FERROCHROME PHILIPPINES, INC., REINHOLD SCHOLSNAGEL AND ENGR. WELHELM WEBER, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, (FIFTH DIVISION) AND HORST BARTSCH, RESPONDENTS.

In this petition for certiorari,
we are asked to annul two (2) Resolutions of the National Labor Relations
Commission (NLRC), dated July 31, 1991 and May 13, 1992, holding that private
respondent Horst Bartsch was illegally dismissed by petitioner.

Private respondent Horst
Bartsch was initially employed as a consultant-engineer of the Austrian company
Voest-Alpine. While thus employed,
Bartsch was assigned to the Philippines as a consultant-engineer of petitioner
Ferrochrome, a subsidiary of Voest-Alpine. His contract of employment^[1]
provided that he would be employed at Ferrochrome for a period of three (3)
months, i.e., from February 15, 1988 to May 15, 1988, extendible for a term
mutually agreeable to the parties.

After Bartsch’s employment expired on May 15, 1988, his services
were still engaged by petitioner Ferrochrome. However, his continued employment was no longer covered by any written
contract.

From July 12-15, 1988, Bartsch was confined at the Capitol
College General Hospital in Misamis Oriental for treatment of a psychological
disorder. On July 15, 1988, Bartsch was
transferred to the Makati Medical Center where he was confined until July 29,
1988.

Thereafter, petitioner granted Bartsch a vacation leave. Bartsch returned to the Philippines on
September 28, 1988. On October 1, 1988,
he assumed his former position at Ferrochrome.

Ferrochrome terminated his services in a letter, dated January
30, 1989,^[2]
which was served on Bartsch on February 13, 1989. It reads:

“Regret to inform you that during discussions with the plant
management, it became apparent that your services as consultant to the Senior
VP-Operations are presently no longer needed and a discontinuation in the
meantime was agreed upon.

“It is our intention to avail of your services again when the
equipment for the new dedusting facility is ready for installation and other
projects have arrived at the implementation stage.

“We wish to thank you for your valuable contribution during
the past 12 months and hope that we can resume a similarly fruitful cooperation
when our projects are ready.”

Thus, on June 5, 1989,
Bartsch filed a complaint against petitioners for unpaid salary, non-payment of
vacation leave, separation pay and 13th month pay, plus damages and attorney’s
fees before the NLRC, Regional Arbitration Branch No. X, Cagayan de Oro City.^[3]

After hearing, Executive
Labor Arbiter Zosimo T. Vasallo dismissed the complaint^[4] but granted a ten thousand peso (P10,000.00)
financial assistance in favor of private respondent Bartsch. The labor arbiter ruled that: Bartsch was fully paid his salary from
February 15, 1988 until the termination of his consultancy contract on February
1989; that Bartsch’s employment expired on May 15, 1988, as per the Consultancy Agreement between the
parties; that since there was no evidence on record which showed that Bartsch’s
employment period was extended for a definite term, his continued employment
with Ferrochrome acquired a contractual character, renewable on a monthly
basis. Thus, it was the prerogative of
Ferrochrome to terminate Bartsch’s consultancy services whenever the former
deemed necessary.

On appeal, public respondent NLRC reversed the decision of the
labor arbiter and ruled that Bartsch was illegally dismissed by Ferrochrome.^[5]

Hence this petition where the following issues are raised:

I

NLRC COMMITTED GRAVE ABUSE OF DISCRETION
WHEN IT RULED THAT FERROCHROME ILLEGALLY DISMISSED BARTSCH FOR IT HAD NO
JURISDICTION TO RESOLVE THE QUESTION OF LEGALITY OF TERMINATION BECAUSE IT IS
AN ISSUE WHICH WAS NEVER RAISED IN THE COMPLAINT, POSITION PAPER AND IN THE
PROCEEDINGS BEFORE THE LABOR ARBITER.

II

ASSUMING IN ARGUENDO THAT THE
LEGALITY OF DISMISSAL IS A PROPER ISSUE BEFORE THE LABOR ARBITER WHICH MAY
SUBSEQUENTLY BE REVIEWED BY THE NLRC, THE LATTER NEVERTHELESS ACTED IN GRAVE
ABUSE OF DISCRETION WHEN IT REVERSED THE FINDING OF THE LABOR ARBITER THAT THE
DISMISSAL OF BARTSCH IS LAWFUL IS ALREADY FINAL AND COULD NOT BE THE SUBJECT TO
REVIEW BY THE NLRC UNDER SECTION 5(C), RULE VIII, REVISED RULES OF THE NLRC.

III

THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN AWARDING BACKWAGES, SEVERANCE PAY, CHRISTMAS BONUS, SALARY BONUS
AND ATTORNEY’S FEES TO BARTSCH.

In support of the first assigned error, petitioner urges that
public respondent NLRC committed grave abuse of discretion when it ruled that
Bartsch was illegally dismissed from service for the issue of illegal dismissal
was never raised by Bartsch in his complaint or position paper filed with the
labor arbiter.

We disagree. The issues
presented in the complaint filed by Bartsch before the labor arbiter for
non-payment of salary, vacation leave, separation pay and 13th month pay
necessarily involve the determination of whether or not complainant was
illegally dismissed. His right to
receive these monetary benefits primarily hinges on the resolution of this
issue. Thus, the NLRC defined the
issues to be resolved, viz:

“First, whether or not an employer-employee relationship
existed between respondents and complainant prior to the dismissal of the
latter from the service;

“Second, whether or not the dismissal of complainant from the
service is legal;

“Third, whether or not complainant is entitled to labor
standards benefits as a result of his dismissal from the service of
respondents.”

Indeed, even the labor arbiter, from whose decision petitioner did not appeal, deemed it
necessary to first pass upon the nature of employment of Bartsch with
petitioner. Moreover, in the
proceedings before the labor arbiter, petitioner itself claimed as a defense
that Bartsch was not one of its regular employees but was engaged in a specific
job?consultancy. In his position
paper,^[6] Bartsch raised as an issue the legality of
his dismissal. He contended that:

“Exhibit ‘C’ (the termination letter) showed that the
dismissal of complainant from his services without any valid reason whatsoever.

“It should be noted and emphasized here that respondent did
not refer, even vaguely, to complainant’s illness in the said termination
letter.

“And considering that complainant was already working on the
second month of the fourth quarter of his employment, the termination of his
services indicates a clear proof of malice and bad faith.”

Clearly, then, the nature
of Bartsch’s employment with petitioner and the legality of his
employment’s termination therein were
put in issue for they were determinative of his right to receive the monetary
benefits he was claiming. Thus, the
NLRC did not act with grave abuse of discretion in passing upon the issue as to
the legality of his dismissal.

In its second assigned
error, petitioner claims that granting that the legality of Bartsch’s dismissal
was a proper issue to be resolved by the NLRC, still, the latter committed
grave abuse of discretion in reversing the finding of the labor arbiter that
the dismissal was valid. Petitioner
claims that Bartsch, in his Memorandum of Appeal,^[7] did not question this finding of the labor
arbiter. Petitioner further claims that
the labor arbiter’s ruling as to the legality of Bartsch’s dismissal was raised
by the latter only in his Supplemental Memorandum of Appeal which was filed nine (9) months after his period to
appeal has expired. Thus, failing to
raise such issue in his Memorandum of Appeal, the ruling of the labor arbiter
insofar as the validity of Bartsch’s termination has already become final and
executory.

The contention has no
merit.

An examination of
Bartsch’s Memorandum of Appeal^[8] would debunk petitioner’s claim. In page 6 of Bartsch’s Memorandum,^[9] Bartsch raised the issue as to the legality
of his dismissal, thus:

“Be it recalled that the letter of respondent which
purportedly is the termination of his employment did not state, even vaguely,
as the reason or cause of his separation from employment. Even if it was the supposed illness that was
the reason for termination, the
respondent cannot rightfully dismiss the complainant even if it complied with
all the requirements of notice because the illness was not voluntary on the
part of the complainant.

“x x x”

Finally, petitioners contend that in view of NLRC’s lack of
jurisdiction to resolve the issue of illegal dismissal, it follows that its
award of backwages, severance pay, Christmas bonus, salary bonus and attorney’s
fees to Bartsch was likewise made in grave abuse of discretion.

As discussed earlier, it was within the province of the NLRC to
pass upon the issue as to the legality of Bartsch’s dismissal from
service. As to NLRC’s award of
backwages, severance pay, Christmas bonus and attorney’s fees, we find the same
to be in order.

The award of backwages and severance pay to Bartsch was
predicated on the finding of the NLRC that Bartsch was employed as a regular
employee.

As defined under the law,^[10] an
employment shall be deemed regular if the employee performs
activities usually necessary or desirable in the usual business and trade of
the employer OR if the employee has rendered at least one (1) year of
service, whether the service be continuous or broken.

Applying these two (2)
tests, we find that contrary to the suppositions of petitioner, Bartsch was a
regular employee of the latter. As
found by the NLRC:

“x x x While the designation of complainant in the service is
denominated as Consultant Engineer, yet the description of his duties states
otherwise. Due consideration is accorded
on the following specific duties, among others:

x x x

“2.1 Undertake such duties in relation to the
Company and its business as the President of the Company shall from time to
time assign to or vest in him. The
President may delegate his authority or
part of it to the SVP Operations/Resident Manager.

“2.2 In the discharge of such duties and in the
exercise of such powers, observe and comply with all Company resolutions, regulations and
directions.

“2.3 Devote
substantially the whole of his time and attention during business
hours to the discharge of his duties.”
(Underscoring supplied)

x x x

“x x x(T)he complainant under the definition of his power and
duties has been consigned to and relegated to the category of an ordinary
technical staff employee. The term
‘consultant’ is merely more of a matter of nomenclature as he is required under
the contract to observe regular office hours. It therefore precludes the hiring of a mere ‘consultant’ who is supposed
to render part-time service to the principal
employer.

“Respondents (petitioners herein) could have terminated
complainant from the service after the lapse of the three (3) months period
stipulated in the Contract of Employment. But management found itself in dire need of the expertise of complainant
that it decided to extend the services of the latter for an indefinite period
which lasted until February 13, 1989 when one W. Weber representing respondents
delivered to complainant the letter of termination dated January 30, 1989 x x
x. When he was terminated from the
service, complainant had more than qualified to be a regular employee x x x.

“x x x

“x x x (T)he extent of complainant’s services with respondent
cover(ed) substantially a period of one (1) year, more or less, as admitted by
respondents in the (termination) letter of January 30, 1989 x x x when it
stated: ‘We wish it (sic) to thank you
for your valuable contribution during the past 12 months and hope that we can
resume a similarly fruitful cooperation when our projects are ready” x x x
has invested in him the status of a regular employee under the second paragraph
of Article 280 of the Labor Code, as amended. x x x”

Being a regular employee,
private respondent is entitled to security of tenure and his services may be terminated
only for causes provided by law.

In the case at bench, we
are confounded as to the real reason why the services of private respondent
were terminated.

In the termination letter^[11] served by petitioner, the latter claims that
the services of private respondent were no longer needed and that management
intends to hire him again “when the equipment for the new dedusting
facility is ready for installation and other projects have arrived at the
implementation stage.” It would thus appear that at the time the
termination letter was made, petitioner company did not consider private
respondent Bartsch as one of its regular employees. Hence, it would appear from said letter that Bartsch’s services
were terminated for they were no longer deemed necessary.

However, during the
proceedings before the labor arbiter, petitioner company alleged a new ground
for terminating Bartsch’s employment. Petitioner claimed that the “real” reason for Bartsch’s
dismissal was the latter’s psychological illness.

It is this vacillating
position of petitioner corporation regarding the cause of private respondent’s
termination which worked against it. As
correctly found by the NLRC, petitioner’s wavering stance showed its bad faith
in terminating the services of private respondent.

Thus, under the
circumstances, petitioner should have complied with the due process
requirements of notice and hearing before terminating the services of private
respondent. An employee should be
notified of his employer’s intent to dismiss him and the true reasons therefor.^[12] Unfortunately, these basic requisites
were not met. It was not shown that
private respondent was informed of the alleged “real” reason for his
dismissal. Neither was he given an
opportunity to air his side and defend himself.

In view of the illegality of private respondent’s dismissal from
service, the latter is entitled to the award of Christmas bonus and salary
bonus for the year 1988 given by petitioner to all its other regular employees.

WHEREFORE, premises considered, the appealed Resolutions
of public respondent NLRC are hereby AFFIRMED in toto.

SO ORDERED.

Narvasa, C.J., (Chairman), Padilla, Regalado, and Mendoza, JJ., concur.

^[1]
Annex “E-9”, Petition, Rollo,
p. 93-95.

^[2]
Annex “D-20,” Petition, Rollo,
p. 65.

^[3]
Annex “B”, Petition, Rollo, p. 42.

^[4]
Annex “G”, Petition, Rollo, pp. 117-121.

^[5]
See Resolution dated July 31, 1991,
Annex “K”, Petition, Rollo, pp. 158-191.

^[6]
Annex “E-3”, Rollo, p. 87.

^[7]
Annex “H”, Petition, Rollo, pp. 122-130.

^[8]
Annex “H”, Petition, Rollo, pp. 122-130.

^[9]
Annex “H-5”, Petition, Rollo, p. 127.

^[10]
Article 280, Labor Code.

^[11]
Annex “D-20”, Rollo, p. 65.

^[12]
Ferrer v. NLRC, G.R. No. 100898,
July 5, 1993, 224 SCRA 410, 420, citing the cases of Kwikway Engineering Works v.
NLRC, 195 SCRA 526 [1991] and Salaw v. NLRC, 202 SCRA 7 [1991].