffer as well. The worker should therefor be protected and insulated against any arbitrary deprivation of his job.28

We reject the petitioner’s general and catch-all submission that its policy for a specific and limited period on an "as the need arises" basis is not prohibited by law or abhorred by the Constitution; and that there is nothing essentially contradictory between a definite period of employment and the nature of the employee’s duties.

The petitioner’s reliance on our ruling in Brent School, Inc. v. Zamora29 and reaffirmed in subsequent rulings is misplaced, precisely in light of the factual milieu of this case. In the Brent School, Inc. case, we ruled that the Labor Code does not outlaw employment contracts on fixed terms or for specific period. We also ruled that the decisive determinant in "term employment" should not be 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 their employment relationship.

However, we also emphasized in the same case that where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals. In the Romares v. NLRC case, we cited the 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.30

None of these criteria has been met in this case. Indeed, in Pure Foods Corporation v. NLRC,31 we sustained the private respondents’ averments therein, thus:

[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 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.32

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. However, the petitioner, through Ms. Cecilia C. Mallari, the Head of Personnel Services of the petitioner, deposed that as agreed upon by the Philips Semiconductor (Phils.), Inc. Workers Union and the petitioner in their CBA, contractual employees hired before December 12, 1993 shall acquire regular employment status after seventeen (17) months of satisfactory service, continuous or broken:

5. Q: What was the response of Philips’ regular employees to your hiring of contractual workers in the event of peak loads?

A: Philip’s regular rank-and-file employees, through their exclusive bargaining agent, the Philips Semiconductors (Phils.), Inc. Workers Union ("Union"), duly recognized the right of Philips, in its best business judgment, to hire contractual workers, and excluded these workers from the bargaining unit of regular rank-and-file employees.

Thus, it is provided under the Collective Bargaining Agreement, dated May 16, 1993, between Philips and the Union that:

ARTICLE I

UNION RECOGNITION

"Section 1. Employees Covered: The Company hereby recognizes the Union as the exclusive bargaining representative of the following regular employees in the Factory at Las Piñas, Metro Manila: Janitors, Material Handlers, Store helpers, Packers, Operators, QA Inspectors, Technicians, Storekeepers, Production Controllers, Inventory Controllers, Draftsmen, Machinists, Sr. Technician, Sr. QA Inspectors,

Controllers, Sr. Draftsmen, and Servicemen, except probationary and Casual/Contractual Employees, all of whom do not belong to the bargaining unit."

A copy of the CBA, dated May 16, 1993, was attached as Annex "1" to Philip’s Position Paper, dated August 30, 1993.

6. Q: May a contractual employee become a regular employee of the Philips?

A: Yes. Under the agreement, dated April 6, 1993, between the Union and Philips, contractual workers hired before 12 December 1993, who have rendered seventeen months of satisfactory service, whether continuous or broken, shall be given regular status. The service rendered by a contractual employee may be broken depending on production needs of Philips as explained earlier.

A copy of the Minutes of the Meeting ("Minutes," for brevity), dated April 6, 1993, evidencing the agreement between Philips and the Union has been submitted as Annex "2" of Philips’ Position Paper.33

In fine, under the CBA, the regularization of a contractual or even a casual employee is based solely on a satisfactory service of the employee/worker for seventeen (17) months and not on an "as needed basis" on the fluctuation of the customers’ demands for its products. The illogic of the petitioner’s incongruent submissions was exposed by the appellate court in its assailed decision, thus:

The contention of private respondent that petitioner was employed on "as needed basis" because its operations and manpower requirements are dictated by the volume of business from its client and the availability of the basic materials, such that when the need ceases, private respondent, at its option, may terminate the contract, is certainly untenable. If such is the case, then we see no reason for private respondent to allow the contractual employees to attain their regular status after they rendered service for seventeen months. Indubitably, even after the lapse of seventeen months, the operation of private respondent would still be dependent on the volume of business from its client and the availability of basic materials. The point is, the operation of every business establishment naturally depends on the law of supply and demand. It cannot be invoked as a reason why a person performing an activity, which is usually desirable and necessary in the usual business, should be placed in a wobbly status. In reiteration, the relation between capital and labor is not merely contractual. It is so impressed with public interest that labor contracts must yield to the common good.

While at the start, petitioner was just a mere contractual employee, she became a regular employee as soon as she had completed one year of service. It is not difficult to see that to uphold the contractual arrangement between private respondent and petitioner would, in effect, be to permit employers to avoid the necessity of hiring regular or permanent employees. By hiring employees indefinitely on a temporary or casual status, employers deny their right to security of tenure. This is not sanctioned by law. …34

Even then, the petitioner’s reliance on the CBA is misplaced. For, as ratiocinated by the appellate court in its assailed decision:

Obviously, it is the express mandate of the CBA not to include contractual employees within its coverage. Such being the case, we see no reason why an agreement between the representative union and private respondent, delaying the regularization of contractual employees, should bind petitioner as well as other contractual employees. Indeed, nothing could be more unjust than to exclude contractual employees from the benefits of the CBA on the premise that the same contains an exclusionary clause while at the same time invoke a collateral agreement entered into between the parties to the CBA to prevent a contractual employee from attaining the status of a regular employee.

This cannot be allowed.

The CBA, during its lifetime, constitutes the law between the parties. Such being the rule, the aforementioned CBA should be binding only upon private respondent and its regular employees who were duly represented by the bargaining union. The agreement embodied in the "Minutes of Meeting" between the representative union and private respondent, providing that contractual employees shall become regular employees only after seventeen months of employment, cannot bind petitioner. Such a provision runs contrary to law not only because contractual employees do not form part of the collective bargaining unit which entered into the CBA with private respondent but also because of the Labor Code provision on regularization. The law explicitly states that an employee who had rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee. The period set by law is one year. The seventeen months provided by the "Minutes of Meeting" is obviously much longer. The principle is well settled that the law forms part of and is read into every contract without the need for the parties expressly making reference to it. …35

On the second and third issues, we agree with the appellate court that the respondent was dismissed by the petitioner without the requisite notice and without any formal investigation. Given the factual milieu in this case, the respondent’s dismissal from employment for incurring five (5) absences in April 1993, three (3) absences in May 1993 and four (4) absences in June 1993, even if true, is too harsh a penalty. We do agree that an employee may be dismissed for violation of reasonable regulations/rules promulgated by the employer. However, we emphasized in PLDT v. NLRC36 that:

Dismissal is the ultimate penalty that can be meted to an employee. Where a penalty less punitive would suffice, whatever missteps may have been committed by the worker ought not to be visited with a consequence so severe such as dismissal from employment. For, the Constitution guarantees the right of workers to "security of tenure." The misery and pain attendant to the loss of jobs then could be avoided if there be acceptance of the view that under certain circumstances of the case the workers should not be deprived of their means of livelihood.37

Neither can the conferences purportedly held between the respondent and the line supervisor be deemed substantial compliance with the requirements of notice and investigation. We are in full accord with the following ratiocinations of the appellate court in its assailed decision:

As to the alleged absences, we are convinced that the same do not constitute sufficient ground for dismissal. Dismissal is just too stern a penalty. No less than the Supreme Court mandates that where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe. (Meracap v. International Ceramics Manufacturing Co., Inc., 92 SCRA 412 [1979]). Besides, the fact that petitioner was repeatedly given a contract shows that she was an efficient worker and, therefore, should be retained despite occasional lapses in attendance. Perfection cannot, after all, be demanded. (Azucena, The Labor Code, Vol. II, 1996 ed., [p.] 680)

Finally, we are convinced that it is erroneous for the Commission to uphold the following findings of the Labor Arbiter, thus:

"Those dialogues of the complainant with the Line Supervisor, substantially, stand for the notice and investigation required to comply with due process. The complainant did not avail of the opportunity to explain her side to justify her shortcomings, especially, on absences. She cannot now complain about deprivation of due process."

Of course, the power to dismiss is a formal prerogative of the employer. However, this is not without limitations. The employer is bound to exercise caution in terminating the services of his employees. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee because it affects not only his position but also his means of livelihood. Employers should respect and protect the rights of their employees which include the right to labor. (Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc., 90 SCRA 391 [1979])

To rule that the mere dialogue between private respondent and petitioner sufficiently complied with the demands of due process is to disregard the strict mandate of the law. A conference is not a substitute for the actual observance of notice and hearing. (Pepsi Cola Bottling Co., Inc. v. National Labor Relations Commission, 210 SCRA 277 [1992]) The failure of private respondent to give petitioner the benefit of a hearing before she was dismissed constitutes an infringement on her constitutional right to due process of law and not to be denied the equal protection of the laws. The right of a person to his labor is deemed to be his property within the meaning of the constitutional guarantee. This is his means of livelihood. He cannot be deprived of his labor or work without due process of law. (Batangas Laguna Tayabas Bus Co. v. Court of Appeals, 71 SCRA 470 [1976])

All told, the court concludes that petitioner’s dismissal is illegal because, first, she was dismissed in the absence of a just cause, and second, she was not afforded procedural due process. In pursuance of Article 279 of the Labor Code, we deem it proper to order the reinstatement of petitioner to her former job and the payment of her full backwages. Also, having been compelled to come to court to protect her rights, we grant petitioner’s prayer for attorney’s fees.38

IN LIGHT OF ALL THE FOREGOING, the assailed decision of the appellate court in CA-G.R. SP No. 52149 is AFFIRMED. The petition at bar is DENIED. Costs against the petitioner.

SO ORDERED.

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

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 170181             June 26, 2008

HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD., HAK KON KIM and/or JHUNIE ADAJAR,petitioners, vs.FELICITO IBAÑEZ, ALIGWAS CAROLINO, ELMER GACULA, ENRIQUE DAGOTDOT AND RUEL CALDA,respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision,1 dated 28 July 2005, rendered by the Court of Appeals, reversing the Decision,2 promulgated by the National Labor Relations Commission (NLRC) on 7 May 2004. The Court of Appeals, in its assailed Decision, declared that respondents are regular employees who were illegally dismissed by petitioner Hanjin Heavy Industries and & Construction Company, Limited (HANJIN).

Petitioner HANJIN is a foreign company duly registered with the Securities and Exchange Commission to engage in the construction business in the Philippines. Petitioners Hak Kon Kim and Jhunie Adajar were employed as Project Director and Supervisor, respectively, by HANJIN.

On 11 April 2002, respondents Felicito Ibañez, Aligwas Carolino, Elmer Gacula, Enrique Dagotdot, Ruel Calda, and four other co-workers filed a complaint before the NLRC, docketed as NLRC Case No. RAB-IV-04-15515-02-RI, for illegal dismissal with prayer for reinstatement and full backwages against petitioners. In their Position Paper dated 29 July 2002, respondents alleged that HANJIN hired them for various positions on different dates, hereunder specified:

Position Date of EmploymentFelicito Ibañez Tireman 7 March 2000Elmer Gacula Crane Operator 1992Enrique Dagotdot Welder 1995Aligwas Carolino Welder September 1994Ruel Calda Warehouseman 26 January 19963

Respondents stated that their tasks were usual and necessary or desirable in the usual business or trade of HANJIN. Respondents additionally averred that they were employed as members of a work pool from which HANJIN draws the workers to be dispatched to its various construction projects; with the exception of Ruel Calda, who as a warehouseman was required to work in HANJIN's main office.4 Among the various construction projects to which they were supposedly assigned, respondents named the North Harbor project in 1992-1994; Manila International Port in 1994-1996; Batangas Port in 1996-1998; the Batangas Pier, and La Mesa Dam.5

On 15 April 2002, Hanjin dismissed respondents from employment. Respondents claimed that at the time of their dismissal, HANJIN had several construction projects that were still in progress, such as Metro Rail Transit (MRT) II and MRT III, and continued to hire employees to fill the positions vacated by the respondents.6

Petitioners denied the respondents' allegations. They maintained that respondents were hired as project employees for the construction of the LRT/MRT Line 2 Package 2 and 3 Project. HANJIN and respondents purportedly executed contracts of employment, in which it was clearly stipulated that the respondents were to be hired as project employees for a period of only three months, but that the contracts may be renewed, to wit:

Article II

TERM OF AGREEMENT

This Agreement takes effect xxx for the duration of three (3) months and shall be considered automatically renewed in the absence of any Notice of Termination by the EMPLOYER to the PROJECT EMPLOYEE. ThisAGREEMENT automatically terminates at the completion of the project or any particular phase thereof,depending upon the progress of the project.7

However, petitioners failed to furnish the Labor Arbiter a copy of said contracts of employment.

Petitioners asserted that respondents were duly informed of HANJIN's policies, rules and regulations, as well as the terms of their contracts. Copies of the employees' rules and regulations were posted on the bulletin boards of all HANJIN campsite offices.8

Petitioners further emphasized that prior to 15 April 2002, Hak Kon Kim, HANJIN's Project Director, notified respondents of the company's intention to reduce its manpower due to the completion of the LRT/MRT Line 2 Package 2 and 3 Project. Respondents were among the project employees who were thereafter laid off, as shown in the Establishment Termination Report filed by HANJIN before the Department of Labor and Employment (DOLE) Regional Office (IV) in Cainta, Rizal on 11 April 2002.9

Finally, petitioners insist that in accordance with the usual practice of the construction industry, a completion bonus was paid to the respondents.10 To support this claim, they offered as evidence payroll records for the period 4 April 2002 to 20 April 2002, with the words "completion bonus" written at the lower left corner of each page.11

Petitioners attached copies of the Quitclaims,12 executed by the respondents, which uniformly stated that the latter received all wages and benefits that were due them and released HANJIN and its representatives from any claims in connection with their employment. These Quitclaims also contained Clearance Certificates which confirmed that the employees concerned were cleared of all accountabilities at the close of the working hours on 15 April 2002.

In their Reply13 dated 27 August 2002, respondents vehemently refuted having signed any written contract stating that they were project employees.

The Labor Arbiter found merit in the respondents' complaint and declared that they were regular employees who had been dismissed without just and valid causes and without due process. It ruled that HANJIN's allegation that respondents were project employees was negated by its failure to present proof thereof. It also noted that a termination report should be presented after the completion of every project or a phase thereof and not just the completion of one of these projects. The Labor Arbiter further construed the number of years that respondents rendered their services for HANJIN as an indication that respondents were regular, not project, employees.14 The Labor Arbiter ordered in its Decision, dated 30 April 2003, that:

WHEREFORE, premises considered, judgment is hereby rendered as follows;

1) Declaring respondent HANJIN HEAVY INDUSTRIES & CONSTRUCTION CO. LTD. guilty of illegal dismissal

>2) Ordering respondent to reinstate all the complainants to positions previously occupied by them with full backwages from the time compensation was withheld from them up to date of actual reinstatement in the following amount (as of date of this decision):

1. Felicito Ibañez P 88,020.832. Elmer A. Gacula 88,020.833. Rizalino De Vera 88,020.834. Enrique Dagotdot 88,020.83

5. Carolino Aligwas 88,020.836. Ruel Calda 88,020.837. Roldan Lanojan 88,020.838. Pascual Caranguian 88,020.839. Carmelito Dalumangcad 88,020.83Total P792, 187.47

3) In lieu of reinstatement, respondent is ordered to pay complainants their separation pay in the following sum:

Felicito Ibañez P 19,500.00Elmer A. Gacula 71,500.00Rizaliano De Vera 19,500.00Enrique Dagotdot 52,000.00Carolino Aligwas 58,500.00Ruel Calda 45,500.00Roldan Lanojan 19,500.00Pascual Caranguian 26,000.00Carmelito Dalumangcad 78,000.00Total P390,000.00

4) Ordering respondent to pay each complainant P50,000.00 for moral damages and P30,000.00 as exemplary damages, or the total sum of P450,000.00 and P270,000.00, respectively; and

5) Ordering respondent to pay complainants litigation expenses in the sum of P30,000.00

All other claims are DISMISSED for lack of merit.15

Petitioners filed an appeal before the NLRC. In their Notice of Appeal/Memorandum Appeal16 dated 5 July 2003, petitioners discarded their earlier claim that respondents signed employment contracts, unequivocally informing them of their status as project employees. Nonetheless, they still contended that the absence of respondents' contracts of employment does not vest the latter with regular status.

The NLRC reversed the Labor Arbiter's Decision dated 30 April 2003, and pronounced that the respondents were project employees who were legally terminated from employment.17 The NLRC gave probative value to the Termination Report submitted by HANJIN to the DOLE, receipts signed by respondents for their completion bonus upon phase completion, and the Quitclaims executed by the respondents in favor of HANJIN. The NLRC also observed that the records were devoid of any proof to support respondents' allegation that they were employed before 1997, the time when construction work on the MRT started. Lastly, it overruled the Labor Arbiter's award of moral and exemplary damages.18 The dispositive part of the Decision dated 7 May 2004 of the NLCR states that:

WHEREFORE, in view of the foregoing, the decision subject of appeal is hereby REVERSED and SET ASIDE and a new one is entered DISMISSING complainants' complaint for lack of merit.19

On appeal, the Court of Appeals reversed the NLRC Decision, dated 7 May 2004. The appellate court looked with disfavor at the change in HANJIN's initial position before the Labor Arbiter-from its initial argument that respondents executed employment contracts; to its modified argument during its appeal before the NLRC-that respondents could still be categorized as project workers despite the absence of contracts of employment. Additionally, it adjudged the Termination Report as inconclusive proof that respondents were project employees. Emphasizing that the employer had the burden of proving the legality of the dismissal, the appellate court ruled that respondents were regular employees and upheld the Labor Arbiter's finding that they were illegally dismissed. The

Court of Appeals, however, adopted the NLRC's deletion of the award of damages.20 The decretal portion of the Decision of the Court of Appeals reads:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the challenged decision and resolution of the NLRC must be, as they hereby are, REVERSED and SET ASIDE. The decision of the Labor Arbiter is herebyREINSTATED relative to the award to petitioners of full backwages, separation pay in lieu of reinstatement, and litigation expenses, but not with respect to the awards for moral damages or for exemplary damages, both of which are hereby DELETED. Without costs in this instance.21

Hence, the present Petition, in which the following issues are raised:

I

WHETHER OR NOT THE FINDINGS OF THE HONORABLE COURT OF APPEALS ARE MERE CONCLUSIONS WITHOUT DELVING INTO THE RECORDS OF THE CASE AND EXAMINE (sic) FOR ITSELF THE QUESTIONED FINDINGS OF THE LABOR ARBITER AND THE NATIONAL LABOR RELATIONS COMMISSION CONTRARY TO THE RULING IN THE CASE OF AGABON VS. NLRC, ET. AL. 442 SCRA 573.

II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS MANIFESTLY OVERLOOKED CERTAIN RELEVANT FACTS WHICH, IF PROPERLY CONSIDERED, WOULD RESULT IN A DIFFERENT CONCLUSION.

III

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING THE PERTINENT PROVISIONS OF POLICY INSTRUCTIONS NO. 20, AS AMENDED BY DEPARTMENT ORDER NO. 19 SERIES OF 1993 IN RELATION TO ARTICLE 280 OF THE LABOR CODE IN CONSIDERING WHETHER OR NOT RESPONDENTS ARE PROJECT EMPLOYEES.

IV

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS WERE ILLEGALLY DISMISSED.22

The Petition is without merit.

As a general rule, the factual findings of the Court of Appeals are binding upon the Supreme Court. One exception to this rule is when the factual findings of the former are contrary to those of the trial court or the lower administrative body, as the case may be. The main question that needs to be settled-whether respondents were regular or project employees-is factual in nature. Nevertheless, this Court is obliged to resolve it due to the incongruent findings of the NLRC and those of the Labor Arbiter and the Court of Appeals. 23

Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee" thus:

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 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. (Emphasis supplied.)

From the foregoing provision, 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.24

In a number of cases, 25 the Court has held that the length of service or the re-hiring of construction workers on a project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a natural consequence of the fact that experienced construction workers are preferred. Employees who are hired for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of which has been determined and made known to the employees at the time of the employment, are properly treated as project employees and their services may be lawfully terminated upon the completion of a project.26 Should the terms of their employment fail to comply with this standard, they cannot be considered project employees.

In Abesco Construction and Development Corporation v. Ramirez,27 which also involved a construction company and its workers, this Court considered it crucial that the employees were informed of their status as project employees:

The principal test for determining whether employees are "project employees" or "regular employees" is whether they are assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time they are engaged for that project. Such duration, as well as the particular work/service to be performed, is defined in an employment agreement and is made clear to the employees at the time of hiring.

In this case, petitioners did not have that kind of agreement with respondents. Neither did they inform respondents of the nature of the latters' work at the time of hiring. Hence, for failure of petitioners to substantiate their claim that respondents were project employees, we are constrained to declare them as regular employees.

In Caramol v. National Labor Relations Commission,28 and later reiterated in Salinas, Jr. v. National Labor Relations Commission,29 the Court markedly stressed the importance of the employees' knowing consent to being engaged as project employees when it clarified that "there is no question that stipulation on employment contract providing for a fixed period of employment such as `project-to-project' contract is valid provided the period was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent x x x."

During the proceedings before the Labor Arbiter, the petitioners' failure to produce respondents' contracts of employment was already noted, especially after they alleged in their pleadings the existence of such contracts stipulating that respondents' employment would only be for the duration of three months, automatically renewed in the absence of notice, and terminated at the completion of the project. Respondents denied having executed such contracts with HANJIN. In their appeal before the NLRC until the present, petitioners now claim that due to a lapse in management procedure, no such employment contracts were executed; nonetheless, the absence of a written contract does not remove respondents from the ambit of being project employees.30

While the absence of a written contract does not automatically confer regular status, it has been construed by this Court as a red flag in cases involving the question of whether the workers concerned are regular or project employees. In Grandspan Development Corporation v. Bernardo31 and Audion Electric Co., Inc. v. National Labor

Relations Commission,32 this Court took note of the fact that the employer was unable to present employment contracts signed by the workers, which stated the duration of the project. In another case, Raycor v. Aircontrol Systems, Inc. v. National Labor Relations Commission,33 this Court refused to give any weight to the employment contracts offered by the employers as evidence, which contained the signature of the president and general manager, but not the signatures of the employees. In cases where this Court ruled that construction workers repeatedly rehired retained their status as project employees, the employers were able to produce employment contracts clearly stipulating that the workers' employment was coterminous with the project to support their claims that the employees were notified of the scope and duration of the project.34

Hence, even though the absence of a written contract does not by itself grant regular status to respondents, such a contract is evidence that respondents were informed of the duration and scope of their work and their status as project employees. In this case, where no other evidence was offered, the absence of an employment contract puts into serious question whether the employees were properly informed at the onset of their employment status as project employees. It is doctrinally entrenched that in illegal dismissal cases, the employer has the burden of proving with clear, accurate, consistent and convincing evidence that a dismissal was valid.35 Absent any other proof that the project employees were informed of their status as such, it will be presumed that they are regular employees in accordance with Clause 3.3(a) of Department Order No. 19, Series of 1993, which states that:

a) Project employees whose aggregate period of continuous employment in a construction company is at least one year shall be considered regular employees, in the absence of a "day certain" agreed upon by the parties for the termination of their relationship. Project employees who have become regular shall be entitled to separation pay.

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

Petitioners call attention to the fact that they complied with two of the indicators of project employment, as prescribed under Section 2.2(e) and (f) of Department Order No. 19, Series of 1993, entitled Guidelines Governing the Employment of Workers in the Construction Industry, issued by the DOLE:

2.2 Indicators of project employment. - Either one or more of the following circumstances, among others, may be considered as indicators that an employee is a project employee.

(a) The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable.

(b) Such duration, as well as the specific work/service to be performed, is defined in an employment agreement and is made clear to the employee at the time of hiring.

(c) The work/service performed by the employee is in connection with the particular project/undertaking for which he is engaged.

(d) The employee, while not employed and awaiting engagement, is free to offer his services to any other employer.

(e) The termination of his employment in the particular project/undertaking is reported to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work, using the prescribed form on employees' terminations/dismissals/suspensions.

(f) An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies. (Emphasis provided.)

Petitioners argue that the Termination Report filed before the DOLE Regional Office (IV) in Cainta, Rizal on 11 April 2002 signifies that respondents' services were engaged merely for the LRT/MRT Line 2 Package 2 and 3 Project.

Given the particular facts established in this case, petitioners' argument fails to persuade this Court. Petitioners were not able to offer evidence to refute or controvert the respondents' claim that they were assigned to various construction projects, particularly the North Harbor Project in 1992-1994; Manila International Port in 1994-1996; Batangas Port in 1996-1998; the Batangas Pier; and La Mesa Dam.36 Had respondents' allegations been false, petitioners could simply present as evidence documents and records in their custody to disprove the same, i.e., payroll for such projects or termination reports, which do not bear respondents' names. Petitioners, instead, chose to remain vague as to the circumstances surrounding the hiring of the respondents. This Court finds it unusual that petitioners cannot even categorically state the exact year when HANJIN employed respondents.

It also bears to note that petitioners did not present other Termination Reports apart from that filed on 11 April 2002. The failure of an employer to file a Termination Report with the DOLE every time a project or a phase thereof is completed indicates that respondents were not project employees.37 Employers cannot mislead their employees, whose work is necessary and desirable in the former's line of business, by treating them as though they are part of a work pool from which workers could be continually drawn and then assigned to various projects and thereafter denied regular status at any time by the expedient act of filing a Termination Report. This would constitute a practice in which an employee is unjustly precluded from acquiring security of tenure, contrary to public policy, morals, good customs and public order.38

In this case, only the last and final termination of petitioners was reported to the DOLE. If respondents were actually project employees, petitioners should have filed as many Termination Reports as there were construction projects actually finished and for which respondents were employed. Thus, a lone Termination Report filed by petitioners only upon the termination of the respondents' final project, and after their previous continuous employment for other projects, is not only unconvincing, but even suspicious.

Petitioners insist that the payment to the respondents of a completion bonus indicates that respondents were project employees. To support their claim, petitioners presented payroll records for the period 4 April 2002 to 20 April 2002, with the words "completion bonus" written at the lower left corner of each page.39 The amount paid to each employee was equivalent to his fifteen-day salary. Respondents, however, deny receiving any such amount.

Assuming that petitioners actually paid respondents a completion bonus, petitioners failed to present evidence showing that they undertook to pay respondents such a bonus upon the completion of the project, as provided under Section 2.2(f) of Department Order No. 19, Series of 1993.40 Petitioners did not even allege how the "completion bonus" was to be computed or the conditions that must be fulfilled before it was to be given. A completion bonus, if paid as a mere afterthought, cannot be used to determine whether or not the employment was regular or merely for a project. Otherwise, an employer may defeat the workers' security of tenure by paying them a completion bonus at any time it is inclined to unjustly dismiss them.

Department Order No. 19, Series of 1993, provides that in the absence of an undertaking that the completion bonus will be paid to the employee, as in this case, the employee may be considered a non-project employee, to wit:

3.4 Completion of the project. Project employees who are separated from work as a result of the completion of the project or any phase thereof in which they are employed are entitled to the pro-rata completion bonus if there is an undertaking by for the grant of such bonus. An undertaking by the employer to pay a completion bonus shall be an indicator that an employee is a project employee. Where there is no such undertaking, the employee may be considered a non-project employee. The pro-rata completion bonus may be based on the industry practice which is at least the employee's one-half (1/2) month salary for every 12 months of service and may be put into effect for any project bid (in case of

bid projects) or tender submitted (in case of negotiated projects) thirty (30) days from the date of issuances of these Guidelines. (Emphasis supplied.)

Furthermore, after examining the payroll documents submitted by petitioners, this Court finds that the payments termed as "completion bonus" are not the completion bonus paid in connection with the termination of the project. First of all, the period from 4 April 2002 to 20 April 2002, as stated in the payrolls, bears no relevance to a completion bonus. A completion bonus is paid in connection with the completion of the project, and is not based on a fifteen-day period. Secondly, the amount paid to each employee as his completion bonus was uniformly equivalent to his fifteen-day wages, without consideration of the number of years of service rendered. Section 3.4 of Department Order No. 19, Series of 1993, provides that based on industry practice, the completion bonus is at least the employee's one-half month salary for every twelve months of service.

Finally, the Quitclaims which the respondents signed cannot bar them from demanding what is legally due them as regular employees. As a rule, quitclaims and waivers or releases are looked upon with disfavor and frowned upon as contrary to public policy. They are thus ineffective to bar claims for the full measure of a worker's legal rights, particularly when the following conditions are applicable: 1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2) where the terms of settlement are unconscionable on their face.41To determine whether the Quitclaims signed by respondents are valid, one important factor that must be taken into account is the consideration accepted by respondents; the amount must constitute a reasonable settlement equivalent to the full measure of their legal rights.42 In this case, the Quitclaims signed by the respondents do not appear to have been made for valuable consideration. Respondents, who are regular employees, are entitled to backwages and separation pay and, therefore, the Quitclaims which they signed cannot prevent them from seeking claims to which they are entitled.43

Due to petitioners' failure to adduce any evidence showing that petitioners were project employees who had been informed of the duration and scope of their employment, they were unable to discharge the burden of proof required to establish that respondents' dismissal was legal and valid. Furthermore, it is a well-settled doctrine that if doubts exist between the evidence presented by the employer and that by the employee, the scales of justice must be tilted in favor of the latter.44 For these reasons, respondents are to be considered regular employees of HANJIN.

Finally, in the instant case, records failed to show that HANJIN afforded respondents, as regular employees, due process prior to their dismissal, through the twin requirements of notice and hearing. Respondents 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. Certainly, the respondents' dismissal was not carried out in accordance with law and was, therefore, illegal.45

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. This Court AFFIRMS the assailed Decision of the Court of Appeals in CA-G.R. SP No. 87474, promulgated on 28 July 2005, declaring that the respondents are regular employees who have been illegally dismissed by Hanjin Heavy Industries & Construction Company, Limited, and are, therefore, entitled to full backwages, separation pay, and litigation expenses. Costs against the petitioners.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 167045             August 29, 2008

COCOMANGAS HOTEL BEACH RESORT and/or SUSAN MUNRO, petitioners, vs.FEDERICO F. VISCA, JOHNNY G. BAREDO, RONALD Q. TIBUS, RICHARD G. VISCA and RAFFIE G. VISCA, respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision1 dated July 30, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 78620 which reversed and set aside the Resolution dated February 27, 2003 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000714-2000; and the CA Resolution2 dated February 2, 2005 which denied petitioners' Motion for Reconsideration.

The present controversy stemmed from five individual complaints3 for illegal

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

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

Name Designation Date Employed

Federico F. Visca Foreman October 1, 1987

Johnny G. Barredo Carpenter April 23, 1993

Ronald Q. Tibus Mason November 9, 1996

Richard G. Visca Carpenter April 1988

Raffie G. Visca Mason/Carpenter March 27, 1993

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

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

On June 30, 2000, the Labor Arbiter (LA) rendered a Decision6 dismissing the complaint, holding that respondent Visca was an independent contractor and the other respondents were hired by him to help him with his contracted works at the resort; that there was no illegal dismissal but completion of projects; that respondents were project workers, not regular employees.

On August 9, 2000, respondents filed a Memorandum of Appeal7 with the NLRC. No comment thereon was filed by the petitioners.

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

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

1. Federico F. Visca P 288,816.53

2. Johnny G. Barredo P 211,058.47

3. Ronald Q. Tibus P 175,774.00

4. Richard C. Visca P 200,977.85

5. Raffie C. Visca P   211,058.47

P1,087,685.32

6. Attorney's fees (10%) P 108,768.53

Total Award P1,196,453.859

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

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

On February 27, 2003, the NLRC made a complete turnabout from its original decision and issued a Resolution13 dismissing the complaint, holding that respondents were not regular employees but project employees, hired for a short period of time to do some repair jobs in petitioners' resort business. Nonetheless, it ordered payment of P10,000.00 to each complainant as financial assistance.

Respondents then filed a Petition for Certiorari14 with the CA raising three issues for resolution: (a) whether or not the respondents were project employees of petitioners; (b) whether or not the respondents' dismissal from work was based on valid grounds; (c) whether or not the NLRC had sufficient basis to overturn its own decision despite its overwhelming findings that respondents were illegally dismissed.

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

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

SO ORDERED.16

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

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

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

Petitioners then filed the present petition19 on the following grounds:

I

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

II

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

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

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

The petition is bereft of merit.

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

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

of the judicial prerogative in accordance with centuries of both civil law and common law traditions.22 (Emphasis supplied)

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

In Garcia v. National Labor Relations Commission,24 the Court elucidated on when certiorari can be properly resorted to, thus:

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

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

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

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

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

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

In the present case, respondents alleged in its petition with the CA that the NLRC’s conclusions had no basis in fact and in law, in that "it totally disregarded the evidence of the [respondents] and gave credence to the [petitioners'] asseverations which were in themselves insufficient to overturn duly established facts and conclusions."27 Consequently, the CA was correct in giving due course to the Petition for Certiorari, since respondents drew attention to the absence of substantial evidence to support the NLRC's complete turnabout from its

original Decision dated August 29, 2002 finding that respondents were regular employees, to its subsequent Resolution dated February 27, 2003 classifying respondents as project employees.

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

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

The petitioners were ambivalent in categorizing respondents. In their Position Paper30 filed before the LA, petitioners classified respondent Visca as an independent contractor and the other respondents as his employees; while in their Motion for Reconsideration31 before the NLRC, petitioners treated respondents as project employees.

Further, petitioners' position in their Motion for Reconsideration before the NLRC runs contrary to their earlier submission in their Position Paper before the LA. While initially advancing the absence of an employer-employee relationship, petitioners on appeal, sang a different tune, so to speak, essentially invoking the termination of the period of their employer-employee relationship.

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

At any rate, after a careful examination of the records, the Court finds that the CA did not err in finding that respondents were regular employees, not project employees. A project employee is one whose "employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season."34 Before an employee hired on a per-project basis can be dismissed, a report must be made to the nearest employment office, of the termination of the services of the workers every time completes a project, pursuant to Policy Instruction No. 20.35

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

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

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

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

That respondents were regular employees is further bolstered by the following evidence: (a) the SSS Quarterly Summary of Contribution Payments41 listing respondents as employees of petitioners; (b) the Service Record Certificates stating that respondents were employees of petitioners for periods ranging from three to twelve years and all have given "very satisfactory performance";42 (c) petty cash vouchers43showing payment of respondents' salaries and holiday and overtime pays.

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

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

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

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

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

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

Double costs against petitioners.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

 

G.R. No. 102973 August 24, 1993

ROGELIO CARAMOL, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION and ATLANTIC GULF and PACIFIC CO. OF MANILA, INC.,respondents.

Ricardo C. Valmonte for petitioner.

Arturo A. Alafriz & Associates for respondent Atlantic Gulf & Pacific Company of Manila, Inc.

 

BELLOSILLO, J.:

The controversy as to whether petitioner is a regular or casual employee arises from the conflicting interpretations by the parties of Art. 280 of the Labor Code, as amended. The article provides —

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

Petitioner Rogelio Caramol, a worker hired by respondent Atlantic Gulf and Pacific Co. of Manila, Inc., (ATLANTIC GULF), on a "project-to-project" basis but whose employment was renewed forty-four (44) times by the latter, seeks the reversal of the decision of public respondent National Labor Relations Commission (NLRC) dated 31 October 1991 in NLRC NCR 00-01-04703-88 1 which reversed and set aside the decision of the Labor Arbiter.

The Labor Arbiter had earlier declared respondent ATLANTIC GULF guilty of unfair labor practice, ordered it to cease and desist from further committing unfair labor practice against petitioner, declared illegal the constructive dismissal of petitioner and directed respondent ATLANTIC GULF to immediately reinstate petitioner to his former position without loss of seniority rights and with full back wages in the amount of P68,826.94 as of 29 November 1989. 2

The factual findings of the Labor Arbiter show that petitioner was hired by respondent ATLANTIC GULF on 2 June 1983 for the position of rigger. Until the occurence of the strike on 10 May 1986, his last assignment was at respondent ATLANTIC GULF's plant in Batangas.

Petitioner claims that because of his involvement in unionism, particularly in actively manning the picket lines, he was among those who were not re-admitted after the strike.

On the other hand, respondent ATLANTIC GULF contends that petitioner was one of the several thousands of workers who were hired on a "project-to-project" basis and whose employment was covered by Project Employment Contract for a particular project and for a definite period of time. On 15 May 1986 private respondent dispensed with the services of petitioner claiming as justification the completion of the Nauru project to which petitioner was assigned and the consequent expiration of the employment contract.

In reversing the Labor Arbiter, public respondent NLRC declared in the dispositive portion of its questioned decision thus —

WHEREFORE, based on the foregoing considerations, the decision appealed from is hereby REVERSED and SET ASIDE, and finding the claim of complainant to be without legal and factual basis.

According to public respondent NLRC, petitioner is a project employee falling under the exception of Art. 280 of the Labor Code, as amended, explaining that —

. . . As correctly asserted by respondent-company, Mr. Caramol's services have been fixed for a specific project shown in the contracts of employment. The principle of party autonomy must not be interfered with absent any showing of violation of law, public policy and jurisprudence. "A contract duly entered into should be respected, since a contract is the law between the parties" (Pakistan International Airlines Corp. v. Ople, G.R. No. 61594, Sept. 28, 1990).

The exception under Article 280 of the Labor Code is precisely designed to meet an exigency like in the case at bar. . . .

Under the Labor Code as well as the Civil Code of the Philippines, "the validity and propriety of contracts and obligation with a fixed or definite period are recognized, and imposes no restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it specie, food or services, except the general admonition against stipulations contrary to law, morals, good custom, public order or public policy" (Brent School, Inc. v. Zamora, G.R. No. 48494, Feb. 5, 1990). . . .

Contract workers are not considered regular. Their services depend upon availability of a project to be undertaken. Thus, it would be unjust to retain an employee in the payroll while waiting for another project. . . .

Petitioner now insists that public respondent NLRC gravely abused its discretion and committed serious errors of law and that its questioned decision is contrary to the jurisprudential doctrine enunciated in Magante v. NLRC 3where it was held that the "project" employee therein was deemed a regular employee considering the attendant circumstances, i.e., the employee was assigned to perform tasks which are usually necessary or desirable in the usual business or trade of the employer; said assignments did not end on a project to project basis, although the contrary was made to appear through the signing of separate employment contracts; there were no reports of termination submitted to the nearest public employment office every time employment was terminated due to the completion of the project.

We grant the petition.

There is no question that stipulation on employment contract providing for a fixed period of employment such as "project-to-project" contract is valid provided the period was agreed upon knowingly and voluntarily the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. 4 However, 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 tenurial security by the employee, they should be struck down as contrary to public policy, morals, good custom or public order.

In the case before us, we find sufficiently established circumstances showing that the supposed fixed period of employment by way of a project-to-project contract has been imposed to preclude acquisition of tenurial security by the petitioner. Accordingly, such arrangement must be struck down as contrary to public policy. After a careful perusal of the records, we sustain the findings of the Labor Arbiter that —

. . . . The records of the case established the fact that during the employment of complainant with the respondent company he was made to sign a project employment contract. This practice started from the time he was hired in 1973 up to May 10, 1986 when the AG & P Workers and Employees Union staged a strike. Expressed differently this practice of the respondent insofar as the complainant is concerned has been going on continiously for thirteen (13) long years. This Office is of the considered belief that the nomenclature by which he was addressed by the

respondent has already attained a regular status of employment. In addition to his length of service the documentary evidence on record established the fact that complainant's job is both necessary and desirable to the business engaged in by the respondent . . . .

Admittedly, the "project-to-project" employment of petitioner was renewed several times, forty-four (44) project contracts 5 according to him. Private respondent points to this successive employment as evidence that petitioner is a project employee in its projects. It is asserted that being in the construction industry, it is not unusual for private respondent and other similar companies to hire employees or workers for a definite period only, or whose employment is co-terminus with the completion of a specific project as recognized by Art. 280 of the Labor Code.

However, with the successive contracts of employment where petitioner continued to perform the same kind of work, i.e., as rigger throughout his period of employment, it is clearly manifest that petitioner's tasks were usually necessary or desirable in the usual business or trade of private respondent. There can therefore be no escape from the conclusion that petitioner is a regular employee of private respondent ATLANTIC GULF.

In this regard, we need only reiterate our ruling in Baguio Country Club Corporation v. NLRC 6 that —

. . . . The primary standard . . . of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence the employment is also considered regular, but only with respect to such activity and while such activity exists" (De Leon v. National Labor Relations Commission, G.R. No. 70705, August 21, 1989, 176 SCRA 615, 620-621) . . . .

Such repeated rehiring and the continuing need for his service are sufficient evidence of the necessity and indispensability of his service to the petitioner's business or trade.

. . . . the private respondent performed the said task which lasted for more than one year, . . . by this fact alone he is entitled by law to be considered a regular employee.

Owing to private respondent's length of service with the petitioner corporation, he became a regular employee, by operation of law, one year after he was employed . . . .

It is of no moment that private respondent was told when he was hired that his employment would only be "on a day to day basis for a temporary period" and may be terminated at any time subject to the petitioner's discretion. Precisely, the law overrides such conditions which are prejudicial to the interest of the worker. Evidently, the employment contracts entered into by private respondent with the petitioner have the purpose of circumventing the employee's security of tenure. The Court, therefore, rigorously disapproves said contracts which demonstrate a clear attempt to exploit the employee and deprive him of the protection sanctioned by the Labor Code.

It is noteworthy that what determines whether a certain employment is regular or casual is not the will and word of the employer, to which the desperate worker often accedes. It is the nature of the activities performed in relation to the particular business or trade considering all circumstances, and in some cases the length of time of its performance and its continued existence (See De Leon v. NLRC, ibid).

Moreover, notwithstanding its claim that petitioner was successively employed, private respondent failed to present any report of termination. On this point, the pronouncement in Magante v. NLRC 7 is of singular relevance to the instant case:

Moreover, if petitioner were employed as a "project employee" private respondent should have submitted a report of termination to the nearest public employment office every time his employment is terminated due to completion of each construction project, as required by Policy Instruction No. 20, which provides:

. . . Moreover, the company is not required to obtain a clearance from the Secretary of Labor in connection with such termination. What is required of the company is a report to the nearest Public Employment Office for Statistical purposes (Emphasis Supplied).

Throughout the duration of petitioner's employment, there should have been filed as many reports of termination as there were construction projects actually finished if it were true that petitioner Telesforo Maganto was only a project worker.

We thus hold significant as to prejudice the cause of private respondent the absence of any such termination reports.

In ignoring or disregarding the existing jurisprudence on regular employment, particularly the Magante decision, by reversing the decision of the Labor Arbiter, public respondent NLRC gravely abused its discretion.

Respondent further claims that since the appeal was filed twenty-nine (29) days from receipt of the NLRC decision by petitioner, the same should be dismissed as having been filed out of time, alluding to the penultimate paragraph of Art. 223 of the Labor Code which states that "[t]he decision of the Commission shall be final and executory after ten (10) calendar days from receipt thereof by the parties."

This is not correct. On the contrary, the instant position is filed pursuant to Sec. 1, Rule 65, of the Rules of Court which may be done within a reasonable time from receipt of the subject decision, and a period of three (3) months is considered reasonable. 8 The fact that the assailed decision becomes final and executory after a ten day period does not preclude the adverse party from challenging it by way of an original action for certiorari under Rule 65 of the Rules of Court. He may even further pray for the issuance of a restraining order or a temporary injunction to prevent the immediate execution of the assailed decision.

WHEREFORE, the petition is GRANTED. consequently, the decision of respondent National Labor Relations Commission dated 31 October 1991 is hereby REVERSED and SET ASIDE. The decision of the Labor Arbiter dated 29 November 1989 is AFFIRMED and REINSTATED.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 141168             April 10, 2006

ABESCO CONSTRUCTION AND DEVELOPMENT CORPORATION and MR. OSCAR BANZON, General Manager, Petitioners, vs.

ALBERTO RAMIREZ, BERNARDO DIWA, MANUEL LOYOLA, REYNALDO P. ACODESIN, ALEXANDER BAUTISTA, EDGAR TAJONERA and GARY DISON,* Respondents.

R E S O L U T I O N

CORONA, J.:

Petitioner company was engaged in a construction business where respondents were hired on different dates from 1976 to 1992 either as laborers, road roller operators, painters or drivers.

In 1997, respondents filed two separate complaints1 for illegal dismissal against the company and its General Manager, Oscar Banzon, before the Labor Arbiter (LA). Petitioners allegedly dismissed them without a valid reason and without due process of law. The complaints also included claims for non-payment of the 13th month pay, five days' service incentive leave pay, premium pay for holidays and rest days, and moral and exemplary damages. The LA later on ordered the consolidation of the two complaints.2

Petitioners denied liability to respondents and countered that respondents were "project employees" since their services were necessary only when the company had projects to be completed. Petitioners argued that, being project employees, respondents' employment was coterminous with the project to which they were assigned. They were not regular employees who enjoyed security of tenure and entitlement to separation pay upon termination from work.

After trial, the LA declared respondents as regular employees because they belonged to a "work pool" from which the company drew workers for assignment to different projects, at its discretion. He ruled that respondents were hired and re-hired over a period of 18 years, hence, they were deemed to be regular employees. He likewise found that their employment was terminated without just cause. In a decision dated January 7, 1998, he stated:

WHEREFORE, judgment is hereby rendered declaring respondents guilty of illegal dismissal and ordering the latter to reinstate complainants to their former positions with backwages and other benefits from the time their compensation was withheld from them up to the time their actual reinstatement which as of the date of this decision amounted to:

NAME

1. Alberto Ramirez P49,764.00

2. Manuel B. Loyola 46,695.22

3. Hernando Diwa 49,764.00

4. Reynaldo Acodesin 46,695.22

5. Alexander Bautista 45,285.24

6. Edgar Tajonera 62,985.00

7. Gary Dison 53,911.00

TOTAL P 355,099.68

However, if reinstatement is no longer feasible, a one-month salary shall be awarded as a form of separation pay, in addition to the aforementioned award.

Respondents are likewise ordered to pay complainants the following:

NAMEUNPAID SALARY

SALARY DIFFERENTIAL

13th MONTH

PAY

5 DAYS SERVICE

INCENTIVE LEAVE

SEPARATION PAY

1.Hernando Diwa P765.00 P1,274.00 P4,147.00

2.Alexander Bautista P23,088.00 11,141.00 P2,005.00 45,617.00

3.Alberto Ramirez 11,141.00 2,005.00 74,646.00

4.Manuel B. Loyola 11,141.00 2,020.00 41,170.00

5.Reynaldo Acodesin 11,141.00 2,020.00 20,735.00

6.Edgardo Tajonera 19,500.00 3,750.00 130,000.00

7.Gary Dison 11,141.00 2,020.00 29,029.00

P 765.00 P 23,088.00 P 76,479.00 P 13,820.00 P 345,344.00

xxx

All other claims are hereby dismissed for lack of merit.3

Petitioners appealed to the National Labor Relations Commission (NLRC) which affirmed the LA's decision.4 1avvphil.net

Subsequently, petitioners filed a petition for review in the Court of Appeals (CA) arguing that they were not liable for illegal dismissal since respondents' services were merely put on hold until the resumption of their business operations. They also averred that they had paid respondents their full wages and benefits as provided by law, hence, the latter had no more right to further benefits.

The CA was not convinced and dismissed petitioners' appeal. It held:

We note that the petitioners are taking a new tack in arguing, for the first time, that the [respondents] were not dismissed but their employment was merely suspended. Previous to this, their defense was that the [respondents] were project employees who were not entitled to security of tenure. The petitioners are barred from raising a new defense at this stage of the case.

xxx xxx xxx

WHEREFORE, the petition for certiorari is hereby dismissed, for lack of merit.5

Petitioners filed a motion for reconsideration but it was dismissed by the CA.6

In this petition for review under Rule 45 of the Rules of Court, petitioners raise the following issues for resolution: (1) whether respondents were project employees or regular employees and (2) whether respondents were illegally dismissed.

On the first issue, we rule that respondents were regular employees. However, we take exception to the reasons cited by the LA (which both the NLRC and the CA affirmed) in considering respondents as regular employees and not as project employees.

Contrary to the disquisitions of the LA, employees (like respondents) 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.7 Length of service is not a controlling factor in determining the nature of one's employment.8

Moreover, employees who are members of a "work pool" from which a company (like petitioner corporation) draws workers for deployment to its different projects do not become regular employees by reason of that fact alone. The Court has enunciated in some cases 9 that members of a "work pool" can either be project employees or regular employees.

The principal test for determining whether employees are "project employees" or "regular employees" is whether they are assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time they are engaged for that project.10 Such duration, as well as the particular work/service to be performed, is defined in an employment agreement and is made clear to the employees at the time of hiring.11

In this case, petitioners did not have that kind of agreement with respondents. Neither did they inform respondents of the nature of the latter's work at the time of hiring. Hence, for failure of petitioners to substantiate their claim that respondents were project employees, we are constrained to declare them as regular employees.

Furthermore, petitioners cannot belatedly argue that respondents continue to be their employees (so as to escape liability for illegal dismissal). Before the LA, petitioners staunchly postured that respondents were only "project employees" whose employment tenure was coterminous with the projects they were assigned to. However, before the CA, they took a different stance by insisting that respondents continued to be their employees. Petitioners' inconsistent and conflicting positions on their true relation with respondents make it all the more evident that the latter were indeed their regular employees.

On the issue of illegal dismissal, we hold that petitioners failed to adhere to the "two-notice rule" which requires that workers to be dismissed must be furnished with: (1) a notice informing them of the particular acts for which they are being dismissed and (2) a notice advising them of the decision to terminate the employment.12Respondents were never given such notices.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioners.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

 

G.R. No. 114290 September 9, 1996

RAYCOR AIRCONTROL SYSTEMS, INC., petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION and ROLANDO LAYA, et al., respondents.

 

PANGANIBAN, J.:

Were private respondents, employed by petitioner in its business of installing airconditioning systems in buildings, project employees or regular employees? And were their dismissals "due to (petitioner's) present status" and effective the day following receipt of notice legal? Where both the petitioner and the respondents fail to present sufficient and convincing evidence to prove their respective claims, how should the case be decided?

This Court answers the foregoing questions in resolving this petition for certiorari assailing the Decision 1promulgated November 29, 1993 by the National Labor Relations Commission, 2 which set aside and reversed the decision of the labor arbiter 3 dated 22 January 1993, as well as the subsequent order of respondent Commission denying petitioner's motion for reconsideration.

The Facts

Petitioner's sole line of business is installing airconditioning systems in the building of its clients. In connection with such installation work, petitioner hired private respondents Roberto Fulgencio, Rolando Laya, Florencio Espina, Romulo Magpili, Ramil Hernandez, Wilfredo Brun, Eduardo Reyes, Crisostomo Donompili, Angelito Realingo, Hernan Delima, Jaime Calipayan, Jorge Cipriano, Carlito de Guzman, Susano Atienza, and Gerardo de Guzman, who worked in various capacities as tinsmith, leadman, aircon mechanic, installer, welder and painter. Private respondents insist that they had been regular employees all along, but petitioner maintains that they were project employees who were assigned to work on specific projects of petitioner, and that the nature of petitioner's business — mere installation (not manufacturing) of aircon systems and equipment in buildings of its clients — prevented petitioner from hiring private respondents as regular employees. As found by the labor arbiter, their average length of service with petitioner exceeded one year, with some ranging from two six years (but private respondents claim much longer tenures, some allegedly exceeding ten years).

In 1991, private respondent Laya and fourteen other employees of petitioner filed NLRC NCR Case No. 00-03-02080-92 for their "regularization". This case was dismissed on May 20, 1992 for want of cause of action. 4

On different dates in 1992, they were served with uniformly-worded notices of "Termination of Employment" by petitioner "due to our present business status", which terminations were to be effective the day following the date of receipt of the notices. Private respondent felt they were given their walking papers after they refused to sign a "Contract Employment" providing for, among others, a fixed period of employment which "automatically terminates without necessity of further notice" or even earlier at petitioner's sole discretion.

Because of the termination, private respondents filed three cases of illegal dismissal against petitioner, alleging that the reason given for the termination of their employment was not one of the valid grounds therefor under the Labor Code. They also claimed that the termination was without benefit of due process.

The three separate cases filed by private respondents against petitioner, docketed as NLRC-NCR 00-03-05930-92, NLRC NCR 00-05-02789-92, and NLRC NCR 00-07-03699-92, were subsequently consolidated. The parties were given opportunity to file their respective memoranda and other supplemental pleadings before the labor arbiter.

On January 22, 1993, the Labor Arbiter issued his decision dismissing the complaints for lack of merit. He reasoned that the evidence showed that the individual complainants (private respondents) were project employees within the meaning of Policy Instructions No. 20 (series of 1977) 5 of the Department of Labor and Employment, having been assigned to work on specific projects involving the installation of air-conditioning units as covered by contracts

between their employer and the latter's clients. Necessarily, the installation of airconditioning systems "must come to a halt as projects come and go", and "(o)f consequence, the [petitioner] cannot hire workers in perpetuity. And as project employees, private respondent would not be entitled to termination pay, separation pay, holiday premium pay, etc.; and neither is the employer required to secure a clearance from the Secretary of Labor in connection with such termination.

Private respondents appealed to the respondent NLRC, which in its November 29, 1993 Decision reversed the arbiter and found private respondent to have been regular employees illegally dismissed. The respondent Commission made the following four-paragraph disquisition:

From the above rules, it can easily be gleaned that complainants belong to a work pool from which the respondent company drew its manpower requirements. This is buttressed by the fact that many of the complainants have been employed for long periods of time already.

We doubt respondent's assertion that complainants were really assigned to different projects. The "Contract Employment" which it submitted (see pp. 32-38, record) purporting to show particular projects are not reliable nay even appears to have been recently typewritten. In the "Contract Employment" submitted by complainants (see p. 65, record), no such name of project appears. Verily, complainants were non-project employees.

Anent the dismissal of complainants, suffice it to state that the same was capricious and whimsical which as shown by the vague reason proffered by respondent for said dismissal which is "due to our present business state" (should read "status") is undoubtedly not one of the valid causes for termination of an employment. We are thus inclined to give credence to complainants' allegation that they were eased out of work for their refusal to sign the one-sided "Contract Employment".

The fact that complainants were dismissed merely to spite them is made more manifest by respondent's failure to make a report of dismissal or secure a clearance from the Department of Labor (see pp. 196 and 197, record) as required under P.I. No 20 and their publication of an advertisement for replacements for the same positions held by complainants (see p. 198, record). Even assuming that complainants were project employees, their unceremonious dismissal coupled with the attempt to replace them via the newspaper advertisement entitles them to reinstatement with backwages under P.I. No. 20.

The dispositive portion followed immediately and read:

WHEREFORE, the appealed Decision is hereby SET ASIDE and a new one entered ordering respondent to:

1. Immediately reinstate complainants (private respondents) to their former positions without loss of seniority rights and privileges; and

2. Pay them full backwages from the time they were dismissed up to the time they are actually reinstated.

Petitioner's motion for reconsideration was denied by public respondent on February 23, 1994 for lack of merit. Hence, this petition.

Issues

Petitioner charges public respondent NLRC with grave abuse of discretion in finding private respondent to have been non-project employees and illegally dismissed, and in ordering their reinstatement with full backwages.

For clarity's sake, let us re-state the pivotal question involved in the instant case as follows: whether private respondents were project employees or regular (non-project) employees, and whether or not they were legally dismissed.

In support of its petition, petitioner reiterates the same points it raised before the tribunals below: that it is engaged solely in the business of installation of airconditioning units or systems in the building of its clients. It has no permanent clients with continuous projects where its workers could be assigned; neither is it a manufacturing firm. Most of its projects last from two to three months. (The foregoing matters were never controverted by private respondents.) Thus, for petitioner, work is "not done in perpetuity but necessarily comes to a halt when the installation of airconditioning units is completed."

On the basis of the foregoing, petitioner asserts that it could not have hired private respondents as anything other than project employees. It further insists that "(a)t the incipience of hiring, private respondents were appraised (sic) that their work consisted only in the installation of airconditioning units and that as soon as the installation is completed, their work ceases and that they have to wait for another installation projects (sic)." In other words, their work was co-terminous with the duration of the project, and was not continuous or uninterrupted as claimed by them. Petitioner also claim that the private respondents signed project contracts of employment indicating the names of the projects or buildings they were working on. And when between projects, these project employees were free to work elsewhere with other establishments.

Private respondents controverted these assertions of petitioner, claiming that they had worked continuously for petitioner for several years, some of them as long as ten years, and thus, by operation of law had become regular employees.

The Court's Ruling

Ordinarily, the findings made by the NLRC are entitled to great respect and are even clothed with finality and deemed binding on this Court, except that when such findings are contrary to those of the labor arbiter, this Court may choose to re-examine the same, as we hereby do in this case now.

The First Issue: Project Employees or Regular Employees?

An Unfounded Conclusion

We scoured the assailed Decision for any trace of arbitrariness, capriciousness or grave abuse discretion, and noted that the respondent Commission first cited the facts of the case, then quoted part of the arbiter's disquisition along with relevant portions of Policy Instructions No. 20, after which it immediately leapt to the conclusion that "(F)rom the above rules, it can easily be gleaned that complainants belong to a work pool from which the respondent company drew its manpower requirements. This is buttressed by the fact that many of the complainants have been employed for long periods of time already. " (emphasis supplied) By reason of such "finding", respondent NLRC concluded that private respondents were regular (not project) employees, but failed to indicate the basis for such finding and conclusion. For our part, we combed the Decision in search of such basis. However, repeated scrutiny of the provisions of Policy Instruction No. 20 pertaining to work pools merely raised further questions.

Members of a work pool from which a construction company draws its project employees, if considered employees of the construction company while in the work pool are non-project employees or employees for an indefinite period. If they are employed in a particular project, the completion of the project or of any phase thereof will not mean severance of employer-employee relationship.

However, if the workers in the work pool are free to leave anytime and offer their services to other employers then they era project employees employed by a construction company in a particular project or in a phase thereof.

A careful reading of the aforequoted and preceding provisions establishes the fact that project employees may or may not be members of a work pool, (that is the employer may or may not have formed a work pool at all), and in turn, members of a work pool could be either project employees or regular employees. In the instant case, respondent NLRC did not indicate how private respondents came to be considered members of a work pool as distinguished from ordinary (non-work pool) employees. It did not establish that a work pool existed in the first place. Neither did it make any finding as to whether the herein private respondents were indeed free to leave anytime and offer their services to other employers, as vigorously contended by petitioner, despite the fact that such a determination would have been critical in defining the precise nature of private respondents' employment. Clearly, the NLRC's conclusion of regular employment has no factual support and is thus unacceptable.

Conclusion Based onUnwarranted Assumption

of Bad Faith

Immediately thereafter, respondent Commission determined — without sufficient basis — that complainants were non-project employees. We quote:

We doubt respondent's (petitioner's) assertion that complainants (private respondents) were really assigned to different projects. The "Contract Employment" which it submitted (see pp. 32-38, record) purporting to show particular projects are not reliable nay even appears to have been contrived. The names of the projects clearly appears to have been contrived. The names of the projects clearly appear to have been recently typewritten. In the "Contract Employment" submitted by complainants (see p. 65, record), no such name of project appears. Verily, complainants were non-project employees." (emphasis supplied)

The basis for respondent NLRC's statement that the contracts were contrived was the fact that the names of projects clearly appeared to have been typed in only after the contracts had been prepared. However, our examination of the contracts (presented by petitioner as Annexes "A", "B", "B-1", "C", "D", "E" and "F" 6 to its Position Paper dated July 30, 1992 filed with the labor arbiter)did not lead inexorably to the conclusion that these were "contrived". Said Annexes were photocopies of photocopies of the original "Contract Employment's", 7 and the names of projects had been typed onto these photocopies, meaning that the originals of said contracts probably did not indicate the project names. But this alone did not automatically or necessarily mean that petitioner had committed any falsehood or fraud, or had any intent to deceive or impose upon tribunals below, because the names of the projects could have been typed/filed in good faith, nunc pro tunc, in order to supply the data which ought to have been indicated in the originals at the time those were issued, but which for some reason or other were omitted in short, the names of projects could have been filled in simply in order to make the contracts speak the truth more clearly or completely. Notably, no reason was advanced for not according the petitioner the presumption of good faith. Respondent NLRC, then made an unwarranted assumption that bad faith and fraudulent intent attended the filling in of the project names in said Annexes. In any event, it can be easily and clearly established with the use of the naked eye that the dates and durations of the projects and/or work assignments had been typed into the original contracts, and therefore, petitioner's failure to indicate in the originals of the contracts the name(s) of the project(s) to which private respondents were assigned does not necessarily mean that they could not have been project employees. (Incidentally, we should make mention here that what is or is not stated in a contract does not control nor change the juridical nature of an employment relationship since the same is determined and fixed by law. As a matter of fact, we note that there is no requirement in Policy Instructions No. 20 that project employees should be issued written contracts of employment, let alone that a written contract should indicate the name of the project to which the employee concerned is being assigned.)

Statutory Basis for Determining Nature of Employment

The parties and their respective counsel, as well as respondent Commission and the Solicitor General, should have re-read and carefully studied ALU-TUCP vs. National Labor Relations Commission, 8 which is highly instructional on this question:

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

Article 280. Regular and Casual Employment — The provisions of the 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. . . .

xxx xxx xxx

. . . 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 property 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. (emphasis ours)

In the realm of business and industry, we note that "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 . . . type of project is a particular construction job or project of a construction company. A construction company ordinarily carried out two or more discrete identifiable construction projects: e.g., a twenty-five story hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in ilolo 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 same decision goes on to say: 9

. . . 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. 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 (201 SCRA 332 [1991]), 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. . . .

Incidentally, we should that both respondent Commission and the Solicitor General were in error in concluding based on private respondents' claimed length of employment (allegedly for over ten years) that

they were regular employees. Sad to state, the Solicitor General in his arguments tried to "force-fit" private respondents into the "regular employee" category and completedly disregarded the critical distinctions set forth in ALU-TUCP and earlier cases.

Inconclusive Evidence

Based on the foregoing considerations, it is patent that, in the instant case, there needs to be a finding as to whether or not the duration and scope of the projects were determined or specified and made known to herein private respondents at the time of their engagement. The labor arbiter tried to do this, relying heavily on the "Contract(s) Employment" presented in petitioner's Annexes as well as on private respondents' own Annex "A" 10 attached to their Position Paper, and citing the fact that the said contracts of employmentindicated the duration of the projects to which the private respondents had been assigned. He then held that "(t)here is no denial that complainants were assigned to work in these projects," 11 and concluded that they were indeed project employees.

But the arbiter completed ignored the fact that all the "Contract(s) Employment" presented in evidence by both petitioner and private respondents had been signed only by petitioner's president and general manager, Luis F. Ortega, but not by the employees concerned, who had precisely refused to sign them. The said contracts therefore could in no wise be deemed conclusive evidence. Thus, private respondents faulted the labor arbiter for giving credence and probative value to said contracts. Besides, they claimed, only seven contracts in all were presented in evidence, pertaining to seven individual employees, while there are fifteen employees involved in the complaints. Moreover, these contracts, purportedly issued either in July or December of 1991, except for one dated May 1992, were all one-shot contracts of short duration, the longest being for about five months. Now, inasmuch as petitioner had not denied nor rebutted private respondent' allegations that they had each worked several years for the petitioner, the obvious question is, why didn't petitioner produce in evidence similar contracts for all the other years that private respondents had worked as project employees? To these points, petitioner offered no explanation whatsoever.

Failure to Discharge Burden of Proof

For that matter, it seems self-evident to this Court that, even if the contracts presented by petitioner had been signed by the employees concerned, still, they would not constitute conclusive proof of petitioner's claim. After all, in the usual scheme of things, contract terms are normally dictated by the employer and simply acceded to and accepted by the employee, who may be desperate for work and therefore in no position to bargain freely or negotiate terms to his liking.

In any event, petitioner in the case undoubtedly could have presented additional evidence to buttress its claim. For instance, petitioner could have presented copies of its contracts with its clients, to show the time, duration and scope of past installation projects. The data from these contracts could then have been correlated to the data which could be found in petitioner's payroll records for, let us say, the past three years or so, 12 to show that private respondents had been working intermittently as and when they were assigned to said projects, and that their compensation had been computed on the basis of such work. But petitioner did not produce such additional evidence, and we find it failed to discharge its burden of proof.

It is not so much that this Court cannot appreciate petitioner's contentions about the nature of its business and its inability to maintain a large workforce on its permanent payroll. Private respondents have admitted that petitioner is engaged only in the installation (not manufacture) of aircon systems or units in buildings, and since such a line of business would obviously be highly (if not wholly) dependent on the availability of buildings or projects requiring such installation services, which factor no businessman, no matter how savvy, can accurately forecast from year to year, it can be easily surmised that petitioner, aware that its revenues and income would be unpredictable, would always try to keep its overhead costs to a minimum, and would naturally want to engage workers on a per-project or per-building basis only, retaining very few employees (if any) on its permanent payroll. It would also have been more than glad if its employees found other employment elsewhere, in between projects. To our mind, it appears rather unlikely that petitioner

would keep private respondent — all fifteen of them — continuously on its permanent payroll for, say, ten or twelve years, knowing fully well that there would be periods (of uncertain duration) when no project can be had. To illustrate, let us assume that private respondents (who were each making about P118.00 to P119.50 per day in 1991) were paid only P100.00 per day. If the fifteen were, as they claimed, regular employees entitled to their wages regardless of whether or not they were assigned to work on any project, the overhead for their salaries alone — computed at P100.00/day for 30 days in a month — would come to no less than P45,000.00 a month, or P540,000.00 a year, not counting 13th month pay, Christmas bonus, SSS/Medicare premium payments, sick leaves and service incentive leaves, and so forth. Even if petitioner may have been able to afford such overhead costs, it certainly does not make business sense for it or anyone else to do so, and is in every sense contrary to human nature, not to mention common business practice. On this score alone, we believe that petitioner could have made out a strong case. Which is why we have difficulty understanding its failure to present clear and convincing evidence on this point, it being doctrinal that in illegal dismissal cases, the employer always has the burden of proof. 13

Petitioner's problem of weak evidence was further compounded by certain documentary evidence in the records below which controverted petitioner's position, or, at the very least, tended to confuse rather than clarify matters. For instance, we noted that in their Memorandum of Appeal dated February 17, 1993 filed with the respondent Commission, herein private respondents had attached as annexes thereto the following documents:

1. As Annex "B" thereof, a Certification dated January 28, 1992, signed by one Flora P. Perez, Administrative/Accountant of Raycor, certifying that " . . . Mr. Roberto B. Fulgencio (one of the private respondents) has been connected with the undersigned corporation (Raycor) from August 22, 1986 to May 18, 1991 and September 01, 1990 to January 25, 1992 as Aircon Installer";

2. As Annex "C" thereof, a Certification dated May 7, 1985, signed by Luis F. Ortega, President and General Manger of herein petitioner corporation, to the effect that ". . . Mr. Jaime Calipayan (another one of the private respondents) has been connected with the undersigned corporation from June 18, 1982 up to present as a Mechanical Installer; and

3. As Annex "D" thereof, a Certification dated June 06, 1991, likewise signed by Luis G. Ortega, president and general manager of Raycor, certifying that ". . . Mr. Susano A. Atienza (still another of the private respondents) has been connected with the undersigned corporation from October 10, 1983 up to present as Aircon Mechanical/Technician".

Understandably, private respondents made big capital out of these certifications. But, while petitioner failed utterly to offer rebutting evidence, still and all, we are not prepared to conclude on the basis of these certifications alone that private respondents were indeed regular employees. First of all, said certifications refer only to three out of the fifteen private respondent, so what could be true of them any not necessarily apply with respect to the other twelve. Moreover, the certifications do not categorically state that the three employees had been permanent employees of Raycor. In other words, they do not necessarily overturn petitioner's contention that private respondents were project employees, since it is still possible to read the documents as saying that the named employees were working as project employees during the period therein specified. This is especially so since the said certifications were prepared by non-lawyers who in all likelihood were not aware of the potential legal implications and ramifications of what were ostensibly innocuous certifications. As held in one recent case, ". . . it is however not difficult to understand that ordinary business activities are performed in the normal course without anticipation nor foreknowledge of litigation, often with dispatch and usually with a minimum of documentation." 14 Nonetheless, all things considered, the certifications, issued by petitioner itself, tend to put its claims in serious doubt.

This situation was still further aggravated by the manner in which petitioner dismissed private respondents. As found by respondent Commission, the reason given for the dismissals, i.e., "due to our present business status," is vague, to say the least, and unarguably is not one of the valid or just causes provided by law for termination of an employment, whatever its classification. But more significantly — if indeed private

respondents were project employees, there would have been no need to terminate them by sending them notices of termination, inasmuch as their employment ceases "as result of the completion of the project or any phase thereof in which they are employed," per Policy Instruction No. 20 itself. Thus, if petitioner resorted to such dismissals, there is the unavoidable inference that petitioner regarded the private respondents as regular employees after all. But again, this is inconclusive, since the notices of termination were signed, and in all likelihood prepared, by the president and general manager of petitioner, probablysans any legal advice or awareness of the implications of such a move.

All the aforesaid conflicting data have the net effect of casting doubt upon and clouding the real nature of the private respondents' employment status. And we are mandated by law to resolve all doubts in favor of labor. For which reason, we hereby hold that private respondents were regular employees of the petitioner.

Having arrived at basically the same results as respondent NLRC with respect to private respondents' employment status, did this Court waste its time and effort in re-examining the instant case? The answer is in the negative. This Court cannot affirm a decision or judgment based on erroneous findings and conclusions, for justice can never be adequately dispensed to all parties if a judgment is not grounded on the truth.

Second Issue: Terminations Illegal

On the second issue of alleged illegality of the subject dismissals, we agree with respondent Commission when it held, as mentioned above, that "the same was capricious and whimsical as shown by the vague reason proffered by respondent for said dismissal which is 'due to our present state' (should read 'status') is undoubtedly not one of the valid causes for termination of an employment." True indeed, for neither the Labor Code nor Policy Instructions No. 20 allows termination on such ground. Even Art. 283 of the Labor Code as amended, which treats of retrenchments and closures due to business losses, requires that the employer first serve written notice on the workers and the Department of Labor at least one month before the intended date thereof; and in certain cases, separation pay must be paid. And it cannot be denied that in the instant case, petitioner did not afford them due process thru the twin requirements of notice and hearing, 15 as the terminations took effect the day following receipt of the notices of termination. Ineluctably, the said terminations are not in accordance with law and therefore illegal.

On top of that, there is evidence of the bad faith of petitioner in terminating the private respondents. Petitioner placed an ad 16 in the classified ads section of the People's Journal, sometime in June 1992, 17which read:

WANTED IMMEDIATELYMECHANICAL INSTALLERS

TINSMITHSWELDERS/PIPEFITTERS

APPLY IN PERSON:

RAYCOR AIR CONTROLSYSTEMS, INC.

RM 306 20TH CENTURY BLDG.632 SHAW BLVD., MAND.

METRO MANILA

Unmistakably, petitioner, in placing the ad, must have had at least one project, maybe more, "in the pipeline" at that time, and was clearly in need of replacements for private respondents whom it had just fired. Thus, the dismissals could hardly have been due to a valid cause, not even due to petitioner's alleged "present business status". On this court as well, the dismissals were illegal.

And lastly, we should mention that an order for reinstatement with payment of backwages must be based on the correct premises. This point is best illustrated by considering the last ratiocination utilized by public respondent: "Even assuming that complainants were project employees, their unceremonious dismissal coupled with the attempt to replace them via the newspaper advertisement entitles them to reinstatement with backwages under P.I. No. 20." There is a world of difference between reinstatement as project employees and reinstatement as regular employees, but the difference was obviously lost on the respondent NLRC.

Conclusion

We reiterate that this Court waded through the records of this case searching for solid evidence upon which to decide the case either way. But all told, neither party managed to make out a clear case. Therefore, considering that in illegal dismissal cases, the employer always has the burden of proof, and considering further that the law mandates that all doubts, uncertainties, ambiguities and insufficiencies be resolved in favor of labor, we perforce rule against petitioner and in favor of private respondents.

WHEREFORE, the foregoing considered, the assailed Decision is hereby SET ASIDE and a new one rendered holding that petitioner has failed to discharge its burden of proof in the instant case and therefore ORDERING the reinstatement of private respondents as regular employees of petitioner, without loss of seniority rights and privileges and with payment of backwages from the day they were dismissed up to the time are actually reinstated. No casts.

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