Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 119268 February 23, 2000

ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO MARCOS,

LUIS DE LOS ANGELES, JOEL ORDENIZA and AMADO CENTENO, petitioners,

vs.

NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN TAXI

(PHILJAMA INTERNATIONAL, INC.) respondents.

QUISUMBING, J.:

This special civil action for certiorari seeks to annul the decision1 of public

respondent promulgated on October 28, 1994, in NLRC NCR CA No. 003883-92,

and its resolution2 dated December 13, 1994 which denied petitioners motion for

reconsideration.

Petitioners were drivers of private respondent, Philjama International Inc., a

domestic corporation engaged in the operation of "Goodman Taxi." Petitioners

used to drive private respondent's taxicabs every other day on a 24-hour work

schedule under the boundary system. Under this arrangement, the petitioners

earned an average of P400.00 daily. Nevertheless, private respondent

admittedly regularly deducts from petitioners, daily earnings the amount of

P30.00 supposedly for the washing of the taxi units. Believing that the deduction

is illegal, petitioners decided to form a labor union to protect their rights and

interests.

Upon learning about the plan of petitioners, private respondent refused to let

petitioners drive their taxicabs when they reported for work on August 6, 1991,

and on succeeding days. Petitioners suspected that they were singled out

because they were the leaders and active members of the proposed union.

Aggrieved, petitioners filed with the labor arbiter a complaint against private

respondent for unfair labor practice, illegal dismissal and illegal deduction of

washing fees. In a decision3 dated August 31, 1992, the labor arbiter dismissed

said complaint for lack of merit.

On appeal, the NLRC (public respondent herein), in a decision dated April 28,

1994, reversed and set aside the judgment of the labor arbiter. The labor tribunal

declared that petitioners are employees of private respondent, and, as such,

their dismissal must be for just cause and after due process. It disposed of the

case as follows:

WHEREFORE, in view of all the foregoing considerations, the decision of

the Labor Arbiter appealed from is hereby SET ASIDE and another one

entered:

1. Declaring the respondent company guilty of illegal dismissal and

accordingly it is directed to reinstate the complainants, namely, Alberto

A. Gonzales, Joel T. Morato, Gavino Panahon, Demetrio L. Calagos, Sonny

M. Lustado, Romeo Q. Clariza, Luis de los Angeles, Amado Centino, Angel

Jardin, Rosendo Marcos, Urbano Marcos, Jr., and Joel Ordeniza, to their

former positions without loss of seniority and other privileges appertaining

thereto; to pay the complainants full backwages and other benefits, less

earnings elsewhere, and to reimburse the drivers the amount paid as

washing charges; and

2. Dismissing the charge of unfair [labor] practice for insufficiency of

evidence.

SO ORDERED.4

Private respondent's first motion for reconsideration was denied. Remaining

hopeful, private respondent filed another motion for reconsideration. This time,

public respondent, in its decision5 dated October 28, 1994, granted aforesaid

second motion for reconsideration. It ruled that it lacks jurisdiction over the case

as petitioners and private respondent have no employer-employee relationship.

It held that the relationship of the parties is leasehold which is covered by the

Civil Code rather than the Labor Code, and disposed of the case as follows:

VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Motion under

reconsideration is hereby given due course.

Accordingly, the Resolution of August 10, 1994, and the Decision of April

28, 1994 are hereby SET ASIDE. The Decision of the Labor Arbiter subject of

the appeal is likewise SET ASIDE and a NEW ONE ENTERED dismissing the

complaint for lack of jurisdiction.

No costs.

SO ORDERED.6

Expectedly, petitioners sought reconsideration of the labor tribunal's latest

decision which was denied. Hence, the instant petition.

In this recourse, petitioners allege that public respondent acted without or in

excess of jurisdiction, or with grave abuse of discretion in rendering the assailed

decision, arguing that:

I

THE NLRC HAS NO JURISDICTION TO ENTERTAIN RESPONDENT'S SECOND MOTION

FOR RECONSIDERATION WHICH IS ADMITTEDLY A PLEADING PROHIBITED UNDER

THE NLRC RULES, AND TO GRANT THE SAME ON GROUNDS NOT EVEN INVOKED

THEREIN.

II

THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES

IS ALREADY A SETTLED ISSUE CONSTITUTING RES JUDICATA, WHICH THE NLRC HAS

NO MORE JURISDICTION TO REVERSE, ALTER OR MODIFY.

III

IN ANY CASE, EXISTING JURISPRUDENCE ON THE MATTER SUPPORTS THE VIEW THAT

PETITIONERS-TAXI DRIVERS ARE EMPLOYEES OF RESPONDENT TAXI COMPANY.7

The petition is impressed with merit.

The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction"

has settled meaning in the jurisprudence of procedure. It means such capricious

and whimsical exercise of judgment by the tribunal exercising judicial or quasi-

judicial power as to amount to lack of power.8 In labor cases, this Court has

declared in several instances that disregarding rules it is bound to observe

constitutes grave abuse of discretion on the part of labor tribunal.

In Garcia vs. NLRC,9 private respondent therein, after receiving a copy of the

labor arbiter's decision, wrote the labor arbiter who rendered the decision and

expressed dismay over the judgment. Neither notice of appeal was filed nor

cash or surety bond was posted by private respondent. Nevertheless, the labor

tribunal took cognizance of the letter from private respondent and treated said

letter as private respondent's appeal. In a certiorari action before this Court, we

ruled that the labor tribunal acted with grave abuse of discretion in treating a

mere letter from private respondent as private respondent's appeal in clear

violation of the rules on appeal prescribed under Section 3(a), Rule VI of the

New Rules of Procedure of NLRC.

In Philippine Airlines Inc. vs. NLRC,10 we held that the labor arbiter committed

grave abuse of discretion when he failed to resolve immediately by written

order a motion to dismiss on the ground of lack of jurisdiction and the

supplemental motion to dismiss as mandated by Section 15 of Rule V of the New

Rules of Procedure of the NLRC.

In Unicane Workers Union-CLUP vs. NLRC,11 we held that the NLRC gravely

abused its discretion by allowing and deciding an appeal without an appeal

bond having been filed as required under Article 223 of the Labor Code.

In Maebo vs. NLRC,12 we declared that the labor arbiter gravely abused its

discretion in disregarding the rule governing position papers. In this case, the

parties have already filed their position papers and even agreed to consider the

case submitted for decision, yet the labor arbiter still admitted a supplemental

position paper and memorandum, and by taking into consideration, as basis for

his decision, the alleged facts adduced therein and the documents attached

thereto.

In Gesulgon vs. NLRC,13 we held that public respondent gravely abused its

discretion in treating the motion to set aside judgment and writ of execution as

a petition for relief of judgment. In doing so, public respondent had, without

sufficient basis, extended the reglementary period for filing petition for relief from

judgment contrary to prevailing rule and case law.

In this case before us, private respondent exhausted administrative remedy

available to it by seeking reconsideration of public respondent's decision dated

April 28, 1994, which public respondent denied. With this motion for

reconsideration, the labor tribunal had ample opportunity to rectify errors or

mistakes it may have committed before resort to courts of justice can be had.14

Thus, when private respondent filed a second motion for reconsideration, public

respondent should have forthwith denied it in accordance with Rule 7, Section

14 of its New Rules of Procedure which allows only one motion for

reconsideration from the same party, thus:

Sec. 14. Motions for Reconsideration. Motions for reconsideration of any order, resolution or decision of the Commission shall not be entertained

except when based on palpable or patent errors, provided that the

motion is under oath and filed within ten (10) calendar days from receipt

of the order, resolution or decision with proof of service that a copy of the

same has been furnished within the reglementary period the adverse

party and provided further, that only one such motion from the same

party shall be entertained. [Emphasis supplied]

The rationale for allowing only one motion for reconsideration from the same

party is to assist the parties in obtaining an expeditious and inexpensive

settlement of labor cases. For obvious reasons, delays cannot be countenanced

in the resolution of labor disputes. The dispute may involve no less than the

livelihood of an employee and that of his loved ones who are dependent upon

him for food, shelter, clothing, medicine, and education. It may as well involve

the survival of a business or an industry.15

As correctly pointed out by petitioner, the second motion for reconsideration

filed by private respondent is indubitably a prohibited pleading16 which should

have not been entertained at all. Public respondent cannot just disregard its

own rules on the pretext of "satisfying the ends of justice",17 especially when its

disposition of a legal controversy ran afoul with a clear and long standing

jurisprudence in this jurisdiction as elucidated in the subsequent discussion.

Clearly, disregarding a settled legal doctrine enunciated by this Court is not a

way of rectifying an error or mistake. In our view, public respondent gravely

abused its discretion in taking cognizance and granting private respondent's

second motion for reconsideration as it wrecks the orderly procedure in seeking

reliefs in labor cases.

But, there is another compelling reason why we cannot leave untouched the

flip-flopping decisions of the public respondent. As mentioned earlier, its

October 28, 1994 judgment is not in accord with the applicable decisions of this

Court. The labor tribunal reasoned out as follows:

On the issue of whether or not employer-employee relationship exists,

admitted is the fact that complainants are taxi drivers purely on the

"boundary system". Under this system the driver takes out his unit and pays

the owner/operator a fee commonly called "boundary" for the use of the

unit. Now, in the determination the existence of employer-employee

relationship, the Supreme Court in the case of Sara, et al., vs. Agarrado, et

al. (G.R. No. 73199, 26 October 1988) has applied the following four-fold

test: "(1) the selection and engagement of the employee; (2) the

payment of wages; (3) the power of dismissal; and (4) the power of

control the employees conduct."

"Among the four (4) requisites", the Supreme Court stresses that "control is

deemed the most important that the other requisites may even be

disregarded". Under the control test, an employer-employee relationship

exists if the "employer" has reserved the right to control the "employee" not

only as to the result of the work done but also as to the means and

methods by which the same is to be accomplished. Otherwise, no such

relationship exists. (Ibid.)

Applying the foregoing parameters to the case herein obtaining, it is clear

that the respondent does not pay the drivers, the complainants herein,

their wages. Instead, the drivers pay a certain fee for the use of the

vehicle. On the matter of control, the drivers, once they are out plying

their trade, are free to choose whatever manner they conduct their trade

and are beyond the physical control of the owner/operator; they

themselves determine the amount of revenue they would want to earn in

a day's driving; and, more significantly aside from the fact that they pay

for the gasoline they consume, they likewise shoulder the cost of repairs

on damages sustained by the vehicles they are driving.

Verily, all the foregoing attributes signify that the relationship of the parties

is more of a leasehold or one that is covered by a charter agreement

under the Civil Code rather than the Labor Code.18

The foregoing ratiocination goes against prevailing jurisprudence.

In a number of cases decided by this Court,19 we ruled that the relationship

between jeepney owners/operators on one hand and jeepney drivers on the

other under the boundary system is that of employer-employee and not of

lessor-lessee. We explained that in the lease of chattels, the lessor loses

complete control over the chattel leased although the lessee cannot be

reckless in the use thereof, otherwise he would be responsible for the damages

to the lessor. In the case of jeepney owners/operators and jeepney drivers, the

former exercise supervision and control over the latter. The management of the

business is in the owner's hands. The owner as holder of the certificate of public

convenience must see to it that the driver follows the route prescribed by the

franchising authority and the rules promulgated as regards its operation. Now,

the fact that the drivers do not receive fixed wages but get only that in excess

of the so-called "boundary" they pay to the owner/operator is not sufficient to

withdraw the relationship between them from that of employer and employee.

We have applied by analogy the abovestated doctrine to the relationships

between bus owner/operator and bus conductor,20 auto-calesa

owner/operator and driver,21 and recently between taxi owners/operators and

taxi drivers.22 Hence, petitioners are undoubtedly employees of private

respondent because as taxi drivers they perform activities which are usually

necessary or desirable in the usual business or trade of their employer.

As consistently held by this Court, termination of employment must be effected

in accordance with law. The just and authorized causes for termination of

employment are enumerated under Articles 282, 283 and 284 of the Labor

Code. The requirement of notice and hearing is set-out in Article 277 (b) of the

said Code. Hence, petitioners, being employees of private respondent, can be

dismissed only for just and authorized cause, and after affording them notice

and hearing prior to termination. In the instant case, private respondent had no

valid cause to terminate the employment of petitioners. Neither were there two

(2) written notices sent by private respondent informing each of the petitioners

that they had been dismissed from work. These lack of valid cause and failure

on the part of private respondent to comply with the twin-notice requirement

underscored the illegality surrounding petitioners' dismissal.

Under the law, an employee who is unjustly dismissed from work shall be entitled

to reinstatement without loss of seniority rights and other privileges and to his full

backwages, inclusive of allowances, and to his other benefits or their monetary

equivalent computed from the time his compensation was withheld from him up

to the time of his actual reinstatement.23 It must be emphasized, though, that

recent judicial pronouncements24 distinguish between employees illegally

dismissed prior to the effectivity of Republic Act No. 6715 on March 21, 1989,

and those whose illegal dismissals were effected after such date. Thus,

employees illegally dismissed prior to March 21, 1989, are entitled to backwages

up to three (3) years without deduction or qualification, while those illegally

dismissed after that date are granted full backwages inclusive of allowances

and other benefits or their monetary equivalent from the time their actual

compensation was withheld from them up to the time of their actual

reinstatement. The legislative policy behind Republic Act No. 6715 points to "full

backwages" as meaning exactly that, i.e., without deducting from backwages

the earnings derived elsewhere by the concerned employee during the period

of his illegal dismissal. Considering that petitioners were terminated from work on

August 1, 1991, they are entitled to full backwages on the basis of their last daily

earnings.

With regard to the amount deducted daily by private respondent from

petitioners for washing of the taxi units, we view the same as not illegal in the

context of the law. We note that after a tour of duty, it is incumbent upon the

driver to restore the unit he has driven to the same clean condition when he

took it out. Car washing after a tour of duty is indeed a practice in the taxi

industry and is in fact dictated by fair play.25 Hence, the drivers are not entitled

to reimbursement of washing charges.1wphi1.nt

WHEREFORE, the instant petition is GRANTED. The assailed DECISION of public

respondent dated October 28, 1994, is hereby SET ASIDE. The DECISION of public

respondent dated April 28, 1994, and its RESOLUTION dated December 13, 1994,

are hereby REINSTATED subject to MODIFICATION. Private respondent is directed

to reinstate petitioners to their positions held at the time of the complained

dismissal. Private respondent is likewise ordered to pay petitioners their full

backwages, to be computed from the date of dismissal until their actual

reinstatement. However, the order of public respondent that petitioners be

reimbursed the amount paid as washing charges is deleted. Costs against

private respondents.

SO ORDERED.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 109114 September 14, 1993

HOLIDAY INN MANILA and/or HUBERT LINER and BABY DISQUITADO, petitioners,

vs.

NATIONAL LABOR RELATIONS COMMISSION (Second Division) and ELENA

HONASAN, respondents.

Inocentes, De Leon, Leogardo, Atienza, Manaye & Azucena Law Office for

petitioners.

Florante M. Yambot for private respondent.

CRUZ, J.:

The employer has absolute discretion in hiring his employees in accordance with

his standards of competence and probity. This is his prerogative. Once hired,

however, the employees are entitled to the protection of the law even during

the probation period and more so after they have become members of the

regular force. The employer does not have the same freedom in the hiring of his

employees as in their dismissal.

Elena Honasan applied for employment with the Holiday Inn and was on April

15, 1991, accepted for "on-the-job training" as a telephone operator for a period

of three weeks. 1 For her services, she received food and transportation

allowance. 2 On May 13, 1992, after completing her training, she was employed

on a "probationary basis" for a period of six months ending November 12,

1991. 3

Her employment contract stipulated that the Hotel could terminate her

probationary employment at any time prior to the expiration of the six-month

period in the event of her failure (a) to learn or progress in her job; (b) to

faithfully observe and comply with the hotel rules and the instructions and orders

of her superiors; or (c) to perform her duties according to hotel standards.

On November 8, 1991, four days before the expiration of the stipulated

deadline, Holiday Inn notified her of her dismissal, on the ground that her

performance had not come up to the standards of the Hotel. 4

Through counsel, Honasan filed a complaint for illegal dismissal, claiming that

she was already a regular employee at the time of her separation and so was

entitled to full security of tenure. 5 The complaint was dismissed on April 22, 1992

by the Labor Arbiter, 6 who held that her separation was justified under Article

281 of the Labor Code providing as follows:

Probationary employment shall not exceed six (6) months from the

date the employee started working, unless it is covered by an

apprenticeship agreement stipulating a longer period. The services

of an employee who has been engaged on a probationary basis

may be terminated for a just cause or when he fails to qualify as a

regular employee in accordance with reasonable standards made

known by the employer to the employee at the time of his

engagement. An employee who is allowed to work after a

probationary period shall be considered a regular employee.

On appeal, this decision was reversed by the NLRC, which held that Honasan

had become a regular employee and so could not be dismissed as a

probationer. 7 In its own decision dated November 27, 1992, the NLRC ordered

the petitioners to reinstate Honasan "to her former position without loss of

seniority rights and other privileges with backwages without deduction and

qualification." Reconsideration was denied in a resolution dated January 26,

1993. 8

The petitioners now fault the NLRC for having entertained Honasan's appeal

although it was filed out of time and for holding that Honasan was already a

regular employee at the time of her dismissal, which was made 4 days days

before the expiration of the probation period.

The petition has no merit.

On the timeliness of the appeal, it is well-settled that all notices which a party is

entitled to receive must be coursed through his counsel of record.

Consequently, the running of the reglementary period is reckoned from the date

of receipt of the judgment by the counsel of the appellant. 9 Notice to the

appellant himself is not sufficient notice. 10 Honasan's counsel received the

decision of the Labor Arbiter on May 18, 1992. 11 Before that, however, the

appeal had already been filed by Honasan herself, on May 8, 1992. 12 The

petitioners claim that she filed it on the thirteenth but this is irrelevant. Even if the

latter date was accepted, the appeal was nevertheless still filed on time, in fact

even before the start of the reglementary period.

On the issue of illegal dismissal, we find that Honasan was placed by the

petitioner on probation twice, first during her on-the-job training for three weeks,

and next during another period of six months, ostensibly in accordance with

Article 281. Her probation clearly exceeded the period of six months prescribed

by this article.

Probation is the period during which the employer may determine if the

employee is qualified for possible inclusion in the regular force. In the case at

bar, the period was for three weeks, during Honasan's on-the-job training. When

her services were continued after this training, the petitioners in effect

recognized that she had passed probation and was qualified to be a regular

employee.

Honasan was certainly under observation during her three-week on-the-job

training. If her services proved unsatisfactory then, she could have been

dropped as early as during that period. But she was not. On the contrary, her

services were continued, presumably because they were acceptable, although

she was formally placed this time on probation.

Even if it be supposed that the probation did not end with the three-week

period of on-the-job training, there is still no reason why that period should not

be included in the stipulated six-month period of probation. Honasan was

accepted for on-the-job training on April 15, 1991. Assuming that her probation

could be extended beyond that date, it nevertheless could continue only up to

October 15, 1991, after the end of six months from the earlier date. Under this

more lenient approach, she had become a regular employee of Holiday Inn

and acquired full security of tenure as of October 15, 1991.

The consequence is that she could no longer be summarily separated on the

ground invoked by the petitioners. As a regular employee, she had acquired the

protection of Article 279 of the Labor Code stating as follows:

Art. 279. Security of Tenure In cases of regular employment, the employer shall not terminate the services of an employee except

for a just cause or when authorized by this Title. An employee who is

unjustly dismissed from work shall be entitled to reinstatement

without loss of seniority rights and other privileges and to his full

backwages, inclusive of allowances, and to his other benefits or

their monetary equivalent computed from the time his

compensation was withheld from him up to the time of his actual

reinstatement.

The grounds for the removal of a regular employee are enumerated in Articles

282, 283 and 284 of the Labor Code. The procedure for such removal is

prescribed in Rule XIV, Book V of the Omnibus Rules Implementing the Labor

Code. These rules were not observed in the case at bar as Honasan was simply

told that her services were being terminated because they were found to be

unsatisfactory. No administrative investigation of any kind was undertaken to

justify this ground. She was not even accorded prior notice, let alone a chance

to be heard.

We find in the Hotel's system of double probation a transparent scheme to

circumvent the plain mandate of the law and make it easier for it to dismiss its

employees even after they shall have already passed probation. The petitioners

had ample time to summarily terminate Honasan's services during her period of

probation if they were deemed unsatisfactory. Not having done so, they may

dismiss her now only upon proof of any of the legal grounds for the separation of

regular employees, to be established according to the prescribed procedure.

The policy of the Constitution is to give the utmost protection to the working

class when subjected to such maneuvers as the one attempted by the

petitioners. This Court is fully committed to that policy and has always been

quick to rise in defense of the rights of labor, as in this case.

WHEREFORE, the petition is DISMISSED, with costs against petitioners. It is so

ordered.

FIRST DIVISION

[G.R. No. 94523. October 27, 1992.]

ST. THERESITAS ACADEMY AND/OR THE SERVANTS OF ST. JOSEPH, Represented by SR. ANITA BAGO, Petitioners, v. THE NATIONAL LABOR RELATIONS COMMISSION

and LILIA ARIOLA, Respondents.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; REGULAR AND CASUAL EMPLOYMENT;

DISTINGUISHED. Article 280 of the Labor Code defines regular employment as follows: "ART. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral

agreement of the parties, an employment shall be deemed to be regular where

the employee has been engaged to perform activities which are usually

necessary or desirable in the usual business or trade of the employer except

where the employment has been fixed for a specific project or undertaking the

completion or termination of which has been determined at the time of the

engagement of the employee or where the work or services to be performed is

seasonal in nature and the employment is for the duration of the season. "An

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

paragraph: Provided, That any employee who has rendered at least one year of

service, whether such service is continuous or broken, shall be considered a

regular employee with respect to the activity in which he is employed and his

employment shall continue while such actually exists."cralaw virtua1aw library

2. ID.; ID.; ID.; APPLICATION TO SCHOOL TEACHERS; CASE AT BAR. With respect to school teachers, paragraph 75 of the Manual of Regulations for Private

Schools provides: "Full-time teachers who have rendered three (3) years of

satisfactory service shall be considered permanent." The record shows that after

Ariola retired in 1976, she was rehired three (3) years later and rendered four (4)

more years of satisfactory service to the petitioner in the school years 1979-1980,

1980-1981, 1981-1982, and 1982-1983. When she was rehired in 1979 she did not

have to undergo the 3-year probationary employment for new teachers for her

teaching competence had already been tried and tested during her 22 years of

service to the school in 1954 to 1976. She reentered the service in 1979 as a

regular or permanent teacher. She could not be discharged solely on account

of the expiration of her fourth annual contract. She could only be dismissed for

cause and with due process, as provided in Article 279 of the Labor Code.

D E C I S I O N

GRIO-AQUINO, J.:

Petition for certiorari with application for preliminary injunction and/or restraining

order to annul and/or set aside the resolution dated July 2, 1990 or the Fourth

Division of the National Labor Relations Commission (Cebu City) (NLRC, for

short), affirming with modification the decision dated August 14, 1987 of the

Labor Arbiter of Bacolod City in RAB-VI-Case No. 0201-83. The dispositive portion

of the decision of the NLRC reads as follows:jgc:chanrobles.com.ph

"WHEREFORE, the appeal filed by respondents is hereby dismissed for lack of

merit and the decision of the Labor Arbiter dated August 14, 1987 is hereby

MODIFIED. Respondent is hereby ordered to pay complainant her backwages

limited to three (3) years without deduction and qualification starting April 1933.

In lieu of reinstatement, respondents are hereby ordered to give separation pay

to herein complainant computed at the rate of one months salary for every

year of service from June 1979 up to March 1986, the end of the three (3) year

rule on backwages." (p. 39, Rollo.)chanrobles.com:cralaw:red

The private respondent, Lilia G. Ariola, had been employed as a school teacher

since the school year 1954-55 up to the school year 1975-76 (or for 22 continuous

years). She retired on March 30, 1976 with separation benefits in the amount of

P4,927.30. For a while, she worked as an insurance underwriter. In 1979, the

Mother Superior invited her to go back as a school teacher because the school

needed qualified and good teachers in Mathematics and English. The

complainant accepted on condition that she should be considered a regular

teacher and not as a newly hired teacher. That condition was accepted

without hesitation. She signed a contract with the school which was renewable

yearly.

Complainant and her co-teachers were paid summer living allowance in 1979-

1980 and 1980-1981. However, in June 1981, that amount was deducted from

their salaries. Complainant and her co-teachers protested against the

deduction. A meeting was called by the school to explain that the payment of

the summer living allowance had been a mistake, hence, it must be paid back

to the school. Another meeting was called by the Mother Superior to discuss the

legality of the deduction and/or nonpayment of the summer living allowance. In

that meeting the complainant and her co-teachers pleaded for the revival of

the summer living allowance but they were advised by the Mother Superior that

the school could not afford to give it to them. The matter was referred to the

Ministry of Labor and Employment. Because of the agitation for the payment of

the summer living allowance, the Siervas de San Jose, which owns and operates

respondent school in Silay City, held a board meeting on January 19, 1983

(Exhibit I), wherein it was resolved that effective school year 1983-84, no Siervas

de San Jose School shall rehire a retired teacher and that any rehired retiree

who is at present a member of the faculty shall be notified that her/his Teachers Contract will not be renewed for the coming year.chanrobles virtual lawlibrary

After four (4) years of continuous satisfactory service, complainant was notified

on March 1, 1983 that her contract would no longer be renewed at the end of

the school year 1982-83. A report was made to the office of the Ministry of Labor

and Employment regarding the impending termination of her teachers contract (Annex E).

On April 7, 1985, private respondent filed in the NLRC, National Arbitration

Branch No. VI in Bacolod City, a complaint against the petitioner for Illegal

Dismissal praying for reinstatement with backwages, ECOLA, non-payment of

allowances, underpayment of 13th month pay and damages.

On August 14, 1987, the Labor Arbiter rendered a decision ordering the

petitioner to pay the private respondent separation pay computed at one-half

(1/2) month for every year of her 4-year service with the school.

On appeal by the school to the NLRC, the latter ruled that:chanrob1es virtual

1aw library

(1) the year-to-year contract between petitioner and private respondent

violated Art. 280 of the Labor Code, hence, despite the fixed period provided

therein, private respondent became a "regular" employee who could not be

dismissed except for cause;

(2) when the year-to-year contracts went beyond three years, private

respondent became a "regular" or "permanent" employee, pursuant to Sec. 75

of the Manual of Regulations for private schools, which provides that "full-time

teachers who have rendered three consecutive years of satisfactory service

shall be considered permanent" (p. 11, Rollo); and

(3) the policy of the school of no longer renewing the year-to-year contracts of

teachers who had been recalled from retirement, violated the security of tenure

of the complainant.

On July 2, 1990, the NLRC issued the resolution quoted earlier in this decision.

In its petition for review of that decision, the petitioner alleges that:.

1. the NLRC decision is clearly contrary to the decision of this Court;

2. the NLRC ruling confuses the three year-to-year probationary contracts given

to new teachers before they become "regular and permanent," with the year-

to-year or other fixed period contract given to teachers who are being recalled

from retirement; for the year-to-year contracts with retired teacher is not

intended to test the teachers fitness to be hired on a permanent basis, unlike a new teacher who must first be tested; andcralawnad

3. it is the prerogative of an employer to adopt a policy of not rehiring retired

teachers and of not renewing the annual contracts of teachers who have been

recalled from retirement.

A review of the records of this case shows that the NLRC did not abuse its

discretion in affirming with modification the decision of the Labor Arbiter.

Article 280 of the Labor Code defines regular employment as

follows:jgc:chanrobles.com.ph

"ARTICLE 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and the oral agreement of the

parties, an employment shall be deemed to be regular where the employee

has been engaged to perform activities which are usually necessary or desirable

in the usual business or trade of the employer except where the employment

has been fixed for a specific project or undertaking the completion or

termination of which has been determined at the time of the engagement of

the employee or where the work or services to be performed is seasonal in

nature and the employment is for the duration of the season.

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

preceding paragraph: Provided, That any employee who has rendered at least

one year of service, whether such service is continuous or broken, shall be

considered a regular employee with respect to the activity in which is employed

and his employment shall continue while such actually exists." (Emphasis

supplied.)

With respect to school teachers, paragraph 75 of the Manual of Regulations for

Private Schools provides:jgc:chanrobles.com.ph

"Full-time teachers who have rendered three (3) years of satisfactory service

shall be considered permanent." (p. 63, Rollo.).

Furthermore, paragraphs 7 and 9 of the Teachers Contract which the petitioner and the private respondent signed, categorically stipulated:chanrobles virtual

lawlibrary

"7. This CONTRACT SHALL BE IN FULL FORCE AND EFFECT during the school year

1982-1983 from June to March, unless sooner terminated by either party for valid

causes and approved by the Director of Private Schools. In the absence of valid

cause(s) for termination of services, this CONTRACT shall be rendered the

teacher shall have gained a Regular or Permanent Status, pursuant to the

pertinent provisions of the Manual of Regulations for Private Schools.

"9. This CONTRACT shall not affect the Permanent Status of the teacher, even if

entered into every school provided that the Probationary Period for new shall be

three (3) years." (Emphasis supplied, p.-79, Rollo.)

The record shows that after Ariola retired in 1976, she was rehired three (3) years

later and rendered four (4) more years of satisfactory service to the petitioner in

the school years 1979-1980, 1980-1981, 1981-1982, and 1982-1983.

When she was rehired in 1979 she did not have to undergo the 3-year

probationary employment for new teachers for her teaching competence had

already been tried and tested during her 22 years of service to the school in

1954 to 1976. She re-entered the service in 1979 as a regular or permanent

teacher. She could not be discharged solely on account of the expiration of her

fourth annual contract. She could only be dismissed for cause and with due

process, as provided in Article 279 of the Labor Code.

The NLRC did not abuse its discretion in holding that her dismissal from the

service, on account of the expiration of her annual contract, was illegal and

that the school is liable to pay her backwages and separation pay.

WHEREFORE; the petition for certiorari is DISMISSED, with costs against the

petitioner.chanrobles virtual lawlibrary

SO ORDERED.

Medialdea and Bellosillo, JJ., concur.

Cruz, J., is on leave.

G.R. No. 96779 November 10, 1993

PINE CITY EDUCATIONAL CENTER and EUGENIO BALTAO, Petitioners, vs. THE

NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and DANGWA

BENTREZ, ROLAND PICART, APOLLO RIBAYA, SR., RUPERTA RIBAYA, VIRGINIA

BOADO, CECILIA EMOCLING, JANE BENTREZ, LEILA DOMINGUEZ, ROSE ANN

BERMUDEZ and LUCIA CHAN, Respondents.

Tenefrancia, Agranzamendez, Liceralde & Associates for petitioners.chanrobles

virtual law library

Reynaldo B. Cajucom for private respondents.

NOCON, J.:

The is a petition for certiorari seeking the reversal of the resolution of public

respondent National Labor Relations Commission dated November 29, 1990, in

NLRC Case No. 01-04-0056-89, which affirmed in toto the decision of the Labor

Arbiter dated February 28,1990.chanroblesvirtualawlibrary chanrobles virtual law

library

The antecedent facts are, a follows:chanrobles virtual law library

Private respondents Dangwa Bentrez, Roland Picart, Apollo Ribaya, Sr., Ruperta

Ribaya, Virginia Boado, Cecilia Emocling, Jane Bentrez, Leila Dominguez, Rose

Ann Bermudez and Lucia Chan were all employed as teachers on probationary

basis by petitioner Pines City Educational Center, represented in this

proceedings by its President, Eugenio Baltao. With the exception of Jane Bentrez

who was hired as a grade school teacher, the remaining private respondents

were hired as college instructors. All the private respondents, except Roland

Picart and Lucia Chan, signed contracts of employment with petitioner for a

fixed duration. On March 31, 1989, due to the expiration of private respondents'

contracts and their poor performance as teachers, they were notified of

petitioners' decision not to renew their contracts

anymore.chanroblesvirtualawlibrarychanrobles virtual law library

On April 10, 1989, private respondents filed a complaint for illegal dismissal

before the Labor Arbiter, alleging that their dismissals were without cause and in

violation of due process. Except for private respondent Leila Dominguez who

worked with petitioners for one semester, all other private respondents were

employed for one to two years. They were never informed in writing by

petitioners regarding the standards or criteria of evaluation so as to enable

them to meet the requirements for appointment as regular employees. They

were merely notified in writing by petitioners, through its chancellor, Dra. Nimia

R. Concepcion, of the termination of their respective services as on March 31,

1989, on account of their below-par performance as

teachers.chanroblesvirtualawlibrarychanrobles virtual law library

For their part, petitioners contended that private respondents' separation from

employment, apart from their poor performance, was due to the expiration of

the periods stipulated in their respective contracts. In the case of private

respondent Dangwa Bentrez, the duration of his employment contract was for

one year, or beginning June, 1988 to March 1989 whereas in the case of the

other private respondents, the duration of their employment contracts was for

one semester, or beginning November, 1988 to March 1989. These stipulations

were the laws that governed their relationships, and there was nothing in said

contracts which was contrary to law, morals, good customs and public policy.

They argued further that they cannot be compelled o enter into new contracts

with private respondents. they concluded that the separation of private

respondents from the service was justified.chanroblesvirtualawlibrarychanrobles

virtual law library

On February 28, 1990, the Labor Arbiter rendered judgment in favor of private

respondents, the dispositive portion of which reads:

WHEREFORE, in the light of the foregoing considerations, judgment is hereby

rendered ORDERING the respondents to reinstate the complainants immediately

to their former positions and to pay their full backwages and other benefits and

privileges without qualification and deduction from the time they were dismissed

up to their actual reinstatement.chanroblesvirtualawlibrarychanrobles virtual law

library

Thus respondents should pay complainants the following:

BACKWAGES

NOTE: Computation covers only the period complainants were terminated up to

January 31, 1990 or 10 months and does not include backwages from January

31, 1990 up to their actual reinstatement.

1) ROLAND PICART

a) Latest salary per month P2,136.00

b) Multiplied by period covered

(March 31, 1989 to January 31, 1990) x 10 months

-----

c) Equals backwages due P21,360.00

2) LUCIA CHAN

a) Latest salary per month P1,600.00

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P16,000.00

3) LEILA DOMINGUEZ

a) Latest salary per month P1,648.24

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P16,482.40

4) RUPERTA RIBAYA

a) Latest salary per month P1,856.00

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P18,560.00

5) CECILIA EMOCLING

a) Latest salary per month P1,648.00

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P16,480.00

6) ROSE ANN BERMUDEZ

a) Latest salary per month P2,600.00

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P26,000.00

7) DANGWA BENTREZ

a) Latest salary per month P1,700.00

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P17,000.00

8) JANE BENTREZ

a) Latest salary per month P1,315.44

b) ultiplied by period covered x 10 months

-----

c) Equals backwages due P13,154.40

9) APOLLO RIBAYA

a) Latest salary per month P1,875.00

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P18,7500.00

10) VIRGINIA BOADO

a) Latest salary per month P1,648.24

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P16,482.40

S U M M A R Y

1) Roland Picart 21,360.00

2) Lucia Chan 16,000.00

3) Leila Dominguez 16,482.40

4) Ruperta Ribaya 18,560.00

5) Cecilia Emocling 16,480.00

6) Rose Ann Bermudez 26,000.00

7) Dangwa Bentrez 17,000.00

8) Jane Bentrez 13,154.40

9) Apollo Ribaya 18,750.00

10) Virginia Boado 16,482.40

-----

GRAND TOTAL (Backwages) P180,269.20

Complainants claims for indemnity pay, premium pay for holidays and rest days,

illegal deduction, 13th month pay and underpayment are hereby DENIED for

lack of merit.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED. 1chanrobles virtual law library

In support of this decision, the Labor Arbiter rationalized that the teacher's

contracts 2are vague and do not include the specific description of duties and

assignments of private respondents. They do not categorically state that there

will be no renewal because their appointments automatically terminate at the

end of the semester. Petitioners did not present any written evidence to

substantiate their allegation that the Academic Committee has evaluated

private respondents' performance during their one semester employment. On

the contrary, they were hastily dismissed.chanroblesvirtualawlibrarychanrobles

virtual law library

On appeal to the National Labor Relations Commission, the decision was

affirmed in toto in its resolution dated November 29, 1990, with the additional

reasoning that "the stipulation in the contract providing for a definite period in

the employment of complainant is obviously null and void, as such stipulation

directly assails the safeguards laid down in Article 280 (of the Labor Code), 3which explicitly abhors the consideration of written or oral agreements

pertaining to definite period in regular employments. 4Hence, the present

petition for certiorari with prayer for the issuance of a temporary restraining

order.chanroblesvirtualawlibrarychanrobles virtual law library

As prayed for, this Court issued a temporary restraining order on March 11, 1991,

enjoining respondents from enforcing the questioned resolution. 5chanrobles

virtual law library

Petitioners raise this sole issue: "THAT THERE IS PRIMA FACIE EVIDENCE OF GRAVE

ABUSE OF DISCRETION ON THE PART OF THE LABOR ARBITER BY WANTONLY,

CAPRICIOUSLY AND MALICIOUSLY DISREGARDING PROVISIONS OF THE LAW AND

JURISPRUDENCE LAID DOWN IN DECISIONS OF THE HONORABLE SUPREME

COURT." 6chanrobles virtual law library

Petitioners reiterate their previous arguments, relying heavily in the case of Brent

School, Inc. et al., v. Zamora, et al. 7chanrobles virtual law library

It is quite easy to resolve the present controversy because the Brent case, which

is a product of extensive research, already provides the answer. We were

categorical therein that:

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 and 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 prevent 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 brought to bear upon the employee and absent any other

circumstances vitiating his consent, or where it satisfactorily appears that the

employer or 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 expressly stated by its framers; it thus becomes pointless and

arbitrary, unjust in its effects and apt to lead to absurd and unintended

consequences. (Emphasis supplied.)

The ruling was reiterated in Pakistan International Airlines Corporation v. Ople,

etc., et al. 8and La Sallete of Santiago, Inc. v. NLRC, et al. 9

In the present case, however, We have to make a

distinction.chanroblesvirtualawlibrarychanrobles virtual law library

Insofar as the private respondents who knowingly and voluntarily agreed upon

fixed periods of employment are concerned, their services were lawfully

terminated by reason of the expiration of the periods of their respective

contracts. These are Dangwa Bentrez, Apollo Ribaya, Sr., Ruperta Ribaya,

Virginia Boado, Cecilia Emocling, Jose Bentrez, Leila Dominguez and Rose Ann

Bermudez. Thus, public respondent committed grave abuse of discretion in

affirming the decision of the Labor Arbiter ordering the reinstatement and

payment of full backwages and other benefits and

privileges.chanroblesvirtualawlibrarychanrobles virtual law library

With respect to private respondents Roland Picart and Lucia Chan, both of

whom did not sign any contract fixing the periods of their employment nor to

have knowingly and voluntarily agreed upon fixed periods of employment,

petitioners had the burden of proving that the termination of their services was

legal. As probationary employees, they are likewise protected by the security of

tenure provision of the Constitution. Consequently, they cannot be removed

from their positions unless for cause. 10On the other hand, petitioner contended

that base don the evaluation of the Academic Committee their performance

as teachers was poor. The Labor Arbiter, however, was not convinced. Thus he

found as follows:

Respondents likewise aver that the Academic Committee has evaluated their

performance during their one semester employment (see Annexes "M" to "X" of

complainants' position paper). However, they did not present any written proofs

or evidence to support their allegation. 11

xxx xxx xxxchanrobles virtual law library

There is absolutely nothing in the record which will show that the complainants

were afforded even an iota of chance to refute respondents' allegations that

the complainants did not meet the reasonable standards and criteria set by the

school. . . . 12chanrobles virtual law library

We concur with these factual findings, there being no showing that they were

resolved arbitrarily. 13 Thus, the order for their reinstatement and payment of full

backwages and other benefits and privileges from the time they were dismissed

up to their actual reinstatement is proper, conformably with Article 279 of the

Labor Code, as amended by Section 34 of Republic Act No. 6715, 14which took

effect on March 21, 1989. 15It should be noted that private respondents Roland

Picart and Lucia Chan were dismissed illegally on March 31, 1989, or after the

effectivity of said amendatory law. However, in ascertaining the total amount of

backwages payable to them, we go back to the rule prior to the mercury drug

rule 16that the total amount derived from employment elsewhere by the

employee from the date of dismissal up to the date of reinstatement, if any,

should be deducted therefrom. 17 We restate the underlying reason that

employees should not be permitted to enrich themselves at the expense of their

employer. 18 In addition, the law abhors double compensation. 19 to this extent,

our ruling in Alex Ferrer, et al., v. NLRC, et al., G.R. No. 100898, promulgated on

July 5, 1993, is hereby modified.chanroblesvirtualawlibrarychanrobles virtual law

library

Public respondent cannot claim not knowing the ruling in the Brent case

because in its questioned resolution, it is stated that one of the cases invoked by

petitioners in their appeal is said case. 20 This notwithstanding, it disregarded Our

ruling therein without any reason at all and expressed the erroneous view that:

The agreement of the parties fixing a definite date for the termination of the

employment relations is contrary to the specific provision of Article 280. being

contrary to law, the agreement cannot be legitimized. . . . 21chanrobles virtual

law library

Stare decisis et no quieta movere. Once a case ha been decided one way,

then another case, involving exactly the same point at issue, should be decided

in the same manner. Public respondent had no choice on the matter. It could

not have ruled in any other way. This Tribunal having spoken in the Brent case, its

duty was to obey. 22Let it be warned that to defy its decisions is to court

contempt. 23chanrobles virtual law library

WHEREFORE, the resolution of public respondent National Labor Relations

Commission dated November 29, 1990 is hereby MODIFIED. private respondents

Roland Picart and Lucia Chan are ordered reinstated without loss of seniority

rights and other privileges and their backwages paid in full inclusive of

allowances, and to their other benefits or their monetary equivalent pursuant to

Article 279 of the Labor Code, as amended by Section 34 of Republic Act No.

6715, subject to deduction of income earned elsewhere during the period of

dismissal, if any, to be computed from the time they were dismissed up to the

time of their actual reinstatement. the rest of the Labor Arbiter's decision dated

February 28, 1990, as affirmed by the NLRC is set aside. The temporary restraining

order issued on March 11, 1991 is made

permanent.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Bidin, Regalado, Davide, Jr., Romero, Bellosillo,

Melo, Quiason and Vitug, JJ., concur.

Separate Opinions

PADILLA, J., concurring:chanrobles virtual law library

I concur in the Court's decision penned by Mr. justice Nocon except that I

cannot see my way clear to allowing deductions from the full backwages

prescribed by law, given the language and evident intention of Rep. Act No.

6715.chanroblesvirtualawlibrarychanrobles virtual law library

1. Art. 279 of the Labor Code as amended by Rep. Act No. 6715 states: "Security

of Tenure - In cases of regular employment, the employer shall not terminate the

services of an employee except for a just cause or when authorized by this Title.

An employee who is unjustly dismissed from work shall be entitled to

reinstatement without loss of seniority rights and other privileges and to his full

backwages, inclusive of allowances, and to his other benefits of their monetary

equivalent computed from the time his compensation was withheld from him up

to the time of his actual reinstatement. (Emphasis supplied)chanrobles virtual

law library

The amendment to Art. 279 of the Labor Code introduced by Rep. Act. No. 6715

inserted the qualification "full" to the word "backwages". The intent of the law

seems to be clear. The plain words of the statute provide that an employee who

is unjustly dismissed is entitled to FULL backwages from the time of his dismissal to

actual reinstatement. The law provides no qualification nor does it state that

income earned by the employee during the period between his unjust dismissal

and reinstatement should be deducted from such backwages. When the law

does not provide, the court should not

improvise.chanroblesvirtualawlibrarychanrobles virtual law library

It is further my view that the principle of unjust enrichment (if no deduction is

allowed from backwages) does not apply in this case, for the following

reasons:chanrobles virtual law library

1. The applicable provision of the law should be construed in favor of

labor.chanroblesvirtualawlibrarychanrobles virtual law library

2. The Labor Code is a special law which should prevail over the Civil Code

provisions on unjust enrichment.chanroblesvirtualawlibrarychanrobles virtual law

library

3. The language employed by the statute and, therefore, its intent are clear.

Where the unjust dismissal occurs after Rep. Act No. 6715 too effect, backwages

must be awarded from the time the employee is unlawfully dismissed until the

time he is actually reinstated. There is no provision authorizing deduction of any

income earned by the employee during that period. The statutory formula was

evidently crafted by the legislature not only for convenience and expediency in

executing the monetary judgments in favor of the employees but also to

prevent the employer from resorting to delaying tactics when the judgment is

executed by pleading income earned by the employee before reinstatement

as proper deductions from backwages. It is true that the dismissed employee

may also resort to the same delaying tactics but when we consider the by and

large inherent inequality of resources between employer and employee, the

legislative formula would seem to be equitable. Besides - and this we cannot

over-stress - given the language of the law, the court appears to have no

alternative but to award such full backwages without deduction or

qualification. Any other interpretation opens the Court to the charge of

indulging in judicial legislation.chanroblesvirtualawlibrarychanrobles virtual law

library

I therefore vote to award private respondents Roland Picart and Lucia Chan full

backwages from the time of their unjust dismissal to their actual reinstatement,

without deduction or qualification in accordance with the mandate of the law

(Rep. Act No, 6715).

FIRST DIVISION

PHILIPPINE DAILY INQUIRER, INC.,

Petitioner,

- versus -

LEON M. MAGTIBAY, JR. and

PHILIPPINE DAILY INQUIRER

EMPLOYEES UNION (PDIEU),

Respondents.

G.R. No. 164532

Present:

PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,

CORONA,

AZCUNA, and

GARCIA, JJ.

Promulgated:

July 24, 2007

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

GARCIA, J.:

By this petition for review on certiorari under Rule 45 of the Rules of Court,

petitioner Philippine Daily Inquirer, Inc. (PDI) seeks the reversal and setting aside

of the decision1[1] dated May 25, 2004 of the Court of Appeals (CA) in CA G.R.

SP No. 78963, affirming the resolution dated September 23, 2002 of the National

Labor Relations Commission (NLRC) in NLRC Case No. 00-03-01945-96. The

affirmed NLRC resolution reversed an earlier decision dated July 29, 1996 of the

Labor Arbiter in NLRC Case No. 011800-96, which dismissed the complaint for

illegal dismissal filed by the herein respondent Leon Magtibay, Jr. against the

petitioner.

The factual antecedents are undisputed:

On February 7, 1995, PDI hired Magtibay, on contractual basis, to assist, for

a period of five months from February 17, 1995, the regular phone operator.

Before the expiration of Magtibays contractual employment, he and PDI

agreed to a fifteen-day contract extension, or from July 17, 1995 up to July 31,

1995, under the same conditions as the existing contract.

After the expiration of Magtibays contractual employment, as extended,

PDI announced the creation and availability of a new position for a second

telephone operator who would undergo probationary employment.

Apparently, it was PDIs policy to accord regular employees preference for new

vacancies in the company. Thus, Ms. Regina M. Layague, a PDI employee and

member of respondent PDI Employees Union (PDIEU), filed her application for

the new position. However, she later withdrew her application, paving the way

for outsiders or non-PDI employees, like Magtibay in this case, to apply.

After the usual interview for the second telephone operator slot, PDI chose

to hire Magtibay on a probationary basis for a period of six (6) months. The

signing of a written contract of employment followed.

On March 13, 1996, or a week before the end the agreed 6-month

probationary period, PDI officer Benita del Rosario handed Magtibay his

termination paper, grounded on his alleged failure to meet company standards.

Aggrieved, Magtibay immediately filed a complaint for illegal dismissal and

damages before the Labor Arbiter. PDIEU later joined the fray by filing a

supplemental complaint for unfair labor practice.

Magtibay anchored his case principally on the postulate that he had

become a regular employee by operation of law, considering that he had been

employed by and had worked for PDI for a total period of ten months, i.e., four

months more than the maximum six-month period provided for by law on

probationary employment. He also claimed that he was not apprised at the

beginning of his employment of the performance standards of the company,

hence, there was no basis for his dismissal. Finally, he described his dismissal as

tainted with bad faith and effected without due process.

PDI, for its part, denied all the factual allegations of Magtibay, adding

that his previous contractual employment was validly terminated upon the

expiration of the period stated therein. Pressing the point, PDI alleged that the

period covered by the contractual employment cannot be counted with or

tacked to the period for probation, inasmuch as there is no basis to consider

Magtibay a regular employee. PDI additionally claimed that Magtibay was

dismissed for violation of company rules and policies, such as allowing his lover

to enter and linger inside the telephone operators booth and for failure to meet

prescribed company standards which were allegedly made known to him at

the start through an orientation seminar conducted by the company.

After due proceedings, the Labor Arbiter found for PDI and accordingly

dismissed Magtibays complaint for illegal dismissal. The Labor Arbiter premised

his holding on the validity of the previous contractual employment of Magtibay

as an independent contract. He also declared as binding the stipulation in the

contract specifying a fixed period of employment. According to the Labor

Arbiter, upon termination of the period stated therein, the contractual

employment was also effectively terminated, implying that Magtibay was

merely on a probationary status when his services were terminated inasmuch as

the reckoning period for probation should be from September 21, 1995 up to

March 31, 1996 as expressly provided in their probationary employment

contract. In fine, it was the Labor Arbiters position that Magtibays previous

contractual employment, as later extended by 15 days, cannot be considered

as part of his subsequent probationary employment.

Apart from the foregoing consideration, the Labor Arbiter further ruled

that Magtibays dismissal from his probationary employment was for a valid

reason. Albeit the basis for termination was couched in the abstract, i.e., you

did not meet the standards of the company, there were three specific reasons

for Magtibays termination, to wit: (1) he repeatedly violated the company rule

prohibiting unauthorized persons from entering the telephone operators room;

(2) he intentionally omitted to indicate in his application form his having a

dependent child; and (3) he exhibited lack of sense of responsibility by locking

the door of the telephone operators room on March 10, 1996 without switching

the proper lines to the company guards so that incoming calls may be

answered by them.

The Labor Arbiter likewise dismissed allegations of denial of due process

and the commission by PDI of unfair labor practice.

PDIEU and Magtibay appealed the decision of the Labor Arbiter to the

NLRC. As stated earlier, the NLRC reversed and set aside said decision,

effectively ruling that Magtibay was illegally dismissed. According to the NLRC,

Magtibays probationary employment had ripened into a regular one.

With the NLRCs denial of its motion for reconsideration, PDI went to the

CA on a petition for certiorari. Eventually, the CA denied due course to PDIs

petition on the strength of the following observations:

We agree with the findings of respondent NLRC.

Petitioner PDI failed to prove that such rules and regulations

were included in or form part of the standards that were supposed

to be made known to respondent Magtibay at the time of his

engagement as telephone operator. Particularly, as regards the

first stated infraction xxx petitioner PDI, contrary to its assertion,

stated in its position paper, motion for reconsideration and in this

petition that respondent Magtibay failed to abide by the rules and

regulations of the company issued by Ms. Benita del Rosario

regarding the entry of persons in the operators booth when respondent was already working for petitioner PDI. Further,

nowhere can it be found in the list of Basic Responsibility and

Specific Duties and Responsibilities (Annex D of the petition) of

respondent Magtibay that he has to abide by the duties, rules and

regulations that he has allegedly violated. The infractions

considered by petitioner PDI as grounds for the dismissal of

respondent Magtibay may at most be classified as just causes for

the termination of the latters employment. x x x.

x x x x x x x x x

Finally, the three questionable grounds also relied upon by

petitioner PDI in dismissing respondent Magtibay may be

considered as just causes. However, petitioner PDI did not raise the

same as an issue in the present petition because the procedure it

adopted in dismissing respondent Magtibay fell short of the

minimum requirements provided by law.

PDI filed a motion for reconsideration but to no avail.

Hence, this recourse by PDI on the following submissions:

I.

THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FINDING THAT

A PROBATIONARY EMPLOYEES FAILURE TO FOLLOW AN EMPLOYERS RULES AND REGULATIONS CANNOT BE DEEMED FAILURE BY SAID

EMPLOYEE TO MEET THE STANDARDS OF HIS EMPLOYER THUS

EMASCULATING PETITIONERS RIGHT TO CHOOSE ITS EMPLOYEES.

II.

THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN REFUSING

TO FIND THAT PROCEDURAL DUE PROCESS AS LAID DOWN IN

SECTION 2, RULE XXIII OF THE IMPLEMENTING RULES OF THE LABOR

CODE HAD BEEN OBSERVED BY THE PETITIONER.

We GRANT the petition.

This Court, to be sure, has for a reason, consistently tended to be partial in

favor of workers or employees in labor cases whenever social legislations are

involved. However, in its quest to strike a balance between the employers

prerogative to choose his employees and the employees right to security of

tenure, the Court remains guided by the gem of a holding in an old but still

applicable case of Pampanga Bus, Co. v. Pambusco Employees Union, Inc.2[2]

In it, the Court said:

The right of a laborer to sell his labor to such persons as he

may choose is, in its essence, the same as the right of an employer

to purchase labor from any person whom it chooses. The employer

and the employee have thus an equality of right guaranteed by

the Constitution. If the employer can compel the employee to work

against the latters will, this is servitude. If the employee can compel the employer to give him work against the employers will, this is oppression.

Management and labor, or the employer and the employee are more

often not situated on the same level playing field, so to speak. Recognizing this

reality, the State has seen fit to adopt measures envisaged to give those who

have less in life more in law. Article 279 of the Labor Code which gives

employees the security of tenure is one playing field leveling measure:

Art. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee

except for a just cause or when authorized by this Title. x x x.

But hand in hand with the restraining effect of Section 279, the same

Labor Code also gives the employer a period within which to determine

whether a particular employee is fit to work for him or not. This employers

prerogative is spelled out in the following provision:

Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the date the

employee started working, unless it is covered by an apprenticeship

agreement stipulating a longer period. The services of an

employee who has been engaged on a probationary basis may be

terminated for a just cause or when he fails to qualify as a regular

employee in accordance with reasonable standards made known

by the employer to the employee at the time of his engagement.

An employee who is allowed to work after a probationary period

shall be considered a regular employee.

In International Catholic Migration Commission v. NLRC,3[3] we have

elucidated what probationary employment entails:

x x x. A probationary employee, as understood under Article

282 (now Article 281) of the Labor Code, is one who is on trial by an

employer during which the employer determines whether or not he

is qualified for permanent employment. A probationary

appointment is made to afford the employer an opportunity to

observe the fitness of a probationer while at work, and to ascertain

whether he will become a proper and efficient employee. The

word probationary, as used to describe the period of employment, implies the purpose of the term or period but not its

length.

Being in the nature of a trial period the essence of a probationary period of employment fundamentally lies in the

purpose or objective sought to be attained by both the employer

and the employee during said period. The length of time is

immaterial in determining the correlative rights of both in dealing

with each other during said period. While the employer, as

stated earlier, observes the fitness, propriety and efficiency of a

probationer to ascertain whether he is qualified for permanent

employment, the probationer, on the other, seeks to prove to the

employer, that he has the qualifications to meet the reasonable

standards for permanent employment.

It is well settled that the employer has the right or is at liberty

to choose who will be hired and who will be denied employment.

In that sense, it is within the exercise of the right to select his

employees that the employer may set or fix a probationary period

within which the latter may test and observe the conduct of the

former before hiring him permanently. x x x.

Within the limited legal six-month probationary period, probationary

employees are still entitled to security of tenure. It is expressly provided in the

afore-quoted Article 281 that a probationary employee may be terminated only

on two grounds: (a) for just cause, or (b) 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.4[4]

PDI invokes the second ground under the premises. In claiming that it had

adequately apprised Magtibay of the reasonable standards against which his

performance will be gauged for purposes of permanent employment, PDI cited

the one-on-one seminar between Magtibay and its Personnel Assistant, Ms.

Rachel Isip-Cuzio. PDI also pointed to Magtibays direct superior, Benita del

Rosario, who diligently briefed him about his responsibilities in PDI. These factual

assertions were never denied nor controverted by Magtibay. Neither did he

belie the existence of a specific rule prohibiting unauthorized persons from

entering the telephone operators booth and that he violated that prohibition.

This notwithstanding, the NLRC and the CA proceeded nonetheless to rule that

the records of the case are bereft of any evidence showing that these rules and

regulations form part of the so-called company standards.

We do not agree with the appellate court when it cleared the NLRC of

commission of grave abuse of discretion despite the latters disregard of clear

and convincing evidence that there were reasonable standards made known

by PDI to Magtibay during his probationary employment. It is on record that

Magtibay committed obstinate infractions of company rules and regulations,

which in turn constitute sufficient manifestations of his inadequacy to meet

reasonable employment norms. The suggestion that Magtibay ought to have

been made to understand during his briefing and orientation that he is

expected to obey and comply with company rules and regulations strains

credulity for acceptance. The CAs observation that nowhere can it be found

in the list of Basic Responsibility and Specific Duties and Responsibilities of

respondent Magtibay that he has to abide by the duties, rules and regulations

that he has allegedly violated is a strained rationalization of an unacceptable

conduct of an employee. Common industry practice and ordinary human

experience do not support the CAs posture. All employees, be they regular or

probationary, are expected to comply with company-imposed rules and

regulations, else why establish them in the first place. Probationary employees

unwilling to abide by such rules have no right to expect, much less demand,

permanent employment. We, therefore find sufficient factual and legal basis,

duly established by substantial evidence, for PDI to legally terminate Magtibays

probationary employment effective upon the end of the 6-month probationary

period.

It is undisputed that PDI apprised Magtibay of the ground of his

termination, i.e., he failed to qualify as a regular employee in accordance with

reasonable standards made known to him at the time of engagement, only a

week before the expiration of the six-month probationary period. Given this

perspective, does this make his termination unlawful for being violative of his

right to due process of law?

It does not.

Unlike under the first ground for the valid termination of probationary

employment which is for just cause, the second ground does not require notice

and hearing. Due process of law for this second ground consists of making the

reasonable standards expected of the employee during his probationary period

known to him at the time of his probationary employment. By the very nature of

a probationary employment, the employee knows from the very start that he will

be under close observation and his performance of his assigned duties and

functions would be under continuous scrutiny by his superiors. It is in apprising

him of the standards against which his performance shall be continuously

assessed where due process regarding the second ground lies, and not in notice

and hearing as in the case of the first ground.

Even if perhaps he wanted to, Magtibay cannot deny as he has not

denied PDIs assertion that he was duly apprised of the employment

standards expected of him at the time of his probationary employment when he

underwent a one-on-one orientation with PDIs personnel assistant, Ms. Rachel

Isip-Cuzio. Neither has he denied nor rebutted PDIs further claim that his direct

superior, Benita del Rosario, briefed him regarding his responsibilities in PDI.

Lest it be overlooked, Magtibay had previously worked for PDI as

telephone operator from February 7, 1995 to July 31, 1995 as a contractual

employee. Thus, the Court entertains no doubt that when PDI took him in on

September 21, 1995, Magtibay was already very much aware of the level of

competency and professionalism PDI wanted out of him for the entire duration

of his probationary employment.

PDI was only exercising its statutory hiring prerogative when it refused to

hire Magtibay on a permanent basis upon the expiration of the six-month

probationary period. This was established during the proceedings before the

labor arbiter and borne out by the records and the pleadings before the Court.

When the NLRC disregarded the substantial evidence establishing the legal

termination of Magtibays probationary employment and rendered judgment

grossly and directly contradicting such clear evidence, the NLRC commits

grave abuse of discretion amounting to lack or excess of jurisdiction. It was,

therefore, reversible error on the part of the appellate court not to annul and set

aside such void judgment of the NLRC.

WHEREFORE, the assailed decision dated May 25, 2004 of the CA in CA

G.R. SP No. 78963 is hereby REVERSED and SET ASIDE, and the earlier resolution

dated September 23, 2002 of the NLRC in NLRC Case No. 00-03-01945-96 is

declared NULL and VOID. The earlier decision dated July 29, 1996 of the Labor

Arbiter in NLRC Case No. 011800-96, dismissing respondent Leon Magtibay, Jr.s

complaint for alleged illegal dismissal, is REINSTATED.

No pronouncement as to costs.

SO ORDERED.

IRST DIVISION

[G.R. No. 149371. April 13, 2005]

ABERDEEN COURT, INC., and RICHARD NG, petitioners, vs. MATEO C. AGUSTIN

JR., respondent.

D E C I S I O N

AZCUNA, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil

Procedure, assailing the Decision of the Court of Appeals in CAG.R. SP No. 60223, entitled Mateo Agustin Jr. v. National Labor Relations Commission (First Division), Aberdeen Court, Inc. and Ricardo Ng, dated January 31, 2001, and the Resolution of August 10, 2001 denying the motion for reconsideration therein.

On September 16, 1996, Aberdeen Court, Inc. (Aberdeen), one of the

petitioners, employed Mateo C. Agustin (Agustin), herein respondent, for the

purpose of trouble shooting the electrical problems in said petitioners establishment. Agustin was engaged on a six-month probationary basis. The

employment contract provided, inter alia, that:

Should my performance be considered unsatisfactory at any time by

management during my probationary period, I understand and agree that the

management can terminate my services at any time, even before the

termination of the agreed six-month period.[1]

On January 12 and 13, 1997 the personnel of Centigrade Industries, Inc.

performed a reading of the exhaust air balancing at the fifth and sixth floors of

Aberdeens premises. Petitioners claim that Agustin was placed in charge of the undertaking. On the other hand, Agustin asserts that Engr. Abad merely

requested him to accompany the aforesaid personnel to show the location of

the exhaust air outlet at the fifth and sixth floors of the premises. He avers that:

The request of Engr. Abad is actually the responsibility of the companys mechanical engineers. Despite the fact that the request of Engr. Abad is not a

part of his job since he is not a mechanical engineer and there were three (3)

other mechanical engineers on duty in the company premises, petitioner [herein

respondent], being a subordinate of Engr. Abad, obliged and accompanied

the aforementioned personnel to the location. There were no other specific

instructions from Engr. Abad to petitioner with respect to the conduct or actual

reading to be made by the Centigrade personnel.

It must be noted that the reading of exhaust air balancing is under the category

of heating, ventilating and air conditioning (HVAC) which are within the realm of

field of work of mechanical engineers. Being an electrical engineer, petitioner

obviously has no knowledge of the procedure and the equipment used by

mechanical engineers in the conduct of the reading of the exhaust air

balancing.[2]

After the Centigrade personnel finished their job, they submitted their report to

Agustin. Petitioners allege that Agustin accepted and signed the report, without

verifying its correctness. Engineer Abad later checked the work of the

Centigrade employees only to find out that four rooms in the fifth floor and five

rooms in the sixth floor were incorrectly done.[3] In contrast, Agustin states that

after the report was handed to him, he took the same to Engr. Abad, who he

claims was responsible for evaluating and confirming the said report. Allegedly,

instead of signing it himself, Engr. Abad directed respondent to sign it, giving the

reason that Agustin was present when the reading was conducted. Respondent

Agustin complied, but he now points out that his signature was not

accompanied by any qualification that he accepted the report on behalf of

Aberdeen. He claims that he signed merely to evidence that he received a

copy of the report.[4]

The parties also differ on the occurrences two days after the signing of the

report or on January 15, 1997. According to petitioners, Aberdeen

management confronted Agustin with his failure to check the job and asked

him to explain his side. Agustin allegedly ignored management and left the

company, which made it impossible for Aberdeen to transmit any further notice

to him.[5]

However, Agustin claims that:

On January 15, 1997 or two days after the report was submitted by Centigrade

Industries, petitioner [herein respondent] was summarily dismissed. In the

afternoon of that day, he received a telephone call from the personnel office of

respondent company ordering him to report to that office after his tour of duty.

At about seven p.m. at the personnel office, Ms. Lani Carlos of the Personnel

Department, informed him that Aberdeen Court is terminating his services as

electrical engineer. Petitioner was flabbergasted. Ms. Carlos then informed him

that he could get his two (2) weeks salary in the amount of P4,000, more or less,

on the condition that he will sign some documents which provides that the

company has no more liability and that he is voluntarily resigning from

Aberdeen Court. Aware of his rights, petitioner did not sign the offered

documents. He was then hurriedly led to the door by Ms. Carlos.

The following day or on January 16, 1997, petitioner requested assistance from

the Department of Labor and Employment (DOLE). A DOLE personnel told him

to report for work since private respondents did not serve him a notice of

termination. As instructed, petitioner reported for work on the same day. Upon

arriving at the company premises, petitioner asked Ms. Carlos if he could still

report for work but private respondents personnel officer told him that he cannot do so.[6]

Within the same month of that year, respondent Agustin filed a complaint for

illegal dismissal which was docketed as NLRC NCR Case No. 00-01-00466-97.

In an undated decision, the labor arbiter rendered judgment in favor of herein

respondent, declaring that Agustin was illegally dismissed, thus:

WHEREFORE, judgment is hereby rendered:

1. Ordering respondent ABERDEEN COURT, INC. to reinstate to his