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Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 167714             March 7, 2007

ROWELL INDUSTRIAL CORPORATION, Petitioner,
vs.
HON. COURT OF APPEALS and JOEL TARIPE, Respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

This case is a Petition for Review under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to set aside the Decision¹and Resolution²of the Court of Appeals in CA-G.R. SP No. 74104, entitled, Rowell Industrial Corp., and/or Edwin Tang vs. National Labor Relations Commission and Joel Taripe, dated 30 September 2004 and 1 April 2005, respectively, which affirmed the Resolutions³of the National Labor Relations Commission (NLRC) dated 7 June 2002 and 20 August 2002, finding herein respondent Joel Taripe (Taripe) as a regular employee who had been illegally dismissed from employment by herein petitioner Rowell Industrial Corp. (RIC), thereby ordering petitioner RIC to reinstate respondent Taripe with full backwages, subject to the modification of exonerating Edwin Tang, the RIC General Manager and Vice President, from liability and computing the backwages of herein respondent Taripe based on the prevailing salary rate at the time of his dismissal. The NLRC Resolutions reversed the Decision⁴of the Labor Arbiter dated 29 September 2000, which dismissed respondent Taripe's complaint.

Petitioner RIC is a corporation engaged in manufacturing tin cans for use in packaging of consumer products, e.g., foods, paints, among other things. Respondent Taripe was employed by petitioner RIC on 8 November 1999 as a "rectangular power press machine operator" with a salary of ₱223.50 per day, until he was allegedly dismissed from his employment by the petitioner on 6 April 2000.

The controversy of the present case arose from the following facts, as summarized by the NLRC and the Court of Appeals:

On [17 February 2000], [herein respondent Taripe] filed a [C]omplaint against [herein petitioner RIC] for regularization and payment of holiday pay, as well as indemnity for severed finger, which was amended on [7 April 2000] to include illegal dismissal. [Respondent Taripe] alleges that [petitioner RIC] employed him starting [8 November 1999] as power press machine operator, such position of which was occupied by [petitioner RIC's] regular employees and the functions of which were necessary to the latter's business. [Respondent Taripe] adds that upon employment, he was made to sign a document, which was not explained to him but which was made a condition for him to be taken in and for which he was not furnished a copy. [Respondent Taripe] states that he was not extended full benefits granted under the law and the [Collective Bargaining Agreement] and that on [6 April 2000], while the case for regularization was pending, he was summarily dismissed from his job although he never violated any of the [petitioner RIC's] company rules and regulations.

[Petitioner RIC], for [its] part, claim[s] that [respondent Taripe] was a contractual employee, whose services were required due to the increase in the demand in packaging requirement of [its] clients for Christmas season and to build up stock levels during the early part of the following year; that on [6 March 2000], [respondent Taripe's] employment contract expired. [Petitioner RIC] avers that the information update for union members, which was allegedly filled up by [respondent Taripe] and submitted by the Union to [petitioner] company, it is stated therein that in the six (6) companies where [respondent Taripe] purportedly worked, the latter's reason for leaving was "finished contract," hence, [respondent Taripe] has knowledge about being employed by contract contrary to his allegation that the document he was signing was not explained to him. [Petitioner RIC] manifest[s] that all benefits, including those under the [Social Security System], were given to him on [12 May 2000].⁵

On 29 September 2000, the Labor Arbiter rendered a Decision dismissing respondent Taripe's Complaint based on a finding that he was a contractual employee whose contract merely expired. The dispositive portion of the said Decision reads, thus:

WHEREFORE, premises considered, judgment is hereby rendered declaring this complaint of [herein respondent Taripe] against [herein petitioner RIC] and Mr. Edwin Tang for illegal dismissal DISMISSED for lack of merit. However, on ground of compassionate justice, [petitioner RIC and Mr. Edwin Tang] are hereby ordered to pay [respondent Taripe] the sum of PHP5,811.00 or one month's salary as financial assistance and holiday pay in the sum of PHP894.00, as well as attorney's fees of 10% based on holiday pay (Article 110, Labor Code).⁶

Aggrieved, respondent Taripe appealed before the NLRC. In a Resolution dated 7 June 2002, the NLRC granted the appeal filed by respondent Taripe and declared that his employment with the petitioner was regular in status; hence, his dismissal was illegal. The decretal portion of the said Resolution reads as follows:

WHEREFORE, premises considered, [herein respondent Taripe's] appeal is GRANTED. The Labor Arbiter's [D]ecision in the above-entitled case is hereby REVERSED. It is hereby declared that [respondent Taripe's] employment with [herein petitioner RIC and Mr. Edwin Tang] is regular in status and that he was illegally dismissed therefrom.

[Petitioner RIC and Mr. Edwin Tang] are hereby ordered to reinstate [respondent Taripe] and to jointly and severally pay him full backwages from the time he was illegally dismissed up to the date of his actual reinstatement, less the amount of P1,427.67. The award of P894.00 for holiday pay is AFFIRMED but the award of P5,811.00 for financial assistance is deleted. The award for attorney's fees is hereby adjusted to ten percent (10%) of [respondent Taripe's] total monetary award.⁷

Dissatisfied, petitioner RIC moved for the reconsideration of the aforesaid Resolution but it was denied in the Resolution of the NLRC dated 20 August 2002.

Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure before the Court of Appeals with the following assignment of errors:

I. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT MISINTERPRETED ARTICLE 280 OF THE LABOR CODE AND IGNORED JURISPRUDENCE WHEN IT DECIDED THAT [RESPONDENT TARIPE] IS A REGULAR EMPLOYEE AND THUS, ILLEGALLY DISMISSED.

II. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT ORDERED [EDWIN TANG] TO (sic) JOINTLY AND SEVERALLY LIABLE FOR MONETARY CLAIMS OF [RESPONDEN TARIPE].

III. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT ORDERED PAYMENT OF MONETARY CLAIMS COMPUTED ON AN ERRONEOUS WAGE RATE.⁸

The Court of Appeals rendered the assailed Decision on 30 September 2004, affirming the Resolution of the NLRC dated 7 June 2002, with modifications. Thus, it disposed -

WHEREFORE, the Resolutions dated [7 June 2002] and [20 August 2002] of [the NLRC] are affirmed, subject to the modification that [Edwin Tang] is exonerated from liability and the computation of backwages of [respondent Taripe] shall be based on P223.50, the last salary he received.⁹

A Motion for Reconsideration of the aforesaid Decision was filed by petitioner RIC, but the same was denied for lack of merit in a Resolution¹⁰of the Court of Appeals dated 1 April 2005.

Hence, this Petition.

Petitioner RIC comes before this Court with the lone issue of whether the Court of Appeals misinterpreted Article 280 of the Labor Code, as amended, and ignored jurisprudence when it affirmed that respondent Taripe was a regular employee and was illegally dismissed.

Petitioner RIC, in its Memorandum,¹¹argues that the Court of Appeals had narrowly interpreted Article 280 of the Labor Code, as amended, and disregarded a contract voluntarily entered into by the parties.

Petitioner RIC emphasizes that while an employee's status of employment is vested by law pursuant to Article 280 of the Labor Code, as amended, said provision of law admits of two exceptions, to wit: (1) those employments which have 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 employment; and (2) when the work or services to be performed are seasonal; hence, the employment is for the duration of the season. Thus, there are certain forms of employment which entail the performance of usual and desirable functions and which exceed one year but do not necessarily qualify as regular employment under Article 280 of the Labor Code, as amended.

The Petition is unmeritorious.

A closer examination of Article 280 of the Labor Code, as amended, is imperative to resolve the issue raised in the present case.

In declaring that respondent Taripe was a regular employee of the petitioner and, thus, his dismissal was illegal, the Court of Appeals ratiocinated in this manner:

In determining the employment status of [herein respondent Taripe], reference must be made to Article 280 of the Labor Code, which provides:

x x x x

Thus, there are two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. [Respondent Taripe] belonged to the first category of regular employees.

The purported contract of employment providing that [respondent Taripe] was hired as contractual employee for five (5) months only, cannot prevail over the undisputed fact that [respondent Taripe] was hired to perform the function of power press operator, a function necessary or desirable in [petitioner's] business of manufacturing tin cans. [Herein petitioner RIC's] contention that the four (4) months length of service of [respondent Taripe] did not grant him a regular status is inconsequential, considering that length of service assumes importance only when the activity in which the employee has been engaged to perform is not necessary or desirable to the usual business or trade of the employer.

As aptly ruled by [the NLRC]:

"In the instant case, there is no doubt that [respondent Taripe], as power press operator, has been engaged to perform activities which are usually necessary or desirable in [petitioner RIC's] usual business or trade of manufacturing of tin cans for use in packaging of food, paint and others. We also find that [respondent Taripe] does not fall under any of the abovementioned exceptions. Other that (sic) [petitioner RIC's] bare allegation thereof, [it] failed to present any evidence to prove that he was employed for a fixed or specific project or undertaking the completion of which has been determined at the time of his engagement or that [respondent Taripe's] services are seasonal in nature and that his employment was for the duration of the season."¹²

Article 280 of the Labor Code, as amended, provides:

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 activity exists. [Emphasis supplied]

The aforesaid Article 280 of the Labor Code, as amended, classifies employees into three categories, namely: (1) regular employees or those whose work is necessary or desirable to the usual business of the employer; (2) project employees or those whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season; and (3) casual employees or those who are neither regular nor project employees.¹³

Regular employees are further classified into: (1) regular employees by nature of work; and (2) regular employees by years of service.¹⁴The former refers to those employees who perform a particular activity which is necessary or desirable in the usual business or trade of the employer, regardless of their length of service; while the latter refers to those employees who have been performing the job, regardless of the nature thereof, for at least a year.¹⁵

The aforesaid Article 280 of the Labor Code, as amended, however, does not proscribe or prohibit an employment contract with a fixed period. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is nothing essentially contradictory between a definite period of employment and the nature of the employee's duties.¹⁶What Article 280 of the Labor Code, as amended, seeks to prevent is the practice of some unscrupulous and covetous employers who wish to circumvent the law that protects lowly workers from capricious dismissal from their employment. The aforesaid provision, however, should not be interpreted in such a way as to deprive employers of the right and prerogative to choose their own workers if they have sufficient basis to refuse an employee a regular status. Management has rights which should also be protected.¹⁷

In the case at bar, respondent Taripe signed a contract of employment prior to his admission into the petitioner's company. Said contract of employment provides, among other things:

4. That my employment shall be contractual for the period of five (5) months which means that the end of the said period, I can (sic) discharged unless this contract is renewed by mutual consent or terminated for cause.¹⁸

Based on the said contract, respondent Taripe's employment with the petitioner is good only for a period of five months unless the said contract is renewed by mutual consent. And as claimed by petitioner RIC, respondent Taripe, along with its other contractual employees, was hired only to meet the increase in demand for packaging materials during the Christmas season and also to build up stock levels during the early part of the year.

Although Article 280 of the Labor Code, as amended, does not forbid fixed term employment, it must, nevertheless, meet any of the following guidelines in order that it cannot be said to circumvent security of tenure: (1) that the fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or (2) it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter.¹⁹

In the present case, it cannot be denied that the employment contract signed by respondent Taripe did not mention that he was hired only for a specific undertaking, the completion of which had been determined at the time of his engagement. The said employment contract neither mentioned that respondent Taripe's services were seasonal in nature and that his employment was only for the duration of the Christmas season as purposely claimed by petitioner RIC. What was stipulated in the said contract was that respondent Taripe's employment was contractual for the period of five months.

Likewise, as the NLRC mentioned in its Resolution, to which the Court of Appeals agreed, other than the bare allegations of petitioner RIC that respondent Taripe was hired only because of the increase in the demand for packaging materials during the Christmas season, petitioner RIC failed to substantiate such claim with any other evidence. Petitioner RIC did not present any evidence which might prove that respondent Taripe was employed for a fixed or specific project or that his services were seasonal in nature.

Also, petitioner RIC failed to controvert the claim of respondent Taripe that he was made to sign the contract of employment, prepared by petitioner RIC, as a condition for his hiring. Such contract in which the terms are prepared by only one party and the other party merely affixes his signature signifying his adhesion thereto is called contract of adhesion.²⁰It is an agreement in which the parties bargaining are not on equal footing, the weaker party's participation being reduced to the alternative "to take it or leave it."²¹In the present case, respondent Taripe, in need of a job, was compelled to agree to the contract, including the five-month period of employment, just so he could be hired. Hence, it cannot be argued that respondent Taripe signed the employment contract with a fixed term of five months willingly and with full knowledge of the impact thereof.

With regard to the second guideline, this Court agrees with the Court of Appeals that petitioner RIC and respondent Taripe cannot be said to have dealt with each other on more or less equal terms with no moral dominance exercised by the former over the latter. As a power press operator, a rank and file employee, he can hardly be on equal terms with petitioner RIC. As the Court of Appeals said, "almost always, employees agree to any terms of an employment contract just to get employed considering that it is difficult to find work given their ordinary qualifications."²²

Therefore, for failure of petitioner RIC to comply with the necessary guidelines for a valid fixed term employment contract, it can be safely stated that the aforesaid contract signed by respondent Taripe for a period of five months was a mere subterfuge to deny to the latter a regular status of employment.

Settled is the rule that the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the casual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety.²³

Given the foregoing, this Court agrees in the findings of the Court of Appeals and the NLRC that, indeed, respondent Taripe, as a rectangular power press machine operator, in charge of manufacturing covers for "four liters rectangular tin cans," was holding a position which is necessary and desirable in the usual business or trade of petitioner RIC, which was the manufacture of tin cans. Therefore, respondent Taripe was a regular employee of petitioner RIC by the nature of work he performed in the company.

Respondent Taripe does not fall under the exceptions mentioned in Article 280 of the Labor Code, as amended, because it was not proven by petitioner RIC that he was employed only for a specific project or undertaking or his employment was merely seasonal. Similarly, the position and function of power press operator cannot be said to be merely seasonal. Such position cannot be considered as only needed for a specific project or undertaking because of the very nature of the business of petitioner RIC. Indeed, respondent Taripe is a regular employee of petitioner RIC and as such, he cannot be dismissed from his employment unless there is just or authorized cause for his dismissal.

Well-established is the rule that regular employees enjoy security of tenure and they can only be dismissed for just cause and with due process, notice and hearing.²⁴And in case of employees' dismissal, the burden is on the employer to prove that the dismissal was legal. Thus, respondent Taripe's summary dismissal, not being based on any of the just or authorized causes enumerated under Articles 282,²⁵283,²⁶and 284²⁷of the Labor Code, as amended, is illegal.

Before concluding, we once more underscore the settled precept that factual findings of the NLRC, having deemed to acquire expertise in matters within its jurisdiction, are generally accorded not only respect but finality especially when such factual findings are affirmed by the Court of Appeals;²⁸hence, such factual findings are binding on this Court.

WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of the Court of Appeals dated 30 September 2004 and 1 April 2005, respectively, which affirmed with modification the Resolutions of the NLRC dated 7 June 2002 and 20 August 2002, respectively, finding herein respondent Taripe as a regular employee who had been illegally dismissed from employment by petitioner RIC, are hereby AFFIRMED. Costs against petitioner RIC.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

(On Leave) ROMEO J. CALLEJO, SR. Asscociate Justice

ANTONIO EDUARDO B. NACHURA
Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

REYNATO S. PUNO
Chief Justice

Footnotes

¹ Penned by Associate Justice Fernanda Lampas Peralta with Associate Justices Conrado M. Vasquez, Jr. and Josefina Guevara-Salonga, concurring, rollo, pp. 17-27.

²Id. at 28.

³Penned by Commissioner Victoriano R. Calaycay with Presiding Commissioner Raul T. Aquino and Commissioner Angelita A. Gacutan, concurring, id. at 36-48; NLRC Records, pp. 147-148.

⁴Penned by Labor Arbiter Natividad M. Roma, id. at 29-35.

⁵Id. at 18-19.

⁶Id. at 35.

⁷Id. at 45-46.

⁸Id. at 21.

⁹Id. at 26.

¹⁰Supra note 2.

¹¹Rollo, pp. 98-104.

¹²Id. at 22-23.

¹³Pangilinan vs. General Milling Corporation, G.R. No. 149329, 12 July 2004, 434 SCRA 159, 169.

¹⁴E. Ganzon, Inc. vs. National Labor Relations Commission, G.R. No. 123769, 22 December 1999, 321 SCRA 434, 440.

¹⁵Pangilinan vs. General Milling Corporation, supra note 13 at 169-170.

¹⁶Id. at 170.

¹⁷Pantranco North Express, Inc. vs. NLRC, G.R. No. 106654, 16 December 1994, 239 SCRA 272, 279.

¹⁸CA rollo, p. 27.

¹⁹Philippine National Oil Co.-Energy Dev't. Corp. vs. NLRC, G.R. No. 97747, 31 March 1993, 220 SCRA 695, 699.

²⁰Fabrigas vs. San Francisco del Monte, Inc., G.R. No. 152346, 25 November 2005, 476 SCRA 247, 263.

²¹Qua Chee Gan vs. Law Union and Rock Insurance Co., Ltd., 98 Phil. 85, 95 (1955).

²²Rollo, p. 25.

²³Lopez vs. Metropolitan Waterworks and Sewerage System, G.R. No. 154472, 30 June 2005, 462 SCRA 428, 453.

²⁴Philippine Amusement and Gaming Corporation vs. Angara, G.R. No. 142937, 15 November 2005, 475 SCRA 41, 61.

²⁵ART. 282. TERMINATION BY EMPLOYER. - An employer may terminate an employment for any of the following causes.

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representatives;

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and

Other causes analogous to the foregoing.

²⁶ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL. - The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the Ministry of Labor and Employment [now Secretary of Labor] at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year.

²⁷ART. 284. DISEASE AS GROUND FOR TERMINATION. - An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.

²⁸Land and Housing Development Corporation vs. Esquillo, G.R. No. 152012, 30 September 2005, 471 SCRA 488, 494.

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