SINGER SEWING MACHINE VS NLRC

193 SCRA 271

FACTS:
Singer Machine Collectors Union-Baguio filed a petition for direct certification as the sole and
exclusive bargaining agent of all collectors of Singer Sewing Machine. The company opposed the
petition mainly because the union members are not employees but independent contractors as
evidenced by the collection agency agreement which they signed.

Med-Arbiter ruled that there exists an employee-employer relationship and granted the certification
election which was affirmed by Sec. Drilon. The company files the present petition on the
determination of the relationship. The union insist that the provisions of the Collection Agreement
belie the company’s position that the union members are independent contractors.

ISSUE:
WON there exists an employer-employee relationship between the parties.

HELD:
Respondents are not employees of the company.
The present case calls for the application of the control test, which if not satisfied, would lead to the
conclusion that no employee-employer relationship exists. If the union members are not employees,
no right to organize for the purpose of bargaining or as a bargaining agent cannot be recognized.

The following elements are generally considered in the determination of the relationship: the
selection and engagement of the employee, payment of wages, power of dismissal and the power to
control the employee’s conduct which is the most important element.

The nature of the relationship between a company and its collecting agents depends on the
circumstances of each particular relationship. Not all collecting agents are employees and neither are
all collecting agents independent contractors. The agreement confirms the status of the collecting
agents as independent contractor. The requirement that collection agents utilize only receipt forms
and report forms issued by the company and that reports shall be submitted at least once a week is
not necessarily an indication of control over the means by which the job collection is to be performed.
Even if report requirements are to be called control measures, any control is only with respect to the
end result of the collection since the requirements regulate the things to be done after the
performance of the collection job or the rendition of service.

The plain language of the agreement reveals that the designation as collection agent does not create
an employment relationship and that the applicant is to be considered at all times as an independent
contractor.

The court finds that since private respondents are not employees of the company, they are not
entitled to the constitutional right to form or join a labor organization for the purposes of collective
bargaining. There is no constitutional and legal basis for their union to be granted their petition for
direct certification.
MANILA GOLF & COUNTRY CLUB, INC., VS IAC AND FERMIN LLAMAR
237 SCRA 207

FACTS:
Respondents were caddies and employees of Manila Golf & Country Club who originally filed a
petition with the Social Security Commission (SSC) for coverage and availment of benefits under the
Social Security Act. They alleged that although the petitioners were employees of the Manila Golf and
Country Club, a domestic corporation, the latter had not registered them as such with the SSS.

In the case before the SSC, the respondent Club alleged that the petitioners, caddies by occupation,
were allowed into the Club premises to render services as such to the individual members and guests
playing the Club's golf course and who themselves paid for such services; that as such caddies, the
petitioners were not subject to the direction and control of the Club as regards the manner in which
they performed their work; and hence, they were not the Club's employees.

ISSUE:
WON there exist an employer-employee relationship between the cadies and the Golf Club

HELD:
No existence of employer-employee relationship.
In the very nature of things, caddies must submit to some supervision of their conduct while enjoying
the privilege of pursuing their occupation within the premises and grounds of whatever club they do
their work in. For all that is made to appear, they work for the club to which they attach themselves
on sufferance but, on the other hand, also without having to observe any working hours, free to leave
anytime they please, to stay away for as long they like. It is not pretended that if found remiss in the
observance of said rules, any discipline may be meted them beyond barring them from the premises
which, it may be supposed, the Club may do in any case even absent any breach of the rules, and
without violating any right to work on their part. All these considerations clash frontally with the
concept of employment.

The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the
caddies as still another indication of the latter's status as employees. It seems to the Court, however,
that the intendment of such fact is to the contrary, showing that the Club has not the measure of
control over the incidents of the caddies' work and compensation that an employer would possess.
Court agree that the group rotation system so-called, is less a measure of employer control than an
assurance that the work is fairly distributed, a caddy who is absent when his turn number is called
simply losing his turn to serve and being assigned instead the last number for the day.

Moreover, as pointed out by petitioner which was never refuted that: has no means of compelling the
presence of a caddy. A caddy is not required to exercise his occupation in the premises of petitioner.
He may work with any other golf club or he may seek employment a caddy or otherwise with any
entity or individual without restriction by petitioner.

ENCYCLOPAEDIA BRITANNICA (PHIL) INC., VS NLRC

264 SCRA 4 [96]

Facts:
Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia
Britannica and was in charge of selling petitioner’s products through some sales representatives. As
compensation, private respondent received commissions from the products sold by his agents. He
was also allowed to use petitioner’s name, goodwill and logo. It was, however, agreed upon that office
expenses would be deducted from private respondent’s commissions. Petitioner would also be
informed about appointments, promotions, and transfers of employees in private respondent’s
district.

On June 1974, Limjoco resigned from office to pursue his private business. He then filed a complaint
against petitioner Encyclopaedia Britannica with DOLE, claiming for non-payment of separation pay
and other benefits, and also illegal deduction from his sales commissions.

Petitioner alleged that Limjoco was not its employee but an independent dealer authorized to
promote and sell its products and in return, received commissions there from. Limjoco did not have
any salary and his income from the company was dependent on the volume of sales
accomplished. He also had his own separate office, financed the business expenses, and maintained
his own workforce. The salaries of his secretary, utility man, and sales representatives were
chargeable to his commissions. Thus, petitioner argued that it had no control and supervision over
the complainant as to the manner and means he conducted his business operations, moreover, the
latter did not even report to the office of the petitioner and did not observe fixed office hours

Issue: WON there exist an employer-employee relationship and necessarily entitles Limjoco of his
claims?

Held: Private respondent was merely an agent or an independent dealer of the petitioner.

In ascertaining whether the relationship is that of employer-employee or one of independent

contractor, each case must be determined by its own facts and all features of the relationship are to
be considered.

Respondent was free to conduct his work and he was free to engage in other means of livelihood. At
the time he was connected with the petitioner company, private respondent was also a director and
later the president of the Farmers’ Rural Bank. Had he been an employee of the company, he could
not be employed elsewhere and he would be required to devote full time for petitioner. If private
respondent was indeed an employee, it was rather unusual for him to wait for more than a year from
his separation from work before he decided to file his claims. As he pointed out in his resignation
letter, Limjoco was aware of “conflict with other interests which xxx have increasingly required my
personal attention”. At the very least, it would indicate that petitioner has no effective control over
the personal activities of Limjoco, who as admitted by the latter had other “conflict of interest”
requiring his personal attention.

As pointed out “the element of control is absent; where a person who works for another does so more
or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is
compensated according to the result of his efforts and not the amount thereof.”

CARUNGCONG VS NLRC, SUN LIFE ASSURANCE CO. OF CANADA

283 SCRA 319

Facts:
Susan Carungcong began as an agent of Sun Life in 1974, she signed an “Agent’s Agreement” and was
designated to solicit applications for insurance and annuity services. The contract set out in detail the
terms and conditions — particularly those concerning the commissions payable to her — under which
her relationship with the company would be governed. Five years later, said contract was superseded
by 2 new agreements: first, is the "Career Agent's (or Unit Manager's) Agreement," dealt with such
matters as the agent's commissions, his obligations, limitations on his authority, and termination of
the agreement by death, or by written notice "with or without cause." It declared that the "Agent
shall be an independent contractor and none of the terms of agreement shall be construed as creating
an employer-employee relationship; second, was titled, "MANAGER'S Supplementary Agreement."
Making explicit reference to the first agreement "which became effective on the 1st day of July, 1979"
said second contract — explicitly described as a "further agreement" — contained provisions
regarding remuneration (overriding commissions in accordance with a fixed schedule), limitation of
authority, and termination of the agreement inter alia by written notice "without cause."

Subsequently, Carungcong and Sun Life executed another Agreement - by which the former was
named New Business Manager with the function generally "to manage a New Business Office
established by her and to obtain applications for life insurance policies and other products offered by
or distributed through Sun Life and to perform such other duties in connection therewith as Sun Life
may require from time to time." This latest Agreement stressed that the "New Business Manager in
performance of his duties defined herein, shall be considered an independent contractor and not . . an
employee of Sun Life," and that "under no circumstance shall the New Business Manager and/or his
employees be considered employees of Sun Life."

After receiving reports of anomalies in relation thereto from unit managers and agents by the
company’s VP, the Manager of Sun Life's Internal Audit Department, commenced an inquiry into the
special fund availments of Carungcong and other New Business Managers which later prompted the
petitioner’s termination. She then instituted proceedings for vindication in the Arbitration Branch of
the National Labor Relations Commission where she succeeded in obtaining a favorable judgment
finding that there existed an employer-employee relationship between her and Sun Life; ruled that
she had been illegally dismissed, thus entitled to reinstatement without loss of seniority rights and
other benefits.

Issue: WON there existed an employer-employee relationship between Caruncong and Sunlife?

Held: Carungcong was an independent contractor and not an employee of Sun Life.
The contracts she had willingly and knowingly signed with Sun Life repeatedly and clearly provided
that said agreements were terminable by either party by written notice with or without cause.
Noteworthy is that this last agreement, it was emphasized, like the "Career Agent's (or Unit
Manager's) Agreement" first signed by her, that in the performance of her duties defined herein.
Carungcong would be considered an independent contractor and not . . an employee of Sun Life," and
that "(u)nder no circumstance shall the New Business Manager and/or his employees be considered
employees of Sun Life."

RAMOS V. CA
380 SCRA 467

Facts:
Petitioner Erlinda Ramos, after seeking professional medical help, was advised to undergo an
operation for the removal of a stone in her gall bladder (cholecystectomy) and was referred to Dr.
Hosaka, a surgeon, who agreed to perform the operation on her. Since neither petitioner Erlinda nor
her husband, petitioner Rogelio, knew of any anesthesiologist, Dr. Hosaka recommended to them the
services of Dr. Gutierrez. Petitioner Erlinda was admitted to the Delos Santos Medical Center. Erlinda
was scheduled to be operated 9 in the morning but Dr. Hosaka only arrived three hours later. When Dr.
Gutierrez tried to intubate the patient, there were some bluish discoloration of Erlinda’s nailbeds on
her left hand. The doctors explained to petitioner Rogelio that his wife had bronchospasm. Erlinda
stayed in the ICU for a month and remained in comatose condition until she died on 1999.

Petitioners filed a civil case for damages against private respondents who where found by the lower
court as negligent in the performance of their duties to Erlinda and were found solidarily liable.
Private respondent Dr. Hosaka argued that he cannot be held liable on the basis of the “captain-of-
the-ship doctrine”. Gutierrez contended that she was not liable. De Los Santos Medical Center stated
that no employer-employee relationship exists between the hospital and Osaka and Gutierrez and
hence it could not be held solidarily liable.

Issues:
1. Whether or not Dr. Hosaka and Gutierrez are negligent
2. Whether or not the hospital is liable for act of negligence committed by their consultant surgeon
and anesthesiologist.

Held:
On the first issue, Dr. Hosaka and Dr. Gutierrez are negligent. The court ruled that Gutierrez failed to
exercise the standards of care in the administration of anesthesia on a patient. The injury incurred by
petitioner Erlinda does not normally happen absent any negligence in the administration of anesthesia
and in the use of an endotracheal tube. The instruments used in the administration of anesthesia,
including the endotracheal tube, were all under the exclusive control of private respondent Dr.
Gutierrez.

As to Hosaka, the court inferred that he exercised a certain degree of, at the very least, supervision
over the procedure then being performed on Erlinda. First, it was he who recommended to petitioners
the services of Dr. Gutierrez. Second, he himself admitted that he was the attending physician of
Erlinda. Thus, when Erlinda showed signs of cyanosis, it was Dr. Hosaka who gave instructions to call
for another anesthesiologist and cardiologist to help resuscitate Erlinda. Third, it is conceded that in
performing their responsibilities to the patient, Drs. Hosaka and Gutierrez worked as a team. Last, the
delay in the operation caused by his late arrival had been proven to have caused a worse effect to
Erlinda’s condition.

As to the liability of DLSMC, applying the four-fold test in determining whether such a relationship
exists between it and the respondent doctors, the court ruled that there is no employer-employee
relationship between DLSMC and Drs. Gutierrez and Hosaka which would hold DLSMC solidarily liable
for the injury suffered by petitioner Erlinda under Article 2180 of the Civil Code. First, the hospital
does not hire or engage the services of a consultant, but rather, accredits the latter and grants him or
her the privilege of maintaining a clinic and/or admitting patients in the hospital upon a showing by
the consultant that he or she possesses the necessary qualifications, such as accreditation by the
appropriate board (diplomate), evidence of fellowship and references. Second, it is not the hospital
but the patient who pays the consultant’s fee for services rendered by the latter. Third, a hospital
does not dismiss a consultant; instead, the latter may lose his or her accreditation or privileges
granted by the hospital. Lastly, when a doctor refers a patient for admission in a hospital, it is the
doctor who prescribes the treatment to be given to said patient. The hospital’s obligation is limited to
providing the patient with the preferred room accommodation, the nutritional diet and medications
prescribed by the doctor, the equipment and facilities necessary for the treatment of the patient, as
well as the services of the hospital staff who perform the ministerial tasks of ensuring that the
doctor’s orders are carried out strictly. Further, no evidence was adduced to show that the injury
suffered by petitioner Erlinda was due to a failure on the part of respondent DLSMC to provide for
hospital facilities and staff necessary for her treatment.

SONZA V. ABS-CBN BROADCASTING CORPORATION

G.R. NO. 138051; JUNE 10, 2004

Facts:
ABS-CBN Broadcasting Corporation, herein respondent, signed an agreement with the Mel and Jay
Management and Development Corporation (MJMDC) which listed the services Sonza, herein
petitioner, would render.

Petitioner wrote a letter to respondent corporation regarding his irrevocable resignation alleging
further that the station did acts violative of their agreement prompting him to serve the notice of
rescission of said agreement. He then filed a complaint against respondent corporation before the
Department of Labor and Employment (DOLE) alleging that the respondent corporation did not pay
his salaries, separation pay, service incentives, leave pay, 13th month pay, among others.

Respondent corporation filed a motion to dismiss on the ground that no employer-employee

relationship existed between the parties. It, however, continued remitting petitioner’s monthly talent
fee. The Labor Arbiter denied the motion. It later decided to dismiss the complaint for lack of
jurisdiction. The National Labor Relations Commission (NLRC) and Court of Appeals (CA) affirmed the
Labor Arbiter’s decision.

Issue: Whether or not an employer-employee relationship existed between Sonza and ABS-CBN
Corporation.
Held: Sonza is not an employee of the respondent corporation. The existence of an employer-
employee relationship could be established if the following elements are present: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal and; (d) the
employee’s power to control the employee on the means and methods by which the works is
accomplished. The last element (control test) is the most important element.

Independent contractors often present themselves to possess unique skills, expertise or talent to
distinguish them from other employees. The respondent corporation specifically select and hire Sonza
because of his unique skills and talent and celebrity status not possessed by ordinary employees.

With regard to the payment of wages, all the talent fees and benefits paid to Sonza were the result of
negotiations that led to the agreement. If petitioner were an employee, there would be no need for
the parties to stipulate on benefits which the law automatically incorporates into ever employer-
employee contract.

During the life of the agreement, respondent agreed to pay Sonza’s talent fees as long as “agent and
Sonza shall faithfully and completely perform each condition of their agreement.” Even if it suffered
severe business losses, respondent could not retrench Sonza because it remained obligated to pay his’
talent fees during the life of the agreement. This indicates an independent contractual relationship.

Applying the control test, the Court found petitioner not an employee but an independent contractor,
petitioner being a talent of respondent corporation. 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 is deemed an employee. Conversely, the more likely the worker is considered an independent
contractor.

LAZARO V SSS
435 SCRA 472 [2004]

Facts:
Lazaro is a proprietor of Royal Star Marketing ("Royal Star"), which is engaged in the business of selling
home appliances. Private respondent Laudato alleged that despite her employment as sales
supervisor of the sales agents for Royal Star, Lazaro had failed during the said period to report her to
the SSC for compulsory coverage or remit Laudato’s social security contributions.

Lazaro denied the respondent’s allegation and instead avers that she was mere sales agent whom he
paid purely on commission basis. He also maintained that Laudato was not subjected to definite hours
and conditions for work and as such could not be deemed an employee of Royal Star.

Issue: Whether or not Laudato is an employee of Royal Star Marketing.

Held: Yes she is an employee. Laudato oversaw and supervised the sales agents of the company and
thus was subject to the control of management as to she implements its policies and its end results.
Based on the particular factual circumstances attending the professional interaction of the parties, it
can be well said that private respondent is an employee.

The fact that Laudato was paid by commission does not preclude the establishment of an employer-
employee relationship neither does it follow that a person who does not observe normal hours of
work cannot be deemed an employee. The Court declared that employer-employee relationship exists
although supervisor is compensated on commission basis for his compensation is measured by the
number of sales she makes.

PHILIPPINE GLOBAL COMMUNICATION V. DE VERA

459 SCRA 260 [2005]

Facts: Petitioner Global is a corporation engaged in the business of communication services who
enlisted Dr. De Vera to attend to the medical needs of its employees through a document
denominated as Retainership Contract. After 14 years however, petitioner terminated the retainer’s
contract. De Vera now filed a complaint of illegal dismissal before the NLRC.

Issue: Whether an employer-employee relationship exists.

Held: No. Applying the four-fold test, in determining the existence of an employer-employee
relationship:

It was the respondent who sets the parameters of what his duties would be in offering to petitioner.
He was also not considered an employee by Global as he was never included in the payroll; was never
deducted any contribution for remittance to the Social Security System. He can even propose his own
time schedule for an employee could not negotiate as this hours of work.

His payment is in the form of professional fees and was in fact subjected to 10% withholding tax for his
professional fee. He even had to bill petitioner for his monthly professional fees which is not done by
an employee.

The power to terminate the relationship was mutually vested on both. Either may terminate the
arrangement with or without cause.

Global had no control over the means and methods by which respondent went about performing his
work at the company. He could even embark in the private practice of his profession, not to mention
that De Vera could negotiate the schedule of his work.

ABS-CBN V. NAZARENO
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, with a monthly compensation of P4,000. They were issued ABS-CBN
employees' identification cards and were required to work for a minimum of eight hours a day,
including Sundays and holidays. They were made to perform the following tasks and duties:
a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and
digicart of respondent ABS-CBN;
b) Coordinate, arrange personalities for air interviews;
c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or
incoming reports;
d) Facilitate, prepare and arrange airtime schedule for public service announcement and
complaints;
e) Assist, anchor program interview, etc; and
f) Record, log clerical reports, man based control radio.

Their respective working hours were as follows:

Name Time No. of Hours
1. Marlene Nazareno 4:30 A.M.-8:00 A.M. 7 1/2
8:00 A.M.-12:00 noon
2. Jennifer Deiparine 4:30 A.M.-12:00M.N 7 1/2
3. Joy Sanchez 1:00 P.M.-10:00 P.M.(Sunday) 9 hrs.
9:00 A.M.-6:00 P.M. (WF) 9 hrs.
4. Merlou Gerzon 9:00 A.M.-6:00 P.M. 9 hrs.

The PAs were under the control and supervision of Assistant Station Manager Dante J. Luzon, and
News Manager Leo Lastimosa.

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.

Petitioner maintained that PAs, reporters, anchors and talents occasionally "sideline" for other
programs they produce, such as drama talents in other productions. As program employees, a PA's
engagement is coterminous with the completion of the program, and may be extended/renewed
provided that the program is on-going; a PA may also be assigned to new programs upon the
cancellation of one program and the commencement of another. As such program employees, their
compensation is computed on a program basis, a fixed amount for performance services irrespective
of the time consumed. At any rate, petitioner claimed, as the payroll will show, respondents were paid
all salaries and benefits due them under the law.

Issue: What is the nature of the employment of respondents?

Ruling:
We reject, as barren of factual basis, petitioner's contention that respondents are considered as its
talents, hence, not regular employees of the broadcasting company. Petitioner's claim that the
functions performed by the respondents are not at all necessary, desirable, or even vital to its trade or
business is belied by the evidence on record.

The question of whether respondents are regular or project employees or independent contractors is
essentially factual in nature; nonetheless, the Court is constrained to resolve it due to its tremendous
effects to the legions of production assistants working in the Philippine broadcasting industry.

We agree with respondents' contention 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. Article 280 of the Labor Code provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer except
where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.

It is of no moment that petitioner hired respondents as "talents." The fact that respondents received
pre-agreed "talent fees" instead of salaries, that they did not observe the required office hours, and
that they were permitted to join other productions during their free time are not conclusive of the
nature of their employment. Respondents cannot be considered "talents" because they are not actors
or actresses or radio specialists or mere clerks or utility employees. They are regular employees who
perform several different duties under the control and direction of ABS-CBN executives and
supervisors.

Thus, there are two kinds of regular employees under the law: (1) those engaged to perform activities
which are necessary or desirable in the usual business or trade of the employer; and (2) those casual
employees who have rendered at least one year of service, whether continuous or broken, with
respect to the activities in which they are employed.

The law overrides such conditions which are prejudicial to the interest of the worker whose weak
bargaining situation necessitates the succor of the State. What determines whether a certain
employment is regular or otherwise is not the will or word of the employer, to which the worker
oftentimes acquiesces, much less the procedure of hiring the employee or the manner of paying the
salary or the actual time spent at work. It is the character of the activities performed in relation to the
particular trade or business taking into account all the circumstances, and in some cases the length of
time of its performance and its continued existence. It is obvious that one year after they were
employed by petitioner, respondents became regular employees by operation of law.

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. Under existing jurisprudence, project could refer to two
distinguishable types of activities. First, a project may refer to a particular job or undertaking that is
within the regular or usual business of the employer, 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. Second, the term project may also refer to a particular job
or undertaking that is not within the regular business of the employer. 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.

In this case, it is undisputed that respondents had continuously performed the same activities for an
average of five years. Their assigned tasks are necessary or desirable in the usual business or trade of
the petitioner.

The persisting need for their services is sufficient evidence of the necessity and indispensability of
such services to petitioner's business or trade. While length of time may not be a sole controlling test
for project employment, it can be a strong factor to determine 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 trade or business of the employer. We note further that petitioner did not
report the termination of respondents' employment in the particular "project" to the Department of
Labor and Employment Regional Office having jurisdiction over the workplace within 30 days following
the date of their separation from work, using the prescribed form on employees'
termination/dismissals/suspensions.

As earlier stated, it is not the will or word of the employer which determines the nature of
employment of an employee but the nature of the activities performed by such employee in relation
to the particular business or trade of the employer. Considering that We have clearly found that
private respondents are regular employees of petitioner, their exclusion from the said CBA on the
misplaced belief of the parties to the said agreement that they are project employees, is therefore not
proper. Finding said private respondents as regular employees and not as mere project employees,
they must be accorded the benefits due under the said Collective Bargaining Agreement.

FRANCISCO V. NLRC
500 SCRA 690 [2006]

Facts:
In 1995, petitioner was hired by Kasei Corporation during its 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 Liaison Officer to the City of Makati to secure business permits,
construction permits and other licenses for the initial operation of the company.

Although she was designated as Corporate Secretary, she was not entrusted with the corporate
documents; neither did she attend any board meeting nor required to do so. She never prepared any
legal document and never represented the company as its Corporate Secretary. However, on some
occasions, she was prevailed upon to sign documentation for the company.

In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as
accountant in lieu of petitioner. As Acting Manager, petitioner was assigned to handle recruitment of
all employees and perform management administration functions; represent the company in all
dealings with government agencies, especially with the Bureau of Internal Revenue (BIR), Social
Security System (SSS) and in the city government of Makati; and to administer all other matters
pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation.

For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary
was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation.

In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she
was required to sign a prepared resolution for her replacement but she was assured that she would
still be connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a
meeting of all employees of Kasei Corporation and announced that nothing had changed and that
petitioner was still connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in
charge of all BIR matters.

Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to
September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her
mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did
not receive her salary from the company. She made repeated follow-ups with the company cashier but
she was advised that the company was not earning well.

On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she
was informed that she is no longer connected with the company.
Since she was no longer paid her salary, petitioner did not report for work and filed an action for
constructive dismissal before the labor arbiter.

Issue: Whether there was an employer-employee relationship between petitioner and private
respondent Kasei Corporation.

Ruling:
In certain cases the control test is not sufficient to give a complete picture of the relationship between
the parties, owing to the complexity of such a relationship where several positions have been held by
the worker. There are instances when, aside from the employer's power to control the employee with
respect to the means and methods by which the work is to be accomplished, economic realities of the
employment relations help provide a comprehensive analysis of the true classification of the
individual, whether as employee, independent contractor, corporate officer or some other capacity.

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.

This two-tiered test would provide us with a framework of analysis, which would take into
consideration the totality of circumstances surrounding the true nature of the relationship between
the parties. This is especially appropriate in this case where there is no written agreement or terms of
reference to base the relationship on; and due to the complexity of the relationship based on the
various positions and responsibilities given to the worker over the period of the latter's employment.

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. She reported for work regularly and served in various capacities as Accountant, Liaison
Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job
functions, that is, rendering accounting and tax services to the company and performing functions
necessary and desirable for the proper operation of the corporation such as securing business permits
and other licenses over an indefinite period of engagement.

Under the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal,
receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security contributions from August 1, 1999 to December
18, 2000. When petitioner was designated General Manager, respondent corporation made a report
to the SSS signed by Irene Ballesteros. Petitioner's membership in the SSS as manifested by a copy of
the SSS specimen signature card which was signed by the President of Kasei Corporation and the
inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-
employee relationship between petitioner and respondent corporation.

It is therefore apparent that petitioner is economically dependent on respondent corporation for her
continued employment in the latter's line of business.
NOGALES V. CAPITOL MEDICAL CENTER
G.R. No. 142625 December 19, 2006

Facts:
Pregnant with her fourth child, Corazon Nogales ("Corazon"), who was then 37 years old, was under
the exclusive prenatal care of Dr. Oscar Estrada ("Dr. Estrada") beginning on her fourth month of
pregnancy or as early as December 1975. While Corazon was on her last trimester of pregnancy, Dr.
Estrada noted an increase in her blood pressure and development of leg edema indicating
preeclampsia, which is a dangerous complication of pregnancy.

Around midnight of 25 May 1976, Corazon started to experience mild labor pains prompting Corazon
and Rogelio Nogales ("Spouses Nogales") to see Dr. Estrada at his home. After examining Corazon, Dr.
Estrada advised her immediate admission to the Capitol Medical Center ("CMC").

On 26 May 1976, Corazon was admitted at 2:30 a.m. at the CMC after the staff nurse noted the
written admission request of Dr. Estrada. Upon Corazon's admission at the CMC, Rogelio Nogales
("Rogelio") executed and signed the "Consent on Admission and Agreement" and "Admission
Agreement." Corazon was then brought to the labor room of the CMC.

Dr. Rosa Uy ("Dr. Uy"), who was then a resident physician of CMC, conducted an internal examination
of Corazon. Dr. Uy then called up Dr. Estrada to notify him of her findings.

Based on the Doctor's Order Sheet, around 3:00 a.m., Dr. Estrada ordered for 10 mg. of valium to be
administered immediately by intramuscular injection. Dr. Estrada later ordered the start of
intravenous administration of syntocinon admixed with dextrose, 5%, in lactated Ringers' solution, at
the rate of eight to ten micro-drops per minute.
At 6:22 a.m., Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazon's baby. In the
process, a 1.0 x 2.5 cm. piece of cervical tissue was allegedly torn. The baby came out in an apnic,
cyanotic, weak and injured condition. Consequently, the baby had to be intubated and resuscitated by
Dr. Enriquez and Dr. Payumo.

At 6:27 a.m., Corazon began to manifest moderate vaginal bleeding which rapidly became profuse.
Corazon's blood pressure dropped from 130/80 to 60/40 within five minutes. There was continuous
profuse vaginal bleeding. The assisting nurse administered hemacel through a gauge needle as a side
drip to the ongoing intravenous injection of dextrose.

At 8:00 a.m., Dr. Noe Espinola ("Dr. Espinola"), head of the Obstetrics-Gynecology Department of the
CMC, was apprised of Corazon's condition by telephone. Upon being informed that Corazon was
bleeding profusely, Dr. Espinola ordered immediate hysterectomy. Rogelio was made to sign a
"Consent to Operation."

Due to the inclement weather then, Dr. Espinola, who was fetched from his residence by an
ambulance, arrived at the CMC about an hour later or at 9:00 a.m. He examined the patient and
ordered some resuscitative measures to be administered. Despite Dr. Espinola's efforts, Corazon died
at 9:15 a.m. The cause of death was "hemorrhage, post partum."
On 14 May 1980, petitioners filed a complaint for damages with the Regional Trial Court of Manila
against CMC, Dr. Estrada, Dr. Villaflor, Dr. Uy, Dr. Enriquez, Dr. Lacson, Dr. Espinola, and a certain Nurse
J. Dumlao for the death of Corazon. Petitioners mainly contended that defendant physicians and CMC
personnel were negligent in the treatment and management of Corazon's condition. Petitioners
charged CMC with negligence in the selection and supervision of defendant physicians and hospital
staff.

Issue: Whether or not there is an existing employer-employee relationship between CMC and Dr.
Estrada as to hold the former vicariously liable for the negligence of the latter.

Ruling:
Dr. Estrada's negligence in handling the treatment and management of Corazon's condition which
ultimately resulted in Corazon's death is no longer in issue. Dr. Estrada did not appeal the decision of
the Court of Appeals which affirmed the ruling of the trial court finding Dr. Estrada solely liable for
damages. Accordingly, the finding of the trial court on Dr. Estrada's negligence is already final.

Petitioners maintain that CMC is vicariously liable for Dr. Estrada's negligence based on Article 2180 in
relation to Article 2176 of the Civil Code. These provisions pertinently state:
Art. 2180. The obligation imposed by article 2176 is demandable not only for one's own
acts or omissions, but also for those of persons for whom one is responsible.
xxx xxx xxx
Employers shall be liable for the damages caused by their employees and household helpers
acting within the scope of their assigned tasks, even though the former are not engaged in any
business or industry.
xxx xxx xxx

The responsibility treated of in this article shall cease when the persons herein mentioned prove that
they observed all the diligence of a good father of a family to prevent damage.

In the present case, petitioners maintain that CMC, in allowing Dr. Estrada to practice and admit
patients at CMC, should be liable for Dr. Estrada's malpractice. Rogelio claims that he knew Dr. Estrada
as an accredited physician of CMC, though he discovered later that Dr. Estrada was not a salaried
employee of the CMC. Rogelio further claims that he was dealing with CMC, whose primary concern
was the treatment and management of his wife's condition. Dr. Estrada just happened to be the
specific person he talked to representing CMC. Moreover, the fact that CMC made Rogelio sign a
Consent on Admission and Admission Agreement and a Consent to Operation printed on the
letterhead of CMC indicates that CMC considered Dr. Estrada as a member of its medical staff.

On the other hand, CMC disclaims liability by asserting that Dr. Estrada was a mere visiting physician
and that it admitted Corazon because her physical condition then was classified an emergency
obstetrics case. CMC alleges that Dr. Estrada is an independent contractor "for whose actuations CMC
would be a total stranger." CMC maintains that it had no control or supervision over Dr. Estrada in the
exercise of his medical profession.
The Court had the occasion to determine the relationship between a hospital and a consultant or
visiting physician and the liability of such hospital for that physician's negligence in Ramos v. Court of
Appeals, to wit:
In the first place, hospitals exercise significant control in the hiring and firing of consultants and
in the conduct of their work within the hospital premises. Doctors who apply for "consultant"
slots, visiting or attending, are required to submit proof of completion of residency, their
educational qualifications; generally, evidence of accreditation by the appropriate board
(diplomate), evidence of fellowship in most cases, and references. These requirements are
carefully scrutinized by members of the hospital administration or by a review committee set
up by the hospital who either accept or reject the application. This is particularly true with
respondent hospital.While "consultants" are not, technically employees, a point which
respondent hospital asserts in denying all responsibility for the patient's condition, the control
exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks
of an employer-employee relationship, with the exception of the payment of wages. In
assessing whether such a relationship in fact exists, the control test is determining. Accordingly,
on the basis of the foregoing, we rule that for the purpose of allocating responsibility in
medical negligence cases, an employer-employee relationship in effect exists between
hospitals and their attending and visiting physicians. This being the case, the question now
arises as to whether or not respondent hospital is solidarily liable with respondent doctors for
petitioner's condition.

After a thorough examination of the voluminous records of this case, the Court finds no single
evidence pointing to CMC's exercise of control over Dr. Estrada's treatment and management of
Corazon's condition. It is undisputed that throughout Corazon's pregnancy, she was under the
exclusive prenatal care of Dr. Estrada. At the time of Corazon's admission at CMC and during her
delivery, it was Dr. Estrada, assisted by Dr. Villaflor, who attended to Corazon. There was no showing
that CMC had a part in diagnosing Corazon's condition. While Dr. Estrada enjoyed staff privileges at
CMC, such fact alone did not make him an employee of CMC. CMC merely allowed Dr. Estrada to use
its facilities when Corazon was about to give birth, which CMC considered an emergency. Considering
these circumstances, Dr. Estrada is not an employee of CMC, but an independent contractor.

COCA COLA BOTTLERS (PHILS.), INC VS. DR. DEAN N. CLIMACO

G.R. No. 146881 February 15, 2007

Facts:
Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers
Phils., Inc. by virtue of a Retainer Agreement that stated:
WHEREAS, the COMPANY desires to engage on a retainer basis the services of a physician and
the said DOCTOR is accepting such engagement upon terms and conditions hereinafter set
forth;

NOW, THEREFORE, in consideration of the premises and the mutual agreement hereinafter
contained, the parties agree as follows:
1. This Agreement shall only be for a period of one (1) year beginning January 1, 1988 up to
December 31, 1988. The said term notwithstanding, either party may terminate the
 contract upon giving a thirty (30)-day written notice to the other.
2. The compensation to be paid by the company for the services of the DOCTOR is hereby
fixed at PESOS: Three Thousand Eight Hundred (P3,800.00) per month. The DOCTOR may
charge professional fee for hospital services rendered in line with his specialization. All
payments in connection with the Retainer Agreement shall be subject to a withholding tax
of ten percent (10%) to be withheld by the COMPANY under the Expanded Withholding
Tax System. In the event the withholding tax rate shall be increased or decreased by
appropriate laws, then the rate herein stipulated shall accordingly be increased or
decreased pursuant to such laws.
3. That in consideration of the above mentioned retainer's fee, the DOCTOR agrees to
perform the duties and obligations enumerated in the COMPREHENSIVE MEDICAL PLAN,
hereto attached as Annex "A" and made an integral part of this Retainer Agreement.
4. That the applicable provisions in the Occupational Safety and Health Standards, Ministry
of Labor and Employment shall be followed.
5. That the DOCTOR shall be directly responsible to the employee concerned and their
dependents for any injury inflicted on, harm done against or damage caused upon the
employee of the COMPANY or their dependents during the course of his examination,
treatment or consultation, if such injury, harm or damage was committed through
professional negligence or incompetence or due to the other valid causes for action.
6. That the DOCTOR shall observe clinic hours at the COMPANY'S premises from Monday to
Saturday of a minimum of two (2) hours each day or a maximum of TWO (2) hours each
day or treatment from 7:30 a.m. to 8:30 a.m. and 3:00 p.m. to 4:00 p.m., respectively
unless such schedule is otherwise changed by the COMPANY as [the] situation so
warrants, subject to the Labor Code provisions on Occupational Safety and Health
Standards as the COMPANY may determine. It is understood that the DOCTOR shall stay at
least two (2) hours a day in the COMPANY clinic and that such two (2) hours be devoted to
the workshifts with the most number of employees. It is further understood that the
DOCTOR shall be on call at all times during the other workshifts to attend to emergency
case[s];
7. That no employee-employer relationship shall exist between the COMPANY and the
DOCTOR whilst this contract is in effect, and in case of its termination, the DOCTOR shall
be entitled only to such retainer fee as may be due him at the time of termination.

It is noted that as early as September 1992, petitioner was already making inquiries regarding his
status with petitioner company.

On February 24, 1994, respondent filed a Complaint before the NLRC, Bacolod City, seeking
recognition as a regular employee of petitioner company and prayed for the payment of all benefits of
a regular employee, including 13th Month Pay, Cost of Living Allowance, Holiday Pay, Service Incentive
Leave Pay, and Christmas Bonus.

Issue: Whether or not there exists an employer-employee relationship between the parties.

Ruling:
The Court, in determining the existence of an employer-employee relationship, has invariably adhered
to the four-fold test: (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 employee's conduct, or the so-called "control
test," considered to be the most important element.

The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of this
case show that no employer-employee relationship exists between the parties. The Labor Arbiter and
the NLRC correctly found that petitioner company lacked the power of control over the performance
by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical Plan, which
contains the respondent's objectives, duties and obligations, does not tell respondent "how to
conduct his physical examination, how to immunize, or how to diagnose and treat his patients,
employees of [petitioner] company, in each case."

Likewise, the allegation of complainant that since he is on call at anytime of the day and night makes
him a regular employee is off-tangent. Complainant does not dispute the fact that outside of the two
(2) hours that he is required to be at respondent company's premises, he is not at all further required
to just sit around in the premises and wait for an emergency to occur so as to enable him from using
such hours for his own benefit and advantage. In fact, complainant maintains his own private clinic
attending to his private practice in the city, where he services his patients, bills them accordingly —
and if it is an employee of respondent company who is attended to by him for special treatment that
needs hospitalization or operation, this is subject to a special billing. More often than not, an
employee is required to stay in the employer's workplace or proximately close thereto that he cannot
utilize his time effectively and gainfully for his own purpose. Such is not the prevailing situation here.

In addition, the Court finds that the schedule of work and the requirement to be on call for emergency
cases do not amount to such control, but are necessary incidents to the Retainership Agreement.

Considering that there is no employer-employee relationship between the parties, the termination of
the Retainership Agreement, which is in accordance with the provisions of the Agreement, does not
constitute illegal dismissal of respondent.

CALAMBA MEDICAL CENTER V NLRC ET AL.

G.R. No. 176484, November 25, 2008

Facts:
The Calamba Medical Center (petitioner), a privately-owned hospital, engaged the services of medical
doctors-spouses Ronaldo Lanzanas (Dr. Lanzanas) and Merceditha Lanzanas (Dr. Merceditha) in March
1992 and August 1995, respectively, as part of its team of resident physicians. Reporting at the
hospital twice-a-week on twenty-four-hour shifts, respondents were paid a monthly "retainer" of
P4,800.00 each. It appears that resident physicians were also given a percentage share out of fees
charged for out-patient treatments, operating room assistance and discharge billings, in addition to
their fixed monthly retainer.

The work schedules of the members of the team of resident physicians were fixed by petitioner's
medical director Dr. Raul Desipeda (Dr. Desipeda). And they were issued identification cards by
petitioner and were enrolled in the Social Security System (SSS). Income taxes were withheld from
them.

On March 7, 1998, Dr. Meluz Trinidad (Dr. Trinidad), also a resident physician at the hospital,
inadvertently overheard a telephone conversation of respondent Dr. Lanzanas with a fellow employee,
Diosdado Miscala, through an extension telephone line. Apparently, Dr. Lanzanas and Miscala were
discussing the low "census" or admission of patients to the hospital.

Inexplicably, petitioner did not give respondent Dr. Merceditha, who was not involved in the said
incident, any work schedule after sending her husband Dr. Lanzanas the memorandum, nor inform her
the reason therefor, albeit she was later informed by the Human Resource Department (HRD) officer
that that was part of petitioner's cost-cutting measures.

On March 20, 1998, Dr. Lanzanas filed a complaint for illegal suspension before the National Labor
Relations Commission (NLRC)-Regional Arbitration Board (RAB) IV. Dr. Merceditha subsequently filed a
complaint for illegal dismissal.\

Issue: Whether there exists an employer-employee relationship between petitioner and the spouses-
respondents.

Ruling:
Denying the existence of such relationship, petitioner argues that the appellate court, as well as the
NLRC, overlooked its twice-a-week reporting arrangement with respondents who are free to practice
their profession elsewhere the rest of the week. And it invites attention to the uncontroverted
allegation that respondents, aside from their monthly retainers, were entitled to one-half of all
suturing, admitting, consultation, medico-legal and operating room assistance fees. These
circumstances, it stresses, are clear badges of the absence of any employment relationship between
them.

This Court is unimpressed. Under the "control test", an employment relationship exists between a
physician and a hospital if the hospital controls both the means and the details of the process by
which the physician is to accomplish his task.

As priorly stated, private respondents maintained specific work-schedules, as determined by

petitioner through its medical director, which consisted of 24-hour shifts totaling forty-eight hours
each week and which were strictly to be observed under pain of administrative sanctions.

That petitioner exercised control over respondents gains light from the undisputed fact that in the
emergency room, the operating room, or any department or ward for that matter, respondents' work
is monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or
consent of petitioner or its medical director, no operations can be undertaken in those areas. For
control test to apply, it is not essential for the employer to actually supervise the performance of
duties of the employee, it being enough that it has the right to wield the power.

Finally, under Section 15, Rule X of Book III of the Implementing Rules of the Labor Code, an employer-
employee relationship exists between the resident physicians and the training hospitals, unless there
is a training agreement between them, and the training program is duly accredited or approved by the
appropriate government agency. In respondents' case, they were not undergoing any specialization
training. They were considered non-training general practitioners, assigned at the emergency rooms
and ward sections.

ESCASINAS ET AL., VS. SHANGRI-LA’S MACTAN ISLAND RESORT ET AL.

G.R. No. 178827, March 4, 2009

Facts:
Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and
1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at
respondent Shangri-la’s Mactan Island Resort (Shangri-la) in Cebu of which she was a retained
physician.

In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) Regional
Arbitration Branch No. VII (NLRC-RAB No. VII) a complaint for regularization, underpayment of wages,
non-payment of holiday pay, night shift differential and 13th month pay differential against
respondents, claiming that they are regular employees of Shangri-la.

Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor whom
it retained via Memorandum of Agreement (MOA) pursuant to Article 157 of the Labor Code, as
amended.

Respondent doctor for her part claimed that petitioners were already working for the previous
retained physicians of Shangri-la before she was retained by Shangri-la; and that she maintained
petitioners’ services upon their request.

Issue: Whether or not an employer-employee relationship exists between Shangri-la and petitioners.

Ruling:
The existence of an employer-employee relationship is established by the presence of the following
determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the
payment of wages by whatever means; and (4) the power to control the worker's conduct, with the
latter assuming primacy in the overall consideration.

Against the above-listed determinants, the Court holds that respondent doctor is a legitimate
independent contractor. That Shangri-la provides the clinic premises and medical supplies for use of
its employees and guests does not necessarily prove that respondent doctor lacks substantial capital
and investment. Besides, the maintenance of a clinic and provision of medical services to its
employees is required under Art. 157, which are not directly related to Shangri-la’s principal business
– operation of hotels and restaurants.

As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS
contributions and other benefits of the staff; group life, group personal accident insurance and
life/death insurance for the staff with minimum benefit payable at 12 times the employee’s last drawn
salary, as well as value added taxes and withholding taxes, sourced from her P60,000.00 monthly
retainer fee and 70% share of the service charges from Shangri-la’s guests who avail of the clinic
services. It is unlikely that respondent doctor would report petitioners as workers, pay their SSS
premium as well as their wages if they were not indeed her employees.

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a
document, “Clinic Policies and Employee Manual” claimed to have been prepared by respondent
doctor exists, to which petitioners gave their conformity and in which they acknowledged their co-
terminus employment status. It is thus presumed that said document, and not the employee manual
being followed by Shangri-la’s regular workers, governs how they perform their respective tasks and
responsibilities.

TONGKO V. MANUFACTURER LIFE INSURANCE CO. (PHILS.), INC.

G.R. No. 167622, January 25, 2011

Facts:
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life
insurance business. Petitioner started as a manager in a certain region by virtue of a Career Agent's
Agreement which he executed with Manulife. In the course of his work with respondent, the latter,
through a letter, directed Tongko to exercise particular administrative activities to improve their
operations in the region where the latter was assigned. This is due to the data collected by Manulife
that the region that petitioner is handling is the lowest performer in terms of recruiting in 2000 and,
as of today, continues to remain one of the laggards in this area. A few months passed, Manulife was
still dissatisfied with the petitioner’s performance despite the letters sent to the latter. This urged
Manulife to terminate Tongko effective 15 days from the receipt of such notice. Tongko then filed a
case with the labor arbiter for illegal dismissal which was denied by the motion of Manulife arguing
that no ER-EE relationship exists based on the agreement contract they entered from the time Tongko
was engaged. Raised to the NLRC, and decided in favor of Tongko. Manulife appealed to CA, which
reversed the decision of NLRC. Hence the case at bar.

Issue: WON there existed an ER-EE relationship between Tongko and Manulife, which would lead to
illegal dismissal by the latter.

Ruling:
YES. The NLRC, for its part, applied the four-fold test and found the existence of all the elements and
declared Tongko an employee of Manulife. The CA, on the other hand, found that the element of
control as an indicator of the existence of an employer-employee relationship was lacking in this case.
The NLRC and the CA based their rulings on the same findings of facts but differed on the ruling. NLRC
arrived at its conclusion, first, on the basis of the letter dated November 6, 2001 addressed by De Dios
to Tongko. According to the NLRC, the letter contained "an abundance of directives or orders that are
intended to directly affect complainant's authority and manner of carrying out his functions as
Regional Sales Manager." The NLRC further ruled that the different codes of conduct that were
applicable to Tongko served as the foundations of the power of control wielded by Manulife over
Tongko that is further manifested in the different administrative and other tasks that he was required
to perform. It also found that Tongko was required to render exclusive service to Manulife, further
bolstering the existence of an ER-EE relationship. Finally, the NLRC ruled that Tongko was integrated
into a management structure over which Manulife exercised control, including the actions of its
officers. The NLRC held that such integration added to the fact that Tongko did not have his own
agency belied Manulife's claim that Tongko was an independent contractor.

SC said that in the instant case, Manulife had the power of control over Tongko that would make him
its employee. Several factors contribute to this conclusion. In an agreement executed by Tongko and
Manulife:

The Agent hereby agrees to comply with all regulations and requirements of the Company as herein
provided as well as maintain a standard of knowledge and competency in the sale of the Company's
products which satisfies those set by the Company and sufficiently meets the volume of new business
required of Production Club membership.

Among the company regulations of Manulife are the different codes of conduct such as the Agent
Code of Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code of Conduct
Agreement, which demonstrate the power of control exercised by the company over Tongko. Thus,
with the company regulations and requirements alone, the fact that Tongko was an employee of
Manulife may already be established. Certainly, these requirements controlled the means and
methods by which Tongko was to achieve the company's goals. More importantly, Manulife's evidence
establishes the fact that Tongko was tasked to perform administrative duties that establishes his
employment with Manulife. Additionally, it must be pointed out that the fact that Tongko was tasked
with recruiting a certain number of agents, in addition to his other administrative functions, leads to
no other conclusion that he was an employee of Manulife.

And so, due to the findings of the SC regarding the existence of ER-EE relationship between Tongko
and Manulife, the latter is liable to the former for illegal dismissal.

ATOK BIG WEDGE COMPANY, INC. VS. JESUS P. GISON

G.R. No. 169510 August 8, 2011

Facts:
Sometime in February 1992, respondent Jesus P. Gison was engaged as part-time consultant on
retainer basis by petitioner Atok Big Wedge Company, Inc. through its then Asst. Vice-President and
Acting Resident Manager, Rutillo A. Torres. As a consultant on retainer basis, respondent assisted
petitioner's retained legal counsel with matters pertaining to the prosecution of cases against illegal
surface occupants within the area covered by the company's mineral claims. Respondent was likewise
tasked to perform liaison work with several government agencies, which he said was his expertise.

Petitioner did not require respondent to report to its office on a regular basis, except when
occasionally requested by the management to discuss matters needing his expertise as a consultant.
As payment for his services, respondent received a retainer fee of P3,000.00 a month, which was
delivered to him either at his residence or in a local restaurant. The parties executed a retainer
agreement, but such agreement was misplaced and can no longer be found.
The said arrangement continued for the next eleven years. Sometime thereafter, since respondent
was getting old, he requested that petitioner cause his registration with the Social Security System
(SSS), but petitioner did not accede to his request. He later reiterated his request but it was ignored by
respondent considering that he was only a retainer/consultant. On February 4, 2003, respondent filed
a Complaint with the SSS against petitioner for the latter's refusal to cause his registration with the
SSS.

On the same date, Mario D. Cera, in his capacity as resident manager of petitioner, issued a
Memorandum advising respondent that within 30 days from receipt thereof, petitioner is terminating
his retainer contract with the company since his services are no longer necessary.

On February 21, 2003, respondent filed a Complaint for illegal dismissal, unfair labor practice,
underpayment of wages, non-payment of 13th month pay, vacation pay, and sick leave pay with the
National Labor Relations Commission (NLRC), Regional Arbitration Branch (RAB), Cordillera
Administrative Region, against petitioner, Mario D. Cera, and Teofilo R. Asuncion, Jr. The case was
docketed as NLRC Case No. RAB-CAR-02-0098-03.

Issue: Whether or not there was an employer-employee realationship and whether Gison was illegally
dismissed.

Ruling:
The petition is meritorious. To ascertain the existence of an employer-employee relationship
jurisprudence has invariably adhered to the four-fold test, to wit: (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
employee's conduct, or the so-called "control test."Of these four, the last one is the most important.
The so-called "control test" is commonly regarded as the most crucial and determinative indicator of
the presence or absence of an employer-employee relationship. Under the control test, an employer-
employee relationship exists where the person for whom the services are performed reserves the
right to control not only the end achieved, but also the manner and means to be used in reaching that
end.

Applying the aforementioned test, an employer-employee relationship is apparently absent in the

case at bar. Among other things, respondent was not required to report everyday during regular office
hours of petitioner. Respondent's monthly retainer fees were paid to him either at his residence or a
local restaurant. More importantly, petitioner did not prescribe the manner in which respondent
would accomplish any of the tasks in which his expertise as a liaison officer was needed; respondent
was left alone and given the freedom to accomplish the tasks using his own means and method.
Respondent was assigned tasks to perform, but petitioner did not control the manner and methods by
which respondent performed these tasks. Verily, the absence of the element of control on the part of
the petitioner engenders a conclusion that he is not an employee of the petitioner.

Moreover, the absence of the parties' retainership agreement notwithstanding, respondent clearly
admitted that petitioner hired him in a limited capacity only and that there will be no employer-
employee relationship between them.
Contrary to the conclusion of the CA, respondent is not an employee, much more a regular employee
of petitioner. The appellate court's premise that regular employees are those who perform activities
which are desirable and necessary for the business of the employer is not determinative in this case.
In fact, any agreement may provide that one party shall render services for and in behalf of another,
no matter how necessary for the latter's business, even without being hired as an employee. Hence,
respondent's length of service and petitioner's repeated act of assigning respondent some tasks to be
performed did not result to respondent's entitlement to the rights and privileges of a regular
employee.

Furthermore, despite the fact that petitioner made use of the services of respondent for eleven years,
he still cannot be considered as a regular employee of petitioner. Article 280 of the Labor Code, in
which the lower court used to buttress its findings that respondent became a regular employee of the
petitioner, is not applicable in the case at bar. Indeed, the Court has ruled that said provision is not the
yardstick for determining the existence of an employment relationship because it merely distinguishes
between two kinds of employees, i.e., regular employees and casual employees, for purposes of
determining the right of an employee to certain benefits, to join or form a union, or to security of
tenure; it does not apply where the existence of an employment relationship is in dispute. It is,
therefore, erroneous on the part of the Court of Appeals to rely on Article 280 in determining whether
an employer-employee relationship exists between respondent and the petitioner.

Considering that there is no employer-employee relationship between the parties, the termination of
respondent's services by the petitioner after due notice did not constitute illegal dismissal warranting
his reinstatement and the payment of full backwages, allowances and other benefits.

SEMBLANTE ET AL. VS. COURT OF APPEALS, ET AL.

G.R. NO. 196426, August 8, 2011

Facts:
Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they were hired by
respondents-spouses Vicente and Maria Luisa Loot, the owners of Gallera de Mandaue (the cockpit),
as the official masiador and sentenciador, respectively, of the cockpit sometime in 1993. Petitioners
had both been issued employees’ identification cards5 that they wear every time they report for duty.
They alleged never having incurred any infraction and/or violation of the cockpit rules and regulations.
petitioners were denied entry into the cockpit upon the instructions of respondents, and were
informed of the termination of their services effective that date. This prompted petitioners to file a
complaint for illegal dismissal against respondents.

Labor Arbiter Julie C. Rendoque found petitioners to be regular employees of respondents as they
performed work that was necessary and indispensable to the usual trade or business of respondents
for a number of years. NLRC denied the appeal for its non-perfection. The NLRC held that there was no
employer-employee relationship between petitioners and respondents, respondents having no part in
the selection and engagement of petitioners, and that no separate individual contract with
respondents was ever executed by petitioners. , the appellate court found for respondents, noting
that referees and bet-takers in a cockfight need to have the kind of expertise that is characteristic of
the game to interpret messages conveyed by mere gestures. Hence, petitioners are akin to
independent contractors who possess unique skills, expertise, and talent to distinguish them from
ordinary employees. Further, respondents did not supply petitioners with the tools and
instrumentalities they needed to perform work. Petitioners only needed their unique skills and talents
to perform their job as masiador and sentenciador. The CA refused to reconsider its Decision.

Issue: WON there is an ER-EE relationship.

Held:
While respondents had failed to post their bond within the 10-day period provided above, it is
evident, on the other hand, that petitioners are NOT employees of respondents, since their
relationship fails to pass muster the four-fold test of employment. As found by both the NLRC and the
CA, respondents had no part in petitioners’ selection and management; petitioners’ compensation
was paid out of the arriba (which is a percentage deducted from the total bets), not by
petitioners; and petitioners performed their functions as masiador and sentenciador free from the
direction and control of respondents. In the conduct of their work, petitioners relied mainly on their
"expertise that is characteristic of the cockfight gambling," and were never given by respondents any
tool needed for the performance of their work.

Respondents, not being petitioners’ employers, could never have dismissed, legally or illegally,
petitioners, since respondents were without power or prerogative to do so in the first place. The rule
on the posting of an appeal bond cannot defeat the substantive rights of respondents to be free from
an unwarranted burden of answering for an illegal dismissal for which they were never responsible.

BERNARTE VS. PHIL. BASKETBALL ASSOCIATION ET AL.

G.R. No. 192084, September 14, 2011

Facts:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to join the PBA as
referees. During the leadership of Commissioner Emilio Bernardino, they were made to sign contracts
on a year-to-year basis. During the term of Commissioner Eala, however, changes were made on the
terms of their employment. They contend they were illegally dismissed. Respondents aver, on the
other hand, that complainants entered into two contracts of retainer with the PBA. Complainants
were not illegally dismissed because they were not employees of the PBA. Their respective contracts
of retainer were simply not renewed. PBA had the prerogative of whether or not to renew their
contracts, which they knew were fixed.

Labor Arbiter declared petitioner an employee whose dismissal by respondents was illegal.
Accordingly, the Labor Arbiter ordered the reinstatement of petitioner and the payment of backwages,
moral and exemplary damages and attorney’s fees. NLRC affirmed the Labor Arbiter’s judgment.
Respondents filed a petition for certiorari with the Court of Appeals, which overturned the decisions
of the NLRC and Labor Arbiter.

Issue: Whether petitioner is an employee of respondents, which in turn determines whether

petitioner was illegally dismissed.
Held:
To determine the existence of an employer-employee relationship, case law has consistently applied
the four-fold test. In this case, PBA admits repeatedly engaging petitioner’s services, as shown in the
retainer contracts. PBA pays petitioner a retainer fee, exclusive of per diem or allowances, as
stipulated in the retainer contract. PBA can terminate the retainer contract for petitioner’s violation of
its terms and conditions.

The contractual stipulations hardly demonstrate control over the means and methods by which
petitioner performs his work as a referee officiating a PBA basketball game. The contractual
stipulations do not pertain to, much less dictate, how and when petitioner will blow the whistle and
make calls. On the contrary, they merely serve as rules of conduct or guidelines in order to maintain
the integrity of the professional basketball league. As correctly observed by the Court of Appeals,
“how could a skilled referee perform his job without blowing a whistle and making calls?
x x x [H]ow can the PBA control the performance of work of a referee without controlling his acts of
blowing the whistle and making calls?”

We agree with respondents that once in the playing court, the referees exercise their own
independent judgment, based on the rules of the game, as to when and how a call or decision is to be
made. The referees decide whether an infraction was committed, and the PBA cannot overrule them
once the decision is made on the playing court. The referees are the only, absolute, and final authority
on the playing court. Respondents or any of the PBA officers cannot and do not determine which calls
to make or not to make and cannot control the referee when he blows the whistle because such
authority exclusively belongs to the referees. The very nature of petitioner’s job of officiating a
professional basketball game undoubtedly calls for freedom of control by respondents.

Moreover, the following circumstances indicate that petitioner is an independent contractor: (1) the
referees are required to report for work only when PBA games are scheduled, which is three times a
week spread over an average of only 105 playing days a year, and they officiate games at an average of
two hours per game; and (2) the only deductions from the fees received by the referees are
withholding taxes.

In other words, unlike regular employees who ordinarily report for work eight hours per day for five
days a week, petitioner is required to report for work only when PBA games are scheduled or three
times a week at two hours per game. In addition, there are no deductions for contributions to the
Social Security System, Philhealth or Pag-Ibig, which are the usual deductions from employees’
salaries. These undisputed circumstances buttress the fact that petitioner is an independent
contractor, and not an employee of respondents.

Furthermore, the applicable foreign case law declares that a referee is an independent contractor,
whose special skills and independent judgment are required specifically for such position and cannot
possibly be controlled by the hiring party.

In addition, the fact that PBA repeatedly hired petitioner does not by itself prove that petitioner is an
employee of the former. For a hired party to be considered an employee, the hiring party must have
control over the means and methods by which the hired party is to perform his work, which is absent
in this case. The continuous rehiring by PBA of petitioner simply signifies the renewal of the contract
between PBA and petitioner, and highlights the satisfactory services rendered by petitioner warranting
such contract renewal. Conversely, if PBA decides to discontinue petitioner’s services at the end of the
term fixed in the contract, whether for unsatisfactory services, or violation of the terms and conditions
of the contract, or for whatever other reason, the same merely results in the non-renewal of the
contract, as in the present case. The non-renewal of the contract between the parties does not
constitute illegal dismissal of petitioner by respondents.

LIRIO VS. GENOVIA

G.R. No. 169757, November 23, 2011

FACTS:
Respondent Genovia alleged he was hired as studio manager by petitioner Lirio, owner of Celkor Ad
Sonicmix Recording Studio (Celkor). He was employed to manage and operate Celkor and to promote
and sell the recording studio's services to music enthusiasts and other prospective clients. Respondent
stated that a few days after he started working as a studio manager, petitioner approached him and
told him about his project to produce an album for his 15-year-old daughter, Celine Mei Lirio, a former
talent of ABS-CBN Star Records. Petitioner asked respondent to compose and arrange songs for Celine
and promised that he (Lirio) would draft a contract to assure respondent of his compensation for such
services. As agreed upon, the additional services that respondent would render included composing
and arranging musical scores only, while the technical aspect in producing the album, such as digital
editing, mixing and sound engineering would be performed by respondent in his capacity as studio
manager for which he was paid on a monthly basis. Petitioner instructed respondent that his work on
the album as composer and arranger would only be done during his spare time, since his other work
as studio manager was the priority. Respondent then started working on the album.

He reminded petitioner about his compensation as composer and arranger of the album. Respondent
again reminded petitioner about the contract on his compensation as composer and arranger of the
album. Petitioner told respondent that since he was practically a nobody and had proven nothing yet
in the music industry, respondent did not deserve a high compensation, and he should be thankful
that he was given a job to feed his family. Petitioner informed respondent that he was entitled only to
20% of the net profit, and not of the gross sales of the album, and that the salaries he received and
would continue to receive as studio manager of Celkor would be deducted from the said 20% net
profit share. Respondent objected and insisted that he be properly compensated. On March 14, 2002,
petitioner verbally terminated respondent’s services, and he was instructed not to report for work.

Labor Arbiter rendered a decision, finding that an employer-employee relationship existed between
petitioner and respondent, and that respondent was illegally dismissed. NLRC reversed and set aside
the decision of the Labor Arbiter. Respondent’s motion for reconsideration was denied by the NLRC.
Court of Appeals rendered a Held10 reversing and setting aside the resolution of the NLRC, and
reinstating the Held of the Labor Arbiter. Petitioner’s motion for reconsideration was denied for lack of
merit by the Court of Appeals.

ISSUE: Whether there exists an ER-EE relationship between the parties.

HELD:
Petitioner’s argument lacks merit. Before a case for illegal dismissal can prosper, it must first be
established that an employer-employee relationship existed between petitioner and respondent.

It is settled that no particular form of evidence is required to prove the existence of an employer-
employee relationship. Any competent and relevant evidence to prove the relationship may be
admitted.

In this case, the documentary evidence presented by respondent to prove that he was an employee of
petitioner are as follows: (a) a document denominated as "payroll" (dated July 31, 2001 to March 15,
2002) certified correct by petitioner,31 which showed that respondent received a monthly salary
of P7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every 30th of the month)
with the corresponding deductions due to absences incurred by respondent; and (2) copies of petty
cash vouchers,32 showing the amounts he received and signed for in the payrolls.

The said documents showed that petitioner hired respondent as an employee and he was paid
monthly wages of P7,000.00. Petitioner wielded the power to dismiss as respondent stated that he
was verbally dismissed by petitioner, and respondent, thereafter, filed an action for illegal dismissal
against petitioner. The power of control refers merely to the existence of the power. It is not essential
for the employer to actually supervise the performance of duties of the employee, as it is sufficient
that the former has a right to wield the power. Nevertheless, petitioner stated in his Position Paper
that it was agreed that he would help and teach respondent how to use the studio equipment. In such
case, petitioner certainly had the power to check on the progress and work of respondent.

On the other hand, petitioner failed to prove that his relationship with respondent was one of
partnership. Such claim was not supported by any written agreement. The Court notes that in the
payroll dated July 31, 2001 to March 15, 2002, there were deductions from the wages of respondent
for his absence from work, which negates petitioner’s claim that the wages paid were advances for
respondent’s work in the partnership.

In termination cases, the burden is upon the employer to show by substantial evidence that the
termination was for lawful cause and validly made. Article 277 (b) of the Labor Code puts the burden
of proving that the dismissal of an employee was for a valid or authorized cause on the employer,
without distinction whether the employer admits or does not admit the dismissal. For an employee’s
dismissal to be valid, (a) the dismissal must be for a valid cause, and (b) the employee must be
afforded due process. Procedural due process requires the employer to furnish an employee with two
written notices before the latter is dismissed: (1) the notice to apprise the employee of the particular
acts or omissions for which his dismissal is sought, which is the equivalent of a charge; and (2) the
notice informing the employee of his dismissal, to be issued after the employee has been given
reasonable opportunity to answer and to be heard on his defense. Petitioner failed to comply with
these legal requirements; hence, the Court of Appeals correctly affirmed the Labor Arbiter’s finding
that respondent was illegally dismissed, and entitled to the payment of backwages, and separation
pay in lieu of reinstatement.
JAO VS. BCC PRODUCTS SALES INC.
G.R. No. 163700, April 18, 2012

FACTS:
Petitioner maintained that respondent BCC Product Sales Inc. (BCC) and its President, respondent
Terrance Ty (Ty), employed him as comptroller starting from September 1995 with a monthly salary
of P20,000.00 to handle the financial aspect of BCC’s business; that on October 19,1995, the security
guards of BCC, acting upon the instruction of Ty, barred him from entering the premises of BCC where
he then worked; that his attempts to report to work in November and December 12, 1995 were
frustrated because he continued to be barred from entering the premises of BCC; and that he filed a
complaint dated December 28, 1995 for illegal dismissal, reinstatement with full backwages, non-
payment of wages, damages and attorney’s fees.

Respondents countered that petitioner was not their employee but the employee of Sobien Food
Corporation (SFC), the major creditor and supplier of BCC; and that SFC had posted him as its
comptroller in BCC to oversee BCC’s finances and business operations and to look after SFC’s interests
or investments in BCC.

Labor Arbiter ruled in favor of petitioner NLRC vacated the ruling and remanded the case for further
proceedings. Thereafter, Labor Arbiter rendered a new Held dismissing petitioner’s complaint for want
of an employer-employee relationship between the parties. NLRC rendered a Held reversing Labor
Arbiter Mayor’s Held, and declaring that petitioner had been illegally dismissed. Respondents moved
for the reconsideration of the NLRC Held, but their motion for reconsideration was denied. Thence,
respondents assailed the NLRC Held on certiorari in the CA which found that no employer-employee
relationship existed between petitioner BCC and the private respondent.

ISSUE: Whether petitioner was respondents’ employee or not.

HELD:
We cannot side with petitioner. Our perusal of the affidavit of petitioner compels a conclusion similar
to that reached by the CA and the Labor Arbiter to the effect that the affidavit actually supported the
contention that petitioner had really worked in BCC as SFC’s representative. It does seem more natural
and more believable that petitioner’s affidavit was referring to his employment by SFC even while he
was reporting to BCC as a comptroller in behalf of SFC. As respondents pointed out, it was implausible
for SFC to still post him to oversee and supervise the collections of accounts receivables due from BCC
beyond December 1995 if, as he insisted, BCC had already illegally dismissed him and had even
prevented him from entering the premises of BCC. Given the patent animosity and strained relations
between him and respondents in such circumstances, indeed, how could he still efficiently perform in
behalf of SFC the essential responsibility to “oversee and supervise collections” at BCC? Surely,
respondents would have vigorously objected to any arrangement with SFC involving him.

We note that petitioner executed the affidavit in March 1996 to refute a statement Ty himself made in
his own affidavit dated December 11, 1995 to the effect that petitioner had illegally appropriated
some checks without authority from BCC. Petitioner thereby sought to show that he had the authority
to receive the checks pursuant to the arrangements between SFC and BCC. This showing would aid in
fending off the criminal charge respondents filed against him arising from his mishandling of the
checks.

Further, an affidavit dated September 5, 2000 by Alfredo So, the President of SFC, whom petitioner
offered as a rebuttal witness, lent credence to respondents’ denial of petitioner’s employment. So
declared in that affidavit, among others, that he had known petitioner for being “earlier his retained
accountant having his own office but did not hold office” in SFC’s premises; that Ty had approached
him (So) “looking for an accountant or comptroller to be employed by him (Ty) in [BCC’s] distribution
business” of SFC’s general merchandise, and had later asked him on his opinion about petitioner; and
that he (So) had subsequently learned that “Ty had already employed [petitioner] as his comptroller
as of September 1995.”

The statements of So really supported respondents’ position in that petitioner’s association with SFC
prior to his supposed employment by BCC went beyond mere acquaintance with So. That So, who had
earlier merely “retained” petitioner as his accountant, thereafter employed petitioner as a “retained”
accountant after his supposed illegal dismissal by BCC raised a doubt as to his employment by BCC,
and rather confirmed respondents’ assertion of petitioner being an employee of SFC while he worked
at BCC.

Moreover, in determining the presence or absence of an employer-employee relationship, the Court

has consistently looked for the following incidents, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to
control the employee on the means and methods by which the work is accomplished. The last
element, the so-called control test, is the most important element.

Hereunder are some of the circumstances and incidents occurring while petitioner was supposedly
employed by BCC that debunked his claim against respondents.

It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his
authority to deliver some 158 checks to SFC. Considering that he contested respondents’ challenge by
pointing to the existing arrangements between BCC and SFC, it should be clear that respondents did
not exercise the power of control over him, because he thereby acted for the benefit and in the
interest of SFC more than of BCC.

In addition, petitioner presented no document setting forth the terms of his employment by BCC. The
failure to present such agreement on terms of employment may be understandable and expected if he
was a common or ordinary laborer who would not jeopardize his employment by demanding such
document from the employer, but may not square well with his actual status as a highly educated
professional.

Petitioner’s admission that he did not receive his salary for the three months of his employment by
BCC, as his complaint for illegal dismissal and non-payment of wages and the criminal case
for estafa he later filed against the respondents for non-payment of wages indicated, further raised
grave doubts about his assertion of employment by BCC. If the assertion was true, we are puzzled how
he could have remained in BCC’s employ in that period of time despite not being paid the first salary
ofP20,000.00/month. Moreover, his name did not appear in the payroll of BCC despite him having
approved the payroll as comptroller.

Lastly, the confusion about the date of his alleged illegal dismissal provides another indicium of the
insincerity of petitioner’s assertion of employment by BCC. In the petition for review on certiorari, he
averred that he had been barred from entering the premises of BCC on October 19, 1995, and thus
was illegally dismissed. Yet, his complaint for illegal dismissal stated that he had been illegally
dismissed on December 12, 1995 when respondents’ security guards barred him from entering the
premises of BCC, causing him to bring his complaint only on December 29, 1995, and after BCC had
already filed the criminal complaint against him. The wide gap between October 19,
1995 and December 12, 1995 cannot be dismissed as a trivial inconsistency considering that the
several incidents affecting the veracity of his assertion of employment by BCC earlier noted herein
transpired in that interval.

With all the grave doubts thus raised against petitioner’s claim, we need not dwell at length on the
other proofs he presented, like the affidavits of some of the employees of BCC, the ID, and the signed
checks, bills and receipts. Suffice it to be stated that such other proofs were easily explainable by
respondents and by the aforestated circumstances showing him to be the employee of SFC, not of
BCC.

LEGEND HOTEL (MANILA) VS. REALUYO

G.R. No. 153511 July 18, 2012

Facts:
Respondent averred that he had worked as a pianist at the Legend Hotel’s Tanglaw Restaurant from
September 1992 with an initial rate of P400.00/night that was given to him after each night’s
performance; that his rate had increased to P750.00/night; and that during his employment, he could
not choose the time of performance, which had been fixed from 7:00 pm to 10:00 pm for three to six
times/week. He added that the Legend Hotel’s restaurant manager had required him to conform with
the venue’s motif; that he had been subjected to the rules on employees’ representation checks and
chits, a privilege granted to other employees; that on July 9, 1999, the management had notified him
that as a cost-cutting measure his services as a pianist would no longer be required effective July 30,
1999; that he disputed the excuse, insisting that Legend Hotel had been lucratively operating as of the
filing of his complaint; and that the loss of his employment made him bring his complaint.

In its defense, petitioner denied the existence of an employer-employee relationship with respondent,
insisting that he had been only a talent engaged to provide live music at Legend Hotel’s Madison
Coffee Shop for three hours/day on two days each week; and stated that the economic crisis that had
hit the country constrained management to dispense with his services.

Issue: Whether or not there existed an employer-employee relationship between the parties

Held: Employer-employee relationship existed between the parties. The factors that determine the
issue include who has the power to select the employee, who pays the employee’s wages, who has
the power to dismiss the employee, and who exercises control of the methods and results by which
the work of the employee is accomplished.

First of all, petitioner actually wielded the power of selection at the time it entered into the service
contract dated September 1, 1992 with respondent. Secondly, respondent was paid P400.00 per three
hours of performance from 7:00 pm to 10:00 pm, three to six nights a week, thus, clearly respondent
received compensation for the services he entered as pianist in petitioner’s hotel. Thirdly, respondent
performed his work as a pianist under petitioner’s supervision and control, specifically, petitioner’s
control of both the end achieved and the manner and means used to achieve that end. The power of
the employer to control the work of the employee is considered the most significant determinant of
the existence of an employer-employee relationship. This is the so-called control test, and is premised
on whether the person for whom the services are performed reserves the right to control both the
end achieved and the manner and means used to achieve that end. Lastly, petitioner had power to
dismiss respondent as shown by the memorandum informing respondent of the discontinuance of his
service because of the present business or financial condition of petitioner showed that the latter had
the power to dismiss him from employment.

THE NEW PHILIPPINE SKYLANDERS, INC., VS. DAKILA

G.R. No. 199547, September 24, 2012

Facts:
The respondent was rehired as consultant by the petitioners under a Contract for Consultancy Services
dated April 30, 1997. Thereafter, in a letter dated April 19, 2007 respondent informed petitioners of
his compulsory retirement and sought for the payment of his retirement benefits pursuant to the
Collective Bargaining Agreement. His request, however, was not acted upon. Instead, he was
terminated from service effective May 1, 2007.

Consequently, respondent filed a complaint against the petitioners. Respondent averred, among
others, that the consultancy contract was a scheme to deprive him of the benefits of regularization,
claiming to have assumed tasks necessary and desirable in the trade or business of petitioners and
under their direct control and supervision.

On the other hand, petitioners asserted that respondent was a consultant and not their regular
employee. The latter was not included in petitioners’ payroll and paid a fixed amount under the
consultancy contract. He was not required to observe regular working hours and was free to adopt
means and methods to accomplish his task except as to the results of the work required of him.
Hence, no employer-employee relationship existed between them. Moreover, respondent terminated
his contract in a letter dated April 19, 2007, thus, negating his dismissal/

Issue: Whether or not there existed an illegal dismissal made by the petitioner against the
respondent.

Held: Yes. The issue of illegal dismissal is premised on the existence of an employer-employee
relationship. Based on findings, there was an existence of an employer-employee relationship.

Following Article 279 of the Labor Code, an employee who is unjustly dismissed from work is entitled
to reinstatement without loss of seniority rights and other privileges and to his full backwages
computed from the time he was illegally dismissed. However, considering that respondent Dakila was
terminated on May 1, 2007, or one (1) day prior to his compulsory retirement on May 2, 2007, his
reinstatement is no longer feasible. Accordingly, the NLRC correctly held him entitled to the payment
of his retirement benefits pursuant to the CBA. On the other hand, his backwages should be computed
only for days prior to his compulsory retirement which in this case is only a day. Consequently, the
award of reinstatement wages pending appeal must be deleted for lack of basis.

The computation of backwages should be limited only for a day prior to his compulsory retirement.

TESORO ET AL., VS. METRO MANILA RETREADERS INC., ET AL.,

GR No. 171482, March 12, 2014

Facts:
The petitioners used to work as salesmen for respondents. The latter offered repair and retread
services for used tires. However, they developed a franchising scheme that would enable others to
operate tire and retreading businesses using its trade name and service system.

The petitioners quit their jobs as salesmen and entered into separate Service Franchise Agreements
(SFAs) with the respondents for the operation of their respective franchises. Under the SFAs, the
respondents would prove funding support to the petitioners subject to a regular or periodic
liquidation of their revolving funds. The expenses out of these funds would be deducted from
petitioners’ sales to determine their incomes.

Meanwhile, the petitioners began to default on their obligations to submit periodic liquidations of
their operational expenses in relation to the revolving funds respondents provided them.
Consequently, Bandag terminated their respective SFA.

Aggrieved, petitioners filed a complaint for constructive dismissal, non-payment of wages, incentive
pay, 13th month pay and damages against respondents with the NLRC. Petitioners contend that,
notwithstanding the execution of the SFAs, they remained to be respondents’ employees, the SFAs
being but a circumvention of their status as regular employees.

For its part, respondents pointed out that petitioners freely resigned from their employment and
decided to avail themselves of the opportunity to be independent entrepreneurs under the franchise
scheme that respondents had. Thus, no employer-employee relationship existed between petitioners
and respondents.

Issue: Whether or not petitioners remained to be Bandag’s salesmen under the franchise scheme it
entered into with them.

Held:
No. The tests for determining employer–employee relationship are: (a) the selection and engagement
of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power
to control the employee with respect to the means and methods by which the work is to be
accomplished. The last is called the “control test,” the most important element.

Uniformity in prices, quality of services, and good business practices are the essence of all franchises.
A franchisee will damage the franchisor’s business if he sells at different prices, renders different or
inferior services, or engages in bad business practices. These business constraints are needed to
maintain collective responsibility for faultless and reliable service to the same class of customers for
the same prices.

This is not the “control” contemplated in employer–employee relationships. Control in such

relationships addresses the details of day to day work like assigning the particular task that has to
be done, monitoring the way tasks are done and their results, and determining the time during which
the employee must report for work or accomplish his assigned task.

This is not the “control” contemplated in employer–employee relationships. Control in such

relationships addresses the details of day to day work like assigning the particular task that has to be
done, monitoring the way tasks are done and their results, and determining the time during which the
employee must report for work or accomplish his assigned task.

Petitioners cannot use the revolving funds feature of the SFAs as evidence of their employer–
employee relationship with Bandag. These funds do not represent wages. They are more in the nature
of capital advances for operations that Bandag conceptualized to attract prospective franchisees.
Petitioners’ incomes depended on the profits they make, controlled by their individual abilities to
increase sales and reduce operating costs.

ROYALE HOMES MARKETING CORP. VS ALCANTARA

GR No. 195190, July 28, 2014

Facts:
In 1994, the petitioners engaged in marketing real estates, appointed the respondent as their
Marketing Director for a fixed period of one year. His work consisted mainly of marketing Petitioners’
real estate inventories on an exclusive basis. Petitioners reappointed him for several consecutive
years, the last of which covered the period January 1 to December 31, 2003 where he held the
position of Division 5 Vice-President-Sales.

On December 17, 2013, respondent filed a Complaint for Illegal Dismissal against the Petitioners. He
alleged that he is a regular employee of the said petitioners since he is performing tasks that are
necessary and desirable to their business; that in 2003 the petitioners gave him 1.2 million pesos for
the services he rendered to them; that in the first of November 2013, however, the petitioners told
him that they were wondering why he still had the gail to come to office and sit at his table, and that
the acts of the petitioners amounted to his dismissal from work without any valid or just cause and in
gross disregard of the proper procedure for dismissing employees. Thus, he also impleaded the
petitioners who, he averred, effected his dismissal in bad faith and in an oppressive manner.

On the other hand, the petitioners vehemently denied that respondent is their employee. They
argued that the appointment paper of respondent is clear that they engaged his services as an
independent sales contractor for a fixed term of one year only. He never received any salary, 13th
month pay, overtime pay or holiday pay from them as he was paid purely on commission basis. In
addition, petitioners had no control on how respondents would accomplish his tasks and
responsibilities as he was free to solicit sales at any time and by any manner which he deem
appropriate and necessary. He is even free to recruit his own sales personnel to assist him in
pursuance of his sales target.

According to the petitioners, respondent decided to leave the company after his wife, who was once
connected with them as a sales agent, had a formed a brokerage company that directly competed
with their business, and even recruited some of their sales agents. In a special management
committee meeting on October 8, 20013, respondent announced publicly and openly that he would
leave the company by the end of October 2003 and that he would no longer finish the unexpired term
of his contract. He has decided to join his wife and pursue their own brokerage business. Petitioners
accepted respondent’s decision.

Issue: Whether or not Alcantara was an independent contractor

Held: Yes. The contract between the petitioners and the respondent conspicuously provides no
employer-employee relationship exists between them.One of the statements of the contract clearly
leaves no doubt upon the intention of the contracting parties: “It is understood, however, that no
employer-employee relationship exists between us, that of your sales personnel/agents.”

Although power to control is one of the four fold test to determine the existence of an employer-
employee relationship, not every form of control is indicative of such relationship. A person who
performs work for another and is subjected to its rules, regulations, and code of ethics does not
necessarily become an employee. As long as the level of control does not interfere with the means
and methods of accomplishing the assigned tasks, the rules imposed by the hiring party on the hired
party do not amount to the labor law concept of control that is indicative of employer-employee
relationship.

The Court agrees with the petitioners that the rules, regulations, code of ethics, and periodic
evaluation alluded to by them do not involve control over the means and methods by which he was to
perform his job.

The respondent has the burden of proof to prove the elements of petitioners’ power of control over
the means and methods of accomplishing the work but he failed to cite specific rules, regulations or
code of ethics that supposedly imposed control on his means and methods of soliciting sales and
dealing with prospective clients. Notably, Alcantara was not required to observe definite working
hours. Except for soliciting sales, petitioners did not assign other tasks to him. He had full control over
the means and methods of accomplishing his tasks as he can “solicit sales at any time and by any
manner which (he may) deem appropriate and necessary.” He performed his tasks on his own account
free from the control and direction of petitioners in all matters connected therewith, except as to the
results thereof.

The element of payment of wages is also absent in this case. As provided in the contract, respondent’s
remunerations consist only of commission override of 0.5%, budget allocation, sales incentive and
other forms of company support. There is no proof that he received fixed monthly salary. No payslip or
payroll was ever presented and there is no proof that petitioners deducted from his supposed salary
withholding tax or that it registered him with the Social Security System, Philippine Health Insurance
Corporation, or Pag-Ibig Fund. In fact, his Complaint merely states a ballpark figure of his alleged
salary of P100,000.00, more or less. All of these indicate an independent contractual relationship.

PURISIMO M. CABAOBAS V. PEPSI-COLA PRODUCTS, PHILIPPINES, INC.,

G.R. No. 176908, March 6, 2017

FACTS:
Respondent Pepsi-Cola Products Philippines, Inc. (PCPPI) is a domestic corporation engaged in the
manufacturing, bottling and distribution of soft drink products, which operates plants all over the
country, one of which is the Tanauan Plant in Tanauan, Leyte.

In 1999, PCPPI’s Tanauan Plant allegedly incurred business losses in the total amount of Twenty-Nine
Million One Hundred Sixty-Seven Thousand and Three Hundred Ninety (P29,167,390.00) Pesos.

To avert further losses, PCPPI implemented a company-wide retrenchment program denominated as

Corporate-wide Rightsizing Program (CRP) from 1999 to 2000, and retrenched forty-seven (47)
employees of its Tanauan Plant on July 31, 1999.

On September 24, 1999, twenty-seven (27) of said employees,5 led by Anecito Molon (Molon, et al.),
filed complaints for illegal dismissal before the NLRC which were docketed as NLRC RAB Cases Nos.
VIII-9-0432-99 to 9-0458-99, entitled “Molon, et al. v. Pepsi-Cola Products, Philippines, Inc.”

On January 15, 2000, petitioners, who are permanent and regular employees of the Tanauan Plant,
received their respective letters, informing them of the cessation of their employment on February 15,
2000, pursuant to PCPPI's CRP. Petitioners then filed their respective complaints for illegal dismissal
before the National Labor Relations Commission Regional Arbitration Branch No. VIII in Tacloban City.
Said complaints were docketed as NLRC RAB VIII-03-0246-00 to 03-0259-00, entitled “Kempis, et al. v.
Pepsi-Cola Products, Philippines, Inc.“

In their Consolidated Position Paper, petitioners alleged that PCPPI was not facing serious financial
losses because after their termination, it regularized four (4) employees and hired replacements for
the forty-seven (47) previously dismissed employees. They also alleged that PCPPI's CRP was just
designed to prevent their union, Leyte Pepsi-Cola Employees Union-Associated Labor Union (LEPCEU-
ALU), from becoming the certified bargaining agent of PCPPI's rank-and-file employees.

In its Position Paper,7 PCPPI countered that petitioners were dismissed pursuant to its CRP to save the
company from total bankruptcy and collapse; thus, it sent notices of termination to them and to the
Department of Labor and Employment. In support of its argument that its CRP is a valid exercise of
management prerogative, PCPPI submitted audited financial statements showing that it suffered
financial reverses in 1998 in the total amount of SEVEN HUNDRED MILLION (P700,000,000.00) PESOS,
TWENTY- SEVEN MILLION (P27,000,000.00) PESOS of which was allegedly incurred in the Tanauan
Plant in 1999.

Aggrieved party appealed and filed it with NLRC. NLRC rendered a decision:

(5) Nullifying, in NLRC Consolidated Case No. V-000071-01 (RAB VIII cases nos. 3-0246-2000 to 3-0258-
2000; Kempis, et al. vs. PCPPI), the Executive Labor Arbiter's Decisions dated December 15, 2000, and
DISMISSING the complaints for illegal dismissal, and in its stead DECLARING the retrenchment
program of Pepsi Cola Products Phils., Inc. pursuant to its CRP, a valid exercise of management
prerogatives; Further, ORDERING Pepsi Cola Products Philippines, Inc. to pay the following
complainants their package separation benefits of 1 & ½ months salary for every year of service, plus
commutation of all vacation and sick leave credits in the respective amounts hereunder indicated
opposite their names:
1. ARTEMIO S. KEMPIS – P167,486.80

2. EXUPERIO C. MOLINA – 168,196.38

3. GILBERTO V. OPINION – 31,799.74

4. PURISIMO M. CABAOBAS – 165,466.09

5. VICENTE P. LAURON – 167,325.86

6. RAMON M. DE PAZ, JR. - 109,652.98

7. ZACARIAS E. CARBO – 160,376.47

8. JULITO C. ABARRACOSO – 161,366.44

9. DOMINGO B. GLORIA – 26,119.26

10. FRANCISCO P. CUMPIO – 165,204.41

Aggrieved, petitioners come before the Court in this petition for review on certiorari assailing the CA
18thDivision Decision dated July 31, 2006, and its Resolution dated February 21, 2007.

ISSUE: Whether or not the dismissal was legal pursuant to PCPPI's retrenchment program.

RULING:
The petition has no merit. On the issue of whether the retrenchment of the petitioners' former co-
employees was in accord with law, the Court ruled that PCPPI had validly implemented its
retrenchment program.

In the present action, the NLRC held that PEPSI-COLA’s financial statementsare substantial evidence
which carry great credibility and reliability viewed in light of the financial crisis that hit the country
which saw multinational corporations closing shops and walking away, or adapting [sic] their own
corporate rightsizing program.

(2) Records also show that the respondents had already been paid the requisite separation pay as
evidenced by the September 1999 quitclaims signed by them. Effectively, the said quitclaims
serve inter alia the purpose of acknowledging receipt of their respective separation pays. Appositely,
respondents never questioned that separation pay arising from their retrenchment was indeed paid
by Pepsi to them. As such, the foregoing fact is now deemed conclusive.

In fact, it is apropos to mention that Pepsi and its employees entered into a collective bargaining
agreement on October 17, 1995 which contained a union shop clause requiring membership in
LEPCEU-UOEF#49, the incumbent bargaining union, as a condition for continued employment. In this
regard, Pepsi had all the reasons to assume that all employees in the bargaining unit were all
members of LEPCEU-UOEF#49; otherwise, the latter would have already lost their employment.

The Court sustains PCPPI's contention. The principle of stare decisis et non quieta movere (to adhere
to precedents and not to unsettle things which are established) is well entrenched in Article 8 of the
New Civil Code which states that judicial decisions applying or interpreting the laws or the
Constitution shall form part of the legal system of the Philippines.

CENTURY PROPERTIES INC. VS. BABIANO, ET AL.

GR No. 220978, July 5, 2016

Doctrine:
It is axiomatic that the existence of an employer-employee relationship cannot be negated by
expressly repudiating it in the management contract and providing therein that the "employee" is an
independent contractor when the terms of the agreement clearly show otherwise. For, the
employment status of a person is defined and prescribed by law and not by what the parties say it
should be. In determining the status of the management contract, the "four-fold test" on
employment earlier mentioned has to be applied.

Facts:
Babiano was hired by CPI as Director of Sales and was eventually appointed as VP of Sales. As VP, he
was remunerated with a monthly salary, allowance and commission. His employment contract also
contained "Confidentiality of Documents and Non-Compete Clause". During the same period,
Concepcion was initially hired as Sales Agent by CPI and was eventually promoted as Project Director.
As such, she signed an employment agreement, denominated as "Contract of Agency for Project
Director" which provided, among others, that she would directly report to Babiano and receive
commission. Notably, it was stipulated in both contracts that no employer-employee relationship
exists between Concepcion and CPI.

Concepcion resigned as CPFs Project Director through a letter dated February 23, 2009, effective
immediately.
Respondents filed a complaint for non-payment of commissions and damages against CPI claiming
that their repeated demands for the payment and release of their commissions remained unheeded.

Petitioner’s Contention:
On Concepcion's money claims, CPI asserted that the NLRC had no jurisdiction to hear the same
because there was no employer-employee relations between them, and thus, she should have
litigated the same in an ordinary civil action.

LA’s Ruling:
Ruled in CPI’s favor. LA found, among others, it had no jurisdiction over Concepcion’s money claim as
she was not an employee but a mere agent of CPI, as clearly stipulated in her engagement contract
with the latter.

NLRC’s Ruling:
Reversed and set aside LA’s ruling. Contrary to the LA's finding, the NLRC ruled that Concepcion was
CPI's employee, considering that CPI: (a) repeatedly hired and promoted her since 2002; (b) paid her
wages despite referring to it as "subsidy"; and (c) exercised the power of dismissal and control over
her.

CA’s Ruling:
Affirmed NLRC.

Issue:
WON Concepcion was an employee of CPI.

Ruling:
Yes. Concepcion is an employee of CPI.

Based on case law, the presence of the following elements evince the existence of an employer-
employee relationship: (a) the power to hire, i.e., the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the
employee's conduct, or the so called "control test." The control test is commonly regarded as the
most important indicator of the presence or absence of an employer-employee relationship.

Guided by these parameters, the Court finds that Concepcion was an employee of CPI considering
that: (a) CPI continuously hired and promoted Concepcion from October 2002 until her resignation,
thus, showing that CPI exercised the power of selection and engagement over her person and that
she performed functions that were necessary and desirable to the business of CPI; (b) the monthly
"subsidy" and cash incentives that Concepcion was receiving from CPI are actually remuneration in
the concept of wages as it was regularly given to her on a monthly basis without any qualification,
save for the "complete submission of documents on what is a sale policy"; (c) CPI had the power to
discipline or even dismiss Concepcion as her engagement contract with CPI expressly conferred upon
the latter "the right to discontinue [her] service anytime during the period of engagement should
[she] fail to meet the performance standards," among others, and that CPI actually exercised such
power to dismiss when it accepted and approved Concepcion's resignation letter; and most
importantly, (d) as aptly pointed out by the CA, CPI possessed the power of control over Concepcion
because in the performance of her duties as Project Director - particularly in the conduct of
recruitment activities, training sessions, and skills development of Sales Directors - she did not
exercise independent discretion thereon, but was still subject to the direct supervision of CPI, acting
through Babiano.

Besides, while the employment agreement of Concepcion was denominated as a "Contract of Agency
for Project Director," it should be stressed that the existence of employer-employee relations could
not be negated by the mere expedient of repudiating it in a contract. In the case of Insular Life
Assurance Co., Ltd. v. NLRC, it was ruled that one's employment status is defined and prescribed by
law, and not by what the parties say it should be. It is axiomatic that the existence of an employer-
employee relationship cannot be negated by expressly repudiating it in the management contract and
providing therein that the "employee" is an independent contractor when the terms of the
agreement clearly show otherwise. For, the employment status of a person is defined and
prescribed by law and not by what the parties say it should be. In determining the status of the
management contract, the "four-fold test" on employment earlier mentioned has to be applied.

LU VS. ENOPIA
GR No. 197899, March 6, 2017

Facts:
Respondents were hired from January 20, 1994 to March 20, 1996 as crew members of the fishing
mother boat F/B MG-28 owned by respondent Joaquin "Jake" Lu (herein petitioner Lu) who is the sole
proprietor of Mommy Gina Tuna Resources [MGTR] based in General Santos City. Petitioners and Lu
had an income-sharing arrangement wherein 55% goes to Lu, 45% to the crew members, with an
additional 4% as "backing incentive." They also equally share the expenses for the maintenance and
repair of the mother boat, and for the purchase of nets, ropes and payaos.

Sometime in August 1997, Lu proposed the signing of a Joint Venture Fishing Agreement between
them, but petitioners refused to sign the same as they opposed the one-year term provided in the
agreement. According to petitioners, during their dialogue on August 18, 1997, Lu terminated their
services right there and then because of their refusal to sign the agreement.

On August 25, 1997, petitioners filed their complaint for illegal dismissal, monetary claims and
damages. Petitioners alleged that their refusal to sign the Joint Venture Fishing Agreement is not a just
cause for their termination.

On the other hand, Lu denied having dismissed petitioners, claiming that their relationship was one of
joint venture where he provided the vessel and other fishing paraphernalia, while petitioners, as
industrial partners, provided labor by fishing in the high seas. Lu alleged that there was no employer-
employee relationship as its elements were not present

Issue:
Whether or not an employer-employee relationship existed between petitioner Lu and respondents,
Enopia et al.

Ruling:
Yes, there is an employer-employee relationship.

In determining the existence of an employer-employee relationship, the following elements are

considered: (1) the selection and engagement of the workers; (2) the power to control the worker's
conduct; (3) the payment of wages by whatever means; and (4) the power of dismissal. We find all
these elements present in this case.

It is settled that no particular form of evidence is required to prove the existence of an employer-
employee relationship. Any competent and relevant evidence to prove the relationship may be
admitted.

In this case, petitioner contends that it was the piado who hired respondents, however, it was shown
by the latter's evidence that the employer stated in their Social Security System (SSS) online inquiry
system printouts was MGTR, which is owned by petitioner. Printouts of their individual sss
contribution sheet that the date of the SSS remitted contributions coincided with the date of
respondents' employment with petitioner. Petitioner failed to rebut such evidence. Thus, the fact that
petitioner had registered the respondents with SSS is proof that they were indeed his employees. The
coverage of the Social Security Law is predicated on the existence of an employer-employee
relationship. Moreover, the records show that these fishermen obtain vale or cash advance from
petitioner and not from the piado who allegedly hired and had control over them.

It should be remembered that the control test merely calls for the existence of the right to control,
and not necessarily the exercise thereof. It is not essential that the employer actually supervises the
performance of duties by the employee. It is enough that the former has a right to wield the power.

The private respondent (petitioner) controls the entire fishing operations. Petitioner assigned a master
fisherman (pi ado) and assistant master fisherman (assistant pi ado) for each mother fishing boat, who
every now and then supervise the fishing operations. Private respondent also assigned checkers based
on the office to monitor and contact every now and then the crew at sea through radio. The checkers
advise the private respondent of the condition and the latter, through radio, will then instruct the
"piado" how to conduct the fishing operations.

The payment of respondents' wages based on the percentage share of the fish catch falls within the
scope and meaning of the term “wage” as defined under Article 97(f) of the Labor Code

Petitioner wielded the power of dismissal over respondents when he dismissed them after they
refused to sign the joint fishing venture agreement.

The primary standard for 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.
There is a direct linkage or causal connection between the nature of petitioners' (now respondents)
work visa- vis MGTR's line of business. In fact, MGTR's line of business could not possibly exist, let
alone flourish without people like the fishermen crew members of its fishing vessels who actually
undertook the fishing activities in the high seas.

Considering that respondents were petitioner's regular employees, the latter's act of asking them to
sign the joint fishing venture agreement which provides that the venture shall be for a period of one
year from the date of the agreement, subject to renewal upon mutual agreement of the parties, and
may be pre-terminated by any of the parties before the expiration of the one-year period, is violative
of the former's security of tenure. And respondents' termination based on their refusal to sign the
same, not being shown to be one of those just causes for termination under Article 282, is, therefore,
illegal.

REYES ET AL., VS. DOCTOLERO, ET AL

GR No. 185597, August 2, 2017

DOCTRINE:
When the employee causes damage due to his own negligence while performing his own duties, there
arises the juris tantum presumption that the employer is negligent, rebuttable only by proof of
observance of the diligence of a good father of a family. The "diligence of a good father" referred to in
the last paragraph of Article 2180 means diligence in the selection and supervision of employees.

To rebut the presumption of negligence, an employer must prove two things: first, that it had
exercised due diligence in the selection of employees, and second, that after hiring the employees, the
employer had exercised due diligence in supervising them.

FACTS:
This case arose from an altercation between respondent Orico Doctolero, a security guard of
respondent Grandeur Security and Services Corporation and petitioners John E.R. Reyes and Mervin
Joseph Reyes in the parking area of respondent Makati Cinema Squares.

Petitioners recounted that after giving confusing traffic signals that almost caused a collision,
Doctolero cussed at them and started pointing his gun at petitioner John which ultimately led to
Doctolero shooting John in his left leg. Mervin, who rushed at John’s rescue, was also shot by another
security guard in the stomach when he went inside MCS.

On the other hand, Grandeur advanced a different version one where it was the petitioners who
started the confrontation when Doctolero, while on duty, stopped John when he tried to go against
traffic rules. According to the report, when John wrestled with Doctolero to get his service firearm,
causing the gun to fire off and hit John’s leg.

RTC AND CA’S RULING:

RTC decided against Doctolero and Avila while dismissed the complaint again MCS and Grandeur and
CA affirmed.

ISSUE:
WON Grandeur and MCS may be held vicariously liable for the damages caused by Doctolero and Avila
to petitioners based on employer-employee and principal-agent relationship, respectively.

RULING:
Grandeur IS NOT vicariously liable. When the employee causes damage due to his own negligence
while performing his own duties, there arises the juris tantum presumption that the employer is
negligent, rebuttable only by proof of observance of the diligence of a good father of a family. The
"diligence of a good father" referred to in the last paragraph of Article 2180 means diligence in the
selection and supervision of employees. Although paragraph 5 of Article 2180 of the Civil Code may be
applicable to Grandeur, it being undisputed that respondent guards were its employees, Grandeur was
able to sufficiently prove, through testimonial and documentary evidence, that it had exercised the
diligence of a good father of a family in the selection and hiring of its security guards.

To rebut the presumption of negligence, Grandeur has proven two things: first, that it had exercised
due diligence in the selection of respondents Doctolero and Avila, and second, that after hiring
Doctolero and Avila, Grandeur had exercised due diligence in supervising them.

Once evidence is introduced showing that the employer exercised the required amount of care in
selecting its employees, half of the employer's burden is overcome.

The question of diligent supervision, however, depends on the circumstances of employment.

Ordinarily, evidence demonstrating that the employer has exercised diligent supervision of its
employee during the performance of the latter's assigned tasks would be enough to relieve him of the
liability imposed by Article 2180 in relation to Article 2176 of the Civil Code.

MCS IS NOT vicariously liable as well. As a general rule, one is only responsible for his own act or
omission. This general rule is laid down in Article 2176 of the Civil Code, which provides:

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

The law, however, provides for exceptions when it makes certain persons liable for the act or omission
of another. One exception is an employer who is made vicariously liable for the tort committed by his
employee under paragraph 5 of Article 2180. Here, although the employer is not the actual tortfeasor,
the law makes him vicariously liable on the basis of the civil law principle of pater familias for failure
to exercise due care and vigilance over the acts of one's subordinates to prevent damage to another.
However, that the above rule is applicable only if there is an employer-employee relationship. This
employer-employee relationship cannot be presumed but must be sufficiently proven by the plaintiff.
The plaintiff must also show that the employee was acting within the scope of his assigned task when
the tort complained of was committed. It is only then that the defendant, as employer, may find it
necessary to interpose the defense of due diligence in the selection and supervision of employees.

We find no employer-employee relationship between MCS and respondent guards. The guards were
merely assigned by Grandeur to secure MCS' premises pursuant to their Contract of Guard Services.
Thus, MCS cannot be held vicariously liable for damages caused by these guards' acts or omissions.
Neither can it be said that a principal-agency relationship existed between MCS and Grandeur. Section
8 of the Contract for Guard Services between them explicitly states that Grandeur is not an agent of
MCS.
Right to Security of Tenure
ALU-TUCP VS. NLRC
G.R. No. 109902. August 2, 1994

Facts:
Petitioners plead that they had been employed by respondent NSC in connection with its Five Year
Expansion Program (FAYEP I & II) for varying lengths of time when they were separated from NSC's
service.

On 5 July 1990, petitioners filed separate complaints for unfair labor practice, regularization and
monetary benefits with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.

The complaints were consolidated and after hearing, the Labor Arbiter in a Held dated 7 June 1991,
declared petitioners "regular project employees who shall continue their employment as such for as
long as such [project] activity exists," but entitled to the salary of a regular employee pursuant to the
provisions in the collective bargaining agreement. It also ordered payment of salary differentials.

Both parties appealed to the NLRC from that Held. Petitioners argued that they were regular, not
project, employees. Private respondent, on the other hand, claimed that petitioners are project
employees as they were employed to undertake a specific project — NSC's Five Year Expansion
Program (FAYEP I & II).

Issue: Whether or not petitioners are properly characterized as "project employees" rather than
"regular employees" of NSC.

Ruling: The law on the matter is Article 280 of the Labor Code which reads in full:
ARTICLE 280. Regular and Casual Employment. — The provisions of the written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the engagement
of the employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph:

Provided, That, any employee who has rendered at least one year service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.

NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate end in view of
expanding the volume and increasing the kinds of products that it may offer for sale to the public.
Instead of contracting out to an outside or independent contractor the tasks of constructing the
buildings with related civil and electrical works that would house the new machinery and equipment,
the installation of the newly acquired mill or plant machinery and equipment and the commissioning
of such machinery and equipment, NSC opted to execute and carry out its Five Year Expansion Projects
"in house," as it were, by administration. The carrying out of the Five Year Expansion Program (or
more precisely, each of its component projects) constitutes a distinct undertaking identifiable from
the ordinary business and activity of NSC. Each component project, of course, begins and ends at
specified times, which had already been determined by the time petitioners were engaged. We also
note that NSC did the work here involved — the construction of buildings and civil and electrical
works, installation of machinery and equipment and the commissioning of such machinery — only for
itself .

Private respondent NSC was not in the business of constructing buildings and installing plant
machinery for the general business community, i.e., for unrelated, third party, corporations. NSC did
not hold itself out to the public as a construction company or as an engineering corporation.

Thus, the particular component projects embraced in the Five Year Expansion Program, to which
petitioners were assigned, were distinguishable from the regular or ordinary business of NSC which, of
course, is the production or making and marketing of steel products. During the time petitioners
rendered services to NSC, their work was limited to one or another of the specific component projects
which made up the FAYEP I and II.
The present case therefore strictly falls under definition of 'project employees' on paragraph one of
Article 280 of the Labor Code, as amended. Moreover, it has been held that the length of service of a
project employee is not the controlling test of employment tenure but whether or not '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'.

COSMOS BOTTLING CORPORATION VS. NLRC

G.R. No. 106600, March 29, 1996

Facts:
Gil C. Castro was employed by Cosmos Bottling Corporation for a specific period from September 51
1988 to October 41 1988. He was re-hired for another specific period from May 30, 1989 to November
6, 1989.

Having satisfactorily served the company for two (2) terms, Castro was recommended for
reemployment with the company's Maintenance Team for the Davao Project on November 22, 1989.
On December 22, 1989, he was re-hired and assigned to the Maintenance Division of the Davao
Project tasked to install the private respondent's annex plant machines in its Davao plant.

On May 21, 1990, Castro's employment was terminated due to the completion of the special project.

Meanwhile, on May 27, 1990, Cosmos Bottling Corporation in valid exercise of its management
prerogative terminated the services of some 228 regular employees by reason of retrenchment. For
obvious reasons, Castro was not among the list of those regular employees whose services were
terminated by reason of retrenchment or those who voluntarily resigned.

On May 25, 1990, Castro filed a complaint for illegal dismissal against Cosmos Bottling Corporation
with the Labor Arbiter contending that being a regular employee, he could not be dismissed without a
just and valid cause. On its part, the company alleged that Castro was a mere project employee whose
employment was coterminous with the project for which he was hired.

Issue: Whether or not private respondent Gil C. Castro is a regular employee or was a mere project
employee of petitioner Cosmos Bottling Corporation.

Ruling: After a careful examination of the records of the case, we find merit in the petition and hold
that respondent NLRC gravely abused its discretion when it rendered the challenged Held finding
private respondent a regular employee. Article 280 of the Labor Code which defines regular, project
and casual employment is applicable here. The same reads in full:
Article 280. Regular and Casual Employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph:

Provided, That, any employee who has rendered at least one year of service whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.

The case at bar presents what appears, to our mind, as a typical example of the first type. Petitioner
Cosmos Bottling Corporation is a duly organized corporation engaged in the manufacture, production,
bottling, sale and distribution of beverage. In the course of its business, it undertakes distinct
identifiable projects as it did in the instant case when it formed special teams assigned to install and
dismantle its annex plant machines in various plants all over the country. These projects are distinct
and separate, and are identifiable as such, from its usual business of bottling beverage.

Their duration and scope are made known prior to their undertaking and their specified goal and
purpose are fulfilled once the projects are completed. When private respondent was initially hired for
a period of one month and re-hired for another five months, and then subsequently re-hired for
another five months, he was assigned to the petitioner's Maintenance Division tasked with the-
installation and dismantling of its annex plant machines. Evidently, these projects or undertakings, the
duration and scope of which had been determined and made known to private respondent at the time
of his employment, can properly be treated as "projects" within the meaning of the "first" kind.
Considered as such, the services rendered by private respondent hired therein for the duration of the
projects may lawfully be terminated at the end or completion of the same.

Clearly, therefore, private respondent being a project employee, or to use the correct term, seasonal
employee, considering that his employment was limited to the installation and dismantling of
petitioners annex plant machines after which there was no more work to do, his employment legally
ended upon completion of the project.
PURE FOODS CORPORATION VS. NLRC, ET AL.
G.R. No. 122653. December 12, 1997

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 29 July 1991, the private respondents filed before the National Labor Relations Commission (NLRC)
Sub-Regional Arbitration Branch No. XI, General Santos City, a complaint for illegal dismissal against
the petitioner and its plant manager, Marciano Aganon.

Issue: Whether employees hired for a definite period and whose services are necessary and desirable
in the usual business or trade of the employer are regular employees.

Ruling:
Article 280 of the Labor Code defines regular and casual employment as follows:
ART. 280. Regular and Casual Employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral argument of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph;

Provided, That, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists.

Thus, the two kinds of regular employees are (1) those who are engaged to perform activities which
are necessary or desirable in the usual business or trade of the employer; and (2) those casual
employees who have rendered at least one year of service, whether continuous or broken, with
respect to the activity in which they are employed.

In the instant case, the private respondents' activities consisted in the receiving, skinning, loining,
packing, and casing-up of tuna fish which were then exported by the petitioner. Indisputably, they
were performing activities which were necessary and desirable in petitioner's business or trade.

Contrary to petitioner's submission, the private respondents could not be regarded as having been
hired for a specific project or undertaking. The term "specific project or undertaking" under Article
280 of the Labor Code contemplates an activity which is not commonly or habitually performed or
such type of work which is not done on a daily basis but only for a specific duration of time or until
completion; the services employed are then necessary and desirable in the employer's usual business
only for the period of time it takes to complete the project.

The fact that the petitioner repeatedly and continuously hired workers to do the same kind of work as
that performed by those whose contracts had expired negates petitioner's contention that those
workers were hired for a specific project or undertaking only.

The NLRC was, thus, 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.

PHILIPPINE FRUIT & VEGETABLE INDUSTRIES, INC. VS. NLRC

G.R. No. 122122. July 20, 1999

Facts:
Petitioner Philippine Fruit and Vegetable Industries, Inc. (PFVII, for brevity) is a government-owned
and controlled corporation engaged in the manufacture and processing of fruit and vegetable purees
for export. Petitioner Pedro Castillo is the former President and General Manager of petitioner PFVII.

On September 5, 1988 herein private respondent Philippine Fruit and Vegetable Workers Union-Tupas
Local Chapter, for and in behalf of 127 of its members, filed a complaint for unfair labor practice
and/or illegal dismissal with damages against petitioner corporation. Private respondent alleged that
many of its complaining members started working for San Carlos Fruits Corporation which later
incorporated into PFVII in January or February 1983 until their dismissal on different dates in 1985,
1986, 1987 and 1988. They further alleged that the dismissals were due to complainants' involvement
in union activities and were without just cause.

Issue: Whether or not complaining members of respondent union are regular employees of PFVII or
are seasonal workers whose employment ceased during the off-season due to the non-availability of
work.

Ruling:
Article 280 of the Labor Code provides:
Regular and Casual Employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employers, except where
the employment has been fixed for a specific project.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph;

 provided, that, any employee who has rendered at least one year of service whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.
Under the above provision, an employment shall be deemed regular where the employee: a) has been
engaged to perform activities which are usually necessary or desirable in the usual business or trade
of the employer; or b) has rendered at least one year of service, whether such service is continuous or
broken, with respect to the activity in which he is employed.

In the case at bar, the work of complainants as seeders, operators, sorters, slicers, janitors, drivers,
truck helpers, mechanics and office personnel is without doubt necessary in the usual business of a
food processing company like petitioner PFVII.

It should be noted that complainants' employment has not been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of their
appointment or hiring. 13 Neither is their employment seasonal in nature. While it may be true that
some phases of petitioner company's processing operations is dependent on the supply of fruits for a
particular season, the other equally important aspects of its business, such as manufacturing and
marketing are not seasonal. The fact is that large-scale food processing companies such as petitioner
company continue to operate and do business throughout the year even if the availability of fruits and
vegetables is seasonal.

PHILIPPINE SEMI CONDUCTORS (PHILS) INC VS.ELOISA FADRIQUELA

G.R. No. 149859, April 14, 2004

Facts:
The petitioner Philips Semiconductors (Phils.), Inc. is a domestic corporation engaged in the
production and assembly of semiconductors such as power devices, RF modules, CATV modules, RF
and metal transistors and glass diods. It caters to domestic and foreign corporations that manufacture
computers, telecommunications equipment and cars.

Aside from contractual employees, the petitioner employed 1,029 regular workers. The employees
were subjected to periodic performance appraisal based on output, quality, attendance and work
attitude. One was required to obtain a performance rating of at least 3.0 for the period covered by the
performance appraisal to maintain good standing as an employee.

On May 8, 1992, respondent Eloisa Fadriquela executed a Contract of Employment with the petitioner
in which she was hired as a production operator with a daily salary of P118. Her initial contact was for
a period of 3 months up to August 8, 1992. This was extended for until June 4, 1993 for the reason
that she was able to consistently meet the performance rating . However, she incurred absesnce for
the months of April, May and June. Line supervisor Shirley F. Velayo asked the respondent why she
incurred said absences, but the latter failed to explain her side. The respondent was warned that if
she offered no valid justification for her absences, Velayo would have no other recourse but to
recommend the non-renewal of her contract The respondent still failed to respond, as a consequence
of which her performance rating declined to 2.8. Velayo recommended to the petitioner that the
respondent’s employment be terminated due to habitual absenteeism, in accordance with the
Company Rules and Regulations. Thus, the respondent’s contract of employment was no longer
renewed.

Respondent filed a complaint alledging the following:

a) That she was illegally discused as there was no valid cause for the termination of her
employment
b) She was not notified of any infraction she alledgedly commited
c) That the petitioner did not conduct any formal investigation before her employemnt was
terminated
d) That she was alread y regular employee and could not be terminated without justifable cause

On the other hand, petitioner contended that the respondent has not been dismissed but that her
contract of employment merely expired and was no longer renewed because of her low performance
rating

Ruling of Labor Arbiter: The complaint is hereby dismissed for lack of merit. The respondent is,
however, ordered to extend to the complainant a send off award or financial assistance in the amount
equivalent to one-month salary on ground of equity. This was because it is stated in the CBA that an
employee may acquire a regular employment status upon completing the 17 months of service to the
petitioner

Ruling of the NLRC: Affimed the decision of the LA

CA: Reversed the ruling of the LA and NLRC. The CBA did not include contractual employee thus the
seventeen month probationary period under the CBA did not apply to respondent. Moreover, the
dialouges between the respondent and the line supervisor cannot be considered substantial
compliance with the requirement of notice and investigation

Issue:
1. Whether or not the respondent was still a contractual employee of the peitioner as of June 4,
1993
2. Whether or not the petitioner dismissed the respondent from her employment
3. If so, whether or not she was accorded the requisite notice and investigation prior to her
dismissal
4. Whether or not the responednt is entited to reinstatement and full payment of backwages as
well as attorney’s fees

Held:

Petition is denied.

The two kinds of regular employees under the law are (1) those engaged to perform activities which
are necessary or desirable in the usual business or trade of the employer; and (2) those casual
employees who have rendered at least one year of service, whether continuous or broken, with
respect to the activities in which they are employed. The primary standard to determine a regular
employment is the reasonable connection between the particular activity performed by the employee
in relation to the business or trade of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. The test is whether the former is
usually necessary or desirable in the usual business or trade of the employer. If the employee has
been performing the job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance as sufficient
evidence of the necessity, if not indispensability of that activity to the business of the employer.
Hence, the employment is also considered regular, but only with respect to such activity and while
such activity exists.[22] The law does not provide the qualification that the employee must first be
issued a regular appointment or must be declared as such before he can acquire a regular employee
status

There is no dispute that the work of the respondent was necessary or desirable in the business or
trade of the petitioner. She remained under the employ of the petitioner without any interruption
since May 8, 1992 to June 4, 1993 or for one (1) year and twenty-eight (28) days. The original contract
of employment had been extended or renewed for four times, to the same position, with the same
chores. Such a continuing need for the services of the respondent is sufficient evidence of the
necessity and indispensability of her services to the petitioner’s business. By operation of law, then,
the respondent had attained the regular status of her employment with the petitioner, and is thus
entitled to security of tenure

Succinctly put, in rehiring petitioner, employment contracts ranging from two (2) to three (3) months
with an express statement that his temporary job/service as mason shall be terminated at the end of
the said period or upon completion of the project was obtrusively a convenient subterfuge utilized to
prevent his regularization

In the Romares v. NLRC case, we cited the criteria under which “term employment” cannot be said to
be in circumvention of the law on security of tenure, namely:

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.[30]

On the second and third issues, we agree with the appellate court that the respondent was dismissed
by the petitioner without the requisite notice and without any formal investigation. Given the factual
milieu in this case, the respondent’s dismissal from employment for incurring five (5) absences in April
1993, three (3) absences in May 1993 and four (4) absences in June 1993, even if true, is too harsh a
penalty. We do agree that an employee may be dismissed for violation of reasonable
regulations/rules promulgated by the employer.

Dismissal is the ultimate penalty that can be meted to an employee. Where a penalty less punitive
would suffice, whatever missteps may have been committed by the worker ought not to be visited
with a consequence so severe such as dismissal from employment.

Neither can the conferences purportedly held between the respondent and the line supervisor be
deemed substantial compliance with the requirements of notice and investigation.

ALCIRA VS. NLRC

G.R. No. 149859, June 9, 2004

Facts:
Respondent Middleby Philippines Corporation (Middleby) hired petitioner as engineering support
services supervisor on a probationary basis for six months. Apparently unhappy with petitioner’s
performance, respondent Middleby terminated petitioner’s services. The bone of contention centered
on whether the termination occurred before or after the six-month probationary period of
employment.

The parties, presenting their respective copies of Alcira’s appointment paper, claimed conflicting
starting dates of employment: May 20, 1996 according to petitioner and May 27, 1996 according to
respondent. Both documents indicated petitioner’s employment status as “probationary (6 mos.)” and
a remark that “after five months (petitioner’s) performance shall be evaluated and any adjustment in
salary shall depend on (his) work performance.”

Labor Arbiter: Respondent Middleby Philippines Corporation (Middleby) hired petitioner as

engineering support services supervisor on a probationary basis for six months. Apparently unhappy
with petitioner’s performance, respondent Middleby terminated petitioner’s services. The bone of
contention centered on whether the termination occurred before or after the six-month probationary
period of employment.

NLRC: affirmed the decision of the Labor Arbiter

CA: Affirmed the judgment of the NLRC

Even assuming, arguendo, that petitioner was not informed of the reasonable standards required of
him by Middleby, the same is not crucial because there is no termination to speak of but rather
expiration of contract. Petitioner loses sight of the fact that his employment was probationary,
contractual in nature, and one with a definite period.

Issue: The bone of contention centered on whether the termination occurred before or after the six-
month probationary period of employment.

Held:
The first issue we must resolve is whether petitioner was allowed to work beyond his probationary
period and was therefore already a regular employee at the time of his alleged dismissal. We rule in
the negative.

Petitioner claims that under the terms of his contract, his probationary employment was only for five
months as indicated by the remark “Please be informed that after five months, your performance shall
be evaluated and any adjustment in salary shall depend on your work performance.” The argument
lacks merit. As correctly held by the labor arbiter, the appointment contract also stated in another part
thereof that petitioner’s employment status was “probationary (6 mos.).” The five-month period
referred to the evaluation of his work.

(O)ur computation of the 6-month probationary period is reckoned from the date of appointment up
to the same calendar date of the 6th month following.

In short, since the number of days in each particular month was irrelevant, petitioner was still a
probationary employee when respondent Middleby opted not to “regularize” him on November 20,
1996.

We hold that respondent Middleby substantially notified petitioner of the standards to qualify as a
regular employee when it apprised him, at the start of his employment, that it would evaluate his
supervisory skills after five months
Conversely, an employer is deemed to substantially comply with the rule on notification of standards if
he apprises the employee that he will be subjected to a performance evaluation on a particular date
after his hiring.

The third issue for resolution is whether petitioner was illegally dismissed when respondent Middleby
opted not to renew his contract on the last day of his probationary employment.

It is settled that even if probationary employees do not enjoy permanent status, they are accorded the
constitutional protection of security of tenure. This means they may only be terminated for just cause
or when they otherwise fail to qualify as regular employees in accordance with reasonable standards
made known to them by the employer at the time of their engagement.

MITSUBISHI MOTORS PHILS. VS. CHRYSLER PHILIPPINES LABOR UNION

G.R. No. 148738, June 29, 2004

Facts:
Mitsubishi Motors Philippines Corporation (MMPC) is a domestic corporation engaged in the assembly
and distribution of Mitsubishi motor vehicles. Chrysler Philippines Labor Union (CPLU) is a legitimate
labor organization and the duly certified bargaining agent of the hourly-paid regular rank and file
employees of MMPC. Nelson Paras was a member of CPLU. His wife, Cecille Paras, was the President
of the Chrysler Philippines Salaried Employees Union (CPSU).

Nelson Paras was first employed by MMPC as a shuttle bus driver on March 19, 1976. He resigned on
June 16, 1982. When he returned to the Philippines, he was re-hired as a welder-fabricator at the
MMPC tooling shop from October 3, 1994 to October 31, 1994. On October 29, 1994, his contract was
renewed from November 1, 1994 up to March 3, 1995.

Sometime in May of 1996, Paras was re-hired on a probationary basis as a manufacturing trainee at
the Plant Engineering Maintenance Department. He and the new and re-hired employees were given
an orientation on May 15, 1996. Paras started reporting for work on May 27, 1996. He was assigned at
the paint ovens, air make-up and conveyors. As part of the MMPC’s policy, Paras was evaluated by his
immediate supervisors Lito R. Lacambacaland Wilfredo J. Lopezafter six (6) months, and received an
average rating. Later, Lacambacal informed Paras that based on his performance rating, he would be
regularized.

However, the Department and Division Managers, A.C. Velando and H.T. Victoria, including Mr. Dante
Ong, reviewed the performance evaluation made on Paras. They unanimously agreed, along with
Paras’ immediate supervisors, that the performance of Paras was unsatisfactory. As a consequence,
Paras was not considered for regularization. On November 26, 1996, he received a Notice of
Termination dated November 25, 1996, informing him that his services were terminated effective the
said date since he failed to meet the required company standards for regularization.

Paras and CPLU Contention: The period of May 27, 1996 to November 26, 1996 consisted of one
hundred eighty-three (183) days. They asserted that the maximum of the probationary period is six
(6) months, which is equivalent to 180 days; as such, Paras, who continued to be employed even after
the 180th day, had become a regular employee as provided for in Article 282 of the Labor Code.

MMPC Contention: The MMPC, for its part, averred that under Article 13 of the New Civil Code, Paras’
probationary employment which commenced on May 27, 1996 would expire on November 27, 1996.
Since he received the notice of termination of his employment on November 25, 1996, the same
should be considered to have been served within the six-month probationary period

Issue: WON the notice of termination was served upon petitioner Nelson Paras after he has already
become a regular employee

Held:
Respondent Paras was employed as a management trainee on a probationary basis. During the
orientation conducted on May 15, 1996, he was apprised of the standards upon which his
regularization would be based. He reported for work on May 27, 1996. As per the company’s policy,
the probationary period was from three (3) months to a maximum of six (6) months.

Applying Article 13 of the Civil Code, the probationary period of six (6) months consists of one
hundred eighty (180) days. This is in conformity with paragraph one, Article 13 of the Civil Code, which
provides that the months which are not designated by their names shall be understood as consisting
of thirty (30) days each. The number of months in the probationary period, six (6), should then be
multiplied by the number of days within a month, thirty (30); hence, the period of one hundred eighty
(180) days.

As clearly provided for in the last paragraph of Article 13, in computing a period, the first day shall be
excluded and the last day included. Thus, the one hundred eighty (180) days commenced on May 27,
1996, and ended on November 23, 1996. The termination letter dated November 25, 1996 was
served on respondent Paras only at 3:00 a.m. of November 26, 1996. He was, by then, already a
regular employee of the petitioner under Article 281 of the Labor Code.
Illegality of the Dimissal
There is no showing that respondent Paras was informed of the basis for the volte face of the
management group tasked to review his performance rating. His immediate supervisor even told him
that he had garnered a satisfactory rating and was qualified for regularization, only to later receive a
letter notifying him that his employment was being terminated.

Considering that respondent Paras was not dismissed for a just or authorized cause, his dismissal from
employment was illegal. Furthermore, the petitioner’s failure to inform him of any charges against
him deprived him of due process. Clearly, the termination of his employment based on his alleged
unsatisfactory performance rating was effected merely to cover up and “deodorize” the illegality of his
dismissal.

PANGILINAN ET AL VS. GENERAL MILLING COPORATION

G.R. No. 149329, July 2, 2004

Facts:
The respondent General Milling Corporation is a domestic corporation engaged in the production and
sale of livestock and poultry.[2] It is, likewise, the distributor of dressed chicken to various restaurants
and establishments nationwide.[3] As such, it employs hundreds of employees, some on a regular
basis and others on a casual basis, as “emergency workers.”

The petitioners were employed by the respondent on different dates as emergency workers at its
poultry plant in Cainta, Rizal, under separate “temporary/casual contracts of employment” for a
period of five months. Upon the expiration of their respective contracts, their services were
terminated. They later filed separate complaints for illegal dismissal and non-payment of holiday pay,
13th month pay, night-shift differential and service incentive leave pay against the respondent before
the Arbitration Branch of the National Labor Relations Commission

Issue: WON the petitioners were regular employees of the respondent GMC when their employment
was terminated

Held: Petitioners were employees with a fixed period, and, as such, were not regular employees.

A regular employee is one who is engaged to perform activities which are necessary and desirable in
the usual business or trade of the employer as against those which are undertaken for a specific
project or are seasonal.[41] There are two separate instances whereby it can be determined that an
employment is regular: (1) if the particular activity performed by the employee is necessary or
desirable in the usual business or trade of the employer; and, (2) if the employee has been performing
the job for at least a year.

The petitioners were hired as “emergency workers” and assigned as chicken dressers, packers and
helpers at the Cainta Processing Plant. The respondent GMC is a domestic corporation engaged in the
production and sale of livestock and poultry, and is a distributor of dressed chicken.
While the petitioners’ employment as chicken dressers is necessary and desirable in the usual
business of the respondent, they were employed on a mere temporary basis, since their employment
was limited to a fixed period. As such, they cannot be said to be regular employees, but are merely
“contractual employees.” Consequently, there was no illegal dismissal when the petitioners’ services
were terminated by reason of the expiration of their contracts. Lack of notice of termination is of no
consequence, because when the contract specifies the period of its duration, it terminates on the
expiration of such period. A contract for employment for a definite period terminates by its own term
at the end of such period.

HACIENDA BINO/HORTENCIA STARK VS. CUENCA

G.R. NO. 150478, April 15, 2005, citing 2003 Hacienda Fatima

Facts:
Hortencia L. Starke, herein petitioner, is the owner and operator of the Hacienda Bino. During the off
milling season of 1996 he issued an Order or Notice which stated, that all Hacienda Employees who
signed in favor of CARP are expressing their desire to get out of employment on their own volition and
wherefore, only those who did not sign for CARP will be given employment by the hacienda.

Herein respondents are employees of the hacienda performing various works, such as cultivation,
planting of cane points, fertilization, watering, weeding, harvesting and loading of harvested
sugarcanes to cargo trucks are those who signed in favor of CARP. They allege that they are regular
and permanent workers of the hacienda and that they were dismissed without just and lawful cause.
They further alleged that they were dismissed because they applied as beneficiaries under the
Comprehensive Agrarian Reform Program (CARP) over the land owned by petitioner Starke. Petitioner
Starke alleged that in there was little work in the plantation as it was off-season; and so, on account of
the seasonal nature of the work, she issued the order giving preference to those who supported the
re-classification. She pointed out that when the milling season began, the work was plentiful again
and she issued notices to all workers, including the respondents, informing them of the availability of
work. However, the respondents refused to report back to work.

Issue: Whether or not the respondents are regular employee?

Ruling:
It held that the ruling in Mercado, Sr. v. NLRC does not operate to abandon the settled doctrine that
sugar workers are considered regular and permanent farm workers of a sugar plantation owner,
considering that there are facts peculiar in that case which are not present in the case at bar. In the
Mercado case, the farm laborers worked only for a definite period for a farm owner since the area of
the land was comparatively small, after which they offer their services to other farm owners. In this
case, the area of the hacienda, which is 236 hectares, simply does not allow for the respondents to
work for a definite period only. The petitioners did not present any evidence that the respondents
were required to perform certain phases of agricultural work for a definite period of time. Although
the petitioners assert that the respondents made their services available to the neighboring
haciendas, the records do not, however, support such assertion. The primary standard for 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. There is no doubt that the
respondents were performing work necessary and desirable in the usual trade or business of an
employer. Hence, they can properly be classified as regular employees. For respondents to be
excluded from those classified as regular employees, it is not enough that they perform work or
services that are seasonal in nature. They must have been employed only for the duration of one
season. While the records sufficiently show that the respondents’ work in the hacienda was seasonal
in nature, there was, however, no proof that they were hired for the duration of one season only. In
fact, the payrolls, submitted in evidence by the petitioners, show that they availed the services of the
respondents since 1991. Absent any proof to the contrary, the general rule of regular employment
should, therefore, stand. It bears stressing that the employer has the burden of proving the lawfulness
of his employee’s dismissal.

PHIL GLOBAL COMMUNICATION V. DE VERA

G.R. No. 157214, June 7, 2005

FACTS:
Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business
of communication services and allied activities, while respondent Ricardo De Vera is a physician by
profession whom petitioner enlisted to attend to the medical needs of its employees. On 15 May
1981, De Vera, via a letter offered his services to the petitioner, therein proposing his plan of works
required of a practitioner in industrial medicine, to include [CERTAIN TASKS]. The parties agreed and
formalized respondent’s proposal in a document denominated as RETAINERSHIP CONTRACT–which
will be for a period of one year subject to renewal, and that respondent’s “retainer fee” will be at
P4,000.00 a month. Said contract was renewed yearly. The retainership arrangement went on from
1981 to 1994 with changes in the retainer’s fee. However, for the years 1995 and 1996, renewal of
the contract was only made verbally. In December 1996 Philcom, thru a letter bearing on the subject
boldly written as “TERMINATION – RETAINERSHIP CONTRACT”, informed De Vera of its decision to
discontinue the latter’s “retainer’s contract with the Company effective at the close of business hours
of December 31, 1996” because management has decided that it would be more practical to provide
medical services to its employees through accredited hospitals near the company premises.

De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC),
alleging that he had been actually employed by Philcom as its company physician since 1981 and was
dismissed without due process. He averred that he was designated as a “company physician on
retainer basis” for reasons allegedly known only to Philcom. He likewise professed that since he was
not conversant with labor laws, he did not give much attention to the designation as anyway he
worked on a full-time basis and was paid a basic monthly salary plus fringe benefits, like any other
regular employees of Philcom.

Labor Arbiter dismissed De Vera’s complaint for lack of merit, on the rationale that as a “retained
physician” under a valid contract mutually agreed upon by the parties, De Vera was an “independent
contractor” and that he “was not dismissed but rather his contract with [PHILCOM] ended when said
contract was not renewed after December 31, 1996”.

NLRC reversed on a finding that - De Vera is Philcom’s “regular employee” and accordingly directed
the company to reinstate him to his former position without loss of seniority rights and privileges and
with full backwages from the date of his dismissal until actual reinstatement.

Philcom then went to the Court of Appeals which rendered a decision, modifying that of the NLRC by
deleting the award of traveling allowance, and ordering payment of separation pay to De Vera in lieu
of reinstatement.

ISSUE: Whether the case is one of a legitimate job contracting agreement or an employer-employee
relationship.

HELD:
The primordial issue of whether an employer-employee relationship exists between petitioner and
respondent, the existence of which is, in itself, a question of fact well within the province of the NLRC.
Nonetheless, given the reality that the NLRC’s findings are at odds with those of the labor arbiter, the
Court is constrained to look deeper into the attendant circumstances obtaining in this case, as
appearing on record.

APPLYING THE FOUR-FOLD TEST TO THIS CASE,

it was respondent himself who sets the parameters of what his duties would be in offering his services
to petitioner, as borne by no less than his own letter which was substantially the basis of the labor
arbiter’s finding that –there existed no employer-employee relationship between petitioner and
respondent in addition to the following factual settings:

[AS TO SELECTION OR HIRING]

The fact that –the complainant was not considered an employee was recognized by the complainant
himself in a signed LETTER to the respondent. The tenor of this letter indicates that –the complainant
was proposing to extend his time with the respondent and seeking additional compensation for said
extension. This shows that the respondent PHILCOM did not have control over the schedule of the
complainant as it [is] the complainant who is proposing his own schedule and asking to be paid for the
same. This is proof that the complainant understood that his relationship with the respondent
PHILCOM was a retained physician and not as an employee. If he were an employee he could not
negotiate as to his hours of work.

The complainant is a Doctor of Medicine, and presumably, a well-educated person. The retainer fee is
indicated on the RETAINERSHIP CONTRACT, and the duration of the contract for one year is also clearly
indicated in paragraph 5 of the Retainership Contract. The complainant cannot claim that he was
unaware that the ‘contract’ was good only for one year, as he signed the same without any objections.
The complainant also accepted its renewal every year thereafter until 1994. As a literate person and
educated person, the complainant cannot claim that he does not know what contract he signed and
that it was renewed on a year to year basis.

[AS TO WAGES]
From the time he started to work with petitioner, he never was included in its payroll; was never
deducted any contribution for remittance to the Social Security System (SSS); and was in fact
subjected by petitioner to the ten (10%) percent withholding tax for his professional fee, in
accordance with the National Internal Revenue Code, matters which are simply inconsistent with an
employer-employee relationship.

But he never raised those issues. An ordinary employee would consider the SSS payments important
and thus make sure they would be paid. The complainant never bothered to ask the respondent to
remit his SSS contributions. This clearly shows that the complainant never considered himself an
employee of PHILCOM and thus, respondent need not remit anything to the SSS in favor of the
complainant.” Clearly, the elements of an employer-employee relationship are wanting in this case.

the records are replete with evidence showing that –respondent had to bill petitioner for his monthly
professional fees. It simply runs against the grain of common experience to imagine that – an ordinary
employee has yet to bill his employer to receive his salary.

[AS TO DISMISSAL]
The power to terminate the parties’ relationship was mutually vested on both. Either may terminate
the arrangement at will, with or without cause.

Finally, remarkably absent from the parties’ arrangement is the ELEMENT OF CONTROL, whereby
the employer has reserved the right to control the employee not only as to the result of the work
done but also as to the means and methods by which the same is to be accomplished.

Here, petitioner had no control over the means and methods by which respondent went about
performing his work at the company premises. He could even embark in the private practice of his
profession, not to mention the fact that respondent’s work hours and the additional compensation
therefor were negotiated upon by the parties.

In fine, the parties themselves practically agreed on every terms and conditions of respondent’s
engagement, which thereby negates the element of control in their relationship. For sure, respondent
has never cited even a single instance when petitioner interfered with his work.

Article 280 of the labor code (sic) provides:

‘The provisions of written agreement to the contrary notwithstanding and regardless of the
oral agreements of the parties, an employment shall be deemed to be REGULAR where the
employee has been engaged to perform in the usual business or trade of the employer,
EXCEPT where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of
the employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.’

‘An employment shall be deemed to be CASUAL if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one (1) year of service,
whether such is continuous or broken, shall be considered a REGULAR with respect to the
activity in which he is employed and his employment shall continue while such activity exists.’

Parenthetically, the position of company physician, in the case of petitioner, is usually necessary and
desirable because the need for medical attention of employees cannot be foreseen, hence, it is
necessary to have a physician at hand.

In fact, the importance and desirability of a physician in a company premises is recognized by ART. 157
OF THE LABOR CODE, which requires the presence of a physician depending on the number of
employees and in the case at bench, in petitioner’s case, as found by public respondent, petitioner
employs more than 500 employees.

The appellate court’s premise that –REGULAR EMPLOYEES are those who perform activities which are
desirable and necessary for the business of the employer – is not determinative in this case. For, we
take it that any agreement may provide that – one party shall render services for and in behalf of
another, no matter how necessary for the latter’s business, even without being hired as an employee.

This set-up is precisely true in the case of an INDEPENDENT CONTRACTORSHIP

as well as in an AGENCY AGREEMENT.

ARTICLE 280 OF THE LABOR CODE, is not the yardstick for determining the existence of an
employment relationship. As it is, the provision merely distinguishes between two (2) kinds of
employees, i.e., regular and casual. It does not apply where, as here, the very existence of an
employment relationship is in dispute.

ART. 157 OF THE LABOR CODE

while it is true that the provision requires employers to engage the services of medical practitioners in
certain establishments depending on the number of their employees,
nothing is there in the law which says that medical practitioners so engaged be actually hired as
employees, adding that the law, as written, only requires the employer “to retain”, not employ, a
part-time physician who needed to stay in the premises of the non-hazardous workplace for two (2)
hours.

what applies here is the last paragraph of Article 157 which, to stress, provides that –
the employer may engage the services of a physician and dentist “on retained basis”, subject to such
regulations as the Secretary of Labor may prescribe. The successive “retainership” agreements of the
parties definitely hue to the very statutory provision relied upon by respondent.

ARTICLE 157 OF THE LABOR CODE clearly and unequivocally allows employers in non-hazardous
establishments to engage “on retained basis” the service of a dentist or physician. Nowhere does the
law provide that the physician or dentist so engaged thereby becomes a regular employee. The very
phrase that they may be engaged “on retained basis”, revolts against the idea that this engagement
gives rise to an employer-employee relationship.

With the recognition of the fact that –petitioner consistently engaged the services of respondent on a
retainer basis, as shown by their various “retainership contracts”, so can petitioner put an end, with or
without cause, to their retainership agreement as therein provided.

[MOOT AND ACADEMIC]

We note, however, that - even as the contracts entered into by the parties invariably provide for a 60-
DAY NOTICE REQUIREMENT prior to termination, the same was not complied with by petitioner when
it terminated the verbally-renewed retainership agreement.

Be that as it may, the record shows, and this is admitted by both parties, that execution of the NLRC
decision had already been made at the NLRC despite the pendency of the present recourse. For sure,
accounts of petitioner had already been garnished and released to respondent despite the previous
Status Quo Order[29] issued by this Court.

To all intents and purposes, therefore, the 60-day notice requirement has become moot and academic
if not waived by the respondent himself.

LACUESTA VS. ATENEO DE MANILA

G.R No. 152777, December 9, 2005

Facts:
Respondent Ateneo de Manila University (Ateneo) hired, on a contractual basis, petitioner Lolita R.
Lacuesta as a part-time lecturer in its English Department for the second semester of school year
1988-1989. She was re-hired, still on a contractual basis, for the first and second semesters of school
year 1989-1990.

On July 13, 1990, the petitioner was first appointed as full-time instructor on probation, in the same
department effective June 1, 1990 until March 31, 1991. Thereafter, her contract as faculty on
probation was renewed effective April 1, 1991 until March 31, 1992. She was again hired for a third
year effective April 1, 1992 until March 31, 1993. During these three years she was on probation
status.

In a letter dated January 27, 1993, respondent Dr. Leovino Ma. Garcia, Dean of Ateneo's Graduate
School and College of Arts and Sciences, notified petitioner that her contract would no longer be
renewed because she did not integrate well with the English Department. Petitioner then appealed to
the President of the Ateneo at the time, Fr. Joaquin Bernas, S.J.

In a letter dated February 11, 1993, Fr. Bernas explained to petitioner that she was not being
terminated, but her contract would simply expire. He also stated that the university president makes a
permanent appointment only upon recommendation of the Dean and confirmation of the Committee
on Faculty Rank and Permanent Appointment. He added that any appointment he might extend would
be tantamount to a midnight appointment.

In another letter dated March 11, 1993, Fr. Bernas offered petitioner the job as book editor in the
University Press under terms comparable to that of a faculty member.

Petitioner worked as editor in the University Press from April 1, 1993 to March 31, 1994 including an
extension of two months after her contract expired. Upon expiry of her contract, petitioner applied for
clearance to collect her final salary as editor. Later, she agreed to extend her contract from June 16,
1994 to October 31, 1994. Petitioner decided not to have her contract renewed due to a severe back
problem. She did not report back to work, but she submitted her clearance on February 20, 1995.
On December 23, 1996, petitioner filed a complaint for illegal dismissal with prayer for reinstatement,
back wages, and moral and exemplary damages. Dr. Leovino Ma. Garcia and Dr. Marijo Ruiz were sued
in their official capacities as the previous and present deans of the College of Arts and Sciences,
respectively.

Simply put, the issue in this case is whether the petitioner was illegally dismissed.
Petitioner contends that Articles 280 and 281 of the Labor Code, 8 not the Manual of Regulations for
Private Schools, is the applicable law to determine whether or not an employee in an educational
institution has acquired regular or permanent status. She argues that (1) under Article 281,
probationary employment shall not exceed six (6) months from date of employment unless a longer
period had been stipulated by an apprenticeship agreement; (2) under Article 280, if the
apprenticeship agreement stipulates a period longer than one year and the employee rendered at
least one year of service, whether continuous or broken, the employee shall be considered as regular
employee with respect to the activity in which he is employed while such activity exists; and (3) it is
with more reason that petitioner be made regular since she had rendered services as part-time and
full-time English teacher for four and a half years, services which are necessary and desirable to the
usual business of Ateneo.

Respondents, for their part, contend that the Manual of Regulations for Private Schools is controlling.
In the Manual, full-time teachers who have rendered three consecutive years of satisfactory service
shall be considered permanent. Respondents also claim that the petitioner was not terminated but
her employment contract expired at the end of the probationary period. Further, institutions of higher
learning, such as respondent Ateneo, enjoy the freedom to choose who may teach according to its
standards.

Issues:
1. Whether or not the Court of Appeals erred in ruling that it is the Manual of Regulations For
Private Schools, not the Labor Code, that determines the acquisition of regular or permanent
status of faculty members in an educational institution;
2. Whether or not after completing the three-year probation with an above-average
performance, petitioner already acquired permanent status.

SC Ruling:
On the first issue, the Manual of Regulations for Private Schools, and not the Labor Code, determines
whether or not a faculty member in an educational institution has attained regular or permanent
status. 10 In University of Santo Tomas v. National Labor Relations Commission the Court en banc said
that under Policy Instructions No. 11 issued by the Department of Labor and Employment, "the
probationary employment of professors, instructors and teachers shall be subject to the standards
established by the Department of Education and Culture." Said standards are embodied in paragraph
75 11 (now Section 93) of the Manual of Regulations for Private Schools.

Section 93 13 of the 1992 Manual of Regulations for Private Schools provides that full-time teachers
who have satisfactorily completed their probationary period shall be considered regular or
permanent. Moreover, for those teaching in the tertiary level, the probationary period shall not be
more than six consecutive regular semesters of satisfactory service. The requisites to acquire
permanent employment, or security of tenure, are (1) the teacher is a full-time teacher; (2) the
teacher must have rendered three consecutive years of service; and (3) such service must have been
satisfactory.

On the second issue, a part-time teacher cannot acquire permanent status. Only when one has served
as a full-time teacher can he acquire permanent or regular status. The petitioner was a part-time
lecturer before she was appointed as a full-time instructor on probation. As a part-time lecturer, her
employment as such had ended when her contract expired. Thus, the three semesters she served as
part-time lecturer could not be credited to her in computing the number of years she has served to
qualify her for permanent status.

Completing the probation period does not automatically qualify her to become a permanent
employee of the university. Petitioner could only qualify to become a permanent employee upon
fulfilling the reasonable standards for permanent employment as faculty member. Consistent with
academic freedom and constitutional autonomy, an institution of higher learning has the prerogative
to provide standards for its teachers and determine whether these standards have been met. 19 At
the end of the probation period, the decision to re-hire an employee on probation, belongs to the
university as the employer alone.

POSEIDON FISHING VS. NLRC

G.R. No. 168052, February 20, 2006

Facts:
Petitioner Poseidon Fishing is a fishing company engaged in the deep-sea fishing industry. Its various
vessels catch fish in the outlying islands of the Philippines, which are traded and sold at the Navotas
Fish Port. One of its boat crew was private respondent Jimmy S. Estoquia. Petitioner Terry de Jesus is
the manager of petitioner company.

Private respondent was employed by Poseidon Fishing in January 1988 as Chief Mate. After five years,
he was promoted to Boat Captain. In 1999, petitioners, without reason, demoted respondent from
Boat Captain to Radio Operator of petitioner Poseidon. 4 As a Radio Operator, he monitored the daily
activities in their office and recorded in the duty logbook the names of the callers and time of their
calls.

On 3 July 2000, private respondent failed to record a 7:25 a.m. call in one of the logbooks. However,
he was able to record the same in the other logbook. Consequently, when he reviewed the two
logbooks, he noticed that he was not able to record the said call in one of the logbooks so he
immediately recorded the 7:25 a.m. call after the 7:30 a.m. entry. 6
Around 9:00 o'clock in the morning of 4 July 2000, petitioner Terry de Jesus detected the error in the
entry in the logbook. Subsequently, she asked private respondent to prepare an incident report to
explain the reason for the said oversight.

At around 2:00 o'clock in the afternoon of that same day, petitioner Poseidon's secretary, namely
Nenita Laderas, summoned private respondent to get his separation pay amounting to Fifty-Five
Thousand Pesos (P55,000.00). However, he refused to accept the amount as he believed that he did
nothing illegal to warrant his immediate discharge from work.

Rising to the occasion, private respondent filed a complaint for illegal dismissal on 11 July 2000

Issue:
1. WON Eustoqia was a regular employee
2. WON deep-sea fishing is a seasonal industry
3. WON Eustoqia was illegally dismissed

SC Ruling:
The fundamental issue entails the determination of the nature of the contractual relationship
between petitioners and private respondent, i.e., was private respondent a regular employee at the
time his employment was terminated on 04 July 2000?

Petitioners lament that fixed-term employment contracts are recognized as valid under the law
notwithstanding the provision of Article 280 of the Labor Code. Petitioners theorize that the Civil Code
has always recognized the validity of contracts with a fixed and definite period, and imposes no
restraints on the freedom of the parties to fix the duration of the contract, whatever its object, be it
species, goods or services, except the general admonition against stipulations contrary to law, morals,
good customs, public order and public policy.

Accordingly, and since the entire purpose behind the development of legislation culminating in the
present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent
circumvention of the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the concept
of regular employment as defined therein should be construed to refer to the substantive evil that the
Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It
should have no application to instances where a fixed period of employment was agreed upon
knowingly and voluntarily by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with each other on more or less
equal terms with no moral dominance whatever being exercised by the former over the latter.

In the case under consideration, the agreement has such an objective — to frustrate the security of
tenure of private respondent- and fittingly, must be nullified. In this case, petitioners' intent to evade
the application of Article 280 of the Labor Code is unmistakable. In a span of 12 years, private
respondent worked for petitioner company first as a Chief Mate, then Boat Captain, and later as Radio
Operator. His job was directly related to the deep-sea fishing business of petitioner Poseidon. His work
was, therefore, necessary and important to the business of his employer. Such being the scenario
involved, private respondent is considered a regular employee of petitioner under Article 280 of the
Labor Code, the law in point, which provides:
Art. 280. Regular and Casual Employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
 which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph:

Provided, That any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.

Ostensibly, in the case at bar, at different times, private respondent occupied the position of Chief
Mate, Boat Captain, and Radio Operator. In petitioners' interpretation, however, this act of hiring and
re-hiring actually highlight private respondent's contractual status saying that for every engagement, a
fresh contract was entered into by the parties at the outset as the conditions of employment changed
when the private respondent filled in a different position. But to this Court, the act of hiring and re-
hiring in various capacities is a mere gambit employed by petitioner to thwart the tenurial protection
of private respondent. Such pattern of re-hiring and the recurring need for his services are testament
to the necessity and indispensability of such services to petitioners' business or trade.

Petitioners next assert that deep-sea fishing is a seasonal industry because catching of fish could only
be undertaken for a limited duration or seasonal within a given year. Thus, according to petitioners,
private respondent was a seasonal or project employee.

As correctly pointed out by the Court of Appeals, the "activity of catching fish is a continuous process
and could hardly be considered as seasonal in nature." In Philex Mining Corp. v. National Labor
Relations Commission, 34 we defined project employees as those workers hired (1) for a specific
project or undertaking, and (2) the completion or termination of such project has been determined at
the time of the engagement of the employee. The principal test for determining whether particular
employees are "project employees" as distinguished from "regular employees," is whether or not the
"project employees" were assigned to carry out a "specific project or undertaking," the duration and
scope of which were specified at the time the employees were engaged for that project. In this case,
petitioners have not shown that private respondent was informed that he will be assigned to a
"specific project or undertaking." As earlier noted, neither has it been established that he was
informed of the duration and scope of such project or undertaking at the time of their engagement.
More to the point, in Maraguinot, Jr. v. National Labor Relations Commission, 35 we ruled that once a
project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by
the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the employer, then the employee must be deemed a
regular employee.

CEBU METAL CORPORATION VS. SALILING, ET AL.

G.R. No. 154463, September 5, 2006

Facts:
Respondent (Cebu Metal Corporation) is a corporation engage (sic) in buying and selling of scrap iron .
. . . In the Bacolod Branch, it has three regular (3) employees holding such positions as Officer-in-
Charge, a scaler and a yardman, . . . whose salaries are paid directly by its main office in Cebu while
others are undertaking pakiao work in the unloading of scrap iron for stockpiling.

Among those workers who presented for work in the unloading of scrap iron in the area are the
unemployed persons or trisicad drivers standing by in the vicinity some of whom are the herein
complainants . . . Gregorio Robert Saliling, Elias Bolido, Manuel Alquiza, Benjie Amparado and non-
complainants Arnel Allera, Eliseo Torralba or any other persons who wanted to augment their income
aside from their regular jobs. Robert Gregorio Saliling started working in 1996, Elias Bolido on (sic)
October 1995 while Manuel Alquiza and Benjie Amparado, on (sic) February 1996.

The Bacolod buying station is mainly a stockyard where scrap metal delivered by its suppliers are
stockpiled.

The supply of scrap metal is not steady as it depends upon many factors, such as availability of
supplies, price, competition and demand among others. The arrivals of these trucks and the deliveries
of scrap metal are not regular and the schedules of deliveries . . . to the stockyard . . . are not known
before hand by the respondent (petitioner company).

Usually, there is a leader for a particular group who is tasked to unload the scrap metal from a
particular truck. It is this leader who distributes the individual take of each member of the particular
group unloading the scrap metal from a particular truck.

In contrast, respondent complainants, Gregorio Saliling, Elias Bolido, Manuel Alquiza and Benjie
Amparado, in their position paper 8 submitted to the Labor Arbiter, narrate:
1) That complainants Gregorio Saliling was employed by defendant Corporation . . . in 1988,
complainant Elias Bolido was hired in 1992 and complainant Benjie Amparado was hired by
respondent in 1994; . . . .
2) The aforesaid complainants, from the time they were employed by respondent, they received
their salary
3) Complainants were required to work from 8:00 A.M. to 12:00 noon and from 1:00 P.M. to 5:00
P.M. or for eight hours a day; seven days a week and thirty days a month;
4) When these complainants demanded from respondent for the increase of their salary,
respondent through Marlon got irritated and instructed complainants to stop working, thus,
complainants, effective December 1996 were precluded from entering respondent loading and
unloading compound . . . .

On 10 January 1997, respondent complainants filed a Complaint 9 before the Regional Arbitration.

SC Ruling:
The above findings validate respondent's position as to the nature of complainants' work. Their
services are needed only when scrap metals are delivered which occurs only one or twice a week or
sometimes no delivery at all in a given week. The irregular nature of work, stoppage of work and then
work again depending on the supply of scrap metal has not been denied by complainants. On the
contrary they even admitted the same in their Reply to respondent's Appeal. . . . . Indeed, it would be
unjust to require respondent to maintain complainants in the payroll even if there is no more work to
be done. To do so would make complainants privileged retainers who collect payment from their
employer for work not done. This is extremely unfair and amount to cuddling of labor at the expense
of management.

It should be remembered that The Philippine Constitution, while inexorably committed towards the
protection of the working class from exploitation and unfair treatment, nevertheless mandates the
policy of social justice so as to strike a balance between an avowed predilection for labor, on the one
hand, and the maintenance of the legal rights of capital, the proverbial hen that lays the golden egg,
on the other. Indeed, we should not be unmindful of the legal norm that justice is in every case for the
deserving, to be dispensed with in the light of established facts, the applicable law, and existing
jurisprudence.

Under the circumstances abovestated:

. . . there can be no illegal dismissal to speak of. Besides, complainants cannot claim regularity
in the hiring every time a truck comes loaded with scrap metal. This is confirmed in the Petty
cash Vouchers which are in the names of different leaders who apportion the amount earned
among his members.

And, quite telling is the fact that not every truck delivery of scrap metal requires the services of
respondent complainants when a particular truck is accompanied by its own "unloader." And
whenever required, respondent complainants were not always the ones contracted to undertake the
unloading of the trucks since the work was offered to whomever were available at a time.

LIGANZA V. RBL SHIPYARD CORP.

G.R. No. 159682, October 17, 2006

Facts:
After working as a carpenter for respondent since August 1991, petitioner's employment was
terminated on 30 October 1999. Such event prompted petitioner to file a complaint for illegal
dismissal, alleging that on said date he was verbally informed that he was already terminated from
employment and barred from entering the premises. On the same occasion, he was told to look for
another job. Thus, he claimed that he was unceremoniously terminated from employment without
any valid or authorized cause. On the other hand, respondent insisted that petitioner was a mere
project employee who was terminated upon completion of the project for which he was hired.

Issue:
Whether or not the Court of Appeals seriously erred in concluding that "petitioner is a project
employee, not a regular employee?

Ruling:
Petitioner is a regular employee.

A project employee is one whose "employment has been fixed for a specific project or undertaking,
the completion or termination of which has been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in nature and the employment is
for the duration of the season." Before an employee hired on a per project basis can be dismissed, a
report must be made to the nearest employment office of the termination of the services of the
workers every time it completed a project, pursuant to Policy Instruction No. 20.

While the appropriate evidence to show that a person is a project employee is the employment
contract specifying the project and the duration of such project, the existence of such contract is not
always conclusive of the nature of one's employment. In the instant case, respondent seeks to prove
the status of petitioner's employment through four (4) employment contracts covering a period of
only two (2) years to declare petitioner as a project employee.

Respondent failed to present the contracts purportedly covering petitioner's employment from 1991
to July 1997, spanning six (6) years of the total eight (8) years of his employment. To explain its failure
in this regard, respondent claims that the records and contracts covering said period were destroyed
by rains and flashfloods that hit the company's office. Such contention is clearly unconvincing.

Even assuming that petitioner is a project employee, respondent failed to prove that his termination
was for a just and valid cause. While it is true that the employment contract states that the contract
ends upon a specific date, or upon completion of the project, respondent failed to prove that the last
project was indeed completed so as to justify petitioner's termination from employment.

In termination cases, the burden of proof rests on the employer to show that the dismissal is for a just
cause. Respondent could have easily proved that the project or phase for which petitioner was hired
has already been completed. A certificate from the owner of the vessel serviced by the company,
pictures perhaps, of the work accomplished, and other proof of completion could have been procured
by respondent. However, all that we have is respondent's self-serving assertion that the project has
been completed.

This Court has held that an employment ceases to be co-terminous with specific projects when the
employee is continuously rehired due to the demands of employer's business and re-engaged for
many more projects without interruption. In Maraguinot, Jr. v. NLRC (Second Division), the Court
ruled that "once a project or work pool employee has been: (1) continuously, as opposed to
intermittently, rehired by the same employer for the same tasks or nature of tasks; and (2) these tasks
are vital, necessary and indispensable to the usual business or trade of the employer, then the
employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and
jurisprudence."

Petitioner, as carpenter, was tasked to "make and repair cabinet, flooring, quarters, ceiling, windows,
doors, kitchen and other parts of the vessel that needs to be repaired." As such, petitioner's work was
necessary or desirable to respondent's business. Assuming, without granting that petitioner was
initially hired for specific projects or undertakings, the repeated re-hiring and continuing need for his
services for over eight (8) years have undeniably made him a regular employee.

Respondent capitalizes on our ruling in D.M. Consunji, Inc. v. NLRC which reiterates the rule that the
length of service of a project employee is not the controlling test of employment tenure but whether
or not "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."

Surely, length of time is not the controlling test for project employment. Nevertheless, it is vital in
determining if the employee was hired for a specific undertaking or tasked to perform functions vital,
necessary and indispensable to the usual business or trade of the employer.

In the case at bar, respondent had been a project employee several times over. His employment
ceased to be coterminous with specific projects when he was repeatedly re-hired due to the demands
of petitioner's business. Where from the circumstances it is apparent that periods have been imposed
to preclude the acquisition of tenurial security by the employee, they should be struck down as
contrary to public policy, morals, good customs or public order.

All considered, there are serious doubts in the evidence on record that petitioner is a project
employee, or that he was terminated for just cause. These doubts shall be resolved in favor of
petitioner, in line with the policy of the law to afford protection to labor and construe doubts in favor
of labor.

FABEZA V. SAN MIGUEL CORP.

G.R. No. 150658, February 9, 2007

Facts:
Petitioners were hired by respondent San Miguel Corporation (SMC) as "Relief Salesmen" for the
Greater Manila Area (GMA) under separate but almost similarly worded "Contracts of Employment
With Fixed Period." After having entered into successive contracts of the same nature with SMC, the
services of petitioners, as well as de Lara and Alovera, were terminated after SMC no longer agreed to
forge another contract with them.

SMC and its co-respondent Arman Hicarte, who was its Human Resources Manager, claimed that the
hiring of petitioners was not intended to be permanent, as the same was merely occasioned by the
need to fill in a vacuum arising from SMC’s gradual transition to a new system of selling and delivering
its products.

While some of the qualified regular salesmen were readily upgraded to the position of Accounts
Specialist, respondents claimed that SMC still had to sell its beer products using the conventional
routing system during the transition stage, thus giving rise to the need for temporary employees; and
the members of the regular Route Crew then existing were required to undergo a training program to
determine whether they possessed or could be trained for the necessary attitude and aptitude
required of an Accounts Specialist, hence, the hiring of petitioners and others for a fixed period, co-
terminus with the completion of the transition period and Training Program for all prospective
Accounts Specialists

The petitioners alleged that they were illegally dismissed by SMC.

The Labor Arbiter held petitioners were illegally dismissed. The Decision of the Labor Arbiter was
affirmed on appeal by the NLRC. Court of Appeals reversed the decision of the Labor Arbiter and of
the NLRC

Issue:
WON the termination of the petitioners is valid.

Held:
Article 280 of the Labor Code defines regular employment as follows:
ART. 280. Regular and casual employment. – The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.

In Pure Foods Corp. v. NLRC, Supreme Court held that under the above-quoted provision, there are
two kinds of regular employees, namely: (1) those who are engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer, and (2) those casual employees
who have rendered at least one year of service, whether continuous or broken, with respect to the
activity in which they are employed.

In Brent School, Inc. v. Zamora, the Supreme Court laid out that Article 280 of the Labor Code appears
to prevent circumvention of the employee’s right to be secure in his tenure, the clause in said
article indiscriminately and completely ruling out all written or oral agreements conflicting with the
concept of regular employment as defined therein should be construed to refer to the substantive evil
that the Code itself has singled out: agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period of employment was agreed
upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with each other on more or less
equal terms with no moral dominance whatever being exercised by the former over the latter.

Since respondents attribute the termination of petitioners’ employment to the expiration of their
respective contracts, a determination of whether petitioners were hired as project or seasonal
employees, or as fixed-term employees without any force, duress or improper pressure having been
exerted against them is in order. If petitioners fall under any of these categories, then indeed their
termination follows from the expiration of their contracts.

The NLRC had sufficient basis to believe that the shift of SMC to the Pre-Selling System was not the
real basis for the forging of fixed-term contracts of employment with petitioners and that the periods
were fixed only as a means to preclude petitioners from acquiring security of tenure.
That petitioners themselves insisted on the one-year fixed-term is not even alleged by respondents. In
fact, the sustained desire of each of the petitioners to enter into another employment contract upon
the termination of the earlier ones clearly indicates their interest in continuing to work for SMC.
Moreover, respondents have not established that the engagement of petitioners’ services, which is
not in the nature of a project employment, required a definite date of termination as a sine qua non.

SORIANO VS. NLRC

G.R. NO. 165594, APRIL 23, 2007, citing 2005 Filipina Pre-Fabricated Bldg. System (FILISYSTEM)

Facts:
Petitioner and certain individuals namely Sergio Benjamin (Benjamin), Maximino Gonzales (Gonzales),
and Noel Apostol (Apostol) were employed by the respondent as Switchman Helpers in its Tondo
Exchange Office (TEO). After participating in several trainings and seminars, petitioner, Benjamin, and
Gonzales were promoted as Switchmen. Apostol, on the other hand, was elevated to the position of
Frameman. One of their duties as Switchmen and Frameman was the manual operation and
maintenance of the Electronic Mechanical Device (EMD) of the TEO. In November 1995, respondent
PLDT implemented a company-wide redundancy program. Subsequently, the respondent PLDT gave
separate letters dated 15 July 1996 to petitioner, Benjamin, Gonzales, and Apostol informing them
that their respective positions were deemed redundant due to the above-cited reasons and that their
services will be terminated on 16 August 1996.10 They requested the respondent PLDT for transfer to
some vacant positions but their requests were denied since all positions were already filled up. Hence,
on 16 August 1996, respondent PLDT dismissed the four from employment.

Ruling:
The Labor Arbiter, the NLRC, and the Court of Appeals all found that substantial evidence supports the
absence of illegal dismissal in the present case. Article 283 of the Labor Code provides that an
employer may dismiss from work an employee by reason of redundancy. The same provision also
states the procedural requirements for the validity of the dismissal. It is clear that the foregoing
documentary evidence constituted substantial evidence to support the findings of Labor Arbiter
Lustria and the NLRC that petitioner’s employment was terminated by respondent PLDT due to a valid
or legal redundancy program since substantial evidence merely refers to that amount of evidence
which a reasonable mind might accept as adequate to support a conclusion. The records show that
respondent PLDT had sufficiently established the existence of redundancy in the position of
Switchman. It is evident from the foregoing facts that respondent PLDT’s utilization of high technology
equipment in its operation such as computers and digital switches necessarily resulted in the
reduction of the demand for the services of a Switchman since computers and digital switches can
aptly perform the function of several Switchmen. Indubitably, the position of Switchman has become
redundant. As to whether Lazam was competent to testify on the effects of respondent PLDT’s
adoption of new technology vis-à-vis the petitioner’s position of Switchman, the records show that
Lazam was highly qualified to do so. He is a licensed electrical engineer and has been employed by the
respondent PLDT since 1971. He was a Senior Manager for Switching Division in several offices of the
respondent PLDT, and had attended multiple training programs on Electronic Switching Systems in
progressive countries. He was also a training instructor of Switchmen in the respondent’s office. The
fact that respondent PLDT hired contractual employees after implementing its redundancy program
does not necessarily negate the existence of redundancy. As amply stated by the respondent PLDT,
such hiring was intended solely for winding up operations using the old system. Since the respondent
PLDT determined that petitioner’s services are no longer necessary either as a Switchman or in any
other position, and such determination was made in good faith and in furtherance of its business
interest, the petitioner’s contention that he should be the last switchman to be laid-off by reason of
his qualifications and outstanding work must fail.

CASERES VS. UNIVERSAL ROBINA SUGAR MILLING CORP., ET AL.,

G.R. NO. 159343, September 28, 2007

Facts:
Universal Robina Sugar Milling Corporation (respondent) is a corporation engaged in the cane sugar
milling business. Pedy Caseres (petitioner Caseres) started working for respondent in 1989, while
Andito Pael (petitioner Pael) in 1993. At the start of their respective employments, they were made to
sign a Contract of Employment for Specific Project or Undertaking. Petitioners' contracts were
renewed from time to time; until May 1999 when they were informed that their contracts will not be
renewed anymore. Petitioners filed a complaint for illegal dismissal, regularization, incentive leave pay,
13th month pay, damages and attorney’s fees.

Issue:
Whether or not the petitioners are seasonal/project/term employees and not regular employees of
respondents

Ruling:
Article 280 of the Labor Code provides:
ART. 280. Regular and Casual Employees. – The provision of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the employment is for the duration
of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph:

Provided, That, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.

The foregoing provision provides for three 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 or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season”; and (c) casual
employees or those who are neither regular nor project employees. The principal test for determining
whether an employee is a project employee or a regular employee is whether 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. A project employee is one whose
employment has been fixed for a specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of the season. A
true project employee should be assigned to a project which begins and ends at determined or
determinable times, and be informed thereof at the time of hiring. Petitioners contend that
respondent's repeated hiring of their services qualifies them to the status of regular employees.

On this score, the LA ruled:

This is further buttressed by the fact that the relationship between complainants and the respondent
URSUMCO, would clearly reveal that the very nature of the terms and conditions of their hiring would
show that complainants were required to perform phases of special projects which are not related to
the main operation of the respondent for a definite period, after which their services are available to
any farm owner.

The NLRC, agreeing with the LA, further ruled that:

In the case at bar, We note that complainants never bothered to deny that they voluntarily, knowingly
and willfully executed the contracts of employment. Neither was there any showing that respondents
exercised moral dominance on the complainants, x x x it is clear that the contracts of employment are
valid and binding on the complainants.

The execution of these contracts in the case at bar is necessitated by the peculiar nature of the work
in the sugar industry which has an off milling season. The very nature of the terms and conditions of
complainants' hiring reveals that they were required to perform phases of special projects for a
definite period after, their services are available to other farm owners. This is so because the planting
of sugar does not entail a whole year operation, and utility works are comparatively small during the
off-milling season.

Finally, the CA noted:

Petitioner Pedy Caseres first applied with private respondent URSUMCO on January 9, 1989 as a
worker assisting the crane operator at the transloading station. Upon application, Caseres was
interviewed and made to understand that his employment would be co-terminus with the phase of
work to which he would be then assigned, that is until February 5, 1989 and thereafter he would be
free to seek employment elsewhere. Caseres agreed and signed the contract of employment for
specific project or undertaking. After an absence of more than five (5) months, Caseres re-applied
with respondent as a seasonal project worker assisting in the general underchassis reconditioning to
transport units on July 17, 1989. Like his first assignment, Caseres was made to understand that his
services would be co-terminus with the work to which he would be then assigned that is from July 17,
1989 to July 20, 1989 and that thereafter he is free to seek employment elsewhere to which Caseres
agreed and readily signed the contract of employment for specific project or undertaking issued to
him. Thereafter Caseres voluntarily signed several other employment contracts for various
undertakings with a determinable period. As in the first contract, Caseres' services were co-terminus
with the work to which he was assigned, and that thereafter, he was free to seek employment with
other sugar millers or elsewhere. The nature and terms and conditions of employment of petitioner
Andito Pael were the same as that of his co-petitioner Caseres. It must be noted that there were
intervals in petitioners' respective employment contracts, and that their work depended on the
availability of such contracts or projects. Consequently, the employment of URSUMCO's work force
was not permanent but co-terminous with the projects to which the employees were assigned and
from whose payrolls they were paid (Palomares vs. NLRC, 277 SCRA 439).

Petitioners' repeated and successive re-employment on the basis of a contract of employment for
more than one year cannot and does not make them regular employees. Length of service is not the
controlling determinant of the employment tenure of a project employee (Rada vs. NLRC, 205 SCRA
69). It should be stressed that contracts for project employment are valid under the law. In Villa v.
National Labor Relations Commission,[16] the Court stated that: by entering into such 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.

The fact that petitioners were constantly re-hired does not ipso facto establish that they became
regular employees. Their respective contracts with respondent show that there were intervals in their
employment. In petitioner Caseres's case, while his employment lasted from August 1989 to May
1999, the duration of his employment ranged from one day to several months at a time, and such
successive employments were not continuous. With regard to petitioner Pael, his employment never
lasted for more than a month at a time. These support the conclusion that they were indeed project
employees, and since their work depended on the availability of such contracts or projects, necessarily
the employment of respondent’s work force was not permanent but co-terminous with the projects to
which they were assigned and from whose payrolls they were paid. As ruled in Palomares v. National
Labor Relations Commission, it would be extremely burdensome for their employer to retain them as
permanent employees and pay them wages even if there were no projects to work on.

Moreover, even if petitioners were repeatedly and successively re-hired, still it did not qualify them as
regular employees, as length of service is not the controlling determinant of the employment tenure
of a project employee, but whether the employment has been fixed for a specific project or
undertaking, its completion has been determined at the time of the engagement of the employee.
Further, the proviso in Article 280, stating that an employee who has rendered service for at least one
(1) year shall be considered a regular employee, pertains to casual employees and not to project
employees. Accordingly, petitioners cannot complain of illegal dismissal inasmuch as the completion
of the contract or phase thereof for which they have been engaged automatically terminates their
employment.

PIER 8 ARRASTRE & STEVEDORING SERVICES, INC. VS. BOCLOT

G.R. No. 173849. September 28, 2007

Facts:
Petitioner Pier 8 Arrastre and Stevedoring Services, Inc. (PASSI) is a domestic corporation engaged in
the business of providing arrastre and stevedoring services 5 at Pier 8 in the Manila North Harbor.
PASSI has been rendering arrastre and stevedoring services at the port area since 1974 and employs
stevedores who assist in the loading and unloading of cargoes to and from the vessels. Petitioner
Eliodoro C. Cruz is its Vice-President and General Manager. Respondent Jeff B. Boclot was hired by
PASSI to perform the functions of a stevedore starting 20 September 1999.
On 15 April 2000, the Philippine Ports Authority (PPA) seized the facilities and took over the
operations of PASSI through its Special Takeover Unit, absorbing PASSI workers as well as their
relievers. By virtue of a Decision dated 9 January 2001 of the Court of Appeals, petitioners were able
to regain control of their arrastre and stevedoring operations at Pier 8 on 12 March 2001.

On 9 May 2003, respondent filed a Complaint with the Labor Arbiter of the NLRC, claiming
regularization; payment of service incentive leave and 13th month pays; moral, exemplary and actual
damages; and attorney's fees. Respondent alleged that he was hired by PASSI in October 1999 and
was issued company ID No. 304, 8 a PPA Pass and SSS documents. In fact, respondent contended that
he became a regular employee by April 2000, since it was his sixth continuous month in service in
PASSI's regular course of business. He argued on the basis of Articles 280 9 and 281 10 of the Labor
Code. He maintains that under paragraph 2 of Article 280, he should be deemed a regular employee
having rendered at least one year of service with the company.

In opposition thereto, petitioners alleged that respondent was hired as a mere "reliever" stevedore
and could thus not become a regular employee.

Ruling:
Evidently, the only issue subject to the resolution of this Court is whether or not respondent has
attained regular status as PASSI's employee.

Petitioners aver that the employment of the stevedores is governed by a system of rotation. Based on
this system of rotation, the work available to reliever stevedores is dependent on the actual
stevedoring and arrastre requirements at a current given time.

After a deliberate study of Labor Law provisions and jurisprudence, and in light of the particular
circumstances of this case, this Court has arrived at the same conclusion as those of the NLRC and the
Court of Appeals that respondent is a regular employee, but on a different basis.

Under the 1987 Philippine Constitution, the State affords full protection to labor, local and overseas,
organized and unorganized; and the promotion of full employment and equality of employment
opportunities for all. The State affirms labor as a primary social economic force and guarantees that it
shall protect the rights of workers and promote their welfare.
The Labor Code, which implements the foregoing Constitutional mandate, draws a fine line between
regular and casual employees to protect the interests of labor. 19 "Its language evidently manifests
the intent to safeguard the tenurial interest of the worker who may be denied the rights and benefits
due a regular employee by virtue of lopsided agreements with the economically powerful employer
who can maneuver to keep an employee on a casual status for as long as convenient." 20 Thus, the
standards for determining whether an employee is a regular employee or a casual or project
employee have been delineated in Article 280 of the Labor Code, to wit:
Article 280. Regular and Casual Employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exist.

Under the foregoing provision, a regular employee is (1) one who is either engaged to perform
activities that are necessary or desirable in the usual trade or business of the employer except for
project 21 or seasonal employees; or (2) a casual employee who has rendered at least one year of
service, whether continuous or broken, with respect to the activity in which he is employed. 22
Additionally, Article 281 of the Labor Code further considers a regular employee as one who is allowed
to work after a probationary period. Based on the aforementioned, although performing activities
that are necessary or desirable in the usual trade or business of the employer, an employee such as a
project or seasonal employee is not necessarily a regular employee. The situation of respondent is
similar to that of a project or seasonal employee, albeit on a daily basis.

Under the second paragraph of the same provision, all other employees who do not fall under the
definition of the preceding paragraph are casual employees. However, the second paragraph also
provides that it deems as regular employees those casual employees who have rendered at least one
year of service regardless of the fact that such service may be continuous or broken.

The primary standard, therefore, of determining a regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or trade
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 the 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 one year, even if the performance is not continuous
or merely intermittent, the law deems the 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 also considered regular, but only with respect to such activity and while such activity
exists. (Emphasis supplied.)

PASSI is engaged in providing stevedoring and arrastre services in the port area in Manila. Stevedoring,
dock and arrastre operations include, but are not limited to, the opening and closing of a vessel's
hatches; discharging of cargoes from ship to truck or dock, lighters and barges, and vice-versa;
movement of cargoes inside vessels, warehouses, terminals and docks; and other related work. In line
with this, petitioners hire stevedores who assist in the loading and unloading of cargoes to and from
the vessels.

Based on the circumstances of the instant case, this Court agrees. It takes judicial notice that it is an
industry practice in port services to hire "reliever" stevedores in order to ensure smooth-flowing 24-
hour stevedoring and arrastre operations in the port area. No doubt, serving as a stevedore,
respondent performs tasks necessary or desirable to the usual business of petitioners. However, it
should be deemed part of the nature of his work that he can only work as a stevedore in the absence
of the employee regularly employed for the very same function. Bearing in mind that respondent
performed services from September 1999 until June 2003 for a period of only 228.5 days in 36
months, or roughly an average of 6.34 days a month; while a regular stevedore working for
petitioners, on the other hand, renders service for an average of 16 days a month, demonstrates that
respondent's employment is subject to the availability of work, depending on the absences of the
regular stevedores. Moreover, respondent does not contest that he was well aware that he would only
be given work when there are absent or unavailable employees. Respondent also does not allege, nor
is there any showing, that he was disallowed or prevented from offering his services to other cargo
handlers in the other piers at the North Harbor other than petitioners. As aforestated, the situation of
respondent is akin to that of a seasonal or project or term employee, albeit on a daily basis.

The second paragraph thereof stipulates in unequivocal terms that all other employees who do not
fall under the definitions in the first paragraph of regular, project and seasonal employees, are
deemed casual employees. Not qualifying under any of the kinds of employees covered by the first
paragraph of Article 280 of the Labor Code, then respondent is a casual employee under the second
paragraph of the same provision.

The same provision, however, provides that a casual employee can be considered as regular employee
if said casual employee has rendered at least one year of service regardless of the fact that such
service may be continuous or broken. Section 3, Rule V, Book II of the Implementing Rules and
Regulations of the Labor Code clearly defines the term "at least one year of service" to mean service
within 12 months, whether continuous or broken, reckoned from the date the employee started
working, including authorized absences and paid regular holidays, unless the working days in the
establishment as a matter of practice or policy, or that provided in the employment contract, is less
than 12 months, in which case said period shall be considered one year. If the employee has been
performing the job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance as sufficient
evidence of the necessity, if not indispensability, of that activity to the business of the employer.
Applying the foregoing, respondent, who has performed actual stevedoring services for petitioners
only for an accumulated period of 228.5 days does not fall under the classification of a casual turned
regular employee after rendering at least one year of service, whether continuous or intermittent.
Where from the circumstances it is apparent that periods have been imposed to preclude acquisition
of tenurial security by an employee, such imposition should be struck down or disregarded as contrary
to public policy and morals. 30 However, we take this occasion to emphasize that the law, while
protecting the rights of the employees, authorizes neither the oppression nor the destruction of the
employer. When the law tilts the scale of justice in favor of labor, the scale should never be so tilted if
the result would be an injustice to the employer. 31 Thus, this Court cannot be compelled to declare
respondent as a regular employee when by the nature of respondent's work as a reliever stevedore
and his accumulated length of service of only eight months do not qualify him to be declared as such
under the provisions of the Labor Code alone.

PACQUING VS. COCA COLA BOTTLERS PHILIPPINES INC.

G.R. No. 157966. January 31. 2008

Facts:
Eddie Pacquing, Roderick Centeno, Juanito M. Guerra, Claro Dupilad, Jr., Louie Centeno, David Reblora,
Raymundo Andrade (petitioners) were sales route helpers or cargadores-pahinantes of Coca-Cola
Bottlers Philippines, Inc.,

Petitioners were part of a complement of three personnel comprised of a driver, a salesman and a
regular route helper, for every delivery truck. They worked exclusively at respondent's plants, sales
offices, and company premises.

On October 22, 1996, petitioners 3 filed a Complaint against respondent for unfair labor practice and
illegal dismissal with claims for regularization, recovery of benefits under the Collective Bargaining
Agreement (CBA), moral and exemplary damages, and attorney's fees.

In their Position Paper, petitioners alleged that they should be declared regular employees of
respondent since the nature of their work as cargadores-pahinantes was necessary or desirable to
respondent's usual business and was directly related to respondent's business and trade.

In its Position Paper, 6 respondent denied liability to petitioners and countered that petitioners were
temporary workers who were engaged for a five-month period to act as substitutes for an absent
regular employee.

Issue: whether petitioners are regular employees of the respondent.

Ruling:
The pivotal question of whether respondent's sales route helpers or cargadores or pahinantes are
regular workers of respondent has already been resolved in Magsalin v. National Organization of
Working Men, thus:
The basic law on the case is Article 280 of the Labor Code. Its pertinent provisions read:
Art. 280. Regular and Casual Employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
 which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph:

Provided, That, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists.
Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinks in the
country. Respondent workers have long been in the service of petitioner company. Respondent
workers, when hired, would go with route salesmen on board delivery trucks and undertake the
laborious task of loading and unloading softdrink products of petitioner company to its various
delivery points.

Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e.,
to ensure a "regular" worker's security of tenure, however, can hardly be doubted. In determining
whether an employment should be considered regular or non-regular, the applicable test is the
reasonable connection between the particular activity performed by the employee in relation to the
usual business or trade of the employer. The standard, supplied by the law itself, is whether the work
undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be
assessed by looking into the nature of the services rendered and its relation to the general scheme
under which the business or trade is pursued in the usual course. It is distinguished from a specific
undertaking that is divorced from the normal activities required in carrying on the particular business
or trade.

But, although the work to be performed is only for a specific project or seasonal, where a person thus
engaged has been performing the job for at least one year, even if the performance is not continuous
or is merely intermittent, the law deems the repeated and continuing need for its performance as
being sufficient to indicate the necessity or desirability of that activity to the business or trade of the
employer. The employment of such person is also then deemed to be regular with respect to such
activity and while such activity exists.

The argument of petitioner that its usual business or trade is softdrink manufacturing and that the
work assigned to respondent workers as sales route helpers so involves merely "post production
activities," one which is not indispensable in the manufacture of its products, scarcely can be
persuasive.

The repeated rehiring of respondent workers and the continuing need for their services clearly attest
to the necessity or desirability of their services in the regular conduct of the business or trade of
petitioner company.

Being regular employees of respondent, petitioners are entitled to security of tenure, as provided in
Article 279 of the Labor Code, and may only be terminated from employment due to just or
authorized causes. Because respondent failed to show such cause, 49 the petitioners are deemed
illegally dismissed and therefore entitled to back wages and reinstatement without loss of seniority
rights and other privileges.

AGUSAN DEL NORTE ELECTRIC COOPERATIVE V JOEL CAGAMPANG

G.R. No. 167627 October 10, 2008

Facts:
Cagampang and Garzon were hired as linemen for ANECO under an employment contract for a period
not exceeding three months. However, their contracts were renewed several times. When such
contracts were not renewed, they filed an illegal dismissal case against ANECO.

The Labor Arbiter declared the dismissal illegal. The NLRC reversed the LA. The Court of Appeals set
aside the NLRC. Hence, the present petition where the petitioners allege that they are regular
employees and not contractual workers.

Issue: Whether there was illegal dismissal

Ruling:
Respondents were illegally dismissed. Respondents' work as linemen was necessary or desirable in the
usual business of ANECO. Additionally, the respondents have been performing the job for at least one
year. The law deems the repeated and continuing need for its performance as sufficient evidence of
the necessity, if not indispensability, of that activity to the business.

Respondents in the present case being regular employees, ANECO as the employer had the burden of
proof to show that the respondents' termination was for a just cause. ANECO failed to discharge such
burden.

WILLIAM UY CONSTRUCTION V TRINIDAD

G.R. NO. 183250, March 10, 2010

Facts:
Trinidad was a truck driver for WUC for 16 years. He had signed several employment contracts with
WUC that identified him as a project employee although he had always been assigned to work on 35
projects that lasted 16 years. Later he was terminated after it shut down operations because of lack of
projects and he was not hired back when it opened up for another project.

The Labor Arbiter dismissed the complaint. The NLRC affirmed, while the CA reversed.

Issue: Whether Trinidad was a regular employee

Ruling:
Generally, length of service provides a fair yardstick for determining when an employee initially hired
on a temporary basis becomes a permanent one, entitled to the security and benefits of
regularization. But this standard will not be fair, if applied to the construction industry, simply because
construction firms cannot guarantee work and funding for its payrolls beyond the life of each project.

Trinidad’s series of employments with petitioner company were co-terminous with its projects. When
its project was finished, Trinidad’s employment ended with it. He was not dismissed. His employment
contract simply ended with the project for which he had signed up. His employment history belies the
claim that he continuously worked for the company. Intervals or gaps separated one contract from
another.

Consequently, petitioner company needed only to show the last status of Trinidad’s employment,
namely, that of a project employee under a contract that had ended and the company’s compliance
with the reporting requirement for the termination of that employment. Indeed, both the Labor
Arbiter and the NLRC were satisfied that the fact of petitioner company’s compliance with DOLE Order
19 had been proved in this case.

DACUITAL, ET AL. V L. M. CAMUS ENGINEERING CORP

G.R. No. 176748, September 1, 2010

Facts:
Petitioners were hired by LMCEC as welders, tinsmiths, pipefitters, and mechanical employees. They
were required to surrender their ID cards and ATM cards and were ordered to execute contracts of
employment. Because petitioners felt that it was the respondent’s strategy to get rid of their regular
status, they did not comply with such directive. Subsequently, they were dismissed. Hence, the
complaint for illegal dismissal. Respondent contends that they were project employees.

LA found that they were illegally dismissed. The NLRC affirmed with modification. The CA found that
the termination was valid and legal. Hence, the present petition.

Issue: Whether petitioners were illegally dismissed

Ruling:
The principal test used to determine whether employees are project employees is whether or not the
employees were assigned to carry out a specific project or undertaking, the duration or scope of
which was specified at the time the employees were engaged for that project.

Dacuital’s contract was presented and does not show that he was informed of the nature, as well as
the duration of his employment. While the non-presentation of the contracts of the other petitioners
gives rise to the presumption that the employees were not informed of the nature and duration of
their employment.

It is doctrinally entrenched that in illegal dismissal cases, the employer has the burden of proving with
clear, accurate, consistent, and convincing evidence that the dismissal was valid. Absent any other
proof that the project employees were informed of their status as such, it will be presumed that they
are regular employees.
Further, there was no evidence that LMCEC submitted a termination report, as required by DO No. 19,
to DOLE.

LMCEC failed to discharge the burden of proving that the dismissal was valid and the records show
that petitioners were not afforded due process prior to their dismissal through the twin requirements
of notice and hearing.

MILLENNIUM ERECTORS CORP. V MAGALLANES

G.R. No. 184362, November 15, 2010

Facts:
Magallanes worked as a utility man for Tiu, Chief Executive Officer of Millennium. He was assigned to
different construction projects. Later, he was told not to report to work anymore due to old age.
Hence, an illegal dismissal complaint. Petitioner claimed that respondent was a project employee
whom it hired for a building project.

The Labor Arbiter dismissed the complaint. The NLRC set aside the LA’s decision, which the CA
affirmed.

Issue: Whether the petitioner was illegally dismissed

Ruling:
Magallanes was a regular, not a project employee. A project employee is one whose employment has
been fixed for a specific project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season.

Petitioner’s various payrolls dating as early as 2001 show that respondent had been employed by it.
As aptly observed by the appellate court, these documents, rather than sustaining petitioner’s
argument, only serve to support respondent’s contention that he had been employed in various
projects, if not for 16 years, at the very least two years prior to his dismissal.

Assuming arguendo that petitioner hired respondent initially on a per project basis, his continued
rehiring, as shown by the sample payrolls converted his status to that of a regular employee.

EXODUS INTERNATIONAL CONSTRUCTION CORP VS. BISCOCHO

GR No. 166109, February 23, 2011

Facts:
Petitioner Exodus International Construction Corporation (Exodus) is a duly licensed labor contractor
for the painting of residential houses, condominium units and commercial buildings. Petitioner
Antonio P. Javalera is the President and General Manager of Exodus.

Exodus obtained from Dutch Boy Philippines, Inc. (Dutch Boy) a contract for the painting of the
Imperial Sky Garden. Dutch Boy awarded another contract to Exodus for the painting. In the
furtherance of its business, Exodus hired respondents as painters on different dates.

Guillermo Biscocho (Guillermo) was assigned at the Imperial Sky Garden from February 8, 1999 to
February 8, 2000. Fernando Pereda (Fernando) worked in the same project from February 8, 1999 to
June 17, 2000. Likewise, Ferdinand Mariano (Ferdinand) worked there from April 12, 1999 to February
17, 2000. All of them were then transferred to Pacific Plaza Towers.
Gregorio S. Bellita (Gregorio) was assigned to work at the house of Mr. Teofilo Yap in Ayala Alabang,
Muntinlupa City from May 20, 1999 to December 4, 1999. Afterwards he was transferred to Pacific
Plaza Towers.

Miguel B. Bobillo (Miguel) was hired and assigned at Pacific Plaza Towers on March 10, 2000.
On November 27, 2000, Guillermo, Fernando, Ferdinand, and Miguel filed a complaint for illegal
dismissal and non-payment of holiday pay, service incentive leave pay, 13th month pay and night-shift
differential pay.

On December 1, 2000, Gregorio also filed a complaint. He claimed that he was dismissed from the
service on September 12, 2000 while Guillermo, Fernando, Ferdinand, and Miguel were orally notified
of their dismissal from the service on November 25, 2000.

Petitioners denied respondents’ allegations. As regards Gregorio, petitioners averred that on

September 15, 2000, he absented himself from work and applied as a painter with SAEI-EEI which is
the general building contractor of Pacific Plaza Towers. Since then, he never reported back to work.

Guillermo absented himself from work without leave on November 27, 2000. When he reported for
work the following day, he was reprimanded for being Absent Without Official Leave (AWOL). Because
of the reprimand, he worked only half-day and thereafter was unheard of until the filing of the instant
complaint.

On March 21, 2002, the Labor Arbiter rendered a Decision exonerating petitioners from the charge of
illegal dismissal as respondents chose not to report for work. The Labor Arbiter ruled that since there
is neither illegal dismissal nor abandonment of job, respondents should be reinstated but without any
backwages. She disallowed the claims for premium pay for holidays and rest days and nightshift
differential pay as respondents failed to prove that actual service was rendered on such non-working
days. However, she allowed the claims for holiday pay, service incentive leave pay and 13th month
pay.

Petitioners sought recourse to the NLRC limiting their appeal to the award of service incentive leave
pay, 13th month pay, holiday pay and 10% attorney’s fees in the sum of P70,183.23. NLRC dismissed
the appeal. It ruled that petitioners, who have complete control over the records of the company,
could have easily rebutted the monetary claims against it. As to the award of attorney’s fees, the NLRC
found the same to be proper because respondents were forced to litigate in order to validate their
claim.

The CA also affirmed LA and NLRC decision, hence this petition.

Issue and Rulings:
No illegal dismissal.
The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were burdened to
prove their allegation that respondents dismissed them from their employment. It must be stressed
that the evidence to prove this fact must be clear, positive and convincing. The rule that the employer
bears the burden of proof in illegal dismissal cases finds no application here because the respondents
deny having dismissed the petitioners.

In this case, petitioners were able to show that they never dismissed respondents. As to the case of
Fernando, Miguel and Ferdinand, it was shown that on November 25, 2000, at around 7:30 a.m., the
petitioners’ foreman, Wenifredo Lalap (Wenifredo) caught the three still eating when they were
supposed to be working already. Wenifredo reprimanded them and, apparently, they resented it so
they no longer reported for work. In the case of Gregorio, he absented himself from work on
September 15, 2000 to apply as a painter with SAEI-EEI, the general contractor of Pacific Plaza Towers.
Since then he never reported back to work. Lastly, in the case of Guillermo, he absented himself
without leave on November 27, 2000, and so he was reprimanded when he reported for work the
following day. Because of the reprimand, he did not report for work anymore.

Respondents must be reinstated and paid their holiday pay, service incentive leave pay, and 13th
month pay.
However, petitioners are of the position that the reinstatement of respondents to their former
positions, which were no longer existing, is impossible, highly unfair and unjust. Having completed
their tasks, their positions automatically ceased to exist. Consequently, there were no more positions
where they can be reinstated as painters.

Petitioners are misguided. They forgot that there are two types of employees in the construction
industry. The first is referred to as project employees or those employed in connection with a
particular construction project or phase thereof and such employment is coterminous with each
project or phase of the project to which they are assigned. The second is known as non-project
employees or those employed without reference to any particular construction project or phase of a
project.

The second category is where respondents are classified. As such they are regular employees of
petitioners. It is clear from the records of the case that when one project is completed, respondents
were automatically transferred to the next project awarded to petitioners. There was no employment
agreement given to respondents which clearly spelled out the duration of their employment, the
specific work to be performed and that such is made clear to them at the time of hiring. It is now too
late for petitioners to claim that respondents are project employees whose employment is
coterminous with each project or phase of the project to which they are assigned.

A project employee x x x may acquire the status of a regular employee when the following [factors]
concur:
1. There is a continuous rehiring of project employees even after cessation of a project; and
2. The tasks performed by the alleged “project employee” are vital, necessary and indespensable
to the usual business or trade of the employer.”
In this case, the evidence on record shows that respondents were employed and assigned
continuously to the various projects of petitioners. As painters, they performed activities which were
necessary and desirable in the usual business of petitioners, who are engaged in subcontracting jobs
for painting of residential units, condominium and commercial buildings. As regular employees,
respondents are entitled to be reinstated without loss of seniority rights.

Respondents are also entitled to the payment of attorney’s fees.

Even though respondents were not represented by counsel in most of the stages of the proceedings of
this case, the award of attorney’s fees as ruled by the Labor Arbiter, the NLRC and the CA to the
respondents is still proper. In Rutaquio v. National Labor Relations Commission, this Court held that:
It is settled that in actions for recovery of wages or where an employee was forced to litigate
and, thus, incur expenses to protect his rights and interest, the award of attorney’s fees is
legally and morally justifiable.

In Producers Bank of the Philippines v. Court of Appeals[30] this Court ruled that:
Attorney’s fees may be awarded when a party is compelled to litigate or to incur expenses to
protect his interest by reason of an unjustified act of the other party.

In this case, respondents filed a complaint for illegal dismissal with claim for payment of their holiday
pay, service incentive leave pay, and 13th month pay. The Labor Arbiter, the NLRC and the CA were
one in ruling that petitioners did not pay the respondents their holiday pay, service incentive leave
pay, and 13th month pay as mandated by law. For sure, this unjustified act of petitioners had
compelled the
respondents to institute an action primarily to protect their rights and interests.

As to Backwages
In cases where there is no evidence of dismissal, the remedy is reinstatement but without
backwages. In this case, both the Labor Arbiter and the NLRC made a finding that there was no
dismissal much less an illegal one. “It is settled that factual findings of quasi-judicial agencies are
generally accorded respect and finality so long as these are supported by substantial evidence.” Thus,
inasmuch as no finding of illegal dismissal had been made, and considering that the absence of such
finding is supported by the records of the case, this Court is bound by such conclusion and cannot
allow an award of the payment of backwages.

LEYTE GEOTHERMAL POWER PROGRESSIVE EMPLOYEES UNION - ALU - TUCP VS. PHILIPPINE
NATIONAL OIL COMPANY - ENERGY DEVELOPMENT CORPORATION
G.R. No. 170351, March 30, 2011

Facts:
Philippine National Oil Corporation-Energy Development Corporation [PNOC-EDC] is a government-
owned and controlled corporation engaged in exploration, development, utilization, generation and
distribution of energy resources like geothermal energy 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. The said Project is composed of the Tongonan 1
Geothermal Project and the Leyte Geothermal Production Field Project. 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.

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.
Petitioner conducted a strike against the respondent on the ground of purported commission by the
latter of unfair labor practice. The Secretary of Labor intervened and certified the labor dispute to the
NLRC for compulsory arbitration. Despite earnest efforts on the part of the Secretary of Labor to
settle the dispute amicably, the petitioner remained adamant and unreasonable in its position.

Consequently, the respondent filed a Complaint for Strike Illegality, Declaration of Loss of Employment
and Damages and for Cancellation of Petitioner's Certificate of Registration. The NLRC 4th Division
rendered a decision in favor of respondent. The CA affirmed the decision of the NLRC. Hence this
petition.

Issue: Whether the officers and members of petitioner Union are project employees of respondent.

Ruling:
SC affirmed the decision of the CA.
The distinction between a regular and a project employment is provided in Article 280, paragraph 1,
of the Labor Code. Article 280 contemplates 4 kinds of employees; regular employees, project
employees, seasonal employees and casual employees. This article establishes that the nature of the
employment is determined by law, regardless of any contract expressing otherwise. Project
employment contracts which fix the employment for a specific project or undertaking remain valid
under the law.

In the case at bar, the records reveal that the officers and the members of petitioner Union signed
employment contracts indicating the specific project or phase of work for which they were hired, with
a fixed period of employment. Both the NLRC and the CA were one in the conclusion that the officers
and the members of petitioner Union were project employees. Nonetheless, petitioner Union insists
that they were regular employees since they performed work which was usually necessary or
desirable to the usual business or trade of the Construction Department of respondent.

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 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.

Plainly, 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.

In this case, the officers and the members of petitioner Union were specifically hired as project
employees for respondent's Leyte Geothermal Power Project and consequently, upon the completion
of the project or substantial phase thereof, the officers and the members of petitioner Union could be
validly terminated.

Petitioner Union is adamant, however, that the lack of interval in the employment contracts of its
officer and members negates the latter's status as mere project employees. This contention is
without merit. Petitioner Union's members' employment for more than a year does equate to their
regular employment with respondent. The first paragraph of Article 280 of the Labor Code answers
the question of who are regular employees. It states that, regardless of any written or oral agreement
to the contrary, an employee is deemed regular where he is engaged in necessary or desirable
activities in the usual business or trade of the employer, except for project employees. The second
paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fall under
the definition of the preceding paragraph.

Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to
their case. The contention is without merit. The proviso is applicable only to the employees who are
deemed "casuals" but not to the "project" employees nor the regular employees treated in
paragraph one of Art. 280.

Clearly, therefore, petitioners being project employees, their employment legally ends upon
completion of the project or the [end of the] season. The termination of their employment cannot and
should not constitute an illegal dismissal.

ST. PAUL COLLEGE QUEZON CITY VS. REMIGIO MICHAEL A. ANCHETA II ET AL

G.R. No. 169905 September 7, 2011

Facts:
Petitioner St. Paul College, Quezon City (SPCQC) is a private Catholic educational institution. It is
represented by its President, petitioner Sr. Lilia Therese Tolentino, SPC, the College Dean, Sr.
Bernadette Racadio, SPC, and the Mass Communication Program Director, Sr. Sarah Manapol, SPC. The
respondents, Spouses Remigio Michael A. Ancheta II and Cynthia A. Ancheta are former teachers of
the same school.

Respondent Remigio Michael was hired by the SPCQC as a teacher in the General Education
Department with a probationary rank in the School Year (SY) 1996-1997 which was renewed in the
following SY 1997-1998. His wife, respondent Cynthia was hired by the same school as a part time
teacher of the Mass Communication Department in the second semester of SY 1996-1997 and her
appointment was renewed for SY 1997-1998.

On February 13, 1998, respondent Remigio Michael wrote a letter to petitioner Sr. Lilia, signifying his
intention to renew his contract with SPCQC for SY 1998-1999. A letter of the same tenor was also
written by respondent Cynthia addressed to petitioner Sr. Lilia.

Petitioner Sr. Bernadette, on March 9, 1998, sent two letters with the same contents to the
respondent spouses informing them that upon the recommendation of the College Council, the school
is extending to them new contracts for SY 1998-1999.

A letter dated April 22, 1998 was sent to petitioner Sr. Bernadette and signed by some of the teachers
of SPCQC, including the respondent spouses. The said letter contained the teachers' sentiments
regarding two school policies, namely: first, the policy of penalizing the delay in encoding final grades
and, second, the policy of withholding salaries of the teachers. Meanwhile, a letter dated April 21,
1998 (the date, later on contested by respondent Remigio Michael to be ante-dated) was written by
petitioner Sr. Bernadette to respondent Remigio Michael, reiterating the conversation that took place
between them the day before the date of the said letter (April 20, 1998). The letter enumerated the
departmental and instructional policies that respondent Remigio Michael failed to comply with, such
as the late submission of final grades, failure to submit final test questions to the Program
Coordinator, the giving of tests in the essay form instead of the multiple choice format as mandated by
the school and the high number of students with failing grades in the classes that he handled.

Thereafter, petitioner Sr. Bernadette wrote a letter dated April 30, 1998 to petitioner Sr. Lilia,
endorsing the immediate termination of the teaching services of the respondent spouses on the
following grounds:
1. Non-compliance with the departmental policy to submit their final test questions to their
respective program coordinators for checking/comments (violating par. 7.1, p. 65 of the Faculty
Manual).
2. Non-compliance with the standard format (multiple choice) of final test questions as agreed
upon in the department. Mr. Ancheta prepared purely essay questions for the students.
3. Failure to encode their modular grade reports as required (violating par. H. 8, p. 66 of our
Faculty manual).
4. Failure to submit and update required modules (syllabi) of their subject despite reminders
(violating D, 1.5, p. 40 of our Faculty Manual).
5. Both spouses have a gross number of failure in their class
6. Failure to report to work on time <re: Mr. Ancheta> (violating par. 1, 21, p. 63 of our Faculty
Manual).
7. Both spouses are not open to suggestions to improve themselves as teachers. They just see
their points and their principles.

When I talked to Mr. Ancheta the second time telling him of the data I gathered, including the
information that statistics permits only 1 to 2% failures, he still refused to budge in to review his
grades and his quality of teaching. He stood firm in his conviction and ground that the students were
to blame for their failures, and reiterated his disagreement with several school policies (which he
violated) contained in his letter which he had asked his wife to give to the dean's office. Not content
on writing down his personal disagreement on some policies, he also asked some faculty members to
read his letter and put their signatures on it if they were in favor of one or all of his points.

In other words, said spouses had refused and continue to refuse to evaluate the students'
performance on the bases of an established grading system to ensure just and fair appraisal (violating
par. 1.4, p. 40 of our Faculty Manual).

Respondent spouses were given an opportunity to comment on the above letter-recommendation of

petitioner Sr. Bernadette. On May 4, 1998, respondent spouses sent their respective comments to
petitioner Sr. Lilia. Subsequently, the respondent spouses received their respective letters of
termination on May 14, 1998. Respondent spouses sent a letter for reconsideration to petitioner Sr.
Lilia, but was eventually denied.

Thus, respondent spouses filed a Complaint for illegal dismissal with the NLRC

Issue: WON the respondent spouses were illegally dismissed.

Held:
Before this Court delves into the merits of the petition, it deems it necessary to discuss the nature of
the employment of the respondents. It is not disputed that respondent Remigio Michael was a full-
time probationary employee and his wife, a part-time teacher of the petitioner school.

A reality we have to face in the consideration of employment on probationary status of teaching

personnel is that they are not governed purely by the Labor Code. The Labor Code is supplemented
with respect to the period of probation by special rules found in the Manual of Regulations for Private
Schools. On the matter of probationary period, Section 92 of these regulations provides:

Section 92. Probationary Period. - Subject in all instances to compliance with the Department and
school requirements, the probationary period for academic personnel shall not be more than three (3)
consecutive years of satisfactory service for those in the elementary and secondary levels, six (6)
consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9)
consecutive trimesters of satisfactory service for those in the tertiary level where collegiate courses
are offered on a trimester basis.

A probationary employee or probationer is one who is on trial for an employer, during which the latter
determines whether or not he is qualified for permanent employment. The probationary employment
is intended to afford the employer an opportunity to observe the fitness of a probationary employee
while at work, and to ascertain whether he will become an efficient and productive employee. While
the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is
qualified for permanent employment, the probationer, on the other hand, seeks to prove to the
employer that he has the qualifications to meet the reasonable standards for permanent employment.
Thus, the word probationary, as used to describe the period of employment, implies the purpose of
the term or period, not its length.

The common practice is for the employer and the teacher to enter into a contract, effective for one
school year. At the end of the school year, the employer has the option not to renew the contract,
particularly considering the teacher's performance. If the contract is not renewed, the employment
relationship terminates. If the contract is renewed, usually for another school year, the probationary
employment continues. Again, at the end of that period, the parties may opt to renew or not to renew
the contract. If renewed, this second renewal of the contract for another school year would then be
the last year – since it would be the third school year – of probationary employment. At the end of
this third year, the employer may now decide whether to extend a permanent appointment to the
employee, primarily on the basis of the employee having met the reasonable standards of
competence and efficiency set by the employer. For the entire duration of this three-year period, the
teacher remains under probation. Upon the expiration of his contract of employment, being simply on
probation, he cannot automatically claim security of tenure and compel the employer to renew his
employment contract.

Petitioner school contends that it did not extend the contracts of respondent spouses. It claims that,
although, it has sent letters to the spouses informing them that the school is extending to them new
contracts for the coming school year, the letters do not constitute as actual employment contracts but
merely offers to teach on the said school year.
Section 91 of the Manual of Regulations for Private Schools, states that:
Section 91. Employment Contract. Every contract of employment shall specify the designation,
qualification, salary rate, the period and nature of service and its date of effectivity, and such
other terms and condition of employment as may be consistent with laws and rules,
regulations and standards of the school. A copy of the contract shall be furnished the
personnel concerned.

It is important that the contract of probationary employment specify the period or term of its
effectivity. The failure to stipulate its precise duration could lead to the inference that the contract is
binding for the full three-year probationary period. Therefore, the letters sent by petitioner Sr.
Racadio, which were void of any specifics cannot be considered as contracts. The closest they can
resemble to are that of informal correspondence among the said individuals. As such, petitioner
school has the right not to renew the contracts of the respondents, the old ones having been expired
at the end of their terms.

Assuming, arguendo, that the employment contracts between the petitioner school and the
respondent spouses were renewed, this Court finds that there was a valid and just cause for their
dismissal. The Labor Code commands that before an employer may legally dismiss an employee from
the service, the requirement of substantial and procedural due process must be complied with. Under
the requirement of substantial due process, the grounds for termination of employment must be
based on just or authorized causes.

Petitioner school charged respondent Remigio Michael of non-compliance with a school policy
regarding the submission of final test questions to his program coordinator for checking or comment.

The plain admissions of the charges against them were the considerations taken into account by the
petitioner school in their decision not to renew the respondent spouses' employment contracts. This
is a right of the school that is mandated by law and jurisprudence. It is the prerogative of the school to
set high standards of efficiency for its teachers since quality education is a mandate of the
Constitution. As long as the standards fixed are reasonable and not arbitrary, courts are not at liberty
to set them aside. Schools cannot be required to adopt standards which barely satisfy criteria set for
government recognition. The same academic freedom grants the school the autonomy to decide for
itself the terms and conditions for hiring its teacher, subject of course to the overarching limitations
under the Labor Code. The authority to hire is likewise covered and protected by its management
prerogative – the right of an employer to regulate all aspects of employment, such as hiring, the
freedom to prescribe work assignments, working methods, process to be followed, regulation
regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and
recall of workers.

LYNVIL FISHING ENTERPRISES VS. ARIOLA

G.R. No. 177812, June 19 2013

Facts:
PETITIONER Lynvil Fishing Enterprises, Inc. (Lynvil) is engaged in deep-sea fishing. Respondents’
services were engaged in various capacities: Andres G. Ariola, captain; Jessie D. Alcovendas, chief
mate; Jimmy B. Calinao, chief engineer; Ismael G. Nubla, cook; Elorde Bañez, oiler; and Leopoldo G.
Sebullen, bodegero.

On Aug. 1, 1998, Lynvil received a report from Ramonito Clarido, one of its employees, that on July 31,
1998, he witnessed that while on board the company vessel Analyn VIII, respondents conspired with
one another and stole eight tubs of “pampano” and “tangigue” fish and delivered them to another
vessel.

Petitioner filed a criminal complaint against respondents before the office of the City Prosecutor of
Malabon City which found probable cause for indictment of respondents for the crime of qualified
theft. Relying on the finding and Nasipit Lumber Company v. NLRC, 257 Phil. 937 (1989), Lynvil
asserted there was sufficient basis for valid termination of employment of respondents based on
serious misconduct and/or loss of trust and confidence.

Issue: Is their merit to the assertion?

Ruling: No.
Nasipit is about a security guard who was charged with qualified theft which charge was dismissed by
the Office of the Prosecutor. However, despite the dismissal of the complaint, he was still terminated
from his employment on the ground of loss of confidence.

We ruled that proof beyond reasonable doubt of an employee’s misconduct is not required when loss
of confidence is the ground for dismissal. It is sufficient if the employer has “some basis” to lose
confidence or that the employer has reasonable ground to believe or to entertain the moral conviction
that the employee concerned is responsible for the misconduct and that the nature of his
participation therein rendered him absolutely unworthy of the trust and confidence demanded by his
position.
It added that the dropping of the qualified theft charges against the respondent is not binding upon a
labor tribunal.

In Nicolas v. National Labor Relations Commission, 327 Phil. 883, 886-887 (1996); Reno Foods, Inc. v.
Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan, G.R. No. 164016, 15 March 2010, 615 SCRA
240, we held that a criminal conviction is not necessary to find just cause for employment
termination. Otherwise stated, an employee’s acquittal in a criminal case, especially one that is
grounded on the existence of reasonable doubt, will not preclude a determination in a labor case that
he is guilty of acts inimical to the employer’s interests. In the reverse, the finding of probable cause is
not followed by automatic adoption of such finding by the labor tribunals.

In other words, whichever way the public prosecutor disposes of a complaint, the finding does not
bind the labor tribunal.

Thus, Lynvil cannot argue that since the Office of the Prosecutor found probable cause for theft the
Labor Arbiter must follow the finding as a valid reason for the termination of respondents’
employment. The proof required for purposes that differ from one and the other are likewise
different. (Lynvil Fishing Enterprises, Inc. and/or Rosendo S. De Borja vs. Andres G. Ariola, Jessie D.
Alcovendas, Jimmy B. Calinao and Leopoldo G. Sebullen, G.R. No. 181974).

D.M. CONSUNJI INC. VS JAMIN

G.R. No. 192514, April 18, 2012 citing Maraguinot

Facts:
On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a construction company, hired
respondent Estelito L. Jamin as a laborer.

Sometime in 1975, Jamin became a helper carpenter. Since his initial hiring, Jamin‘s employment
contract had been renewed a number of times. On March 20, 1999, his work at DMCI was terminated
due to the completion of the SM Manila project. This termination marked the end of his employment
with DMCI as he was not rehired again.

On April 5, 1999, Jamin filed a complaint for illegal dismissal, with several money claims (including
attorney‘s fees), against DMCI and its

President/General Manager, David M. Consunji. Jamin alleged that DMCI terminated his employment
without a just and authorized cause at a time when he was already 55 years old and had no
independent source of livelihood. He claimed that he rendered service to DMCI continuously for
almost 31 years. In addition to the schedule of projects (where he was assigned) submitted by DMCI
to the labor arbiter, he alleged that he worked for three other DMCI projects: Twin Towers, Ritz
Towers, from July 29, 1980 to June 12, 1982; New Istana Project, B.S.B. Brunei, from June 23, 1982 to
February 16, 1984; and New Istana Project, B.S.B. Brunei, from January 24, 1986 to May 25, 1986.

DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from the start of his
engagement in 1968 until the completion of its SM Manila project on March 20, 1999 where Jamin
last worked. With the completion of the project, it terminated Jamin‘s employment. It alleged that it
submitted a report to the Department of Labor and Employment (DOLE) everytime it terminated
Jamin‘s services.

Issue: Whether there was violation of security of tenure.

Ruling:
Jamin worked for DMCI for almost 31 years, initially as a laborer and, for the most part, as a
carpenter. Through all those years, DMCI treated him as a project employee, so that he never
obtained tenure. On the surface and at first glance, DMCI appears to be correct. Jamin entered into a
contract of employment (actually an appointment paper to which he signified his conformity) with
DMCI either as a field worker, a temporary worker, a casual employee, or a project employee
everytime DMCI needed his services and a termination of employment paper was served on him upon
completion of every project or phase of the project where he worked.

The CA pierced the cover of Jamin‘s project employment contract and declared him a regular
employee who had been dismissed without cause and without notice. To reiterate, the CA‘s findings
were based on: (1) Jamin‘s repeated and successive engagements in DMCI‘s construction projects,
and (2) Jamin‘s performance of activities necessary or desirable in DMCI‘s usual trade or business.

We agree with the CA. In Liganza v. RBL Shipyard Corporation, the Court held that "[a]ssuming,
without granting[,] that [the] petitioner was initially hired for specific projects or undertakings, the
repeated re-hiring and continuing need for his services for over eight (8) years have undeniably made
him a regular employee." We find the Liganza ruling squarely applicable to this case, considering that
for almost 31 years,

DMCI had repeatedly, continuously and successively engaged Jamin‘s services since he was hired on
December 17, 1968 or for a total of 38 times — 35 as shown by the schedule of projects submitted by
DMCI to the labor arbiter and three more projects or engagements added by Jamin, which he claimed
DMCI intentionally did not include in its schedule so as to make it appear that there were wide gaps in
his engagements.

We reviewed Jamin‘s employment contracts as the CA did and we noted that while the contracts
indeed show that Jamin had been engaged as a project employee, there was an almost unbroken
string of Jamin‘s rehiring from December 17, 1968 up to the termination of his employment on March
20, 1999. While the history of Jamin‘s employment (schedule of projects) relied upon by DMCI shows
a gap of almost four years in his employment for the period between July 28, 1980 (the supposed
completion date of the Midtown Plaza project) and June 13, 1984 (the start of the IRRI Dorm IV
project), the gap was caused by the company‘s omission of the three projects.

For not disclosing that there had been other projects where DMCI engaged his services, Jamin accuses
the company of suppressing vital evidence that supports his contention that he rendered service in
the company‘s construction projects continuously and repeatedly for more than three decades. The
non-disclosure might not have constituted suppression of evidence — it could just have been
overlooked by the company — but the oversight is unfair to Jamin as the non-inclusion of the three
projects gives the impression that there were substantial gaps not only of several months but years in
his employment with DMCI.

To reiterate, Jamin‘s employment history with DMCI stands out for his continuous, repeated and
successive rehiring in the company‘s construction projects. In all the 38 projects where DMCI engaged
Jamin‘s services, the tasks he performed as a carpenter were indisputably necessary and desirable in
DMCI‘s construction business. He might not have been a member of a work pool as DMCI insisted that
it does not maintain a work pool, but his continuous rehiring and the nature of his work unmistakably
made him a regular employee. In Maraguinot, Jr. v. NLRC, the Court held that once a project or work
pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same
employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the employer, then the employee must be deemed a
regular employee.

Further, as we stressed in Liganza, "[r]espondent capitalizes on our ruling in D.M. Consunji, Inc. v.
NLRC which reiterates the rule that the length of service of a project employee is not the controlling
test of employment tenure but whether or not ‗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.‘"

"Surely, length of time is not the controlling test for project employment. Nevertheless, it is vital in
determining if the employee was hired for a specific undertaking or tasked to perform functions vital,
necessary and indispensable to the usual business or trade of the employer. Here, [private]
respondent had been a project employee several times over. His employment ceased to be
coterminous with specific projects when he was repeatedly re-hired due to the demands of
petitioner‘s business." Without doubt, Jamin‘s case fits squarely into the employment situation just
quoted.

GAPAYAO V. FULO
G.R. No. 193493, June 13, 2013

Facts:
Jaime Fulo (deceased) died of "acute renal failure secondary to 1st degree burn 70% secondary
electrocution"5 while doing repairs at the residence and business establishment of petitioner located
at San Julian, Irosin, Sorsogon.

Private respondent did not hold petitioner liable for the death of her husband. Thereafter, both
parties executed a compromise agreement.
1. The undersigned employer, hereby agrees to pay the sum of FORTY THOUSAND PESOS
(P40,000.00) to the surviving spouse of JAIME POLO, an employee who died of an accident, as
a complete and full payment for all claims due the victim.
2. On the other hand, the undersigned surviving spouse of the victim having received the said
amount do [sic] hereby release and discharge the employer from any and all claims that
maybe due the victim in connection with the victim’s employment thereat.
Private respondent filed a claim for social security benefits with the Social Security System
(SSS). However, she discovered that the deceased was not a registered member of the SSS. She
contended that her late husband had been employed by petitioner from 1983 to 1997.

Fule: her late husband had been in the employ of petitioner for 14 years, from 1983 to 1997. He was
made to work as a laborer in the agricultural landholdings, a harvester in the abaca plantation, and a
repairman/utility worker in several business establishments owned by petitioner. Therefore, the
considerable length of time during which [the deceased] was given diverse tasks by petitioner was a
clear indication of the necessity and indispensability of her late husband’s services to petitioner’s
business. This view is bolstered by the admission of petitioner himself in the Compromise
Agreement that he was the deceased’s employer.

Gapayo: the deceased was not the former’s employee, but was rather an independent contractor
whose tasks were not subject to petitioner’s control and supervision. That the deceased was hired by
Adolfo Gamba, the contractor whom he had hired to construct their building; and by Amado Gacelo,
the tenant whom petitioner instructed to manage the latter’s farm. In other words, he was a worker
of the tenant and not the landlord.

Assuming arguendo that the deceased was petitioner’s employee, he was still not entitled to be paid
his SSS premiums for the intervening period when he was not at work, as he was an "intermittent
worker who was only summoned every now and then as the need arose. Hence, no obligation to
report to SSS.

Lastly, petitioner alleges that the deceased is a freelance worker because he was engaged on a
pakyaw basis and worked for a short period of time, in the nature of a farm worker every season, he
was not precluded from working with other persons and in fact worked for them. Under Article 280 of
the Labor Code, seasonal employees are not covered by the definitions of regular and casual
employees. Furthermore, he cited a case where the court held that seasonal workers do not become
regular employees by the mere fact that they have rendered at least one year of service, whether
continuous or broken.

SSS: Fulo was en employee, therefore, entitled to compulsory coverage under the Social Security Law.
CA: gave credence to the findings of the SSC. Petitioner exercised his control through an overseer in
the person of Amado Gacelo, the tenant on petitioner’s land.23 Most important, petitioner entered
into a Compromise Agreement with private respondent and expressly admitted therein that he was
the employer of the deceased.

Issue: Whether or not there exists between the deceased Jaime Fulo and petitioner an employer-
employee relationship that would merit an award of benefits in favor of private respondent under
social security laws.
Ruling:
Farm workers may be considered regular seasonal employees.
Article 280 of the Labor Code states:
Article 280.Regular and Casual Employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
 shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph:

Provided, That, any employee who has rendered at least one year of service whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.

Jurisprudence has identified the three types of employees mentioned in the provision:
(1) regular employees or those who have been engaged to perform activities that are usually
necessary or desirable in the usual business or trade of the employer;
(2) project employees or those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of their
engagement, or those whose work or service is seasonal in nature and is performed for the
duration of the season; and
(3) casual employees or those who are neither regular nor project employees.

Farm workers generally fall under the definition of seasonal employees. We have consistently held
that seasonal employees may be considered as regular employees. Regular seasonal employees are
those called to work from time to time. The nature of their relationship with the employer is such
that during the off season, they are temporarily laid off; but reemployed during the summer season or
when their services may be needed. They are in regular employment because of the nature of their
job,and not because of the length of time they have worked.

The rule, however, is not absolute. The Court held that seasonal workers who have worked for one
season only may not be considered regular employees. Similarly, in Mercado, Sr. v. NLRC,60 it was
held that when seasonal employees are free to contract their services with other farm owners, then
the former are not regular employees.

For regular employees to be considered as such, the primary standard used is the reasonable
connection between the particular activity they perform and the usual trade or business of the
employer.

The primary standard, therefore, of determining a regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or trade
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 the 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 one year, even if the performance is not
continuous or merely intermittent, the law deems the 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 also considered regular, but only with respect to such activity
and while such activity exists.

A reading of the records reveals that the deceased was indeed a farm worker who was in the regular
employ of petitioner. From year to year, starting January 1983 up until his death, the deceased had
been working on petitioner’s land by harvesting abaca and coconut, processing copra, and clearing
weeds. His employment was continuous in the sense that it was done for more than one harvesting
season. Moreover, no amount of reasoning could detract from the fact that these tasks were
necessary or desirable in the usual business of petitioner.

The other tasks allegedly done by the deceased outside his usual farm work only bolster the existence
of an employer-employee relationship. As found by the SSC, the deceased was a construction worker
in the building and a helper in the bakery, grocery, hardware, and piggery – all owned by
petitioner. This fact only proves that even during the off season, the deceased was still in the employ
of petitioner.

The most telling indicia of this relationship is the Compromise Agreement executed by petitioner
and private respondent. Petitioner entered into the agreement with full knowledge that he was
described as the employer of the deceased. This knowledge cannot simply be denied by a statement
that petitioner was merely forced or threatened into such an agreement. His belated attempt to
circumvent the agreement should not be given any consideration or weight by this Court.

Pakyaw workers are regular employees, provided they are subject to the control of petitioner.

Pakyaw workers are considered employees for as long as their employers exercise control over them.
In Legend Hotel Manila v. Realuyo,68 the Court held that "the power of the employer to control the
work of the employee is considered the most significant determinant of the existence of an employer-
employee relationship. This is the so-called control test and is premised on whether the person for
whom the services are performed reserves the right to control both the end achieved and the
manner and means used to achieve that end." It should be remembered that the control test merely
calls for the existence of the right to control, and not necessarily the exercise thereof. It is not
essential that the employer actually supervises the performance of duties by the employee. It is
enough that the former has a right to wield the power.

In this case, we agree with the CA that petitioner wielded control over the deceased in the discharge
of his functions. Being the owner of the farm on which the latter worked, petitioner – on his own or
through his overseer – necessarily had the right to review the quality of work produced by his
laborers. It matters not whether the deceased conducted his work inside petitioner’s farm or not
because petitioner retained the right to control him in his work, and in fact exercised it through his
farm manager Amado Gacelo. The latter himself testified that petitioner had hired the deceased as
one of the pakyaw workers whose salaries were derived from the gross proceeds of the harvest.

Petition is denied.

CONCRETE SOLUTIONS V. CABUSAS

G.R. No. 177812, June 19, 2013

Facts:
Respondent Arthur Cabusas (respondent) was hired by petitioner Primary Structures Corporation
(PSC) as transit mixer driver for petitioner Concrete Solutions Inc. (CSI) - Batching Plant Project. The
appointment letter contained: that respondent was hired from 2000 to 2001 and the status of his
employment was that of a project employee and, as such, his employment was co-terminus with the
completion of the project or any phase thereof; that upon completion of the particular project or
phase, he was free to seek other employment of his choice; and, that within the duration of the work,
petitioners shall have the right to terminate his employment without any liability on their part if his
performance did not meet the company standards, or if he violated petitioners' rules and regulations.

A report reached petitioners that respondent unloaded less than a cubic meter of concrete mix more
than two kilometers away from its project site, instead of returning the excess concrete mix to the
plant; and that respondent sold the excess concrete mix to the residents of the place where he
unloaded the same.

Petitioners' Manager required respondent to explain in writing why he should not be meted with a
disciplinary action for the alleged act of theft or dishonesty. Respondent explained that he threw
away the concrete mix at Cabancalan, Mandaue City, instead of turning them over to the plant as he
will wash the transit mixer at A.S. Fortuna, Mandaue City. Respondent was meted a three (3)-day
suspension. It was also alleged that he stole the company’s plastic drum and by reason of this,
petitioner called his attention and asked him to explain why should there be no disciplinary action
meted on him and to inform him to attend the formal investigation.

Respondent denied the accusation against him and claimed that he could not had driven the transit
mixer out of the company’s premises without passing through the guard house; hence, it was
impossible to steal the plastic drum without the knowledge of the guard. He personally delivered his
letter of explanation to the company, but was refused entry by the security guards. Respondent was
placed under preventive suspension pending investigation of his case.

While the investigation was on-going, petitioner discovered that respondent was not registered with
the SSS as the SSS number he submitted was that of another person in the name of Alex Cabusas. As a
result, they needed clarifications from the respondent but the latter had been absent without leave.

Consequently, petitioner sent the respondent a termination letter. Petitioners submitted to the
Department of Labor and Employment an Establishment Termination Report17 indicating that the
project where respondent was assigned was already completed and also that respondent was
terminated for being absent without leave (AWOL)

Respondent had filed a Complaint for unfair labor practice, illegal dismissal, non-payment of holiday
pay, premium pay for holiday, rest day, night shift premium, separation pay and moral damages
against petitioners. He alleged among others: that it was not true that he went on AWOL. He alleged
that when the administrative investigation on his alleged theft of company property was conducted
and terminated, his counsel asked to be furnished a copy of the result of the investigation; that since
then, they eagerly waited for such result, thus they were surprised to receive a telegram where he
was said to have been AWOL since May 5, 2001; that immediately upon receipt of the telegram,
respondent went to petitioners' office, but he was refused entry for the reason that he was AWOL;
that there was no valid cause for his dismissal and petitioners found the lame excuse of declaring him
AWOL if only to create a semblance of justification for his unlawful termination; that he had
previously tendered a follow-up letter for a copy of the resolution of the administrative investigation
that was terminated on May 4, 2001, however, petitioners unceremoniously refused to receive a copy
of the letter he personally delivered, thus his counsel was compelled to send the letter by way of
registered mail; that petitioners did not reply to his letter and did not even furnish his counsel with a
copy of the suspension letter; that petitioners' imputation that he committed dishonest acts was
founded on falsehood and fabrications as no evidence was presented during the so-called
administrative hearing. Respondent had prayed for his reinstatement, among others.

Petitioners contend that respondent was a project employee and the project to which he was hired
was already completed, thus he could not be reinstated anymore.

LA: ruled in favour of petitioner. It was a valid dismissal as he abandoned his job and that he failed to
report to work despite the directive through telegram.

NLRC: He was illegally dismissed and reinstatement should be granted because the alleged preventive
suspension order was unwritten; that the telegram sent to respondent did not direct him to report for
work but merely stated “you have been absent without official leave since May 5, 2001, please notify
CSI as soon as possible” and that even before respondent was dismissed for abandonment of work on
June 12, 2001, he had already filed a complaint for illegal dismissal on May 30, 2001 which negated
any intention on his part t\o forsake his work.

However, it found no credence to petitioners' allegation that respondent was a project employee
applying the principle that where from circumstances it is apparent that periods have been imposed
to preclude acquisition of tenurial security by the employee, they should be disregarded for being
contrary to public policy.

Issue: whether or not the respondent's is entitled to reinstatement.

Ruling:
Project employee is one whose employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the employment is
for the duration of the season. We held that the length of service of a project employee is not the
controlling test of employment tenure but whether or not 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.

We rule that respondent is a project employee. His appointment letter showed that he was hired as
transit mixer driver for the Concrete Solutions Inc. (CSI) – Batching Plant Project for the period from
June 28, 2000 until June 23, 2001. The same letter provided that he was a project employee whose
employment was co -terminus with the completion of the project or any phase thereof and upon
completion of the particular project or phase, he was free to seek other employment of his choice.
There is no evidence showing that respondent did not sign the conforme part of the appointment
letter voluntarily. Hence, respondent was bound by the provisions in the appointment letter.
Moreover, there is also no showing that the period fixed in the appointment letter was imposed to
preclude acquisition of tenurial security by the employee and should be disregarded for being
contrary to public policy as ruled by the NLRC since no evidence exists on the record to support such
conclusion.

Considering that respondent was dismissed prior to the expiration of the duration of his employment
and without a valid or just cause, his termination was therefore illegal. However, respondent could no
longer be reinstated since the project he was assigned to was already completely finished. However,
we find that he is entitled to the salary corresponding to the unexpired portion of his employment.43
Respondent is entitled to the payment of his salary from the time he was not admitted back to work
on May 26, 2001 up to June 23, 2001, the expiration of his employment contract.

D.M. CONSUNJI INC. VS JAMIN

G.R. No. 159371, July 29, 2013

Facts:
On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a construction company, hired
respondent Estelito L. Jamin as a laborer. Sometime in 1975, Jamin became a helper carpenter. Since
his initial hiring, Jamin’s employment contract had been renewed a number of times. On March 20,
1999, his work at DMCI was terminated due to the completion of the SM Manila project. This
termination marked the end of his employment with DMCI as he was not rehired again. We affirm
CA’s finding that having found Jamin to be a regular employee, the CA declared his dismissal illegal as
it was without a valid cause and without due process.

On April 5, 1999, Jamin filed a complaint for illegal dismissal, with several money claims (including
attorney’s fees), against DMCI and its President/General Manager, David M. Consunji. Jamin alleged
that DMCI terminated his employment without a just and authorized cause at a time when he was
already 55 years old and had no independent source of livelihood. He claimed that he rendered
service to DMCI continuously for almost 31 years. In addition to the schedule of projects (where he
was assigned) submitted by DMCI to the labor arbiter, he alleged that he worked for three other DMCI
projects: Twin Towers, Ritz Towers, from July 29, 1980 to June 12, 1982; New Istana Project, B.S.B.
Brunei, from June 23, 1982 to February 16, 1984; and New Istana Project, B.S.B. Brunei, from January
24, 1986 to May 25, 1986.

DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from the start of his
engagement in 1968 until the completion of its SM Manila project on March 20, 1999 where Jamin
last worked. With the completion of the project, it terminated Jamin’s employment. It alleged that it
submitted a report to the Department of Labor and Employment (DOLE) everytime it terminated
Jamin’s services.

Issue: Whether the termination was without just cause and due process
Ruling:
Jamin worked for DMCI for almost 31 years, initially as a laborer and, for the most part, as a
carpenter. Through all those years, DMCI treated him as a project employee, so that he never obtained
tenure. On the surface and at first glance, DMCI appears to be correct. Jamin entered into a contract
of employment (actually an appointment paper to which he signified his conformity) with DMCI either
as a field worker, a temporary worker, a casual employee, or a project employee everytime DMCI
needed his services and a termination of employment paper was served on him upon completion of
every project or phase of the project where he worked.

In Liganza v. RBL Shipyard Corporation, the Court held that “[a]ssuming, without granting[,] that
[the] petitioner was initially hired for specific projects or undertakings, the repeated re-hiring and
continuing need for his services for over eight (8) years have undeniably made him a regular
employee.” We find theLiganza ruling squarely applicable to this case, considering that for almost 31
years, DMCI had repeatedly, continuously and successively engaged Jamin’s services since he was
hired on December 17, 1968 or for a total of 38 times — 35 as shown by the schedule of projects
submitted by DMCI to the labor arbiterand three more projects or engagements added by Jamin,
which he claimed DMCI intentionally did not include in its schedule so as to make it appear that there
were wide gaps in his engagements. One of the three projects was local, the Ritz Towers, from July 29,
1980 to June 12, 1982, while the other two were overseas — theNew Istana Project in Brunei,
Darussalam, from June 23, 1982 to February 16, 1984;[ and again, the New Istana Project, from
January 24, 1986 to May 25, 1986.

We reviewed Jamin’s employment contracts as the CA did and we noted that while the contracts
indeed show that Jamin had been engaged as a project employee, there was an almost unbroken
string of Jamin’s rehiring from December 17, 1968 up to the termination of his employment on March
20, 1999. While the history of Jamin’s employment (schedule of projects)[ relied upon by DMCI shows
a gap of almost four years in his employment for the period between July 28, 1980 (the supposed
completion date of the Midtown Plaza project) and June 13, 1984 (the start of the IRRI Dorm IV
project), the gap was caused by the company’s omission of the three projects above mentioned.

Further, as we stressed in Liganza, “[r]espondent capitalizes on our ruling in D.M. Consunji, Inc. v.
NLRC which reiterates the rule that the length of service of a project employee is not the controlling
test of employment tenure but whether or not ‘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.’”

“Surely, length of time is not the controlling test for project employment. Nevertheless, it is vital in
determining if the employee was hired for a specific undertaking or tasked to perform functions vital,
necessary and indispensable to the usual business or trade of the employer. Here, [private]
respondent had been a project employee several times over. His employment ceased to be
coterminous with specific projects when he was repeatedly re-hired due to the demands of
petitioner’s business.” Without doubt, Jamin’s case fits squarely into the employment situation just
quoted.
With our ruling that Jamin had been a regular employee, the issue of whether DMCI submitted
termination of employment reports, pursuant to Policy Instructions No. 20 (Undated[), as superseded
by DOLE Department Order No. 19 (series of 1993), has become academic. DOLE Policy Instructions
No. 20 provides in part:

Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the number
of projects in which they have been employed by a particular construction company. Moreover, the
company is not required to obtain a clearance from the Secretary of Labor in connection with such
termination. What is required of the company is a report to the nearest Public Employment Office for
statistical purposes.

COLEGIO DEL SANTISIMO ROSARIO ET AL. VS. ROJO

GR No 170388, September 4, 2013

FACTS:
Colegio de Santisimo Rosario hired Rojo as a high school teacher on probationary basis for the schoold
years 1992-93, 1993-94 and 1994-95. At the end of the third year, the school decided not to renew
Rojo’s contract leading to the latter’s filing of the complaint for illegal dismissal.

Rojo alleged that since he has already worked for the school for three years, he should already be
considered as a permanent employee which is according to the 1970 Manual of Regulation for Private
Schools.

Petitioners contended that the probationary contract merely expired and was not renewed. It claimed
that the three years mentioned in the Manual refer to 36 months, not three school years. And since
Rojo served for only three school years of 10 months each or 30 months, then he had not yet served
the “three years” or 36 months mentioned in the Manual.

LABOR ARBITER:
The labor arbiter ruled that “three school years” means three years of 10 months, not 12 months.
Thus, Rojo should have been already considered as a regular employee. The LA also found the school
in bad faith after treating ROjo’s termination merely as the expiration of the thirs employment
contract.

NLRC:
Affirmed the LA’s decision. Rojo is entitled with reinstatement, if viable, or separation pay, if
reinstatement was no longer feasible.

COURT OF APPEALS:
Denied the petition for lack of merit. The only reason given by the school is that the contract has
already expired, not any unsatisfactory service. Also, there was no showing that the school set
performance standards for the employment of respondent, which could be the basis of his
unsatisfactory or satisfactory performance. There being no reasonable standards made known to him
at the time of his engagement, respondent was deemed a regular employee and was illegally
dismissed.

ISSUE: Was Rojo illegally dismissed?

SUPREME COURT RULING:

According to the 1992 Manual,
Section 92.Probationary Period. – Subject in all instances to compliance with the Department
and school requirements, the probationary period for academic personnel shall not be more
than three (3) consecutive years of satisfactory service for those in the elementary and
secondary levels, six (6) consecutive regular semesters of satisfactory service for those in the
tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary
level where collegiate courses are offered on a trimester basis.

Sec. 93.Regular or Permanent Status. - Those who have served the probationary period shall be
made regular or permanent. Full-time teachers who have satisfactorily completed their
probationary period shall be considered regular or permanent.

The above provisions clearly provides that full-time teacher become regular or permanent employees
once they satisfactorily completed the probationary period of three school years. If a teacher is under
probation he shall satisfactorily do his job within the probationary period to be accepted as a
permanent one.

For teachers on probationary employment, it is incumbent upon the school to have not only set
reasonable standars to be followed by said teachers in determining qualification for regular
employment, the same must have also been communicated to the teachers at the start of the
probationary period, or at the very least at the start of the period when they were to be applied. If
the teachers have not been apprised of such reasonable standards at the time specified, they shall
be deemed regular employees.

JOCELYN HERRERA-MANAOIS V ST. SCHOLASTICA’S COLLEGE

GR No 188914 December 11, 2013

Academic qualification required to attain the status of a permanent full-time faculty member in the
tertiary level

FACTS:
Jocelyn graduated in the St. Scholastica’s College in October 1992. SSC is a private educational
institution offering elemtary, secondary and tertiary education. After Jocelyn graduated, she returned
to her school as a part-time English teacher.

In 2000, Jocelyn applied for a position as full-time instructor for the AY 2000-2001. It was stated in her
application that she has been taking a master’s degree at the University of the Philippines-Diliman;
that she is completing her thesis; and that her oral defense was scheduled on June 2000.

Accordingly, the school hired her as a probationary full-time faculty member with an assigned rank of
an instructor. Near the end of her 3-year probationary period, Jocelyn applied for an extension which
was not accepted. The Board of the school informed her that they will not renew her contract on the
following grounds: 1) failure to obtain a master’s degree within the 3-year probationary period and 2)
college’s curriculum changes and streamlining.

The Chair of the English department did not endorse the application for permanency since Jocelyn
had not finished her master’s degree which is a requirement according to the school’s manual.

LABOR ARBITER:
Dismissal was illegal. The condition that Jocelyn will become an permanent employee if he obtains a
master’s degree was not disclosed to her. It was not made known at the start of the engagement.

The labor arbiter noted that under the SSC Faculty Manual, the minimum requirementsfor the rank of
instructor, for which petitioner had been hired under the employmentcontract, was a bachelor's
degree with at least 25% units of master's studies completed.He then found that the requirement for
a master's degree actually pertained to the rank ofassistant Professor, a position that had not been
applied for by Manaois.

NLRC:
Upheld the LA’s decision in toto.

CA:
Reversed the ruling of the NLRC on the grave abuse of discretion. I ruled that Jocelyn was aware of
the condition according the facts and circumstances. When she applied for the permanency, she
already told the college that she was currently finishing her master’s degree, an indication that she
knew the condition.

According to the SSC Manual, “explicitly stated that the criteria for permanencyincluded the
completion of a master's degree. According to the CA, the labor arbitergravely erred when he solely
relied on the minimum requirements provided for the rank ofinstructor. It stressed that the criteria
cited for the rank of instructor referred to the basison which full-time and part-time faculty members
were ranked, and not to the requirements to be fufilled in order to become a permanent faculty
member.”

ISSUE: Is the completion of the Master’s Degree a requirement for a probationary instructor to be a
permanent employee?

SC RULING:
The Supreme Court agreed with the Court of Appeals. The contracts she signed was based on the SSC
Faculty Manual. According to the Manual, the school has the right to terminate a faculty member if it
did not follow that rules and regulations stated in the said manual.

On the criteria of permanency, it was stated in the manual a faculty member applying for permanency
must obtain first a Master’s degree among other requirements.
Jocelyn knew about the condition

She knew from the start about it. On her application, she told the school that she is finishing her
Master’s Degree. And in the application for extension, she stated again about her degree.

Labor Arbiter and NLRC misinterpreted the SSC Manual. The minimum requirements talks about the
ranking, not to the academic qualifications required to attain permanency. The sections on both
thepermanency and the ranking of an instructor, as provided in the SSC Manual, must be readin
conjunction with each another.

Nonetheless, even without the SSC Manual, Jocelyn still cannot be considered as a permanent
employee. According 1992 Manual of Regulations for Private Schools (1992 Manual):

Section 92.Probationary Period. — Subject in all instances tocompliance with Department and
school requirements, the probationaryperiod for academic personnel shall not be more than
three (3) consecutive yearsof satisfactory service for those in the elementary and secondary
levels, six(6) consecutive regular semesters of satisfactory service for those inthe tertiary
level, and nine (9) consecutive trimesters of satisfactory service forthose in the tertiary level
where collegiate courses are offered on the trimesterbasis.

Section 44.Minimum Faculty Qualifications. — The minimum qualificationsfor faculty for the
different grades and levels of instruction duly supported byappropriate credentials on file in the
school shall be as follows:

xxx xxxxxx

c. Tertiary
(1) For undergraduate courses, other than vocational:

(a) Holder of a master's degree, toteach largely in his major held ; or, forprofessional courses,
holder of the appropriateprofessional license required for at least a bachelor'sdegree. Any
deviation from this requirement will besubject to regulation by the Department.

Section 45.Full-time and Part-time Faculty. — As a general rule, all privateschools shall employ
full-time academic personnel consistent with thelevels of instruction.Full-time academic
personnel are those meeting all the followingrequirements:

xxxx

All teaching personnel who do not meet the foregoing qualifications are considered part-time.

In this case, Jocelyn is a part-time faculty member according to the 1992 Manual.

UNIVERSAL ROBINA SUGAR MILLING CORPORATION VS. ACIBO ET AL.

GR No 186439, January 15 2014
Regular employees

FACTS:
URSMC is a domestic corporation. Complainants are employees of the said corporation. They were
hired on carious dates and on different capacities (e.i. drivers, crane operators bucket holders and
etc.) At the start of their respective engagements, the complainants signed contracts of employment
for a period of one monthor for a given season.

The corporation repeatedly hired them (1988-1996) to perform the same duties and, for every
engagement required them to sign a new employment contract for the same duration of one month
or one season.

Acibo et al filed a complaint for a regularization, entitlement to benefits under the CBA and the
attorney’s fees.

The LA dismissed the complaint. It held that the employees are seasonal or project workers. They
were required to work on a definite period. And their work is not directly related to the main business
of the corporation.

NLRC reversed. It stated that the employees are regular and should be granted monetary claims. It
ruled that the activities were necessary and desirable to the business of the corporation. Being
regular employees, they are entitled monetary benefits according to their CBA.

The CA granted the petition partly. It ruled that the employees are regular but not entitled to the
monetary benefits. The CA held the various activities that the complainants were tasked to do were
necessary, if not indispensable to the nature of the corporation’s business. The repeated and
continuing need for the complainants’ performance of these same tasks constitutes sufficient
evidence of the necessity of the activity.

ISSUE: Are complainants regular employees?

RULING:
Complainants are considered regular seasonal workers. “When seasonal workers are continuously
and repeatedly hired to perform the tasks or activities for several seasons or even the cessation of the
season, this length of time may serve as badge of regular employment. In fact, even though
denominated as “seasonal workers”, if these workers are called to work from time to time and are
only temporarily laid off during the off season, the law does not consider them separated from the
service during the off-season period. The law simply considers these seasonal workers on leave until
re-employed.

Factual considerations to prove this:

1. They were made to perform various tasks regularly and habitually needed in the corporation’s
operations during the milling season.
2. They were regularly and repeatedly hired.
 3. There was no evidence that the complainants were free to work elsewhere during off-season.

DIONARTO Q. NOBLEJAS V. ITALIAN MARITIME ACADEMY PHILS., INC

G.R. NO. 207888, June 9, 2014

Facts:
IMAPI was a training center for seamen. Capt. Terrei was its Managing Director while Ferrez was the
secretary.

The complaint:
Terrei, IMAPI President, wrote a letter to Noblejas informing him that he had been appointed as
training instructor/assessor of the company on a contractual basis for a period of three (3) months,
with a monthly salary of PhP75,000.00 inclusive of tax. After the expiration of the 3-month period,
IMAPI hired Noblejas anew as training instructor/assessor with the same salary rate, but no written
contract was drawn for his rehiring.

The absence of a written contract for the renewal of his employment became Noblejas' major
concern. To address it, he wrote Capt. Terrei a letter requesting that a new contract be executed.
Not acting on his letter, Noblejashad a meeting with Capt. Terrei but an altercation between them
ensued. After that incident, Noblejas claimed that Capt. Terrei instructed Ferrez to dismiss him from
employment. He claimed that when he asked from Ferrez for a copy of his old contract, he was told
that he was terminated from this day on.

Respondents’ version:
Noblejas got angry, hurled invectives against Ferrez and even threatened to file a case against them
after Capt. Terreireplied to his letter that there was no previous agreement to grant him tax refund,
health insurance and food, schooling and gasoline allowances and that he had to render at least one
year of service before the company could decide whether to accord him the status of a regular
employee. The following day, he did not report for work anymore and filed the complaint against
them.

Respondents theorized that the complaint was filed on the mistaken impression by Noblejas that the
failure to meet his demands was tantamount to his termination from employment. They, however,
insisted that he was not entitled to 13th month pay because he was hired as a consultant and not as a
regular employee. For unused leave credits, they posited that IMAPI could not be held liable in view
of their payment to him of his sick leave pay.

Labor Arbiter’s decision:

Noblejas was illegally dismissed from his employment. The LA gave credence to his allegation that
Capt. Terrei instructed his secretary, Ferrez, to terminate his employment after he had sought
clarification on matters pertaining to his employment contract and monetary benefits. The LA
concluded that Noblejas was a regular employee and, as such, was entitled to his proportionate 13th
month pay. The other monetary claims were denied for being unfounded. Moreover, as
reinstatement was no longer feasible considering the strained relationship between the parties, LA
ruled that payment of separation pay was the more equitable relief.
NLRC Decision:
LA decision was reversed. The NLRC explained that there was no showing that respondents
committed any positive and overt act of dismissal and that the claim of Noblejas that Capt. Terrei
ordered Ferrez to terminate his employment was not substantiated. According to the NLRC, it was
Noblejas who severed his employment with IMAPI after it had refused to grant his numerous
demands. Moreover, Noblejas was a contractual employee of IMAPI and, hence, there was no basis
for his monetary award.

CA decision
It upheld the findings of the NLRC that Noblejas was a contractual employee of IMAPI and that there
was no evidence to prove that he was dismissed from employment.

Issues:
1. Whether or not petitioner is a regular employee
2. Whether or not he was illegally dismissed

Held:
The Court finds Noblejas to be a regular employee of IMAPI.
Pursuant to Article 280 of the Labor Code, there are two kinds of regular employees, namely: (1)
those who are engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; and (2) those who have rendered at least one year of service,
whether continuous or broken, with respect to the activities in which they are employed.Regular
employees are further classified into (1) regular employees — by nature of work and (2) regular
employees — by years of service.The former refers to those employees who perform a particular
function which is necessary or desirable in the usual business or trade of the employer, regardless of
their length of service; while the latter refers to those employees who have been performing the job,
regardless of its nature thereof, for at least a year.

In the case at bench, Noblejas was employed by IMAPI as a training instructor/assessor for a period of
three (3) months. After the end of the 3-month period, he was rehired by IMAPI for the same position
and continued to work as such. There is no dispute that the work of Noblejas was necessary or
desirable in the business or trade of IMAPI. Moreover, such continuing need for his services is
sufficient evidence of the necessity and indispensability of his services to IMAPI's business. Taken in
this light, Noblejas had indeed attained the status of a regular employee at the time he ceased to
report for work.

There was, however, no illegal dismissal.

The Court is not unmindful of the rule in labor cases that the employer has the burden of proving that
the termination was for a valid or authorized cause. It is likewise incumbent upon the employees,
however, that they should first establish by competent evidence the fact of their dismissal from
employment. It is an age-old rule that the one who alleges a fact has the burden of proving it and the
proof should be clear, positive and convincing. Mere allegation is not evidence.

The record is bereft of any indication that Noblejas was prevented from returning to work or
otherwise deprived of any work assignment. It is also noted that no evidence was submitted to show
that respondent Ferrez was indeed instructed by Capt. Terrei to dismiss him from employment.

The Court finds it odd that, instead of clarifying from Capt. Terrei what he heard from Ferrez, Noblejas
immediately instituted an illegal dismissal case against the respondents and never reported back for
work since then. The Court quotes with approval the observation of the NLRC on this score:
Complainant's allegation that he was dismissed from employment cannot be accorded
credence for it is obvious that being unhappy with not being granted his demands, it was he
himself who is no longer interested to continue his employment with respondent company.
The filing of a complaint for illegal dismissal with numerous money claims against respondent
is obviously intended to compel respondent company to abide with his demands.
Respondents' refusal to grant complainant's demands does not constitute an overt act of
dismissal.
For the above reasons, the Court sustains the LA in granting Noblejas proportionate 13th month pay.
Furthermore, the respondents should accept him back and reinstate him to his former position. There
should, however, be no payment of backwages under the principle of "no work, no pay.

OMNI HAULING SERVICES, INC VS. BERNARDO BON

G.R. No. 199388, September 3, 2014

Facts:
Petitioner Omni Hauling Services, Inc. (Omni) was awarded a one (1) year service contract by the local
government of Quezon City to provide garbage hauling services. For this purpose, Omni hired
respondents as garbage truck drivers and paleros who were then paid on a per trip basis.

When the service contract was renewed for another year, petitioners required each of the
respondents to sign employment contracts which provided that they will be "re-hired" only for the
duration of the same period. However, respondents refused to sign the employment contracts,
claiming that they were regular employees since they were engaged to perform activities which were
necessary and desirable to Omni's usual business or trade.

For this reason, Omni terminated the employment of respondents which, in turn, resulted in the filing
of cases for illegal dismissal, nonpayment of Emergency Cost of Living Allowance (ECOLA) and 13th
month pay, and actual, moral, and exemplary damages.

The LA Ruling
The LA ruled in favor of petitioners, finding that respondents were not illegally dismissed. The LA
found that respondents, at the time of their engagement, were informed that their employment will
be limited for a specific period of one year and was co-terminus with the service contract with the
Quezon City government.Thus, respondents were not regular but merely project employees whose
hiring was solely dependent on the aforesaid service contract. As a result, respondents' contracts with
Omni expired upon the service contract's expiration.

The NLRC affirmed the LA's ruling in toto. The CA reversed and set aside the NLRC's earlier
pronouncements.
Issue: Whether or not respondents were project employees

Held:
Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee" in this
wise:
Art. 280. Regular and casual employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.

A project employee is assigned to a project which begins and ends at determined or determinable
times.Unlike regular employees who may only be dismissed for just and/or authorized causes under
the Labor Code, the services of employees who are hired as "project employees" may be lawfully
terminated at the completion of the project.

According to jurisprudence, the principal test for determining whether particular employees are
properly characterized as "project employees" as distinguished from "regular employees," is whether
or not the employees were assigned to carry out a "specific project or undertaking," the duration (and
scope) of which were specified at the time they were engaged for that project. The project could
either be (1) 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; or (2) a particular job or undertaking that is not within the regular
business of the corporation.

In order to safeguard the rights of workers against the arbitrary use of the word "project" to prevent
employees from attaining a regular status, employers claiming that their workers are project
employees should not only prove that the duration and scope of the employment was specified at
the time they were engaged, but also that there was indeed a project.

Even though the absence of a written contract does not by itself grant regular status to respondents,
such a contract is evidence that respondents were informed of the duration and scope of their work
and their status as project employees.

In this case, records are bereft of any evidence to show that respondents were made to sign
employment contracts explicitly stating that they were going to be hired as project employees, with
the period of their employment to be co-terminus with the original period of Omni's service contract
with the Quezon City government. Thus, the logical conclusion is that respondents were not clearly
and knowingly informed of their employment status as mere project employees, with the duration
and scope of the project specified at the time they were engaged. As such, the presumption of regular
employment should be accorded in their favor pursuant to Article 280 of the Labor Code which
provides that "[employees] who have rendered at least one year of service, whether such service is
continuous or broken shall beconsidered as [regular employees] with respect to the activity in which
[they] are employed and [their] employment shall continue while such activity actually exists."

The determination that respondents are regular and not merely project employees resultantly means
that their services could not have been validly terminated at the expiration of the project, or, in this
case, the service contract of Omni with the Quezon City government. As regular employees, it is
incumbent upon petitioners to establish that respondents had been dismissed for a just and/or
authorized cause. However, petitioners failed in this respect; hence, respondents were illegally
dismissed.

HACIENDA LEDD/RICARDO GAMBOA, JR. VS. PAQUITO VILLEGAS

G.R. No. 179654. September 22, 2014

Facts:
The complaint:
Villegas is an employee at the Hacienda Leddy as early as 1960. During his employment up to the time
of his dismissal, Villegas performed sugar farming job 8 hours a day, 6 days a week work, continuously
for not less than 302 days a year, and for which services he was paid P45.00 per day. He likewise
worked in petitioner's coconut lumber business where he was paid P34.00 a day for 8 hours work.

On June 9, 1993, Gamboa went to Villegas' house and told him that his services were no longer
needed without prior notice or valid reason. Hence, Villegas filed the instant complaint for illegal
dismissal.

The defense:
There is no employer-employee relationship between them because respondent was paid on a piece-
rate basis without supervision. Since his job was not necessary or desirable in the usual business or
trade of the hacienda, he cannot be considered as a regular employee. In fact, it was Villegas who has
stopped working in the hacienda and that he was not dismissed.

Issue:
1. Whether or not Villegas is a regular worker
2. Whether or not there was an illegal dismissal

Held:
Villegas is a regular worker.
Respondent have been employed in the Hacienda while the same was still being managed by
petitioner's father until the latter's death in 1993. The length of time that Villegas had worked with
the Gamboas had been more than 20 years of service. Indeed, petitioner's length of service is an
indication of the regularity of his employment. Even assuming that he was doing odd jobs around the
farm, such long period of doing said odd jobs is indicative that the same was either necessary or
desirable to petitioner's trade or business. Thus, by his length of service alone, Villegas became a
regular employee, by operation of law, one year after he was employed.
Article 280 of the Labor Code, describes a regular employee as one who is either (1) engaged to
perform activities which are necessary or desirable in the usual business or trade of the employer;
and (2) those casual employees who have rendered at least one year of service, whether continuous
or broken, with respect to the activity in which he is employed.

In Integrated Contractor and Plumbing Works, Inc. v. National Labor Relations Commission, we held
that the test to determine whether employment is regular or not is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or trade
of the employer. If the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and continuing
need for its performance as sufficient evidence of the necessity. Clearly, with more than 20 years of
service, Villegas, without doubt, passed this test to attain employment regularity.

Gamboa likewise argued that Villegas was paid on a piece-rate basis.However, payment on a piece-
rate basis does not negate regular employment. "The term 'wage' is broadly defined in Article 97
of the Labor Code as remuneration or earnings, capable of being expressed in terms of money
whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is just a
method of compensation and does not define the essence of the relations."
The Labor Code draws a fine line between regular and casual employees to protect the interests of
labor. Thus, notwithstanding any agreements to the contrary, what determines whether a certain
employment is regular or casual is not the will and word of the employer, to which the desperate
worker often accedes, much less the procedure of hiring the employee or the manner of paying his
salary. It is the nature of the activities performed in relation to the particular business or trades
considering all circumstances, and in some cases the length of time of its performance and its
continued existence.

There is an illegal dismissal.

As a regular worker, Villegas is entitled to security of tenure under Article 279 of the Labor Code and
can only be removed for cause. We found no valid cause attending to his dismissal and found also
that his dismissal was without due process.

The failure of the petitioner to comply with the procedural guidelines set forth in the Labor Code
renders its dismissal of Villegas illegal. An illegally dismissed employee should be entitled to either
reinstatement — if viable, or separation pay if reinstatement is no longer viable, plus backwages in
either instance. Considering that reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay should be granted.

FVR SKILLS AND SERVICES EXPONENTS, INC. V. SEVA,

G.R. No. 200857, October 22, 2014

Facts:
The twenty-eight (28) respondents (employees) in this case were employees of petitioner FVR Skills
and Services Exponents, Inc. (petitioner), an independent contractor engaged in the business of
providing janitorial and other manpower services to its clients. As early as 1998, some of the
respondents had already been under the petitioner's employ.
FVR entered into a Contract of Janitorial Service 8 (service contract) with Robinsons Land
Corporation (Robinsons) and agreed that the FVR shall supply janitorial, manpower and sanitation
services to Robinsons for a period of one year — from January 1, 2008 to December 31,
2008. 9 Pursuant to this, the employees were deployed to Robinsons.

Halfway through the service contract, the FVR asked the employees to execute individual contracts
which stipulated that their respective employments shall end on December 31, 2008, unless earlier
terminated. The FVR and Robinsons no longer extended their contract of janitorial services.

Consequently, the FVR dismissed the respondents as they were project employees whose duration
of employment was dependent on the petitioner's service contract with Robinsons. SCcHIE

The employees filed a complaint for illegal dismissal with the NLRC arguing that that they were not
project employees; they were regular employees who may only be dismissed for just or authorized
causes. 11 They also asked for payment of their unpaid wage differential, 13th month pay differential,
service incentive leave pay, holiday pay and separation pay. 12

FVR:
The petitioner submits that the CA erred in ruling that the respondents were regular employees and
that they had been illegally dismissed.
The respondents' contracts of employments did not only provide for a fixed term, but were also
dependent on the continued existence of the Robinsons' service contract. 19 Since this main contract
had not been renewed, the respondents' respective employment contracts were properly terminated.
Based on this reasoning, no illegal dismissal took place, only the expiration of the respondents' fixed
term contracts.

Respondent employees:
The respondents reiterate that even before the execution of the petitioner's service contract with
Robinsons, they had already been working for the petitioner between the years 1998 to 2007. Since
their hiring, they had been performing janitorial and other manpower activities that were necessary
or desirable to the petitioner's business.
They further argue that the employment contracts they executed were void since these were signed
under duress; the petitioner threatened not to release their salaries if they would refuse to sign.

Issue: Whether or not the respondent employees are regular empployees?

Held:
The Supreme Court denied the FVR’S petition. The employees are regular employees and not project
employees.

Article 280 (now Article 294) 23 of the Labor Code governs the determination of whether an
employee is a regular or a project employee. Under this provision, there are two kinds of regular
employees, namely:
(1) those who were engaged to perform activities which are usually necessary or desirable in the
 usual business or trade of the employer; and
(2) those casual employees who became regular after one year of service, whether continuous or
broken, but only with respect to the activity for which they have been hired.

The primary standard in determining regular employment is the reasonable connection between the
particular activity performed by the employee and the employer's business or trade. This connection
can be ascertained by considering the nature of the work performed and its relation to the scheme of
the particular business, or the trade in its entirety.
Guided by this test, we conclude that the respondents' work as janitors, service crews and sanitation
aides, are necessary or desirable to the petitioner's business of providing janitorial and manpower
services to its clients as an independent contractor.

Also, the respondents had already been working for the petitioner as early as 1998. Even before the
service contract with Robinsons, the respondents were already under the petitioner's employ. They
had been doing the same type of work and occupying the same positions from the time they were
hired and until they were dismissed in January 2009.There was no gap in between the projects
where they were assigned to. The petitioner continuously availed of their services by constantly
deploying them to its clients.

Lastly, under Department Order (DO) 18-02, the applicable labor issuance to the petitioner's case, the
contractor or subcontractor is considered as the employer of the contractual employee for purposes
of enforcing the provisions of the Labor Code and other social legislation.DO 18-02 grants contractual
employees all the rights and privileges due a regular employee, including the following: (a) safe and
healthful working conditions;(b) labor standards such as service incentive leave, rest days, overtime
pay, holiday pay, 13th month pay and separation pay; (c) social security and welfare benefits; (d)
self-organization, collective bargaining and peaceful concerted action; and (e) security of tenure.

In this light, we thus conclude that although the employees were assigned as contractual employees
to the FVR’s various clients, under the law, they remain to be the petitioner's regular employees, who
are entitled to all the rights and benefits of regular employment.

The respondents' employment contracts, which were belatedly signed, are voidable.
As already discussed, for an employee to be validly categorized as a project employee, it is necessary
that the specific project or undertaking had been identified and its period and completion date
determined and made known to the employee at the time of his engagement.

If the petitioner really intended the respondents to be project employees, then the contracts should
have been executed right from the time of hiring, or when the respondents were first assigned to
Robinsons, not when the petitioner's service contract was winding up. The terms and conditions of
the respondents' engagement should have been disclosed and explained to them from the
commencement of their employment. The petitioner's failure to do so supports the conclusion that it
had been in bad faith in evading the respondents' right to security of tenure.

In Glory Philippines, Inc. v. Vergara, 30 the Court rejected the validity of a fixed term contract
belatedly executed, and ruled that its belated signing was a deliberate employer ploy to evade the
employees' right to security of tenure.

Moreover, under Article 1390 of the Civil Code, contracts where the consent of a party was vitiated
by mistake, violence, intimidation, undue influence or fraud ,are voidable or annullable. The
petitioner's threat of non-payment of the respondents' salaries clearly amounted to intimidation.
Under this situation, and the suspect timing when these contracts were executed, we rule that these
employment contracts were voidable and were effectively questioned when the respondents filed
their illegal dismissal complaint.

JEANETTE V. MANALO VS. TNS PHILIPPINES, INC.

G.R No. 208567 November 26, 2014

Facts:
Respondent TNS Philippines, Inc. (TNS), with Gary Ocampo as its president and general manager, was
engaged primarily in the business of marketing research and information. As a market research
facility, TNS conducted public surveys about consumer goods, products, merchandise and/or services
of its clients. 7 TNS hired several field personnel on a project-to-project basis whose functions were
the following: a) to gather data on consumer goods, commodities, merchandise, and such other
products as requested by clients, through personal interviews, telephone interviews and/or such
other modes akin to the foregoing; and b) to submit the gathered data to the company for evaluation
and/or analysis.

Petitioners Jeanette V. Manalo, Vilma P. Barrios, Lourdes Lynn Michelle Fernandez, and Leila B.
Taiño (petitioners) were hired by TNS as field personnel on various dates starting 1996 for several
projects. They were made to sign a project-to-project employment contract. Thereafter, TNS would
file the corresponding termination report with the Department of Labor and Employment Regional
Office (DOLE-RO).

Petitioners were likewise assigned office-based tasks for which they were required to be in the office
from 9:00 o'clock in the morning to 6:00 o'clock in the evening, but most of the time, they worked
beyond 6:00 o'clock without receiving the corresponding overtime pay. These office-based tasks were
not on a per project basis and petitioners did not sign any contract for these jobs. These assignments
were not reported to the DOLE either.

A meeting among the Field Interviewers (FIs) was called by TNS' field manager. They were told that all
old FIs assigned in the "tracking" projects would be pulled out eventually and replaced by new FIs
contracted from an agency. Old FIs would be assigned only to "ad hoc" projects which were seasonal.
This prompted petitioners to file a consolidated complaint for regularization before the LA.

Labor Arbiter:
Dismissed the complaint on the ground that petitioners were found to be project employees who
knew the nature of their positions as such at the time of their employment and who agreed with full
understanding that the contracts would lapse upon completion of the project stated in their
respective contracts. The LA further ruled that even if petitioners were continuously rehired for
several and different projects, the determining factor was whether, at the time of hiring, the
employment was fixed for a specific project or undertaking and its completion was predetermined.

The LA was also of the view that petitioners were not illegally dismissed because as project
employees, the employer-employee relationship was terminated upon completion of the project or
phase for which they were hired. The term of their employment was coterminus with the duration
and until the accomplishment of the project.
NLRC:
Ruled in favor of petitioners and reversed the LA ruling. NLRC resolved that complainants used to be
project employees as shown by the samples of project-to-project employment contracts, project
clearance slips, and the establishment termination reports adduced in evidence. Case records,
however, show that the last time respondent company filed an establishment termination report
was in November 2007 indicating project completion on November 30, 2007. What is clear though is
that complainants were allowed to continue working after November 30, 2007. Respondent
company did not adduce in evidence employment contracts relating to the latest employment of the
complainants. In the absence of proof that the subsequent employment of the complainants
continued to be on a project-to-project basis under a contract of employment, complainants are
considered to have become regular employees after November 30, 2007. The failure to present
contract of project employment means that the employees are regular. Being regular employees,
petitioners were illegally dismissed because TNS, who had the burden of proving legality in dismissal
cases, failed to show how and why the employment of petitioners was terminated on October 21,
2008.

Court of Appeals:
Ruled in favor of TNS and opined that the projects assigned to petitioners were distinct and separate
from the other undertakings of TNS; that they were required to sign project-to-project employment
contracts; and that a corresponding termination report was made to DOLE for every accomplished
project. Further, it stated that the repeated re-hiring of petitioners for at least one (1) year did
not ipso facto convert their status to regular employees. According to the CA, the mere fact that a
project employee had worked on a specific project for more than one (1) year did not necessarily
change his status from project employee to regular or permanent employee.

Issue: Whether or not the complainant employees are project employees

Held:
Upon review of the records, the evidence failed to clearly, accurately, consistently, and convincingly
show that petitioners were still project employees of TNS.

Article 280 of the Labor Code, as amended, clearly defined a project employee as one
whose employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or service to be performed is seasonal in nature and the employment is for the
duration of the season. Additionally, a project employee is one whose termination of his employment
contract is reported to the DOLE every time the project for which he was engaged has been
completed.
In Maraguinot, Jr. v. NLRC, the Court held that once a project or work pool employee has been: (1)
continuously, as opposed to intermittently, rehired by the same employer for the same tasks or
nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or
trade of the employer, then the employee must be deemed a regular employee.

Although it is true that the length of time of the employee's service is not a controlling determinant of
project employment, it is vital in determining whether he was hired for a specific undertaking or in
fact tasked to perform functions vital, necessary and indispensable to the usual business or trade of
the employer. Petitioners' successive re-engagement in order to perform the same kind of work firmly
manifested the necessity and desirability of their work in the usual business of TNS as a market
research facility. Undisputed also is the fact that the petitioners were assigned office-based tasks
from 9:00 o'clock in the morning up to 6:00 o'clock in the evening, at the earliest, without any
corresponding remuneration.

The project employment scheme used by TNS easily circumvented the law and precluded its
employees from attaining regular employment status in the subtlest way possible.

Granting arguendo that petitioners were rehired intermittently, a careful review of the project
employment contracts of petitioners reveals some other vague provisions. Oddly, one of the terms
and conditions in the said contract stated that:
1. The need for your services being determinable and for a specific project starting
_____________ your employment will be for the duration of said project of the Company,
namely Project _____________ which is expected to be finished on _______________. The
Company shall have the option of renewing or extending the period of this agreement for
such time as it may be necessary to complete the project or because we need further time to
determine your competence on the job.

To the Court, the phrase "because we need further time to determine your competence on the job"
would refer to a probationary employment. Such phrase changes the tenor of the contract and runs
counter to the very nature of a project employment. TNS can, therefore, extend the contract which
was already fixed when it deemed it necessary to determine whether or not the employee was
qualified and fit for the job. Corollarily, TNS can likewise pre-terminate the contract not because the
specific project was completed ahead of time, but because of failure to qualify for the job.

For said reason, at the outset, the supposed project employment contract was highly doubtful. In
determining the true nature of an employment, the entirety of the contract, not merely its
designation or by which it was denominated, is controlling. Though there is a rule that conflicting
provisions in a contract should be harmonized to give effect to all, in this case, however,
harmonization is impossible because project employment and probationary employment are distinct
from one another and cannot co-exist with each other. Hence, should there be ambiguity in the
provisions of the contract, the rule is that all doubts, uncertainties, ambiguities and insufficiencies
should be resolved in favor of labor. This is in consonance with the constitutional policy of providing
full protection to labor.

In sum, petitioners are deemed to have become regular employees. As such, the burden of proving
the legality of their dismissal rests upon TNS. Having failed to discharge such burden of proving a just
or authorized cause, TNS is liable for illegal dismissal.

FUJI TELEVISION NETWORK, INC. VS. ARLENE S. ESPIRITU

G.R. NO. 204944-45, December 3, 2014

Facts:
Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc. (Fuji) as a news
correspondent/producer tasked to report Philippine news to Fuji through its Manila Bureau field
office. The employment contract was initially for one year, but was successively renewed on a yearly
basis with salary adjustments upon every renewal.

In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her condition, and
the Chief of News Agency of Fuji, Yoshiki Aoki, informed the former that the company had a problem
with renewing her contract considering her condition. Arlene insisted she was still fit to work as
certified by her attending physician.

After a series of verbal and written communications, Arlene and Fuji signed a non-renewal contract. In
consideration thereof, Arlene acknowledged the receipt of the total amount of her salary from
March-May 2009, year-end bonus, mid-year bonus and separation pay. However, Arlene executed the
non-renewal contract under protest.

Arlene filed a complaint for illegal dismissal with the NCR Arbitration Branch of the NLRC, alleging that
she was forced to sign the non-renewal contract after Fuji came to know of her illness. She also
alleged that Fuji withheld her salaries and other benefits when she refused to sign, and that she was
left with no other recourse but to sign the non-renewal contract to get her salaries.

Issues:
(1) Was Arlene an independent contractor?
(2) Was Arlene a regular employee?
(3) Was Arlene illegally dismissed? (discussion on security of tenure)
(4) Did the Court of Appeals correctly awarded reinstatement, damages and attorney’s fees?
(5)
Held:
Arlene was not an independent contractor.
Fuji alleged that Arlene was an independent contractor citing the Sonza case. She was hired because
of her skills. Her salary was higher than the normal rate. She had the power to bargain with her
employer. Her contract was for a fixed term. It also stated that Arlene was not forced to sign the non-
renewal agreement, considering that she sent an email with another version of her non-renewal
agreement.

Arlene argued (1) that she was a regular employee because Fuji had control and supervision over her
work; (2) that she based her work on instructions from Fuji; (3) that the successive renewal of her
contracts for four years indicated that her work was necessary and desirable; (4) that the payment of
separation pay indicated that she was a regular employee; (5) that the Sonza case is not applicable
because she was a plain reporter for Fuji; (6) that her illness was not a ground for her dismissal; (7)
that she signed the non-renewal agreement because she was not in a position to reject the same.

Distinctions among fixed-term employees, independent contractors, and regular employees

Fixed Term Employment

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.

These indications, which must be read together, make the Brent doctrine applicable only in a few
special cases wherein the employer and employee are on more or less in equal footing in entering
into the contract. The reason for this is evident: when a prospective employee, on account of special
skills or market forces, is in a position to make demands upon the prospective employer, such
prospective employee needs less protection than the ordinary worker. Lesser limitations on the
parties’ freedom of contract are thus required for the protection of the employee.

For as long as the guidelines laid down in Brent are satisfied, this court will recognize the validity of
the fixed-term contract. (GMA Network, Inc. vs. Pabriga)

Independent Contractor
One who carries on a distinct and independent business and undertakes to perform the job, work, or
service on its own account and under one’s own responsibility according to one’s own manner and
method, free from the control and direction of the principal in all matters connected with the
performance of the work except as to the results thereof.

No employer-employee relationship exists between the independent contractors and their principals.

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another
person for the performance of the former’s work, the employees of the contractor and of the latter’s
subcontractor, if any, shall be paid in accordance with the provisions of this Code.

XXX
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting
or restricting, he may make appropriate distinctions between labor-only contracting and job
contracting as well as differentiations within these types of contracting and determine who among
the parties involved shall be considered the employer for purposes of this Code, to prevent any
violation or circumvention of any provision of this Code.

There is “labor-only” contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are
directly related to the principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him.

Department Order No. 18-A, Series of 2011, Section 3

. . . an arrangement whereby a principal agrees to put out or farm out with a contractor the
performance or completion of a specific job, work or service within a definite or predetermined
period, regardless of whether such job, work or service is to be performed or completed within or
outside the premises of the principal.

This department order also states that there is a trilateral relationship in legitimate job contracting
and subcontracting arrangements among the principal, contractor, and employees of the contractor.
There is no employer-employee relationship between the contractor and principal who engages the
contractor’s services, but there is an employer-employee relationship between the contractor and
workers hired to accomplish the work for the principal.

Jurisprudence has recognized another kind of independent contractor: individuals with unique skills
and talents that set them apart from ordinary employees. There is no trilateral relationship in this
case because the independent contractor himself or herself performs the work for the principal. In
other words, the relationship is bilateral.

XXX

There are different kinds of independent contractors: those engaged in legitimate job contracting and
those who have unique skills and talents that set them apart from ordinary employees.

Since no employer-employee relationship exists between independent contractors and their

principals, their contracts are governed by the Civil Code provisions on contracts and other applicable
laws.

Regular Employees
Contracts of employment are different and have a higher level of regulation because they are
impressed with public interest. Article 13, Section 3 of the 1987 Constitution provides full protection
to labor.

Apart from the Constitutional guarantee, Article 1700 of the Civil Code states that: 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.

The level of protection to labor should vary from case to caese. When a prospective employee, on
account of special skills or market forces, is in a position to make demands upon the prospective
employer, such prospective employee needs less protection than the ordinary worker.

The level of protection to labor must be determined on the basis of the nature of the work,
qualifications of the employee, and other relevant circumstances such as but not limited to
educational attainment and other special qualifications.

Fuji’s argument that Arlene was an independent contractor under a fixed-term contract is
contradictory. Employees under fixed-term contracts cannot be independent contractors because in
fixed-term contracts, an employer-employee relationship exists. The test in this kind of contract is not
the necessity and desirability of the employee’s activities, “but the day certain agreed upon by the
parties for the commencement and termination of the employment relationship.” For regular
employees, the necessity and desirability of their work in the usual course of the employer’s business
are the determining factors. On the other hand, independent contractors do not have employer-
employee relationships with their principals.

To determine the status of employment, the existence of employer-employee relationship must first
be settled with the use of the four-fold test, especially the qualifications for the power to control.

The distinction is in this guise:

Rules that merely serve as guidelines towards the achievement of a mutually desired result without
dictating the means or methods to be employed creates no employer-employee relationship; whereas
those that control or fix the methodology and bind or restrict the party hired to the use of such means
creates the relationship.

In appliacation, Arlene was hired by Fuji as a news producer, but there was no evidence that she was
hired for her unique skills that would distinguish her from ordinary employees. Her monthly salary
appeared to be a substantial sum. Fuji had the power to dismiss Arlene, as provided for in her
employment contract. The contract also indicated that Fuji had control over her work as she was
rquired to report for 8 hours from Monday to Friday. Fuji gave her instructions on what to report and
even her mode of transportation in carrying out her functions was controlled.

Therefore, Arlene could not be an independent contractor.

Arlene was a regular employee with a fixed-term contract.

In determining whether an employment should be considered regular or non-regular, the applicable
test is the reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The standard, supplied by the law itself, is
whether the work undertaken is necessary or desirable in the usual business or trade of the employer,
a fact that can be assessed by looking into the nature of the services rendered and its relation to the
general scheme under which the business or trade is pursued in the usual course.
However, there may be a situation where an employee’s work is necessary but is not always desirable
in the usual course of business of the employer. In this situation, there is no regular employment.

Fuji’s Manila Bureau Office is a small unit213 and has a few employees. Arlene had to do all activities
related to news gathering.

The successive renewals of her contract indicated the necessity and desirability of her work in the
usual course of Fuji’s business. Because of this, Arlene had become a regular employee with the right
to security of tenure.

Arlene’s contract indicating a fixed term did not automatically mean that she could never be a regular
employee. For as long as it was the employee who requested, or bargained, that the contract have a
“definite date of termination,” or that the fixed-term contract be freely entered into by the employer
and the employee, then the validity of the fixed-term contract will be upheld.

Arlene was illegally dismissed.

As a regular employee, Arlene was entitled to security of tenure under Article 279 of the Labor Code
and could be dismissed only for just or authorized causaes and after observance of due process.

The expiration of the contract does not negate the finding of illegal dismissal. The manner by which
Fuji informed Arlene of non-renewal through email a month after she informed Fuji of her illness is
tantamount to constructive dismissal. Further, Arlene was asked to sign a letter of resignation
prepared by Fuji. The existence of a fixed-term contract should not mean that there can be no illegal
dismissal. Due process must still be observed.

Moreoever, disease as a ground for termination under Article 284 of the Labor Code and Book VI, Rule
1, Section 8 of the Omnibus Rules Implementing the Labor Code require two requirements to be
complied with: (1) the employee’s disease cannot be cured within six months and his continued
employment is prohibited by law or prejudicial to his health as well as to the health of his co-
employees; and (2) certification issued by a competent public health authority that even with proper
medical treatment, the disease cannot be cured within six months. The burden of proving compliance
with these requisites is on the employer. Non-compliance leads to illegal dismissal.

Arlene was not accorded due process. After informing her employer of her lung cancer, she was not
given the chance to present medical certificates. Fuji immediately concluded that Arlene could no
longer perform her duties because of chemotherapy. Neither did it suggest for her to take a leave. It
did not present any certificate from a competent public health authority.

GADIA, ET AL. VS SYKES ASIA, INC.

G.R No. 209499, January 28, 2015

Facts:
In this case, Alltel Communications (Alltel), a United States-based telecommunications firm,
contracted Sykes Asia to accommodate the needs and demands of Alltel clients for its postpaid and
prepaid services (Alltel Project). Services for the said project went on smoothly until Alltel sent two (2)
letters to Sykes Asia dated August 7, 2009 and September 9, 2009 informing the latter that it was
terminating all support services provided by Sykes Asia related to the Alltel Project. In view of this
development, Sykes Asia sent each of the petitioners end-of-life notices, informing them of their
dismissal from employment due to the termination of the Alltel Project.

Aggrieved, petitioners (there are 23 employees-petitioners) filed separate complaints for illegal
dismissal against respondents Sykes Asia, Chuck Sykes, the President and Chief Operating Officer of
Sykes Enterprise, Inc., and Mike Hinds and Michael Henderson, the President and Operations Director,
respectively, of Sykes Asia (respondents), praying for reinstatement, backwages, 13th month pay,
service incentive leave pay, night shift differential, moral and exemplary damages, and attorney’s
fees. In their complaints, petitioners alleged that their dismissal from service was unjust as the same
was effected without substantive and procedural due process.

In their defense, respondents averred that petitioners were not regular employees but merely
project-based employees, and as such, the termination of the Alltel Project served as a valid ground
for their dismissal. In support of their position, respondents noted that it was expressly indicated in
petitioners’ respective employment contracts that their positions are “project-based” and thus, “co-
terminus to the project.” Respondents further maintained that they complied with the requirements
of procedural due process in dismissing petitioners by furnishing each of them their notices of
termination at least thirty (30) days prior to their respective dates of dismissal.

Labor arbiter decided in favor of Sykes, it stated that petitioners are project-based employees.

NLRC decided that they are regular employees but were validly terminated due to redundancy.

The CA reinstated the decision of the Labor Arbiter.

Issue: Whether or not petitioners were merely project-based employees.

Held:
Yes, petitioners were project-based employees. Article 294 of the Labor Code, as amended,
distinguishing project-based employee from a regular employee;
Art. 294. Regular and casual employment.—The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specificproject or undertaking the completion or
termination of which hasbeen determined at the time of the engagement of the employee
or where the work or services to be performed is seasonal in nature and the employment is
for the duration of the season.
x x x x (Emphasis and underscoring supplied)

Verily, for an employee to be considered project-based, the employer must show compliance with
two (2) requisites, namely that: (a) the employee was assigned to carry out a specific project or
undertaking; and (b) the duration and scope of which were specified at the time they were engaged
for such project.
In the instant case, n this case, records reveal that Sykes Asia adequately informed petitioners of their
employment status at the time of their engagement, as evidenced by the latter’s employment
contracts which similarly provide that they were hired in connection with the Alltel Project, and that
their positions were “project-based and as such is co-terminus to the project.” In this light, the CA
correctly ruled that petitioners were indeed project-based employees, considering that: (a) they were
hired to carry out a specific undertaking, i.e., the Alltel Project; and (b) the duration and scope of such
project were made known to them at the time of their engagement, i.e., “co-terminus with the
project.”

The word “determinable time” concerning the duration of the undertaking simply means “capable of
being determined or fixed” The Court said that Sykes Asia substantially complied with this requisite
when it expressly indicated in petitioners’ contracts that their positions were “co-terminus with the
project”. This sufficiently apprised petitioners that their security of tenure with Sykes Asia would only
last as long as the Alltel project was subsisting.

The Supreme Court therefore decided in favor of Sykes Asia.

BASAN VS. COCA-COLA BOTTLERS PHILS

G.R No. 174265, February 4, 2015

Facts:
On February 18, 1997, petitioners Romeo Basan filed a complaint for illegal dismissal with money
claims against respondent Coca-Cola Bottlers Philippines, alleging that respondent dismissed them
without just cause and prior written notice required by law.

Respondent corporation, however, countered that it hired petitioners as temporary route helpers to
act as substitutes for its absent regular route helpers merely for a fixed period in anticipation of the
high volume of work in its plants or sales offices.6 As such, petitioners’ claims have no basis for they
knew that their assignment as route helpers was temporary in duration.

In 1998, the Labor Arbiter ruled in favor of petitioners and found that since they were performing
activities necessary and desirable to the usual business of petitioner for more than the period for
regularization, petitioners are considered as regular employees, and thus, their dismissal was done
contrary to law in the absence of just cause and prior written notice.7 Thus, it ordered respondent to
reinstate petitioners with full backwages from the time their salaries were withheld until their actual
reinstatement and to pay their lump sum increase extended to them in their collective bargaining
agreement, their accrued vacation and sick leave benefits, as well as monetary awards and attorney’s
fees

In 2003, the NLRC affirmed the Labor Arbiter’s decision and rejected respondent’s contention that
petitioners were merely employed for a specific project or undertaking the completion or termination
of which has been determined at the time of their engagement - nowhere in the records of the case
was it shown that petitioners were hired as project or seasonal employees, respondent having failed
to submit any contract of project or other similar proof thereof.9 It also noted that neither can
petitioners be considered as probationary employees for the fact that they had performed their
services for more than six (6) months.

Issue: WON the petitioner are not regular employees

Held:
The petition is impressed with merit.

As for the primordial issue in this case, it must be noted that the same has already been resolved in
Magsalin v. National Organization of Working Men, 20 wherein this Court has categorically declared
that the nature of work of route helpers hired by Coca Cola Bottlers Philippines, Inc. is necessary and
desirable in its usual business or trade thereby qualifying them as regular employees

Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinks in the
country. Respondent workers have long been in the service of petitioner company. Respondent
workers, when hired, would go with route salesmen on board delivery trucks and undertake the
laborious task of loading and unloading softdrink products of petitioner company to its various
delivery points. Even while the language of law might have been more definitive, the clarity of its
spirit and intent, i.e., to ensure a "regular" worker's security of tenure, however, can hardly be
doubted. In determining whether an employment should be considered regular or non-regular, the
applicable test is the reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. The standard, supplied by the
law itself, is whether the work undertaken is necessary or desirable in the usual business or trade of
the employer, a fact that can be assessed by looking into the nature of the services rendered and its
relation to the general scheme under which the business or trade is pursued in the usual course.

Here, respondent, in its position paper, expressly admitted that petitioners were employed as route
helpers in anticipation of the high volume of work in its plants and sales offices.23 As such,
respondent’s contention that petitioners could not have attained regular employment status for they
merely rendered services for periods of less than a year cannot be sustained in view of the Magsalin
doctrine previously cited. Indeed, the “pernicious practice” of engaging employees for a fixed period
short of the six-month probationary period of employment, and again, on a day-to-day basis
thereafter, mocks the law. At this point, it is worth recalling that Article 280 of the Labor Code, as
amended, provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.

Preceding paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with respect to
the activity in which he is employed and his employment shall continue while such activity exists.
Thus, pursuant to the Article quoted above, there are two kinds of regular employees, namely:
 1. Those who are engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer; and
2. Those who have rendered at least one year of service, whether continuous or broken, with
respect to the activities in which they are employed.

Simply stated, regular employees are classified into:

1. Regular employees by nature of work; and
2. Regular employees by years of service.

The former refers to those employees who perform a particular activity which is necessary or
desirable in the usual business or trade of the employer, regardless of their length of service; while
the latter refers to those employees who have been performing the job, regardless of the nature
thereof, for at least a year. Petitioners, in this case, fall under the first kind of regular employee
above.

As route helpers who are engaged in the service of loading and unloading softdrink products of
respondent company to its various delivery points, which is necessary or desirable in its usual
business or trade, petitioners are considered as regular employees. That they merely rendered
services for periods of less than a year is of no moment since for as long as they were performing
activities necessary to the business of respondent, they are deemed as regular employees under the
Labor Code, irrespective of the length of their service.

HACIENDA CATAYWA V. ROSARIO LOREZO

G.R. No. 179654, September 22, 2014

Facts:
In 2002, respondent Rosario Lorezo received, upon inquiry, a letter from the Social Security System
(SSS) Western Visayas Group informing her that she cannot avail of their retirement benefits since per
their record she has only paid 16 months. Such is 104 months short of the minimum requirement of
120 months payment to be entitle to the benefit.

She was also informed that their investigation of her alleged employment under employer Hda.
Cataywa could not be confirmed because Manuel Villanueva was permanently residing in Manila and
Joemarie Villanueva denied having managed the farm. She was also advised of her options: continue
paying contributions as voluntary member; request for refund; leave her contributions in-trust with
the System, or file a petition before the Social Security Commission (SSC) so that liabilities, if any, of
her employer may be determined.

Respondent then filed her Amended Petition dated September 30, 2003, before the SSC. She alleged
that she was employed as laborer in Hda. Cataywa managed by Jose Marie Villanueva in 1970 but was
reported to the SSS only in 1978. She alleged that SSS contributions were deducted from her wages
from 1970 to 1995, but not all were remitted to the SSS which, subsequently, caused the rejection of
her claim.

Petitioners Manuel and Jose Villanueva refuted in their answer, the allegation that not all
contributions of respondent were remitted. Petitioners alleged that all farm workers of Hda. Cataywa
were reported a^id their contributions were duly paid and remitted to SSS. It was the late Domingo
Lizares, Jr. who managed and administered the hacienda.

Issue: WON Respondent is considered to be a regular employee

Held:
It was settled that there is no particular form of evidence required to Drove the existence of the
employer-employee relationship. Any competent and relevant evidence to prove such relationship
may be admitted. This may entirely be testimonial

Petitioners erred in insisting that, due to passage of time, SSS Form R-1A is the only remaining source
of information available to prove when respondent started working for them. However, such form
merely reflected the time in which the petitioners reported the respondent for coverage of the SSS
benefit. They failed to substantiate their claim that it was only in 1978 that respondent reported for
work.

Jurisprudence has identified the three types of employees mentioned in the provision20 of the Labor
Code:
1. Regular employees or those who have been engaged to perform activities that are usually
necessary or desirable in the usual business or trade of the employer;
2. Project employees or those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of their
engagement, or those whose work or service is seasonal in nature and is performed for the
duration of the season; and
3. Casual employees or those who are neither regular nor project employees.

Farm workers generally fall under the definition of seasonal employees. It was also consistently held
that seasonal employees may be considered as regular employees when they are called to work from
time to time. They are in regular employment because of the nature of the job, and not because of
the length of time they have worked. However, seasonal workers who have worked for one season
only may not be considered regular employees.

The nature of the services performed and not the duration thereof, is determinative of coverage
under the law. To be exempted on the basis of casual employment, the services must not merely be
irregular, temporary or intermittent, but the same must not also be in connection with the business
or occupation of the employer. Thus, it is erroneous for the petitioners to conclude that the
respondent was a very casual worker simply because the SSS form revealed that she had 16 months
of contributions. It does not, in any way, prove that the respondent performed a job which is not in
connection with the business or occupation of the employer to be considered as casual employee.

Petitioners failed to dispute the allegation that the respondent performed hacienda work, such as
planting sugarcane point, fertilizing, weeding, replanting dead sugarcane fields and routine
miscellaneous hacienda work. They merely alleged that respondent was a very casual worker because
she only rendered work for 16 months. Thus, respondent is considered a regular seasonal worker and
not a casual worker as the petitioners alleged.

OKS DESIGNTECH, INC VS. MARY JAYNE L. CACCAM

GR. No. 211263, August 5, 2015

Facts:
Petitioner OKS DesignTech, Inc. hired respondent, Mary Jayne L. Caccam as an accountant under a
Contract of Employment for a Fixed Period from January 21, 2008 to June 21, 2008. Thereafter, the
contract was renewed for the period June 22, 2008 to June 21, 2009.

On June 8, 2009, Mary Jayne received a letter dated June 6, 2009 signed by the Company Manager,
Engr. Pongad, informing her of the expiration of her contract on June 21, 2009. She was also given the
option to consume her 19 days of unused leave credits until the end of her contract with the balance,
if any, to be converted to cash and released together with her last salary and 13th month pay on or
before June 30, 2009.

Claiming to have been summarily dismissed by virtue of the letter and not paid her earned salary and
benefits as promised, respondent filed on July 2, 2009, a complaint for illegal dismissal, nonpayment
of salaries (for the period May 21, 2009 to June 20, 2009), 13th month pay, allowances, service
incentive leave pay, damages and attorney’s fees, with prayer for reinstatement, against petitioner

OK DesignTech’s contention: denied that Mary Jayne was illegally dismissed. Instead, they claimed
that it was respondent who requested Pongad to sign the notice of end contract dated June 6, 2009,
and the certificate of employment which were to be used in her legal action for correction of her first
name in her birth certificate.

Mary Jayne’s contention:

She claims that she was a regular employee, arguing that the nature of her work was necessary and
desirable in the usual business of petitioner, and that she was merely imposed a fixed-term
employment with an understanding that her contract would just be renewed upon its expiration.
Hence, in view of her regular status, and petitioner’s failure to afford her the opportunity to be heard
before terminating her employment, she asserted that she was illegally dismissed.

While she admitted having secured the Certificate of Employment from Pongad, she denied having
caused him to issue and sign the notice of end contract. She further admitted that she opted not to
report for work after she received the notice of end of contract on June 8, 2009 since she was allowed
to use her 19 days unused leave credits, as stated in the June 6, 2009 letter

LA Ruling:
LA declared respondent to have been illegally dismissed. The LA ruled that since the latter signed the
first contract only on April 21, 2008 and not on January 21, 2008, the date she was hired, the said
contract was deemed a probationary contract, and that by extending it for another year, she attained
the status of a regular employee who may be dismissed only for just or authorized cause

NLRC Ruling:
The NLRC reversed and set aside the LA’s decision and instead, dismissed the complaint, ratiocinating
that there was no factual basis to support the conclusion that the first contract was a contract for
probationary employment. It observed that none of the parties assailed the fixed period employment,
adding that the nature of respondent’s work, even if necessary and desirable in the usual trade or
business of petitioner, and the fact that the period of her employment extended for more than one
year were not decisive indicators for regularity of employment in a fixed period employment.

CA Ruling:
The CA reversed and set aside the NLRC’s April 29, 2011 Decision and reinstated the LA’s April 23,
2010 Decision insofar as it declared respondent’s termination from work to be illegal. It concurred
with the LA that respondent was a regular employee, despite the existence of a fixed-term contract of
employment, since said contract, despite purportedly beginning on January 21, 2008, was actually
executed only on April 21, 2008, and extended for another year, during which respondent was
performing tasks that were usually necessary and desirable in the usual trade or business of
petitioner.

Issue: WON the employee was hired for a fixed period or is a regular employee who may not be
dismissed except for a just and authorized cause

Ruling:
The employee entered into a valid fixed-term employment.
Under Art. 294 of the Labor code, regular employment exists when the employee is: (a) one engaged
to perform activities that are necessary or desirable in the usual trade or business of the employer; or
(b) a casual employee who has rendered at least one year of service, whether continuous or broken,
with respect to the activity in which he is employed.

Meanwhile, an employee is said to be under a fixed-term employment when he is hired under a

contract which specifies that the employment will last only for a definite period.

In the landmark case of Brent School, Inc. v. Zamora, this Court sustained the validity of fixed-term
employment contracts. In light of the said case, the Court laid down the following indicators under
which fixed-term employment could not be construed as a circumvention of the law on security of
tenure:
(a) 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
(b) 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.

An examination of the contracts entered into by respondent reveals that her employment was clearly
limited to a fixed period and did not go beyond such period. She, however, asserted that she is
deemed a regular employee in view of the nature of her employment as an accountant, an activity
that is necessary and desirable in the usual business or trade of the company. This notwithstanding,
case law dictates that even if an employee is engaged to perform activities that are necessary or
desirable in the usual trade or business of the employer, the same does not preclude the fixing of
employment for a definite period. There is nothing essentially contradictory between a definite
period of employment and the nature of the employee’s duties.

In fact, the Court, in Brent, had already pronounced that the decisive determinant in fixed-term
employment should not be the activities that the employee is called upon to perform, but the day
certain agreed upon by the parties for the commencement and termination of their employment
relationship.

Here, respondent undisputedly executed a first employment contract which clearly states on its face
that it was for a fixed period of five (5) months beginning from January 21, 2008 to June 21, 2008.
While it appears that the said contract was actually signed only on April 21, 2008, the fact remains
that respondent was made well-aware of the fixed period undertaking from the time of her
engagement on January 21, 2008. Otherwise, she would not have agreed to the contract’s signing.
Significantly, nothing on record shows that respondent’s consent thereto was vitiated or that force,
duress, or improper pressure was exerted on her, or that petitioner exercised moral dominance over
her. The same holds true for the second fixed-term contract covering the period from June 22, 2008
until June 21, 2009 which she voluntarily signed on June 21, 2008.

That respondent was made to believe that her contract will just be renewed every time it expires was
not supported by substantial evidence.

The crucial factor to it all is that there is no showing that the subject contracts were used as
subterfuge to deny respondent of her security of tenure. Contrary to the findings of the CA, there was
no ambiguity in the said contracts when it stipulated that the employee may be terminated if he “fails
to meet the reasonable standards made known to him.” While such provision would commonly
appear in a probationary contract pursuant to Article 295 of the Labor Code, its inclusion in the fixed-
period contracts in this case never gave rise to an implied probationary employment status, for which
she was to be evaluated by the company under certain regularization standards during a specified
trial period, simply because respondent was never employed on a probationary basis.

Further, it would not be amiss to point out that while respondent had presented a Certificate of
Employment dated June 6, 2009 which showed that she was supposedly “terminated” on June 5,
2009, the same cannot be considered as evidence of her premature termination from the company
but instead, evidence to show that respondent had chosen to avail of her 19 days unused leave
credits, as allowed by the company per its June 6, 2009 letter. Upon her own request, she was issued
this certification to clear her of all her outstanding liabilities since she, as admitted, would not
anymore report for work in view of her leave availment.

For all the foregoing reasons, the Court upholds the finding that respondent was a fixed-term
employee and not a regular one whose employment may be validly terminated upon the expiration of
her contract. To reiterate, contracts of employment for a fixed period are not per se unlawful. What is
objectionable is the practice of some unscrupulous employers who try to circumvent the law
protecting the workers from the capricious termination of employment
In fine, having been hired under a valid fixed-period employment contract, respondent's employment
was lawfully terminated upon its expiration on June 21, 2009 without need of any further notice.
ENCHANTED KINGDOM, INC VS. MIGUEL J. VERZO
GR No. 209559, December 9, 2015

Facts:
On August 19, 2009, Verzo was hired by Enchanted to work as Section Head – Mechanical &
Instrumentation Maintenance (SH-MIM) for its theme park in Sta. Rosa City, Laguna, for a period of six
(6) months on probationary status. He was tasked to conduct “mechanical and structural system
assessments,” as well as to inspect and evaluate the “conditions, operations and maintenance
requirements of rides, facilities and buildings to ensure compliance with applicable codes, regulations
and standards.” He was also provided with a detailed list of responsibilities that he should fulfill.

During the probationary period, Enchanted assessed Verzo’s performance as not up to par. On
January 26, 2010, Schoefield, one of Verzo’s fellow section heads, made his recommendation to
Velesrubio, Verzo’s immediate supervisor, that he should not be considered for regularization. In his
memorandum, Schoefield noted the following: Verzo failed to take action to replace the faucets in the
lavatories of the park and to ensure that the proximity brackets of one of the rides were properly
installed; he mishandled the operation of the park’s submersible pump, which resulted in the
overflow of the sludge from Enchanted’s sewage treatment plant towards the parking entrance; he
once reported that the ZORB Ball pond had sufficient water for its operation, but the following day,
one of Enchanted’s patrons got injured due to the pond’s low water level; and he often used
company time browsing the internet for his personal use. Schoefield’s evaluation was shared by
another section head, Jun Montemayor (Montemayor).

On February 15, 2010, Enchanted formally informed Verzo that he did not qualify for regularization
because his work performance for the past five (5) months “did not meet the requirements of the
position of Section Head for Mechanical and Instrumentation Maintenance”

Believing that he was arbitrarily deprived of his employment, Verzo filed a complaint for illegal
dismissal, damages and attorney’s fees before the LA.

In his complaint, Verzo claimed that it was only after he was formally hired by Enchanted that he was
informed of his probationary status. And even after despite being placed on a probationary status, he
was not advised as to the standards required for his regularization

The Decision of the LA:

The LA rendered its decision dismissing Verzo’s complaint for lack of merit. The LA explained that his
status being probationary, his employment was only temporary and, thus, could be terminated at any
time. The LA stated that as long as the termination was made before the end of the six-month
probationary period, Enchanted was well within its rights to sever the employer-employee
relationship with Verzo.

The Decision of the NLRC:

The NLRC issued a resolution denying Verzo’s appeal for lack of merit. According to the NLRC, his
contention that he was not furnished or shown a probationary contract so that he could have been
advised of the standards for regularization was belied by the fact that he himself attached to his
position paper his signed contract of employment informing him of his probationary status and the
job description of his position at Enchanted.

The Decision of the CA:

The CA, in the assailed decision, reversed the findings of the NLRC and the LA. It was of the view that
the probationary contract between the parties failed to set the standards that would gauge Verzo’s
fitness and qualification for regular employment.

Essentially, Enchanted questions the finding of the CA that it illegally dismissed Verzo, considering
that it was simply exercising its prerogative to dismiss a probationary employee for failing to meet the
reasonable standards it set at the time he was hired.

Verzo, on the other hand, contends that he was a regular employee of Enchanted because he was not
apprised of his probationary status at the start of his employment and was not informed of the
reasonable standards for his regularization. As a regular employee, Verzo claims that he could only be
dismissed for cause and only after the twin requirements of notice and hearing had been complied
with.

Issue: WON Verzo was illegally dismissed

Ruling: No, Verzo was not illegally dismissed.

A probationary employee is one who, for a given period of time, is being observed and evaluated to
determine whether or not he is qualified for permanent employment. A probationary appointment
affords the employer an opportunity to observe the skill, competence and attitude of a probationer. A
probationary employee, like a regular employee, enjoys security of tenure. A probationary employee
may be terminated for any of the following: (a) a just; or (b) an authorized cause; and (c) when he fails
to qualify as a regular employee in accordance with the reasonable standards prescribed by the
employer

Section 6(d), Rule I, Book VI of the Implementing Rules of the Labor Code provides that if the
employer fails to inform the probationary employee of the reasonable standards on which his
regularization would be based at the time of the engagement, then the said employee shall be
deemed a regular employee.

In Abbott Laboratories v. Alcaraz, the Court stated that when dealing with a probationary employee,
the employer is made to comply with two (2) requirements: first, the employer must communicate
the regularization standards to the probationary employee; and second, the employer must make
such communication at the time of the probationary employee’s engagement. If the employer fails to
comply with either, the employee is deemed as a regular and not a probationary employee. An
exception to this rule is when the job is self-descriptive, as in the case of maids, cooks, drivers, or
messengers.

In the case at bench, the evidence is clear that when Verzo was first hired by Enchanted, he was
placed on a probationary status. The letter, dated August 26, 2009, clearly reflects not only the
agreement of both parties as to the probationary status of the employment and its duration, but also
the fact that Enchanted informed Verzo of the standards for his regularization.

Verzo makes much noise of the fact that the letter was not served upon him immediately at the very
start of his employment on August 19, 2009. While it may be argued that ideally employers should
immediately inform a probationary employee of the standards for his regularization from day one,
strict compliance thereof is not required. The true test of compliance with the requirements of the
law is, of course, one of reasonableness. As long as the probationary employee is given a reasonable
time and opportunity to be made fully aware of what is expected of him during the early phases of
the probationary period, the requirement of the law has been satisfied.

At any rate, contrary to the findings of the CA, the Court finds that Enchanted had basis when it
decided not to continue with the services of Verzo as SH-MIM based on reports detailing the reasons
why Verzo failed to meet the standards set by Enchanted and compromised the safety of its patrons.

On punctuality, in the recent case of Carvajal v. Luzon Development Bank,the Court has emphasized
that:
Punctuality is a reasonable standard imposed on every employee, whether in government or private
sector. As a matter of fact, habitual tardiness is a serious offense that may very well constitute gross
or habitual neglect of duty, a just cause to dismiss a regular employee.

Notice and Hearing Not Required

Whether or not Verzo was afforded the opportunity to explain his side is of no consequence. Under
Section 2 Rule I, Book VI of the Implementing Rules of the Labor Code: “If the termination is brought
about by the completion of a contract or phase thereof, or by failure of an employee to meet the
standards of the employer in the case of probationary employment, it shall be sufficient that a written
notice is served the employee, within a reasonable time from the effective date of termination.
[Emphasis Supplied]”

In Philippine Daily Inquirer v. Magtibay, the Court stressed that notice and hearing are not required in
case a probationary employee is not retained for failure to comply with the reasonable standards set
by his employer.

Considering that Verzo failed to meet the reasonable standards set out by it, Enchanted cannot be
compelled to regularize Verzo. Enchanted, being engaged in the business of providing entertainment
and amusement with mechanical rides and facilities, is not duty-bound to retain an employee who is
clearly unfit. With his attitude, inefficiency and incompetency, it is most likely that an accident would
occur for which Enchanted, an amusement enterprise which caters mostly to children, could be sued
for damages

OLYMPIA HOUSING, INC. VS. ALLAN LAPASTORA AND IRENE UBALUBAO

GR No. 187691, January 13, 2016

Facts:
The instant case stemmed from a complaint for illegal dismissal, payment of backwages and other
benefits, and regularization of employment filed by Allan Lapastora (Lapastora) and Irene Ubalubao
(Ubalubao) against Olympic Housing, Inc. (OHI), the entity engaged in the management of the
Olympia Executive Residences (OER), a condominium hotel building situated in Makati City, owned by
a Philippine-registered corporation known as the Olympia Condominium Corporation (OCC).

Lapastora and Ubalubao alleged that they worked as room attendants of OHI from March 1995 and
June 1997, respectively, until they were placed on floating status on February 24, 2000, through a
memorandum sent by Fast Manpower.

To establish employer-employee relationship with OHI, Lapastora and Ubalubao alleged that they
were directly hired by the company and received salaries directly from its operations clerk, Myrna
Jaylo (Jaylo). They also claimed that OHI exercised control over them as they were issued time cards,
disciplinary action reports and checklists of room assignments. It was also OHI which terminated their
employment after they petitioned for regularization. Prior to their dismissal, they were subjected to
investigations for their alleged involvement in the theft of personal items and cash belonging to hotel
guests and were summarily dismissed by OHI despite lack of evidence.

OHI and Limcaoco alleged that Lapastora and Ubalubao were not employees of the company but of
Fast Manpower, with which it had a contract of services, particularly, for the provision of room
attendants. They claimed that Fast Manpower is an independent contractor as it (1) renders janitorial
services to various establishments in Metro Manila, with 500 janitors under its employ; (2) maintains
an office where janitors assemble before they are dispatched to their assignments; (3) exercises the
right to select, refuse or change personnel assigned to OHI; and (4) supervises and pays the wages of
its employees.

Reinforcing OHI’s claims, Fast Manpower reiterated that it is a legitimate manpower agency and that
it had a valid contract of services with OHI, pursuant to which Lapastora and Ubalubao were deployed
as room attendants. Lapastora and Ubalubao were, however, found to have violated house rules and
regulations and were reprimanded accordingly. It denied the employees’ claim that they were
dismissed and maintained they were only placed on floating status for lack of available work
assignments.

Subsequently, on August 22, 2000, a memorandum of agreement was executed, stipulating the
transfer of management of the OER from OHI to HSAI-Raintree, Inc. (HSAI-Raintree). Thereafter, OHI
informed the Department of Labor and Employment (DOLE) of its cessation of operations due to the
said change of management and issued notices of termination to all its employees. This occurrence
prompted some union officers and members to file a separate complaint for illegal dismissal and
unfair labor practice against OHI, OCC and HSAI-Raintree

LA DECISION: Lapastora and Ubalubao were regular employees of OHI and that they were illegally
dismissed.

NLRC DECISION: Dismissed the appeal for lack of merit.The NLRC held that OHI is the employer of
Lapastora and Ubalubao since Fast Manpower failed to establish the fact that it is an independent
contractor. Further, it ruled that the memorandum of agreement between OCC and HSAI-Raintree
did not render the reinstatement of Lapastora and Ubalubao impossible since a change in the
management does not automatically result in a change of personnel especially when the
memorandum itself did not include a provision on that matter. The NLRC then likewise upheld the
validity of the closure of business and the consequent termination of employees in favor of OHI,
holding that the measures taken by the company were proper exercises of management prerogative.

Ubalubao, on her own behalf, filed a Motion to Dismiss/Withdraw Complaint and Waiver,29 stating
that she has decided to accept the financial assistance in the amount of ₱50,000.00 offered by OHI, in
lieu of all the monetary claims she has against the company, as full and complete satisfaction of any
judgment that may be subsequently rendered in her favor. She likewise informed the Court that she
had willingly and knowingly executed a quitclaim and waiver agreement, releasing OHI from any
liability. She thus prayed for the dismissal of the complaint she filed against OHI. The Court granted
Ubalubao’s motion and considered the case closed and terminated as to her part, leaving Lapastora
as the lone respondent in the present petition.

Issue: WON Lapastora was illegally dismissed

Ruling: Yes, Lapastora was illegally dismissed.

Indisputably, Lapastora was a regular employee of OHI. As found by the LA, he has been under the
continuous employ of OHI since March 3, 1995 until he was placed on floating status in February
2000. His uninterrupted employment by OHI, lasting for more than a year, manifests the continuing
need and desirability of his services, which characterize regular employment.

Based on records, OHI is engaged in the business of managing residential and commercial
condominium units at the OER. By the nature of its business, it is imperative that it maintains a pool
of housekeeping staff to ensure that the premises remain an uncluttered place of comfort for the
occupants. It is no wonder why Lapastora, among several others, was continuously employed by OHI
precisely because of the indispensability of their services to its business. The fact alone that
Lapastora was allowed to work for an unbroken period of almost five years is all the same a reason to
consider him a regular employee.

The attainment of a regular status of employment guarantees the employee’s security of tenure that
he cannot be unceremoniously terminated from employment. “To justify fully the dismissal of an
employee, the employer must, as a rule, prove that the dismissal was for a just cause and that the
employee was afforded due process prior to dismissal. As a complementary principle, the employer
has the onus of proving with clear, accurate, consistent, and convincing evidence the validity of the
dismissal.”

OHI miserably failed to discharge its burdens thus making Lapastora’s termination illegal.

On the substantive aspect, it appears that OHI failed to prove that Lapastora’s dismissal was grounded
on a just or authorized cause. While it claims that it had called Lapastora’s attention several times for
tardiness, unexplained absences and loitering, it does not appear from the records that the latter had
been notified of the company’s dissatisfaction over his performance and that he was made to explain
his supposed infractions. It does not even show from the records that Lapastora was ever disciplined
because of his alleged tardiness. In the same manner, allegations regarding Lapastora’s involvement
in the theft of personal items and cash belonging to hotel guests remained unfounded suspicions as
they were not proven despite OHI’s probe into the incidents.

On the procedural aspect, OHI admittedly failed to observe the twin notice rule in termination cases.
As a rule, the employer is required to furnish the concerned employee two written notices: (1) a
written notice served on the employee specifying the ground or grounds for termination, and giving
to said employee reasonable opportunity within which to explain his side; and (2) a written notice of
termination served on the employee indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination. In the present case, Lapastora was not
informed of the charges against him and was denied the opportunity to disprove the same. He was
summarily terminated from employment.

That there is an existing contract of services between OHI and Fast Manpower where both parties
acknowledged the latter as the employer of the housekeeping staff, including Lapastora, did not alter
established facts proving the contrary. The parties cannot evade the application of labor laws by
mere expedient of a contract considering that labor and employment are matters imbued with public
interest. It cannot be subjected to the agreement of the parties but rather on existing laws designed
specifically for the protection of labor.The Court finds no compelling reason to deviate from the
findings of the LA and NLRC, especially in this case when the same was affirmed by the CA.

SAMONTE V LA SALLE GREENHILLS

G.R. No. 199683, February 10, 2016

Facts:
From 1989 (for 15 years) La Salle contracted the services of medical professionals (pedia, dentists and
a physician) to compromise its Health Service Team (HST). Petitioners, along with other members of
the HST signed uniform contracts of retainer for the period of a specific academic calendar beginning
in June 1989 and the succeeding 15 years and terminating in March of the following year when the
school year ends. The retainer states that it shall be temporary in character and shall be solely limited
to the project/undertaking assigned to the retainer within the said project. The retainer without need
of notice automatically ceases on the expiration date of the said project. And that La Salle may, upon
prior notice, terminate the contract should the retainer fail in any way to perform his assign task.
After 15 consecutive years of renewal, La Salle informed the petitioners that their contract will no
longer be renewed for the following school year by reason that they will hire 2 full time doctors and
dentists. When petitioners requested for payment of separation pay, they were denied, thus they
filed a complaint for illegal dismissal. Petitioners alleged that they were regular employees who could
only be dismissed for just and authorized causes. That they received up to the time of their
termination regular monthly pay, annual 13th month pay, automatic yearly increase to their monthly
salary, and a performance bonus. That they served an average of 9 hrs a week and they were on call
for any medical exigencies beyond their duty hours. They attended staff meeting and participated in
various gatherings and activities sponsored by respondent school. They also participated in
medical/dental missions in the name of the respondent. Formulation of health services unit manual,
participated in the collation of evaluation of services rendered. Participated in the yearly evaluation of
complaints which is a function of a regular employee.
On the other hand, La Salle denied that petitioners were regular employees, instead they were
independent contractors who were retained by La Salle by reason of their medical skills and expertise
to provide ancillary medical and dental services to both its students and faculty. That petitioners were
on retainer basis paid monthly retainer fees and not regular salaries. And that La Salle had no power
to impose disciplinary measure upon them including dismissal from employment. And that La Salle
had no power of control over how petitioners actually performed their services.

Labor Arbiter dismissed the petitioners and ruled that they were independent contractors under
retainership contracts who never became regular employees based on the absence of control by La
Salle over them. The services provided by petitioners were not necessary to La Salle’s business; the
pay slips are not salaries but professional fees; issuance of ids and requirement to log are not indicia
of La Salle’s power of control over them and were only imposed for security reasons. Petitioners were
also not required to attend or participate in school sponsored activities and did not enjoy benefits.
Their schedule were also only for 2-3 days a well for 3 hrs a day, for a maximum of 9 hrs. Regardless,
Labor Arbiter still awarded them separation pay at a rate of ½ month salary for every year of service
on the ground of compassionate social justice.

NLRC ruled that petitioners were fixed period employees whose terms of employment were subject
to agreement for a specific duration.

CA ruled against petitioner’s claim of regular employment.

Issues: WON petitioners were fixed period employees or regular employees. WON they were illegally
dismissed.

Ruling:
ART. 280 LC classifies employees into regular, project, seasonal, and casual. It states that:
The provisions of written agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to be regular where the
employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except where the employment has been fixed for
a specific project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or service to be performed
is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed casual if it is not covered by the preceding paragraph:

provided that any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exist.

The provision classifies regular employees into 2 kinds: (1) those engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer; and (1) casual
employees who have rendered at least 1 year of service, whether continuous or broken.
NLRC correctly identified the existence of an er-ee relationship between petitioners and La Salle and
not a bilateral independent contractor relationship.

NLRC relied on Brent Case ruling. There are employment contracts where a fixed term is an essential
and natural appurtenance such as overseas employment contracts and officers in educational
institutions. The determinant in the terms of employment contract should not be the activities that
the employee is called upon to perform, but the day certain agreed upon by the parties for the
commencement and termination of their employment relationship. Art. 280’s purpose is to prevent
circumvention of the employee’s right to be secure in his tenure. However this should have no
application where a fixed period of employment was agreed upon knowingly and voluntarily by the
parties, without any force, duress or improper pressure being brought to bear upon the employee
and absent any other circumstances vitiating his consent, or where it is satisfactorily appears that the
employee and employer dealt with each other or more or less equal terms with no moral dominance
whatever being exercised by the former over the latter.

Thus, a fixed term employment is allowable under the LC only if it was voluntarily and knowingly
entered into by the parties who must have dealt with each other on equal terms not one exercising
moral dominance over the other. Further, the nomenclature of contracts, especially employment
contracts, does not define the employment status of a person. Rather it is defined and prescribed by
law and not by what the parties say it should be. Also important to consider is that a contract of
employment is impressed with public interest such that labor contracts must yield to the common
good.

Also a fixed term contract is an employment contract which the repeated renewals thereof make for a
regular employment. Employees under fixed term contract can’t be independent contractors because
in fixed term, an employer-employee relationship exists. In this court the CA disregarded the repeated
renewals of the contracts of retainers. Also the contracts of retainer were prepared by La Salle alone.
Petitioners were still not on equal footing with La Salle as they did not want to lose their jobs that
they had stayed in for 15 yrs. There were no terms and conditions in the contracts that would indicate
that petitioners were on equal footing in negotiation it. And without specifying what the task assigned
to petitioners are, La Salle may upon prior notice terminate the contract should retainer fail in any
way to perform his assigned task.

Also, the contact shows that La Salle has power of control over the petitioners. Power of control being
referred to as the existence of power and not necessarily to the actual exercise. Given that there was
repeated renewals for 15 yrs, the necessity of work performed by the petitioners, the existence of La
Salle’s power of control over the means and method pursued by petitioners in the performance of
their job.
Petitioners attained regular employment and is entitled to security tenure who could only be
dismissed for just and authorized cases.

FALLARME V SAN JUAN DE DIOS EDUCATIONAL FOUNDATION

G.R. No. 190015, September 14, 2016

Facts:
Fallarme and Gacos were hired by San Juan de Dios Educational Foundation (respondent) for full time
teaching positions. Both of their appointments were signified by a memorandum issued by the school
informing them that they had been hired. Memorandum did not specify whether petitioners were
being employed on a regular or probationary status. Fallarme was also appointed to perform
administrative work for the school as personnel officer and to serve as head of the Human Devt.
Counselling Services. Despite hacing served as a faculty member since 2003-2004, she was only asked
to sign and submit to respondent a written contract on the nature of her employment and
corresponding obligations in 2006. This contract specified that the status of Fallarme was a
probationary faculty member. After the expiration of the contract she was informed that her contract
would not be renewed and that it was the school’s administrative prerogative.

Gacos has the same circumstances with Fallarme. She taught since 2003-2004 and was only later in
2006 when she was made to sign and submit a written contract on the nature of her employment and
corresponding obligations. Her status was likewise probationary. And later she was also informed that
her contract would not be renewed. Petitioners questioned the nonrenewal and was not satisfied
with the reply proceeded to file a complaint against respondents for illegal dismissal.

Respondents claim that petitioners had been remiss in their duties. That both petitioners sold
computerized final exam sheets to their students without school approval.

Labor Arbiter ruled that petitioners were regular employees who were entitled to security of tenure.
Cited 1992 Manual Regulations for Private Schools which provides that regularization must be given
to a teacher who is employed as a full-time teacher; has rendered 2 consecutive yrs of service; and
has performed satisfactorily within that period.
NLRLC reversed the Labor Arbiter and held that petitioners failed to meet the 3rdrequirement, they
had not served respondent college satisfactorily. CA affirmed NLRC.

Issues: WON petitioners are regular respondents. WON there was illegal dismissal of the petitioners.

Ruling:
Petitioners are regular employees of the respondent college however they were dismissed for a valid
cause.

Petitioners were considered regular employees since day 1 of their employment. While the LC
provides general rules as to probationary employment, these rules are supplemented by the Manual
Regulations for Private Schools with respect to the period of probationary employment of private
school teachers. That a teacher must satisfy the following requisites to be entitled to a regular faculty
status: (1) must be a full time teacher; (2) rendered 3 yrs of service;(3) service must have been
satisfactory. The first 2 requisites was realized however the parties disagree on the fulfillment of the
3rd requisites whether petitioner’s performance within the probationary period was satisfactory.

As to the determination whether the performance of probationary teaching personnel has been
sufficiently satisfactory as to warrant their regularization lies in the hands of the school. Academic
freedom gives the school the discretion and prerogative to impose standards on its teachers and to
determine whether these have been met upon the conclusion of probationary period. The schools
exercise of administrative prerogative in this respect is not plenary and it is still subject to the
limitations imposed by the C and jurisprudence on valid probationary employment.

Valid probationary requirement under Art. 281 presupposes the concurrence of 2 requirements: the
employer must have made known to the probationary employee the reasonable standard that the
latter must comply with to qualify as regular employee; and the employer must have informed the
probationary employee of the applicable performance standard at the time of the latter’s
engagement.

With respect to the regularization of probationary teachers, they must have rendered satisfactory
service. Satisfactory connotes the requirement for schools to set reasonable standards to be followed
by teachers on probationary employment. The records lack evidence that respondent college clearly
and directly communicated to petitioners, at the time they were hired, what reasonable standards
they must meet for the school to consider their performance satisfactory and for it to grant them
regularization. Memorandum also did not indicate their status as probationary employees, the
specific period of affectivity of their status as such, and reasonable standards they need to comply
with to be granted regular status. Failure to inform about them of these matters is in violation of the
requirements of valid probationary employment. Every contract must specify the designation,
qualification, salary rate, period and nature of service and its date of affectivity.

However, the dismissals of petitioners is valid. Dismissals have two facetes: the legality of the act of
dismissal. With respect to substantive due process, insubordination or willful disobedience is one of
the just causes of dismissal. Under Art 282 LC for there to be valid cause, the employee’s assailed
conduct must have been willful; the order violated must have been reasonable m lawful, made know
to the employee and pertinent to the duties that the employee has been engage to discharge.

The infractions committed by both petitioners were selling computerized final examination sheets to
students without rep and colleges permission. Petitioner’s act of collecting money from their students
fails under one of the valid id cards for termination under 1992. And also both sold textbooks. Gaco’s
act of out of campus activities without consent of respondent college.

Thus although the dismissal was for a valid cause, we nevertheless find that rep college failed to
comply with the proper procedure for their dismissal in violation of procedural due process. And for
termination based on a just cause, the law requires 2 written notices before the termination of
employment: (1) a written notice served by the employer on the employee specifying the ground for
termination and giving reasonable opportunity for that employee to explain thee latters side; (2)
written notice of termination served by the employer on the employee indicating that upon die
considerations of all circumstances, grounds have been established to justify the latter’s termination.
However, if the dismissal was for a valid cause, failure to comply with the proper procedural
requirements shall not nullify the dismissal, but shall only warrant the payment of indemnity in the
form of nominal damages.

OYSTER PLAZA HOTEL VS. MELIVO

GR No. 217455, October 05, 2016

Facts:
Respondent Errol O. Melivo (Melivo) filed before the NLRC a Complaint for illegal dismissal with
prayers for reinstatement and payment of back wages, holiday pay, overtime pay, service incentive
leave, and, 13th month pay against petitioners Oyster Plaza Hotel (Oyster Plaza), Rolito Go (Go), and
Jennifer Ampel (Ampel).

Melivo filed his Position Paper, alleging the following: that Oyster Plaza was a business entity
engaged in the business of hotel operation, under the ownership/management of Go and Ampel;
that in August 2008, Oyster Plaza hired him as a trainee room boy; that in November 2008, Oyster
Plaza hired him as a probationary room boy and he was made to sign an employment contract but
he was not furnished a copy, that the said contract expired in March 2009 and his work ended; that
on April 7, 2009, Oyster Plaza hired him again as a room boy, but without any employment contract
or document; and that in September 2009, his supervisor Ampel verbally told him that his contract
was expiring, thus, he must stop reporting for work.

The LA, the NLRC and the CA ruled that Melivo was illegally dismissed. Considering that Melivo had
already rendered six (6) months of service for Oyster Plaza, the LA held that he had become a
regular employee by operation of law. The LA stated that having attained the regular employment
status, he could only be terminated for a valid cause; and because the petitioners failed to present
countervailing evidence to justify Melivo's dismissal, there could be no other conclusion except that
the dismissal was illegal.

They were of the view that the petitioners' denial of illegal dismissal did not deserve any
consideration. It posited that the contract of employment failed to reveal the specific project or any
phase of it where he was employed; and that the petitioners failed to submit a report of his
termination to the nearest public employment office, as required under Department
Order (D.O.) No. 19. The failure to file a termination report upon the alleged cessation of Melivo's
employment was an indication that he was not a project employee, but a regular employee.

Petitioner contended that Melivo was not illegally dismissed because he was merely employed for
a fixed term, which term already expired. The petitioners also submitted Melivo's Contract of
Employment as an attachment to their memorandum.

|||
Issue: Whether or not the court of appeals erred in holding that Melivo was illegally dismissed

Ruling: The CA correctly affirmed the ruling of the NLRC.

Probation is the period during which the employer may determine if the employee is qualified for
possible inclusion in the regular force. The employer has the right or is at liberty to choose who will
be hired and who will be denied employment. In that sense, it is within the exercise of the right to
select his employees that the employer may set or fix a probationary period within which the
latter may test and observe the conduct of the former before hiring him permanently. An
employee allowed to work beyond the probationary period is deemed a regular employee.
In this case, Melivo was first hired as a trainee in August 2008. His training lasted for three (3)
months. As a room boy, his performance was certainly under observation. Thus, it can be reasonably
deduced that Melivo's probationary employment actually started in August 2008, at the same time
he started working as a trainee. Therefore, when he was re-hired as room boy after his training
period sometime in November 2008 he attained regular employment status.

Assuming arguendo that the 3-month training period could be considered a probationary period,
the conclusion would still be the same. It should be remembered that Melivo was again employed as
a room boy in November 2008 under probationary status for five (5) months or until March 2009.
Records would show that Melivo had completed his probationary employment. Thus, when Oyster
Plaza re-hired him for the third time on April 7, 2009, he became its regular employee thereof.

The petitioners' contention that Melivo was hired as a project employee is untenable. Under
Article 280 of the Labor Code, as amended, a project employee is one 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. Here, the contract of employment
failed to indicate the specific project or undertaking for which Oyster Plaza sought Melivo's services.
Moreover, as correctly noted by the NLRC, the petitioners failed to submit a report of Melivo's
termination to the nearest public employment office, as required under Section 2 of D.O. No. 19.

As a regular employee, Melivo could only be dismissed for just or authorized causes after affording
him the procedural requirement of notice and hearing. The petitioners failed to adduce evidence
that Melivo's dismissal was for a just or authorized cause, or that he was sufficiently notified and
given opportunity to be heard why his employment should not be terminated. Hence, Melivo's
dismissal was illegal.

QUEBRAL ET AL., VS ANGBUS CONSTRUCTION INC.

G.R. No. 221867, November 7, 2016

FACTS:
Petitioners alleged that Angbus employed them as construction workers. They claimed to be
regular employees since they were engaged to perform tasks which are necessary and desirable to
the usual business of Angbus, and that they have rendered services to the latter's construction
business for several years already. However, They were summarily dismissed from work without
any just or authorized cause and due process. Thus, they filed consolidated cases for illegal
dismissal with prayer for reinstatement and payment of full backwages, salary differential, ECOLA,
13th month pay, service incentive leave pay, overtime and holiday pay, including moral and
exemplary damages as well as attorney's fees

Respondents maintained that petitioners were first employed by Angelfe Management and
Consultancy (Angelfe) for a one time project only. Two or three years after the completion of the
Angelfe project, they were then hired by Angbus, which is a separate and distinct business entity
from the former. Thus, petitioners were hired only for two project employment contracts - one
each with Angelfe and Angbus.
ISSUE:
Whether or not petitioners are merely project employees of Angbus and consequently, holding
their dismissal to be valid.

RULING: No. Petitioners are considered regular employees. Thus, the termination of petitioners'
employment should have been for a just or authorized cause, the lack of which, as in this case,
amounts to illegal dismissal.
Art. 295 [280]. Regular and casual employment. - The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.
x x x x (Emphasis and underscoring supplied)

A project-based employee is assigned to a project which begins and ends at determined or

determinable times. Unlike regular employees who may only be dismissed for just and/or
authorized causes under the Labor Code, the services of employees who are hired as project-
based employees may be lawfully terminated at the completion of the project.

To safeguard the rights of workers against the arbitrary use of the word "project" to preclude
them from attaining regular status, jurisprudence provides that employers claiming that their
workers are project-based employees have the burden to prove that these two requisites
concur: (a) the employees were assigned to carry out a specific project or undertaking; and (b)
the duration and scope of which were specified at the time they were engaged for such project.

In this case, Angbus failed to discharge this burden. Notably, Angbus did not state the specific
project or undertaking assigned to petitioners. As to the second requisite, not only was Angbus
unable to produce petitioners' employment contracts, it also failed to present other evidence to
show that it informed petitioners of the duration and scope of their work.

E. GANZON INC. VS ANDO, JR

G.R. No. 214183, February 20, 2017

FACTS:
On May 16, 2011, respondent Fortunato B. Ando, Jr. (Ando) filed a complaint[6] against petitioner E.
Ganzon, Inc. (EGI) and its President, Eulalio Ganzon, for illegal dismissal and money claims for:
underpayment of salary, overtime pay, and 13th month pay; non-payment of holiday pay and service
incentive leave; illegal deduction; and attorneys fees. He alleged that he was a regular employee
working as a finishing carpenter in the construction business of EGI; he was repeatedly hired from
January 21, 2010 until April 30, 2011 when he was terminated without prior notice and hearing; his
daily salary of 292.00 was below the amount required by law; and wage deductions were made
without his consent, such as rent for the barracks located in the job site and payment for insurance
premium.

EGI countered that, as proven by the three (3) project employment contract, Ando was engaged as a
project worker (Formworker-2) in Bahay Pamulinawen Project in Laoag, Ilocos Norte from June 1, 2010
to September 30,2010[7] and from January 3, 2011 to February 28,2011[8] as well as in EGI West
Insula Project in Quezon City, Metro Manila from February 22, 2011 to March 31, 2011;[9] he was paid
the correct salary based on the Wage Order applicable in the region; he already received the 13th
month pay for 2010 but the claim for 2011 was not yet processed at the time the complaint was filed;
and he voluntarily agreed to pay 500.00 monthly for the cost of the barracks, beds, water, electricity,
and other expenses of his stay at the job site.

ISSUE:
Whether or not respondent Ando is a regular employee of EGI

Ruling: No. Ando is considered as a Project Employee. Ando is still a project employee even if records
showed that Ando's contracts for Bahay Pamulinawen Project were extended.

First, Ando was adequately notified of his employment status at the time his services were engaged
by EGI for the Bahay Pamulinawen and the West Insula Projects. The contracts he signed consistently
stipulated that his services as a project worker were being sought. There was an informed consent to
be engaged as such. His consent was not vitiated. As a matter of fact, Ando did not even allege that
force, duress or improper pressure were used against him in order to agree. His being a carpenter
does not suffice.

Second, There was no attempt to frustrate Ando's security of tenure. His employment was for a
specific project or undertaking because the nature of EGI's business is one which will not allow it to
employ workers for an indefinite period. As a corporation engaged in construction and residential
projects, EGI depends for its business on the contracts it is able to obtain. Since work depends on the
availability of such contracts, necessarily the duration of the employment of its work force is not
permanent but coterminous with the projects to which they are assigned and from whose payrolls
they are paid. It would be extremely burdensome for EGI as an employer if it would have to carry
them as permanent employees and pay them wages even if there are no projects for them to work on.

Third, The fact that Ando was required to render services necessary or desirable in the operation of
EGI's business for more than a year does not in any way impair the validity of his project
employment contracts. Time and again, We have held that the length of service through repeated and
successive rehiring is not the controlling determinant of the employment tenure of a project
employee. The rehiring of construction workers on a project-to-project basis does not confer upon
them regular employment status as it is only dictated by the practical consideration that experienced
construction workers are more preferred. In Ando's case, he was rehired precisely because of his
previous experience working with the other phases of the project.

Lastly, The foregoing considered, EGI did not violate any requirement of procedural due process by
failing to give Ando advance notice of his termination. Prior notice of termination is not part of
procedural due process if the termination is brought about by the completion of the contract or phase
thereof for which the project employee was engaged. Such completion automatically terminates the
employment and the employer is, under the law, only required to render a report to the Department
of Labor and Employment (DOLE) on the termination of employment. 49 In this case, it is undisputed
that EGI submitted the required Establishment Employment Reports to DOLE-NCR Makati/Pasay Field
Office regarding Ando's "temporary lay-off" effective February 16, 2011 and "permanent termination"
effective May 2, 2011.

HERMA SHIPYARD INC VS OLIVEROS

G.R. No. 208936, April 17, 2017

Facts:
Herma Shipyard is a domestic corporation engaged in the business of shipbuilding and repair. The
respondents were its employees occupying various positions such as welder, lead man, pipe fitter,
laborer, helper, etc.

Respondents filed a complaint for illegal dismissal, regularization, and non-payment of service
incentive leave pay with prayer for the payment of full back wages and attorney' fees against
petitioners. They alleged that they were regular employees who have been continuously performing
tasks usually necessary and desirable in its business. On various dates, however, petitioners dismissed
them from employment. Respondents further alleged that as condition to their continuous and
uninterrupted employment, petitioners made them sign employment contracts for a fixed period
ranging from one to four months to make it appear that they were project-based employees.

They alleged that there was never a time when they ceased working for Herma Shipyard due to
expiration of project-based employment contracts. According to them, no report to DOLE of the
completion of the project was made.

For their defense, petitioners argued that respondents were its project-based employees in its
shipbuilding projects and that the specific project for which they were hired had already been
completed. Herma Shipyard presented contracts of employment, some of which are written in the
vernacular and denominated as Kasunduang Paglilingkod (Pang-Proyektong Kawani).

The Labor Arbiter ruled that they were project-based employees. This was affirmed in toto by the
NLRC. The respondent employees filed a Petition for Certiorari at the Court of Appeals and the latter
set aside the labor tribunal’s decision and declared that the respondents were regular employees who
were illegally dismissed.

Issue: WON the respondents were regular employees.

Held:
The CA erred in disregarding the project employment contracts and in concluding that respondents
have become regular employees because they were performing tasks necessary and desirable to the
business of Herma Shipyard and were repeatedly rehired.
The records of this case reveal that for each and every project respondents were hired, they were
adequately informed of their employment status as project-based employees at least at the time they
signed their employment contract. They were fully apprised of the nature and scope of their work
whenever they a fixed their signature to their employment contract. Their contracts of employment
(mostly written in the vernacular) provide in no uncertain terms that they were hired as project-based
employees whose services are coterminous with the completion of the specific task indicated therein.
All their contract of employment state clearly the date of the commencement of the specific task and
the expected completion date thereof.

They also contain a provision expressly stating that respondents' employment shall end upon the
arrival of the target completion date or upon the completion of such project.

There is no indication that respondents were coerced into signing their employment contract or that
they affixed their signature thereto against their will. While they claim that they signed the said
contracts in order to secure continuous employment, they have not, however, presented sufficient
evidence to support the same other than their bare allegations. It is settled that "contracts for
project employment are valid under the law."

By voluntarily entering into the aforementioned project employment contracts, respondents are
deemed to have understood that their employment is coterminous with the particular project
indicated therein. It is settled, however, that project-based employees may or may not be performing
tasks usually necessary or desirable in the usual business or trade of the employer. The fact that the
job is usually necessary or desirable in the business operation of the employer does not automatically
imply regular employment; neither does it impair the validity of the project employment contract
stipulating a fixed duration of employment.

While the tasks assigned to the respondents were indeed necessary and desirable in the usual
business of Herma Shipyard, the same were distinct, separate, and identifiable from the other
projects or contract services (employee’s summary of their names, positions, projects and durations
lifted from their employment contract were presented)

Repeated rehiring of project employees to different projects does not ipso facto make them regular
employees. Length of service (through rehiring) is not the controlling determinant of the employment
tenure [of project-based employees but, as earlier mentioned], whether the employment has been
fixed for a specific project or undertaking, with its completion having been determined at the time of
[their] engagement.

Indeed, if we consider the nature of Herma Shipyard's business, it is clear that Herma Shipyard only
hires workers when it has existing contracts for shipbuilding and repair. It is not engaged in the
business of building vessels for sale which would require it to continuously construct vessels for its
inventory and consequently hire a number of permanent employees. Hence, Herma Shipyard should
be allowed "to reduce [its] work force into a number suited for the remaining work to be done upon
the completion or proximate accomplishment of [each particular] project." As for respondents, since
they were assigned to a project or a phase thereof which begins and ends at determined or
determinable times, their services were lawfully terminated upon the completion of such project or
phase thereof.

Moreover, our examination of the records revealed other circumstances that convince us that
respondents were and remained project-based employees, albeit repeatedly rehired. Contrary to
their claim, respondents' employment were neither continuous and uninterrupted nor for a uniform
period of one month; they were intermittent with varying durations, as well as gaps ranging from a
few days to several weeks or months. These gaps coincide with the completion of a particular
project and the start of a new specific and distinct project for which they were individually rehired.

And for each completed project, petitioners submitted the required Establishment Employment
Records to the DOLE which is a clear indicator of project employment. The records also show that
respondents' employment had never been extended beyond the completion of each project or phase
thereof for which they had been engaged.

As to the requirement that the completion or termination of the specific project or undertaking for
which respondents were hired should be determined at the time of their engagement, we rule and so
hold that it is enough that Herma Shipyard gave the approximate or target completion date in the
project employment contract. Given the nature of its business and the scope of its projects which take
months or even years to finish, we cannot expect Herma Shipyard to give a definite and exact
completion date. It can only approximate or estimate the completion date.

What is important is that the respondents were apprised at the time of their engagement that their
employment is coterminous with the specific project and that should their employment be
extended by virtue of paragraph the purpose of the extension is only to complete the same specific
project, and not to keep them employed even after the completion thereof.

Put differently, paragraph 10 does not allow the parties to extend the period of respondents'
employment after the completion of the specific project for which they were hired. Their employment
can only be extended if that particular project, to which their employment depends, remains
unfinished.

UST VS. SAMAHANG MANGGAGAWA NG UST

G.R. No. 184262, April 24, 2017

Facts:
A complaint for regularization and illegal dismissal filed by Samahang Manggagawa ng UST and
Pontesor, et al. (respondents) against petitioner before the NLRC. Respondents alleged that on
various periods spanning the years 1990-1999, petitioner repeatedly hired Pontesor, et al. to perform
various maintenance duties within its campus, i.e., as laborer, mason, tinsmith, painter, electrician,
welder, carpenter. Essentially, respondents insisted that in view of Pontesor, et al.'s performance of
such maintenance tasks throughout the years, they should be deemed regular employees of
petitioner. Respondents further argued that for as long as petitioner continues to operate and exist as
an educational institution, with rooms, buildings, and facilities to maintain, the latter could not
dispense with Pontesor, et al.'s services which are necessary and desirable to the business of
petitioner.
On the other hand, while petitioner admitted that it repeatedly hired Pontesor, et al. in different
capacities throughout the aforesaid years, it nevertheless maintained that they were merely hired on
a per-project basis, as evidenced by numerous Contractual Employee Appointments (CEAs) signed by
them. In this regard, petitioner pointed out that each of the CEAs that Pontesor, et al. signed defined
the nature and term of the project to which they are assigned, and that each contract was renewable
in the event the project remained unfinished upon the expiration of the specified term. In accordance
with the express provisions of said CEAs, Pontesor, et al.'s project employment were automatically
terminated: (a) upon the expiration of the specific term specified in the CEA; (b) when the project is
completed ahead of such expiration; or (c) in cases when their employment was extended due to the
non-completion of the specific project for which they were hired, upon the completion of the said
project. As such, the termination of Pontesor, et al.'s employment with petitioner was validly made
due to the completion of the specific projects for which they were hired.

CA held that Pontesor, et al. cannot be considered as merely fixed term or project employees,
considering that: (a) they performed work that is necessary and desirable to petitioner's business, as
evidenced by their repeated rehiring and petitioner's continuous need for their services; and (b) the
specific undertaking or project for which they were employed were not clear as the project
description set forth in their respective CEAs were either too general or too broad. Thus, the CA
classified Pontesor, et al. as regular employees, who are entitled to security of tenure and cannot be
terminated without any just or authorized cause.

Issue: WoN Pontesor, et al. are regular employees and, consequently, were illegally dismissed by
petitioner.

Ruling: Pontesor, et al. are regular employees and were illegally dismissed.
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
emplovee 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 necessitv 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.

In view of the foregoing, Pontesor, et al. should be considered regularized casual employees who
enjoy, inter alia, security of tenure. Accordingly, they CANNOT be terminated from employment
without any just and/or authorized cause, which unfortunately, petitioner was guilty of doing in this
case. Hence, Pontesor, et al. must be reinstated to their former or equivalent positions, with full
backwages and without loss of seniority rights.

CA ruling was upheld.

Management Prerogative
DOSCH V. NLRC
G.R. NO. L-51182, July 5, 1983

Facts:
Petitioner Helmut Dosch, an American citizen, married to a Filipina, was the resident Manager
of Northwest Airlines, Inc. in the Philippines. He has to his credit eleven (11) years of continuous
service with the company, including nine (9) years as Northwest Manager with station at
Manila. On August 18, 1975 he received an inter-office communication from R.C. Jenkins,
Northwest's Vice President for Orient Region based in Tokyo, promoting him to the position of
Director of International Sales and transferring him to Northwest's General Office in
Minneapolis, U.S.A., effective the same day. Petitioner in a letter dated August 28, 1975,
expressed appreciation for the promotion and at the same time regretted that for personal
reasons and reasons involving his family; he is unable to accept a transfer from the
Philippines. Telegrams were also sent by petitioner to Mr. Nightingale, Director for Finance and
to Mr. Jenkins, clearly stating petitioner's desire to remain as Manager-Philippines of Northwest.

On September 9, 1975, the Vice-President for the Orient Region of Northwest advised
petitioner that "in view of the foregoing, your status as an employee of the company ceased on
the close of business on August 31, 1975" and "the company therefore considers your letter of
August 28, 1975, to be a resignation without notice.

Issue: Whether or not the petitioner in not accepting the promotion and transfer can be
deemed resigned from his job for insubordination

Held:
The Supreme Court treats the Jenkins letter as directing the promotion of the petitioner from
his position as Philippine manager to Director of International Sales in Minneapolis, U.S.A. It is
not merely a transfer order alone but as the Solicitor General correctly observes, "it is more in
the nature of a promotion than a transfer, the latter being merely incidental to such
promotion." The inter-office communication of Vice President Jenkins is captioned "Transfer"
but it is basically and essentially a promotion for the nature of an instrument is characterized
not by the title given to it but by its body and contents. The communication informed the
petitioner that effective August 18, 1975, he was to be promoted to the position of Director of
International Sales, and his compensation would be upgraded and the payroll accordingly
adjusted. Petitioner was, therefore, advanced to a higher position and rank and his salary was
increased and that is a promotion.

There is no law that compels an employee to accept a promotion, as a promotion is in the

nature of a gift or a reward, which a person has a right to refuse. When petitioner refused to
accept his promotion to Director of International Sales, he was exercising a right and he
cannot be punished for it as qui jure suo utitur neminem laedit. He who uses his own legal
right injures no one. While it may be true that the right to transfer or reassign an employee is
an employer's exclusive right and the prerogative of management, such right is not absolute.
The right of an employer to freely select or discharge his employee is limited by the paramount
police power for the relations between capital and labor are not merely contractual but
impressed with public interest (Article 1700, New Civil Code). And neither capital nor labor
shall act oppressively against each other. The Court did not agree to Northwest's submission
that petitioner was guilty of disobedience and insubordination which respondent Commission
sustained. Petitioners acknowledgment of his promotion and the way he expressed his desire to
remain in his position in the Philippines for reasons involving his family, the Court could not
discern even the slightest hint of defiance, much less imply insubordination on the part of
petitioner.

The Court emphasized the long and faithful years of service that petitioner had rendered to
respondent company, eleven good years, nine of which as Manager with station at Manila. It is
plainly abusive of the company and oppressive to the petitioner that the latter is peremptorily
dismissed on the shallow claim of "resignation without notice,". The Court ordered petitioner's
reinstatement to his former position with full backwages for three (3) years without loss of
seniority rights and other benefits recognized by law, including attorney's fees equivalent to
10% of the total monetary benefits which the petitioner may recover, and ordered petitioners
reinstatement.

PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION VS. COURT OF APPEALS

G.R. No. 152057, September 29, 2003

Facts:
PT&T conducted a series of studies regarding the profitability of its retail operations, its existing
branches and the number of employees, the petitioner came up with a Relocation and
Restructuring Program designed to (a) sustain its (PT&T’s) retail operations; (b) decongest
surplus workforce in some branches, to promote efficiency and productivity; (c) lower expenses
incidental to hiring and training new personnel; and (d) avoid retrenchment of employees
occupying redundant positions.

As a result to the Relocation and Restructuring Program, several EE’s (7 EE’s – Respondent
herein) were directed to be transferred to another branch, which is more aggressive in terms of
its earnings. In addition to the relocation, as an incentive, PT&T provided that the transfer will
cause the EE’s rank step up and there will also be an increase in salary. The EE’s did not accept
this offer because they believe that the branches where they are supposed to be transferred to
is very far and it will cause them inconvenience. Because of this, PT&T considered them to be
guilty of insubordination and dismissed them from work, and so this case.

The contention of the ER is that “the transfers were made in the lawful exercise of its
management prerogative and were done in good faith. The transfers were aimed at
decongesting surplus employees and detailing them to a more demanding branch.”

The contention of the EE’s is that “since their respective transfers resulted in their promotion,
they had the right to refuse or decline the positions being offered to them. Resultantly, the
refusal to accept the transfer could not have amounted to insubordination or willful
disobedience to the “lawful orders of the employer.”

Issue: Whether or not the dismissal of the 7 EE’s a Management Prerogative or is there an
actual Promotion

Ruling:
There is a Promotion because there is advancement from 1 position to another and so
therefore, the EE’s consent must be obtained for that promotion to be effective. The dismissal is
considered illegal and EE’s reinstatement without loss of seniority rights and the payment of
backwages from the time of their dismissal up to their actual reinstatement should be done.

Promotion (defined) - is the advancement from one position to another with an increase in
duties and responsibilities as authorized by law, and usually accompanied by an increase in
salary.” Apparently, the indispensable element for there to be a promotion is that there must
be an “advancement from one position to another” or an upward vertical movement of the
employee’s rank or position. Any increase in salary should only be considered incidental but
never determinative of whether or not a promotion is bestowed upon an employee. This can
be likened to the upgrading of salaries of government employees without conferring upon the,
the concomitant elevation to the higher positions…
An employee cannot be promoted, even if merely as a result of a transfer, without his consent.

MENDOZA VS. RURAL BANK OF LUCBAN

G.R. No. 155421, July 7, 2004

Facts:
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board
Resolution Nos. 99-52 and 99-53, ordering the reshuffling of its and employees in line with the
policy of the bank to familiarize bank employees with the various phases of bank operations
and further strengthen the existing internal control system. In that Board resolution, petitioner
was assigned to Clerk-Meralco collection from the position of Appraiser. Petitioner in an
undated letter to the Bank’s Board Chairman stated that the transfer was in effect a demotion
on his part without legal basis. The Board’s Chairman in his reply, only reiterated that the
reason behind the resolution on the reshuffling of its employees was merely familiarize bank
employees with the various phases of bank operations and further strengthen the existing
internal control system. On June 7, 2009, petitioner in a letter applied for leave of absence due
to an ailment good for ten days, and another was submitted for 30 days. Within this period,
petitioner filed a complaint before Arbitration Branch No. IV of the National Labor Relations
Commission against the Rural Bank of Lucban for illegal dismissal, underpayment, separation
pay and damages. The Labor Arbiter upheld petitioner’s claims but then it was reversed by the
NLRC on appeal. The Court of Appeals also found no grave abuse of discretion on the part of the
NLRC.

Issue: Whether or not the petitioner was constructively dismissed from his employment.
Ruling:
Constructive dismissal is defined as an involuntary resignation resorted to when continued
employment is rendered impossible, unreasonable or unlikely; when there is a demotion in
rank or a diminution of pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee. Petitioner argues that he was compelled to file
an action for constructive dismissal, because he had been demoted from appraiser to clerk and
not given any work to do, while his table had been placed near the toilet and eventually
removed. He adds that the reshuffling of employees was done in bad faith, because it was
designed primarily to force him to resign. In the pursuit of its legitimate business interest,
management has the prerogative to transfer or assign employees from one office or area of
operation to another — provided there is no demotion in rank or diminution of salary,
benefits, and other privileges; and the action is not motivated by discrimination, made in bad
faith, or effected as a form of punishment or demotion without sufficient cause. This privilege
is inherent in the right of employers to control and manage their enterprise effectively. The right
of employees to security of tenure does not give them vested rights to their positions to the
extent of depriving management of its prerogative to change their assignments or to transfer
them. Managerial prerogatives, however, are subject to limitations provided by law, collective
bargaining agreements, and general principles of fair play and justice. Petitioner's transfer was
made in pursuit of respondent's policy to "familiarize bank employees with the various phases
of bank operations and further strengthen the existing internal control system" of all officers
and employees. We have previously held that employees may be transferred — based on their
qualifications, aptitudes and competencies — to positions in which they can function with
maximum benefit to the company. There appears no justification for denying an employer the
right to transfer employees to expand their competence and maximize their full potential for
the advancement of the establishment. Petitioner was not singled out; other employees were
also reassigned without their express consent. Petition is denied.