PHILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT CORPORATION/FRANCIS PALAFOX, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION AND FRANCISCO MATA, RESPONDENTS.

Texans used to complain that when they tried to dig for water,
all they struck was oil. On the other
hand, Filipinos have been heard to complain that every time they tried to dig
for oil, all they got was water — and steam, to boot. In the 1970’s, with the energy crisis having
become unmanageable, the government decided to harness steam to drive turbine
engines to generate electricity. When
petitioner Philippine National Oil Company-Energy Development Corporation
started to develop the Bacon-Manito Geothermal Project in Bonga, Sorsogon, one
question which arose is whether or not an employee contracted to drive for
petitioner during the construction of the steam wells is considered a project
employee or a regular employee.

As summarized by the Solicitor General, the facts leading to the
filing of the instant petition, are as follows:

“On November 11, 1980, petitioners hired private respondent
Francisco Mata as Service Driver on a daily wage of P39.74. Assigned to the PNOC-EDA Bacon-Manito
Geothermal Project in Bonga, Sorsogon, Sorsogon, he worked there until
September 1, 1985. On this day, his
employment was terminated through a letter advice dated September 1, 1985,
signed by his supervisor, B.B. Balista, allegedly for ‘contract expiration’
(Exh. ‘A’, p. 10, Records), even when the project was still a continuing one.

“On November 8, 1985, private respondent complained of illegal
dismissal, and accused petitioners of withholding his backwages, overtime pay,
and separation pay (p. 1, Records). A
dismissal of the complaint was sought on jurisdictional ground, petitioner
company asserting that it is a government-owned and controlled corporation,
hence, its employees must be governed by the Civil Service Law and not by the
Labor Code, and citing National Housing Corporation v. Benjamin Juco and the NLRC (134 SCRA
176).

“On February 26, 1987,
Labor Arbiter Voltaire A. Balitaan dismissed the complaint for lack of
jurisdiction (pp. 116-118, Records). On
appeal to public respondent, however, the First Division, on September 16,
1988, set aside the Labor Arbiter’s decision, assumed jurisdiction over the
case, and directed the Arbitration Branch to conduct further proceedings (pp.
127-131, Records).

“Petitioners maintained that private respondent was a project
employee whose employment was for a definite period and coterminous with the
project for which he was hired. It was
for this reason that his employment was terminated.

“Finding for private respondent, Executive Labor Arbiter Vito
C. Bose’s Decision of August 23, 1990, held:

‘There is no dispute that complainant was hired as service driver
assigned in the Administrative Department of respondent since November 11, 1980
at its Bacon-Manito Geothermal Project working regularly from 6:00 A.M. to 6:00
P.M. Monday thru Saturday until he was dismissed on September 15, 1985 for
alleged contract expiration. As driver
assigned in the Administrative Department servicing or performing activities
which are usually necessary or at least desirable in the business of the company. He was actually a company driver and not a
contractual project employee as what respondent perceived him to be.

Hence, contrary to the provisions of the
Employment Contract, complainant is a regular and permanent employee of
respondent entitled to the protective mantle of the security of tenure
provisions of the Labor Code, x x x.’

“x x x We entertain no doubt that respondent is guilty of
illegal dismissal for having terminated the services of complainant without
just or authorized cause. The alleged contract
expiration is not one of the valid or authorized causes for dismissal xxx’ (pp.
6-7, Decision, pp. 175-176, Records).

and concluded:

‘WHEREFORE, judgment is hereby rendered finding respondent company
guilty of illegal dismissal and ordering the same to pay complainant thru this
Branch within ten (10) days from receipt of this order, the following:

1.   Backwages
…………………P51,408.00

2.   Overtime
pay ……………… 2,100.00

3.   Separation
pay ………….… 3,570.00

4.   Moral
damages …………… 20,000.00

5.   Exemplary
damages……… 20,000.00

6.   Attorney’s
fee

(10% of the award)………… 5,350.00

P102,428.80

‘SO ORDERED’ (p. 8, Decision, p. 177, Records).

“Dissatisfied, petitioners appealed to public respondent, on
the following grounds:

‘A.
THAT THE EXECUTIVE LABOR ARBITER ERRED WHEN IT RULED THAT FRANCISCO MATA WAS A
REGULAR EMPLOYEE;

‘B. WHEN
IT RULED THAT FRANCISCO MATA WAS TERMINATED ILLEGALLY; and

‘C. WHEN IT AWARDED BACKWAGES, OVERTIME PAY, MORAL
DAMAGES, EXEMPLARY DAMAGES, AND ATTORNEY’S FEES’ (p. 178, Records).’

“Public respondent, through its Third Division, modified the
appealed decision in its Resolution of November 29, 1990 (as follows ) x x x x
x:

x          x          x

‘WHEREFORE, premises considered, except to the awards of backwages
and separation pay which are hereby AFFIRMED, all other claims are DISMISSED for lack
of merit’ (pp. 4?7, Resolution, Annex ‘H’, Petition).

“On January 15, 1991, petitioners filed a Motion for
Reconsideration based on practically the same grounds (Annex ‘I’, Petition). This was denied for lack of merit by public
respondent in the second question Resolution issued on February 15, 1991 (Annex
‘J’, Petition).”^[1]

Thus, petitioners filed this petition for certiorari.

The three (3) issues presented to this Court are whether or not
public respondent National Labor Relations Commission committed grave abuse of
discretion amounting to lack of jurisdiction when it ruled that Francisco Mata
was (a) a regular employee and (b) that he was illegally terminated; and (c)
when it awarded Francisco Mata backwages and separation pay.^[2]

I

Petitioners claim that the fixed contract of employment which
private respondent entered into was read, translated to, comprehended and
voluntarily accepted by him. No
evidence was presented to prove improper pressure or undue influence when he
entered, perfected and consummated said contract. And even if private respondent’s services were necessary and
desirable in petitioner’s business, nevertheless private respondent’s term was
limited, citing as authority Brent School v. Zamora.^[3]

Private respondent, while admitting such fixed term contract of
employment, counters that the same was used as a vehicle to circumvent the law
on security of tenure, as provided not only by the Labor Code but likewise guaranteed
by the Constitution.

Much can be learned from the leading case of Brent School v.
Zamora, supra. In this case, the
Court analyzed the development of Article 280 from its first version as Article
319 and its amendments under PD 850 and BP 130 and made the following
observation:

“Accordingly, and since the entire purpose behind the
development of legislation culminating in the present Article 280 of the Labor
Code clearly appears to have been, as already observed, to prevent
circumvention of the employee’s right to be secure in his tenure, the clause in
said article indiscriminately and completely ruling out all written or oral
agreements conflicting with the concept of regular employment as defined
therein should be construed to refer to the substantive evil that
the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to
instances where a fixed period of employment was agreed upon knowingly and
voluntarily by the parties, without any force, duress or improper pressure
being brought to bear upon the employee and absent any other circumstances
vitiating his consent, or where it satisfactorily appears that the
employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law
would be made to apply to purposes other than those explicitly stated by its
framers; it thus becomes pointless and arbitrary, unjust in its effects and apt
to lead to absurd and unintended consequences.”^[4]
(Emphasis and italics supplied)

As can be gleaned from the said case, the two guidelines, by
which fixed contracts of employments can be said NOT to circumvent security of
tenure, are either:

1. 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.

Does petitioner’s fixed contract of employment with private
respondent satisfy any of the guidelines above stated?

Yes, it does.

A careful examination of the last Employment Contract signed by
respondent Mata shows that he indeed signed the same.^[5]
In fact petitioners claim that all the previous employment contracts were also
translated for the benefit of private respondent, and it was only when he
understood the same that he signed said contracts. As per Guideline No. 1, given the circumstances behind private
respondent Mata’s employment, private respondent is a project employee.

As explained by petitioners in their Memorandum:

“[I]t must be clarified that the Bacon-­Manito Geothermal
Project is one big ‘project consisting of several phases, namely the
exploration, development and operation stages. Mata was employed in connection with the well-completion project
which was part of the exploration stage. Said well-completion which follows a drilling operation is now finished
and completed. The other projects in
the development stage are still on-going but the project for which Mata’s
services were required is now complete and terminated. x x x”^[6]
(Underscoring in petitioner’s memorandum)

Paraphrasing Rada v. NLRC,^[7]
it is clear that private respondent Mata is a project employee considering that
he does not belong to a “work pool” from which petitioner PNOC would
draw workers for assignment to other projects at its discretion. It is likewise apparent from the facts of
the case that private respondent Mata was utilized only for one particular
project, the well-completion project which was part of the exploration stage of
the PNOC Bacon-­Manito Geothermal Project. Hence, private respondent Mata can be dismissed upon the termination of
the project as there would be no need for his services. We should not expect petitioner to continue
on hiring private respondent in the other phases of the project when his
services will no longer be needed.^[8]

II

As a project employee, was he legally terminated?

Paragraph No. 5, Policy Instruction No. 20,^[9]
reads, as follows:

“If a construction project or any phase thereof has a duration
of more than one year and a Project employee is allowed to be employed therein
for at least one year, such employee may not be terminated until the completion
of the project or of any phase thereof in which he is employed without a
previous written clearance from the Secretary of Labor. If such an employee is terminated without a
clearance from the Secretary of Labor, he shall be entitled to reinstatement
with backwages.”

As to the manner private respondent was terminated, public
respondent NLRC found it to be as follows:

“[I]n the case of Ochoco vs. NLRC, 120 SCRA 774, the Supreme
Court ruled that ‘if petitioner was
employed as a project employee, private respondent should have submitted a
report of termination to the nearest public employment office every time his
employment is terminated due to the completion of each project as required by
Policy Instruction No. 20.’

“Applying the (Ochoco) doctrine to the instant case,
respondent corporation should have filed as many reports of termination as
there were construction projects actually finished, considering that petitioner
had been hired since 1980 up to 1985. Not a single report was submitted by the respondent company. This failure to submit reports of
termination convinced Us more that petitioner was indeed a regular
employee.”^[10]

The records do not show that petitioners obtained the necessary
written clearance to terminate the contract of employment of private respondent
Mata. The latter is, therefore,
entitled to reinstatement with backwages.

Considering, however, that the Bacon-Manito project has already
been completed and is, presumably, now operating,^[11]
reinstatement of private respondent is impossible. He is, however, entitled to backwages and separation pay. For this purpose, We adopt the Executive
Labor Arbiter’s computation as to how much backwages and separation pay private
respondent will get, as follows:

“[S]ince at the time of his dismissal complainant was
receiving P56.00 daily wage then his backwages for three (3) years amounted to
P51,408.00 computed as follows: P56.00
daily wage x 25.5 normal days work in a month x 12 mos. x 3 years.

x x x

“[W]e feel that reinstatement is no longer feasible or
advisable hence, separation pay equivalent to one-half month pay for every year
of service should take its place. Since, complainant started working with respondent on November 11, 1980
and stopped on September 18, 1985 or five (5) years, the complainant’s
separation pay should be P3,570.00 (P1,428.00 monthly rate x 5 years +
2).”^[12]

Note, that while We have reversed the decision of the public
respondent, We still affirm the granting of backwages and separation pay due to
the fact that petitioners did not secure the necessary written clearance from
the Secretary of Labor in terminating private respondent Mata. The dispositive portions of the public
respondent’s resolutions – which actually constitute the resolutions of public
respondent NLRC – have to be affirmed.

WHEREFORE, the petition is DISMISSED. It is hereby ORDERED
that petitioners pay private respondent Mata P51,408.00 as backwages and
P3,570.00 as separation pay.

SO ORDERED.

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

^[1]
Rollo, pp. 129-135.

^[2]
Ibid., pp. 6-7.

^[3]
181 SCRA 702 (1990).

^[4]
Ibid., p. 716.

^[5]
“I, the above name(d) applicant, hereby certify that: I have read or ________(interpreter) has
read and translated to me the contents of this Contract of employment; I have
understood all the contents hereof; and I agree and accept all its terms and
conditions.” (Rollo, p. 155)

^[6]
Rollo, pp. 149-150.

^[7]
205 SCRA 69, 81 (1992), where petitioner Rada therein claimed that he was a
regular employee since he had driven for private respondent PHILNOR Consultants
and Planners, Inc.

^[8]
Cartagenas vs. Romago Electric Company, Inc., 177 SCRA 637 (1989).

^[9]
Undated issuance by Hon. Blas F. Ople, Secretary of Labor, entitled
“Employer-Employee Relations in the Construction Industry”.

^[10]
Mata vs. Philippine National Oil Co. – Energy Development Corporation,
RAB-V-0391-85, promulgated November 29, 1990, Royales, Commissioner, ponente;
Javier, Presiding Commissioner, and Bernardo, Commissioner, concurring, pp.
4-5, Decision; Rollo, pp. 67-68.

^[11]
“MT. POCDOL, Sorsogon–Deep in the wilderness of this geothermal energy
rich mountain range some 700 meters above sea level, heavy construction work is
going on. The Philippine National Oil
Company (PNOC) is rushing the P7-billion geothermal energy project which will
boost Bicol region’s power output by 150 megawatts.

“Hundreds of heavy equipment
and over 1,500 workers are involved in the first phase of the project which is
expected to be finished this month. President Aquino will grace the inaugural switching on of the first
phase of the PNOC’s Bacon-Manito (Bac-Man) geothermal energy development
project, said Carli Recto, PNOC resident manager.

x x x

“He said 22 production and
seven reinjection wells each costing P30 million to P45 million have been
drilled. Each production well can
generate an average of seven megawatts.”

(Philippine Daily Inquirer, March 2,
1992.

^[12]
Rollo, pp. 54 & 55.