The State affirms labor as a primary social

economic force. It shall protect the rights of

1987 CONSTITUTION
workers and promote their welfare.
Article II
Section 20.( private sector as a source of
Section 9. (promotion of just and dynamic social investmments)
order-----propensity and indp (thru) policies----
The State recognizes the indispensable role of the
promote full employment)
private sector, encourages private enterprise, and
The State shall promote a just and dynamic social provides incentives to needed investments.
order that will ensure the prosperity and
Article III
independence of the nation and free the people
from poverty through policies that provide Section 1
adequate social services, promote full employment,
No person shall be deprived of life, liberty, or
a rising standard of living, and an improved
property without due process of law, nor shall any
quality of life for all.
person be denied the equal protection of the laws.
Section 10. (promotion of social justice)
Section 4.
The State shall promote social justice in all phases
No law shall be passed abridging the freedom of
of national development.
speech, of expression, or of the press, or the right of
SECTION 11. (values dignity and full respect to the people peaceably to assemble and petition the
human rights) government for redress of grievances.
The State values the dignity of every human person SECTION 7.( Right to information)
and guarantees full respect for human rights.
The right of the people to information on matters
SECTION 13. (protection of the youth to serve of public concern shall be recognized. Access to
their role in nation building) official records, and to documents, and papers
pertaining to official acts, transactions, or
The State recognizes the vital role of the youth in
decisions, as well as to government research data
nation-building and shall promote and protect their
used as basis for policy development, shall be
physical, moral, spiritual, intellectual, and social
afforded the citizen, subject to such limitations as
well-being. It shall inculcate in the youth
may be provided by law.
patriotism and nationalism, and encourage their
involvement in public and civic affairs. Section 8 ( right to form unions, assoc or socs for
purposes not contrary to law)
SECTION 14. (fundamental equality of women
and men) The right of the people, including those employed in
the public and private sectors, to form unions,
The State recognizes the role of women in nation-
associations, or societies for purposes not contrary
building, and shall ensure the fundamental
to law shall not be abridged.
equality before the law of women and men.
SECTION 10.( non-impairment clause) No law
Section 18.(labor as prim. Econ. Labor force and
impairing the obligation of contracts shall be
protection and promotion of worker’s right and
passed.
welfare)
SECTION 16. All persons shall have the right to a
speedy disposition of their cases before all judicial,
quasi-judicial, or administrative bodies.
Sec 18 (2) No involuntary servitude in any form
shall exist except as a punishment for a crime
whereof the party shall have been duly convicted.
Article XIII
SECTION 1. (promote social justice)
The Congress shall give highest priority to the
enactment of measures that protect and enhance
the right of all the people to human dignity, reduce
social, economic, and political inequalities, and
remove cultural inequities by equitably diffusing
wealth and political power for the common good.
To this end, the State shall regulate the
acquisition, ownership, use, and disposition of
property and its increments.
SECTION 2. The promotion of social justice shall
include the commitment to create economic
opportunities based on freedom of initiative and
self-reliance.
Section 3.
The State shall afford full protection to labor,
local and overseas, organized and unorganized,
and promote full employment and equality of
employment opportunities for all. It shall
guarantee the rights of all workers to self-
organization, collective bargaining and
negotiations, and peaceful concerted activities,
including the right to strike in accordance with
law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage.
They shall also participate in policy and decision-
making processes affecting their rights and benefits
as may be provided by law. The State shall promote
the principle of shared responsibility between
workers and employers and the preferential use of
voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between
workers and employers, recognizing the right of
labor to its just share in the fruits of production
and the right of enterprises to reasonable returns to
investments, and to expansion and growth.
SECTION 13. The State shall establish a special
agency for disabled persons for rehabilitation, self-
development and self-reliance, and their
integration into the mainstream of society.
Section 14.
The State shall protect working women by
providing safe and healthful working conditions,
taking into account their maternal functions, and
such facilities and opportunities that will enhance
their welfare and enable them to realize their full
potential in the service of the nation
Art. 19
Every person must in the exercise of his rights and
in the performance of his duties, act with justice,
give everyone his due and observe honesty and good
faith.
Art. 1700.
The relations between capital and labor are not
merely contractual. They are so impressed with
public interest that labor contracts must yield to
the common good. Therefore, such contracts are
subject to the special laws on labor unions,
collective bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of labor
and similar subjects.
Art. 1702. In case of doubt, all labor legislation
and all labor contracts shall be construed in favor
of the safety and decent living for the laborer.
1. LVN PICTURES, INC., vs. PHILIPPINE
MUSICIANS Guild G.R. No. L-12582 January 28,
1961
Facts: The Philippine Musicians Guild filed a petition before
the CIR that sought to be certified as the sole and exclusive
bargaining agency of all musicians working at LVN Pictures,
Inc., Sampaguita Pictures, Inc., and Premiere Productions,
Inc. The latter are corporations, duly organized under the
Philippine laws, engaged in the making of motion pictures and
in the processing and distribution thereof. That said companies
employ musicians for the purpose of making music recordings
for title music, background music, musical numbers, finale
music and other incidental music, without which a motion
picture is incomplete; that ninety-five (95%) percent of all the
musicians playing for the musical recordings of said companies
are members of the Guild
In their answers, LVN and Premiere denied that they have
any musicians as employees, and alleged that the musical
numbers in the filing of the companies are furnished by
independent contractors.
The lower court, however, rejected this pretense and sustained
the theory of the Guild. A reconsideration of the order
complained of having been denied by the Court en banc, LVN
Pictures, inc., and Sampaguita Pictures, Inc., (Premiere has
not appealed) filed these petitions for review for certiorari.
Issue: WON the musicians are employees of the film
companies.
Held: Yes. To determine whether a person who performs work
for another is the latter's employee or an independent
contractor, the National Labor Relations relies on 'the right to
control' test. Under this test an employer-employee
relationship exist where the person for whom the services are
performed reserves the right to control not only the end to be
achieved, but also the manner and means to be used in reaching
the end.
'Notwithstanding that the employees are called independent
contractors', the Board will hold them to be employees where
the extent of the employer's control over them indicates that
the relationship is in reality one of employment.
The right of control of the film company over the musicians is
shown (1) by calling the musicians through 'call slips' in 'the
name of the company; (2) by arranging schedules in its studio
for recording sessions; (3) by furnishing transportation and
meals to musicians; and (4) by supervising and directing in
detail, through the motion picture director, the performance of
the musicians before the camera, in order to suit the music they
are playing to the picture which is being flashed on the screen.
Thus, in the application of Philippine statutes and pertinent
decisions of the United States Courts on the matter to the facts
established in this case, we cannot but conclude that to
effectuate the policies of the Act and by virtue of the 'right of
control' test, the members of the Philippine Musicians Guild
are employees of the three film companies and, therefore,
entitled to right of collective bargaining under Republic Act
No. 875.
In view of the fact that the three (3) film companies did not
question the union's majority, the Philippine Musicians Guild
is hereby declared as the sole collective bargaining
representative for all the musicians employed by the film
companies."
3. G.R. No. L-32245 May 25, 1979
DY KEH BENG vs. INTERNATIONAL LABOR and
MARINE UNION OF THE PHILIPPINES, ET AL.
FACTS: Petitioner Dy Keh Beng is a proprietor of a basket
factory who was charged with unfair labor practice.
Respondents Tudla and Solano alleged that they were
terminated because of their union activities. Petitioner Dy Keh
Beng contended that the respondent Tudla was never his
employee and that Solano was only hired on pakiaw basis.
After preliminary investigation was conducted, a case was
filed in the Court of Industrial Relations for in behalf of the
International Labor and Marine Union of the Philippines and
two of its members, Solano and Tudla. According to the
Hearing Examiner, the evidence for the complainant Union
tended to show that except in the event of illness, Tudal and
Solano's work with the establishment was continuous
although their services were compensated on piece basis.
Evidence likewise showed that at times the establishment had
eight (8) workers and never less than five (5); including the
complainants, and that complainants used to receive ?5.00 a
day. sometimes less.
According to Dy Keh Beng, however, Solano was not his
employee for the following reasons:
(1) Solano never stayed long enought at Dy's establishment;
(2) Solano had to leave as soon as he was through with the
(3) order given him by Dy;
(4) When there were no orders needing his services there was
nothing for him to do;
(5) When orders came to the shop that his regular workers
could not fill it was then that Dy went to his address in
Caloocan and fetched him for these orders; and
(6) Solano's work with Dy's establishment was not
continuous. ,
Court of Industrial Relations Ruling: An employee-employer
relationship was found to have existed between Dy Keh Beng
and complainants Tudla and Solano, although Solano was
admitted to have worked on piece basis.
ISSUE: Whether there existed an employee employer relation
between petitioner Dy Keh Beng and the respondents Solano
and Tudla .
RULING: Yes. While this Court upholds the control test
under which an employer-employee relationship exists "where
the person for whom the services are performed reserves a right
to control not only the end to be achieved but also the means
to be used in reaching such end, " it finds no merit with
petitioner's arguments as stated above. It should be borne in
mind that the control test calls merely for the existence of the
right to control the manner of doing the work, not the actual
exercise of the right. Considering the finding by the Hearing
Examiner that the establishment of Dy Keh Beng is "engaged
in the manufacture of baskets known as kaing, it is natural to
expect that those working under Dy would have to observe,
among others, Dy's requirements of size and quality of the
kaing. Some control would necessarily be exercised by Dy as
the making of thekaing would be subject to Dy's specifications.
Parenthetically, since the work on the baskets is done at Dy's
establishments, it can be inferred that the proprietor Dy could
easily exercise control on the men he employed.
As to the contention that Solano was not an employee because
he worked on piece basis, this Court agrees with the Hearing
Examiner that circumstances must be construed to determine
indeed if payment by the piece is just a method of compensation
and does not define the essence of the relation. Units of time
... and units of work are in establishments like respondent (sic)
just yardsticks whereby to determine rate of compensation, to
be applied whenever agreed upon. We cannot construe
payment by the piece where work is done in such an
establishment so as to put the worker completely at liberty to
turn him out and take in another at pleasure.
9. G.R. No. 129315 October 2, 2000
OSIAS I. CORPORAL vs. NLRC
FACTS: Petitioners are employed by the New Look Barber
Shop, a single proprietorship owned and managed by Mr.
Vicente Lao. In or about January 1982, the children of
Vicente Lao organized a corporation which was registered
with the Securities and Exchange Commission as Lao Enteng
Co. Inc. with Trinidad Ong as President of the said
corporation. Upon its incorporation, the respondent company
took over the assets, equipment, and properties of the New
Look Barber Shop and continued the business. All the
petitioners were allowed to continue working with the new
company until April 15, 1995 when respondent Trinidad Ong
informed them that the building wherein the New Look
Barber Shop was located had been sold and that their services
were no longer needed.2
On April 28, 1995, petitioners filed with the Arbitration
Branch of the NLRC, a complaint for illegal dismissal, illegal
deduction, separation pay, non-payment of 13th month pay,
and salary differentials.
Private respondent in its position paper averred that the
petitioners were joint venture partners and were receiving fifty
percent commission of the amount charged to customers. Thus,
there was no employer-employee relationship between them
and petitioners. And assuming arguendo, that there was an
employer-employee relationship, still petitioners are not
entitled to separation pay because the cessation of operations
of the barber shop was due to serious business losses. Trinidad
explained that some of the petitioners were allowed to register
with the Social Security System as employees of Lao Enteng
Company, Inc. only as an act of accommodation. All the SSS
contributions were made by petitioners.
Labor Arbiter: Petitioners and the respondents were engaged
in a joint venture and that there existed no employer-employee
relation between them. The Labor Arbiter also found that the
barber shop was closed due to serious business losses or
financial reverses and consequently declared that the law does
not compel the establishment to pay separation pay to whoever
were its employees.
NLRC: Affirmed the findings of the Labor Arbiter and
dismissed the complaint for want of merit. The NLRC
concluded that the petitioners were independent contractors.
The barbers maybe characterized as independent contractors
because they are under the control of the barber shop owner
only with respect to the result of the work, but not with
respect to the details or manner of performance. The barbers
are engaged in an independent calling requiring special skills
available to the public at large.
ISSUE: Whether or not an employer-employee relationship
existed between petitioners and private respondent Lao
Enteng Company, Inc.
RULING: Yes. Records of the case show that the late Vicente
Lao engaged the services of the petitioners to work as barbers
and manicurists in the New Look Barber Shop, then a single
proprietorship owned by him; that in January 1982, his
children organized a corporation which they registered with
the Securities and Exchange Commission as Lao Enteng
Company, Inc.; that upon its incorporation, it took over the
assets, equipment, and properties of the New Look Barber
Shop and continued the business; that the respondent company
retained the services of all the petitioners and continuously
paid their wages. Clearly, all three elements exist in petitioners'
and private respondent's working arrangements.
Private respondent claims it had no control over petitioners.
The power to control refers to the existence of the power and
not necessarily to the actual exercise thereof, nor is it essential
for the employer to actually supervise the performance of
duties of the employee. It is enough that the employer has the
right to wield that power. As to the "control test", the
following facts indubitably reveal that respondent company
wielded control over the work performance of petitioners, in
that: (1) they worked in the barber shop owned and operated
by the respondents; (2) they were required to report daily and
observe definite hours of work; (3) they were not free to accept
other employment elsewhere but devoted their full time
working in the New Look Barber Shop for all the fifteen (15)
years they have worked until April 15, 1995; (4) that some
have worked with respondents as early as in the 1960's; (5)
that petitioner Patricia Nas was instructed by the respondents
to watch the other six (6) petitioners in their daily task.
Certainly, respondent company was clothed with the power to
dismiss any or all of them for just and valid cause. Petitioners
were unarguably performing work necessary and desirable in
the business of the respondent company.
While it is no longer true that membership to SSS is predicated
on the existence of an employee-employer relationship since the
policy is now to encourage even the self-employed dressmakers,
manicurists and jeepney drivers to become SSS members, we
could not agree with private respondents that petitioners were
registered with the Social Security System as their employees
only as an accommodation. As we have earlier mentioned
private respondent showed no proof to their claim that
petitioners were the ones who solely paid all SSS
contributions. It is unlikely that respondents would report
certain persons as their workers, pay their SSS premium as well
as their wages if it were not true that they were indeed their
employees.
PEOPLE’S BROADCASTING SERVICE
(BOMBO RADYO PHILS, INC.) vs
SECRETARY OF THE
DEPARTMENT OF LABOR AND
EMPLOYMENT, THE REGIONAL
DIRECTOR, DOLE REGION VII, AND
JANDELEON JUEZAN
This is a Petition for Certiorari. Private
Respondent Juezan filed a complaint against
petitioner with the DOLE Region No. VII, Cebu
City for illegal deduction, nonpayment of service
incentive leave, 13th month pay, premium pay for
holiday and rest day and illegal diminution of
benefits, delayed payment of wages and
noncoverage of SSS, PAG-IBIG and Philhealth.
The DOLE Regional Director found
that Juezan is petitioner’s employee and was
entitled to the money claims.
In the Decision of the Court, it was found that there
was no employer-employee relationship (Er-Ee)
between the parties. It was further stated that
while the DOLE may make a determination of the
existence of an employer-employee relationship, this
function could not be co-extensive with the
visitorial and enforcement power provided in Art.
128(b) of the Labor Code, as amended by RA 7730
(An Act Further Strengthening the Visitorial and
Enforcement Powers of the Secretary of Labor). The
National Labor Relations Commission (NLRC) was
held to be the primary agency in determining the
existence of an employer-employee relationship. This
was the interpretation of the Court of the clause in
cases where the relationship of employer-employee
still exists in Art. 128(b). From this Decision, the
Public Attorneys Office (PAO) filed a Motion for
Clarification of Decision (with Leave of Court). The
PAO sought to clarify as to when the visitorial and
enforcement power of the DOLE be not considered
as co-extensive with the power to determine the
existence of an employer-employee relationship. In
its Comment, the DOLE sought clarification as
well, as to the extent of its visitorial and
enforcement power under the Labor Code, as
amended.
May the DOLE make a determination of whether
or not an employer-employee relationship exists, and
if so, to what extent?
Yes, the DOLE can determine whether or not an
Er-Ee Relationship exists. In the Decision, the
Court had placed a limitation upon the power of the
DOLE, that is, the determination of the existence
of an employer-employee relationship cannot be co-
extensive with the visitorial and enforcement power
of the DOLE. But even in conceding the power of
the DOLE to determine the existence of an
employer-employee relationship, the Court held that
the determination of the existence of an employer-
employee relationship is still primarily within the
power of the NLRC, that any finding by the DOLE
is merely preliminary. This conclusion must be
revisited. No limitation in the law was placed upon
the power of the DOLE to determine the existence
of an employer-employee relationship. No procedure
was laid down where the DOLE would only make
a preliminary finding, that the power was primarily
held by the NLRC. The law did not say that the
DOLE would first seek the NLRCs determination
of the existence of an employer-employee
relationship, or that should the existence of the
employer-employee relationship be disputed, the
DOLE would refer the matter to the NLRC. The
DOLE must have the power to determine whether
or not an employer-employee relationship exists, and
from there to decide whether or not to issue
compliance orders in accordance with Art. 128(b) of
the Labor Code, as amended by RA 7730. The
determination of the existence of an employer-
employee relationship by the DOLE must be
respected. The expanded visitorial and enforcement
power of the DOLE granted by RA 7730 would be
rendered nugatory if the alleged employer could, by
the simple expedient of disputing the employer-
employee relationship, force the referral of the
matter to the NLRC.
If the DOLE makes a finding that there is an
existing employer-employee relationship, it takes
cognizance of the matter, to the exclusion of the
NLRC. The DOLE would have no jurisdiction only
if the employer-employee relationship has already
been terminated, or it appears, upon review, that no
employer-employee relationship existed in the first
place. This is not to say that the determination by
the DOLE is beyond question or review. Suffice it
to say, there are judicial remedies such as a petition
for certiorari under Rule 65 that may be availed of,
should a party wish to dispute the findings of the
DOLE. Under Art. 128(b) of the Labor Code, as
amended by RA 7730, the DOLE is fully
empowered to make a determination as to the
existence of an employer-employee relationship in
the exercise of its visitorial and enforcement power,
subject to judicial review, not review by the NLRC.
There is a view that despite Art. 128(b) of the Labor
Code, as amended by RA 7730, there is still a
threshold amount set by Arts. 129 and 217 of the
Labor Code when money claims are involved, i.e.,
that if it is for PhP 5,000 and below, the
jurisdiction is with the regional director of the
DOLE, under Art. 129, and if the amount involved
exceeds PhP 5,000, the jurisdiction is with the labor
arbiter, under Art. 217. The view states that despite
the wording of Art. 128(b), this would only apply in
the course of regular inspections undertaken by the
DOLE, as differentiated from cases under Arts. 129
and 217, which originate from complaints. There are
several cases, however, where the Court has ruled
that Art. 128(b) has been amended to expand the
powers of the DOLE Secretary and his duly
authorized representatives by RA 7730. In these
cases, the Court resolved that the DOLE had the
jurisdiction, despite the amount of the money claims
involved. Furthermore, in these cases, the inspection
held by the DOLE regional director was prompted
specifically by a complaint. Therefore, the initiation
of a case through a complaint does not divest the
DOLE Secretary or his duly authorized
representative of jurisdiction under Art. 128(b). In
the present case, the finding of the DOLE Regional
Director that there was an employer-employee
relationship has been subjected to review by this
Court, with the finding being that there was no
employer-employee relationship between petitioner
and private respondent, based on the evidence
presented. Private respondent presented self-serving
allegations as well as self-defeating evidence. The
findings of the Regional Director were not based on
substantial evidence, and private respondent failed
to prove the existence of an employer-employee
relationship. The DOLE had no jurisdiction over
the case, as there was no employer-employee
relationship present. Thus, the dismissal of the
complaint against petitioner is proper. The Decision
is AFFIRMED, with the MODIFICATION that
in the exercise of the DOLEs visitorial and
enforcement power, the Labor Secretary or the
latters authorized representative shall have the
power to determine the existence of an employer-
employee relationship, to the exclusion of the NLRC

Sonza v. abs-cbn
Facts:
Respondent ABS-CBN signed an Agreement with
the Mel and Jay Management Development
Corporation where the latter agreed to provide
petitioner Sonza’s services exclusively to ABS-
CBN as talent for radio and television. Later,
Sonza tendered a letter rescinding their agreement
and filed a complaint before the DOLE for
payment of his labor standard benefits. ABS-CBN
contends on the ground that no employer-employee
relationship existed between the parties. The Labor
Arbiter found for respondent citing that Sonza as
a ‘talent’ cannot be considered an employee of
petitioner. Both NLRC and CA affirmed.
Issue:
Whether or not employer-employee relationship
existed between petitioner and ABS-CBN.
Ruling: NO.
Applying the control test to the present case, we
find that SONZA is not an employee but an
independent contractor. The control test is the most
important test our courts apply in distinguishing
an employee from an independent Contractor. This
test is based on the extent of control the hirer
exercises over a worker. The greater the supervision
and control the hirer exercises, the more likely the
worker is deemed an employee. The converse holds
true as well – the less control the hirer exercises,
the more likely the worker is considered an
independent contractor.
We find that ABS-CBN was not involved in the
actual performance that produced the finished
product of SONZA’s work. ABS-CBN did not
instruct SONZA how to perform his job. ABS-
CBN merely reserved the right to modify the
program format and airtime schedule “for more
effective programming.” ABS-CBN’s sole concern
was the quality of the shows and their standing in
the ratings. Clearly, ABS-CBN did not exercise
control over the means and methods of performance
of SONZA’s work.
In any event, not all rules imposed by the hiring
party on the hired party indicate that the latter is
an employee of the former. In this case, SONZA
failed to show that these rules controlled his
performance. We find that these general rules are
merely guidelines towards the achievement of the
mutually desired result, which are top-rating
television and radio programs that comply with
standards of the industry.
Being an exclusive talent does not by itself mean
that SONZA is an employee of ABS-CBN. Even
an independent contractor can validly provide his
services exclusively to the hiring party. In the
broadcast industry, exclusivity is not necessarily
the same as control.
*Not every performance of services for a fee creates
an employer-employee relationship. To hold that
every person who renders services to another for a
fee is an employee – to give meaning to the security
of tenure clause – will lead to absurd results.
MARIWASA vs. LEOGARDO
FACTS:
Joaquin A. Dequila (or Dequilla) was hired on
probation by Mariwasa Manufacturing, Inc. as a
general utility worker on January 10, 1979. After
6 months, he was informed that his work was
unsatisfactory and had failed to meet the required
standards. To give him another chance, and with
Dequila’s written consent, Mariwasa extended
Dequila’s probationary period for another three
months: from July 10 to October 9, 1979.
Dequila’s performance, however, did not improve
and Mariwasa terminated his employment at the
end of the extended period.
Dequila filed a complaint for illegal dismissal
against Mariwasa and its VP for Administration,
Angel T. Dazo, and violation of Presidential
Decrees Nos. 928 and 1389.
DIRECTOR OF MINISTRY OF LABOR:
Complaint is dismissed. Termination is justified.
Thus, Dequila appeals to the Minister of Labor.
MINISTER OF LABOR: Deputy Minister
Vicente Leogardo, Jr. held that Dequila was
already a regular employee at the time of his
dismissal, thus, he was illegally dismissed. (Initial
order: Reinstatement with full backwages. Later
amended to direct payment of Dequila’s backwages
from the date of his dismissal to December 20,
1982 only.)
ISSUE: WON employer and employee may, by
agreement, extend the probationary period of
employment beyond the six months prescribed in
Art. 282 of the Labor Code?
RULING: YES, agreements stipulating longer
probationary periods may constitute lawful
exceptions to the statutory prescription limiting
such periods to six months.
The SC in its decision in Buiser vs. Leogardo, Jr.
(1984) said that “Generally, the probationary
period of employment is limited to six (6) months.
The exception to this general rule is when the
parties to an employment contract may agree
otherwise, such as when the same is established by
company policy or when the same is required by the
nature of work to be performed by the employee. In
the latter case, there is recognition of the exercise
of managerial prerogatives in requiring a longer
period of probationary employment, such as in the
present case where the probationary period was set
for eighteen (18) months, i.e. from May, 1980 to
October, 1981 inclusive, especially where the
employee must learn a particular kind of work such
as selling, or when the job requires certain
qualifications, skills experience or training.”
In this case, the extension given to Dequila could
not have been pre-arranged to avoid the legal
consequences of a probationary period
satisfactorily completed. In fact, it was ex gratia,
an act of liberality on the part of his employer
affording him a second chance to make good after
having initially failed to prove his worth as an
employee. Such an act cannot now unjustly be
turned against said employer’s account to compel it
to keep on its payroll one who could not perform
according to its work standards.
By voluntarily agreeing to an extension of the
probationary period, Dequila in effect waived any
benefit attaching to the completion of said period
if he still failed to make the grade during the period
Later that day, she accepted the said offer and
of extension. By reasonably extending the period of
received an electronic mail (e-mail) from Abbott’s
probation, the questioned agreement actually
Recruitment Officer, Teresita C. Bernardo
improved the probationary employee’s prospects of
(Bernardo), confirming the same. Attached to
demonstrating his fitness for regular employment.
Bernardo’s e-mail were Abbott’s organizational
chart and a job description of Alcaraz’s work.
Petition granted. Order of Deputy Minister
Leogardo reversed.
On February 12, 2005, Alcaraz signed an
Abbott vs alcaraz employment contract which stated that she was to
be placed on probation for a period of six (6)
FACTS:
months beginning February 15, 2005 to August 14,
2005.

On June 27, 2004, Abbott Laboratories,

Philippines (Abbott) caused the publication in a
During Alcaraz’s pre-employment orientation,
major broadsheet newspaper of its need for a
Allan G. Almazar, Hospira’s Country Transition
Medical and Regulatory Affairs Manager who
Manager, briefed her on her duties and
would: (a) be responsible for drug safety
responsibilities as Regulatory Affairs Manager:
surveillance operations, staffing, and budget; (b)
lead the development and implementation of
standard operating procedures/policies for drug
(a) she will handle the staff of Hospira ALSU and
safety surveillance and vigilance; and (c) act as the
will directly report to Almazar on matters
primary interface with internal and external
regarding Hopira’s local operations, operational
customers regarding safety operations and queries.
budget, and performance evaluation of the Hospira
ALSU Staff who are on probationary status;
Alcaraz – who was then a Regulatory Affairs and
Information Manager at Aventis Pasteur
(b) she must implement Abbott’s Code of Good
Philippines, Incorporated (another pharmaceutical
Corporate Conduct (Code of Conduct), office
company like Abbott) – showed interest and
policies on human resources and finance, and
submitted her application on October 4, 2004.
ensure that Abbott will hire people who are fit in
the organizational discipline;
On December 7, 2004, Abbott formally offered
Alcaraz the above-mentioned position which was
(c) Kelly Walsh, Manager of the Literature Drug
an item under the company’s Hospira Affiliate
Surveillance Drug Safety of Hospira, will be her
Local Surveillance Unit (ALSU) department.
immediate supervisor;

In Abbott’s offer sheet, it was stated that Alcaraz

was to be employed on a probationary basis.
(d) she should always coordinate with Abbott’s
human resource officers in the management and
discipline of the staff;
(e) Hospira ALSU will spin off from Abbott in
early 2006 and will be officially incorporated and
known as Hospira, Philippines; and
(f) the processing of information and/or raw
material data subject of Hospira ALSU operations
will be strictly confined and controlled under the
computer system and network being maintained
and operated from the United States. For this
purpose, all those involved in Hospira ALSU are
required to use two identification cards: one, to
identify them as Abbott’s employees and another,
to identify them as Hospira employees.
On March 3, 2005, Maria Olivia T. Yabut-Misa,
Abbott’s Human Resources (HR) Director, sent
Alcaraz an e-mail which contained an explanation
of the procedure for evaluating the performance of
probationary employees and further indicated that
Abbott had only one evaluation system for all of
its employees. Alcaraz was also given copies of
Abbott’s Code of Conduct and Probationary
Performance Standards and Evaluation (PPSE)
and Performance Excellence Orientation Modules
(Performance Modules) which she had to apply in
line with her task of evaluating the Hospira
ALSU staff.
Abbott’s PPSE procedure mandates that the job
performance of a probationary employee should be
formally reviewed and discussed with the employee
at least twice: first on the third month and second
on the fifth month from the date of employment.
The necessary Performance Improvement Plan
should also be made during the third-month review
in case of a gap between the employee’s
performance and the standards set. These
performance standards should be discussed in detail
with the employee within the first two (2) weeks
on the job. It was equally required that a signed
copy of the PPSE form must be submitted to
Abbott’s Human Resources Department (HRD)
and shall serve as documentation of the employee’s
performance during his/her probationary period.
This shall form the basis for recommending the
confirmation or termination of the probationary
employment.
On April 20, 2005, Alcaraz had a meeting with
Cecille Terrible, Abbott’s former HR Director, to
discuss certain issues regarding staff performance
standards. In the course thereof, Alcaraz
accidentally saw a printed copy of an e-mail sent
by Walsh to some staff members which essentially
contained queries regarding the former’s job
performance. Alcaraz asked if Walsh’s action was
the normal process of evaluation. Terrible said that
it was not.
On May 16, 2005, Alcaraz was called to a meeting
with Walsh and Terrible where she was informed
that she failed to meet the regularization standards
for the position of Regulatory Affairs Manager.
Thereafter, Walsh and Terrible requested Alcaraz
to tender her resignation, else they be forced to
terminate her services. She was also told that,
regardless of her choice, she should no longer report
for work and was asked to surrender her office
identification cards. She requested to be given one
week to decide on the same, but to no avail.
On May 17, 2005, Alcaraz told her administrative
assistant, Claude Gonzales (Gonzales), that she
would be on leave for that day. However, Gonzales
told her that Walsh and Terrible already
announced to the whole Hospira ALSU staff that
Alcaraz already resigned due to health reasons.
 (a) they threatened her with termination;
On May 23, 2005, Walsh, Almazar, and Bernardo
personally handed to Alcaraz a letter stating that
(b) she was ordered not to enter company premises
her services had been terminated effective May 19,
even if she was still an employee thereof; and
2005. The letter detailed the reasons for Alcaraz’s
termination – particularly, that Alcaraz:

(c) they publicly announced that she already

resigned in order to humiliate her.
(a) did not manage her time effectively;

Abbott maintained that Alcaraz was validly

(b) failed to gain the trust of her staff and to build
terminated from her probationary employment
an effective rapport with them;
given her failure to satisfy the prescribed standards
for her regularization which were made known to
her at the time of her engagement.
(c) failed to train her staff effectively; and

The Labor Arbiter ruled in Abbott’s favor. The

(d) was not able to obtain the knowledge and
NLRC reversed, upholding Alcaraz’s allegations.
ability to make sound judgments on case processing
The CA affirmed the NLRC decision.
and article review which were necessary for the
proper performance of her duties.
ISSUES:
Alcaraz felt that she was unjustly terminated from
her employment and thus, filed a complaint for
1) WON Alcaraz was sufficiently informed of the
illegal dismissal and damages against Abbott and
reasonable standards to qualify her as a regular
its officers, namely, Misa, Bernardo, Almazar,
employee
Walsh, Terrible, and Feist. She claimed that she
should have already been considered as a regular
and not a probationary employee given Abbott’s
failure to inform her of the reasonable standards MAJORITY: YES. Abbott clearly conveyed to
for her regularization upon her engagement as Alcaraz her duties and responsibilities as
required under Article 295 of the Labor Code. In Regulatory Affairs Manager prior to, during the
this relation, she contended that while her time of her engagement, and the incipient stages of
employment contract stated that she was to be her employment. On this score, the Court finds it
engaged on a probationary status, the same did not apt to detail not only the incidents which point out
indicate the standards on which her regularization to the efforts made by Abbott but also those
would be based. She further averred that the circumstances which would show that Alcaraz
individual petitioners maliciously connived to was well-apprised of her employer’s expectations
illegally dismiss her when: that would, in turn, determine her regularization:
(a) On June 27, 2004, Abbott caused the
publication in a major broadsheet newspaper of its
need for a Regulatory Affairs Manager, indicating
therein the job description for as well as the duties
and responsibilities attendant to the aforesaid
position; this prompted Alcaraz to submit her
application to Abbott on October 4, 2004;
(b) In Abbott’s December 7, 2004 offer sheet, it
was stated that Alcaraz was to be employed on a
probationary status;
(c) On February 12, 2005, Alcaraz signed an
employment contract which specifically stated,
inter alia, that she was to be placed on probation
for a period of six (6) months beginning February
15, 2005 to August 14, 2005;
(d) On the day Alcaraz accepted Abbott’s
employment offer, Bernardo sent her (d) On the day
Alcaraz accepted Abbott’s employment offer,
Bernardo sent her copies of Abbott’s
organizational structure and her job description
through e-mail;
(e) Alcaraz was made to undergo a pre-employment
orientation where Almazar informed her that she
had to implement Abbott’s Code of Conduct and
office policies on human resources and finance and
that she would be reporting directly to Walsh;
(f) Alcaraz was also required to undergo a training
program as part of her orientation;
(g) Alcaraz received copies of Abbott’s Code of
Conduct and Performance Modules from Misa who
explained to her the procedure for evaluating the
performance of probationary employees; she was
further notified that Abbott had only one
evaluation system for all of its employees; and
(h) Moreover, Alcaraz had previously worked for
another pharmaceutical company and had admitted
to have an “extensive training and background” to
acquire the necessary skills for her job.
Considering the totality of the above-stated
circumstances, Alcaraz was well-aware that her
regularization would depend on her ability and
capacity to fulfill the requirements of her position
as Regulatory Affairs Manager and that her
failure to perform such would give Abbott a valid
cause to terminate her probationary employment.
Verily, basic knowledge and common sense dictate
that the adequate performance of one’s duties is, by
and of itself, an inherent and implied standard for
a probationary employee to be regularized; such is a
regularization standard which need not be literally
spelled out or mapped into technical indicators in
every case.
DISSENT (Brion, J.): NO. The Offer Sheet was
designed to inform Alcaraz of the compensation
and benefits package offered to her by Abbott and
can in no way be read as a statement of the
applicable probationary employment standard. It
was communicated even prior to engagement when
the parties were negotiating, not at the point of
engagement as the law requires.
The pre-employment orientation on Alcaraz’s duty
to implement Abbott’s Code of Conduct, office
policies and training program likewise cannot be
characterized as performance standards; they
simply related to activities aimed at acquainting
and training Alcaraz on her duties and not for the
purpose of informing her of the performance
standards applicable to her. What stands out is
that they do not pertain specifically to Alcaraz and
the required performance standard applicable for
DISSENT (Brion, J.): Based on these premises, the
her qualification for regular employment; they
ponencia then deftly argues that because the duties
related to the staff Alcaraz managed and
and responsibilities of the position have been
supervised. Additionally, these were all relayed
explained to Alcaraz, an experienced human
prior to or after Alcaraz was engaged by Abbott.
resource specialist, she should have known what
was expected for her to attain regular status. The
ponencia’s reasoning, however, is badly flawed.
An important distinction to remember at this point
is that Alcaraz’s knowledge of the duties that her
work entailed, and her knowledge of the employer’s
1st. The ponencia impliedly admits that no
performance standard, are two distinct matters
performance standards were expressly given but
separately requiring the presentation of
argues that because Alcaraz had been informed of
independent proof.
her duties and responsibilities (a fact that was and
is not disputed), she should be deemed to know
what was expected of her for purposes of
MAJORITY: Keeping with [the Omnibus Rules
regularization. This is a major flaw that the
Implementing the Labor Code], an employer is
ponencia satisfies only via an assumption. The
deemed to have made known the standards that
ponencia apparently forgets that knowledge of
would qualify a probationary employee to be a
duties and responsibilities is different from the
regular employee when it has exerted reasonable
measure of how these duties and responsibilities
efforts to apprise the employee of what he is
should be delivered. They are separate elements and
expected to do to accomplish during the trial of
the latter element is missing in the present case.
probation. This goes without saying that the
employee is sufficiently made aware of his
probationary status as well as the length of time of
2nd. The ponencia glosses over the communication
the probation.
aspect. Not only must there be express performance
standards; there must be effective communication.
If no standards were provided, what would be
The exception to the foregoing is when the job is
communicated?
self-descriptive in nature, for instance, in the case
of maids, cooks, drivers, or messengers. Also in
Aberdeen Court, Inc v. Agustin, it has been held
3rd. The ponencia badly contradicts itself in
that the rule on notifying a probationary employee
claiming that actual communication of specific
of the standards of regularization should not be
standards might not be necessary “when the job is
used to exculpate an employee in a manner contrary
self-descriptive in nature, for instance, in the case
to basic knowledge and common sense in regard to
of maids, cooks, drivers, or messengers.” Alcaraz, in
which there is no need to spell out a policy or
the first place, was never a maid, cook, driver or a
standard to be met. In the same light, an
messenger and cannot be placed under this
employee’s failure to perform the duties and
classification; she was hired and employed as a
responsibilities which have been clearly made
human resources manager, in short, a managerial
known to him constitutes a justifiable basis for a
employee. Plain and common sense reasoning by
probationary employee’s non-regularization.
one who ever had been in an employment situation
dictates that the job of a manager cannot be self-
explanatory, in the way the ponencia implied; the
The Court modified Agabon v. NLRC in the case of
complexity of a managerial job must necessarily
Jaka Food Processing Corporation v. Pacot where
require that the level of performance to be delivered
it created a distinction between procedurally
must be specified and cannot simply be assumed
defective dismissals due to a just cause, on one
based on the communication of the manager’s
hand, and those due to an authorized cause, on the
duties and responsibilities.
other.

4th. The ponencia also forgets that what these

If the dismissal is based on a just cause under
“performance standards” or measures cannot simply
Article 296 of the Labor Code but the employer
be assumed because they are critically important in
failed to comply with the notice requirement, the
this case, or for that matter, in any case involving
sanction to be imposed upon him should be
jobs whose duties and responsibilities are not
tempered because the dismissal process was, in
simple or self-descriptive. If Alcaraz had been
effect, initiated by an act imputable to the
evaluated or assessed in the manner that the
employee
company’s internal rules require, these standards
would have been the basis for her performance or
lack of it. Last but not the least, Alcaraz’s services
were terminated on the basis of the performance If the dismissal is based on an authorized cause
standards that, by law, the employer set or under Article 297 but the employer failed to comply
prescribed at the time of the employee’s with the notice requirement, the sanction should be
engagement. If none had been prescribed in the stiffer because the dismissal process was initiated
first place, under what basis could the employee by the employer’s exercise of his management
then be assessed for purposes of termination or prerogative.
regularization?

Alcaraz’s dismissal proceeded from her failure to

2) WON Alcaraz was validly terminated from her
employment
MAJORITY: NO. Abbott failed to follow the
above-stated procedure in evaluating Alcaraz. For
one, there lies a hiatus of evidence that a signed
copy of Alcaraz’s PPSE form was submitted to the
HRD. It was not even shown that a PPSE form
was completed to formally assess her performance.
Neither was the performance evaluation discussed
with her during the third and fifth months of her
employment. Nor did Abbott come up with the
necessary Performance Improvement Plan to
properly gauge Alcaraz’s performance with the set
company standards.
comply with the standards required for her
regularization. As such, it is undeniable that the
dismissal process was, in effect, initiated by an act
imputable to the employee, akin to dismissals due
to just causes under Article 296 of the Labor Code.
Therefore, the Court deems it appropriate to fix the
amount of nominal damages at the amount of
P30,000.00, consistent with its rulings in both
Agabon and Jaka.
DISSENT (Brion, J.): YES. Alcaraz was
dismissed as she “failed to qualify as regular
employee in accordance with the prescribed
standards set by the Company.” Even granting for
the sake of argument that Abbott had apprised
Alcaraz of an applicable performance standard, the
evidence failed to show that Alcaraz did not meet
this standard in a manner and to the extent
equivalent to the “just cause” that the law requires.
In defense of Abbott’s failure to observe the two-
notice requirement, the ponencia argues that a
different procedure applies when terminating a
probationary employee; the usual two-notice
requirement does not govern, citing for this purpose
Section 2, Rule I, Book VI of the Implementing
Rules of the Labor Code. The ponencia, however,
forgets that the single notice rule applies only if the
employee is validly on probationary basis; it does
not apply where the employee is deemed a regular
employee for the company’s failure to provide and
to communicate a prescribed performance standard
applicable to the probationary employee.
3) WON the individual petitioners herein are liable
MAJORITY: NO. Other than her unfounded
assertions on the matter, there is no evidence to
support the fact that the individual petitioners
herein, in their capacity as Abbott’s officers and
employees, acted in bad faith or were motivated by
ill will in terminating Alcaraz’s services. The fact
that Alcaraz was made to resign and not allowed
to enter the workplace does not necessarily indicate
bad faith on Abbott’s part since a sufficient
ground existed for the latter to actually proceed
with her termination. On the alleged loss of her
personal belongings, records are bereft of any
showing that the same could be attributed to
Abbott or any of its officers.
DISSENT (Brion, J.): YES. The NLRC
exhaustively discussed Abbott’s bad faith, as
demonstrated by the actions of the individual
petitioners:
First, Alcaraz was pressured to resign:
(1) she was threatened with termination, which
will surely damage her reputation in the
pharmaceutical industry;
(2) she was asked to evacuate her Commission and
ordered not to enter the Company’s premises even if
she was still an Abbott employee; and
(3) Terrible and Walsh made a public
announcement to the staff that Alcaraz already
resigned even if in reality she did not.
The CA also described in detail the abrupt and
oppressive manner in which Alcaraz’s employment
was dismissed by Abbott:
On May 23, 2005, Alcaraz still reported for work
since Abbott had not yet handed the termination
notice to her. However, the security guard did not
allow her to enter the Hospira ALSU office
pursuant to Walsh[’s] instruction. She requested
Walsh that she be allowed to enter the company
premises to retrieve her last remaining things in her
office which are mostly her personal belongings.
She was allowed to enter. However, she was
surprised to see her drawers already unlocked and,
when she opened the same, she discovered that her
small brown envelope x x x, white pouch
containing the duplicate keys, and the staff’s final
evaluation sheets were missing.Alcaraz informed
Bernardo about the incident. The latter responded
by saying she was no longer an employee of the
company since May 19, 2005.
Alcaraz reported the matter to the Pasig Police
Station and asked for help regarding the theft of
her properties. The Pasig Police incident report
stated as follows:
x x x x When confronted by the suspect, in the
presence of one SOCO officer and staff, named
Christian Perez, Kelly Walsh allegedly admitted
that she was the one who opened the drawer and
got the green folders containing the staff
evaluations. The Reportee was told by Kelly Walsh
that her Rolex wristwatch will be returned to her
provided that she will immediately vacate her
office.
On the same date, Alcaraz’s termination letter
dated May 19, 2005 was handed to her by Walsh,
Almazar and Bernardo.
RESULT: CA reversed. In favor of Abbott.
ABS-CBN vs NAZARENO Case Digest
G.R. No. 164156
September 26, 2006
Facts: Petitioner ABS-CBN Broadcasting
Corporation (ABS-CBN) is engaged in the
broadcasting business and owns a network of
television and radio stations, whose operations
revolve around the broadcast, transmission, and
relay of telecommunication signals. It sells and
deals in or otherwise utilizes the airtime it
generates from its radio and television operations.
It has a franchise as a broadcasting company, and
was likewise issued a license and authority to
operate by the National Telecommunications
Commission.
Petitioner employed respondents Nazareno,
Gerzon, Deiparine, and Lerasan as production
assistants (PAs) on different dates. They were
assigned at the news and public affairs, for various
radio programs in the Cebu Broadcasting Station.
On December 19, 1996, petitioner and the ABS-
CBN Rank-and-File Employees executed a
Collective Bargaining Agreement (CBA) to be
effective during the period from December 11, 1996
to December 11, 1999. However, since petitioner
refused to recognize PAs as part of the bargaining
unit, respondents were not included to the CBA.
On October 12, 2000, respondents filed a
Complaint for Recognition of Regular Employment
Status, Underpayment of Overtime Pay, Holiday
Pay, Premium Pay, Service Incentive Pay, Sick
Leave Pay, and 13th Month Pay with Damages
against the petitioner before the NLRC. The Labor
Arbiter rendered judgment in favor of the
respondents, and declared that they were regular
employees of petitioner as such, they were awarded
monetary benefits. NLRC affirmed the decision of
the Labor Arbiter. Petitioner filed a motion for
reconsideration but CA dismissed it.
Issue: Whether or not the respondents were
considered regular employees of ABS-CBN.
Ruling: The respondents are regular employees of
ABS-CBN. It was held that where a person has
rendered at least one year of service, regardless of
the nature of the activity performed, or where the
work is continuous or intermittent, the
employment is considered regular as long as the
activity exists, the reason being that a customary
appointment is not indispensable before one may be
formally declared as having attained regular
status.
In Universal Robina Corporation v. Catapang, the
Court states that the primary standard, therefore,
of determining regular employment is the
reasonable connection between the particular
activity performed by the employee in relation to
the usual trade or business of the employer. The
test is whether the former is usually necessary or
desirable in the usual business or trade of the
employer. The connection can be determined by
considering the nature of work performed and its
relation to the scheme of the particular business or
trade in its entirety. Also, if the employee has been
performing the job for at least a year, even if the
performance is not continuous and merely
intermittent, the law deems repeated and
continuing need for its performance as sufficient
evidence of the necessity if not indispensability of
that activity to the business. Hence, the
employment is considered regular, but only with
respect to such activity and while such activity
exists.
Additionally, respondents cannot be considered as
project or program employees because no evidence
was presented to show that the duration and scope
of the project were determined or specified at the
time of their engagement. In the case at bar,
however, the employer-employee relationship
between petitioner and respondents has been
proven. In the selection and engagement of
respondents, no peculiar or unique skill, talent or
celebrity status was required from them because
they were merely hired through petitioner’s
personnel department just like any ordinary
employee. Respondents did not have the power to
bargain for huge talent fees, a circumstance
negating independent contractual relationship.
Respondents are highly dependent on the petitioner
for continued work. The degree of control and
supervision exercised by petitioner over respondents
through its supervisors negates the allegation that
respondents are independent contractors.
The presumption is that when the work done is an
integral part of the regular business of the employer
and when the worker, relative to the employer,
does not furnish an independent business or
professional service, such work is a regular
employment of such employee and not an
independent contractor. As regular employees,
respondents are entitled to the benefits granted to
all other regular employees of petitioner under the
CBA . Besides, only talent-artists were excluded
from the CBA and not production assistants who
are regular employees of the respondents.
Moreover, under Article 1702 of the New Civil
Code: “In case of doubt, all labor legislation and
all labor contracts shall be construed in favor of
the safety and decent living of the laborer.”
Pure foods vs nlrc
FACTS:
The private respondents (numbering 906) were
hired by petitioner Pure Foods Corporation to
work for a fixed period of five months at its tuna
cannery plant in Tambler, General Santos City.
After the expiration of their respective contracts of
employment in June and July 1991, their services
were terminated. They forthwith executed a
“Release and Quitclaim” stating that they had no
claim whatsoever against the petitioner. On
December 1992, Private respondents filed before
the NLRC a complaint for illegal dismissal against
the petitioner and its plant manager, Marciano
Aganon.
The Labor Arbiter dismissed the complaint on the
ground that the private respondents were mere
contractual workers, and not regular employees;
hence, they could not avail of the law on security
of tenure. The private respondents appealed from
the decision to the NLRC which affirmed the
Labor Arbiter's decision. On private respondents’
motion for reconsideration, the NLRC rendered
another decision on 30 January 1995 vacating and
setting aside its earlier decision and held that the
private respondents and their co-complainants
were regular employees. It declared that the
contract of employment for five months was a
“clandestine scheme employed by [the petitioner] to
stifle [private respondents’] right to security of
tenure” and should therefore be struck down and
disregarded for being contrary to law, public
policy, and morals. Hence, their dismissal on
account of the expiration of their respective
contracts was illegal.
Petitioner’s motion for reconsideration was denied;
hence, this appeal.
Petitioner’s submission before the Court: the
private respondents are now estopped from
questioning their separation from petitioner’s
employ in view of their express conformity with the
five-month duration of their employment contracts.
In the instant case, the private respondents were
employed for a period of five months only. In any
event, private respondents' prayer for
reinstatement is well within the purview of the
“Release and Quitclaim” they had executed wherein
they unconditionally released the petitioner from
any and all other claims which might have arisen
from their past employment with the petitioner.
ISSUE: Whether or not the 5-month period
specified in private respondents’ employment
contract is invalid and is therefore violative of
their constitutional right to security of tenure.
Ruling:
The five-month period specified in private
respondents’ employment contract is invalid. In
the leading case of Brent School, Inc. v. Zamora,
although the Court has upheld the legality of
fixed-term employment, the Court also held that
where from the circumstances it is apparent that
the periods have been imposed to preclude
acquisition of tenurial security by the employee,
they should be struck down or disregarded as
contrary to public policy and morals.
Brent also laid down the criteria under which term
employment cannot be said to be in circumvention
of the law on security of tenure: 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 the
employee dealt with each other on more or less
equal terms with no moral dominance exercised by
the former or the latter.
None of these criteria had been met in the present
case. It could not be supposed that private
respondents and all other so-called “casual”
workers of [the petitioner] KNOWINGLY and
VOLUNTARILY agreed to the 5-month
employment contract.
The petitioner does not deny or rebut private
respondents' averments (1) that the main bulk of
its workforce consisted of its so-called “casual”
employees; (2) that as of July 1991, “casual”
workers numbered 1,835; and regular employees,
263; (3) that the company hired “casual” every
month for the duration of five months, after which
their services were terminated and they were
replaced by other “casual” employees on the same
five-month duration; and (4) that these “casual”
employees were actually doing work that were
necessary and desirable in petitioner’s usual
business.
This scheme of the petitioner was apparently
designed to prevent the private respondents and
the other “casual” employees from attaining the
status of a regular employee. It was a clear
circumvention of the employees’ right to security of
tenure and to other benefits like minimum wage,
cost-of-living allowance, sick leave, holiday pay,
and 13th month pay. Indeed, the petitioner
succeeded in evading the application of labor laws.
Also, it saved itself from the trouble or burden of
establishing a just cause for terminating employees
by the simple expedient of refusing to renew the
employment contracts.
The five-month period specified in private
respondents’ employment contracts having been
imposed precisely to circumvent the constitutional
guarantee on security of tenure should, therefore,
be struck down or disregarded as contrary to public
policy or morals. To uphold the contractual
arrangement between the petitioner and the private
respondents would, in effect, permit the former to
avoid hiring permanent or regular employees by
simply hiring them on a temporary or casual basis,
thereby violating the employees’ security of tenure
in their jobs.
The NLRC was correct in finding that the private
respondents were regular employees and that they
were illegally dismissed from their jobs. Under
Article 279 of the Labor Code and the recent
jurisprudence, the legal consequence of illegal
dismissal is reinstatement without loss of seniority
rights and other privileges, with full back wages
computed from the time of dismissal up to the time
of actual reinstatement, without deducting the
earnings derived elsewhere pending the resolution
of the case.
However, since reinstatement is no longer possible
because the petitioner's tuna cannery plant had,
admittedly, been closed in November 1994, the
proper award is separation pay equivalent to one
month pay or one-half month pay for every year of
service, whichever is higher, to be computed from
the commencement of their employment up to the
closure of the tuna cannery plant. The amount of
back wages must be computed from the time the
private respondents were dismissed until the time
petitioner's cannery plant ceased operation.
Decision: WHEREFORE, for lack of merit, the
instant petition is DISMISSED and the
challenged decision of 30 January 1995 of the
National Labor Relations Commission in NLRC
CA No. M-001323-93 is hereby AFFIRMED
subject to the above modification on the
computation of the separation pay and back wages.
Maraguinot v. NLRC
FACTS:
Petitioner maintains that he was employed by
respondents as part of the filming crew. He was
laterpromoted as an electrician. Petitioners’ tasks
contained of loading movie equipment in the
shoothing area.Petitioners sought the assistance of
their supervisor, Cesario, to facilitate their request
that respondents adjusttheir salary in accordance
with the minimum wage law. Mrs. Cesario
informed petitioners that del Rosario wouldagree
to increase their salary only if they signed a blank
employment contract. As petitioner refused to
sign,respondents forced Enero (the other petitioner
who worked as a crew member) to go on leave.
However, when hereported to work, respondent
refused to take him back. Maraguinot was dropped
from the company payroll butwhen he returned, he
was again asked to sign a blank employment
contract, and when he still refused,respondent’s
terminated his services. Petitioners thus sued for
illegal dismissal.Private respondents assert that
they contract persons called producers to produce or
make movies forprivate respondents and contend
that petitioners are project employees of the
associate producers, who act asindependent
contractors. Thus, there is no ER-EE
relationship.However, petitioners cited that their
performance of activities is necessary in the usual
trade or business of respondents and their work in
continuous.
ISSUE:
W/N ER-EE relationship exists
HELD:
Yes.With regards to VIVA’s contention that it
does not make movies but merely distributes motion
pictures,there is no sufficient proof to prove this
contention.In respect to respondents’ allegation
that petitioners are project employees, it is a settled
rule that thecontracting out of labor is allowed
only in case of job contracting. However, assuming
that the associate producersare job contactors, they
must then be engaged in the business of making
motion pictures. Associate producersmust have
tools necessary to make motion pictures. However,
the associate producers in this case have none of
these. The movie-making equipment are supplied to
the producers and owned by VIVA. Thus, it is
clear that theassociate producer merely leases the
equipment from VIVA.In addition, the associate
producers of VIVA cannot be considered labor-only
contractors as they did notsupply, recruit nor hire
the workers. It was Cesario, the Shooting
Supervisor of VIVA, who recruited crew members.
Thus, the relationship between VIVA and its
producers or associate producers seems to be that of
agency.With regards to the issue of illegal
dismissal, petitioners assert that they were regular
employees who wereillegally dismissed. Petitioners
in this case had already attained the status of
regular employees in view of VIVA’sconduct.
Thus, petitioners are entitled to back wages.A
project employee or a member of a work pool may
acquire the status of a regular employee
when:a.there is a continuous rehiring of project
employees even after a cessation of projectb.the
tasks performed by the alleged project employee are
vital and necessary to the business of employer The
tasks of petitioners in loading movie equipment
and returning it to VIVA’s warehouse and fixing
thelighting system were vital, necessary and
indispensable to the usual business or trade of the
employer.Wherefore, petition is granted
Leyte vs. PNOC
FACTS: Respondent is a GOCC while petitioner is
a legitimate labor organization. Among
[respondent’s] geothermal projects is the Leyte
Geothermal Power Project located at the Greater
Tongonan Geothermal Reservation in Leyte. Thus,
the [respondent] hired and employed hundreds of
employees on a contractual basis, whereby, their
employment was only good up to the completion or
termination of the project and would automatically
expire upon the completion of such project.
Majority of the employees hired by [respondent] in
its Leyte Geothermal Power Projects had become
members of petitioner. In view of that
circumstance, the petitioner demands from the
[respondent] for recognition of it as the collective
bargaining agent of said employees and for a CBA
negotiation with it. However, the [respondent] did
not heed such demands of the petitioner. Sometime
in 1998 when the project was about to be
completed, the [respondent] proceeded to serve
Notices of Termination of Employment upon the
employees who are members of the petitioner.
On December 28, 1998, the petitioner filed a
Notice of Strike with DOLE against the
[respondent] on the ground of purported
commission by the latter of unfair labor practice
for “refusal to bargain collectively, union busting
and mass termination.” On the same day, the
petitioner declared a strike and staged such strike.
Secretary of Labor intervened and ordered all
workers to return to work. However, petitioner did
not abide.
NLRC: ruled that the employees are PROJECT
EMPLOYEES, and the strike as ILLEGAL
Petitioner Union contends that its officers and
members performed activities that were usually
necessary and desirable to respondent’s usual
business.
ISSUE: WON they are project employees
HELD: They are PROJECT EMPLOYEES
Article 280 of the Labor Code contemplates four
(4) kinds of employees:
(a) regular employees or those who have been
“engaged to perform activities which are usually
necessary or desirable in the usual business or trade
of the employer”;
(b) 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”;
(c) seasonal employees or those who work or
perform services which are seasonal in nature, and
the employment is for the duration of the season;
and
(d) casual employees or those who are not regular,
project, or seasonal employees.
Jurisprudence has added a fifth kind— a fixed-
term employee.
By entering into such a contract, an employee is
deemed to understand that his employment is
coterminous with the project. He may not expect to
be employed continuously beyond the completion of
the project. It is of judicial notice that project
employees engaged for manual services or those for
special skills like those of carpenters or masons, are,
as a rule, unschooled. However, this fact alone is
not a valid reason for bestowing special treatment
on them or for invalidating a contract of
employment. Project employment contracts are not
lopsided agreements in favor of only one party
thereto. The employer’s interest is equally
important as that of the employee[s’] for theirs is
the interest that propels economic activity. While
it may be true that it is the employer who drafts
project employment contracts with its business
interest as overriding consideration, such contracts
do not, of necessity, prejudice the employee.
Neither is the employee left helpless by a
prejudicial employment contract. After all, under
the law, the interest of the worker is paramount.
Union’s own admission, both parties had executed
the contracts freely and voluntarily without force,
duress or acts tending to vitiate the worker[s’]
consent. Thus, we see no reason not to honor and
give effect to the terms and conditions stipulated
therein.
The litmus test to determine whether an individual
is a project employee lies in setting a fixed period of
employment involving a specific undertaking which
completion or termination has been determined at
the time of the particular employee’s engagement.
NOTES:
WHAT IS A PROJECT? In the realm of business
and industry, we note that “project” could refer to
one or the other of at least two (2) distinguishable
types of activities. Firstly, a project could refer to a
particular job or undertaking that is within the
regular or usual business of the employer company,
but which is distinct and separate, and identifiable
as such, from the other undertakings of the
company. Such job or undertaking begins and ends
at determined or determinable times. The typical
example of this first type of project is a particular
construction job or project of a construction
company. A construction company ordinarily
carries out two or more [distinct] identifiable
construction projects: e.g., a twenty-five-storey
hotel in Makati; a residential condominium
building in Baguio City; and a domestic air
terminal in Iloilo City. Employees who are hired
for the carrying out of one of these separate
projects, the scope and duration of which has been
determined and made known to the employees at
the time of employment, are properly treated as
“project employees,” and their services may be
lawfully terminated at completion of the project.
The term “project” could also refer to, secondly, a
particular job or undertaking that is not within the
regular business of the corporation. Such a job or
undertaking must also be identifiably separate and
distinct from the ordinary or regular business
operations of the employer. The job or undertaking
also begins and ends at determined or determinable
times.
Lao vs NLRC
Facts:
Private respondents were filed complaints for
illegal dismissal against petitioners with NLRC.
Respondents were hired for various periods as
construction workers in different capacities they
described in the terms. They alternately worked for
Tomas Lao Corp., Tomas and James Developer,
LVM Construction, altogether as Lao Group of
Companies. They engaged in construction of public
roads and bridges. Each one would also allow the
utilization of the employees. With the arrangement
workers were transferred whenever necessary to
on-going projects of the same company or rehired
after the completion of the project or project phase
which they were assigned. In 1989 issued
memorandum requiring all workers and company
personnel to sign employment contracts forms and
clearances. To ensure compliance with the directive,
the company ordered the withholding of the salary
of any employee who refused to sign. All
respondents refused to sign contending that this
scheme was designed by their employer to
downgrade their status from their regular
employees to mere project employees. Their salaries
were withheld. Since the workers stood firm in
their refusal to comply with the directives their
services were terminated. The NLRC dismissed the
complaint finding that respondents were project
employees whose employees could be terminated
upon the completion of the project. However the
decision of LA was reversed on appeal finding that
respondents were regular employees who were
dismissed without just cause and denied due
process. The petitioners expostulation is that
respondents have no valid cause to complain about
their employment contracts since documents
formalized their status as project employees. They
cite Policy Instruction No. 20 of DOLE which
defines project employees as those employed in
connection with particular construction project.
ISSUE: W/N dismissal of private respondents
were illegal
RULING: The court ruled that, the principal test
in determining whether particular employees are
project employees distinguished from regular
employees is whether the project employees are
assigned to carry out specific project or
undertaking, the duration of which are specified at
the time of the employees are engaged for the
project. Project in the realm of industry and
business refers to a particular job or undertaking
that it is within the regular or usual business of
employer, but which is distinct and separate and
identifiable as such from the undertakings of the
company. They allowed to workers hired for
specific projects and hence can be classified as
project employees, the repeated re-hiring and the
continuing need for the services over a long span of
time have undeniably made them regular employees.
Length of time may not be a controlling test for
project employment, it can be a strong factor in
determining whether the employee was hired for a
specific undertaking or in fact tasked to perform
functions which are vital, necessary and
indispensable to the usual business or trade of the
employer. In the case at bar, private respondents
had already gone through the status of project
employees. But their employments became non-
coterminous with specific projects when they
started to be continuously re-hired due to demands
of petitioners business and were re-engaged for
many more projects without interruption.
The denial by petitioners of the existence of a work
pool in the company because their projects were
not continuous. A work pool may exist although
the workers in the pool do not receive salaries and
are free to seek other employment during temporary
breaks in the business, provided that the worker
shall be available when called to report for a
project. The court finds that the continuous re-
hiring of of the same set of employees within the
framework is strongly indicative that private
respondents were an integral part of a work pool in
which petitioners drew its workers for its various
projects.
The court finally finds that the NLRC was correct
in finding the workers were illegally dismissed.
Private respondents were dismissed because of
insubordination or blatant refusal to comply with
lawful directive of their employer. But willful
disobedience envisages the concurrence of at least 2
requisites 1.) the employee’s assailed conduct must
have been willful or intentional b.) the order
violated must have been reasonable, lawful .
The allegation of petioners that private
respondents are guilty of abandonment of duty is
without merit. The elements of abandonment are
a.) failure to report for work or absence without
valid or justifiable reason, b.) clear intention to
sever the employer-employee relationships. Private
respondents did not intend to sever ties with
petitioner and permanently abandon their jobs.
The burden of proving that an employee has been
lawfully dismissed lies with the employer. In the
case at bar, the assertions were self-serving and
insufficient to substantiate their claim of
proximate project completion. The services of
employees were terminated not because of contract
expiration but as sanction for their refusal to sign
the project employment forms and quitclaims.
The dismissal is without just cause, we find it
unnecessary to dwell on the non-observance of
procedural due process.
Petition is denied and petitioners ordered to
reinstate private respondents to their former
positions without loss of seniority rights and other
privileges with full back wages, inclusive of
allowances, computed from the time compensation
was withheld up to the time of actual
reinstatement.
INDUSTRIAL-COMMERCIAL-
AGRICULTURAL WORKERS'
ORGANIZATION (ICAWO), petitioner-
appellant,
vs.
COURT OF INDUSTRIAL RELATIONS,
CENTRAL AZUCARERA DE PILAR and/or
ANTONIO BELZARENA as Manager,
CENTRAL AZUCARERA DE PILAR
ALLIED WORKERS ASSOCIATION
(CAPAWA), respondents-appellees.
FACTS:
ICAWO is an independent organization
of workers who who works with the Central
Azucarera De Pilar (Azucarera) some of them have
been working with the latter since the pre-war
years. On the other hand CAPAWA is another
workers’ association which is considered to be a
company union of the Azucarera with which the
latter has a collective bargaining agreement,
prioritizing members of CAPAWA when hiring
unskilled workers. The ICAWO staged a strike
against the Azucarera asking for a fair treatment
between the workers belonging to the two labor
unions. The matter was settled through an
amicable settlement with the Azucarera promising
not to discriminate the members of the ICAWO
whether a striker or not. During the opening of the
milling season in 1956, 101 seasonal employees
who are members of the ICAWO was denied re-
admission to work by the Azucarera on the ground
that the latter is precluded by its collective
bargaining agreement with CAPAWA containing
a closed-shop clause. The ICAWO filed an unfair
labor practice charge against the Azucarera before
the Court of Industrial Relations (CIR) who
subsequently ordered the reinstatement of the said
workers. However, on the motion for
reconsideration, The CIR reversed its previous
order relying on the contention of the Azucarera
that the members of the ICAWO could not be re-
admitted without violating their collective
bargaining agreement with CAPAWA, stating
that the members of the latter must be preferred
when hiring new workers. Hence, this appeal.
ISSUE:
Is the employment of seasonal workers severed
when they are allowed to seek other employment
during the off-season when they don’t work for the
company hence, considering them as new workers
when the operation of the company resumes?
RULING:
No, their employment is merely suspended
temporarily and the workers are deemed on-leave
without pay. Even if they were allowed to seek
employment during the temporary lay-off, their
employment subsist and they are not terminated
from work when the season ends, hence, they are
not to be considered as new employee when the
operation of the company resumes at the start of
the milling season. Seeking other employment
during off-season is natural because the laborers
are not being paid therefore they must find means
to support their family’s living. The seasonal
stoppage of work does not, therefore, negate the
reasonable expectation of the laborers to be
subsequently allowed to resume work unless there
be justifiable reasons for acting otherwise. In view
thereof, the Court hereby sets aside the resolution
of the CIR and directs the latter to reinstate the
101 seasonal workers to their former positions in
the Azucarera. Motion for reconsideration is
denied, and case is remanded to the CIR for the
determination of backwages, if any.
(ICAWO) vs. CIR
FACTS:
ICAWO is an independent organization
of workers who who works with the Central
Azucarera De Pilar (Azucarera) some of them have
been working with the latter since the pre-war
years. On the other hand CAPAWA is another
workers’ association which is considered to be a
company union of the Azucarera with which the
latter has a collective bargaining agreement,
prioritizing members of CAPAWA when hiring
unskilled workers. The ICAWO staged a strike
against the Azucarera asking for a fair treatment
between the workers belonging to the two labor
unions. The matter was settled through an
amicable settlement with the Azucarera promising
not to discriminate the members of the ICAWO
whether a striker or not. During the opening of the
milling season in 1956, 101 seasonal employees
who are members of the ICAWO was denied re-
admission to work by the Azucarera on the ground
that the latter is precluded by its collective
bargaining agreement with CAPAWA containing
a closed-shop clause. The ICAWO filed an unfair
labor practice charge against the Azucarera before
the Court of Industrial Relations (CIR) who
subsequently ordered the reinstatement of the said
workers. However, on the motion for
reconsideration, The CIR reversed its previous
order relying on the contention of the Azucarera
that the members of the ICAWO could not be re-
admitted without violating their collective
bargaining agreement with CAPAWA, stating
that the members of the latter must be preferred
when hiring new workers. Hence, this appeal.
ISSUE:
Is the employment of seasonal workers severed
when they are allowed to seek other employment
during the off-season when they don’t work for the
company hence, considering them as new workers
when the operation of the company resumes?
RULING:
No, their employment is merely suspended
temporarily and the workers are deemed on-leave
without pay. Even if they were allowed to seek
employment during the temporary lay-off, their
employment subsist and they are not terminated
from work when the season ends, hence, they are
not to be considered as new employee when the
operation of the company resumes at the start of
the milling season. Seeking other employment
during off-season is natural because the laborers
are not being paid therefore they must find means
to support their family’s living. The seasonal
stoppage of work does not, therefore, negate the
reasonable expectation of the laborers to be
subsequently allowed to resume work unless there
be justifiable reasons for acting otherwise. In view
thereof, the Court hereby sets aside the resolution
of the CIR and directs the latter to reinstate the
101 seasonal workers to their former positions in
the Azucarera. Motion for reconsideration is
denied, and case is remanded to the CIR for the
determination of backwages, if any.
Gapayao vs fulo
Ratio decidendi
Fixed-Term EmploymentFixed-term employment is
valid when: (a) the fixed period of employment was
knowingly and voluntarily agreed upon by the
employer and employee without any force, duress,
orimproper pressure being brought to bear upon the
employee and absent any other circumstances
vitiating his consent; or (b) it satisfactorily appears
that the employer andthe employee dealt with each
other on more or less equal terms with no moral
dominance exercised by the former or the latter.
(SeeCaparoso, et al. v. Court of Appeals, G.R. No.
155505, 15 February 2007)Probationary
Employment
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Probationary employment exists when the
employee, upon his engagement is made to undergo
a trial period where the employee determines his
fitness to qualify for regular employment, based on
reasonable standards made known to him at the
time of engagement. 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. (See Section 6(d),
Implementing Rules of Book VI, Rule VII-A of
the Labor Code)Generally, probationary
employment shall not exceed six (6) months from
the date the employee started working. (See Article
281, Labor Code)
BRENT SCHOOL vs. ZAMORA
FACTS:
Private respondent Doroteo R. Alegre was engaged
as athletic director by petitioner Brent School, Inc.
at a yearly compensation of P20,000.00. The
contract fixed a specific term for its existence, five
(5) years, i.e., from July 18, 1971, the date of
execution of the agreement, to July 17, 1976.
Subsequent subsidiary agreements dated March 15,
1973, August 28, 1973, and September 14, 1974
reiterated the same terms and conditions, including
the expiry date, as those contained in the original
contract of July 18, 1971.
On April 20,1976, Alegre was given a copy of the
report filed by Brent School with the Department
of Labor advising of the termination of his services
effective on July 16, 1976. The stated ground for
the termination was "completion of contract,
expiration of the definite period of employment."
Although protesting the announced termination
stating that his services were necessary and
desirable in the usual business of his employer, and
his employment lasted for 5 years - therefore he had
acquired the status of regular employee - Alegre
accepted the amount of P3,177.71, and signed a
receipt therefor containing the phrase, "in full
payment of services for the period May 16, to July
17, 1976 as full payment of contract."
The Regional Director considered Brent School's
report as an application for clearance to terminate
employment (not a report of termination), and
accepting the recommendation of the Labor
Conciliator, refused to give such clearance and
instead required the reinstatement of Alegre, as a
"permanent employee," to his former position
without loss of seniority rights and with full back
wages.
ISSUE:
Whether or not the provisions of the Labor Code,
as amended, have anathematized "fixed period
employment" or employment for a term.
RULING:
Respondent Alegre's contract of employment with
Brent School having lawfully terminated with and
by reason of the expiration of the agreed term of
period thereof, he is declared not entitled to
reinstatement.
The employment contract between Brent School
and Alegre was executed on July 18, 1971, at a
time when the Labor Code of the Philippines (P.D.
442) had not yet been promulgated. At that time,
the validity of term employment was impliedly
recognized by the Termination Pay Law, R.A.
1052, as amended by R.A. 1787. Prior, thereto, it
was the Code of Commerce (Article 302) which
governed employment without a fixed period, and
also implicitly acknowledged the propriety of
employment with a fixed period. The Civil Code of
the Philippines, which was approved on June 18,
1949 and became effective on August 30,1950,
itself deals with obligations with a period. No
prohibition against term-or fixed-period
employment is contained in any of its articles or is
otherwise deducible therefrom.
It is plain then that when the employment contract
was signed between Brent School and Alegre, it
was perfectly legitimate for them to include in it a
stipulation fixing the duration thereof Stipulations
for a term were explicitly recognized as valid by
this Court.
The status of legitimacy continued to be enjoyed by
fixed-period employment contracts under the Labor
Code (PD 442), which went into effect on
November 1, 1974. The Code contained explicit
references to fixed period employment, or
employment with a fixed or definite period.
Nevertheless, obscuration of the principle of
licitness of term employment began to take place at
about this time.
Article 320 originally stated that the "termination
of employment of probationary employees and
those employed WITH A FIXED PERIOD shall
be subject to such regulations as the Secretary of
Labor may prescribe." Article 321 prescribed the
just causes for which an employer could terminate
"an employment without a definite period." And
Article 319 undertook to define "employment
without a fixed period" in the following manner:
…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.
Subsequently, the foregoing articles regarding
employment with "a definite period" and "regular"
employment were amended by Presidential Decree
No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed
period employment," was altered by eliminating the
reference to persons "employed with a fixed period,"
and was renumbered (becoming Article 271).
As it is evident that Article 280 of the Labor Code,
under a narrow and literal interpretation, not only
fails to exhaust the gamut of employment contracts
to which the lack of a fixed period would be an
anomaly, but would also appear to restrict,
without reasonable distinctions, the right of an
employee to freely stipulate with his employer the
duration of his engagement, it logically follows
that such a literal interpretation should be
eschewed or avoided. The law must be given a
reasonable interpretation, to preclude absurdity in
its application. Outlawing the whole concept of
term employment and subverting to boot the
principle of freedom of contract to remedy the evil
of employer's using it as a means to prevent their
employees from obtaining security of tenure is like
cutting off the nose to spite the face or, more
relevantly, curing a headache by lopping off the
head.
Such interpretation puts the seal on Bibiso upon
the effect of the expiry of an agreed period of
employment as still good rule—a rule reaffirmed in
the recent case of Escudero vs. Office of the
President (G.R. No. 57822, April 26, 1989) where,
in the fairly analogous case of a teacher being
served by her school a notice of termination
following the expiration of the last of three
successive fixed-term employment contracts, the
Court held:
Reyes (the teacher's) argument is not persuasive. It
loses sight of the fact that her employment was
probationary, contractual in nature, and one with
a definitive period. At the expiration of the period
stipulated in the contract, her appointment was
deemed terminated and the letter informing her of
the non-renewal of her contract is not a condition
sine qua non before Reyes may be deemed to have
ceased in the employ of petitioner UST. The notice
is a mere reminder that Reyes' contract of
employment was due to expire and that the
contract would no longer be renewed. It is not a
letter of termination.
Paraphrasing Escudero, respondent Alegre's
employment was terminated upon the
expiration of his last contract with Brent School
on July 16, 1976 without the necessity of any
notice. The advance written advice given the
Department of Labor with copy to said petitioner
was a mere reminder of the impending expiration of
his contract, not a letter of termination, nor an
application for clearance to terminate which
needed the approval of the Department of Labor to
make the termination of his services effective. In
any case, such clearance should properly have been
given, not denied.
Francisco vs. NLRC, 500 SCRA 690 [2006]
Facts:
Petitoner was hired by Kasei Corporation during
the incorporation stage. She was designated as
accountant and corporate secretary and was
assigned to handle all the accounting needs of the
company. She was also designated as Liason
Officer to the City of Manila to secure permits for
the operation of the company.In 1996, Petitioner
was designated as Acting Manager. She was
assigned to handle recruitment of all employees and
perform management administration functions. In
2001, she was replaced by Liza Fuentes as
Manager. Kasei Corporation reduced her salary to
P2,500 per month which was until September. She
asked for her salary but was informed that she was
no longer connected to the company. She did not
anymore report to work since she was not paid for
her salary. She filed an action for constructive
dismissal with the Labor Arbiter. The Labor
Arbiter found that the petitioner was illegally
dismissed. NLRC affirmed the decision while CA
reversed it.
The following issue is to be discussed, whether
there was an employer-employee relationship.
Ruling:
The court held that in this jurisdiction, there has
been no uniform test to determine the existence of
an employer-employee relation. Generally, courts
have relied on the so-called right of control test
where the person for whom the services are
performed reserves a right to control not only the
end to be achieved but also the means to be used in
reaching such end. In addition to the standard of
right-of-control, the existing economic conditions
prevailing between the parties, like the inclusion of
the employee in the payrolls, can help in
determining the existence of an employer-employee
relationship. The better approach would therefore
be to adopt a two-tiered test involving: (1) the
putative employer’s power to control the employee
with respect to the means and methods by which
the work is to be accomplished; and (2) the
underlying economic realities of the activity or
relationship. In Sevilla v. Court of Appeals, the
court observed the need to consider the existing
economic conditions prevailing between the parties,
in addition to the standard of right-of-control like
the inclusion of the employee in the payrolls, to
give a clearer picture in determining the existence
of an employer-employee relationship based on an
analysis of the totality of economic circumstances
of the worker.
Thus, the determination of the relationship
between employer and employee depends upon the
circumstances of the whole economic activity, such
as: (1) the extent to which the services performed
are an integral part of the employer’s business; (2)
the extent of the worker’s investment in equipment
and facilities; (3) the nature and degree of control
exercised by the employer; (4) the worker’s
opportunity for profit and loss; (5) the amount of
initiative, skill, judgment or foresight required for
the success of the claimed independent enterprise;
(6) the permanency and duration of the relationship
between the worker and the employer; and (7) the
degree of dependency of the worker upon the
employer for his continued employment in that line
of business. The proper standard of economic
dependence is whether the worker is dependent on
the alleged employer for his continued employment
in that line of business.
By applying the control test, there is no doubt that
petitioner is an employee of Kasei Corporation
because she was under the direct control and
supervision of Seiji Kamura, the corporation’s
Technical Consultant. It is therefore apparent that
petitioner is economically dependent on
Respondent Corporation for her continued
employment in the latter’s line of business. There
can be no other conclusion that petitioner is an
employee of respondent Kasei Corporation. She
was selected and engaged by the company for
compensation, and is economically dependent upon
respondent for her continued employment in that
line of business. Her main job function involved
accounting and tax services rendered to
Respondent Corporation on a regular basis over an
indefinite period of engagement. Respondent
Corporation hired and engaged petitioner for
compensation, with the power to dismiss her for
cause. More importantly, Respondent Corporation
had the power to control petitioner with the means
and methods by which the work is to be
accomplished.
Javier vs Fly ace
FACTS: Javier an employee of Fly Ace performing
various work for the latter filed a complaint before
the NLRC for underpayment of salaries and other
labor standard benefits.
He alleged that he reported for work from Monday
to Saturday from 7:00 oclock in the morning to
5:00 oclock in the afternoon; that during his
employment, he was not issued an identification
card and pay slips by the company; that he reported
for work but he was no longer allowed to enter the
company premises by the security guard upon the
instruction of Ruben Ong (Mr. Ong), his superior;
that after several minutes of begging to the guard
to allow him to enter, he saw Ong whom he
approached and asked why he was being barred
from entering the premises; that Ong replied by
saying, Tanungin mo anak mo;that he discovered
that Ong had been courting his daughter Annalyn
after the two met at a fiesta celebration in
Malabon City; that Annalyn tried to talk to Ong
and convince him to spare her father from trouble
but he refused to accede; that thereafter, Javier
was terminated from his employment without
notice; and that he was neither given the
opportunity to refute the cause/s of his dismissal
from work.
For its part p, Fly Ace denied the existence of
employer-employee relationship between them and
Javier as the latter was only called roughly 5 to 6
times only in a month whenever the vehicle of its
contracted hauler, Milmar Hauling Services, was
not available. Labor Arbiter dismissed the
complaint ruling that respondent Fly Ace is not
engaged in trucking business but in the
importation and sales of groceries. Since there is a
regular hauler to deliver its products, we give
credence to Respondents claim that complainant
was contracted on pakiao basis.
On appeal, NLRC reversed the decisin of the LA.
It was of the view that a pakyaw-basis
arrangement did not preclude the existence of
employer-employee relationship. Payment by result
x x x is a method of compensation and does not
define the essence of the relation. It is a mere
method of computing compensation, not a basis for
determining the existence or absence of an
employer-employee relationship. The NLRC further
averred that it did not follow that a worker was a
job contractor and not an employee, just because
the work he was doing was not directly related to
the employers trade or business or the work may be
considered as extra helper as in this case; and that
the relationship of an employer and an employee
was determined by law and the same would prevail
whatever the parties may call it. Finding Javier to
be a regular employee, the NLRC ruled that he was
entitled to a security of tenure. For failing to
present proof of a valid cause for his termination,
Fly Ace was found to be liable for illegal dismissal
of Javier who was likewise entitled to backwages
and separation pay in lieu of reinstatement.
However, on appeal, CA reversed the ruling of
NLRC
The CA ruled thatJaviers failure to present salary
vouchers, payslips, or other pieces of evidence to
bolster his contention, pointed to the inescapable
conclusion that he was not an employee of Fly Ace.
Further, it found that Javiers work was not
necessary and desirable to the business or trade of
the company, as it was only when there were
scheduled deliveries, which a regular hauling
service could not deliver, that Fly Ace would
contract the services of Javier as an extra helper.
Lastly, the CA declared that the facts alleged by
Javier did not pass the control test.
He contracted work outside the company premises;
he was not required to observe definite hours of
work; he was not required to report daily; and he
was free to accept other work elsewhere as there
was no exclusivity of his contracted service to the
company, the same being co-terminous with the
trip only. Since no substantial evidence was
presented to establish an employer-employee
relationship, the case for illegal dismissal could not
prosper. Hence, this appeal.
ISSUE:
Does an employer-employee relationship exist
between Javier and Fly Ace, thereby holding the
latter guilty of illegal dismissal?
HELD: As the records bear out, the LA and the
CA found Javiers claim of employment with Fly
Ace as wanting and deficient. The Court is
constrained to agree. Labor officials are enjoined to
use reasonable means to ascertain the facts speedily
and objectively with little regard to technicalities
or formalities but nowhere in the rules are they
provided a license to completely discount evidence,
or the lack of it. The quantum of proof required,
however, must still be satisfied. Hence, when
confronted with conflicting versions on factual
matters, it is for them in the exercise of discretion
to determine which party deserves credence on the
basis of evidence received, subject only to the
requirement that their decision must be supported
by substantial evidence.Accordingly, the petitioner
needs to show by substantial evidence that he was
indeed an employee of the company against which
he claims illegal dismissal.
In sum, the rule of thumb remains: the onus
probandi falls on petitioner to establish or
substantiate such claim by the requisite quantum
of evidence. Whoever claims entitlement to the
benefits provided by law should establish his or her
right thereto x x x. Sadly, Javier failed to adduce
substantial evidence as basis for the grant of relief.
By way of evidence on this point, all that Javier
presented were his self-serving statements
purportedly showing his activities as an employee
of Fly Ace. Clearly, Javier failed to pass the
substantiality requirement to support his claim.
Hence, the Court sees no reason to depart from the
findings of the CA.
While Javier remains firm in his position that as
an employed stevedore of Fly Ace, he was made to
work in the company premises during weekdays
arranging and cleaning grocery items for delivery to
clients, no other proof was submitted to fortify his
claim. The lone affidavit executed by one Bengie
Valenzuela was unsuccessful in strengthening
Javiers cause.
The Court is of the considerable view that on
Javier lies the burden to pass the well-settled tests
to determine the existence of an employer-employee
relationship, viz: (1) the selection and engagement
of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control
the employees conduct. Of these elements, the most
important criterion is whether the employer
controls or has reserved the right to control the
employee not only as to the result of the work but
also as to the means and methods by which the
result is to be accomplished.
DENIED
Orozco vs. Fifth Division of the Court of Appeals
Facts:
PDI engaged the services of Orozco to write a
weeklycolumn for its Lifestyle section. She
religiously submitted her articles except for a 6-
month stint when she went to NY
City.Nevertheless, she continued to send her
articles through mail.She also received
compensation for every column that
waspublished.When Orozco’s column appeared in
the newspaper for the last time, her editor,
Logarta, told her that the PDI’s editor-in-chief,
Magsanoc, wanted to stop publishing her columns
for noreason at all and advised her to talk to the
editor-in-chief. WhenOrozco talked to Magsanoc,
the latter told her that it was the PDIchairperson
who wanted to stop the publication of her
column.However, when Orozco talked to Apostol,
the latter told her thatMagsanoc informed her that
the Lifestyle section had alreadymany
columnists.PDI claims that Magsanoc met with
the editor of theLifestyle section to discuss how to
improve said section. Theyagreed to cut down the
number of columnists by keeping onlythose whose
columns were well-written, with regular
feedbackand following. In their judgment,
petitioner’s column failed toimprove, continued to
be superficially and poorly written, andfailed to
meet the high standards of the newspaper. Hence,
theydecided to terminate petitioner’s
column.Orozco filed a complaint for illegal Itonly reserved the right to shorten petitioner’s
dismissal. The LAdecided in favor of petitioner. On articles based onthe newspaper’s capacity to
appeal, the NLRC dismissedthe appeal and accommodate the same. This factwas not unique to
affirmed the LA’s decision. The CA on the other petitioner’s column. It is a reality in thenewspaper
hand, set aside the NLRC’s decision and dismissed business that space constraints often dictate
Orozco’scomplaint.Issue:Whether petitioner is an thelength of articles and columns, even those that
employee of PDI.Whether petitioner was illegally regularly appear therein.Furthermore, respondent
dismissed.Decision:Petition dismissed. Judgment PDI did not supply petitioner withthe tools and
and Resolution affirmed.Applying the four-fold instrumentalities she needed to perform her
test, the Court held that PDIlacked control over work.Petitioner only needed her talent and skill to
the petitioner. Though PDI issued guidelinesfor the come up with acolumn every week. As such, she
petitioner to follow in the course of writing her had all the tools she needed toperform her work.
columns,careful examination reveals that the Hence, since Orozco is not an employee of PDI, the
factors enumerated by thepetitioner are inherent latter cannot be held guilty of illegally dismissing
conditions in running a newspaper. Inother words, thepetitioner
the so-called control as to time, space, anddiscipline
are dictated by the very nature of the newspaper
business itself. Aside from the constraints
presented by thespace allocation of her column,
there were no restraints on her creativity;
petitioner was free to write her column in the
manner and style she was accustomed to and to use
whatever researchmethod she deemed suitable for
her purpose. The apparentlimitation that she had
to write only on subjects that befitted theLifestyle
section did not translate to control, but was simply
alogical consequence of the fact that her column
appeared in thatsection and therefore had to cater
to the preference of thereaders of that
section.Orozco in this case is considered as an
independentcontractor. As stated in the case of
Sonza vs. ABS-CBN,independent contractors
often present themselves to possessunique skills,
expertise or talent to distinguish them from
ordinaryemployees. Like the petitioner in the cited
case, Petitioner wasengaged as a columnist for her
talent, skill, experience, and her unique viewpoint
as a feminist advocate. How she utilized allthese
in writing her column was not subject to dictation
byrespondent. As in
Sonza
, respondent PDI was not involved inthe actual
performance that produced the finished product.