EN BANC

G.R. No. L-48494

February 5, 1990

BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners,

vs.
RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President,
and DOROTEO R. ALEGRE, respondents.

Quasha, Asperilla, Ancheta, Pea & Nolasco for petitioners.

Mauricio G. Domogon for respondent Alegre.

NARVASA, J.:

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

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

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

However, at the investigation conducted by a Labor Conciliator of said report of termination

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

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

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

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

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

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

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

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

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

There was, to repeat, clear albeit implied recognition of the licitness of term employment. RA
1787 also enumerated what it considered to be just causes for terminating an employment
without a definite period, either by the employer or by the employee without incurring any
liability therefor.

Prior, thereto, it was the Code of Commerce which governed employment without a fixed
period, and also implicitly acknowledged the propriety of employment with a fixed period. Its
Article 302 provided that

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

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

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

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

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

years. Biboso involved teachers in a private school as regards whom, the following
pronouncement was made:

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

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

The status of legitimacy continued to be enjoyed by fixed-period employment contracts

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

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

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

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

An employment shall be deemed to be without a definite period for purposes of this Chapter
where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of the
season.

The question immediately provoked by a reading of Article 319 is whether or not a voluntary
agreement on a fixed term or period would be valid where the employee "has been engaged
to perform activities which are usually necessary or desirable in the usual business or trade
of the employer." The definition seems a non sequitur. From the premise that the duties of

an employee entail "activities which are usually necessary or desirable in the usual business
or trade of the employer the" conclusion does not necessarily follow that the employer
and employee should be forbidden to stipulate any period of time for the performance of
those activities. There is nothing essentially contradictory between a definite period of an
employment contract and the nature of the employee's duties set down in that contract as
being "usually necessary or desirable in the usual business or trade of the employer." The
concept of the employee's duties as being "usually necessary or desirable in the usual
business or trade of the employer" is not synonymous with or identical to employment with a
fixed term. Logically, the decisive determinant in term employment should not be the
activities that the employee is called upon to perform, but the day certain agreed upon by the
parties for the commencement and termination of their employment relationship, a day
certain being understood to be "that which must necessarily come, although it may not be
known when." 19 Seasonal employment, and employment for a particular project are merely
instances employment in which a period, where not expressly set down, necessarily implied.

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

Subsequently, the foregoing articles regarding employment with "a definite period" and
"regular" employment were amended by Presidential Decree No. 850, effective December
16, 1975.

Article 320, dealing with "Probationary and fixed period employment," was altered by
eliminating the reference to persons "employed with a fixed period," and was renumbered
(becoming Article 271). The article 22 now reads:

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

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

Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra)
by (a) deleting mention of employment with a fixed or definite period, (b) adding a general
exclusion clause declaring irrelevant written or oral agreements "to the contrary," and (c)

making the provision treat exclusively of "regular" and "casual" employment. As revised, said
article, renumbered 270, 23 now reads:

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

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

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

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

The first paragraph is identical to Article 319 except that, as just mentioned, a clause has
been added, to wit: "The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreements of the parties . . ." The clause would appear to be
addressed inter alia to agreements fixing a definite period for employment. There is withal no
clear indication of the intent to deny validity to employment for a definite period. Indeed, not
only is the concept of regular employment not essentially inconsistent with employment for a
fixed term, as above pointed out, Article 272 of the Labor Code, as amended by said PD
850, still impliedly acknowledged the propriety of term employment: it listed the "just causes"
for which "an employer may terminate employment without a definite period," thus giving rise
to the inference that if the employment be with a definite period, there need be no just cause
for termination thereof if the ground be precisely the expiration of the term agreed upon by
the parties for the duration of such employment.

Still later, however, said Article 272 (formerly Article 321) was further amended by Batas
Pambansa Bilang 130, 24 to eliminate altogether reference to employment without a definite
period. As lastly amended, the opening lines of the article (renumbered 283), now pertinently
read: "An employer may terminate an employment for any of the following just causes: . . . "
BP 130 thus completed the elimination of every reference in the Labor Code, express or
implied, to employment with a fixed or definite period or term.

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

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

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

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

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

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

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

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

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

It is a salutary principle in statutory construction that there exists a valid presumption that
undesirable consequences were never intended by a legislative measure, and that a
construction of which the statute is fairly susceptible is favored, which will avoid all
objecionable mischievous, undefensible, wrongful, evil and injurious consequences. 28

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

. . . We have, here, then a case where the true intent of the law is clear that calls for the
application of the cardinal rule of statutory construction that such intent of spirit must prevail
over the letter thereof, for whatever is within the spirit of a statute is within the statute, since
adherence to the letter would result in absurdity, injustice and contradictions and would
defeat the plain and vital purpose of the statute. 30

Accordingly, and since the entire purpose behind the development of legislation culminating
in the present Article 280 of the Labor Code clearly appears to have been, as already
observed, to prevent circumvention of the employee's right to be secure in his tenure, the

clause in said article indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein should be construed to
refer to the substantive evil that the Code itself has singled out: agreements entered into
precisely to circumvent security of tenure. It should have no application to instances where a
fixed period of employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon the employee
and absent any other circumstances vitiating his consent, or where it satisfactorily appears
that the employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter. Unless thus limited
in its purview, the law would be made to apply to purposes other than those explicitly stated
by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to
absurd and unintended consequences.

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

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

Paraphrasing Escudero, respondent Alegre's employment was terminated upon the

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

WHEREFORE, the public respondent's Decision complained of is REVERSED and SET

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

SO ORDERED.

Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Corts,
Grio-Aquino, Medialdea and Regalado, JJ., concur.

Fernan, C.J., took no part.

Separate Opinions

SARMIENTO, J., concurring and dissenting:

I am agreed that the Labor Code has not foresaken "term employments", held valid in
Biboso V. Victorias Milling Company, Inc. (No. L-44360, March 31, 1977, 76 SCRA 250).
That notwithstanding, I can not liken employment contracts to ordinary civil contracts in
which the relationship is established by stipulations agreed upon. Under the very Civil Code:

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

xxx

xxx

xxx

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

The courts (or labor officials) should nevertheless be vigilant as to whether or not the
termination of the employment contract is done by reason of expiration of the period or to
cheat the employee out of office. The latter amounts to circumvention of the law.

THIRD DIVISION

G.R. No. 188839

June 22, 2015

CESAR NAGUIT, Petitioner,

vs.
SAN MIGUEL CORPORATION, Respondent.

DECISION

PERALTA, J.:

Assailed in the present petition for review on certiorari under Rule 45 of the Rules of Court
are the Resolutions1 of the Court of Appeals (CA), dated February 13, 2009 and July 15,
2009 in CA-G.R. SP No. 107311. The Resolution of February 13, 2009 denied petitioner's
Motion for Extension of Time to File Petition for Certiorari,2 while the Resolution dated July
15, 2009 denied petitioner's Motion for Reconsideration.

Petitioner was employed as a machine operator of San Miguel Corporation Metal Closure
and Lithography Plant, a division of herein respondent corporation which is engaged in the
business of manufacturing printed metal caps and crowns for beer, beverage and
pharmaceutical products.

Sometime in the afternoon of September 23, 2002, petitioner and one Renato Regala
(Regala), also an employee of respondent corporation, got involved in an altercation in
respondent corporation's Canlubang Plant. In his Position Paper, petitioner claimed that
Regala went to the Canlubang Plant to distribute anti-union materials that are libelous and
defamatory and that, as union steward, petitioner confronted Regala, which confrontation
developed to a heated exchange of words. Petitioner then elbowed Regala, hitting him in the
face, causing him to lose his balance and fall to the ground.

As a consequence, Regala filed a complaint with respondent corporation's Human

Resources Department. Respondent corporation then conducted an administrative
investigation giving both parties the opportunity to defend themselves. However, petitioner
opted to remain silent and did not address the charges against him. On January 29, 2003,
the company-designated investigator submitted his report and recommendation finding
petitioner guilty of willful injury to another employee within company premises, which is an

infraction of the company's rules and regulations. On February 7, 2003, respondent

corporation served upon petitioner a letter informing him of the termination of his
employment on the basis of the findings and recommendation of the investigator. Petitioner
then filed a complaint for illegal dismissal against respondent corporation.3

On January 4, 2005, the Labor Arbiter (LA) assigned to the case rendered a Decision4 in
favor of respondent corporation. Accordingly, petitioner's complaint was dismissed for lack of
merit. Petitioner filed an Appeal5 with the National Labor Relations Commission (NLRC). In
its Decision6 dated April 30, 2008, the NLRC dismissed petitioner's appeal and affirmed the
Decision of the LA. Petitioner filed a motion for reconsideration, but the NLRC denied it in its
Resolution7 dated October 31, 2008.

Aggrieved, petitioner intended to file a special civil action for certiorari with the CA to assail
the NLRC Decision.

On February 9, 2009, petitioner filed with the CA a Motion for Extension of Time to File
Petition for Certiorari.8 Petitioner claimed that on December 10, 2008, his former counsel
received a copy of the NLRC Resolution denying his motion for reconsideration of the NLRC
Decision dated April 30, 2008; that he had until February 9, 2009 to file a certiorari petition;
and, that he just hired a new counsel who still had to study the records of the case.

On February 13, 2009, the CA promulgated a Resolution9 denying petitioner's Motion for
Extension of Time to File Petition for Certiorari. Citing the amended provisions of Section 4,
Rule 65 of the Rules of Court, the CA held that the 60-day period to file a petition for
certiorari is non-extendible.

On March 9, 2009, the CA issued another Resolution10 resolving to consider petitioner's

certiorari petition as filed out of time and declaring the questioned NLRC Decision as final
and executory.

On even date, petitioner filed a Motion for Reconsideration11 of the CA Resolution which
denied his Motion for Extension of Time to File Petition for Certiorari.

On July 15, 2009, the CA promulgated its Resolution12 denying petitioner's Motion for
Reconsideration for lack of merit.

Hence, the present petition for review on certiorari raising the following ISSUES, to wit:

I. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION

WHEN IT FAILED TO DECIDE THIS CASE ON THE MERITS IN ACCORDANCE WITH
SUPREME COURT JURISPRUDENCE AFFORDED TO LABOR CASES;

II. WHETHER OR NOT THE COURT OF APPEALS FAILED TO LOOK INTO THE
SUBSTANTIAL FACTS AND APPLICABLE LAWS OF THIS CASE;

III. WHETHER OR NOT THE PETITIONER HAD BEEN UNLAWFULLY DISMISSED AND
THUS IS ENTITLED TO REINSTATEMENT AND FULL BACKWAGES AND OTHER
BENEFITS AS WELL AS DAMAGES AND ATTORNEY'S FEES.13

The petition lacks merit.

As to the first issue raised, which pertains to the procedural aspect of the case, the Court is
not persuaded by petitioner's contention that the CA should have decided the case on its
merits and not simply dismissed his certiorari petition by denying his motion for extension to
file the said petition.

In this regard, the Court's ruling in the recent case of Thenamaris Philippines, Inc. (Formerly
Intermare Maritime Agencies, Inc.) v. Court of Appeals14 is instructive, to wit:

In Republic v. St. Vincent de Paul Colleges, Inc., we had the occasion to settle the seeming
conflict on various jurisprudence touching upon the issue of whether the period for filing a
petition for certiorari may be extended. In said case, we stated that the general rule, as laid
down in Laguna Metts Corporation v. Court of Appeals, is that a petition for certiorari must be
filed strictly within 60 days from notice of judgment or from the order denying a motion for
reconsideration. This is in accordance with the amendment introduced by A.M. No. 07-7-12SC where no provision for the filing of a motion for extension to file a petition for certiorari
exists, unlike in the original Section 4 of Rule 65 which allowed the filing of such a motion but
only for compelling reason and in no case exceeding 15 days. Under exceptional cases,
however, and as held in Domdom v. Third and Fifth Divisions of the Sandiganbayan, the 60day period may be extended subject to the courts sound discretion. In Domdom, we stated
that the deletion of the provisions in Rule 65 pertaining to extension of time did not make the
filing of such pleading absolutely prohibited. "If such were the intention, the deleted portion
could just have simply been reworded to state that no extension of time to file the petition
shall be granted. Absent such a prohibition, motions for extension are allowed, subject to the
courts sound discretion."

Then in Labao v. Flores, we laid down some of the exceptions to the strict application of the
60-day period rule, thus:

[T]here are recognized exceptions to their strict observance, such as: (1) most persuasive
and weighty reasons; (2) to relieve a litigant from an injustice not commensurate with his
failure to comply with the prescribed procedure; (3) good faith of the defaulting party by
immediately paying within a reasonable time from the time of the default; (4) the existence of
special or compelling circumstances; (5) the merits of the case; (6) a cause not entirely
attributable to the fault or negligence of the party favored by the suspension of the rules; (7)
a lack of any showing that the review sought is merely frivolous and dilatory; (8) the other
party will not be unjustly prejudiced thereby; (9) fraud, accident, mistake or excusable
negligence without appellants fault; (10) peculiar legal and equitable circumstances
attendant to each case; (11) in the name of substantial justice and fair play; (12) importance
of the issues involved; and (13) exercise of sound discretion by the judge guided by all the
attendant circumstances. Thus, there should be an effort on the part of the party invoking
liberality to advance a reasonable or meritorious explanation for his/her failure to comply with
the rules.15

In the instant case, petitioner asserts that, due to the unavailability of his former lawyer, he
retained the services of a new counsel who has a heavy workload and that the records were
forwarded to the latter only a week before the expiration of the period for filing of the petition
with the CA.

The Court is not convinced.

Suffice it to say that workload and resignation of the lawyer handling the case are insufficient
reasons to justify the relaxation of the procedural rules.16 Heavy workload is relative and
often self-serving.17

In addition, it is also the duty of petitioner to monitor the status of his case and not simply
rely on his former lawyer, whom he already knew to be unable to attend to his duties as
counsel. It is settled that litigants represented by counsel should not expect that all they
need to do is sit back and relax, and await the outcome of their case.18 They should give the
necessary assistance to their counsel, for at stake is their interest in the case.19

Moreover, it is true that rules of procedure are tools designed to facilitate the attainment of
justice. Also, the general rule is that every litigant must be given amplest opportunity for the
proper and just determination of his cause, free from the constraints of technicalities.
However, the Court agrees with the CA that petitioner's failure to file his petition on time does
not involve mere technicality but is jurisdictional.20 Petitioner's failure to timely file his
petition renders the questioned NLRC Decision final and executory, thus, depriving the CA of
its jurisdiction over the said petition.21

Furthermore, no one has a vested right to file an appeal or a petition for certiorari. These are
statutory privileges which may be exercised only in the manner prescribed by law. Rules of
procedure must be faithfully complied with and should not be discarded with by the mere

expediency of claiming substantial merit.22 In Lanzaderas v. Amethyst Security and General

Services, Inc.,23 this Court held that:

xxxx

x x x Although technical rules of procedure are not ends in themselves, they are necessary,
however, for an effective and expeditious administration of justice. It is settled that a party
who seeks to avail of certiorari must observe the rules thereon and non-observance of said
rules may not be brushed aside as "mere technicality." While litigation is not a game of
technicalities, and that the rules of procedure should not be enforced strictly at the cost of
substantial justice, still it does not follow that the Rules of Court may be ignored at will and at
random to the prejudice of the orderly presentation, assessment and just resolution of the
issues. Procedural rules should not be belittled or dismissed simply because they may have
resulted in prejudice to a partys substantial rights. Like all rules, they are required to be
followed except only for compelling reasons.24

As to the substantive aspect of the case, petitioner, in the second and third issues raised,
insists on questioning the findings of fact of the LA and the NLRC. However, it is settled that
in a petition for review on certiorari with this Court, only questions of law may be
raised.1wphi1 Questions of fact may not be inquired into. While there are exceptions to this
rule, to wit:

(1) the findings are grounded entirely on speculations, surmises, or conjectures; (2) the
inference made is manifestly mistaken, absurd, or impossible; (3) there is a grave abuse of
discretion; (4) the judgment is based on misappreciation of facts; (5) the findings of fact are
conflicting; (6) in making its findings, the same are contrary to the admissions of both
appellant and appellee; (7) the findings are contrary to those of the trial court; (8) the findings
are conclusions without citation of specific evidence on which they are based; (9) the facts
set forth in the petition as well as in the petitioners main and reply briefs are not disputed by
the respondent; and (10) the findings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record.25

the Court finds that none exists in the instant case.

Equally settled is the rule that factual findings of quasi-judicial bodies like the NLRC, if
supported by substantial evidence, are accorded respect and even finality by this Court,
more so when they coincide with those of the LA.26

In any case, even if the case be decided on its merits, the Court still finds no cogent reason
to depart from the findings of the LA and the NLRC that petitioner was validly dismissed from
his employment. As noted by both the LA and the NLRC, substantial evidence exists to show
that petitioner committed acts which are tantamount to serious misconduct and willful

disobedience of company rules and regulations. On the other hand, the Labor Arbiter noted
that, other than his bare allegations, petitioner did not submit proof to support his allegations
nor did he provide evidence to counter those which were submitted by respondent.

Lastly, the Court does not agree with petitioner's argument that the penalty of dismissal
imposed upon him is too harsh and is not commensurate to the infraction he has committed,
considering that he has been in respondent's employ for fifteen years and that this is just his
first offense of this nature.

The settled rule is that fighting within company premises is a valid ground for the dismissal of
an employee.27 Moreover, the act of assaulting another employee is serious misconduct
which justifies the termination of employment.28

Also, the Court agrees with respondent's contention that if petitioner's long years of service
would be regarded as a justification for moderating the penalty of dismissal, it will actually
become a prize for disloyalty, perverting the meaning of social justice and undermining the
efforts of labor to cleanse its ranks of all undesirables.29 In addition, where the totality of the
evidence was sufficient to warrant the dismissal of the employees, the law warrants their
dismissal without making any distinction between a first offender and a habitual
delinquent.30 In the present case, all the more should petitioner's years of service be taken
against him in light of the finding of the lower tribunals that his violation of an established
company rule was shown to be willful and such willfulness was characterized by a wrongful
attitude. Moreover, petitioner has never shown any feelings of remorse for what he has
done, considering that the lower tribunals found no justification on his part in inflicting injury
upon a co-employee. To make matters worse, petitioner even exhibited a seemingly arrogant
attitude in insisting to remain silent and rejecting requests for him to explain his side despite
having been given numerous opportunities to do so.

On the basis of the foregoing, the Court finds no error on the part of the CA in denying
petitioner's motion for extension of time to file his petition for certiorari.

WHEREFORE, the instant petition is DENIED. The Resolutions of the Court of Appeals,
dated February 13, 2009 and July 15, 2009 in CA-G.R. SP No. 107311, are AFFIRMED.

SO ORDERED.

SECOND DIVISION

G.R. No. 195513

June 22, 2015

MARLON BED UY A, ROSARIO DUMAS* ALEX LEONOZA, RAMILO FAJARDO, HARLAN

LEONOZA, ALVIN ABUYOT, DINDO URSABIA,** BERNIE BESONA, ROMEO ONANAD,***
ARMANDO LIPORADA,**** FRANKFER ODULIO, MARCELO MATA, ALEX COLOCADO,
JOJO PACATANG, RANDY GENODIA and ISABINO B. ALARMA, JR., Petitioners,******
vs.
ACE PROMOTION AND MARKETING CORPORATION and GLEN******** HERNANDEZ,
Respondents.

DECISION

DEL CASTILLO, J.:

Procedural rules should be relaxed if only to serve the ends of justice.

This Petition for Review on Certiorari1 assails the November 30, 2010 Decision2 of the
Court of Appeals (CA) in CA-G.R. SP No. 111536 affirming the February 23, 2009 Decision3
and August 4, 2009 Resolution4 of the National Labor Relations Commission (NLRC), which
granted respondents appeal from the April 24, 2008 Decision5 of the Labor Arbiter and
ordered the dismissal of petitioners complaint for illegal dismissal. Likewise assailed is the
February 3, 2011 CA Resolution6 which denied petitioners Motion for Reconsideration of the
said CA Decision.

Antecedent Facts

Respondent Ace Promotion and Marketing Corporation (APMC), with respondent Glen
Hernandez as its President, is a contractor engaged in the deployment of workers to various
companies to promote the latters products through promotional and merchandising services.
In pursuance of its business, APMC entered into a Promotional Contract7 with Delfi
Marketing, Inc.8 (Delfi) whereby the former undertook to conduct promotional activities for
the latters confectionery products. For this purpose, APMC employed workers, including
petitioners Marlon Beduya, Rosario Dumas, Alex Leonoza, Alvin Abuyot, Dindo Ursabia,
Bernie Bosona, Romeo Onanad, Armando Liporada, Frankfer Odulio, Marcelo Mata, Alex
Colocado, Jojo Pacatang, Randy Genodia and Isabino B. Alarma, Jr. (petitioners), as
merchandisers and assigned them to various retail outlets and supermarkets under fixedterm employment contracts. The last contracts of employment9 that petitioners signed were
until January 30, 2007.

In a letter10 dated December 27, 2006, Delfi notified APMC that their Promotional Contract
will expire effective January 31, 2007. On January 29, 2007, APMC informed petitioners,
among other workers, that their last day of work would be on January 30, 2007.

Proceedings before the Labor Arbiter

Before the Labor Arbiter, three separate complaints11 for illegal dismissal and money claims
against respondents were filed by petitioners and by other employees (complainants) w hose
employment was terminated allegedly by reason of the expiration of APMCs contract with
Delfi. The said complaints, docketed as NLRC-NCR Case No s. 00-02-01022-07, 00-020185-07 and 00-03-02756-07, were consolidated.

In their Position Paper,12 complainants alleged that: they are regular employees of APMC,
having continuously worked in APMC since 1997; they are bona fide members of the Social
Security System (SSS) and the companys Home Development Mutual Fund (HDMF); the
expiration of the Promotional Contract between APMC and Delfi does not automatically
result in their dismissal; and, the said Promotional Contract is still subsisting as new workers
were hired as their replacements. All of the complainants asked for wage differentials,
claiming that part of their wages were unlawfully withheld unless they sign a waiver and
quitclaim in favor of APMC, while 18 of them additionally prayed for recovery of unpaid
ECOLA.

Respondents, on the other hand, countered that AP MC is a legitimate job contractor that
hires employees for a specific job on a contractual basis. With respect to complainants,
respondents claimed that they were duly apprised of the contractual nature of their
employment, its duration, working hours, basic salaries, and the basic work policies as
stipulated in their contracts of employment. And since complainants were hired as
merchandisers for Delfi, their employment automatically ended when APMCs Promotional
Contract with Delfi expired. On the complainants allegation of continuous employment,
respondents explained that, indeed, complainants were previously engaged as
merchandisers for a client, Goya, Inc. (Goya). But when Goyas business interest was sold
to Delfi, complainants fixed-term employment contracts also accordingly expired. They were
then rehired and reassigned to Delfi, again on a fixed-term basis, which employment was
necessarily terminated upon the end of the term. In view of this, respondents denied liability
over complainants money claims, damages, and attorneys fees.

In a Decision13 dated April 24, 2008, the Labor Arbiter, after finding no credible evidence to
prove that they were employed on a contractual basis, declared complain ants to have been
illegally dismissed. He found unconvincing APMCs allegation that complainants
employment was terminated due to the expiration of its contract with Delfi considering that it
continued to hire new employees as replacements for complainants. This, the Labor Arbiter
opined, infringed upon complainants right to security of tenure. On the other hand, he
viewed complainants continuous employment with APMC for a considerable length of time
and the fact that they are SSS and HDMF members, as indications of their being regular
employees. Thus, he ordered complainants reinstatement or payment of separation pay,
payment of backwages, unpaid wages, ECOLA, moral and exemplary damages, and
attorneys fees. The dispositive portion of the Labor Arbiters Decision reads:

WHEREFORE, premises all considered, judgment is hereby rendered finding the dismissal
illegal and ordering respondents, as follows:

1. To reinstate complainants to their former position with full backwages to be reckoned from
the date of their dismissal up to the finality of this decision.

2. In the alternative, to pay them x x x their backwages plus separation pay equivalent to half
month salary for every year of service if employment is no longer tenable.

3. To pay the named eighteen (18) employees x x x their unpaid ECOLA for one (1) year.

4. To pay complainants x x x their unpaid wages for fifteen (15) days.

5. To pay moral damages in the amount of P10,000.00 each.

6. To pay exemplary damages [in] the [amount] of P5,000.00 each.

7. To pay attorneys fees equivalent to 10% of the total monetary award.

The computation of the monetary award as computed by the Computation Division of this
Office is attached hereto and forms part of this decision.

SO ORDERED.14

Proceedings before the National Labor Relations Commission

Respondents filed a Memorandum of Appeal with Motion for Reduction of Bond15 with the
NLRC. They maintained that complainants were contractual employees. As such, their
contracts of employment were terminated upon the expiration of APMCs Promotional
Contract with Delfi. Anent their motion for reduction of appeal bond, respondents contended
that the awards granted to complainants amounting to 6,269,856.89 should be decreased
considering that:

(1) eight complainants did not sign the position paper submitted to the Labor Arbiter and
therefore, the monetary awards given in their favor should be excluded in the computation of
the total award; (2) nine complainants already withdrew their complaints as shown by their
Affidavits of Desistance;16 (3) assuming that separation pay was correctly awarded, the

computation thereof should start from year 2003 when complainants started working for
Goya and not from year 1997 as computed by the Labor Arbiter; and (4) the backwages
should be computed only up to January 31, 2007 or up to the expiration of the Promotional
Contract with Delfi and not until July 31, 2008. Respondents attached a supersede as
bond17 in the amount of 437,210.00 along with their appeal.

In their Opposition with Motion to Dismiss Appeal,18 complainants prayed for the dismissal
of respondents appeal based on insufficiency of the bond posted. This thus resulted in the
non-perfection of the appeal, and consequently, the Labor Arbiters Decision had become
final and executory.

Without acting on respondents motion for reduction of bond and the complainants
opposition thereto, the NLRC rendered a Decision19 on February 23, 2009 finding
complainants to be contractual employees hired for a specific duration. The NLRC noted that
complainants were duly informed at the commencement of their employment that they were
hired for a definite period and for a specific project, i.e., Delfi, and that they voluntarily
agreed to these and the other terms of their employment contracts. Hence, when the specific
project or undertaking for which they were hired cease d, their employment also ceased.
They were therefore not illegally dismissed. In the ultimate, the NLRC reversed the Labor
Arbiters Decision and dismissed the complaints for illegal dismissal. It, however, affirmed
the awards of unpaid wages and ECOLA in favor of complainants. Thus:

WHEREFORE, premises considered, judgment is hereby rendered GRANTING the instant

appeal. The Decision of the Labor Arbiter dated 24 April 2008 is hereby reversed and set
aside, and a new one is issued dismissing the complaint. Respondents-Appellants are,
however, directed to cause the immediate satisfaction of complainants-appellees unpaid
wages for fifteen (15) days and ECOLA for one (1) year.

SO ORDERED.20

In their Motion for Reconsideration,21 complainants maintained that the

437,210.00 appeal bond is in sufficient and unreasonable in relation to the total monetary
award of 6,269,856 .89, which should have warranted the dismissal of respondents appeal.
Complainants likewise pointed out that the NLRC gravely abused its discretion when it did
not re solve respondents motion to reduce bond and their opposition thereto with motion to
dismiss before rendering its decision granting the appeal. Complainants Motion for
Reconsideration was, however, denied by the NLRC in its Resolution22 dated August 4,
2009.

Proceedings before the Court of Appeals

Some of the complainants, including petitioners, filed a Petition for Certiorari23 with the CA.
They insisted that the NLRC gravely abused its discretion in granting respondents appeal
despite the latters failure to perfect the same since the appeal bond filed was grossly
insufficient and inadequate. Consequently, the Labor Arbiters Decision had already become
final and executory.

On November 30, 2010, the CA rendered a Decision24 dismissing the petition. It found
respondents willingness and good faith in complying with the requirements as sufficient
justification to relax the rule on posting of an appeal bond. Moreover, the CA agreed with the
NLRC in finding that complainants were not illegally dismissed. The termination of their
employment was simply brought about by the expiration of the fixed period stipulated in their
contract s that they voluntarily signed after the terms thereof were fully explained to them.

Complainants Motion for Reconsideration25 was denied by the CA in its Resolution26 of

February 3, 2011.

Thus, petitioners, from among all the complainants, are now before this Court through the
present Petition.

Issues

(a)

WHETHER X X X THE FILING OF APPEAL WITH MOTION TO REDUCE APPEAL BOND

WILL TOLL THE RUNNING OF THE PERIOD TO PERFECT AN APPEAL

(b)

WHETHER X X X AN APPEAL BOND IN THE AMOUNT OF P473,210.00 IS REASONABLE

IN RELATION TO [A POSSIBLE] MONETARY AWARD OF 6,269,856.00

(c)

WHETHER X X X THE DECISION RENDERED BY THE LABOR ARBITER IS DEEMED

FINAL AND EXECUTORY AS THE APPEAL WAS NOT PERFECTED

(d)

WHETHER X X X IT IS PROCEDURALLY CORRECT TO PASS JUDGMENT ON A CASE

WHEN THERE IS STILL A PENDING MOTION TO BE RESOLVED27

For respondents alleged failure to comply with the jurisdictional requirements on appeal
bonds, petitioners maintain that the NLRC did not acquire jurisdiction over respondents
appeal. Moreover, they claim that the NLRC erred in resolving the merits of the appeal
without first ruling on respondents motion to reduce appeal bond and their opposition
thereto with motion to dismiss.

Our Ruling

The Petition has no merit.

Article 223 of the Labor Code provides:

ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10) calendar
days from receipt of such decisions, awards, or orders.

Such appeal may be entertained only on any of the following grounds:

(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;

(b) If the decision, order or award was secured through fraud or coercion, including graft and
corruption;

(c) If made purely on questions of law; and

(d) If serious errors in the finding of facts are raised which would cause grave or irreparable
damage or injury to the appellant.

In case of a judgment involving a monetary award, an appeal by the employer may be

perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to the monetary
award in the judgment appealed from.

While Sections 4(a) and 6 of Rule VI of the 2005 Revised Rules of Procedure of the NLRC
provide:

SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. (a) The Appeal shall be: 1)
filed within the reglementary period as provided in Section 1 of this Rule; 2) verified by
appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, as amended; 3)
in the form of a memorandum of appeal which shall state the grounds relied upon and the
arguments in support thereof, the relief prayed for, and with a statement of the date the
appellant received the appealed decision, resolution or order; 4) in three (3) legibly written or
printed copies; and 5) accompanied by i) proof of payment of the required appeal fee; ii)
posting of a cash or surety bond as provided in Section 6 of this Rule; iii) a certificate of nonforum shopping; and iv) proof of service upon the other parties.

SECTION 6. BOND. In case the decision of the Labor Arbiter or the Regional Director
involves a monetary award, an appeal by the employer may be perfected only upon the
posting of a bond which shall either be in the form of cash deposit or surety bond equivalent
in amount to the monetary award, exclusive of damages and attorneys fees.

No motion to reduce bond shall be entertained except on meritorious grounds, and only
upon the posting of a bond in a reasonable amount in relation to the monetary award.

The mere filing of a motion to reduce bond without complying with the requisites in the
preceding paragraphs shall not stop the running of the period to perfect an appeal.

It is thus clear from the foregoing that the filing of supersede as bond for the perfection of an
appeal is mandatory and jurisdictional and failure to comply with this requirement renders
the decision of the Labor

Arbiter final and executory.28

However, this Court, in many cases,29 has relaxed this stringent requirement whenever
justified. Thus, the rules, specifically Section 6 of Rule VI of the 2005 Revised Rules of
Procedure of the NLRC, allows the reduction of the appeal bond subject to the conditions
that: (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a
reasonable amount in relation to the monetary award is posted by the appellant. Otherwise,
the filing of a motion to reduce bond shall not stop the running of the period to perfect an
appeal. Still, the rule that the filing of a motion to reduce bond shall not stop the running of
the period to perfect an appeal is not absolute.30 The Court may relax the rule under certain
exceptional circumstances which include fundamental consideration of substantial justice,
prevention of miscarriage of justice or of unjust enrichment and special circumstances of the
case combined with its legal merits, and the amount and the issue involved.31 Indeed, in
meritorious cases, the Court was propelled to relax the requirements relating to appeal

bonds such as when there are valid issues raised in the appeal32 and in the absence of any
valid claims against the employer.33

In the case at bench, the Court finds that respondents motion to reduce appeal bond was
predicated on meritorious and justifiable grounds. First, the fact that eight complainants
failed to verify or affix their signatures on the position paper filed before the Labor Arbiter
merits the exclusion of the monetary awards adjudged to them. In Martos v. New San Jose
Builders, Inc.,34 it was held that the failure of some of the complainants therein to verify their
position paper submitted before the Labor Arbiter brought about the dismissal of the
complaint as to them who did not verify. The Court went on to say that their negligence and
passive attitude towards the rule on verification amounted to their refusal to further
prosecute their claims. Second, the withdrawal of seven complainants35 in this case likewise
warrants the reduction of the monetary award rendered against respondents. Suffice it to say
that the said seven complainants are bound by the Affidavits of Desistance which are
presumed to have been freely and voluntarily executed by them. Accordingly, they no longer
participated in the subsequent proceedings after having received their last salaries and due
benefits.

Petitioners, however, posit that the amount of the appeal bond posted, i.e.,

437,210.00, is unreasonable and inadequate vis-a-vis the total monetary award of

6,269,856.83. What they consider as reasonable percentage of the total monetary award is
at least 30% thereof.

In the recent case of Mcburnie v. Ganzon,36 the Court has set a provisional percentage of
10% of the monetary award, exclusive of damages and attorneys fees, as a reasonable
amount of bond that an appellant should post pending resolution by the NLRC of a motion to
reduce bond. It is only after the posting of this bond that an appellants period to perfect an
appeal is suspended. Here, after deducting from the total monetary award the amount of
attorneys fees and the amounts awarded to those complainants who did not verify their
position papers and those who had withdrawn their complaints, the total monetary award
amounts to only more than 3 million.37 Hence, the appeal bond of 437,210.00 posted by
respondents is in fact even more than 10% of the said total monetary award. Thus, applying
the same parameter set in Mcburnie, the Court finds the amount of bond posted by
respondents in the present case to be reasonable.

In any event, the Court notes that in Mcburnie, it was held that the required 10% of the
monetary award as appeal bond is merely provisional given that the NLRC still retains the
authority to exercise its full discretion to resolve a motion for the reduction of bond and
determine the final amount of bond that should be posted by an appellant in accordance with
the standards of meritorious grounds and reasonable amount.38

In consideration of the foregoing, the Court finds no merit in petitioners contention that the
NLRC fa iled to establish its jurisdictional authority over respondents appeal. Again, the filing

of a motion to reduce bond predicated on meritorious grounds coupled with the posting of a
reasonable amount of cash or surety bond suffice to suspend the running of the period within
which to appeal. As discussed, respondents in this case have substantially complied with
these requirements and, on account thereof, their appeal from the Labor Arbiters Decision
was timely filed. Clearly, the NLRC was conferred with jurisdiction over respondents appeal
thus placing the same within the power of the said labor tribunal to review.

With respect to the NLRCs failure to initially ac t upon respondents motion to reduce bond
and petitioners opposition thereto with motion to dismiss, suffice it to say that the same did
not divest the NLRC of its authority to resolve the appeal on its substantive matters. After all,
the NLRC is not bound by technical rules of procedure and is allowed to be liberal in the
application of its rules in deciding labor cases.39 Further, the NLRC is mandated to use
every and all reasonable means to ascertain the fact s in each case speedily and objectively,
without regard to technicalities of law or procedure, all in the interest of due process.40

Coming now to the substantive matters, the Court finds that the CA correctly affirmed the
NLRC Decision which granted respondents appeal and dismissed the illegal dismissal
complaints. As aptly found by them, petitioners were fixed-term employees whose respective
contracts of employment had already expired. Therefore, there can be no illegal dismissal to
speak of. The following observations made by the CA were supported by substantial
evidence on record, viz:

We find and so rule that private respondents are independent contractors, and petitioners
were deployed to Delfi Foods to render various services.1wphi1 This was admitted by
petitioners during the proceedings before the labor tribunal. The relationship between the
parties is governed by the Employment Contract which petitioners voluntarily signed before
being deployed at Delfi Foods.

The NLRC extensively quoted the aforesaid contract which primarily provided that
petitioners employment was for a fixed period, that is, from 1 December 2006 until 30
January 2007. Significantly, no allegations were made that petitioners were forced or
pressure d into affixing their signatures upon the contract. There is likewise no concrete
proof that private respondents prevailed upon petitioners, exercising moral dominance over
the latter, to accept the conditions set forth in the said contract. Having accepted the terms
thereof, petitioners were bound by its unequivocal stipulation that their employment was not
permanent, but would expire at the end of the fixed period.41

WHEREFORE, the Petition is DENIED. The November 30, 2010 Decision and February 3,
2011 Resolution of the Court of Appeals in CA-G.R. SP No. 111536 are AFFIRMED.

SO ORDERED.

SECOND DIVISION

G.R. No. 182255

June 15, 2015

PETRON CORPORATION, Petitioner,

vs.
ARMZ CABERTE, ANTONIO CABERTE, JR., MICHAEL SERVICIO,* ARIEL DEVELOS,
ADOLFO GESTUPA, ARCHIE PONTERAS, ARNOLD BLANCO, DANTE MARIANO,*
VIRGILIO GALOROSA, and CAMILO TE,* Respondents.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the November 14, 2007 Decision2 of the
Court of Appeals (CA) in CA-G.R SP No. 82356 which reversed the May 14, 2003 Decision3
and November 27, 2003 Resolution4 of the National Labor Relations Commission (NLRC) in
NLRC Case No. V-000329-2002. The NLRC affirmed the March 7, 2002 Decision5 of the
Labor Arbiter dismissing the Complaints for illegal dismissal and payment of monetary claims
filed by respondents Armz Caberte (Caberte), Antonio Caberte, Jr. (Caberte Jr.), Michael
Servicio (Servicio), Ariel Develos (Develos), Adolfo Gestupa (Gestupa), Archie Ponteras
(Ponteras), Arnold Blanco (Blanco), Dante Mariano (Mariano), Virgilio Galorosa (Galorosa)
and Camilo Te (Te) against petitioner Petron Corporation (Petron), ABC Contracting Services
(ABC), and its owner Antonio B. Caberte, Sr. (Caberte Sr.). Likewise assailed is the CA
Resolution6 dated March 4, 2008 which denied Petrons Motion for Reconsideration.

Factual Antecedents

Petron is a domestic corporation engaged in the manufacture and distribution to the general
public of various petroleum products. In pursuance of its business, Petron owns and
operates several bulk plants in the country for receiving, storing and distributing its products.

On various dates from 1979 to 1998, respondents were hired to work at Petrons Bacolod
Bulk Plant in San Patricio, Bacolod City, Negros Occidental as LPG/Gasul fillers,
maintenance crew, warehousemen, utility workers and tanker receiving crew.

For the periods from March 1, 1996 to February 28, 1999 and November 1, 1996 to June 30,
1999, Petron and ABC, a labor contracting business owned and operated by Caberte Sr.,
entered into a Contract for Services7 and a Contract for LPG Assistance Services.8 Under
both service contracts, ABC undertook to provide utility and maintenance services to Petron
in its Bacolod Bulk Plant.

Proceedings before the Labor Arbiter

On July 2, 1999, respondents Caberte,Caberte Jr., Servicio, Develos, Gestupa, Ponteras,

Blanco and Mariano filed before the Labor Arbiter a Complaint9 for illegal dismissal,
underpayment of wages and non-payment of allowances, 13th month pay, overtime pay,
holiday pay, service incentive leave pay, moral and exemplary damages and attorneys fees
against Petron, ABC and Caberte Sr., docketed as NLRC RAB VI Case No. 06-07-10588-99.
Subsequently, respondents Galorosa and Te separately filed similar Complaints10 docketed
as NLRC RAB VI Case No. 06-07-10675-99 and RAB Case No. 06-09-10785-99,
respectively. The three Complaints were consolidated in an Order11 dated October 25, 1999
of the Labor Arbiter.

Respondents averred that even before Petron engaged ABC as contractor in 1996, most of
them had already been working for Petron for years. However, every time Petron engages a
new contractor, it would designate such new contractor as their employer. Despite such
arrangement, Petron exercised control and supervision over their work, the performance of
which is necessary and desirable in its usual trade and business. Respondents added that
ABC is a mere labor-only contractor which had no substantial capital and investment, and
had no control over the manner and method on how they accomplished their work. Thus,
Petron is their true employer. On July 1, 1999, however, Petron no longer allowed them to
enter and work in the premises of its Bacolod Bulk Plant. Hence, the complaints for illegal
dismissal.

On the other hand, Petron asserted that ABC is an independent contractor which supplied
the needed manpower for the maintenance of its bulk handling premises and offices, as well
as for tanker assistance in the receiving and re-filling of its LPG products; that among the
workers supplied by ABC were respondents, except Caberte Jr., who does not appear to be
one of those assigned by ABC to work for it; that it has no direct control and supervision over
respondents who were tasked to perform work required by the service contracts it entered
into with ABC; and, that it cannot allow the continuous employment of respondents beyond
the expiration of the contracts with ABC. To prove the legitimacy and capacity of ABC as an
independent contractor, Petron submitted the following documents: (1) Contractors PreQualification Statement;12 (2) Petrons Conflict of Interest Policy signed by Caberte Sr., as
proprietor of ABC;13 (3) ABCs Certificate of Registration issued by the Bureau of Internal
Revenue (BIR);14 (4) Value-Added Tax Return for the year 1995;15 (5) BIR Confirmation
Receipt;16 (6) Caberte Sr.s Tax Identification Number (TIN) issued by the BIR;17 (7)
Caberte Sr.s Individual Income Tax Return for the years 199318 and 1994;19 (8) ABCs
Audited Financial Statements for the years 1992,20 199321 and 1994;22 (9) ABCs Mayors
Permit for the year 1995;23 and, (10) ABCs Certificate of Registration of Business Name
issued by the Department of Trade and Industry (DTI).24 In addition, it averred that ABC, as

a contractor, had duly posted a performance bond25 and took out insurance policies26
against liabilities. Petron likewise presented affidavits27 of two Petron employees stating
that respondents do not perform activities related to Petrons business operation but only
tasks which are intermittent and which can be contracted out. Also submitted were
affidavits28 of three former employees of ABC attesting to the fact that during their stint in
Petron, they used materials such as floor polisher, floor wax, broom, dustpan, cleaning rags
and other equipment owned by ABC to accomplish their tasks and that they worked under
the supervision of Caberte Sr., through the latters designated overall supervisor, respondent
Caberte. Petron further revealed that ABC/Caberte Sr. has the power to hire and fire
respondents and was the one paying their wages.

In a Decision29 dated March 7, 2002,Executive Labor Arbiter Danilo C. Acosta (LA Acosta)
held that ABC is an independent contractor that has substantial capital and that respondents
were its employees. He likewise ruled that ABCs cessation of operation is a force majeure
that justifies respondents dismissal. Nonetheless, LA Acosta awarded respondents
separation pay based on the applicable minimum wage rate at the time of expiration of the
contracts of service. He, however, denied the claims for overtime pay and night shift
differential pay for lack of merit. The dispositive portion of the Decision reads:

Conformably with the foregoing, respondent ABC is hereby ORDERED TO PAY EACH
COMPLAINANT, namely, complainants Antonio Caberte, Jr., Armz M. Caberte, Michael
Servicio, Ariel Develos, Adolfo Gestupa, Archie Ponteras, Arnold Blanco, Dante Mirano,
Virgilio Galorosa and Camilo Te, separation pay of one month for every year of service.

All other claims and the claims against respondent PETRON are hereby ORDERED
DISMISSED for lack of merit.

SO ORDERED.30

Proceedings before the National Labor Relations Commission

Respondents appealed to the NLRC where they insisted that they are regular employees of
Petron since ABC is a labor-only contractor.

In a Decision31 dated May 14, 2003,the NLRC affirmed the ruling of the Labor Arbiter after it
found that ABC is not a mere labor contractor but a legitimate independent contractor. In so
ruling, the NLRC took into account the following: (1) ABC/Caberte Sr. has the power of
control over respondents as Caberte Sr. was the one controlling and supervising
respondents in their work. While Petron intervened at times, the same was limited to safety
precautions due to the hazardous nature of the products the workers were dealing with; (2)
ABC possessed sufficient capital and equipment per the various documents that Petron
submitted showing the formers financial capability to maintain its status as an accredited

contractor of the latter. In fact, Caberte Sr. was even able to establish ABCs Bacolod City
Office; and, (3) ABC/Caberte Sr. has the power to hire and dismiss respondents. Hence, the
dispositive portion of the Decision, viz: WHEREFORE, premises considered, this appeal is
DISMISSED and the decision of the Executive Labor Arbiter is AFFIRMED.

SO ORDERED.32

Respondents filed a Motion for Reconsideration which was, however, denied in the NLRC
Resolution33 dated November 27, 2003.

Proceedings before the Court of Appeals

Aggrieved, respondents filed a Petition for Certiorari34 before the CA ascribing upon the
NLRC grave abuse of discretion amounting to lack or in excess of jurisdiction in holding that
they are not employees of Petron.

The CA, in a Decision35 dated November 14,2007, found merit in respondents Petition. It
ruled that ABC is engaged in labor-only contracting because: first, it did not have substantial
capital or investment in the form of tools, equipment, implements, machineries and work
premises, actually and directly used in the performance or completion of the job it contracted
out from Petron; second, the work assigned to respondents were directly related to Petrons
business; and, third, the nature of Petrons business requires it to exercise control over the
performance of respondents work. Consequently, the CA declared respondents as Petrons
regular employees. And since Petron did not comply with the requirements under the Labor
Code when it terminated their employment, respondents were illegally dismissed and
therefore entitled to reinstatement without loss of seniority rights and other privileges, with
the alternative relief of separation pay in lieu of reinstatement, and to full backwages,
inclusive of allowances, and to other benefits or their monetary equivalent computed from
the time compensation was withheld up to the time of actual reinstatement. The CA,
however, denied respondents claims for moral and exemplary damages in the absence of
bad faith in Petrons act of dismissing them but awarded respondents 10% attorneys fees
for having to litigate to protect their interests. The dispositive portion of the Decision reads:

WHEREFORE, in view of the foregoing, the decision of the National Labor Relations
Commission dated May 14, 2003, in NLRC Case No. V-000329-2002, affirming the March 7,
2002 Decision of Executive Labor Arbiter Danilo C. Acosta of the Sub-Regional Arbitration
Branch VI, Bacolod City, is hereby REVERSED.

Respondent Petron Corporation is ordered to reinstate Armz Caberte, Antonio Caberte, Jr.,
Michael Servicio, Ariel Develos, Adolfo Gestupa, Archie Ponteras, Arnold Blanco, Dante
Mirano, Virgilio Galorosa and Camilo Te to their former positions with the same rights and
benefits and the same salary rates as its regular employees.

Respondent Petron Corporation is likewise ordered to pay petitioners attorneys fees

equivalent to ten percent (10%) of the monetary award.

All other claims are dismissed for lack of merit.

Costs against private respondent Petron.

SO ORDERED.36

Petrons Motion for Reconsideration37 was denied by the CA in its Resolution38 dated
March 4, 2008. Hence, this present recourse.

Issues

Petron presents the following grounds for review:

X X X THE COURT OF APPEALS SERIOUSLY ERRED AND DECIDED A QUESTION OF

SUBSTANCE IN A MANNER NOT IN ACCORD WITH LAW AND WITH APPLICABLE
JURISPRUDENCE IN FINDING THAT ABC CONTRACTING SERVICESIS A MERE
LABOR-ONLY CONTRACTOR AND IN HOLDING THAT RESPONDENTS ARE THUS
REGULAR EMPLOYEES OF THE COMPANY CONSIDERING THAT:

A. THERE IS A LEGITIMATE SERVICE CONTRACTING AGREEMENT BETWEEN THE

COMPANY AND ABC CONTRACTING SERVICES;

B. THE CONTRACTED SERVICES THAT RESPONDENTS PERFORMED ARE NOT

DIRECTLY RELATED AND NECESSARY OR DESIRABLE TO THE COMPANYS
PRINCIPAL BUSINESS;

C. ABC CONTRACTING SERVICES CARRIES ON AN INDEPENDENT BUSINESS AND

POSSESSES SUBSTANTIAL CAPITAL AND INVESTMENT; AND

D. RESPONDENTS ARE EMPLOYEES OF ABC CONTRACTING SERVICES.39

Petron asserts that ABC, as an independent contractor, rendered janitorial, utility and LPG
assistance services by virtue of legitimate contracts entered into by and between them. As
such, the services rendered by respondents were purely maintenance and utility works
which are not directly related, necessary and desirable to Petrons main business.

Petron likewise insists that ABC is not a labor-only contractor as it carries on an independent
business and uses its own equipment, tools, materials and supplies in the performance of its
contracted services. Further, it asserts that ABC wielded and exercised the power of
selection or engagement, payment of wages, discipline or dismissal, and of control over
respondents.

Our Ruling

The Petition has no merit.

Labor-only contracting and permissible

job contracting, defined; a contractor is
presumed by law to be a labor-only
contractor; anyone claiming the
supposed status of an independent
contractor bears the burden of proving
the same.

As defined under Article 106 of the Labor Code, labor-only contracting, a prohibited act, is an
arrangement where the contractor, who does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among others, supplies workers
to an employer and the workers recruited are performing activities which are directly related
to the principal business of such employer.

Permissible or legitimate job contracting or subcontracting, on the other hand, "refers to an

arrangement whereby a principal agrees to put out or farm out with the contractor or
subcontractor the performance or completion of a specific job, work, or service within a
definite or predetermined period, regardless of whether such job, work, or service is to be
performed or completed within or outside the premises of the principal. A person is
considered engaged in legitimate job contracting or subcontracting if the following conditions
concur: (a) the contractor carries on a distinct and independent business and partakes the
contract work on his account under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal in all matters
connected with the performance of his work except as to the results thereof; (b) the
contractor has substantial capital or investment; and (c) the agreement between the principal

and the contractor or subcontractor assures the contractual employees entitlement to all
labor and occupational safety and health standards, free exercise of the right to selforganization, security of tenure, and social welfare benefits."40

To determine whether a contractor is engaged in labor-only contracting or permissible job

contracting, "the totality of the facts and the surrounding circumstances of the case are to be
considered."41

Petron contends that the CA erred in ruling that ABC is a labor-only contractor since
respondents failed to prove that ABC is not an independent contractor. The contention,
however, is incorrect. The law presumes a contractor to be a labor-only contractor and the
employees are not expected to prove the negative fact that the contractor is a labor-only
contractor.42 Thus, it is not respondents but Petron which bears the burden of establishing
that ABC is not a labor-only contractor but a legitimate independent contractor. As held in
Alilin v. Petron Corporation,43 "where the principal is the one claiming that the contractor is a
legitimate contractor, the burden of proving the supposed status of the contractor rests on
the principal."

Petron failed to overcome the

presumption that ABC is a labor-only
contractor.

Foremost, Petron banks on the contracts of services it entered into with ABC. It contends
that the said contracts were legitimate business transactions and were not only for the
purpose of ABC providing manpower or labor-only to Petron, but rather for specific services
pertaining to janitorial, utility and LPG assistance.

Suffice it to state, however, that Petron cannot place reliance on the contracts it entered into
with ABC since these are not determinative of the true nature of the parties relationship. As
held in Babas v. Lorenzo Shipping Corporation,44 the character of the business, whether as
labor-only contractor or as a job contractor, should be determined by the criteria set by
statute and the parties cannot dictate by the mere expedience of a unilateral declaration in a
contract the character of their business.

Next, Petron endeavours to prove that ABC is a legitimate independent contractor.

To restate, a contractor is deemed to be a labor-only contractor if the following elements are

present: (i) the contractor does not have substantial capital or investment to actually perform
the job, work or service under its own account and responsibility; and (ii) the employees
recruited, supplied or placed by such contractor are performing activities which are directly
related to the main business of the principal.45 Conversely, in proving that ABC is not a

labor-only contractor, it is incumbent upon Petron to show that ABC has substantial capital or
investment and that respondents were performing activities which were not directly related to
Petrons principal business.

To show that ABC has substantial capital or investment, Petron submitted, among others,
ABCs BIR Certificate of Registration, VAT Return, BIR Confirmation Receipt, TIN, Individual
Income Tax Return, Mayors Permit and DTI Certificate of Registration. However, the Court
observes that these documents are not conclusive evidence of ABCs financial capability. At
most, they merely show that ABC is engaged in business and licensed by the appropriate
government agencies.

As for the financial statements presented, it appears that only the audited financial
statements of ABC for the years 1992, 1993 and 1994 were submitted. As aptly observed by
the CA, these documents cannot be given much credence considering that the service
contracts between Petron and ABC commenced in 1996 and ended in 1999. However, no
audited financial statements for the years material to this case (1996, 1997, 1998 and 1999)
were submitted. Also, as per record, ABC was obligated to submit to Petron at least once
every two years its latest audited financial statements, among others, as a requirement for
the retention of its status as an accredited contractor of Petron.46 If it is true that ABC
continued to possess its financial qualification after 1994, Petron should have presented
ABCs financial statements for the said years which are presumed to be in Petrons
possession considering that they are part of the requirements that it itself set for its
accredited contractors.

Neither does the performance bond taken out by ABC serve as significant evidence of its
substantial capital. As aptly explained by the CA:

The performance bond posted by ABC Contracting Services likewise fails to convince us that
the former has substantial capital or investment inasmuch as it was not shown that the
performance bond in the amount of P596,799.51 was enough to cover not only payrolls,
rentals and equipment but also possible damages to the equipment and to third parties and
other contingent liabilities. Moreover, this Court takes judicial notice that bonds of this nature
are issued upon payment of a small percentage as premium without necessarily requiring
any guarantee.

If at all, the bond was a convenient smoke screen to disguise the real nature of ABCs
employment as an agent of Petron.47

Anent substantial investment in the form of equipment, tools, implements, machineries and
work premises, Petron likewise failed to show that ABC possessed the same.1wphi1
Instead, what is evident in the records was that ABC had been renting a forklift from Petron
in order to carry out the job of respondents.48 This only shows that ABC does not own basic
equipment needed in the performance of respondents job. Similarly and again as correctly
held by the CA, the fact that ABC leased a property for the establishment of its Bacolod

office is immaterial since it was not shown that it was used in the performance or completion
of the job contracted out. "Substantial capital or investment," under Section 5, Rule VIII-A,
Book III of the Omnibus Rules Implementing the Labor Code (Implementing Rules), as
amended by Department Order No. 18-02,49 does not include those which are not actually
and directly used in the performance of the job contracted out.

Going now to the activities performed by respondents, Petron avers that the same were not
necessary or desirable to its principal business. In fact, the service contracts it entered into
with ABC clearly referred to respondents functions as maintenance and utility works only
which are remote to its principal business of manufacturing and distributing petroleum
products.

The Court finds otherwise. Gestupa, Ponteras, Develos, Blanco and Mariano were LPG
fillers and maintenance crew; Caberte was an LPG operator supervisor; Te was a
warehouseman and utility worker; and Servicio and Galorosa were tanker receiving crew
and utility workers. Undoubtedly, the work they rendered were directly related to Petrons
main business, vital as they are in the manufacture and distribution of petroleum products.
Besides, some of the respondents were already working for Petron even before it engaged
ABC as a contractor in 1996. Albeit it was made to appear that they were under the different
contractors that Petron engaged over the years, respondents have been regularly
performing the same tasks within the premises of Petron. This "the repeated and continuing
need for the performance of the job is sufficient evidence of the necessity, if not
indispensability of the activity to the business."50 What further militates against Petrons
claim that ABC, as an alleged independent contractor, is the true employer of respondents, is
the fact that Petron has the power of control over respondents in the performance of their
work. It bears stressing that the power of control merely calls for the existence of the right to
control and not necessarily the exercise thereof.51 Here, Petron admitted in its Position
Paper that the supervision of a Petron employee is required over LPG and tanker assistance
jobs for inventory control and safety checking purposes. It explained that due to the
hazardous nature of its products, constant checking of the procedures in their handling is
essential considering the high possibility of fatal accidents. It also admitted that it was the
one supplying the needed materials and equipment in discharging these functions to better
insure the integrity, quality and safety of its products.

From the foregoing, it is clear that Petron failed to discharge its burden of proving that ABC
is not a labor-only contractor. Consequently, and as warranted by the facts, the Court
declares ABC as a mere labor-only contractor. "A finding that a contractor is a labor-only
contractor is equivalent to declaring that there is an employer-employee relationship
between the principal and the employees of the supposed contractor, and the labor-only
contractor is considered as a mere agent of the principal, the real employer."52 Accordingly
in this case, Petron is declared to be the true employer of respondents who are considered
regular employees in view of the fact that they have been regularly performing activities
which are necessary and desirable to the usual business of Petron for a number of years.

Respondents, except Antonio Caberte, Jr., were illegally dismissed.

With respect to respondents dismissal, Petron claimed that the same sprang from the
termination or conclusion of the service contracts it entered into with ABC. As earlier held,
respondents are considered regular employees. In cases of regular employment, an
employer may only terminate the services of an employee for just or authorized causes
under the law.53 As the reason given by Petron for dismissing respondents does not
constitute a just or authorized cause for termination,54 the latter are declared to have been
illegally dismissed. Respondents are thus entitled to all the remedies of an illegally
dismissed employee, i.e., backwages and reinstatement, or if no longer feasible, separation
pay. The CA is thus correct in ruling that respondents are entitled to reinstatement without
loss of seniority rights and other privileges. However, if reinstatement is no longer feasible,
respondents are entitled to receive separation pay equivalent to one month salary for every
year of service. In addition, respondents are entitled to full backwages from the time they
were not allowed to work on July 1, 1999 up to actual reinstatement or finality of this
Decision as the case may be.

An exception must be taken, however, with respect to Caberte Jr. From the beginning,
Petron disputes the fact he ever worked for Petron. Therefore, before his case against
Petron can prosper, Caberte Jr. must first establish that an employer-employee relationship
existed between them since it is basic that the issue of illegal dismissal is premised on the
existence of such relationship between the parties.55 Unfortunately, nowhere in the records
does it show that he indeed worked for Petron. Consequently, his complaint should be
dismissed. WHEREFORE, the petition is DENIED. The November 14, 2007 Decision and
the March 4, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 82356 are
MODIFIED in that: (1) the Complaint of respondent Antonio Caberte, Jr. against petitioner
Petron Corporation is dismissed; and (2) petitioner Petron Corporation is ordered to reinstate
all of the respondents, except for Antonio Caberte, Jr., to their former positions with the same
rights and benefits and the same salary rates as its regular employees, or if reinstatement is
no longer feasible, to separation pay equivalent to one month salary for every year of service
and to pay them their full backwages from July 1, 1999 until actual reinstatement or upon
finality of this Decision as the case may be, as well as attorney's fees equivalent to 10% of
the monetary award, with costs against Petron Corporation.

SO ORDERED.

FIRST DIVISION

G.R. No. 159350, March 09, 2016

ALUMAMAY O. JAMIAS, JENNIFER C. MATUGUINAS AND JENNIFER F.

CRUZ,*Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION (SECOND

DIVISION), HON. COMMISSIONERS: RAUL T. AQUINO, VICTORIANO R. CALAYCAY AND

ANGELITA A. GACUTAN; HON. LABOR ARBITER VICENTE R. LAYAWEN; INNODATA
PHILIPPINES,
INC.,
INNODATA PROCESSING
CORPORATION,
(INNODATA
CORPORATION), AND TODD SOLOMON, Respondents.

DECISION

BERSAMIN, J.:

The petitioners appeal the adverse judgment promulgated on July 31, 2002,1 whereby the
Court of Appeals (CA) upheld the ruling of the National Labor Relations Commission (NLRC)
declaring them as project employees hired for a fixed period.

Antecedents

Respondent Innodata Philippines, Inc. (Innodata), a domestic corporation engaged in the

business of data processing and conversion for foreign clients,2 hired the following
individuals on various dates and under the following terms, to wit:

Name
Position
Duration of Contract
Alumamay Jamias
Manual Editor
August 7, 1995 to August 7, 19963
Marietha V. Delos Santos
Manual Editor
August 7, 1995 to August 7, 19964
Lilian R. Guamil
Manual Editor
August 16, 1995 to August 16, 19965
Rina C. Duque
Manual Editor
August 7, 1995 to August 7, 19966

Marilen Agabayani
Manual Editor
August 23, 1995 to August 23, 19967
Alvin V. Patnon
Production Personnel
September 1, 1995 to September 1, 19968
Analyn I. Beter
Type Reader
September 18, 1995 to September 18, 19969
Jerry O. Soldevilla
Production Personnel
September 18, 1995 to September 18, 199610
Ma. Concepcion A. Dela Cruz
Production Personnel
September 18, 1995 to September 18, 199611
Jennifer Cruz
Data Encoder
November 20, 1995 to November 20, 199612
Jennifer Matuguinas
Data Encoder
November 20, 1995 to November 20, 199613
After their respective contracts expired, the aforenamed individuals filed a complaint for
illegal dismissal claiming that Innodata had made it appear that they had been hired as
project employees in order to prevent them from becoming regular employees.14

Decision of the Labor Arbiter

On September 8, 1998, Labor Arbiter (LA) Vicente Layawen rendered his decision
dismissing the complaint for lack of merit.15 He found and held that the petitioners had
knowingly signed their respective contracts in which the durations of their engagements
were clearly stated; and that their fixed term contracts, being exceptions to Article 280 of the
Labor Code, precluded their claiming regularization.

Ruling of the National Labor Relations Commission

On appeal, the NLRC affirmed the decision of LA Layawen,16 opining that Article 280 of the
Labor Code did not prohibit employment contracts with fixed periods provided the contracts
had been voluntarily entered into by the parties, viz.:

[I]t is distinctly provided that complainants were hired for a definite period of one year
incidental upon the needs of the respondent by reason of the seasonal increase in the
volume of its business. Consequently, following the rulings in Pantranco North Express, Inc.
vs. NLRC, et al., G.R. No. 106654, December 16, 1994, the decisive determinant in term of
employment should not be the activities that the employee is called upon to perform, but the
day certain agreed upon by the parties for the commencement and termination of their
employment relationship, a day certain being understood to be "that which must necessarily
come, although it may not be known when." Further, Article 280 of the Labor Code does not
prescribe or prohibit an employment contract with a fixed period provided, the same is
entered into by the parties, without any force, duress or improper pressure being brought to
bear upon the employee and absent any other circumstance vitiating consent. It does not
necessarily follow that where the duties of the employee consist of activities usually
necessary or desirable in the usual business of the employer, the parties are forbidden from
agreeing on a period of time for the performance of such activities. There is thus nothing
essentially contradictory between a definite period of employment and the nature of the
employee's duties. x x x17
Judgment of the CA

As earlier mentioned, the CA upheld the NLRC. It observed that the desirability and
necessity of the functions being discharged by the petitioners did not make them regular
employees; that Innodata and the employees could still validly enter into their contracts of
employment for a fixed period provided they had agreed upon the same at the time of the
employees' engagement;18 that Innodata's operations were contingent on job orders or
undertakings for its foreign clients; and that the availability of contracts from foreign clients,
and the duration of the employments could not be treated as permanent, but coterminous
with the projects.19

The petitioners moved for reconsideration,20 but the CA denied their motion on August 8,
2003.21

Hence, this appeal by only three of the original complainants, namely petitioners Alumamay
Jamias, Jennifer Matuguinas and Jennifer Cruz.

Issues

The petitioners anchor their appeal on the following:

I

THE HON. COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF JURISDICTION AS IT
CANNOT REVERSE OR ALTER THE SUPREME COURT DECISION

THE SUPREME COURT HAS RULED THAT THE NATURE OF EMPLOYMENT AT

RESPONDENTS IS REGULAR NOT FIXED OR CONTRACTUAL IN AT LEAST TWO (2)
CASES AGAINST INNODATA PHILS., INC.

II

THE HON. COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW WHEN IT DID
NOT STICK TO PRECENDENT AS IT HAS ALREADY RULED IN AN EARLIER CASE THAT
THE NATURE OF EMPLOYMENT AT INNODATA PHILS., INC. IS REGULAR AND NOT
CONTRACTUAL

III

THE HON. COURT OF APPEALS PATENTLY ERRED IN LAW AND COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN RULING THAT
PETITIONERS' EMPLOYMENT IS FOR A FIXED PERIOD CO-TERMINOUS WITH A
PROJECT WHEN THERE IS NO PROJECT TO SPEAK OF

IV

THE HON. COURT OF APPEALS PALPABLY ERRED IN LAW IN RULING THAT THE
STIPULATION IN CONTRACT IS GOVERNING AND NOT THE NATURE OF
EMPLOYMENT AS DEFINED BY LAW.22
The petitioners maintain that the nature of employment in Innodata had been settled in
Villanueva v. National Labor Relations Commission (Second Division)23 and Servidad v.
National Labor Relations Commission,24 whereby the Court accorded regular status to the
employees because the work they performed were necessary and desirable to the business
of data encoding, processing and conversion.25 They insist that the CA consequently
committed serious error in not applying the pronouncement in said rulings, thereby ignoring
the principle of stare decisis in declaring their employment as governed by the contract of
employment; that the CA also erroneously found that the engagement of the petitioners was
coterminous with the project that was nonexistent; that Innodata engaged in "semantic
interplay of words" by introducing the concept of "fixed term employment" or "project
employment" that were not founded in law;26 and that Article 280 of the Labor Code
guarantees the right of workers to security of tenure, which rendered the contracts between
the petitioners and Innodata meaningless.27

In refutation, Innodata insists that the contracts dealt with in Villanueva and Servidad were
different from those entered into by the petitioners herein,28 in that the former contained
stipulations that violated the provisions of the Labor Code on probationary employment and
security of tenure,29 while the latter contained terms known and explained to the petitioners
who then willingly signed the same;30 that as a mere service provider, it did not create jobs
because its operations depended on the availability of job orders or undertakings from its
client;31 that Article 280 of the Labor Code allowed "term employment" as an exception to
security of tenure; and that the decisive determinant was the day certain agreed upon by the
parties, not the activities that the employees were called upon to perform.32

Were the petitioners regular or project employees of Innodata?

Ruling of the Court

We deny the petition for review on certiorari.

Stare decisis does not apply where the facts are essentially different

Contrary to the petitioners' insistence, the doctrine of stare decisis, by which the
pronouncements in Villanueva and Servidad would control the resolution of this case, had no
application herein.

The doctrine of stare decisis enjoins adherence to judicial precedents.33 When a court has
laid down a principle of law as applicable to a certain state of facts, it will adhere to that
principle and apply it to all future cases in which the facts are substantially the same; but
when the facts are essentially different, stare decisis does not apply because a perfectly
sound principle as applied to one set of facts might be entirely inappropriate when a factual
variance is introduced.34

Servidad and Villanueva involved contracts that contained stipulations not found in the
contracts entered by the petitioners. The cogent observations in this regard by the CA are
worth reiterating:
A cursory examination of the facts would reveal that while all the cases abovementioned
involved employment contracts with a fixed term, the employment contract subject of
contention in the Servidad and Villanueva cases provided for double probation, meaning,
that the employees concerned, by virtue of a clause incorporated in their contracts, were
made to remain as probationary employees even if they continue to work beyond the six

month probation period set by law. Indeed, such stipulation militates against Constitutional
policy of guaranteeing the tenurial security of the workingman. To Our mind, the provision
alluded to is what prodded the Supreme Court to disregard and nullify altogether the terms
of the written entente. Nonetheless, it does not appear to be the intendment of the High
Tribunal to sweepingly invalidate or declare as unlawful all employment contracts with a
fixed period. To phrase it differently, the said agreements providing for a one year term would
have been declared valid and, consequently, the separation from work of the employees
concerned would have been sustained had their contracts not included any unlawful and
circumventive condition.

It ought to be underscored that unlike in the Servidad and Villanueva cases, the written
contracts governing the relations of the respondent company and the petitioners herein do
not embody such illicit stipulation.35
We also disagree with the petitioners' manifestation36 that the Court struck down in
Innodata Philippines, Inc. v. Quejada-Lopez37 a contract of employment that was similarly
worded as their contracts with Innodata. What the Court invalidated in Innodata Philippines,
Inc. v. Quejada-Lopez was the purported fixed-term contract that provided for two periods - a
fixed term of one year under paragraph 1 of the contract, and a three-month period under
paragraph 7.4 of the contract - that in reality placed the employees under probation. In
contrast, the petitioners' contracts did not contain similar stipulations, but stipulations to the
effect that their engagement was for the fixed period of 12 months, to wit:
1. The EMPLOYER shall employ the EMPLOYEE and the EMPLOYEE shall serve the
EMPLOYER in the EMPLOYER'S business as a MANUAL EDITOR on a fixed term only and
for a fixed and definite period of twelve months, commencing on August 7, 1995 and
terminating on August 7, 1996, x x x.38
In other words, the terms of the petitioners' contracts did not subject them to a probationary
period similar to that indicated in the contracts struck down in Innodata, Villanueva and
Servidad.

II

A fixed period in a contract of employment does not by itself signify an intention to

circumvent Article 280 of the Labor Code

The petitioners argue that Innodata circumvented the security of tenure protected under
Article 280 of the Labor Code by providing a fixed term; and that they were regular
employees because the work they performed were necessary and desirable to the business
of Innodata.

The arguments of the petitioners lack merit and substance.

Article 280 of the Labor Code provides:

Art. 280. Regular and Casual Employment. - 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 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 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 actuallv
exists.
The provision contemplates three kinds of employees, namely: (a) regular employees; (b)
project employees; and (c) casuals who are neither regular nor project employees. The
nature of employment of a worker is determined by the factors provided in Article 280 of the
Labor Code, regardless of any stipulation in the contract to the contrary.39 Thus, in Brent
School, Inc. v. Zamora,40 we explained that the clause referring to written contracts should
be construed to refer to agreements entered into for the purpose of circumventing the
security of tenure. Obviously, Article 280 does not preclude an agreement providing for a
fixed term of employment knowingly and voluntarily executed by the parties.41

A fixed term agreement, to be valid, must strictly conform with the requirements and
conditions provided in Article 280 of the Labor Code. The test to determine whether a
particular employee is engaged as a project or regular employee is whether or not the
employee is assigned to carry out a specific project or undertaking, the duration or scope of
which was specified at the time of his engagement.42 There must be a determination of, or a
clear agreement on, the completion or termination of the project at the time the employee is
engaged.43 Otherwise put, the fixed period of employment must be 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 it must satisfactorily appear that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatsoever being exercised by
the former on the latter.44

The contracts of the petitioners indicated the one-year duration of their engagement as well
as their respective project assignments (i.e., Jamias being assigned to the CD-ROM project;
Cruz and Matuguinas to the TSET project).45 There is no indication that the petitioners were
made to sign the contracts against their will. Neither did they refute Innodata's assertion that
it did not employ force, intimidate or fraudulently manipulate the petitioners into signing their
contracts, and that the terms thereof had been explained and made known to them.46
Hence, the petitioners knowingly agreed to the terms of and voluntarily signed their
respective contracts.

That Innodata drafted the contracts with its business interest as the overriding consideration
did not necessarily warrant the holding that the contracts were prejudicial against the
petitioners.47 The fixing by Innodata of the period specified in the contracts of employment
did not also indicate its ill-motive to circumvent the petitioners' security of tenure. Indeed, the
petitioners could not presume that the fixing of the one-year term was intended to evade or
avoid the protection to tenure under Article 280 of the Labor Code in the absence of other
evidence establishing such intention. This presumption must ordinarily be based on some
aspect of the agreement other than the mere specification of the fixed term of the
employment agreement, or on evidence aliunde of the intent to evade.48

Lastly, the petitioners posit that they should be accorded regular status because their work
as editors and proofreaders were usually necessary to Innodata's business of data
processing.

We reject this position. For one, it would be unusual for a company like Innodata to
undertake a project that had no relationship to its usual business.49 Also, the necessity and
desirability of the work performed by the employees are not the determinants in term
employment, but rather the "day certain" voluntarily agreed upon by the parties.50 As the CA
cogently observed in this respect:
There is proof to establish that Innodata's operations indeed rests upon job orders or
undertakings coming from its foreign clients. Apparently, its employees are assigned to
projects - one batch may be given a fixed period of one year, others, a slightly shorter
duration, depending on the estimated time of completion of the particular job or undertaking
farmed out by the client to the company.51
In fine, the employment of the petitioners who were engaged as project employees for a
fixed term legally ended upon the expiration of their contract. Their complaint for illegal
dismissal was plainly lacking in merit.

WHEREFORE, we DENY the petition for review on certiorari; AFFIRM the decision
promulgated on July 31, 2002; and ORDER the petitioners to pay the costs of suit

SO ORDERED.

THIRD DIVISION

G.R. No. 199683, February 10, 2016

ARLENE T. SAMONTE, VLADIMIR P. SAMONTE, MA. AUREA S. ELEPANO, Petitioners, v.

LA SALLE GREENHILLS, INC., BRO. BERNARD S. OCA, Respondents.

DECISION

PEREZ, J.:

As each and all of the various and varied classes of employees in the gamut of the labor
force, from non-professionals to professionals, are afforded full protection of law and security
of tenure as enshrined in the Constitution, the entitlement is determined on the basis of the
nature of the work, qualifications of the employee, and other relevant circumstances.

Assailed in this petition for review on certiorari is the Decision1 of the Court of Appeals in
C.A. G.R. SP No. 110391. affirming the Decision of the National Labor Relations
Commission (NLRC) in NLRC CA No. 044835-052 finding that petitioners Arlene T.
Samonte, Vladimir P. Samonte and Ma. Aurea S. Elepano were fixed-term employees of
respondent La Salle Greenhills, Inc. (LSGI). The NLRC (First Division) ruling is a
modification of the ruling of the Labor Arbiter that petitioners were independent contractors of
respondent LSGI.3

The facts are not in dispute.

From 1989, and for fifteen (15) years thereafter, LSGI contracted the services of medical
professionals, specifically pediatricians, dentists and a physician, to comprise its Health
Service Team (HST).

Petitioners, along with other members of the HST signed uniform one-page Contracts of
Retainer for the period of a specific academic calendar beginning in June of a certain year
(1989 and the succeeding 15 years) and terminating in March of the following year when the
school year ends. The Contracts of Retainer succinctly read, to wit:

C O N TRAC TO F R E TAI N E R

Name of Retainer _________________________________________

Address_________________________________________________
Community Tax Cert. No.__________________________________
Issued at_______________ on ____________________________

Taxpayer Identification No. (TIN)_________________

Department Assigned to________ HRD-CENTRO Operation___________
Project/Undertaking (Description and Duration)
____________ Health Services__________________
Job Task (Description and Duration)
School [physician] from June 1, [x x x] to March 31, [x x x]
Rate__________________

Conditions:

1. This retainer is only temporary in character and, as above specified, shall be solely and
exclusively limited to the project/undertaking and/ or to the job/task assigned to the retainer
within the said project/undertaking;

2. This retainer shall, without need of any notice to the retainer, automatically cease on the
aforespecified expiration date/s of the said project/undertaking and/or the said job/task;
provided, that this retainer shall likewise be deemed terminated if the said
project/undertaking and/or fob/task shall be completed on a date/s priot to their
aforespecified expiration date/s;

3. The foregoing notwithstanding, at any time prior to said expiration or completion date/s, La
Salle Greenhills, Inc. may upon prior written notice to the retainer, terminate this contract
should the retainer fail in any way to perform his assigned job/task to the satisfaction of La
Salle Greenhills, Inc. or for any other just cause.

HERMAN G. ROCHESTER
Head Administrator

BELEN T. MASILUNGAN
Personnel Officer

_____________________
Retainer

_____________________
Date Signed

Signed in the Presence of:

DANTE M. FERRER
FRD Head Administrator

BRO. BERNARD S. OCA

President4

After fifteen consecutive years of renewal each academic year, where the last Contract of
Retainer was for the school year of 2003-2004 i.e., June 1, 2003 to March 31, 2004, LSGI
Head Administrator, Herman Rochester, on that last day of the school year, informed the
Medical Service Team, including herein petitioners, that their contracts will no longer be
renewed for the following school year by reason of LSGI's decision to hire two (2) full-time
doctors and dentists. One of the physicians from the same Health Service Team was hired
by LSGI as a full-time doctor.

When petitioners', along with their medical colleagues', requests for

payment of their separation pay were denied, they filed a complaint for illegal dismissal with
prayer for separation pay, damages and attorney's fees before the NLRC. They included the
President of LSGI, Bro. Bernard S. Oca, as respondent.

In their Position Paper, petitioners alleged that they were regular employees who could only
be dismissed for just and authorized causes, who, up to the time of their termination,
regularly received the following amounts:

1. Monthly salary for the ten-month period of a given school year:

Name
Monthly Salary
a) Jennifer A. Ramirez
Php 20,682.73
b) Brandon D. Ericta
28,603.62
c) [Petitioner] Arlene T. Samonte
20,682.73
d) [Petitioner] Vladimir P. Samonte
20,682.73
e) Alma S. Resurrecion
12,700.83
f) Ma. Socorro A. Salazar
21,117.00
g) [Petitioner] Ma. Aurea S. Elepano

8,429.43

2. Annual 13th Month Pay equivalent to their one month salary;

3. Automatic yearly increase to their monthly salary, the rate of which is discretionary to
LSGFs Executive Administrator based on a comparative rate to the across the board
increase of the regular school employees which increase was subsequently reflected in their
[HST'S] monthly salaries for the following school year;

4. Since 1996, as a result of the HST's request for a performance bonus, the team was
likewise evaluated for a year-end performance rating by HRD- CENTRO Head Administrator,
the Assistant Principal, the Health Services Team Leader and the designated Physician's
Coordinator, complainant Jennifer Ramirez.

To further bolster their claim of regular employment, complainants pointed out the following
in their Position Paper:

In the course of their employment, each of the complainants served an average of nine
hours a week. But beyond their duty hours, they were on call for any medical exigencies of
the La Sallian community. Furthermore, over the years, additional tasks were assigned to the
complainants and were required to suffer the following services/activites:

a) To attend staff meetings and to participate in the formulation/adoption of policies and

programs designed to enhance the School services to its constituents and to upgrade the
School's standards. Complainants' involvement in Staff Meetings of the Health Services Unit
of respondent school was a regular activity associated with personnel who are regular
employees of an institution;

b) To participate in various gatherings and activities sponsored by the respondent school

such as the Kabihasnan (the bi-annual school fair), symposiums, seminars, orientation
programs, workshops, lectures, etc., including purely political activities such as the
NAMFREL quick count, of which the respondent school is a staunch supporter;

c) Participation of the complainants in Medical/Dental Missions in the name of respondent

school;

d) Formulation of the Health Services Unit Manual;

e) Participation in the collation of evaluation of services rendered by the Health Services

Unit, as required for the continuing PAASCU (Philippine Association of Accredited Schools
Colleges & Universities) accreditation of the School;

f) Participation in the yearly evaluation of complainants, which is a

function of regular employees in the HRD-CENTRO Operations, of the HRD-CENTRO Head

Administrator;

g) Designation of certain complainants, particularly Dr. Jennifer A. Ramirez, as member of

panel of investigation to inquire into an alleged misdemeanor of a regular employee of
respondent school; and

h) Regular inspection of the canteen concessionaire and the toilet facilities of the school
premises to insure its high standards of sanitation.

Complainants were likewise included among so-called members of the "LA SALLIAN
FAMILY: Builder of a Culture of Peace," under the heading "Health Services Team" of the La
Salle Green Hills High School Student Handbook 2003-2004. Such public presentation of the
complainants as members of the "LA SALLIAN FAMILY" leaves no doubt about the intent of
respondent school to project complainants as part of its professional staff.5

On the other hand, in their Position Paper,6 LSGI denied that complainants were regular
employees, asserting that complainants were independent contractors who were retained by
LSGI by reason of their medical skills and expertise to provide ancillary medical and dental
services to both its students and faculty, consistent with the following circumstances:

1. Complainants were professional physicians and dentists on retainer basis, paid on

monthly retainer fees, not regular salaries;

2. LSGI had no power to impose disciplinary measures upon complainants including

dismissal from employment;

3. LSGI had no power of control over how complainants actually performed their professional
services.

In the main, LSGI invoked the case of Sonza v. ABS-CBN7 to justify its stance that
complainants were independent contractors and not regular employees citing, thus:

SONZA contends that ABS-CBN exercised control over the means and methods of his work.

SONZA's argument is misplaced. ABS-CBN engaged SONZA's services specifically to cohost the "Mel & Jay" programs. ABS-CBN did not assign any other work to SONZA. To
perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines,
appeared on television, and sounded on radio were outside ABS-CBN's control. SONZA did
not have to render 8 hours of work per day. The Agreement required SONZA to attend only
rehearsals and tapings of the shows, as well as pre and post-production staff meetings.
ABS-CBN could not dictate the contents of SONZA's script. However, the Agreement
prohibited SONZA from criticising in his shows ABS-CBN or its interests. The clear
implication is that SONZA had a free hand on what to say or discuss in his shows provided
he did not attack ABS-CBN or its interests.

As previously adverted, the Labor Arbiter dismissed petitioners' (and their colleagues')
complaint and ruled that complainants, as propounded by LSGI, were independent
contractors under retainership contracts and never became regular employees of LSGI. The
Labor Arbiter based its over-all finding of the absence of control by LSGI over complainants
on the following points:

1. The professional services provided by complainants, including herein petitioners, cannot

be considered as necessary to LSGI's business of providing primary and secondary
education to its students.

2. The pay slips of complainants are not salaries but professional fees less taxes withheld for
the medical services they provided;

3. Issuance of identification cards to, and the requirement to log the time-in and time-out of,
complainants are not indicia of LSGI's power of control over them but were only imposed for
security reasons and in compliance with the agreed clinic schedules of complainants at LSGI
premises.

4. In contrast to regular employees of LSGI, complainants: (a) were not required to attend or
participate in school-sponsored activities and (b) did not enjoy benefits such as educational
subsidy for their dependents.

5. On this score alone, complainants' respective clinic schedule at LSGI for two (2) to three
(3) days a week for three (3) hours a day, for a maximum of nine (9) hours a week, was not
commensurate to the required number of hours work rendered by a regular employee in a
given week of at least 40 hours a week or 8 hours a day for five (5) days. In addition, the
appointed clinic schedule was based on the preference of complainants.

Curiously, despite the finding that complainants were independent contractors and not
regular employees, the Labor Arbiter, on the ground of compassionate social justice,
awarded complainants separation pay at the rate of one-half month salary for every year of
service:

Separately, both parties, complainants, including herein petitioners, and respondents

appealed to the NLRC.

At the outset, the NLRC disagreed with the Labor Arbiter's ruling that complainants were
independent contractors based on the latter's opinion that the services rendered by
complainants are not considered necessary to LSGI's operation as an educational institution.
The NLRC noted that Presidential Decree No. 856, otherwise known as the Sanitation Code
of the Philippines, requires that private educational institutions comply with the sanitary laws.
Nonetheless, the NLRC found that complainants were fixed-period employees whose terms
of employment were subject to agreement for a specific duration. In all, the NLRC ruled that
the Contracts of Retainer between complainants and LSGI are valid fixed-term employment
contracts where complainants as medical professionals understood the terms thereof when
they agreed to such continuously for more than ten (10) years. Consequently, the valid
termination of their retainership contracts at the end of the period stated therein, did not
entitle complainants to reinstatement, nor, to payment of separation pay.

At this point, only herein petitioners, filed a petition for certiorari under Rule 65 of the Rules
of Court before the Court of Appeals alleging that grave abuse of discretion attended the
ruling of the NLRC that they were not regular employees and thus not entitled to the twin
remedies of reinstatement to work with payment of full backwages or separation pay with
backwages.

In dismissing the petition for certiorari, the appellate court ruled that the NLRC did not
commit an error of jurisdiction which is correctible by a writ of certiorari. The Court of
Appeals found that the NLRC's ruling was based on the Contracts of Retainer signed by
petitioners who, as professionals, supposedly ought to have known the import of the
contracts they voluntarily signed, i.e. (a) temporary in character; (b) automatically ceasing on
the specified expiration date, or (c) likewise deemed terminated if job/task shall be
completed on a date prior to specified expiration date.

The Court of Appeals ruled against petitioners' claim of regular employment, thus:

Moreover, this Court is not persuaded by petitioners' averments that they are regular
employees simply because they received benefits such as overtime pay, allowances,
Christmas bonuses and the like; or because they were subjected to administrative rules such
as those that regulate their time and hours of work, or subjected to LSGFs disciplinary rules
and regulations; or simply because they were treated as part of LSGFs professional staff. It

must be emphasised that LSGI, being the employer, has the inherent right to regulate all
aspects of employment of every employee whether regular, probationary, contractual or
fixed-term. Besides, petitioners were hired for specific tasks and under fixed terms and
conditions and it is LSGI's prerogative to monitor their performance to see if they are doing
their tasks according to the terms and conditions of their contract and to give them incentives
for good performance.8

Hence, this petition for review on certiorari raising the following issues for resolution of the
Court:

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT PETITIONERS

WERE FIXED-PERIOD EMPLOYEES AND NOT REGULAR EMPLOYEES OF LSGI.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HAVING RULED THAT
PETITIONERS WERE ILLEGALLY DISMISSED FROM WORK.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HAVING RULED THAT
PETITIONERS ARE ENTITLED TO REINSTATEMENT, BACKWA'GES AND OTHER
MONETARY BENEFITS PROVIDED BY LAW, MORAL AND EXEMPLARY DAMAGES, AS
WELL AS ATTORNEY'S FEES.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HAVING RULED THAT
RESPONDENTS ARE SOLIDARILY LIABLE AS THEY ACTED IN BAD FAITH AND WITH
MALICE IN DEALING WITH THE PETITIONERS.9

The pivotal issue for resolution is whether the Court of Appeals correctly ruled that the NLRC
did not commit grave abuse of discretion in ruling that petitioners were not regular
employees who may only be dismissed for just and authorized causes.

Our inquiry and disposition will delve into the kind of employment relationship between the
parties, such employment relationship having been as much as admitted by LSGI and then
ruled upon categorically by the NLRC and the appellate court which both held that
petitioners were fixed-term employees and not independent contractors.

Article 280 of the Labor Code classifies employees into regular, project, seasonal, and
casual:

Art. 280. Regular and casual employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities

which are usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of
the employee or where the . work or 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
activity exists.

The provision classifies regular employees into two kinds (1) those "engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the
employer"; and (2) casual employees who have "rendered at least one year of service,
whether such service is continuous or broken."

The NLRC correctly identified the existence of an employer-employee relationship between

petitioners and LSGI and not a bilateral independent contractor relationship. On more than
one occasion, we recognised certain workers to be independent contractors: individuals with
unique skills and talents that set them apart from ordinary employees.10 We found them to
be independent contractors because of these unique skills and talents and the lack of control
over the means and methods in the performance of their work. In some instances, doctors
and other medical professional may fall into this independent contractor category,
legitimately providing medical professional services. However, as has been declared by theNLRC and the appellate court, petitioners herein are not independent contractors.

We need to examine next the ruling of the NLRC and the Court of Appeals that petitioners
were fixed-term employees.

To factually support such conclusion, the NLRC solely relied on the case of Brent v. Zamor11
and perfunctorily noted that petitioners, professional doctors and dentists, continuously
signed the contracts for more than ten (10) years. Such was heedless of our prescription that
the ruling in Brent be strictly construed, applying only to cases where it appears that the
employer and employee are on equal footing. Observably, nowhere in the two and half page
ratiocination of the NLRC was there reference to the standard that "it [should] satisfactorily
appear 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 on the latter."

From Brent, which remains as the exception rather than the rule in the determination of the
nature of employment, we are schooled that there are employment contracts where a "fixed

term is an essential and natural appurtenance" such as overseas employment contracts and
officers in educational institutions. We learned thus:

[T]he decisive determinant in the term employment contract should not be the activities that
the employee is called upon to perform, but the day certain agreed upon by the parties for
the commencement and termination of their employment relationship, a day certain being
understood to be "that which must necessarily come, although it may not be known when.

xxx

Accordingly, and since the entire purpose behind the development of legislation culminating
in the present Article 280 of the Labor Code clearly appears to have been, as already
observed, to prevent circumvention of the employee's right to be secure in his tenure, the
clause in said article indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein should be construed to
refer to the substantive evil that the Code itself has singled out: agreements entered into
precisely to circumvent security of tenure. It should have no application to instances where a
fixed period of employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon the employee
and absent any other circumstances vitiating his consent, or where it satisfactorily appears
that the employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter.

Tersely put, a fixed-term employment is allowable under the Labor Code only if the term was
voluntarily and knowingly entered into by the parties who must have dealt with each other on
equal terms not one exercising moral dominance over the other.

Indeed, Price, et. al. v. Innodata Corp., teaches us, from the wording of Article 280 of the
Labor Code, that the nomenclature of contracts, especially employment contracts, does not
define the employment status of a person: Such is defined and prescribed by law and not by
what the parties say it should be. Equally important to consider is that a contract of
employment is impressed with public interest such that labor contracts must yield to the
common good. Thus, provisions of applicable statutes are deemed written into the contract,
and the parties are not at liberty to insulate themselves and their relationships from the
impact of labor laws and regulations by simply contracting with each other.

Further, a fixed-term contract is an employment contract, the repeated renewals of which

make for a regular employment. In Fuji Network Television v. Espiritu,12 wenoted that Fuji's
argument that Espiritu was an independent contractor under a fixed-term contract is
contradictory where employees under fixed-term contracts cannot be independent
contractors because in fixed-term contracts, an employer-employee relationship exists.
Significantly, we ruled therein that Espiritu's contract indicating a fixed term did not
automatically mean that she could never be a regular employee which is precisely what
Article 280 of the Labor Code sought to avoid. The repeated renewal of Espiritu's contract

coupled with the nature of work performed pointed to the regular nature of her employment
despite contrary claims of Fuji and the nomenclature of the contract. Citing Dumpit-Murillo v.
Court of Appeals13 and Philips Semiconductors, Inc. v. Fadriquela,14 we declared in Fuji
that the repeated engagement under contract of hire is indicative of the necessity and
desirability of the [employee's] work in respondent's business and where employee's
contract has been continuously extended or renewed to the same position, with the same
duties and remained in the employ without any interruption, then such employee is a regular
employee.

In the case at bar, the Court of Appeals disregarded the repeated renewals of the Contracts
of Retainer of petitioners spanning a decade and a half. The Court of Appeals ruled that
petitioners never became regular employees:

[T]his Court is not persuaded by petitioners' averments that they are regular employees
simply because they received benefits such as overtime pay, allowances, Christmas
bonuses and the like; or because they were subjected to administrative rules such as those
that regulate their time and hours of work, or subjected to LSGl's disciplinary rules and
regulations; or simply because they were treated as part of LSGLs professional staff. It must
be emphasised that LSG1, as the employer, has the inherent right to regulate all aspects of
employment of every employee whether regular, probationary, contractual or fixed-term.
Besides, petitioners were hired for specific tasks and under fixed terms and conditions and it
is LSGl's prerogative to monitor their performance to see if they are doing their tasks
according to the terms and conditions of their contract and to give them incentives for good
performance.15

We completely disagree with the Court of Appeals.

The uniform one-page Contracts of Retainer signed by petitioners were prepared by LSGI
alone. Petitioners, medical professionals as they were, were still not on equal footing with
LSGI as they obviously did not want to lose their jobs that they had stayed in for fifteen (15)
years. There is no specificity in the contracts regarding terms and conditions of employment
that would indicate that petitioners and LSGI were on equal footing in negotiating it. Notably,
without specifying what are the tasks assigned to petitioners, LSGI "may upon prior written
notice to the retainer, terminate [the] contract should the retainer fail in any way to perform
his assigned job/task to the satisfaction of La Salle Greenhills, Inc. or for any other just
cause."16

While vague in its sparseness, the Contract of Retainer very clearly spelled out that LSGI
had the power of control over petitioners.

Time and again we have held that the power of control refers to the existence of the power
and not necessarily to the actual exercise thereof, nor is it essential for the employer to
actually supervise the performance of duties of the employee.17 It is enough that the
employer has the right to wield that power.

In all, given the following: (1) repeated renewal of petitioners' contract for fifteen years,
interrupted only by the close of the school year; (2) the necessity of the work performed by
petitioners as school physicians and dentists; and (3) the existence of LSGI's power of
control over the means and method pursued by petitioners in the performance of their job,
we rule that petitioners attained regular employment, entitled to security of tenure who could
only be dismissed for just and authorized causes. Consequently, petitioners were illegally
dismissed and are entitled to the twin remedies of payment of separation pay and full back
wages. We order separation pay in lieu of reinstatement given the time that has lapsed,
twelve years, in the litigation of this case.

We clarify, however, that our ruling herein is only confined to the three (3) petitioners who
had filed this appeal by certiorari under Rule 45 of theRules of Court, and prior thereto, the
petition for certiorari under Rule 65 thereof before the Court of Appeals. The Decision of the
NLRC covering other complainants in NLRC CA No. 044835-05 has already become final
and executory as to them.

Not being trier of facts, we remand this case to the NLRC for the determination of separation
pay and full back wages from the time petitioners were precluded from returning to work the
school year 2004 and compensation for work performed in that period.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA G.R.
SP No. 110391 is REVERSED AND SET ASIDE. The Decisions of the NLRC in NLRC CA
No. 044835-05 and NLRC CASE No. 00-0607081-04 are ANNULLED AND SET ASIDE.
The Complaint of petitioners Arlene T. Samonte, Vladimir P. Samonte, Ma. Carmen Aurea S.
Elepano against La Salle Greenhills, Inc. for illegal dismissal is GRANTED. We REMAND
this case to the NLRC for the computation of the three (3) petitioners' separation pay and full
back wages.

No pronouncement as to costs.

SO ORDERED.