G.R. No. L-75927 October 5, 1988
LAND AND HOUSING DEVELOPMENT CORP. AND AMERAD BETONG VAGFORBATTINGER (ABV), petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION AND EDUARDO A. YABUT, respondents.

FACTS

Private respondent Eduardo A. Yabut was hired by petitioner Amerad Betong Vagforbattinger (ABV), through its local agent Land and Housing Development Corporation (LHDC), as a camp administrator/personnel coordinator for a project in Libya. His initial contract commenced on March 3, 1981, and was subsequently extended three times. His employment was terminated on September 15, 1984, after which he received his salaries, one month’s pay in lieu of notice, and a pro-rata bonus. Yabut filed a complaint for illegal dismissal and claims for separation pay, damages, and unpaid bonus before the Philippine Overseas Employment Administration (POEA).
The petitioners, LHDC and ABV, contended that Yabut’s dismissal was due to the completion of their project and subsequent retrenchment necessitated by reduced work activities. They argued that the Overseas Employment Agreement contained no provision for separation pay upon termination. The POEA ruled that while the dismissal was not illegal, as it was due to a valid retrenchment, Yabut was nevertheless entitled to separation pay. The National Labor Relations Commission (NLRC) affirmed the POEA’s decision, prompting the petitioners to file this certiorari petition.

ISSUE

The primary issues were: (1) whether Yabut was a regular employee, and (2) whether he was entitled to separation pay despite the dismissal being for a just cause (retrenchment).

RULING

The Supreme Court dismissed the petition, upholding the NLRC and POEA rulings. On the first issue, the Court ruled that Yabut was a regular employee. Applying Article 280 of the Labor Code, the Court emphasized that the determination of regular status depends on the nature of the job and the length of service, not merely the contractual stipulations. Yabut, employed as a camp administrator for over four years, was performing activities necessary and desirable to the petitioners’ usual business or trade. The Court cited its precedent in Erectors Incorporated vs. NLRC, which held that overseas workers rendering more than one year of service are considered regular employees.
On the second issue, the Court affirmed Yabut’s entitlement to separation pay. Since the POEA and NLRC found the dismissal was due to retrenchment—a just cause under Article 283 of the Labor Code—the law mandates payment of separation pay equivalent to at least one month’s pay or one-half month’s pay for every year of service, whichever is higher. The petitioners’ argument that the employment contract lacked a separation pay clause was overruled, as the contract itself stipulated it would be governed by Philippine laws, thereby incorporating the Labor Code’s mandatory provisions. The Court accorded great weight and finality to the factual findings of the specialized administrative agencies, finding no grave abuse of discretion in their conclusion that Yabut was entitled to US $4,500.00 as separation pay.