Wilfredo Aro vs.

NLRC

The issue as to whether petitioners were project employees or regular employees is factual in nature. It is well-settled in jurisprudence that factual findings of administrative or quasi-judicial bodies, which are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality, and bind the Court when supported by substantial evidence.1[7 We [this Court] may take cognizance of and resolve factual issues, only when the findings of fact and conclusions of law of the Labor Arbiter or the NLRC are inconsistent with those of the CA.2[9] In the present case, the NLRC and the CA have opposing views According to the CA, petitioners are project employees as found by Labor Arbiter Ernesto Carreon in his Decision dated May 28, 1998, because they were hired for the construction of the Cordova Reef Village Resort in Cordova, Cebu, which was later on affirmed by the NLRC in its January 12, 1999 decision. The only discrepancy is the Order of the NLRC that petitioners are entitled to backwages up to the finality of its decision, when as project employees, private respondents are only entitled to payment of backwages until the date of the completion of the project. In a later resolution on private respondent's motion for reconsideration of its January 12, 1999 decision, the NLRC changed its findings by ruling that petitioners herein were regular employees and, therefore, entitled to full backwages, until finality of the decision, citing that petitioners repeated rehiring over a long span of time made them regular employees. Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee," thus:
Article 280. Regular and Casual Employment The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been

fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or 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 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.

In Hanjin Heavy Industries and Construction Co. Ltd. v. Ibaez,3[10] this Court extensively discussed the above distinction, thus:
x x x [T]he principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular employees" is whether or not the project employees were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project.4[11] In a number of cases,5[12] the Court has held that the length of service or the rehiring of construction workers on a project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a natural consequence of the fact that experienced construction workers are preferred. Employees who are hired for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of which has been determined and made known to the employees at the time of the employment , are properly treated as project employees and their services may be lawfully terminated upon the completion of a project.6[13] Should the terms of their employment fail to comply with this standard, they cannot be considered project employees.

In Abesco Construction and Development Corporation v. Ramirez,7[14] which also involved a construction company and its workers, this Court considered it crucial that the employees were informed of their status as project employees: The principal test for determining whether employees are "project employees" or "regular employees" is whether they are assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time they are engaged for that project. Such duration, as well as the particular work/service to be performed, is defined in an employment agreement and is made clear to the employees at the time of hiring. In this case, petitioners did not have that kind of agreement with respondents. Neither did they inform respondents of the nature of the latters work at the time of hiring. Hence, for failure of petitioners to substantiate their claim that respondents were project employees, we are constrained to declare them as regular employees.

Applying the above disquisition, this Court agrees with the findings of the CA that petitioners were project employees. It is not disputed that petitioners were hired for the construction of the Cordova Reef Village Resort in Cordova, Cebu. By the nature of the contract alone, it is clear that petitioners' employment was to carry out a specific project. Hence, the CA did not commit grave abuse of discretion when it affirmed the findings of the Labor Arbiter. Therefore, being project employees, petitioners are only entitled to full backwages, computed from the date of the termination of their employment until the actual completion of the work. Illegally dismissed workers are entitled to the payment of their salaries corresponding to the unexpired portion of their employment where the employment is for a definite period.8[18] In this case, as found by the CA, the Cordova Reef Village Resort project had been completed in October 1996 and private respondent herein had signified its willingness, by way

of concession to petitioners, to set the date of completion of the project as March 18, 1997; hence, the latter date should be considered as the date of completion of the project for purposes of computing the full backwages of petitioners. WHEREFORE, the Petition for Review dated October 7, 2006, of petitioners Wilfredo Aro, Ronilo Tirol, Jose Pacaldo, Primitivo Casquejo and Marcial Abgo is hereby DENIED. Consequently, the Decision dated March 7, 2006 and Resolution dated July 27, 2006 of the Court of Appeals are hereby AFFIRMED in toto
RADIN C. ALCIRA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Central to the matter at hand is Article 281 of the Labor Code which provides that: 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. The first issue we must resolve is whether petitioner was allowed to work beyond his probationary period and was therefore already a regular employee at the time of his alleged dismissal. We rule in the negative. Petitioner claims that under the terms of his contract, his probationary employment was only for five months as indicated by the remark Please be informed that after five months, your performance shall be evaluated and any adjustment in salary shall depend on your work performance. The argument lacks merit. As correctly held by the labor arbiter, the appointment contract also stated in another part thereof that petitioners employment status was probationary (6 mos.). The five-month period referred to the evaluation of his work.9[10] Petitioner insists that he already attained the status of a regular employee when he was dismissed on November 20, 1996 because, having started work on May 20, 1996, the six-month probationary period ended on November 16, 1996. According to petitioners computation, since Article 13 of the Civil Code provides that one month is composed of thirty days, six months total one hundred eighty days. As the appointment provided that petitioners status was probationary (6 mos.) without any specific date of termination, the 180th day fell on November 16, 1996. Thus, when he was dismissed on November 20, 1996, he was already a regular employee.

Petitioners contention is incorrect. In CALS Poultry Supply Corporation, et. al. vs. Roco, et. al.,10[11] this Court dealt with the same issue of whether an employment contract from May 16, 1995 to November 15, 1995 was within or outside the six-month probationary period. We ruled that November 15, 1995 was still within the six-month probationary period. We reiterate our ruling in CALS Poultry Supply: (O)ur computation of the 6-month probationary period is reckoned from the date of appointment up to the same calendar date of the 6th month following.(italics supplied) In short, since the number of days in each particular month was irrelevant, petitioner was still a probationary employee when respondent Middleby opted not to regularize him on November 20, 1996. The second issue is whether respondent Middleby informed petitioner of the standards for regularization at the start of his employment. Section 6 (d) of Rule 1 of the Implementing Rules of Book VI of the Labor Code (Department Order No. 10, Series of 1997) provides that: xxx xxx xxx

(d) In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee. xxx xxx xxx

We hold that respondent Middleby substantially notified petitioner of the standards to qualify as a regular employee when it apprised him, at the start of his employment, that it would evaluate his supervisory skills after five months. In Orient Express Placement Philippines vs. National Labor Relations Commission,11[12] we ruled that an employer failed to inform an employee of the reasonable standards for becoming a regular employee: Neither private respondent's Agency-Worker Agreement with ORIENT EXPRESS nor his Employment Contract with NADRICO ever mentioned that he must first take and pass a Crane Operator's License Examination in Saudi Arabia before he would be allowed to even touch a crane. Neither did he know that he would be assigned as floorman pending release of the results

of the examination or in the event that he failed; more importantly, that he would be subjected to a performance evaluation by his superior one (1) month after his hiring to determine whether the company was amenable to continuing with his employment. Hence, respondent Flores could not be faulted for precisely harboring the impression that he was hired as crane operator for a definite period of one (1) year to commence upon his arrival at the work-site and to terminate at the end of one (1) year. No other condition was laid out except that he was to be on probation for three (3) months.(emphasis supplied) Conversely, an employer is deemed to substantially comply with the rule on notification of standards if he apprises the employee that he will be subjected to a performance evaluation on a particular date after his hiring. We agree with the labor arbiter when he ruled that: In the instant case, petitioner cannot successfully say that he was never informed by private respondent of the standards that he must satisfy in order to be converted into regular status. This rans (sic) counter to the agreement between the parties that after five months of service the petitioners performance would be evaluated. It is only but natural that the evaluation should be made vis--vis the performance standards for the job. Private respondent Trifona Mamaradlo speaks of such standard in her affidavit referring to the fact that petitioner did not perform well in his assigned work and his attitude was below par compared to the companys standard required of him.12[13] The third issue for resolution is whether petitioner was illegally dismissed when respondent Middleby opted not to renew his contract on the last day of his probationary employment. It is settled that even if probationary employees do not enjoy permanent status, they are accorded the constitutional protection of security of tenure. This means they may only be terminated for just cause or when they otherwise fail to qualify as regular employees in accordance with reasonable standards made known to them by the employer at the time of their engagement.13[14] But we have also ruled in Manlimos, et. al. vs. National Labor Relations Commission14[15] that this constitutional protection ends on the expiration of the probationary period. On that date, the parties are free to either renew or terminate their contract of employment. Manlimos concluded that (t)his development has rendered moot the question of whether there was a just cause for the

dismissal of the petitioners xxx.15[16] In the case at bar, respondent Middleby exercised its option not to renew the contract when it informed petitioner on the last day of his probationary employment that it did not intend to grant him a regular status. Although we can regard petitioners severance from work as dismissal, the same cannot be deemed illegal. As found by the labor arbiter, the NLRC and the Court of Appeals, petitioner (1) incurred ten absences (2) was tardy several times (3) failed to wear the proper uniform many times and (4) showed inferior supervisory skills. Petitioner failed to satisfactorily refute these substantiated allegations. Taking all this in its entirety, respondent Middleby was clearly justified to end its employment relationship with petitioner.

Mitsubishi motors vs. chrysler

The Courts Ruling At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for review on certiorari of CA decisions.16[23] Questions of fact are not entertained.17[24] This Court is not a trier of facts and, in labor cases, this doctrine applies with greater force. Factual questions are for labor tribunals to resolve.18[25] The findings of fact of quasi-judicial bodies like the National Labor Relations Commission (NLRC), are accorded with respect, even finality, if supported by substantial evidence.

Particularly when passed upon and upheld by the Court of Appeals, such findings are binding and conclusive upon the Supreme Court and will not normally be disturbed.19[26]

However, when the findings of the NLRC and the Court of Appeals are inconsistent with each other, there is a need to review the records to determine which of them should be preferred as more conformable to the evidentiary facts.20[27] Considering that the CAs findings of fact clash with those of the Voluntary Arbitrator, this Court is compelled to go over the records of the case, as well as the submissions of the parties.21[28]

Regularization of Employment

Indeed, an employer, in the exercise of its management prerogative, may hire an employee on a probationary basis in order to determine his fitness to perform work.22[29] Under Article 281 of the Labor Code, the employer must inform the employee of the standards for which his employment may be considered for regularization. Such probationary period, unless covered by an apprenticeship agreement, shall not exceed six (6) months from the date the employee started working. The employees services may be terminated for just cause or for his failure to qualify as a regular employee based on reasonable standards made known to him.23[30]

Respondent Paras was employed as a management trainee on a probationary basis. During the orientation conducted on May 15, 1996, he was apprised of the standards upon which his regularization would be based. He reported for work on May 27, 1996. As per the companys policy, the probationary period was from three (3) months to a maximum of six (6) months.

Applying Article 13 of the Civil Code,24[31] the probationary period of six (6) months consists of one hundred eighty (180) days.25[32] This is in conformity with paragraph one, Article 13 of the Civil Code, which provides that the months which are not designated by their names shall be understood as consisting of thirty (30) days each. The number of months in the probationary period, six (6), should then be multiplied by the number of days within a month, thirty (30); hence, the period of one hundred eighty (180) days.

As clearly provided for in the last paragraph of Article 13, in computing a period, the first day shall be excluded and the last day included. Thus, the one hundred eighty (180) days commenced on May 27, 1996, and ended on November 23, 1996. The termination letter dated November 25, 1996 was served on respondent Paras only at 3:00 a.m. of

November 26, 1996. He was, by then, already a regular employee of the petitioner under Article 281 of the Labor Code.

The Legality of The Dismissal

An employee cannot be dismissed except for just or authorized cause as found in the Labor Code and after due process.26[33] The following grounds would justify the dismissal of an employee:

(a)

Serious misconduct or willful disobedience by the employee of the lawful orders of the employer or representative in connection with his work; Gross and habitual neglect by the employee of his duties; Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; Commission of a crime or offense by the employee against the person of his employer or of any immediate member of his family or his duly authorized representative; and Other causes analogous to the foregoing.27[34]

(b) (c)

(d)

(e)

The basis for which respondent Paras services were terminated was his alleged unsatisfactory rating arising from poor performance. It is a settled doctrine that the employer has the burden of proving the lawfulness of his employees dismissal. The validity of the charge must be clearly established in a manner consistent with due process.28[35]

Under Article 282 of the Labor Code, an unsatisfactory rating can be a just cause for dismissal only if it amounts to gross and habitual neglect of duties. Gross negligence has been defined to be the want or absence of even slight care or diligence as to amount to a reckless disregard of the safety of person or property. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.29[36] A careful perusal of the records of this case does not show that respondent Paras was grossly negligent in the performance of his duties.

The company policy provides the following rule in performance evaluation: The performance rating sheet must be accomplished by the immediate supervisor, then reviewed by the Department Head, and concurred by the Division Head. The Personnel Manager likewise must note all submitted performance sheets. Once the rating sheet has gone through this standard procedure, the immediate supervisor shall discuss the results of the performance rating with the employee. The discussion/conference may be done in the presence of the Department Head. This is to emphasize the point that the employee is given due importance especially in matters pertaining to his development as a person and employee.30[37]

In the present case, the immediate supervisor of respondent Paras gave him an average performance rating and found him fit for regularization.31[38] Thereafter, his immediate supervisor and the department head reviewed the said rating, which was duly noted by the personnel manager. However, in a complete turn around, the petitioner made it appear that after the performance evaluation of respondent Paras was reviewed by the department and division heads, it was unanimously agreed that the

respondents performance rating was unsatisfactory, making him unfit for regularization.

There is no showing that respondent Paras was informed of the basis for the volte face of the management group tasked to review his performance rating. His immediate supervisor even told him that he had garnered a satisfactory rating and was qualified for regularization, only to later receive a letter notifying him that his employment was being terminated.

Considering that respondent Paras was not dismissed for a just or authorized cause, his dismissal from employment was illegal. Furthermore, the petitioners failure to inform him of any charges against him deprived him of due process. Clearly, the termination of his employment based on his alleged unsatisfactory performance rating was effected merely to cover up and deodorize the illegality of his dismissal.

Reinstatement and Backwages

The normal consequences of illegal dismissal are reinstatement without loss of seniority rights and the payment of backwages computed from the time the employees compensation was withheld from him.32[39] Since respondent Paras dismissal from employment is illegal, he is entitled to

reinstatement and to be paid backwages from the time of his dismissal up to the time of his actual reinstatement.

The petitioner asserts that assuming respondent Paras was illegally dismissed, his reinstatement had become moot and academic because of its retrenchment program which was effected beginning February 1998. The petitioner posits that even if respondent Paras had become a regular employee by November 26, 1996, he would have been included in the first phase of its retrenchment program, pursuant to the last in first out policy embedded in the CBA. Hence, the petitioner concludes, the payment of backwages should be computed up to February of 1998.

The respondents, for their part, aver that the petitioner is proscribed from alleging new circumstances and allegations of fact, particularly on financial reverses, before the Court of Appeals and the Voluntary Arbitrator.

We do not agree with the respondents.

A cursory examination of the records shows that the petitioner could not raise its retrenchment program as an issue before the VA, because it was implemented only in February 1998, when the case was already in the CA. However, we note that the petitioner did not raise the same in its comment to the petition. The petitioner asserted the matter only in its October 20, 2000 motion for reconsideration of the decision of the CA, where it alleged that the retrenchment program was effected to arrest the continuing business losses resulting from the financial reverses it experienced in 1997.

Nevertheless, it is not denied that because of the petitioners losses, it retrenched seven hundred (700) employees. Business reverses or losses are recognized by law as an authorized cause for termination of employment. Still, it is an essential requirement that alleged losses in business operations must be proven convincingly. Otherwise, such ground for termination would be susceptible to abuse by scheming employers, who might be merely feigning business losses or reverses in their business ventures to ease out employees.33[40] Retrenchment is an authorized cause for termination of employment which the law accords an employer who is not making good in its operations in order to cut back on expenses for salaries and wages by laying off some employees. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing.34[41]

In this case, the petitioner submitted in the CA its financial statements for 1996, 1997 and 199835[42] as well as its application for retrenchment. In its Statements of Income and Unappropriated Retained Earning, it was shown that in 1996, the parent company of the petitioner had a net income of P467,744,285. In 1997, it had a net loss of P29,253,511.36[43] In 1998, its net loss, after effecting retrenchment and closing several plants, was arrested and dropped to P8,156,585.37[44] This shows that even after the retrenchment, the petitioner MMPC still suffered net losses.

In 1996, the petitioners current assets amounted to P5,381,743,576; it increased to P8,033,932,74538[45] in 1997, while in 1998, it was reduced to P5,053,874,359.39[46] This shows that the petitioners assets acquired in 1997 diminished in 1998. The figures for Current Liabilities are consistent with the movement of current assets for 1997 and 1998.

In 1996, the petitioner incurred current liabilities of P1,966,445,401 which increased to P5,088,990,11740[47] in 1997 and decreased to P2,880,259,81141[48] in 1998. To reduce its losses, the petitioner had to dispose of some of its current assets to cover the increased liability incurred in 1997, and had to resort to borrowings in 1998. The continuity of losses which started in 1997 is

further illustrated in the figures on retained earnings for 1996, 1997 and 1998. In 1996, retained earnings stood at P1,838,098,175,42[49] which decreased to P994,942,62843[50] in 1997 and further decreased to P592,614,54844[51] in 1998.

The petitioners losses in 1997 and 1998 are not insignificant. It is beyond cavil then, that the serious and actual business reverses suffered by the petitioner justified its resort to retrenchment of seven hundred (700) of its employees.

The records show that the petitioner informed the Department of Labor and Employment of its plight and intention to retrench employees as a result of the shutdown of its plants.45[52] The termination of the five hundred thirty-one (531) affected employees were made effective a month from receipt of the termination letter mailed on February 25, 1998.46[53]

In accordance with the CBA between MMPC and CPLU, employees who were recently hired were the ones retrenched. Considering that respondent Paras had just been regularized on November 24, 1996, he would have been included among those who had been retrenched had he not been dismissed.

The unfavorable financial conditions of the petitioner may not justify reinstatement. However, it is not a sufficient ground to deny backwages to respondent Paras who was illegally dismissed.47[54]

Considering that notices of retrenchment were mailed on February 25, 1998 and made effective one month therefrom, respondent Paras should be paid full backwages from the date of his illegal dismissal up to March 25, 1998. Pursuant to Article 283 of the Labor Code, he should be paid separation pay equivalent to one (1) month salary, or to at least one-half month pay for every year of service, whichever is higher, a fraction of at least six months to be considered as one (1) year.48[55]

IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The September 13, 2000 Decision of the Court of Appeals in CAGR SP No. 46030 is hereby AFFIRMED WITH MODIFICATIONS. The petitioner is ORDERED to pay respondent Nelson Paras separation pay equivalent to one (1) month, or to at least one-half (1/2) month pay for every year of service, whichever is higher, a fraction of at least six (6) months to be considered as one year; and to pay full backwages, computed from the time of his dismissal up to March 25, 1998. That portion of the decision of the Court of Appeals directing the reinstatement of the respondent Paras is DELETED.