Chapter III

The learnership agreement shall be subject to inspection by the Secretary of

Labor and Employment or his duly authorized representative.

Regular, Casual and Probationary Employment

Omnibus Rules Implementing the Labor Code
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.
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.
ART. 281. Probationary employment. - Probationary employment shall not
exceed six (6) months from the date the employee started working, unless it
is covered by an apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary basis may
be terminated for a just cause or when he fails to qualify as a regular employee
in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to
work after a probationary period shall be considered a regular employee.

A. Regular Employment
ART. 75. Learnership agreement. - Any employer desiring to employ
learners shall enter into a learnership agreement with them, which agreement
shall include: (d) A commitment to employ the learners if they so desire, as
regular employees upon completion of the learnership. All learners who have
been allowed or suffered to work during the first two (2) months shall be
deemed regular employees if training is terminated by the employer before
the end of the stipulated period through no fault of the learners.

SECTION 5. Regular and casual employment. (a) The provisions of

written agreements to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be considered to be regular
employment for purposes of Book VI of the Labor Code 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.
(b) Employment shall be deemed as casual in nature 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 not, 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.
(c) An employee who is allowed to work after a probationary period shall be
considered a regular employee.
SECTION 6. Probationary employment. (a) Where the work for which an
employee has been engaged is learnable or apprenticeable in accordance with
the standards prescribed by the Department of Labor, the probationary
employment period of the employee shall be limited to the authorized
learnership or apprenticeship period, whichever is applicable.
(b) Where the work is neither learnable nor apprenticeable, the probationary
employment period shall not exceed six (6) months reckoned from the date
the employee actually started working.
(c) The services of an employee who has been engaged on probationary basis
may be terminated only for a just cause or when authorized by existing laws,
or when he fails to qualify as a regular employee in accordance with
reasonable standards prescribed by the employer.

(d) In all cases involving employees engaged on probationary basis, the

employer shall make known to the employee the standards under which he
will qualify as a regular employee at the time of his engagement.
A.1 By Nature of Work an employment is deemed regular when an
employee is engaged to perform activities which are usually necessary or
desirable to the business or trade of an employer even if there is a written or
oral agreement to the contrary EVEN if there is a written or oral agreement
to the contrary
Hacienda Fatima v. National Federation of Sugarcane Workers
Doctrine: For them to be excluded as regulars, it is not enough that they
perform work that is seasonal in nature but they also are employed for the
duration of one season.
Facts: The petitioner disfavored the fact that the private respondent
employees have formed a union. When the union became the collective
bargaining representative in the certification election, the petitioner refused
to sit down to negotiate a CBA. Moreover, the respondents were not given
work for a month amounting to unjustified dismissal. As a result, the
complainants staged a strike to protest but was settled through a
memorandum of agreement which contained a list of those considered as
regular employees for the payroll.
The NLRC held that there was illegal dismissal and this was affirmed by the
Court of Appeals.

The CA did not err when it ruled that Mercado v. NLRC was not applicable
to the case at bar. In the earlier case, the workers were required to perform
phases of agricultural work for a definite period of time, after which their
services would be available to any other farm owner. They were not hired
regularly and repeatedly for the same phase/s of agricultural work, but on and
off for any single phase thereof. On the other hand, herein respondents,
having performed the same tasks for petitioners every season for several
years, are considered the latters regular employees for their respective tasks.
Petitioners eventual refusal to use their services -- even if they were ready,
able and willing to perform their usual duties whenever these were available
-- and hiring of other workers to perform the tasks originally assigned to
respondents amounted to illegal dismissal of the latter.
Note: [T]he fact that [respondents] do not work continuously for one whole
year but only for the duration of the x x x season does not detract from
considering them in regular employment since in a litany of cases this Court
has already settled that seasonal workers who are called to work from time to
time and are temporarily laid off during off-season are not separated from
service in said period, but merely considered on leave until re-employed.

ASSOCIATION OF TRADE UNIONS (ATU), RODOLFO

MONTECLARO and EDGAR JUESAN, petitioners, vs. HON.
COMISSIONERS OSCAR N. ABELLA, MUSIB N. BUAT, LEON
GONZAGA JR., ALGON ENGINEERING CONSTRUCTION CORP.,
ALEX GONZALES and EDITHA YAP, respondents.

Issue: W/N the employees are regular workers

Held: Yes, they are regular and not seasonal employees. For them to be
excluded as regulars, it is not enough that they perform work that is seasonal
in nature but they also are employed for the duration of one season. The
evidence only proved the first but not the second requirement.
The ruling in Mercado v. NLRC is not applicable since in that case, the
workers were merely required to perform phases of agricultural work for a
definite period of time, after which, their services are available to other
employers. The management's sudden change of assignment reeks of bad
faith, it is likewise guilty of ULP.

Doctrine: The contracts of employment of petitioners attest to the fact that

they were hired for specific projects and their employment was coterminous
with the completion of the project for which they had been hired. Also,
they were informed in advance that said project or undertaking for which
they were hired would end on a stated or determinable date. Since the
workers were project employees, their employment legally ended upon
completion of their respective projects.
Facts: Respondent company is a domestic corporation engaged in road
construction projects of the government. From 1968 to 1989, it engaged the

services of the following workers to work on various projects on different

dates: Rodolfo Monteclaro (mechanic), Edgar Juesan (painter), Victorio
Lunzaga (tanker driver), Alfredo Jalet (batteryman), Julito Macabodbod
(trailer helper), Ramon Tabada (carpenter), Remsy, Asensi (machinist),
Armand Acero (helper mechanic), Lordito Tatad (painter helper), Rogelio
Tantuan (painter), Teodoro Tabio (checker), Gemudo Asejo (electrician),
Roland Olivar (latheman), Valeriano Mijas (driver), Jose Noval (welder),
Felimon Lagbao (mechanic), Pedro Roche (head welder), and Justiniano
Sollano (carpenter). Their contracts indicate the particular project they are
assigned, the duration of their employment and their daily wage.
In February 1989, the above-named workers joined petitioner union as
members. Accordingly, petitioner union filed a petition for certification
election with the regional office of the labor department. Respondent
company opposed the petition on the ground that the workers were project
employees and therefore not qualified to form part of the rank and file
collective bargaining unit.
Shortly thereafter, respondent company terminated the employment of
aforementioned workers owing to the completion of its projects or the
expiration of workers' contracts.
However, the affected workers claim that they were dismissed because of
their union activities. In view of the alleged illegal dismissals and
harassment by their employer, the workers staged a strike on May 17, 1989.
Upon complaint of respondent company, Labor Arbiter Newton Sancho
declared said strike illegal and decreed further that Victorio Lunzaga,
Alfred Jalet, Julito Macabodbod, Ramon Tabada and Remsy Asensi, who
had participated in the strike, were deemed to have lost their employment
status.
Issue: WoN there was an illegal dismissal

Held: None, In the case at bar, the contracts of employment of the

petitioners attest to the fact that they had been hired for specific projects,
and their employment was coterminous with the completion of the project
for which they had been hired. Said contracts expressly provide that the
workers' tenure of employment would depend on the duration of any phase

of the project or the completion of the awarded government construction

projects in any of their planned phases. Further, petitioners were informed
in advance that said project or undertaking for which they were hired would
end on a stated or determinable date. Besides, public respondent noted that
respondent company regularly submitted reports of termination of services
of project workers to the regional office of the labor department as required
under Policy Instruction No. 20. This compliance with the reportorial
requirement confirms that petitioners were project employees.
Considering that petitioners were project employees, whose nature of
employment they were fully informed about, at the time of their
engagement, related to a specific project, work or undertaking, their
employment legally ended upon completion of said project. The termination
of their employment could not be regarded as illegal dismissal.
ABS CBN vs NAZARENO (GR no. 164156)
Doctrine: The presumption is that when the work done is an integral part
of the regular business of the employer and when the worker, relative to the
employer, does not furnish an independent business or professional service,
such work is a regular employment of such employee and not an
independent contractor.
Facts: ABS-CBN 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: 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.
Petitioner and the ABS-CBN Rank-and-File Employees executed a
Collective Bargaining Agreement (CBA) to be effective during the period

from Dec 11, 1996 to Dec 11, 1999. However, since petitioner refused to
recognize PAs as part of the bargaining unit, respondents were not included
to the CBA.
Due to a memorandum assigning PAs to non-drama programs, and that the
DYAB studio operations would be handled by the studio technician. There
was a revision of the schedule and assignments and that respondent Gerzon
was assigned as the full-time PA of the TV News Department reporting
directly to Leo Lastimosa.
On Oct 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.
Issue: WON the respondents are regular employees?
Held: Respondents are considered regular employees of ABS-CBN and are
entitled to the benefits granted to all regular employees.
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:
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.
Any employee who has rendered at least one year of service, whether
continuous or intermittent, is deemed regular with respect to the activity

performed and while such activity actually exists. 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. They are regular employees who perform several different
duties under the control and direction of ABS-CBN executives and
supervisors.
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.
What determines whether a certain employment is regular or otherwise 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.
The employer-employee relationship between petitioner and respondents has
been proven by the ff:
First. In the selection and engagement of respondents, no peculiar
or unique skill, talent or celebrity status was required from them
because they were merely hired through petitioners personnel
department just like any ordinary employee.
Second. The so-called talent fees of respondents correspond to
wages given as a result of an employer-employee relationship.
Respondents did not have the power to bargain for huge talent fees,
a circumstance negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it find
their work unsatisfactory, and respondents are highly dependent on
the petitioner for continued work.
Fourth. The degree of control and supervision exercised by
petitioner over respondents through its supervisors negates the
allegation that respondents are independent contractors.

BRENT SCHOOL, INC.DIMACHE vs. RONALDO ZAMORA and

DOROTEO R. ALEGRE
G.R. No. L-48494 February 5, 1990 en banc
Doctrine: stipulations in employment contracts providing for term
employment or fixed period employment are valid when the period were
agreed upon knowingly and voluntarily by the parties without 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.
FACTS: Private respondent Doroteo R. Alegre was engaged as athletic
director by petitioner Brent School, Inc. at a yearly compensation of
P20,000.00. The contract fixed a specific term for its existence, five (5)
years, i.e., from July 18, 1971, the date of execution of the agreement, to
July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973,
August 28, 1973, and September 14, 1974 reiterated the same terms and
conditions, including the expiry date, as those contained in the original
contract of July 18, 1971.
On April 20,1976, Alegre was given a copy of the report filed by Brent
School with the Department of Labor advising of the termination of his
services effective on July 16, 1976. The stated ground for the termination
was "completion of contract, expiration of the definite period of
employment." Although protesting the announced termination stating that
his services were necessary and desirable in the usual business of his
employer, and his employment lasted for 5 years - therefore he had acquired
the status of regular employee - Alegre accepted the amount of P3,177.71,
and signed a receipt therefor containing the phrase, "in full payment of
services for the period May 16, to July 17, 1976 as full payment of
contract."
The Regional Director considered Brent School's report as an application
for clearance to terminate employment (not a report of termination), and
accepting the recommendation of the Labor Conciliator, refused to give
such clearance and instead required the reinstatement of Alegre, as a
"permanent employee," to his former position without loss of seniority
rights and with full back wages.

ISSUE: Whether or not the provisions of the Labor Code, as amended,

have anathematized "fixed period employment" or employment for a term.
Held: Respondent Alegre's contract of employment with Brent School
having lawfully terminated with and by reason of the expiration of the
agreed term of period thereof, he is declared not entitled to reinstatement.
The employment contract between Brent School and Alegre was executed
on July 18, 1971, at a time when the Labor Code of the Philippines (P.D.
442) had not yet been promulgated. At that time, the validity of term
employment was impliedly recognized by the Termination Pay Law, R.A.
1052, as amended by R.A. 1787. Prior, thereto, it was the Code of
Commerce (Article 302) which governed employment without a fixed
period, and also implicitly acknowledged the propriety of employment with
a fixed period. The Civil Code of the Philippines, which was approved on
June 18, 1949 and became effective on August 30,1950, itself deals with
obligations with a period. No prohibition against term-or fixed-period
employment is contained in any of its articles or is otherwise deducible
therefrom.
It is plain then that when the employment contract was signed between
Brent School and Alegre, it was perfectly legitimate for them to include in it
a stipulation fixing the duration thereof Stipulations for a term were
explicitly recognized as valid by this Court.
The status of legitimacy continued to be enjoyed by fixed-period
employment contracts under the Labor Code (PD 442), which went into
effect on November 1, 1974. The Code contained explicit references to
fixed period employment, or employment with a fixed or definite period.
Nevertheless, obscuration of the principle of licitness of term employment
began to take place at about this time.
Article 320 originally stated that the "termination of employment of
probationary employees and those employed WITH A FIXED PERIOD
shall be subject to such regulations as the Secretary of Labor may
prescribe." Article 321 prescribed the just causes for which an employer
could terminate "an employment without a definite period." And Article
319 undertook to define "employment without a fixed period" in the
following manner: where the employee has been engaged to perform

activities which are usually necessary or desirable in the usual business or

trade of the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where
the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
Subsequently, the foregoing articles regarding employment with "a definite
period" and "regular" employment were amended by Presidential Decree
No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was
altered by eliminating the reference to persons "employed with a fixed
period," and was renumbered (becoming Article 271).
As it is evident that Article 280 of the Labor Code, under a narrow and
literal interpretation, not only fails to exhaust the gamut of employment
contracts to which the lack of a fixed period would be an anomaly, but
would also appear to restrict, without reasonable distinctions, the right of an
employee to freely stipulate with his employer the duration of his
engagement, it logically follows that such a literal interpretation should be
eschewed or avoided. The law must be given a reasonable interpretation, to
preclude absurdity in its application. Outlawing the whole concept of term
employment and subverting to boot the principle of freedom of contract to
remedy the evil of employer's using it as a means to prevent their employees
from obtaining security of tenure is like cutting off the nose to spite the face
or, more relevantly, curing a headache by lopping off the head.
Such interpretation puts the seal on Bibiso upon the effect of the expiry of
an agreed period of employment as still good rulea rule reaffirmed in the
recent case of Escudero vs. Office of the President (G.R. No. 57822, April
26, 1989) where, in the fairly analogous case of a teacher being served by
her school a notice of termination following the expiration of the last of
three successive fixed-term employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact
that her employment was probationary, contractual in nature, and one with a
definitive period. At the expiration of the period stipulated in the contract,
her appointment was deemed terminated and the letter informing her of the
non-renewal of her contract is not a condition sine qua non before Reyes
may be deemed to have ceased in the employ of petitioner UST. The notice

is a mere reminder that Reyes' contract of employment was due to expire

and that the contract would no longer be renewed. It is not a letter of
termination.
Paraphrasing Escudero, respondent Alegre's employment was terminated
upon the
expiration of his last contract with Brent School on July 16, 1976 without
the necessity of any notice. The advance written advice given the
Department of Labor with copy to said petitioner was a mere reminder of
the impending expiration of his contract, not a letter of termination, nor an
application for clearance to terminate which needed the approval of the
Department of Labor to make the termination of his services effective. In
any case, such clearance should properly have been given, not denied.
Note: Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention of the
employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has
singled out: agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period
of employment was agreed upon knowingly and voluntarily by the
parties, without any force, duress or improper pressure being brought
to bear upon the employee and absent any other circumstances
vitiating his consent, or where it satisfactorily appears that the
employer and employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the
former over the latter. Unless, thus, limited in its purview, the law would
be made to apply to purposes other than those explicitly stated by its
framers; it thus becomes pointless and arbitrary, unjust in its effects and apt
to lead to absurd and unintended consequences.
Columbus Philippine Bus Corp vs NLRC
Doctrine: The primary standard, x x x 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 consider regular, but only with respect to such
activity and while such activity exists.
Facts: Petitioner Columbus Philippines Bus Corporation is engaged in the
business of operating passenger buses. Since the start of its operations in
1990, it has maintained a list of drivers and conductors who rendered
service in its bus units allegedly on a first come first served basis and
compensated purely on commission. The drivers and
conductors/conductress worked for about ten (10) to fifteen (15) days a
month and were allegedly not required to work everyday.
Private respondent Roman Domasig started working as a driver with the
petitioner on August 30, 1990 with a daily income ranging from Three
Hundred Fifty Pesos (P350.00) to Six Hundred Fifty Pesos (P650.00), while
his wife and co-respondent, Zenaida Domasig, was employed as a bus
conductress on October 1, 1990 with a daily income of Two Hundred Fifty
Pesos (P250.00) to Five Hundred Pesos (P500.00). The employment of
private respondents Roman and Zenaida Domasig with the petitioner was
abruptly terminated on January 21 and 22, 1992, respectively, for their
having allegedly formed a labor union.
Thus, these two (2) related cases of unfair labor practice, illegal dismissal,
illegal deductions from salary, and non-payment of service incentive leave
pay and 13th month pay were instituted by private respondents against
petitioner Columbus Philippines Bus Corporation and its officers
The petitioner Columbus Philippines Bus Corporation alleges that the
private respondents like its other drivers and conductors are not regular
employees, that the services of private respondents were rendered on a first
come first served basis and compensated purely on commission basis; that

they worked for only about ten (10) to fifteen (15) days a month, and only
when they felt like doing so.
Issue: WoN respondents are regular employees despite working for 10-15
days a month and at there discretion
Held: Considering the above-quoted standard (refer to doctrine) for
determining a regular employment, it appears that the employment of
private respondents is regular. They perform work necessary and desirable
in the business of the petitioner. Without the services of the bus drivers and
conductors, like the private respondents, the petitioner could not have
operated and managed its business of providing transportation services to
the public.
SINGER SEWING MACHINE COMPANY vs.DRILON
FACTS: On February 15, 1989, the respondent union filed a petition for
direct certification as the sole and exclusive bargaining agent of all
collectors of the Singer Sewing Machine Company.
The Company opposed the petition mainly on the ground that the union
members are actually not employees but are independent contractors as
evidenced by the collection agency agreement which they signed.
ISSUE: W/N petitioners are regular employees therefore entitled to right of
self-organization
HELD: The Court finds the contention of the respondents that the union
members are employees under Article 280 of the Labor Code to have no
basis. The definition 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.
Any agreement may provide that one party shall render services for and in
behalf of another for a consideration (no matter how necessary for the
latter's business) even without being hired as an employee. This is precisely
true in the case of an independent contractorship as well as in an agency
agreement.

The Court agrees with the petitioner's argument that Article 280 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. Article 280 does not apply where the existence of an
employment relationship is in dispute.
The collection agent does his work "more or less at his own pleasure"
without a regular daily time frame imposed on him
The Court finds that since private respondents are not employees of the
Company, they are not entitled to the constitutional right to join or form a
labor organization for purposes of collective bargaining. Accordingly, there
is no constitutional and legal basis for their union to be granted their
petition for direct certification. This Court made this pronouncement in La
Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor
Relations, supra:
. . . The question of whether employer-employee relationship exists is a
primordial consideration before extending labor benefits under the
workmens compensation, social security, medicare, termination pay and
labor relations law. It is important in the determination of who shall be
included in a proposed bargaining unit because, it is the sine qua non, the
fundamental and essential condition that a bargaining unit be composed of
employees. Failure to establish this juridical relationship between the union
members and the employer affects the legality of the union itself. It means
the ineligibility of the union members to present a petition for certification
election as well as to vote therein
JOSE SONZA vs. ABS-CBN BROADCASTING CORPORATION
G.R. No. 138051
June 10, 2004
Facts: In May 1994, ABS-CBN signed an agreement with the Mel and Jay
Management and Development Corporation (MJMDC). ABS-CBN was
represented by its corporate officers while MJMDC was represented by
Sonza, as President and general manager, and Tiangco as its EVP and
treasurer. Referred to in the agreement as agent, MJMDC agreed to provide

Sonzas services exclusively to ABS-CBN as talent for radio and television.

ABS-CBN agreed to pay Sonza a monthly talent fee of P310, 000 for the first
year and P317, 000 for the second and third year.
On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably
resigned in view of the recent events concerning his program and career.
After the said letter, Sonza filed with the Department of Labor and
Employment a complaint alleging that ABS-CBN did not pay his salaries,
separation pay, service incentive pay,13th month pay, signing bonus, travel
allowance and amounts under the Employees Stock Option Plan (ESOP).
ABS-CBN contended that no employee-employer relationship existed
between the parties. However, ABS-CBN continued to remit Sonzas
monthly talent fees but opened another account for the same purpose.
The Labor Arbiter dismissed the complaint and found that there is no
employee-employer relationship. NLRC affirmed the decision of the Labor
Arbiter. CA also affirmed the decision of NLRC.
Issue: Whether or not there was employer-employee relationship between
the parties.
Ruling: Case law has consistently held that the elements of an employeeemployer relationship are selection and engagement of the employee, the
payment of wages, the power of dismissal and the employers 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.
Sonzas services to co-host its television and radio programs are because of
his peculiar talents, skills and celebrity status. Independent contractors often
present themselves to possess unique skills, expertise or talent to distinguish
them from ordinary employees. The specific selection and hiring of SONZA,
because of his unique skills, talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship. All the talent fees and benefits paid to
SONZA were the result of negotiations that led to the Agreement. For
violation of any provision of the Agreement, either party may terminate their
relationship. Applying the control test to the present case, we find that
SONZA is not an employee but an independent contractor.

The control test is the most important test our courts apply in distinguishing
an employee from an independent contractor. This test is based on the extent
of control the hirer exercises over a worker. The greater the supervision and
control the hirer exercises, the more likely the worker is deemed an employee.
The converse holds true as well the less control the hirer exercises, the more
likely the worker is considered an independent contractor. To perform his
work, SONZA only needed his skills and talent. How SONZA delivered his
lines, appeared on television, and sounded on radio were outside ABS-CBNs
control. ABS-CBN did not instruct SONZA how to perform his job. ABSCBN merely reserved the right to modify the program format and airtime
schedule "for more effective programming." ABS-CBNs sole concern was
the quality of the shows and their standing in the ratings.
Clearly, ABS-CBN did not exercise control over the means and methods of
performance of Sonzas work. A radio broadcast specialist who works under
minimal supervision is an independent contractor. Sonzas work as television
and radio program host required special skills and talent, which SONZA
admittedly possesses.
ABS-CBN claims that there exists a prevailing practice in the broadcast and
entertainment industries to treat talents like Sonza as independent contractors.
The right of labor to security of tenure as guaranteed in the Constitution arises
only if there is an employer-employee relationship under labor laws.
Individuals with special skills, expertise or talent enjoy the freedom to offer
their services as independent contractors. The right to life and livelihood
guarantees this freedom to contract as independent contractors. The right of
labor to security of tenure cannot operate to deprive an individual, possessed
with special skills, expertise and talent, of his right to contract as an
independent contractor.
DUMPIT MURILLO VS. CA AND ABC

dominance being exercised by the employer over the employee. Moreover, fixedterm employment will not be considered valid where, from the circumstances, it
is apparent that periods have been imposed to preclude acquisition of tenurial
security by the employee.
FACTS: Thelma Dumpit Murillo was employed as a newscaster and a coanchor for Balitang-balita by the Associated Broadcasting Company on
October 2, 1995.
The contract was for a period of three months. On September 30, 1999,
after four years of repeated renewals, Petitioners talent contract expired.
Two weeks after the expiration of the last contract, petitioner sent a letter to
Mr. Jose Javier, Vice President for News and Public Affairs of ABC,
informing the latter that she was still interested in renewing her contract
subject to a salary increase.No contract was again entered into by the parties
to the previous contract.
The petitioners then wrote a letter demanding her reinstatement to her
former position, payment of backwages and services. On December 30,
1999, petitioner filed a case against ABC for illegal constructive dismissal.
The labor arbiter ruled in favor of ABC. The NLRC however reversed the
decision and ruled that an employer-employee relationship existed between
petitioner and respondent and that the petitioner was a regular employee
illegally dismissed. When the case reached the Court of Appeals, the latter
decided that Petitioner should not be allowed to renege from the stipulations
she had voluntarily and knowingly executed by invoking the security of
tenure of the Labor Code, hence this appeal.
ISSUE: WON an employee-employer relationship existed between ABC
and
Petitioner and was she illegally dismissed.

Doctrine: For a fixed-period contract to be valid, it should be shown that the

fixed period was knowingly and voluntarily agreed upon by the parties. There
should have been no force, duress or improper pressure brought to bear upon the
employee; neither should there be any other circumstance that vitiates the
employees consent. It should satisfactorily appear that the employer and the
employee dealt with each other on more or less equal terms with no moral

HELD:
The CA committed reversible error when it held that petitioner was a fixed
term employee. Petitioner was a regular employee under contemplation of
law. The practice of having fixed term contracts in the industry does not
automatically make all talent contracts valid and compliant with labor law.
In Manila Water Company vs. Pena, the elements to determine the existence
of an employer employee relationship are:

The contention of the appellate court that the contract was characterized
(a) the selection and engagement of the employee (b) the payment of wages,
(c) the power of dismissal, (d) the employers power to control. The duties of
the Petitioner as enumerated in her employment contract indicate that ABC
had control over the work of the Petitioner. Aside from control, ABC also
dictated the work assignments and payment of Petitioners wages. ABC also
had the power to dismiss her. All these being present, clearly there existed
an employer-employee relationship between
Petitioner and ABC.
Concerning regular employment, the
Law provides for two kinds of employees. (1) those engaged to perform
activities which are usually necessary or desirable to the usual business or
trade of the employer, (2) those who have rendered at least one year of
service, whether continuous broken.
The Petitioners work was necessary or desirable in the usual business or
trade of the employer which includes its participation in the Governments
news and public information dissemination. In addition, her work was
continuous for four years. Her contract was renewed for over
15 times. This repetitive renewal was indicative of Petitioners works
desirability and necessity. Hence it is concluded that she is a regular
employee.

Note: In our view, the requisites for regularity of employment have been met
in the instant case. Gleaned from the description of the scope of services
aforementioned, petitioners work was necessary or desirable in the usual
business or trade of the employer which includes, as a pre-condition for its
enfranchisement, its participation in the governments news and public
information dissemination. In addition, her work was continuous for a period
of four years. This repeated engagement under contract of hire is indicative
of the necessity and desirability of the petitioners work in private respondent
ABCs business.

by a valid fixed-period employment is untenable. For such contract to be valid, it

should be shown that the fixed period was knowingly and voluntarily agreed
upon by the parties. There should have been no force, duress or improper pressure
brought to bear upon the employee; neither should there be any other
circumstance that vitiates the employees consent. It should satisfactorily appear
that the employer and the employee dealt with each other on more or less equal
terms with no moral dominance being exercised by the employer over the
employee. Moreover, fixed-term employment will not be considered valid where,
from the circumstances, it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee.
In the case at bar, it does not appear that the employer and employee dealt with
each other on equal terms. Understandably, the petitioner could not object to the
terms of her employment contract because she did not want to lose the job that she
loved and the workplace that she had grown accustomed to, which is exactly what
happened when she finally manifested her intention to negotiate. Being one of the
numerous newscasters/broadcasters of ABC and desiring to keep her job as a
broadcasting practitioner, petitioner was left with no choice but to affix her
signature of conformity on each renewal of her contract as already prepared by
private respondents; otherwise, private respondents would have simply refused to
renew her contract. Patently, the petitioner occupied a position of weakness vis-vis the employer. Moreover, private respondents practice of repeatedly extending
petitioners 3-month contract for four years is a circumvention of the acquisition of
regular status. Hence, there was no valid fixed-term employment between
petitioner and private respondents.
While this Court has recognized the validity of fixed-term employment
contracts in a number of cases, it has consistently emphasized that when the
circumstances of a case show that the periods were imposed to block the
acquisition of security of tenure, they should be struck down for being
contrary to law, morals, good customs, public order or public policy.
DIFFERENCE between Sonza case and Dumpit case

All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. If SONZA were ABS-CBNs
employee, there would be no need for the parties to stipulate on benefits
such as SSS, Medicare, x x x and 13th month paywhich the law
automatically incorporates into every employer-employee contract.
Whatever benefits SONZA enjoyed arose from contract and not because of
an employer-employee relationship.
THERE was voluntariness and freedom to negotiate the terms and
conditions of the contract in the case Sonza however in the case of Dumpit
there was none.
the petitioner could not object to the terms of her employment contract because she
did not want to lose the job that she loved and the workplace that she had grown
accustomed to, which is exactly what happened when she finally manifested her
intention to negotiate.
Further, the Sonza case is not applicable. In Sonza, the television station did
not instruct Sonza how to perform his job. How Sonza delivered his lines,
appeared on television, and sounded on radio were outside the television
stations control. Sonza had a free hand on what to say or discuss in his shows
provided he did not attack the television station or its interests. Clearly, the
television station did not exercise control over the means and methods of the
performance of Sonzas work. In the case at bar, ABC had control over the
performance of petitioners work. Noteworthy too, is the comparatively low
P28,000 monthly pay of petitioner vis the P300,000 a month salary of Sonza,
that all the more bolsters the conclusion that petitioner was not in the same
situation as Sonza.

television serial programs for petitioner's week-day afternoon time slots in

Cebu. Respondents were assigned among three (3) production groups, each
with its own set of directors, writers, videographers, lightsmen, editors,
actors and utility personnel. Each production group was given a weekly
budget, initially at P30,000.00, which was later increased to P40,000.00 a
week.
The television-series did so well that several more were subsequently
produced. The production groups were continuously engaged to film
succeeding programs to replace the concluded ones.
On June 15, 1999, respondents addressed a letter to petitioner asking for a
25% increase in their weekly budget, but the same was denied by
petitioner's AVP for the Visayas Cluster, Ma. Luisa L. Ascalon. Instead,
respondents were informed of the termination of their services effective
August 13, 1999.
petitioner insisted that respondents were hired as program employees in the
nature of contractual or project employment; that respondents were mere
"talents", i.e. they were contracted because of their expertise or talents as
program employees; and that respondents were, in effect, mere program
employees under Policy Instruction No. 40, series of 1979 whom petitioner
contracted due to their expertise for particular projects, in this case the
production of the Visayan tele-series programs.
Issue: WoN respondents are regular employees
Held:

ABS-CBN vs Marquez (G.R. no. 167638)

Doctrine: A project employee or a member of a workpool may acquire the
status of a regular employee when the following concur: there is continuous
rehiring of project employees even after the cessation of the project; and the
tasks performed by the alleged "project employee" are vital, necessary, and
indispensable to the usual business or trade of his employer.
Facts: Petitioner hired the services of respondents on various dates starting
December, 1994 to undertake the production in the Cebuano dialect of

It is a matter of record that respondents have rendered almost five (5) years
of continuous service to petitioner, doing work that is necessary and
desirable to the usual business of the latter. Hence, even granting on the
extreme that respondents were not performing work that is vital, necessary
and indispensable to the usual business of petitioner, nonetheless the second
paragraph of Article 280 of the Labor Code still applies. It reads:
ART. 280. REGULAR AND CASUAL EMPLOYMENT

xxx

xxx

xxx

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.
We thus rule and so hold that respondents are petitioner's regular
employees, at least with respect to the production of petitioner's Visayan
tele-series programs and until such activity exists.
NOTE: with respect to Policy no. 40 Petitioner relied upon and took
undue advantage of Policy Instruction No. 40, by treating herein
respondents as talents and classifying them as independent contractors and
freelancers.
Policy Instruction No. 40 pertinently provides:
Program employees are those whose skills, talents or services are engaged
by the station for a particular or specific program or undertaking and who
are not required to observe normal working hours such that on some days
they work for less than eight (8) hours and on other days beyond the normal
work hours observed by station employees and are allowed to enter into
employment contracts with other persons, stations, advertising agencies or
sponsoring companies. The engagement of program employees, including
those hired by advertising or sponsoring companies, shall be under a
written contract specifying, among other things, the nature of the work
to be performed, rates of pay, and the programs in which they will
work. The contract shall be duly registered by the station with the
Broadcast Media Council within three days from its consummation.
(Emphasis supplied)
Ironically, however, petitioner failed to adduce an iota proof that the
requirements for program employment were even complied with by it. It is
basic that project or contractual employees are appraised of the project they
will work under a written contract, specifying, inter alia, the nature of work
to be performed and the rates of pay and the program in which they will

work. Sadly, however, no such written contract was ever presented by the
petitioner. Petitioner is in the best of position to present these documents.
And because none was presented, we have every reason to surmise that no
such written contract was ever accomplished by the parties, thereby belying
petitioner's posture.
Consolidated Broadcasting System vs. Oberio
G.R. No. 168424, June 8, 2007
Facts:
DYWB-Bombo Radyo, a radio station owned and operated by
petitioner, employed respondents as drama talents. They worked daily for
six days in a week and were required to record their drama production in
advance. Some of them were employed since 1974, while the latest one was
hired 1997. Their drama programs were aired in Bacolod City and in the
sister stations of DYWB in the VisMin areas.
Petitioner reduced the number of its drama productions, but was
opposed by respondents. After the negotiations failed, the latter sought the
intervention of DOLE. An inspection of DWYB revealed that petitioner is
guilty of violation of labor standard laws. Petitioner contended that
respondents are not its employees and refused to submit the payroll and
DTRs. Vexed by the respondents complaint, petitioner allegedly
intimidated respondents by suspending them for minor lapses and delaying
the payment of their salaries. Eventually, respondents were barred by
petitioner from reporting for work; thus, the former claimed constructive
dismissal.
On appeal to the NLRC, respondents raised the issue of ER-EE
relationship and submitted the following to prove the existence of such
relationship: time cards, identification cards, payroll, a show cause order of
the station manager to respondent Oberio and memoranda either noted or
issued by said manager. Petitioner, on the other hand, did not present any
documentary evidence in its behalf and merely denied the allegations of
respondents. It claimed that the radio station pays for the drama recorded by
piece and that it has no control over the conduct of respondents.

NLRC rendered a decision holding that respondents were regular

employees of petitioner who were illegally dismissed by the latter.
Issues:
1) Whether respondents were employees of petitioner; and
2) Whether their dismissal was illegal.
Ruling:
Petitioner failed to controvert with substantial evidence the
allegation of respondents that the former hired them. If petitioner did not hire
them and if it was the director alone who chose the talents, petitioner could
have easily shown a contract to such effect. However, petitioner merely
relied on its contention that respondents were piece rate contractors paid by
results. Under Policy Instruction No. 40 (P.I. #40), petitioner is obliged to
execute the necessary contract specifying the nature of the work to be
performed, rates of pay, and the programs in which they will
work. Moreover, project or contractual employees are required to be
apprised of the project they will undertake under a written contract. This was
not complied with by the petitioner.
In ABS-CBN v. Marquez, the failure of the employer to produce the
contract mandated by P.I. #40) is indicative that the so-called talents or
project workers are in reality, regular employees -- Program employees are
those whose skills, talents or services are engaged by the station for a
particular or specific program or undertaking and who are not required to
observe normal working hours such that on some days they work for less than
eight (8) hours and on other days beyond the normal work hours observed by
station employees and are allowed to enter into employment contracts with
other persons, stations, advertising agencies or sponsoring companies. The
engagement of program employees, including those hired by advertising or
sponsoring companies, shall be under a written contract specifying, among
other things, the nature of the work to be performed, rates of pay, and the
programs in which they will work. The contract shall be duly registered by

the station with the Broadcast Media Council within 3 days from its
consummation.
It is basic that project or contractual employees are appraised of the
project they will work under a written contract, specifying the nature of work
to be performed and the rates of pay and the program in which they will work.
No written contract was ever presented when petitioner is in the best of
position to present these documents. Since none was presented to show that
no written contract was accomplished, thus belying petitioners defense.
There was no showing of compliance with the required reports to be
filed, as provided either under the very Policy Instruction, or under the
Omnibus Implementing Rules of the Labor Code for project employees. This
bolsters respondents contention that they were indeed petitioners regular
employees since their employment was not only for a particular program.
Moreover, the engagement of respondents from 2 to 25 years and
the fact that their drama programs were aired not only in Bacolod City but
also in the sister stations of DYWB in the Visayas and Mindanao areas,
undoubtedly show that their work is necessary and indispensable to the usual
business or trade of petitioner. 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. 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. Thus, even assuming that respondents were initially hired as
project/contractual employees, the engagement of their services for 2 to 25
years justify their classification as regular employees.
As to the payment of wages, it was petitioner who paid the same as
shown by the payroll bearing the name of petitioner company in the heading
with the respective salaries of respondents opposite their names. Anent the
power of control, dismissal, and imposition of disciplinary measures, the
same were duly proven by the: (1) memorandum noted by petitioners station
manager, calling the attention of the Drama Department to the late
submission of scripts by writers and the tardiness and absences of directors
and talents, as well as the imposable fines for future infractions; (2) the

memorandum of the station manager directing respondent Oberio to explain

why no disciplinary action should be taken against him for punching the time
card of a certain Mrs. Fe Oberio; and (3) the station managers memorandum
suspending respondent Oberio for six days for the said infraction. These,
taken together show the existence of an ER-EE relationship.

number of columnists by keeping only those whose columns were wellwritten, with regular feedback and following. In their judgment, petitioners
column failed to improve, continued to be superficially and poorly written,
and failed to meet the high standards of the newspaper. Hence, they decided
to terminate petitioners column.

Respondents were illegally dismissed. Petitioner merely contended

that it was respondents who ceased to report to work, and never presented
any substantial evidence to support said allegation. Petitioner failed to
discharge its burden, hence, respondents were correctly declared to have been
illegally dismissed. Furthermore, if doubts exist between the evidence
presented by the employer and the employee, the scales of justice must be
tilted in favor of the latter the employer must affirmatively show rationally
adequate evidence that the dismissal was for a justifiable cause. It is a timehonored rule that in controversies between a laborer and his master, doubts
reasonably arising from the evidence should be resolved in the formers
favor. The policy is to extend the doctrine to a greater number of employees
who can avail of the benefits under the law, which is in consonance with the
avowed policy of the State to give maximum aid and protection of labor.

Orozco filed a complaint for illegal dismissal. The LA decided in

favor of petitioner. On appeal, the NLRC dismissed the appeal and affirmed
the LAs decision. The CA on the other hand, set aside the NLRCs decision
and dismissed Orozcos complaint.

Orozco vs. Fifth Division of the Court of Appeals

Facts: PDI engaged the services of Orozco to write a weekly column for its
Lifestyle section. She religiously submitted her articles except for a 6-month
stint when she went to NY City. Nevertheless, she continued to send her
articles through mail. She also received compensation for every column that
was published.
When Orozcos column appeared in the newspaper for the last time,
her editor, Logarta, told her that the PDIs editor-in-chief, Magsanoc, wanted
to stop publishing her columns for no reason at all and advised her to talk to
the editor-in-chief. When Orozco talked to Magsanoc, the latter told her that
it was the PDI chairperson who wanted to stop the publication of her column.
However, when Orozco talked to Apostol, the latter told her that Magsanoc
informed her that the Lifestyle section had already many columnists.
PDI claims that Magsanoc met with the editor of the Lifestyle
section to discuss how to improve said section. They agreed to cut down the

Issue:

Whether petitioner is an employee of PDI.

Whether petitioner was illegally dismissed.

Decision: Petition dismissed. Judgment and Resolution affirmed.

Applying the four-fold test, the Court held that PDI lacked control
over the petitioner. Though PDI issued guidelines for the petitioner to follow
in the course of writing her columns, careful examination reveals that the
factors enumerated by the petitioner are inherent conditions in running a
newspaper. In other words, the so-called control as to time, space, and
discipline are dictated by the very nature of the newspaper business itself.
Aside from the constraints presented by the space allocation of her column,
there were no restraints on her creativity; petitioner was free to write her
column in the manner and style she was accustomed to and to use whatever
research method she deemed suitable for her purpose. The apparent limitation
that she had to write only on subjects that befitted the Lifestyle section did
not translate to control, but was simply a logical consequence of the fact that
her column appeared in that section and therefore had to cater to the
preference of the readers of that section.
Orozco in this case is considered as an independent contractor. As
stated in the case of Sonza vs. ABS-CBN, independent contractors often
present themselves to possess unique skills, expertise or talent to distinguish
them from ordinary employees. Like the petitioner in the cited case,
Petitioner was engaged as a columnist for her talent, skill, experience, and
her unique viewpoint as a feminist advocate. How she utilized all these in

writing her column was not subject to dictation by respondent. As in Sonza,

respondent PDI was not involved in the actual performance that produced the
finished product. It only reserved the right to shorten petitioners articles
based on the newspapers capacity to accommodate the same. This fact was
not unique to petitioners column. It is a reality in the newspaper business
that space constraints often dictate the length of articles and columns, even
those that regularly appear therein.
Furthermore, respondent PDI did not supply petitioner with the tools
and instrumentalities she needed to perform her work. Petitioner only needed
her talent and skill to come up with a column every week. As such, she had
all the tools she needed to perform her work. Hence, since Orozco is not an
employee of PDI, the latter cannot be held guilty of illegally dismissing the
petitioner.
A.2 By period of Service an employment is considered regular when an
employee has rendered at least 1 year of service, whether continuous or
broken, on such activity in which he is employed and his employment shall
continue while such activity exists
Audion Electric Co. Inc vs NLRC
Doctrine: We have held that where the employment of project employees is
extended long after the supposed project has been finished, the employees
are removed from the scope of project employees and considered regular
employees.
Facts: The facts of the case as summarized by Labor Arbiter Cresencio R.
Iniego in his decision rendered on November 15, 1990 in NLRC-NCR Case
No. -00-08-03906-89, and which are quoted in the questioned Resolution
dated March 24, 1992 of the public respondent are as follows:

surprised to receive a letter informing him that he will be considered

terminated after the turnover of materials, including respondents tools and
equipments not later than August 15, 1989.
Complainant claims that he was dismissed without justifiable cause and due
process and that his dismissal was done in bad faith which renders the
dismissal illegal. For this reason, he claims that he is entitled to
reinstatement with full backwages. He also claims that he is entitled to
moral and exemplary damages. He includes payment of his overtime pay,
project allowance, minimum wage increase adjustment, proportionate 13th
month pay and attorneys fees.
On its part, respondent merely relied on its unverified letter-communication
signed by its project manager, dated September 25, 1989, the contents of
which are as follows:
A.
ILLEGAL DISMISSAL- There is no course (sic) to complain
since employment contract signed by complainant with respondent is coterminus with the project. xxx
B.
UNPAID WAGES- Admitting that salary payment was delayed
due to late remittance of collection from respondents Japanese prime
contractor but nonetheless settled with complainant as evidenced by signed
Payroll Slips by complainant. xxx
C.
NON-PAYMENT OF 13th MONTH PAY- As earlier admitted,
there was a relative delay in the remittance of collection payment from our
Japanese prime contractor but respondent knowing the economic
predecament (sic) of complainant has seen to it that respondent be satisfied
without awaiting for remittance of 13th month from its Japanese contractor.

Issue: WoN respondent is a regular employee

From the position paper and affidavit corroborated by oral testimony, it
appears that complainant was employed by respondent Audion Electric
Company on June 30, 1976 as fabricator and continuously rendered service
assigned in different offices or projects as helper electrician, stockman and
timekeeper. He has rendered thirteen (13) years of continuous, loyal and
dedicated service with a clean record. On August 3, complainant was

Held: Firstly, respondents assigning complainant to its various projects did

not make complainant a project worker. As found by the Labor Arbiter, it
appears that complainant was employed by respondent xxx as fabricator and
or projects as helper electrician, stockman and timekeeper. Simply put,
complainant was a regular non-project worker."

Private respondents employment status was established by the Certification

of Employment dated April 10, 1989 issued by petitioner which certified
that private respondent is a bona fide employee of the petitioner from June
30, 1976 up to the time the certification was issued on April 10, 1989. The
same certificate of employment showed that private respondents exposure
to their field of operation was as fabricator, helper/electrician,
stockman/timekeeper. This proves that private respondent was regularly and
continuously employed by petitioner in various job assignments from 1976
to 1989, for a total of 13 years. The alleged gap in employment service cited
by petitioner does not defeat private respondents regular status as he was
rehired for many more projects without interruption and performed
functions which are vital, necessary and indispensable to the usual business
of petitioner.

NOTE: Policy Instruction No. 20 of the Department of Labor is explicit

that employers of project employees are exempted from the clearance
requirement but not from the submission of termination report. This court
has consistently held that failure of the employer to file termination reports
after every project completion with the nearest public employment office is
an indication that private respondent was not and is not a project employee.
Department Order No. 19 superseding Policy Instruction No. 20 expressly
provides that the report of termination is one of the indications of project
employment.
Universal Robina Corporation vs. Catapang
473 SCRA 189 October 14, 2005
Certiorari
Callejo, Sr.

FACTS:
Pet:
Universal Robina Corporation- company
Randy Gregorio manager of companys duck farm in Calauan,
Laguna
Resp: 30 people
-

Respondents were hired by the company on various dates from

1991-1993 to work at its duck farm. Their contracts were only for
a 5-month period, renewed every expiration/ in 1996, the company
told the respondents that their contract wont be renewed anymore.
Respondents filed complaints for illegal dismissal, reinstatement,
backwages, damages and attorneys fees against petitioners.

LA: illegal dismissal. Respondents must be reinstated to former

positions without loss of seniority rights and must pay backwages
Petitioners appealed to NLRC while respondents filed Writ of
Execution with LA
Petitioners told LA that they can only reinstate 17 of the 30
respondents (reason: phase out). For the 13, there are no other
positions similar to their previous ones but 10 may be
accommodated for a 3-day-per-week work
Petitioners initially failed to comply with LAs order but the 17
were eventually reinstated. The duck farm was closed.
The 13 respondents wanted garnishment to collect the wages
awarded by the LA. Petitioners wanted to quash, saying that they
cant accommodate the 13 anymore because of phase out and their
previous positions were already filled up
NLRC: affirm LA decision
CA: respondents were regular employees. Their being hired for
more than 1 year doing the same work made them regular and not
just project employees. 5-month contracts are only a means to
refuse them security of tenure. The 13 should have been paid even
if they were not reinstated.

ISSUE and HELD: WON respondents are regular employees--- YES.

RATIO:
- [there was a discussion regarding procedure. Petitioners werent
able to file MR within the reglementary period, saying that they
did not receive the decision on time and they miscounted the
period for filing.SC said NO, the petition is late, this should have
been dismissed.]
- Abasolo vs. NLRC: test in determining whether one is a regular
employee:
o Primary standard: reasonable connection between the
particular activity performed by the employee in relation
to the usual trade or business of the employer.
o Is the activity usually necessary or desirable to
employers trade or business?
o Must consider the nature of work performed and its
relation to the scheme of the particular business or trade
in its entirety

If employee has been performing the work for at least a

year, even if intermittently, this is sufficient to say that the
work is necessary and indispensable to the business. Thus,
he is regular with respect to that work and while it lasts.
Affirm CAs findings. The 5-month contract was only used to
prevent respondents from being regulars. This is contrary to public
policy or morals. 3-5 years of continuous hiring negates
petitioners argument that they are only for a specific project
Factual findings of labor officials who have expertise are accorded
not only respect but even finality and is binding on SC when
supported by substantial evidence

Abesco, on the other hand, denies the allegations of the respondent

employees. Abesco argued that the respondents are project employees
because their services are availed only when the company had projects
for completion. The company further added that as project employees, the
respondents do not have a security of tenure and consequently not entitled
to a separation pay upon termination.
Issue/s:
Does continuous engagement and period of service sufficient to
determine whether an individual is a regular or project?

ABESCO Construction and Development Corporation vs. Ramirez

If not, what are other determinative factors to be considered?

GR No. 141168 20 April 2006

Ruling:

Doctrine: The principal test for determining whether employees are

"project employees" or "regular employees" is
1.
2.
3.

whether they are assigned to carry out a specific project or

undertaking,
the duration and scope of which are specified at the time they are
engaged for that project.
Such duration, as well as the particular work/service to be
performed, is defined in an employment agreement and is made
clear to the employees at the time of hiring.

In this case, petitioners did not have that kind of agreement with
respondents.
Facts: The respondents were employees of Abesco from 1976-1992. In
1997, they filed 2 complaints of illegal dismissal against Abesco and its
general manager, contending that they are regular employees of the
company as evidenced by their continuous engagement as laborers,
road roller operator, painters or drivers by Abesco. The respondents
also indicate that as regular employees they are entitled to claims for
the non-payment of 13th month, 5-day service incentive leave pay,
premiums on holidays and rests days, and moral and exemplary damages.
The said complaints were later on consolidated by the Labor Arbiter.

The Labor Arbiter ruled that the employees are regular employees as
manifested by the hiring and re-hiring of the respondents for Abesco
projects.In his resolution, the Labor Arbiter highlighted the fact that
the respondents were part of a work pool which was readily tapped
by the company at their discretion and that it has been a practice for a
period of 18 years.
The Supreme Court sustained the ruling of the Labor Arbiter but
indicated that long period of service does not automatically make the
respondents regular employees as length of service is not a controlling
factor. The Supreme Court explained that the primary test to
determine whether the respondents are
regular or project employees is (i) whether they are assigned to carry
out a specific project or undertaking and (ii) the duration and scope of
which are specified at the time they are engaged for that project. The high
court also emphasized that such duration and particular work/service to be
performed should be defined in the employment agreement and are
made clear to the employees at the time of hiring.
In this case, petitioners did not have that kind of agreement with
respondents. Neither did they inform respondents of the nature of the latter's
work at the time of hiring. Hence, for failure of petitioners to substantiate

their claim that respondents were project employees, we are constrained to

declare them as regular employees.

ascertain whether he will become a proper and efficient employee. (relevant

to the syllabus)

Furthermore, petitioners cannot belatedly argue that respondents continue to

be their employees (so as to escape liability for illegal dismissal). Before the
LA, petitioners staunchly postured that respondents were only "project
employees" whose employment tenure was coterminous with the projects
they were assigned to. However, before the CA, they took a different stance
by insisting that respondents continued to be their employees. Petitioners'
inconsistent and conflicting positions on their true relation with respondents
make it all the more evident that the latter were indeed their regular
employees.

Facts: Sometime in September 1982, private respondent Victoria Abril was

employed by petitioner Philippine Federation of Credit Cooperatives, Inc.
(PFCCI), a corporation engaged in organizing services to credit and
cooperative entities, as Junior Auditor/Field Examiner and thereafter held
positions in different capacities, to wit: as office secretary in 1985 and as
cashier-designate for four (4) months ending in April 1988. Respondent,
shortly after resuming her position as office secretary, subsequently went on
leave until she gave birth to a baby girl. Upon her return sometime in
November 1989, however, she discovered that a certain Vangie Santos had
been permanently appointed to her former position. She, nevertheless,
accepted the position of Regional Field Officer as evidenced by a contract
which stipulated, among other things, that respondents employment status
shall be probationary for a period of six (6) months. Said period having
elapsed, respondent was allowed to work until PFCCI presented to her
another employment contract for a period of one year commencing on
January 2, 1991 until December 31, 1991, after which period, her
employment was terminated.

A.3 By Probationary employment an employee who is allowed to work

after a probationary period (not to exceed 6 months) shall be considered
regular
a.

Statutory definition of Probationary employment

ART. 281. Probationary employment. - Probationary employment shall not

exceed six (6) months from the date the employee started working, unless it
is covered by an apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary basis may
be terminated for a just cause or when he fails to qualify as a regular employee
in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to
work after a probationary period shall be considered a regular employee.
b.

Nature of Probationary employment

Philippine federation of credit cooperatives vs NLRC

Doctrine: Probationary employment is in nature of a trial period a
probationary employee is one who is on trial by an employer during which
the employer determines whether or not he is qualified for permanent
employment. A probationary employment is made to afford the employer an
opportunity to observe the fitness of a probationer while at work, and to

In a complaint for illegal dismissal filed by respondent against PFCCI on

April 1, 1992, Labor Arbiter Cornelio L. Linsangan rendered a decision on
March 10, 1993 dismissing the same for lack of merit but ordered PFCCI to
reimburse her the amount of P2,500.00 which had been deducted from her
salary.
On appeal, however, the said decision was reversed by the National Labor
Relations Commission (NLRC)
Issue: WoN the respondent is deemed a regular employee after the lapse of
the probationary period
Held: Regardless of the designation petitioner may have conferred upon
respondents employment status, it is, however, uncontroverted that the
latter, having completed the probationary period and allowed to work
thereafter, became a regular employee who may be dismissed only for just
or authorized causes under Articles 282, 283 and 284 of the Labor Code, as
amended.

While the initial statements of the contract show that respondents

employment was for a fixed period, the succeeding provisions thereof
contradicted the same when it provided that respondent shall be under
probationary status commencing on February 17, 1990 and ending six (6)
months thereafter. Petitioner manifested that respondents employment for a
period of one year, from January until December 1991, having been fixed
for a specified period, could not have converted her employment status to
one of regular employment. Conversely, it likewise insisted that respondent
was employed to perform work related to a project funded by the World
Council of Credit Unions (WOCCU) and hence, her status is that of a
project employee. The Court is, thus, confronted with a situation under
which the terms of the contract are so ambiguous as to preclude a precise
application of the pertinent labor laws.
Amidst the muddled assertions by petitioner, we adhere to the
pronouncement stated in the recent case of Villanueva v. NLRC, where the
Court ruled that where a contract of employment, being a contract of
adhesion, is ambiguous, any ambiguity therein should be construed strictly
against the party who prepared it. Furthermore, Article 1702 of the Civil
Code provides that, in case of doubt, all labor contracts shall be construed in
favor of the laborer.
c.

Computation of the sixth (6) month probationary period

CALS poultry supply vs Roco

Doctrine: Our computation of the 6-month probationary period is reckoned
from the date of appointment up to the same calendar date of the 6 th month
following.
Facts: On March 15, 1984 CALS hired Alfredo Roco as its driver. On the
same date, CALS hired Edna Roco, Alfredos sister, as a helper in the
dressing room of CALS. On May 16, 1995, it hired Candelaria Roco,
another sister, as helper, also at its chicken dressing plant on a probationary
basis.
On March 5, 1996, Alfredo Roco and Candelaria Roco filed a complaint for
illegal dismissal against CALS and Danilo Yap alleging that Alfredo and
Candelaria were illegally dismissed on January 20, 1996 and November 5,

1996, respectively. Both also claimed that they were underpaid of their
wages. Edna Roco, likewise, filed a complaint for illegal dismissal, alleging
that on June 26, 1996, she was reassigned to the task of washing dirty sacks
and for this reason, in addition to her being transferred from night shift to
day time duties, which she considered as management act of harassment,
she did not report for work.
The Labor Arbiter on April 16, 1998, issued a decision dismissing the
complaints for illegal dismissal for lack of merit. The Labor Arbiter found
that Alfredo Roco applied for and was granted a leave of absence for the
period from January 4 to 18, 1996. He did not report back for work after the
expiration of his leave of absence, prompting CALS, through its Chief
Maintenance Officer to send him a letter on March 12, 1996 inquiring if he
still had intentions of resuming his work. Alfredo Roco did not respond to
the letter despite receipt thereof, thus, Alfredo was not dismissed; it was he
who unilaterally severed his relation with his employer.
In the case of Candelaria Roco, the Labor Arbiter upheld CALS decision
not to continue with her probationary employment having been found her
unsuited for the work for which her services were engaged. She was hired
on May 16, 1995 and her services were terminated on November 15, 1995.
In ruling in favor of Candelaria Roco, the appellate court held that when her
employment was terminated on November 15, 1995 (she was hired on May
16, 1995), it was four (4) days after she ceased to be a probationary
employee and became a regular employee within the ambit of Article 281 of
the Labor Code
CALS argues that the Court of Appeals computation of the 6-month
probationary period is erroneous as the termination of Candelarias services
on November 15, 1995 was exactly on the last day of the 6-month period.
Issue: WoN the 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.
Held: With respect to Candelaria Roco, there is no dispute that she was
employed on probationary basis. CALS argues that the Court of Appeals
computation of the 6-month probationary period is erroneous as the

termination of Candelarias services on November 15, 1995 was exactly on

the last day of the 6-month period.
We agree with CALS contention as upheld by both the Labor Arbiter and
the NLRC that Candelarias services was terminated within and not beyond
the 6-month probationary period.
In Cebu Royal v. Deputy Minister of Labor, our 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. Thus, we held:
The original findings were contained in a one-page order reciting simply
that complainant was employed on a probationary period of employment for
six (6) months. After said period, he underwent medical examination for
qualification as regular employee but the results showed that he is suffering
from PTB minimal. Consequently, he was informed of the termination of
his employment by respondent. The order then concluded that the
termination was justified.
d.

Application of Art. 13 of the Civil Code in the computation of

sixth month probationary period

Mitsubishi motors vs Chrysler

Doctrine: Applying Article 13 of the Civil Code, the probationary period of
six (6) months consists of one hundred eighty (180) days.
Facts: Nelson Paras was first employed by MMPC as a shuttle bus driver
on March 19, 1976. He resigned on June 16, 1982. He applied for and was
hired as a diesel mechanic and heavy equipment operator in Saudi Arabia
from 1982 to 1993. 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

They unanimously agreed, along with Paras immediate supervisors, that the
performance of Paras was unsatisfactory. As a consequence, Paras was not
considered for regularization.
According to CPLU and Paras, the latters dismissal was an offshoot of the
heated argument during the CBA negotiations between MMPC Labor
Relations Manager, Atty. Carlos S. Cao, on the one hand, and Cecille Paras,
the President of the Chrysler Philippines Salaried Employees Union (CPSU)
and Paras wife, on the other.
CPLU posited that Paras was dismissed on his one hundred eighty third
(183rd) day of employment, or three (3) days after the expiration of the
probationary period of six (6) months. It was contended that Paras was
already a regular employee on the date of the termination of his
probationary employment.
Issue: WoN Paras has worked after the expiration of the probationary
period of six months thus entitling him to be deem as 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 companys 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.
e.

Extension of Probationary period relaxed by the Supreme

Court

Mariwasa Manufacturing inc. vs Leogardo

Doctrine: Generally, the probationary period of employment is limited to
six (6) months. The exception to this general rule is when the parties to an
employment contract may agree otherwise
FACTS: Joaquin A. Dequila (or Dequilla) was hired on probation by
Mariwasa Manufacturing, Inc. as a general utility worker on January 10,
1979. After 6 months, he was informed that his work was unsatisfactory and
had failed to meet the required standards. To give him another chance, and
with Dequilas written consent, Mariwasa extended Dequilas probationary
period for another three months: from July 10 to October 9, 1979. Dequilas
performance, however, did not improve and Mariwasa terminated his
employment at the end of the extended period.
Dequila filed a complaint for illegal dismissal against Mariwasa and its VP
for Administration, Angel T. Dazo, and violation of Presidential Decrees
Nos. 928 and 1389.
DIRECTOR OF MINISTRY OF LABOR: Complaint is dismissed.
Termination is justified. Thus, Dequila appeals to the Minister of Labor.
MINISTER OF LABOR: Deputy Minister Vicente Leogardo, Jr. held that
Dequila was already a regular employee at the time of his dismissal, thus,
he was illegally dismissed. (Initial order: Reinstatement with full
backwages. Later amended to direct payment of Dequilas backwages from
the date of his dismissal to December 20, 1982 only.)
ISSUE: WON employer and employee may, by agreement, extend the
probationary period of employment beyond the six months prescribed in
Art. 281 of the Labor Code?

Held: YES, agreements stipulating longer probationary periods may

constitute lawful exceptions to the statutory prescription limiting such
periods to six months.
The SC in its decision in Buiser vs. Leogardo, Jr. (1984) said that
Generally, the probationary period of employment is limited to six (6)
months. The exception to this general rule is when the parties to an
employment contract may agree otherwise, such as when the same is
established by company policy or when the same is required by the nature
of work to be performed by the employee. In the latter case, there is
recognition of the exercise of managerial prerogatives in requiring a longer
period of probationary employment, such as in the present case where the
probationary period was set for eighteen (18) months, i.e. from May, 1980
to October, 1981 inclusive, especially where the employee must learn a
particular kind of work such as selling, or when the job requires certain
qualifications, skills experience or training.
In this case, the extension given to Dequila could not have been prearranged to avoid the legal consequences of a probationary period
satisfactorily completed. In fact, it was ex gratia, an act of liberality on the
part of his employer affording him a second chance to make good after
having initially failed to prove his worth as an employee. Such an act
cannot now unjustly be turned against said employers account to compel it
to keep on its payroll one who could not perform according to its work
standards.
By voluntarily agreeing to an extension of the probationary period, Dequila
in effect waived any benefit attaching to the completion of said period if he
still failed to make the grade during the period of extension. By reasonably
extending the period of probation, the questioned agreement actually
improved the probationary employees prospects of demonstrating his
fitness for regular employment.
f.

Repetitive probationary period

Villanueva vs NLRC
Doctrine: The termination of petitioner's employment contract on 21
February 1995, as well as the subsequent issuance on 13 March 1995 of a

"new" contract for five months as "data encoder," was a devious, but crude,
attempt to circumvent petitioner's right to security of tenure as a regular
employee guaranteed by Article 279 of the Labor Code.
Facts: The contract of employment provided for a period of effectivity of
"one year commencing on Feb. 21, 1994, until Aug. 21, 1995." It was also
stipulated that from 21 February 1994 to 21 August 1994, or for a period of
six months, petitioner's employment would be "contractual" and could be
terminated at whatever date within this period by mere service of notice to
that effect. However, should his employment be continued beyond 21
August 1994, he would become a regular employee upon demonstration of
sufficient skill to meet the standards set by the respondent company. Should
he fail to demonstrate the ability to master his task during the first six
months, he could be placed on probation for another six months; after
which, he could be evaluated for promotion as a regular employee.
On 21 February 1995, petitioner's services were terminated by reason of
"end of contract."
Three weeks thereafter, the petitioner was rehired by the respondent
corporation, this time, as a data encoder effective 13 March 1995 to 15
August 1995, with a lesser pay of P164.10 per day.
On 13 August 1995, the petitioner was again separated from the respondent
company also on account of "end of contract." This prompted the petitioner
to file a complaint against the respondent company and its president, Todd
Solomon, for illegal dismissal with prayer for moral and exemplary
damages and attorney's fees.
the respondent company supports the assailed decision and maintains that
the petitioner was hired on a fixed-term basis and was never placed on
probation. The termination of his services was not due to his dismissal but
the expiration of his term of employment

From Feb. 21, 1994 to August 21, 1994, or for a period of six (6) months,
the EMPLOYEE shall be contractual during which the EMPLOYER can
terminate the EMPLOYEE's services by serving written notice to that
effect. Such termination shall be immediate, or at whatever date within this
six-month period, as the EMPLOYER may determine. Should the
EMPLOYEE continue his employment beyond Aug. 21, 1994, he shall
become a regular employee upon demonstration of sufficient skill in terms
of his ability to meet the standards set by the EMPLOYER. If the
EMPLOYEE fails to demonstrate the ability to master his task during the
first six months he can be placed on probation for another six (6) months
after which he will be evaluated for promotion as regular employee.
It is clear that the first six months was in reality the "probation period"
under Article 281 of the Labor Code, since petitioner would become a
regular employee if the employment would continue beyond that period
upon demonstration of sufficient skill in accord with the standards set by
the respondent corporation.
Significantly, the respondent company alleges that it has never placed the
petitioner on probation. This could only mean that petitioner's continuance
in employment beyond 21 August 1994 was not for probation purposes
under the fourth sentence of the second paragraph of Section 2 reading as
follows: "If the employee fails to demonstrate the ability to master his task
during the first six months he can be placed on probation for another six (6)
months after which he will be evaluated for promotion as a regular
employee." If the petitioner was thus allowed to remain in employment
beyond 21 August 1994, it could be for no other reason than that he
demonstrated "sufficient skill in terms of his ability to meet the standards
set" by the respondent company. He, therefore, became a regular employee
by virtue of the third sentence of the second paragraph of Section 2 of the
contract.

g.
Issue: WoN Petitioner is a regular employee
Held: Section 2. This contract shall be effective for a period of one year
commencing on Feb. 21, 1994 until Aug. 21, 1995, unless sooner
terminated pursuant to the provision hereof.

Stipulation in employment contract fixing the period of

probationary period

Innodata Phil. Vs Quejada Lopez

Doctrine: While this Court has recognized the validity of fixed-term

employment contracts in a number of cases, it has consistently emphasized
that when the circumstances of a case show that the periods were imposed
to block the acquisition of security of tenure, they should be struck down
for being contrary to law, morals, good customs, public order or public
policy.

The CA ruled that respondents were regular employees in accordance with

Section 280 of the Labor Code. It said that the fixed-term contract prepared
by petitioner was a crude attempt to circumvent respondents right to
security of tenure.

Facts: "Innodata Philippines, Inc., is engaged in the encoding/data

conversion business. It employs encoders, indexers, formatters,
programmers, quality/quantity staff, and others, to maintain its business and
do the job orders of its clients.

Issue: WoN A contract that misuses a purported fixed-term employment to

block the acquisition of tenure by the employees deserves to be struck down
for being contrary to law, morals, good customs, public order and public
policy.

"Estrella G. Natividad and Jocelyn L. Quejada were employed as formatters

by Innodata Philippines, Inc. They [worked] from March 4, 1997, until their
separation on March 3, 1998.

Held: "If the contract was really for a fixed term, the [employer] should not
have been given the discretion to dismiss the [employee] during the one
year period of employment for reasons other than the just and authorized
causes under the Labor Code. Settled is the rule that an employer can
terminate the services of an employee only for valid and just causes which
must be shown by clear and convincing evidence.

"Claiming that their job was necessary and desirable to the usual business of
the company which is data processing/conversion and that their
employment is regular pursuant to Article 280 of the Labor Code,
[respondents] filed a complaint for illegal dismissal and for damages as well
as for attorneys fees against Innodata Phils., Incorporated, Innodata
Processing Corporation and Todd Solomon. [Respondents] further invoke
the stare decicis doctrine in the case of Juanito Villanueva vs. National
Labor Relations Commission, et al., G.R. No. 127448 dated September 17,
1998 and the case of Joaquin Servidad vs. National Labor Relations
Commission, et al., G.R. No. 128682 dated March 18, 1999, arguing that
the Highest Court has already ruled with finality that the nature of
employment at [petitioner] corporation is regular and not on a fixed term
basis, as the job in the company is necessary and desirable to the usual
business of the corporation.
"On the other hand, [petitioner] contends that [respondents] employment
contracts expired, for [these were] only for a fixed period of one (1) year.
[Petitioner] company further invoked the Brent School case by saying that
since the period expired, [respondents] employment was likewise
terminated.
"After examination of the pleadings filed, Labor Arbiter Donato G. Quinto
rendered a judgment in favor of complainants

Hence, this Petition.

xxxxxxxxx
"The language of the contract in dispute is truly a double-bladed scheme to
block the acquisition of the employee of tenurial security. Thereunder, [the
employer] has two options. It can terminate the employee by reason of
expiration of contract, or it may use failure to meet work standards as the
ground for the employees dismissal. In either case, the tenor of the contract
jeopardizes the right of the worker to security of tenure guaranteed by the
Constitution."
h.

Exception to probationary period exceeding six month period

Buiser vs Hon. Leogardo

Doctrine: Generally, the probationary period of employment is limited to
six (6) months. The exception to this general rule is When the parties to an
employment contract may agree otherwise, such as when the same is
established by company policy or when the same is required by the nature
of work to be performed by the employee. In the latter case, there is
recognition of the exercise of managerial prerogatives in requiring a longer

period of probationary employment, such as in the present case where the

probationary period was set for eighteen (18) months, i.e. from May, 1980
to October, 1981 inclusive, especially where the employee must learn a
particular kind of work such as selling, or when the job requires certain
qualifications, skills, experience or training.

Minister of Labor and Employment nor any agreement of the parties could
prevail over this mandatory requirement of the law

Facts: Petitioners were employed by the private respondent GENERAL

TELEPHONE DIRECTORY COMPANY as sales representatives and
charged with the duty of soliciting advertisements for inclusion in a
telephone directory.

Held: Policy Instruction No. 11 of the Minister of Labor and Employment

has clarified any and all doubts on the period of probationary employment.
It states as follows:

The records show that petitioners Iluminada Ver Buiser and Ma. Mercedes
P. Intengan entered into an "Employment Contract (on Probationary
Status)" on May 26, 1980 with private respondent, a corporation engaged in
the business of publication and circulation of the directory of the Philippine
Long Distance Telephone Company. Petitioner Ma. Cecilia Rillo-Acuna
entered into the same employment contract on June 11, 1980 with the
private respondent.
Among others, the "Employment Contract (On Probationary Status)"
included the following common provisions:
l. The company hereby employs the employee as
telephone representative on a probationary status for a
period of eighteen (18) months, i.e. from May 1980 to
October 1981, inclusive. It is understood that darung the
probationary period of employment, the Employee may
be terminated at the pleasure of the company without the
necessity of giving notice of termination or the payment
of termination pay.
Corollary to this, the private respondent prescribed sales quotas to be
accomplished or met by the petitioners. Failing to meet their respective
sales quotas, the petitioners were dismissed from the service by the private
respondent.
It is petitioners' submission that probationary employment cannot exceed
six (6) months, the only exception being apprenticeship and learnership
agreements as provided in the Labor Code; that the Policy Instruction of the

Issue: WoN the stipulation in the contract requiring an 18 month

probationary period is valid

Probationary Employment has been the subject of

misunderstanding in some quarter. Some people believe
six (6) months is the probationary period in all cases. On
the other hand employs who have already served the
probationary period are sometimes required to serve again
on probation.
Under the Labor Code, six (6) months is the general
probationary period ' but the probationary period is
actually the period needed to determine fitness for the job.
This period, for lack of a better measurement is deemed to
be the period needed to learn the job.
The purpose of this policy is to protect the worker at the
same time enable the employer to make a meaningful
employee selection. This purpose should be kept in mind
in enforcing this provision of the Code. This issuance
shall take effect immediately.
In the case at bar, it is shown that private respondent Company needs at
least eighteen (18) months to determine the character and selling
capabilities of the petitioners as sales representatives. The Company is
engaged in advertisement and publication in the Yellow Pages of the PLDT
Telephone Directories. Publication of solicited ads are only made a year
after the sale has been made and only then win the company be able to
evaluate the efficiency, conduct, and selling ability of its sales
representatives, the evaluation being based on the published ads. Moreover,
an eighteen month probationary period is recognized by the Labor Union in

the private respondent company, which is Article V of the Collective

Bargaining Agreement, ... thus:
Probationary Period New employees hired for regular
or permanent shall undergo a probationary or trial period
of six (6) months, except in the cases of telephone or sales
representatives where the probationary period shall be
eighteen (I 8) months.
And as indicated earlier, the very contracts of employment signed and
acquiesced to by the petitioners specifically indicate that "the company
hereby employs the employee as telephone sales representative on a
probationary status for a period of eighteen (18) months, i.e. from May
1980 to October 1981, inclusive. This stipulation is not contrary to law,
morals and public policy.
i.

Probationary period for different workers

1.

Probationary period of Apprentices

"Section 6. Probationary employment. - There is probationary

employment where the employee, upon his engagement, is made to
undergo a trial period during which the employer determines his
fitness to qualify for regular employment based on reasonable
standards made known to him at the time of engagement.
"Probationary employment shall be governed by the following
rules:
"(a) Where the work for which the employee has been
engaged is learnable or apprenticeable in accordance with
the standards prescribed by the Department of Labor and
Employment, the period of probationary employment shall
be limited to the authorized learnership or apprenticeship
period, which is applicable.

Doctrine: Prior approval by the Department of Labor and Employment of

the proposed apprenticeship program is, therefore, a condition sine quo non
before an apprenticeship agreement can be validly entered into.
Facts: Petitioner Nitto Enterprises, a company engaged in the sale of glass
and aluminum products, hired Roberto Capili sometime in May 1990 as an
apprentice machinist, molder and core maker as evidenced by an
apprenticeship agreement 2 for a period of six (6) months from May 28,
1990 to November 28, 1990 with a daily wage rate of P66.75 which was
75% of the applicable minimum wage.
At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a
piece of glass which he was working on, accidentally hit and injured the leg
of an office secretary who was treated at a nearby hospital.
Later that same day, after office hours, private respondent entered a
workshop within the office premises which was not his work station. There,
he operated one of the power press machines without authority and in the
process injured his left thumb. Petitioner spent the amount of P1,023.04 to
cover the medication of private respondent.
The following day, Roberto Capili was asked to resign in a letter
On August 3, 1990 private respondent executed a Quitclaim and Release in
favor of petitioner for and in consideration of the sum of P1,912.79. 4
Three days after, or on August 6, 1990, private respondent formally filed
before the NLRC Arbitration Branch, National Capital Region a complaint
for illegal dismissal and payment of other monetary benefits.
Petitioner further insists that the mere signing of the apprenticeship
agreement already established an employer-apprentice relationship.
Issues: WoN there exists an employer-apprentice relationship

Nitto Enterprises vs NLRC

Held: The act of filing the proposed apprenticeship program with the
Department of Labor and Employment is a preliminary step towards its

final approval and does not instantaneously give rise to an employerapprentice relationship.

(b) The duration of the learnership period, which shall not exceed three (3)
months;

Article 57 of the Labor Code provides that the State aims to "establish a
national apprenticeship program through the participation of employers,
workers and government and non-government agencies" and "to establish
apprenticeship standards for the protection of apprentices." To translate
such objectives into existence, prior approval of the DOLE to any
apprenticeship program has to be secured as a condition sine qua non before
any such apprenticeship agreement can be fully enforced. The role of the
DOLE in apprenticeship programs and agreements cannot be debased.

Learnership vs Apprenticeship

Hence, since the apprenticeship agreement between petitioner and private

respondent has no force and effect in the absence of a valid apprenticeship
program duly approved by the DOLE, private respondent's assertion that he
was hired not as an apprentice but as a delivery boy ("kargador" or
"pahinante") deserves credence. He should rightly be considered as a
regular employee of petitioner as defined by Article 280 of the Labor Code

Difference

NOTE: Petitioner further argues that, there is a valid cause for the dismissal
of private respondent.

As to hiring after period of training

There is an abundance of cases wherein the Court ruled that the twin
requirements of due process, substantive and procedural, must be complied
with, before valid dismissal exists. 10 Without which, the dismissal becomes
void.
The twin requirements of notice and hearing constitute the essential
elements of due process. This simply means that the employer shall afford
the worker ample opportunity to be heard and to defend himself with the
assistance of his representative, if he so desires.
2.

Probationary period of Learners

ART. 75. Learnership agreement. - Any employer desiring to employ

learners shall enter into a learnership agreement with them, which
agreement shall include:

Similarities
Both mean training periods for jobs requiring skills that can be acquired
through actual work experience
They may be paid wages 25% lower than the applicable minimum wage.

As to focus and terms of training

A learner trains in a semi-skilled job or in industrial occupations requiring
less than 3 months of training.
An Apprentice trains in a highly skilled job or in a job found only in a
highly technical industry thus the training period exceeds three months

The employer is committed to hire the learner-trainee as an employee after

training period.
No Such commitment exists in apprenticeship.
3.

Probationary period of Handicapped Learners

ART. 78. Definition. - Handicapped workers are those whose earning

capacity is impaired by age or physical or mental deficiency or injury.
ART. 81. Eligibility for apprenticeship. - Subject to the appropriate
provisions of this Code, handicapped workers may be hired as apprentices
or learners if their handicap is not such as to effectively impede the
performance of job operations in the particular occupations for which they
are hired.
4.

Probationary period of Teachers

1992 Manual of Regulations for Private Schools

5.
Section 92. Probationary Period. Subject in all instances to compliance
with 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 the trimester basis.
UST vs NLRC GR 85519 (not included in the syllabus)
According to Policy Instructions No. 11 issued by the Department of Labor
and Employment, "the probationary employment of professors, instructors
and teachers shall be subject to standards established by the Department of
Education and Culture." Said standards are embodied in paragraph 75 of the
Manual of Regulations for Private Schools, to wit: 75. Full time teachers
who have rendered three consecutive years of satisfactory service shall be
considered permanent." (Emphasis supplied)
The legal requisites, therefore, for acquisition by a teacher of permanent
employment, or security of tenure, are as follows:

Requirement for regularization of Private School Teachers

Chang Kai Shek School vs CA

Doctrine: Parenthetically, R.A. No. 4670, otherwise known as the Magna
Carta for Public School Teachers, confers security of tenure on the teacher
upon appointment as long as he possesses the required qualification. And
under the present policy of the Department of Education, Culture and
Sports, a teacher becomes permanent and automatically acquires security of
tenure upon completion of three years in the service.
It is clear now that a charitable institution is covered by the labor laws
Facts: An unpleasant surprise awaited Fausta F. Oh when she reported for
work at the Chiang Kai Shek School in Sorsogon on the first week of July,
1968. She was told she had no assignment for the next semester. Oh was
shocked. She had been teaching in the school since 1932 for a continuous
period of almost 33 years. And now, out of the blue, and for no apparent or
given reason, this abrupt dismissal.
Oh sued. She demanded separation pay, social security benefits, salary
differentials, maternity benefits and moral and exemplary damages.

1) the teacher is a full time teacher;

2) the teacher must have rendered three (3) consecutive years of service;
and
3) such service must have been satisfactory.
"a full-time teacher" is "one whose total working day is devoted to the
school, has no other regular remunerative employment and is paid on a
regular monthly basis regardless of the number of teaching hours" (Par. 77);
and that in college, "the nominal teaching load of a full-time instructor shall
be eighteen hours a week" (par. 78).
It follows that a part-time member of the faculty cannot acquire permanence
in employment under the Manual of Regulations in relation to the Labor
Code.

Petitioners argument: The petitioner says the private respondent had not
been illegally dismissed because her teaching contract was on a yearly basis
and the school was not required to rehire her in 1968. The argument is that
her services were terminable at the end of each year at the discretion of the
school.
Respondents argument: She is entitled to security of tenure
Issue: WoN a school teacher who works in an alleged charitable institution
may acquire security of tenure
Held: It is clear now that a charitable institution is covered by the labor
laws. While it may be that the petitioner was engaged in charitable works, it
would not necessarily follow that those in its employ were as generously
motivated. Obviously, most of them would not have the means for such

charity. The private respondent herself was only a humble school teacher
receiving a meager salary of Pl80. 00 per month.
At that, it has not been established that the petitioner is a charitable
institution, considering especially that it charges tuition fees and collects
book rentals from its students
The Court holds, after considering the particular circumstance of Oh's
employment, that she had become a permanent employee of the school and
entitled to security of tenure at the time of her dismissal. Since no cause was
shown and established at an appropriate hearing, and the notice then
required by law had not been given, such dismissal was invalid.
The private respondent's position is no different from that of the rank-andfile employees involved in Gregorio Araneta University Foundation v.
NLRC, 9 of whom the Court had the following to say:
Undoubtedly, the private respondents' positions as deans
and department heads of the petitioner university are
necessary in its usual business. Moreover, all the private
respondents have been serving the university from 18 to
28 years. All of them rose from the ranks starting as
instructors until they became deans and department heads
of the university. A person who has served the University
for 28 years and who occupies a high administrative
position in addition to teaching duties could not possibly
be a temporary employee or a casual.

Espiritu Santo Parochial School vs NLRC (GR 82325)

Doctrine: A teacher can only be dismissed for just cause or when he fails
to qualify as regular employees
Facts: seven individual private respondents were hired by the petitionerschool on a probationary basis on June 1, 1984, 1 whereupon, sometime
between April 1 and 15, 1985 2 their services were terminated. On May 8,
1985, 2 they charged the petitioner-school with unfair labor practice and

illegal dismissal. They likewise asked for damages. The labor arbiter ruled
as follows: WHEREFORE, judgment is hereby rendered in favor of the
respondents
The school appealed to the National Labor Relations Commission, but the
decision of the labor arbiter was affirmed
Petitioners argument: the school submits the following issues:
1. The respondents-teachers were not dismissed. Their contracts have,
simply, expired and not renewed.
2. Their contracts subsist from schoolyear to schoolyear, and unless
renewed, the same automatically expire;
3. Although Article 282 of the Labor Code (now, Article 281) fixes
probationary periods to six months Biboso v. Victorias Milling Company,
Inc.' 4 and Buiser v. Leogardo 5 supposedly held that the contract of
probationary employment may provide otherwise;
4. The school is not guilty of unfair labor practice, much less, of illegal
dismissal, because school authorities, in terminating the seven private
respondents' services, did not allegedly know that they were union
members. Furthermore, it was the head teachers themselves, also leaders of
the union, who recommended termination.
Respondents argument: the said seven private respondents-teachers
contend as follows:
1. Under the Manual of Regulations for Private Schools, teachers undergo a
probationary period of three years, during which, they may be dismissed
only for a just cause.
2. Since the said seven teachers were laid off after less than one year of
probationary service, the lay-off was illegal.
Issue: WoN the employees were terminated in accordance with the Manual
of Regulations for Private Schools

Held: There is no dispute that the individual complainants were

probationary employees pursuant to the policy enunciated by the Bureau of
Private Schools extending the probationary employment of teachers to three
(3) years.
The above policy, however, did not repeal or render inoperative Article 282
of the Labor Code, as amended which provides that:
. . . The services of an employee who has been engaged on a probationary
basis may be terminated for a just cause or when he fails to qualify as a
regular employee in accordance with reasonable standards made known to
the employee at the time of his engagement.
We see no clear evidence that the individual complainants were terminated
either for a just cause or that they have failed to qualify as regular
employees in accordance with the standards set by respondent school made
known to the former at the time of hiring. In fact, it is shown that the
individual complainants were issued individual certifications of
employment and whose performance ratings ranged from 85% to 90%
In Biboso, the contracts to teach were for definite periods. ("None of the
complainants who testified disputed the fact that they all signed identical
contracts of employment which provided for a definite period of
employment expiring June 30 of the particular school year ." 12 On the other
hand, the contracts involved here stipulate no period. In that eventuality, the
three-year probation period provided by the Manual of Regulations for
Private Schools must apply. Under the Manual, no teacher may be removed
unless for just and valid causes. The petitioners can not, therefore,
successfully invoke Bibioso. Resort therefore to the Manual is not only
justifiable but unavoidable.
6.

REPUBLIC ACT NO. 4670 June 18, 1966

THE MAGNA CARTA FOR PUBLIC SCHOOL TEACHERS

Sec. 4. Probationary Period. When recruitment takes place after adequate
training and professional preparation in any school recognized by the
Government, no probationary period preceding regular appointment shall be

imposed if the teacher possesses the appropriate civil service eligibility:

Provided, however, That where, due to the exigencies of the service, it is
necessary to employ as teacher a person who possesses the minimum
educational qualifications herein above set forth but lacks the appropriate
civil service eligibility, such person shall be appointed on a provisional
status and shall undergo a period of probation for not less than one year
from and after the date of his provisional appointment.
7.

Probationary period of Part-Time Employees

Completion of the 6 month period for such number of hours or days. Acting
DOLE Sec. Jose S. Brillantes.
2. Project Employment
SECTION 5. Regular and casual employment. (a) The provisions of
written agreements to the contrary notwithstanding and regardless of the
oral agreements of the parties, an employment shall be considered to be
regular employment for purposes of Book VI of the Labor Code 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.
DO no. 19 Series of 1993
2.1 Generally, there are two types of employees in the construction
industry, namely 1) Project Employees and 2) Non-project Employees.
Project employees are those employed in connection with a particular
construction project. Non-project employees are those employed by a
construction company without reference to a particular project.
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.

2.2 Indicators of project employment. - Either one or more of the following

circumstances, among others, may be considered as indicators that an
employee is a project employee.

work or service to be performed is seasonal in nature and the employment is

for the duration of the season
a. Definition and Nature of project employment

(a) The duration of the specific/identified undertaking for which the worker
is engaged is reasonably determinable.
(b) Such duration, as well as the specific work/service to be performed, is
defined in an employment agreement and is made clear to the employee at
the time of hiring.
(c) The work/service performed by the employee is in connection with the
particular project/undertaking for which he is engaged.
(d) The employee, while not employed and awaiting engagement, is free to
offer his services to any other employer.
(e) The termination of his employment in the particular project/undertaking
is reported to the Department of Labor and Employment (DOLE) Regional
Office having jurisdiction over the workplace within 30 days following the
date of his separation from work, using the prescribed form on employees
terminations/dismissals/suspensions.
(f) An undertaking in the employment contract by the employer to pay
completion bonus to the project employee as practiced by most construction
companies.
* Department Order No. 19, which was issued on April 1, 1993, did not
totally dispense with the notice requirement but, instead, made provisions
therefor and considered it as one of the indicators that a worker is a project
employee.

2.A Nature of Project Employment an 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 where the

HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD.

Vs FELICITO IBAEZ
Doctrine: The principal test for determining whether particular employees
are properly characterized as "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 a number of cases, the Court has held that the length of service or the rehiring of construction workers on a project-to-project basis does not confer
upon them regular employment status, since their re-hiring is only a natural
consequence of the fact that experienced construction workers are preferred.
Employees who are hired for carrying out a separate job, distinct from the
other undertakings of the company, the scope and duration of which has
been determined and made known to the employees at the time of the
employment, are properly treated as project employees and their services
may be lawfully terminated upon the completion of a project. Should the
terms of their employment fail to comply with this standard, they cannot be
considered project employees.
Absent any other proof that the project employees were informed of their
status as such, it will be presumed that they are regular employees in
accordance with Clause 3.3(a) of Department Order No. 19, Series of 1993,
which states that:
a) Project employees whose aggregate period of continuous
employment in a construction company is at least one year
shall be considered regular employees, in the absence of a "day
certain" agreed upon by the parties for the termination of their
relationship. Project employees who have become regular shall be
entitled to separation pay.

Facts: Petitioner HANJIN is a foreign company duly registered with the

Securities and Exchange Commission to engage in the construction business
in the Philippines.
Respondents Felicito Ibaez, Aligwas Carolino, Elmer Gacula, Enrique
Dagotdot, Ruel Calda, and four other co-workers filed a complaint before
the NLRC, docketed as NLRC Case No. RAB-IV-04-15515-02-RI, for
illegal dismissal with prayer for reinstatement and full backwages against
petitioners. In their Position Paper dated 29 July 2002, respondents alleged
that HANJIN hired them for various positions on different dates
Petitioners argument: They maintained that respondents were hired as
project employees for the construction of the LRT/MRT Line 2 Package 2
and 3 Project. HANJIN and respondents purportedly executed contracts of
employment, in which it was clearly stipulated that the respondents were to
be hired as project employees for a period of only three months, but that the
contracts may be renewed. Petitioners further emphasized that prior to 15
April 2002, Hak Kon Kim, HANJIN's Project Director, notified respondents
of the company's intention to reduce its manpower due to the completion of
the LRT/MRT Line 2 Package 2 and 3 Project. Respondents were among
the project employees who were thereafter laid off, as shown in the
Establishment Termination Report filed by HANJIN before the Department
of Labor and Employment (DOLE) Regional Office (IV) in Cainta, Rizal on
11 April 2002.
Finally, petitioners insist that in accordance with the usual practice of the
construction industry, a completion bonus was paid to the respondents. To
support this claim, they offered as evidence payroll records for the period 4
April 2002 to 20 April 2002, with the words "completion bonus" written at
the lower left corner of each page.
Respondents argument: Respondents stated that their tasks were usual
and necessary or desirable in the usual business or trade of HANJIN.
Respondents claimed that at the time of their dismissal, HANJIN had
several construction projects that were still in progress, such as Metro Rail
Transit (MRT) II and MRT III, and continued to hire employees to fill the
positions vacated by the respondents.

The Labor Arbiter found merit in the respondents' complaint and declared
that they were regular employees who had been dismissed without just and
valid causes and without due process. It ruled that HANJIN's allegation that
respondents were project employees was negated by its failure to present
proof thereof.
The NLRC reversed the Labor Arbiter's Decision dated 30 April 2003, and
pronounced that the respondents were project employees who were legally
terminated from employment.17 The NLRC gave probative value to the
Termination Report submitted by HANJIN to the DOLE, receipts signed by
respondents for their completion bonus upon phase completion, and the
Quitclaims executed by the respondents in favor of HANJIN.
On appeal, the Court of Appeals reversed the NLRC Decision, dated 7
May 2004. The appellate court looked with disfavor at the change in
HANJIN's initial position before the Labor Arbiter-from its initial argument
that respondents executed employment contracts
Issue: WoN Respondents are project employees
Held: NO, Due to petitioners' failure to adduce any evidence showing that
petitioners were project employees who had been informed of the duration
and scope of their employment, they were unable to discharge the burden of
proof required to establish that respondents' dismissal was legal and valid.
Furthermore, it is a well-settled doctrine that if doubts exist between the
evidence presented by the employer and that by the employee, the scales of
justice must be tilted in favor of the latter. For these reasons, respondents
are to be considered regular employees of HANJIN.
Note: While the absence of a written contract does not automatically confer
regular status, it has been construed by this Court as a red flag in cases
involving the question of whether the workers concerned are regular or
project employees.
A "day" as used herein, is understood to be that which must necessarily
come, although it may not be known exactly when. This means that where
the final completion of a project or phase thereof is in fact determinable and
the expected completion is made known to the employee, such project
employee may not be considered regular, notwithstanding the one-year

duration of employment in the project or phase thereof or the one-year

duration of two or more employments in the same project or phase of the
project.
Sec. 2.2
(e) The termination of his employment in the particular
project/undertaking is reported to the Department of Labor and
Employment (DOLE) Regional Office having jurisdiction over the
workplace within 30 days following the date of his separation from
work, using the prescribed form on employees'
terminations/dismissals/suspensions.
If respondents were actually project employees, petitioners should have
filed as many Termination Reports as there were construction projects
actually finished and for which respondents were employed. Thus, a lone
Termination Report filed by petitioners only upon the termination of the
respondents' final project, and after their previous continuous employment
for other projects, is not only unconvincing, but even suspicious.
(f) An undertaking in the employment contract by the employer to pay
completion bonus to the project employee as practiced by most
construction companies. (
Petitioners insist that the payment to the respondents of a completion bonus
indicates that respondents were project employees. To support their claim,
petitioners presented payroll records for the period 4 April 2002 to 20 April
2002, with the words "completion bonus" written at the lower left corner of
each page.The amount paid to each employee was equivalent to his fifteenday salary. Respondents, however, deny receiving any such amount.
Assuming that petitioners actually paid respondents a completion bonus,
petitioners failed to present evidence showing that they undertook to pay
respondents such a bonus upon the completion of the project, as provided
under Section 2.2(f) of Department Order No. 19, Series of 1993.Petitioners
did not even allege how the "completion bonus" was to be computed or the
conditions that must be fulfilled before it was to be given. A completion
bonus, if paid as a mere afterthought, cannot be used to determine whether
or not the employment was regular or merely for a project. Otherwise, an

employer may defeat the workers' security of tenure by paying them a

completion bonus at any time it is inclined to unjustly dismiss them.
Department Order No. 19, Series of 1993, provides that in the absence of an
undertaking that the completion bonus will be paid to the employee, as in
this case, the employee may be considered a non-project employee, to wit:
3.4 Completion of the project. Project employees who are
separated from work as a result of the completion of the project or
any phase thereof in which they are employed are entitled to the
pro-rata completion bonus if there is an undertaking by for the
grant of such bonus. An undertaking by the employer to pay a
completion bonus shall be an indicator that an employee is a
project employee. Where there is no such undertaking, the
employee may be considered a non-project employee.
A completion bonus is paid in connection with the completion of the
project, and is not based on a fifteen-day period. Secondly, the amount paid
to each employee as his completion bonus was uniformly equivalent to his
fifteen-day wages, without consideration of the number of years of service
rendered. Section 3.4 of Department Order No. 19, Series of 1993, provides
that based on industry practice, the completion bonus is at least the
employee's one-half month salary for every twelve months of service.
Quit Claims
Finally, the Quitclaims which the respondents signed cannot bar them from
demanding what is legally due them as regular employees. As a rule,
quitclaims and waivers or releases are looked upon with disfavor and
frowned upon as contrary to public policy. They are thus ineffective to bar
claims for the full measure of a worker's legal rights, particularly when the
following conditions are applicable:
1) where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or
(2) where the terms of settlement are unconscionable on their face.To
determine whether the Quitclaims signed by respondents are valid, one

important factor that must be taken into account is the consideration

accepted by respondents;

(d) The employee, while not employed and awaiting engagement, is

free to offer his services to any other employer.

the amount must constitute a reasonable settlement equivalent to the full

measure of their legal rights. In this case, the Quitclaims signed by the
respondents do not appear to have been made for valuable consideration.
Respondents, who are regular employees, are entitled to backwages and
separation pay and, therefore, the Quitclaims which they signed cannot
prevent them from seeking claims to which they are entitled.

(e) The termination of his employment in the particular

project/undertaking is reported to the Department of Labor and
Employment (DOLE) Regional Office having jurisdiction over the
workplace within 30 days following the date of his separation from
work, using the prescribed form on employees
terminations/dismissals/suspensions.

Twin Requirements of Notice and Hearing

(f) An undertaking in the employment contract by the employer to pay

completion bonus to the project employee as practiced by most
construction companies.

Finally, in the instant case, records failed to show that HANJIN afforded
respondents, as regular employees, due process prior to their dismissal,
through the twin requirements of notice and hearing. Respondents were not
served notices informing them of the particular acts for which their
dismissal was sought. Nor were they required to give their side regarding
the charges made against them. Certainly, the respondents' dismissal was
not carried out in accordance with law and was, therefore, illegal.
a.

Indicator of project employment

DO 19 series of 1993
2.2 Indicators of project employment. - Either one or more of the
following circumstances, among others, may be considered as
indicators that an employee is a project employee.
(a) The duration of the specific/identified undertaking for which the
worker is engaged is reasonably determinable.
(b) Such duration, as well as the specific work/service to be performed,
is defined in an employment agreement and is made clear to the
employee at the time of hiring.
(c) The work/service performed by the employee is in connection with
the particular project/undertaking for which he is engaged.

Cocomangas Hotel Beach Resort vs Visca

Doctrine: Petitioners' failure to file termination reports is an indication that
the respondents were not project employees but regular employees.
Facts: dismissal filed on June 15, 1999 by Federico F. Visca (Visca),
Johnny G. Barredo, Ronald Q. Tibus, Richard G. Visca and Raffie G. Visca
(respondents) against Cocomangas Hotel Beach Resort and/or its ownermanager, Susan Munro (petitioners) before Sub-Regional Arbitration
Branch No. pa
Maria Nida Iigo-Taala, the Front Desk Officer/Sales Manager, informed
them not to report for work since the ongoing constructions and repairs
would be temporarily suspended because they caused irritation and
annoyance to the resort's guests; as instructed, they did not report for work
the succeeding days; John Munro, husband of petitioner Susan Munro,
subsequently visited respondent foreman Visca and informed him that the
work suspension was due to budgetary constraints; when respondent Visca
later discovered that four new workers were hired to do respondents' tasks,
he confronted petitioner Munro who explained that respondents' resumption
of work was not possible due to budgetary constraints; when not less than
ten workers were subsequently hired by petitioners to do repairs in two
cottages of the resort and two workers were retained after the completion

without respondents being allowed to resume work, they filed their

individual complaints for illegal dismissal
Petitioners argument: petitioners denied any employer-employee
relationship with respondents and countered that respondent Visca was an
independent contractor.
Petitioners filed a Motion for Reconsideration, arguing that respondents
were project employees.
Respondents argument: respondents alleged that they were regular
employees of petitioners
They argue that they have amply established that they are regular
employees of petitioners, since their jobs as carpenters, which include the
repairs of furniture, motor boats, cottages and windbreakers, are not at all
foreign to the business of maintaining a beach resort.
the Labor Arbiter (LA) rendered a Decisiondismissing the complaint,
holding that respondent Visca was an independent contractor

furniture, motor boats, cottages, and windbreakers and other resort facilities.
There is likewise no evidence of the project employment contracts covering
respondents' alleged periods of employment. More importantly, there is no
evidence that petitioners reported the termination of respondents' supposed
project employment to the DOLE as project employees. Department Order
No. 19, as well as the old Policy Instructions No. 20, requires employers to
submit a report of an employees termination to the nearest public
employment office every time his employment is terminated due to a
completion of a project. Petitioners' failure to file termination reports is an
indication that the respondents were not project employees but regular
employees.
Note: Maraguinot, Jr. v. National Labor Relations Commission, 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.

the NLRC rendered a Decision, setting aside the Decision of the LA

the NLRC made a complete turnabout from its original decision and issued
a Resolution dismissing the complaint, holding that respondents were not
regular employees but project employees, hired for a short period of time to
do some repair jobs in petitioners' resort business.
The CA held respondents were regular employees, not project workers,
since in the years that petitioners repeatedly hired respondents' services, the
former failed to set, even once, specific periods when the employment
relationship would be terminated
Issue: WoN the respondents are project employees
Held: In the present case, respondents cannot be classified as project
employees, since they worked continuously for petitioners from three to
twelve years without any mention of a "project" to which they were
specifically assigned. While they had designations as "foreman,"
"carpenter" and "mason," they performed work other than carpentry or
masonry. They were tasked with the maintenance and repair of the

Application to Sec. 2.2 of DO 19 series of 1993

2.2 Indicators of project employment. - Either one or more of the
following circumstances, among others, may be considered as
indicators that an employee is a project employee.
(a) The duration of the specific/identified undertaking for which
the worker is engaged is reasonably determinable.
they worked continuously for petitioners from three to twelve years
without any mention of a "project" to which they were specifically
assigned.
(b) Such duration, as well as the specific work/service to be
performed, is defined in an employment agreement and is made
clear to the employee at the time of hiring.

While they had designations as "foreman," "carpenter" and "mason,"

they performed work other than carpentry or masonry. They were
tasked with the maintenance and repair of the furniture, motor boats,
cottages, and windbreakers and other resort facilities. There is likewise
no evidence of the project employment contracts covering respondents'
alleged periods of employment.
(c) The work/service performed by the employee is in connection with
the particular project/undertaking for which he is engaged.
(d) The employee, while not employed and awaiting engagement, is
free to offer his services to any other employer.
(e) The termination of his employment in the particular
project/undertaking is reported to the Department of Labor and
Employment (DOLE) Regional Office having jurisdiction over the
workplace within 30 days following the date of his separation from
work, using the prescribed form on employees
terminations/dismissals/suspensions.
More importantly, there is no evidence that petitioners reported the
termination of respondents' supposed project employment to the
DOLE as project employees. Department Order No. 19, as well as the
old Policy Instructions No. 20, requires employers to submit a report of
an employees termination to the nearest public employment office
every time his employment is terminated due to a completion of a
project.
(f) An undertaking in the employment contract by the employer to pay
completion bonus to the project employee as practiced by most
construction companies.
b.

Employees should be notified of their status as project

employment only

Abesco Construction and Development Corp. vs Ramirez

Doctrine: The principal test for determining whether employees are project
employees or regular employees is whether they are assigned to carry out a
specific project or undertaking, the duration and scope of which are
specified at the time they are engaged for that project. Such duration, as
well as the particular work/service to be performed, is defined in an
employment agreement and is made clear to the employees at the time of
hiring.
Facts: Petitioner company was engaged in a construction business where
respondents were hired on different dates from 1976 to 1992 either as
laborers, road roller operators, painters or drivers.
In 1997, respondents filed two separate complaints for illegal
dismissal against the company and its General Manager, Oscar Banzon,
before the Labor Arbiter (LA). Petitioners allegedly dismissed them without
a valid reason and without due process of law.
Petitioners argument: Petitioners denied liability to respondents and
countered that respondents were project employees since their services were
necessary only when the company had projects to be completed. Petitioners
argued that, being project employees, respondents employment was
coterminous with the project to which they were assigned. They were not
regular employees who enjoyed security of tenure and entitlement to
separation pay upon termination from work.
Subsequently, petitioners filed a petition for review in the Court of Appeals
(CA) arguing that they were not liable for illegal dismissal since
respondents services were merely put on hold until the resumption of their
business operations.
Respondents argument: Respondent argued that they are regular
employees
After trial, the LA declared respondents as regular employees because they
belonged to a work pool from which the company drew workers for
assignment to different projects, at its discretion. He ruled that respondents
were hired and re-hired over a period of 18 years, hence, they were deemed
to be regular employees.
the National Labor Relations Commission (NLRC) affirmed the LAs
decision.

The CA was not convinced and dismissed petitioners appeal. It held:

We note that the petitioners are taking a new tack in arguing, for the first
time, that the [respondents] were not dismissed but their employment was
merely suspended. Previous to this, their defense was that the [respondents]
were project employees who were not entitled to security of tenure. The
petitioners are barred from raising a new defense at this stage of the case.
Issue: (1) whether respondents were project employees or regular
employees
Held: We rule that respondents were regular employees. However, we take
exception to the reasons cited by the LA (which both the NLRC and the CA
affirmed) in considering respondents as regular employees and not as
project employees.
Contrary to the disquisitions of the LA, employees (like respondents) who
work under different project employment contracts for several years do not
automatically become regular employees; they can remain as project
employees regardless of the number of years they work. Length of service is
not a controlling factor in determining the nature of ones employment.
Moreover, employees who are members of a work pool from which a
company (like petitioner corporation) draws workers for deployment to its
different projects do not become regular employees by reason of that fact
alone. The Court has enunciated in some cases that members of a work
pool can either be project employees or regular employees.
The principal test for determining whether employees are project employees
or regular employees is whether they are assigned to carry out a specific
project or undertaking, the duration and scope of which are specified at the
time they are engaged for that project. Such duration, as well as the
particular work/service to be performed, is defined in an employment
agreement and is made clear to the employees at the time of hiring.
In this case, petitioners did not have that kind of agreement with
respondents. Neither did they inform respondents of the nature of the latters
work at the time of hiring. Hence, for failure of petitioners to substantiate

their claim that respondents were project employees, we are constrained to

declare them as regular employees.

c.

The Employment contract is only signed by the president and

the manager but not the employee concered

Raycor vs Aircontrol System

Doctrine: the arbiter completed ignored the fact that all the "Contract(s)
Employment" presented in evidence by both petitioner and private
respondents had been signed only by petitioner's president and general
manager, Luis F. Ortega, but not by the employees concerned, who had
precisely refused to sign them. The said contracts therefore could in no wise
be deemed conclusive evidence.
For that matter, it seems self-evident to this Court that, even if the contracts
presented by petitioner had been signed by the employees concerned, still,
they would not constitute conclusive proof of petitioner's claim. After all, in
the usual scheme of things, contract terms are normally dictated by the
employer and simply acceded to and accepted by the employee, who may
be desperate for work and therefore in no position to bargain freely or
negotiate terms to his liking.
Facts: In 1991, private respondent Laya and fourteen other employees of
petitioner filed NLRC NCR Case No. 00-03-02080-92 for their
"regularization". This case, was dismissed on May 20, 1992 for want of
cause of action.
On different dates in 1992, they were served with uniformly-worded notices
of "Termination of Employment" by petitioner "due to our present business
status", which terminations were to be effective the day following the date
of receipt of the notices. Private respondents felt they were given their
walking papers after they refused to sign a "Contract Employment"
providing for, among others, a fixed period of employment which
"automatically terminates without necessity of further notice" or even
earlier at petitioner's sole discretion.

Because of the termination, private respondents filed three cases of illegal

dismissal against petitioner, alleging that the reason given for the
termination of their employment was not one of the valid grounds therefor
under the Labor Code. They also claimed that the termination was without
benefit of due process.
Petitioners argument: petitioner maintains that they were project
employees who were assigned to work on specific projects of petitioner,
and that the nature of petitioner's business -- mere installation (not
manufacturing) of aircon systems and equipment in buildings of its clients - prevented petitioner from hiring private respondents as regular
employees.
petitioner asserts that it could not have hired private respondents as
anything other than project employees. It further insists that "(a)t the
incipience of hiring, private respondents were appraised (sic) that their work
consisted only in the installation of airconditioning units and that as soon as
the installation is completed, their work ceases and that they have to wait
for another installation projects (sic)." In other words, their work was coterminous with the duration of the project, and was not continuous or
uninterrupted as claimed by them. Petitioner also claims that the private
respondents signed project contracts of employment indicating the names of
the projects or buildings they are working on. And when between projects,
there project employees were free to work elsewhere with other
establishments.
Respondents argument: Private respondents insist that they had been
regular employees all along
Private respondents controverted these assertions of petitioner, claiming that
they had worked continuously for petitioner for several years, some of them
as long as ten years, and thus, by operation of law had become regular
employees.
the Labor Arbiter issued his decision dismissing the complaints for lack of
merit. He reasoned that the evidence showed that the individual
complainants (private respondents) were project employees

NLRC, which in its November 29, 1993 Decision reversed the arbiter and
found private respondents to have been regular employees illegally
dismissed.
The labor arbiter relying heavily on the "Contract(s) Employment"
presented in petitioner's Annexes as well as on private respondents' own
Annex "A" attached to their Position Paper, and citing the fact that the said
contracts of employment indicated the duration of the projects to which the
private respondents had been assigned. He then held that "(t)here is no
denial that complainants were assigned to work in these projects," and
concluded that they were indeed project employees.
Issue: WoN the employment contract was determinative of the status of
employment of respondents
Held: the arbiter completed ignored the fact that all the "Contract(s)
Employment" presented in evidence by both petitioner and private
respondents had been signed only by petitioner's president and general
manager, Luis F. Ortega, but not by the employees concerned, who had
precisely refused to sign them. The said contracts therefore could in no wise
be deemed conclusive evidence.
For that matter, it seems self-evident to this Court that, even if the contracts
presented by petitioner had been signed by the employees concerned, still,
they would not constitute conclusive proof of petitioner's claim.
All the aforesaid conflicting data have the net effect of casting doubt upon
and clouding the real nature of the private respondents' employment status.
And we are mandated by law to resolve all doubts in favor of labor. For
which reason, we hereby hold that private respondents were regular
employees of the petitioner.
Having arrived at basically the same results as respondent NLRC with
respect to private respondents' employment status.
Notes:
Questions in the cases

Were private respondents, employed by petitioner in its business of

installing airconditioning systems in buildings, project employees or regular
employees?
Answer: we hereby hold that private respondents were regular employees
of the petitioner.
And were their dismissals "due to (petitioner's) present business status" and
effective the day following receipt of notice legal?
Answer: petitioner, in placing the ad, must have had at least one project,
maybe more, "in the pipeline" at that time, and was clearly in need of
replacements for private respondents whom it had just fired. Thus, the
dismissals could hardly have been due to a valid cause, not even due to
petitioner's alleged "present business status". On this count as well, the
dismissals were illegal.
Where both the petitioner and the respondents fail to present sufficient and
convincing evidence to prove their respective claims, how should the case
be decided?
Answer: And we are mandated by law to resolve all doubts in favor of
labor. For which reason, we hereby hold that private respondents were
regular employees of the petitioner.
d.

Consent must be knowingly and voluntarily and without force,

duress or improper pressure.

Caramol vs NLRC
Doctrine: There is no question that stipulation on employment contract
providing for a fixed period of employment such as "project-to-project"
contract is valid provided the period was agreed upon knowingly and
voluntarily 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.

However, 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 tenurial security by the
employee, they should be struck down as contrary to public policy, morals,
good custom or public order.
Facts: Petitioner Rogelio Caramol, a worker hired by respondent Atlantic
Gulf and Pacific Co. of Manila, Inc., (ATLANTIC GULF), on a "project-toproject" basis but whose employment was renewed forty-four (44) times by
the latter, seeks the reversal of the decision of public respondent National
Labor Relations Commission (NLRC) dated 31 October 1991 in NLRC
NCR 00-01-04703-88 1 which reversed and set aside the decision of the
Labor Arbiter.
The factual findings of the Labor Arbiter show that petitioner was hired by
respondent ATLANTIC GULF on 2 June 1983 for the position of rigger.
Until the occurence of the strike on 10 May 1986, his last assignment was at
respondent ATLANTIC GULF's plant in Batangas.
Petitioners argument: Petitioner claims that because of his involvement
in unionism, particularly in actively manning the picket lines, he was among
those who were not re-admitted after the strike.
Respondents argument: Respondent ATLANTIC GULF contends that
petitioner was one of the several thousands of workers who were hired on a
"project-to-project" basis and whose employment was covered by Project
Employment Contract for a particular project and for a definite period of
time. On 15 May 1986 private respondent dispensed with the services of
petitioner claiming as justification the completion of the Nauru project to
which petitioner was assigned and the consequent expiration of the
employment contract.
Private respondent points to this successive employment as evidence that
petitioner is a project employee in its projects. It is asserted that being in the
construction industry, it is not unusual for private respondent and other
similar companies to hire employees or workers for a definite period only,
or whose employment is co-terminus with the completion of a specific
project as recognized by Art. 280 of the Labor Code

The Labor Arbiter had earlier declared respondent ATLANTIC GULF

guilty of unfair labor practice, ordered it to cease and desist from further
committing unfair labor practice against petitioner, declared illegal the
constructive dismissal of petitioner and directed respondent ATLANTIC
GULF to immediately reinstate petitioner to his former position without
loss of seniority rights and with full back wages in the amount of
P68,826.94 as of 29 November 1989.

the fact that complainant's job is both necessary and

desirable to the business engaged in by the respondent . . .
.
Admittedly, the "project-to-project" employment of petitioner was renewed
several times, forty-four (44) project contracts
e.

According to public respondent NLRC, petitioner is a project employee

falling under the exception of Art. 280 of the Labor Code: As correctly
asserted by respondent-company, Mr. Caramol's services have been fixed
for a specific project shown in the contracts of employment. The principle
of party autonomy must not be interfered with absent any showing of
violation of law, public policy and jurisprudence. "A contract duly entered
into should be respected, since a contract is the law between the parties
Issue: WoN the contract of fixed period of employment has dictated the
status of herein petitioners as project employees
Held: In the case before us, we find sufficiently established circumstances
showing that the supposed fixed period of employment by way of a projectto-project contract has been imposed to preclude acquisition of tenurial
security by the petitioner. Accordingly, such arrangement must be struck
down as contrary to public policy. After a careful perusal of the records, we
sustain the findings of the Labor Arbiter that
. . . . The records of the case established the fact that
during the employment of complainant with the
respondent company he was made to sign a project
employment contract. This practice started from the time
he was hired in 1973 up to May 10, 1986 when the AG &
P Workers and Employees Union staged a strike.
Expressed differently this practice of the respondent
insofar as the complainant is concerned has been going on
continiously for thirteen (13) long years. This Office is of
the considered belief that the nomenclature by which he
was addressed by the respondent has already attained a
regular status of employment. In addition to his length of
service the documentary evidence on record established

Exception to article 280, a fixed period employment, a day

certain; requisites

BRENT SCHOOL, INC.DIMACHE vs. RONALDO ZAMORA and

DOROTEO R. ALEGRE
G.R. No. L-48494 February 5, 1990 en banc
Doctrine: stipulations in employment contracts providing for term
employment or fixed period employment are valid when the period were
agreed upon knowingly and voluntarily by the parties without 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.
Logically, the decisive determinant in 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, a day certain being understood to be "that which
must necessarily come, although it may not be known when." 19 Seasonal
employment, and employment for a particular project are merely instances
employment in which a period, where not expressly set down, necessarily
implied.
Requisites:
1. a fixed period of employment was agreed upon knowingly and
voluntarily by the parties
2. without any force, duress or improper pressure being brought to
bear upon the employee and absent any other circumstances
vitiating his consent; OR

3. 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.
Exception: where from the circumstances it is apparent that periods have
been imposed to preclude acquisition of tenurial security by the employee,
they should be struck down or disregarded as contrary to public policy,
morals, etc.
FACTS: Private respondent Doroteo R. Alegre was engaged as athletic
director by petitioner Brent School, Inc. at a yearly compensation of
P20,000.00. The contract fixed a specific term for its existence, five (5)
years, i.e., from July 18, 1971, the date of execution of the agreement,
to July 17, 1976. Subsequent subsidiary agreements dated March 15,
1973, August 28, 1973, and September 14, 1974 reiterated the same
terms and conditions, including the expiry date, as those contained in
the original contract of July 18, 1971.
On April 20,1976, Alegre was given a copy of the report filed by Brent
School with the Department of Labor advising of the termination of his
services effective on July 16, 1976. The stated ground for the
termination was "completion of contract, expiration of the definite
period of employment." Although protesting the announced termination
stating that his services were necessary and desirable in the usual
business of his employer, and his employment lasted for 5 years therefore he had acquired the status of regular employee - Alegre
accepted the amount of P3,177.71, and signed a receipt therefor
containing the phrase, "in full payment of services for the period May
16, to July 17, 1976 as full payment of contract."
The Regional Director considered Brent School's report as an
application for clearance to terminate employment (not a report of
termination), and accepting the recommendation of the Labor
Conciliator, refused to give such clearance and instead required the
reinstatement of Alegre, as a "permanent employee," to his former
position without loss of seniority rights and with full back wages.
ISSUE: Whether or not the provisions of the Labor Code, as amended,
have anathematized "fixed period employment" or employment for a
term.

Held: Respondent Alegre's contract of employment with Brent School

having lawfully terminated with and by reason of the expiration of the
agreed term of period thereof, he is declared not entitled to
reinstatement.
The employment contract between Brent School and Alegre was
executed on July 18, 1971, at a time when the Labor Code of the
Philippines (P.D. 442) had not yet been promulgated. At that time, the
validity of term employment was impliedly recognized by the
Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior,
thereto, it was the Code of Commerce (Article 302) which governed
employment without a fixed period, and also implicitly acknowledged
the propriety of employment with a fixed period. The Civil Code of the
Philippines, which was approved on June 18, 1949 and became
effective on August 30,1950, itself deals with obligations with a period.
No prohibition against term-or fixed-period employment is contained in
any of its articles or is otherwise deducible therefrom.
It is plain then that when the employment contract was signed between
Brent School and Alegre, it was perfectly legitimate for them to include
in it a stipulation fixing the duration thereof Stipulations for a term
were explicitly recognized as valid by this Court.
The status of legitimacy continued to be enjoyed by fixed-period
employment contracts under the Labor Code (PD 442), which went into
effect on November 1, 1974. The Code contained explicit references to
fixed period employment, or employment with a fixed or definite
period. Nevertheless, obscuration of the principle of licitness of term
employment began to take place at about this time.
Article 320 originally stated that the "termination of employment of
probationary employees and those employed WITH A FIXED PERIOD
shall be subject to such regulations as the Secretary of Labor may
prescribe." Article 321 prescribed the just causes for which an
employer could terminate "an employment without a definite period."
And Article 319 undertook to define "employment without a fixed
period" in the following manner: where the employee has been
engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer, except where the

employment has been fixed for a specific project or undertaking the

completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration
of the season.
Subsequently, the foregoing articles regarding employment with "a
definite period" and "regular" employment were amended by
Presidential Decree No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment,"
was altered by eliminating the reference to persons "employed with a
fixed period," and was renumbered (becoming Article 271).
As it is evident that Article 280 of the Labor Code, under a narrow and
literal interpretation, not only fails to exhaust the gamut of employment
contracts to which the lack of a fixed period would be an anomaly, but
would also appear to restrict, without reasonable distinctions, the right
of an employee to freely stipulate with his employer the duration of his
engagement, it logically follows that such a literal interpretation should
be eschewed or avoided. The law must be given a reasonable
interpretation, to preclude absurdity in its application. Outlawing the
whole concept of term employment and subverting to boot the principle
of freedom of contract to remedy the evil of employer's using it as a
means to prevent their employees from obtaining security of tenure is
like cutting off the nose to spite the face or, more relevantly, curing a
headache by lopping off the head.
Such interpretation puts the seal on Bibiso upon the effect of the expiry
of an agreed period of employment as still good rulea rule reaffirmed
in the recent case of Escudero vs. Office of the President (G.R. No.
57822, April 26, 1989) where, in the fairly analogous case of a teacher
being served by her school a notice of termination following the
expiration of the last of three successive fixed-term employment
contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the
fact that her employment was probationary, contractual in nature, and
one with a definitive period. At the expiration of the period stipulated
in the contract, her appointment was deemed terminated and the letter
informing her of the non-renewal of her contract is not a condition sine

qua non before Reyes may be deemed to have ceased in the employ of
petitioner UST. The notice is a mere reminder that Reyes' contract of
employment was due to expire and that the contract would no longer be
renewed. It is not a letter of termination.
Paraphrasing Escudero, respondent Alegre's employment was
terminated upon the
expiration of his last contract with Brent School on July 16, 1976
without the necessity of any notice. The advance written advice given
the Department of Labor with copy to said petitioner was a mere
reminder of the impending expiration of his contract, not a letter of
termination, nor an application for clearance to terminate which needed
the approval of the Department of Labor to make the termination of his
services effective. In any case, such clearance should properly have
been given, not denied.
f.

Absence of a provision in the contract of employment of

specific project or undertaking

Price vs Innodata
Doctrine: Periods which are simply fixed in the employment contracts
without reference or connection to the period required for the completion of
a project are insufficient therefore the rule that all doubts, uncertainties,
ambiguities and insufficiencies should be resolved in favor of labor.
Facts: Respondent Innodata Philippines, Inc./Innodata Corporation
(INNODATA) was a domestic corporation engaged in the data encoding
and data conversion business. It employed encoders, indexers, formatters,
programmers, quality/quantity staff, and others, to maintain its business and
accomplish the job orders of its clients. Respondent Leo Rabang was its
Human Resources and Development (HRAD) Manager, while respondent
Jane Navarette was its Project Manager. INNODATA had since ceased
operations due to business losses in June 2002.
Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera were
employed as formatters by INNODATA. The parties executed an
employment contract denominated as a "Contract of Employment for a
Fixed Period," stipulating that the contract shall be for a period of one year

On 16 February 2000, the HRAD Manager of INNODATA wrote

petitioners informing them of their last day of work.

security of tenure; and, applying the ruling of this Court in Brent, declared
that petitioners fixed-term employment contracts were valid.

Petitioners filed a Complaint6 for illegal dismissal and damages against

respondents.

Issue: WoN the assertion of Innodata that the petitioners are fixed-term and
project employees are tenable

Petitioners argument: Petitioners claimed that they should be considered

regular employees since their positions as formatters were necessary and
desirable to the usual business of INNODATA as an encoding, conversion
and data processing company.

Held: After a painstaking review of the arguments and evidences of the

parties, the Court finds merit in the present Petition. There were no valid
fixed-term contracts and petitioners were regular employees of the
INNODATA who could not be dismissed except for just or authorized
cause.

Respondents argument: According to INNODATA, petitioners

employment already ceased due to the end of their contract. Respondents
further argued that petitioners were estopped from asserting a position
contrary to the contracts which they had knowingly, voluntarily, and
willfully agreed to or entered into. Further attempting to exonerate itself
from any liability for illegal dismissal, INNODATA contends that
petitioners were project employees whose employment ceased at the end of
a specific project or undertaking.

The employment status of a person is defined and prescribed by law and not
by what the parties say it should be. Equally important to consider is that a
contract of employment is impressed with public interest such that labor
contracts must yield to the common good. Thus, provisions of applicable
statutes are deemed written into the contract, and the parties are not at
liberty to insulate themselves and their relationships from the impact of
Labor laws and regulations by simply contracting with each other.

the Labor Arbiter issued its Decision finding petitioners complaint for
illegal dismissal and damages meritorious. The Labor Arbiter held that as
formatters, petitioners occupied jobs that were necessary, desirable, and
indispensable to the data processing and encoding business of INNODATA.

After considering petitioners contracts in their entirety, as well as the

circumstances surrounding petitioners employment at INNODATA, the
Court is convinced that the terms fixed therein were meant only to
circumvent petitioners right to security of tenure and are, therefore, invalid.

The NLRC, in its Decision dated 14 December 2001, reversed the Labor
Arbiters Decision dated 17 October 2000, and absolved INNODATA of
the charge of illegal dismissal.
The NLRC found that petitioners were not regular employees, but were
fixed-term employees as stipulated in their respective contracts of
employment.
the Court of Appeals promulgated its Decision sustaining the ruling of the
NLRC that petitioners were not illegally dismissed.
The appellate court concluded that the periods in petitioners contracts of
employment were not imposed to preclude petitioners from acquiring

Scrutinizing petitioners employment contracts with INNODATA, however,

failed to reveal any mention therein of what specific project or undertaking
petitioners were hired for. Although the contracts made general references
to a "project," such project was neither named nor described at all therein.
The conclusion by the Court of Appeals that petitioners were hired for the
Earthweb project is not supported by any evidence on record. The one-year
period for which petitioners were hired was simply fixed in the employment
contracts without reference or connection to the period required for the
completion of a project. More importantly, there is also a dearth of evidence
that such project or undertaking had already been completed or terminated
to justify the dismissal of petitioners. In fact, petitioners alleged - and
respondents failed to dispute that petitioners did not work on just one
project, but continuously worked for a series of projects for various clients
of INNODATA.

g.

No notice that employees were appraised of the nature of

employment, the specific projects or any phase thereof

concluded that said employees were not entitled to coverage under the
Social Security Act.

Chua vs Court of Appeals (GR 125837)

Respondents argument: Private respondents claimed that they were

Doctrine: 1. It is not enough that an employee is hired for a specific project

or phase of work.

assigned by petitioner in his various construction projects continuously

2. There must also be a determination of, or a clear agreement on, the

completion or termination of the project at the time the employee was
engaged if the objectives of Article 280 are to be achieved

the SSC issued its Order which ruled in favor of private respondents. The
SSC, declared private respondents to be petitioners regular employees.

Facts: Respondents filed a Petition with the SSC for SSS coverage and

The Court of Appeals, citing Article 280 of the Labor Code, declared that
private respondents were all regular employees of the petitioner in relation
to certain activities since they all worked either as masons, carpenters and
fine graders in petitioners various construction projects for at least one year,
and that their work was necessary and desirable to petitioners business
which involved the construction of roads and bridges.

contributions against petitioner Reynaldo Chua, owner of Prime Mover

Construction Development, claiming that they were all regular employees of
the petitioner in his construction business.
Private respondents alleged that petitioner dismissed all of them without
justifiable grounds and without notice to them and to the then Ministry of
Labor and Employment. They further alleged that petitioner did not report
them to the SSS for compulsory coverage in flagrant violation of the Social
Security Act.
the SSS filed a Petition in Intervention alleging that it has an interest in the
petition filed by private respondents as it is charged with the
implementation and enforcement of the provisions of the Social Security
Act. The SSS stated that it is the mandatory obligation of every employer to
report its employees to the SSS for coverage and to remit the required
contribution, including the penalty imposed for late premium remittances.
Petitioners argument: petitioner claimed that private respondents had no
cause of action against him, and assuming there was any, the same was
barred by prescription and laches. In addition, he claimed that private
respondents were not regular employees, but project employees whose work
had been fixed for a specific project or undertaking the completion of which
was determined at the time of their engagement. This being the case, he

Issue: WoN the respondents are regular employees

Held: Yes, This Court also finds no reason to deviate from the finding of
the Court of Appeals regarding the nature of employment of private
respondents. In the proceedings before the SSC and the Court of Appeals,
petitioner was unable to show that private respondents were appraised of the
project nature of their employment, the specific projects themselves or any
phase thereof undertaken by petitioner and for which private respondents
were hired. He failed to show any document such as private respondents
employment contracts and employment records that would indicate the
dates of hiring and termination in relation to the particular construction
project or phases in which they were employed.
Notes: This Court has held that an employment ceases to be co-terminus
with specific projects when the employee is continuously rehired due to the
demands of the employers business and re-engaged for many more projects
without interruption.
h.

Elements before a project employee attains the status of a

regular employment

Maraguianot Jr. vs NLRC

Doctrine: A project employee or a member of a work pool may acquire the
status of a regular employee when the following 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 indispensable to the usual business or trade of the employer.
Facts: Petitioner Alejandro Maraguinot, Jr. maintains that he was employed
by private respondents on 18 July 1989 as part of the filming crew with a
salary of P375.00 per week. About four months later, he was designated
Assistant Electrician with a weekly salary of P400.00, which was increased
to P450.00 in May 1990. In June 1991, he was promoted to the rank of
Electrician with a weekly salary of P475.00, which was increased to
P593.00 in September 1991.
Petitioner Paulino Enero, on his part, claims that private respondents
employed him in June 1990 as a member of the shooting crew with a
weekly salary of P375.00, which was increased to P425.00 in May 1991,
then to P475.00 on 21 December 1991.
Petitioners tasks consisted of loading, unloading and arranging movie
equipment in the shooting area as instructed by the cameraman, returning
the equipment to Viva Films warehouse, assisting in the fixing of the
lighting system, and performing other tasks that the cameraman and/or
director may assign.
Sometime in May 1992, petitioners sought the assistance of their
supervisor, Mrs. Alejandria Cesario, to facilitate their request that private
respondents adjust their salary in accordance with the minimum wage law.
In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario
would agree to increase their salary only if they signed a blank employment
contract. As petitioners refused to sign, private respondents forced Enero to
go on leave in June 1992, then refused to take him back when he reported
for work on 20 July 1992. Meanwhile, Maraguinot was dropped from the
company payroll from 8 to 21 June 1992, but was returned on 22 June 1992.

He was again asked to sign a blank employment contract, and when he still
refused, private respondents terminated his services on 20 July 1992.
Petitioners thus sued for illegal dismissal
Petitioners argument: To support their claim that they were regular (and
not project) employees of private respondents, petitioners cited their
performance of activities that were necessary or desirable in the usual trade
or business of private respondents and added that their work was
continuous, i.e., after one project was completed they were assigned to
another project. Petitioners thus considered themselves part of a work pool
from which private respondents drew workers for assignment to different
projects. Petitioners assert that they were regular employees who were
illegally dismissed.
Respondents argument: On the other hand, private respondents claim
that Viva Films (hereafter VIVA) is the trade name of Viva Productions,
Inc., and that it is primarily engaged in the distribution and exhibition of
movies -- but not in the business of making movies; in the same vein,
private respondent Vic del Rosario is merely an executive producer, i.e., the
financier who invests a certain sum of money for the production of movies
distributed and exhibited by VIVA. Private respondents contend that
petitioners were project employees whose employment was automatically
terminated with the completion of their respective projects.
Private respondents assert that they contract persons called producers -- also
referred to as associate producers -- to produce or make movies for private
respondents; and contend that petitioners are project employees of the
associate producers who, in turn, act as independent contractors. As such,
there is no employer-employee relationship between petitioners and private
respondents.
the Labor Arbiter found as follows: this Office rules that complainants are
the employees of the respondents.
The NLRC, in reversing the Labor Arbiter, then concluded that these
circumstances, taken together, indicated that complainants (herein
petitioners) were project employees. i.e. Complainants [petitioners herein]
were hired for specific movie projects and their employment was coterminus with each movie project the completion/termination of which are

pre-determined, such fact being made known to complainants at the time of

their engagement.

Held: It may not be ignored, however, that private respondents expressly

admitted that petitioners were part of a work pool; and, while petitioners
were initially hired possibly as project employees, they had attained the
status of regular employees in view of VIVAs conduct.

A work pool may exist although the workers in the pool do not receive
salaries and are free to seek other employment during temporary breaks in
the business, provided that the worker shall be available when called to
report for a project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project workers insofar as the
effect of temporary cessation of work is concerned. This is beneficial to
both the employer and employee for it prevents the unjust situation of
coddling labor at the expense of capital and at the same time enables the
workers to attain the status of regular employees.

A project employee or a member of a work pool may acquire the status of a

regular employee when the following concur:

The Supreme Court Cited the case of Tomas Lao Construction, et al. v.
NLRC,

1)
There is a continuous rehiring of project employees even after
cessation of a project; and

In a final attempt to convince the Court that private respondents were

indeed project employees, petitioners point out that the workers were not
regularly maintained in the payroll and were free to offer their services to
other companies when there were no on-going projects. This argument
however cannot defeat the workers status of regularity. We apply by
analogy the case of Industrial-Commercial-Agricultural Workers
Organization v. CIR [16 SCRA 562, 567-68 (1966)] which deals with
regular seasonal employees. There we held: xxx

Issue: WoN petitioners are regular employees

2)
The tasks performed by the alleged project employee are vital,
necessary and indispensable to the usual business or trade of the employer.
However, the length of time during which the employee was continuously
re-hired is not controlling, but merely serves as a badge of regular
employment.
All that we hold today is 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, pursuant to Article
280 of the Labor Code and jurisprudence.
Note: Assuming that the associate producers are job contractors, they must
then be engaged in the business of making motion pictures. As such, and to
be a job contractor under the preceding description, associate producers
must have tools, equipment, machinery, work premises, and other materials
necessary to make motion pictures. However, the associate producers here
have none of these. Private respondents evidence reveals that the moviemaking equipment are supplied to the producers and owned by VIVA.

Truly, the cessation of construction activities at the end of every project is a

foreseeable suspension of work. Of course, no compensation can be
demanded from the employer because the stoppage of operations at the end
of a project and before the start of a new one is regular and expected by
both parties to the labor relations. Similar to the case of regular seasonal
employees, the employment relation is not severed by merely being
suspended. [citing Manila Hotel Co. v. CIR, 9 SCRA 186 (1963)] The
employees are, strictly speaking, not separated from services but
merely on leave of absence without pay until they are reemployed. Thus
we cannot affirm the argument that non-payment of salary or non-inclusion
in the payroll and the opportunity to seek other employment denote project
employment.
2.B Work Pool Employment, Policy Instruction No. 20
a. Classification of Work Pool

1. Non Project Employees are those employed by a construction

company without reference to a particular project

the expiration of the contract period or the completion of the project for
which the workers was hired.

2. Project Employees are those employed in connection with a particular

construction project.

Except for Florencio Gomez all private respondents refused to sign

contending that this scheme was designed by their employer to downgrade
their status from regular employees to mere project employees. Resultantly,
their salaries were withheld. They were also required to explain why their
services should not be terminated for violating company rules and warned
that failure to satisfactorily explain would be construed as disinterest in
continued employment with the company. Since the workers stood firm in
their refusal to comply with the directives their services were terminated.

3. Regular Project Employees are those employed in connection with

particular projects but which do not cease to be employees of the company
employing them, the law considers them to be merely on leave of absence
during the stoppage of the operations at the end of the project. Project or
work pool employees who have gained the status of regular employees are
subject to the "no work-no pay" principle
Tomas Lao Construction vs NLRC
Doctrine: where the employment of project employees is extended long
after the supposed project has been finished, the employees are removed
from the scope of project employees and considered regular employees.
Facts: TLC, T&J and LVM are engaged in the construction of public roads
and bridges. Under joint venture agreements they entered into among each
other, they would undertake their projects either simultaneously or
successively so that, whenever necessary, they would lease tools and
equipment to one another. Each one would also allow the utilization of their
employees by the other two (2). With this arrangement, workers were
transferred whenever necessary to on-going projects of the same company
or of the others, or were rehired after the completion of the project or
project phase to which they were assigned. Soon after, however, TLC
ceased its operations while T&J and LVM stayed on.
Sometime in 1989 Andres Lao, Managing Director of LVM and President
of T&J, issued a memorandum requiring all workers and company
personnel to sign employment contract forms and clearances which were
issued on 1 July 1989 but antedated 10 January 1989. These were to be used
allegedly for audit purposes pursuant to a joint venture agreement between
LVM and T&J. To ensure compliance with the directive, the company
ordered the withholding of the salary of any employee who refused to sign.
Quite notably, the contracts expressly described the construction workers as
project employees whose employments were for a definite period, i.e., upon

private respondents individually filed complaints for illegal dismissal

against petitioners with the National Labor Relations Commission Regional
Petitioners argument: The main thrust of petitioners expostulation is that
respondents have no valid cause to complain about their employment
contracts since these documents merely formalized their status as project
employees.
Respondents argument: they are regular employees
NLRC RAB VIII dismissed the complaints lodged before it, finding that
private respondents were project employees whose employments could be
terminated upon completion of the projects or project phase for which they
were hired.
(NLRC) of Cebu City found that private respondents were regular
employees who were dismissed without just cause and denied due process.
Issue: WoN respondents are regular employees even though they are hired
for specific projects or undertakings
Held: While it may be allowed that in the instant case the workers were
initially hired for specific projects or undertakings of the company and
hence can be classified as project employees, the repeated re-hiring and the
continuing need for their services over a long span of time (the shortest, at
seven [7] years) have undeniably made them regular employees. Thus, we
held that where the employment of project employees is extended long after

the supposed project has been finished, the employees are removed from the
scope of project employees and considered regular employees.
While length of time may not be a controlling test for project employment,
it can be a strong factor in determining whether the employee was hired for
a specific undertaking or in fact tasked to perform functions which are vital,
necessary and indispensable to the usual business or trade of the employer.
In the case at bar, private respondents had already gone through the status
of project employees. But their employments became non-coterminous with
specific projects when they started to be continuously re-hired due to the
demands of petitioners business and were re-engaged for many more
projects without interruption.

While Lao admittedly involved the construction industry, to which Policy

Instruction No. 20/Department Order No. 19 regarding work pools
specifically applies, there seems to be no impediment to applying the
underlying principles to industries other than the construction industry.
Neither may it be argued that a substantial distinction exists between the
projects undertaken in the construction industry and the motion picture
industry. On the contrary, the raison d' etre of both industries concern
projects with a foreseeable suspension of work.

c. Application of Work pool in the business of data encoding

Imbuido vs NLRC

We likewise reject petitioners justification in re-hiring private respondents

i.e., that it is much cheaper and economical to re-hire or re-employ the same
workers than to train a new set of employees. It is precisely because of this
cost-saving benefit to the employer that the law deems it fair that the
employees be given a regular status. We need not belabor this point.
Note: Project in the realm of business and industry refers to a particular job
or undertaking that is within the regular or usual business of employer, but
which is distinct and separate and identifiable as such from the undertakings
of the company. Such job or undertaking begins and ends at determined or
determinable times.
Policy Instruction No. 20 is explicit that employers of project employees are
exempted from the clearance requirement but not from the submission of
termination report. We have consistently held that failure of the employer to
file termination reports after every project completion proves that the
employees are not project employees. Nowhere in the New Labor Code is it
provided that the reportorial requirement is dispensed with. The fact is that
Department Order No. 19 superseding Policy Instruction No. 20 expressly
provides that the report of termination is one of the indicators of project
employment.
b. Work Pool in Industry other than in construction business
MOVIE INDUSTRY

Doctrine: All that we hold today is 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, pursuant to Article 280 of the Labor Code and
jurisprudence.
Facts: Petitioner was employed as a data encoder by private respondent
International Information Services, Inc., a domestic corporation engaged in
the business of data encoding and keypunching, from August 26, 1988 until
October 18, 1991 when her services were terminated. From August 26,
1988 until October 18, 1991, petitioner entered into thirteen (13) separate
employment contracts with private respondent, each contract lasting only
for a period of three (3) months. Aside from the basic hourly rate, specific
job contract number and period of employment
In September 1991, petitioner and twelve (12) other employees of private
respondent allegedly agreed to the filing of a petition for certification
election involving the rank-and-file employees of private respondent. Thus,
on October 8, 1991, Lakas Manggagawa sa Pilipinas (LAKAS) filed a
petition for certification election with the Bureau of Labor Relations (BLR),
docketed as NCR-OD-M-9110-128.

Subsequently, on October 18, 1991, petitioner received a termination letter

from Edna Kasilag, Administrative Officer of private respondent, allegedly
"due to low volume of work."
Petitioners argument: Petitioner alleged that her employment was
terminated not due to the alleged low volume of work but because she
"signed a petition for certification election among the rank and file
employees of respondents,"
Respondents argument: Private respondent further argued that petitioners
employment was for a "specific project with a specified period of
engagement." According to private respondent, "the certainty of the
expiration of complainants engagement has been determined at the time of
their (sic) engagement (until 27 November 1991) or when the project is
earlier completed or when the client withdraws," as provided in the contract.
"The happening of the second event [completion of the project] has
materialized, thus, her contract of employment is deemed terminated per the
Brent School ruling." Finally, private respondent averred that petitioners
"claims for non-payment of overtime time (sic) and service incentive leave
[pay] are without factual and legal basis."
labor arbiter Raul T. Aquino, ruled in favor of petitioner, the labor arbiter
found petitioner to be a regular employee

2) The tasks performed by the alleged "project employee"

are vital, necessary and indispensable to the usual
business or trade of the employer. "
The evidence on record reveals that petitioner was employed by private
respondent as a data encoder, performing activities which are usually
necessary or desirable in the usual business or trade of her employer,
continuously for a period of more than three (3) years, from August 26,
1988 to October 18, 1991 and contracted for a total of thirteen (13)
successive projects. We have previously ruled that "[h]owever, the length of
time during which the employee was continuously re-hired is not
controlling, but merely serves as a badge of regular employment." Based on
the foregoing, we conclude that petitioner has attained the status of a regular
employee of private respondent.
2.c Two (2) types of Project Employment
1. Project that is within the regular trade or business of the employer
Magcalas vs NLRC
Doctrine: 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.

On appeal, the NLRC reversed the decision of the labor arbiter

The NLRC held that the complainant [petitioner herein], while hired as a
regular worker, is statutorily guaranteed, in her tenurial security, only up to
the time the specific project for which she was hired is completed."
Held: we held that "[a] project employee or a member of a work pool may
acquire the status of a regular employee when the following concur:
Rtcspped
1) There is a continuous rehiring of project employees
even after [the] cessation of a project; and

Firstly, a project could refer to a particular job or undertaking that is within

the regular or usual business of the employer company, but which is distinct
and separate, and identifiable as such, from the other undertakings of the
company. Such job or undertaking begins and ends at determined or
determinable times. The typical example of this first type of project is a
particular construction job or project of a construction company. A
construction company ordinarily carries out two or more discrete
identifiable construction projects: e.g., a twenty-five- storey hotel in
Makati; a residential condominium building in Baguio City; and a domestic
air terminal in Iloilo City. Employees who are hired for the carrying out of
one of these separate projects, the scope and duration of which has been
determined and made known to the employees at the time of employment,
are properly treated as "project employees," and their services may be
lawfully terminated at completion of the project.

The term "project" could also refer to, secondly, a particular job or
undertaking that is not within the regular business of the corporation. Such a
job or undertaking must also be identifiably separate and distinct from the
ordinary or regular business operations of the employer. The job or
undertaking also begins and ends at determined or determinable times. The
case at bar presents what appears to our mind as a typical example of this
kind of "project."

the air(-) conditioning equipment at the Asian Development Bank

and Interbank projects.

Facts: Facts stated are just the argument of the parties

With the completion of their task on August 31, 1988 in their

respective installation projects, the employment of the
complainants (ipso facto) expired as they had no more work to
do. They now claim that they were illegally dismissed.'

Petitioners argument: "In their basic complaint and counter position

paper, the complainants alleged (inter alia) that they were all regular
employees of the respondent company, having rendered continuous services
in various capacities, ranging from leadman, tinsmith, tradeshelper to
general clerk; that the respondent has been engaged in the business of
installing air conditioning (should be air-conditioning) and refrigeration
equipment in its different projects and jobsites where the complainants have
been assigned; that the complainants have worked for a number of years,
the minimum of which was one and a half years and the maximum (was)
eight years under several supervisors; that on August 30, 1988, they were
dismissed (en masse) without prior notice and investigation, and that their
dismissals were effected for no other cause than their persistent demands for
payment of money claims (as) mandated by law.
Respondents argument: On the other hand, the respondents
interposed the defense of contract/project employment and averred the
following statement of facts in support thereof:
'The respondent company is engaged in the business of
manufacturing and installation of air(-) conditioning and
refrigeration equipments (sic).
The manufacturing aspect of its operation is handled by its regular
employees, while the installation aspect, by reason of its
intermittence, is carried out by its project or contract employees.
The installation of the air(-)conditioning equipment at the Asian
Development Bank Building and (the) Interbank building was
awarded to the respondent herein. The complainants herein were
among the contract employees hired by the respondent to install

The aforesaid employees were engaged to work on (sic) the

installation projects until August 31, 1988, when their task was
expected to be completed. This is evidenced by their respective
employment contracts, copies of which are hereto attached as
ANNEXES 1 to 18.

Issue: WoN petitioners are regular employees

Held: The overwhelming fact of petitioners' continuous employment as
found by the labor arbiter ineludibly shows that the petitioners were regular
employees. On the other hand, we find that substantial evidence, applicable
laws and jurisprudence do not support the ruling in the assailed Decision
that petitioners were project employees. The Court here reiterates the rule
that all doubts, uncertainties, ambiguities and insufficiencies should be
resolved in favor of labor. It is a well-entrenched doctrine that in illegal
dismissal cases, the employer has the burden of proof. This burden was not
discharged in the present case.
Petitioners were hired on different dates. Some of them worked for eight (8)
years, while others for only one and a half (1) years. Private respondent, on
the other hand, insisted that petitioners were hired on per project basis.
Private respondent, however, did not present any evidence to show the
termination of the employment contracts at the end of each project.
Notes: May regular employment be restricted to a definite or fixed term?
Upon the expiration of such term, may the employment be deemed
terminated upon payment of separation pay?
As regular employees, petitioners' employment cannot be terminated at the
whim of the employer. For a dismissal of an employee to be valid, two
requisites must be met: (1) the employee is afforded due process, meaning,
he is given notice of the cause of his dismissal and an adequate opportunity
to be heard and to defend himself; and (2) the dismissal is for a valid cause

as indicated in Article 282 of the Labor Code. The services of petitioners

were purportedly terminated at the end of the ADB and Interbank projects,
but this could not have been a valid cause for, as discussed above, they were
regular and not project employees. Thus, the Court does not hesitate to
conclude that petitioners were illegally dismissed.
As a consequence of their illegal termination, petitioners are entitled to
reinstatement and backwages in accordance with the Labor Code. The
backwages however are to be computed only for three years from August
30, 1988, the date of their dismissal, without deduction or qualification.
Where the illegal dismissal transpired before the effectivity of RA 6715, or
before March 21, 1989, the award of backwages in favor of the dismissed
employees is limited to three (3) years without deduction or qualification.
Second Issue: Is Ground for Dismissal Valid?
As regular employees, petitioners' employment cannot be terminated at the
whim of the employer. For a dismissal of an employee to be valid, two
requisites must be met: (1) the employee is afforded due process, meaning,
he is given notice of the cause of his dismissal and an adequate opportunity
to be heard and to defend himself; and (2) the dismissal is for a valid cause
as indicated in Article 282 of the Labor Code. The services of petitioners
were purportedly terminated at the end of the ADB and Interbank projects,
but this could not have been a valid cause for, as discussed above, they were
regular and not project employees. Thus, the Court does not hesitate to
conclude that petitioners were illegally dismissed.
2. Project not within the regular trade or business of the employer
Villa vs NLRC
Doctrine: First, 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. The example given is a construction company
that may undertake two or more projects at the same time in different
places.

Second, a project may refer to 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. Classifying the NSCs project as
of the second type, the Court said:
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. The Five Year Expansion
Program had a number of component projects: e.g., (a) the setting up of a
`Cold Rolling Mill Expansion Project; (b) the establishment of a `Billet
Steelmaking Plant (BSP); (c) the acquisition and installation of a `Five
Stand TDM; and (d) the `Cold Mill Peripherals Project. 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.
Facts: Respondent National Steel Corporation (NSC), one of the biggest
modern steel mills in Southeast Asia, produces hot rolled products, cold
rolled products, tinplates and billets. These products are in turn transformed
by downstream industries into truss assemblies, farm implements, pipe
structures, shipbuilding and repairing materials, automotive structures and
machine parts, GI roof sheets or galvanized iron, drums, nails, fasteners and
wires.

The NSC embarked on a Five-Year Expansion Program

One of the major projects of the NSC was the billet steelmaking plant.
According to the NSCs brochure, the plants product is the steel billet, a
semi-finished form of steel used as raw materials by steel rerolling mills
producing steel bars and wire rods. To produce the billets, the plant would
initially use 100% scrap as its raw materials. Eventually, NSC would build
a Direct Reduced Iron (DRI) plant in line with its expansion program and
integration program. Upon the availability of DRI, the raw materials feed
mix will eventually be 20 per cent scrap and 80 per cent DRI.
In line with its program to use 100% scrap, the NSC ventured into a
shipbreaking operation. Under this operation, ships/vessels at sea would be
cut up into large chunks and brought to land to be cut further into smaller
sizes. However, due to scarcity of vessels/ships for salvaging, the higher
costs of operation and the unsuitability of raw materials, this experimental
project was stopped after four or five ships had been chopped. When the
project was completely phased out in November 1986, the laborers hired for
said project were terminated.
Prior to the phasing out of the project, the NSC had been beset by labor
problems. On May 2, 1986 the National Steel Corporation Employees
Association-Southern Philippines Federation of Labor (NSCEA-SPFL) filed
a notice of strike. It charged the NSC with unfair labor practices consisting
of (a) wage discrimination, (b) interference with the employees right to selforganization, (c) nonregularization of contractual employees, (d) illegal
termination of employees, (e) nonpayment of wage/benefit differentials, and
(f) nonrecognition of NSCEA-SPFL as the sole bargaining representative of
the company.
Petitioners argument: Petitioners assert that the contract each of them
executed with the NSC does not mean anything. The contracts were
prepared by the management which, no doubt, stands on a higher footing
than the petitioners whose need for employment comes from vital and even
desperate necessity. Under the forceful intimidation of urgent need, an
individual worker could not have agreed to the contract freely and
voluntarily; that there was actually a vice of consent.
Respondents argument:

Issue: whether or not workers contracted as project employees may be

considered as regular employees on account of their performance of duties
inherent in the business of the employer.
Held: The Labor Code provides for project employees under Art. 280 on
casual and regular employees as follows:
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. (Italics supplied.)
This provision of law conceives of 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.
Under this law, the nature of the employment is determined by the factors
set by law, regardless of any contract expressing otherwise. The supremacy
of the law over contracts is explained by the fact that labor contracts are not

ordinary contracts; these are imbued with public interest and therefore are
subject to the police power of the State. Thus, the Civil Code provides:

employees are removed from the scope of project employees and they shall
be considered regular employees.

ART. 1700. The relations between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts
must yield to the common good. Therefore, such contracts are subject to the
special laws on labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and similar subjects.

Extant in the record are the findings of the NLRC that the petitioners in this
case were utilized in operations other than billet making or other
components of the FYEP I and II, such as shipbreaking. We are constrained
to rule that while it is true that they performed other activities which were
necessary or desirable in the usual business of the NSC and that the duration
of their employment was for a period of more than one year, these factors
did not make them regular employees in contemplation of Article 280 of the
Labor Code, as amended. Thus, the fact that petitioners worked for NSC
under different project employment contracts for several years cannot be
made a basis to consider them as regular employees, for they remain project
employees regardless of the number of projects in which they have worked.
Length of service is not the controlling determinant of the employment
tenure of a project employee.

Contracts for project employment are valid under the law. By entering into
such a contract, an employee is deemed to understand that his employment
is coterminous with the project. He may not expect to be employed
continuously beyond the completion of the project. It is of judicial notice
that project employees engaged for manual services or those for special
skills like those of carpenters or masons, are, as a rule, unschooled.
However, this fact alone is not a valid reason for bestowing special
treatment on them or for invalidating a contract of employment. Project
employment contracts are not lopsided agreements in favor of only one
party thereto. The employers interest is equally important as that of the
employees 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.
A project employment terminates as soon as the project is completed. Thus,
an employer is allowed by law to reduce the work force into a number
suited for the remaining work to be done upon the completion or proximate
accomplishment of the project. However, the law requires that, upon
completion of the project, the employer must present proof of termination
of the services of the project employees at the nearest public employment
office. This is specially provided for as regards construction workers
obviously to obviate indiscriminate termination of employment in
derogation of the workers right to security of tenure. After the termination
of the project, an employer may wind up its operations only to complete the
project. In such a case, the remaining employees do not necessarily lose
their status as project employees. However, if the employees services are
extended long after the supposed project had been completed, the

Notes: In the case of Mercado, Sr. v. NLRC, this Court ruled that the
proviso in the second paragraph of Article 280, providing that an employee
who has served for at least one year, shall be considered a regular
employees, relates only to casual employees and not to project employees.
Tucor Industries vs NLRC
Doctrine: The term "specific project or undertaking" under Article 280 of
the Labor Code contemplates an activity which was 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 the completion of the project. The
services employed are thus necessary or desirable in the employer's usual
business only for the period of time it takes to complete the project. Without
the performance of such services on a regular basis, the employer's main
business is not expected to grind to a halt.
Facts: Petitioner is a corporation principally engaged in the moving and
storage of various goods owned by military personnel residing within the
United States military facilities in the Philippines. On various dates herein
private respondents were hired as packers, drivers and
utilitymen/carpenters. They signed uniform company-prepared master
employment contracts

All of private respondents had continuously been employed by petitioner

for more than a year before the services were terminated.
Issue: WoN respondents are regular employees
Held: In the case at bar, private respondents were assigned to do carpentry
work, packing and driving, activities which are usually necessary and
desirable in petitioners' usual business and which thus had to be done on a
regular basis.
The fact that private respondents had rendered more than one year of
service at the time of their dismissal overturns the petitioner's allegation that
private respondents were hired for a specific or a fixed undertaking for a
limited period of time. The company-prepared master employment contracts
placed the private respondents at the mercy of those who crafted the said
contract. The work of the private respondents is hardly "specific" or
"seasonal." Such is one instance under the Code "where the employee has
been engaged to perform activities which are usually necessary or desirable
in the usual business."
Private respondents are therefore regular employees of petitioner the
provisions of their contract of employment notwithstanding. They are
entitled to security of tenure. The contention of the petitioners that private
respondents were employed on "as needed basis" and under the principle of
"no work, no pay" and that when such needs cease, petitioners, at their
option may terminate their contract, is certainly untenable.
3. Seasonal Employment
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.

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.
SECTION 5. Regular and casual employment. (a) The provisions of
written agreements to the contrary notwithstanding and regardless of the
oral agreements of the parties, an employment shall be considered to be
regular employment for purposes of Book VI of the Labor Code 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.

Seasonal workers do not become regular employees even after

one (1) year of service.

Mercado vs NLRC
Doctrine: The second paragraph of Art. 280 demarcates as "casual"
employees, all other employees who do not fan under the definition of the
preceding paragraph. The proviso, in said second paragraph, 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 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.
Facts: Petitioners alleged in their complaint that they were agricultural
workers utilized by private respondents in all the agricultural phases of
work on the 7 1/2 hectares of ace land and 10 hectares of sugar land owned
by the latter; that Fortunato Mercado, Sr. and Leon Santillan worked in the
farm of private respondents since 1949, Fortunato Mercado, Jr. and Antonio

Mercado since 1972 and the rest of the petitioners since 1960 up to April
1979, when they were all allegedly dismissed from their employment
Petitioners argument: They submit that petitioners' employment, even
assuming said employment were seasonal, continued for so many years
such that, by express provision of Article 280 of the Labor Code as
amended, petitioners have become regular and permanent employees.
Respondents argument: Private respondent Aurora Cruz in her answer to
petitioners' complaint denied that said petitioners were her regular
employees and instead averred that she engaged their services, through
Spouses Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that
is, persons who take charge in supplying the number of workers needed by
owners of various farms, but only to do a particular phase of agricultural
work necessary in rice production and/or sugar cane production, after which
they would be free to render services to other farm owners who need their
services.
Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private
respondents and held that petitioners were not regular and permanent
workers of the private respondents, for the nature of the terms and
conditions of their hiring reveal that they were required to perform phases
of agricultural work for a definite period of time after which their services
would be available to any other farm owner.
The NLRC ruled in favor of private respondents affirming the decision of
the respondent Labor Arbiter, with the modification of the deletion of the
award for financial assistance to petitioners.
Issue: whether or not petitioners are regular and permanent farm workers
and therefore entitled to the benefits which they pray for
Held: The contention of petitioners that the second paragraph of Article 280
of the Labor Code should have been applied in their case presents an
opportunity to clarify the afore-mentioned provision of law.
Article 280 of the Labor Code 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 first paragraph answers the question of who are 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.
A project employee has been defined to be 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 26 as in the present case.
The second paragraph of Art. 280 demarcates as "casual" employees, all
other employees who do not fan under the definition of the preceding
paragraph. The proviso, in said second paragraph, 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.

Petitioners, in effect, contend that the proviso in the second paragraph of

Art. 280 is applicable to their case and that the Labor Arbiter should have
considered them regular by virtue of said proviso. The contention is without
merit.

Petitioner Tan Cheng Pian alias "Piana" told private respondents "to look
for another job" without giving any reason.

The general rule is that the office of a proviso is to qualify or modify only
the phrase immediately preceding it or restrain or limit the generality of the
clause that it immediately follows. 27 Thus, it has been held that a proviso is
to be construed with reference to the immediately preceding part of the
provision to which it is attached, and not to the statute itself or to other
sections thereof. 28 The only exception to this rule is where the clear
legislative intent is to restrain or qualify not only the phrase immediately
preceding it (the proviso) but also earlier provisions of the statute or even
the statute itself as a whole. 29

Labor Arbiter' Armando Polintan rendered the Decision of April 11, 1984
ordering petitioners to pay private respondents their separation pay as
specifically indicated in the said decision.

Policy Instruction No. 12 of the Department of Labor and Employment

discloses that the concept of regular and casual employees was designed to
put an end to casual employment in regular jobs, which has been abused by
many employers to prevent called casuals from enjoying the benefits of
regular employees or to prevent casuals from joining unions. The same
instructions show that the proviso in the second paragraph of Art. 280 was
not designed to stifle small-scale businesses nor to oppress agricultural land
owners to further the interests of laborers, whether agricultural or industrial.
What it seeks to eliminate are abuses of employers against their employees
and not, as petitioners would have us believe, to prevent small-scale
businesses from engaging in legitimate methods to realize profit. Hence,
b.

Seasonal Workers become regular employees after one year of

service

Tacloban Sagkahan Rice and Corn Mills vs NLRC

Doctrine: Rice and corn milling business is not seasonal in nature,
contemplated in the Labor Code. It is the planting and harvesting of rice
that is seasonal. Thus an alleged seasonal worker is a regular employee.
Facts: It appears that private respondents, before their termination on July
25, 1983, were all regular employees of petitioners.

Private respondents thus filed their complaint for illegal dismissal

Petitioners appealed the above decision to the respondent Commission

which dismissed the appeal and affirmed the decision
Issue: WoN respondents have become regular employees after 1 year
Held: The pertinent provision of the Labor Code reads:
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.

The evidence on record has established that private respondents Carlito

Codilan and Maximo Docena had been working for petitioners for 25 years,
respondent Eugenio Go for 22 years, respondent Teofilo Trangria for 15
years and respondent Reynaldo Tulin for 6 years. Aside from their lengthy
service, it should be noted that private respondents' employment was not
fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of their appointment or hiring.
Likewise, it must be borne in mind that petitioners never rebutted private
respondents' claim that they performed activities usually necessary or
desirable in the usual business of the former.

to sit down to negotiate a CBA. Moreover, the respondents were not given
work for a month amounting to unjustified dismissal. As a result, the
complainants staged a strike to protest but was settled through a
memorandum of agreement which contained a list of those considered as
regular employees for the payroll.

Furthermore, the services performed or to be performed by private

respondents are not seasonal in nature. While it may be true that the harvest
of palay is seasonal, the milling operations which is the main business of
petitioners are not seasonal. The fact is that big rice mills such as the one
owned by petitioners continue to operate and do business throughout the
year even if there are only two or three harvest seasons within the year. It is
a common practice among farmers and rice dealers to store their palay and
to have the same milled as the need arises.

Held: Yes, they are regular and not seasonal employees. For them to be
excluded as regulars, it is not enough that they perform work that is seasonal
in nature but they also are employed for the duration of one season. The
evidence only proved the first but not the second requirement.

C. Requisites in order that seasonal employment may be regular

employment
Doctrine: 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 also been employed only for the
duration of one season.
Thus it may be stated that the requisites for seasonal employment to be
deemed regular employment the following requisites must concur:

1. The work or service are seasonal in nature

2. They are employed for more than one season
3. In a continuous manner
Hacienda Fatima vs NFS
Facts: The petitioner disfavored the fact that the private respondent
employees have formed a union. When the union became the collective
bargaining representative in the certification election, the petitioner refused

The NLRC held that there was illegal dismissal and this was affirmed by the
Court of Appeals.
Issue: W/N the employees are regular workers

The ruling in Mercado v. NLRC is not applicable since in that case, the
workers were merely required to perform phases of agricultural work for a
definite period of time, after which, their services are available to other
employers. The management's sudden change of assignment reeks of bad
faith, it is likewise guilty of ULP.
The CA did not err when it ruled that Mercado v. NLRC was not applicable
to the case at bar. In the earlier case, the workers were required to perform
phases of agricultural work for a definite period of time, after which their
services would be available to any other farm owner. They were not hired
regularly and repeatedly for the same phase/s of agricultural work, but on and
off for any single phase thereof. On the other hand, herein respondents,
having performed the same tasks for petitioners every season for several
years, are considered the latters regular employees for their respective tasks.
Petitioners eventual refusal to use their services -- even if they were ready,
able and willing to perform their usual duties whenever these were available
-- and hiring of other workers to perform the tasks originally assigned to
respondents amounted to illegal dismissal of the latter.
Note: [T]he fact that [respondents] do not work continuously for one whole
year but only for the duration of the x x x season does not detract from
considering them in regular employment since in a litany of cases this Court
has already settled that seasonal workers who are called to work from time to

time and are temporarily laid off during off-season are not separated from
service in said period, but merely considered on leave until re-employed.
Abasolo vs NLRC
Doctrine: this Court has already settled that seasonal workers who are
called to work from time to time and are temporarily laid off during offseason are not separated from service in said period, but are merely
considered on leave until re-employed.
Facts: Private respondent La Union Tobacco Redrying Corporation
(LUTORCO), which is owned by private respondent See Lin Chan, is
engaged in the business of buying, selling, redrying and processing of
tobacco leaves and its by-products. Tobacco season starts sometime in
October of every year when tobacco farmers germinate their seeds in plots
until they are ready for replanting in November. The harvest season starts in
mid-February. Then, the farmers sell the harvested tobacco leaves to
redrying plants or do the redrying themselves. The redrying plant of
LUTORCO receives tobacco for redrying at the end of February and starts
redrying in March until August or September.
Petitioners have been under the employ of LUTORCO for several years
until their employment with LUTORCO was abruptly interrupted sometime
in March 1993 when Compania General de Tabaccos de Filipinas (also
known as TABACALERA) took over LUTORCOs tobacco operations.
New signboards were posted indicating a change of ownership and
petitioners were then asked by LUTORCO to file their respective
applications for employment with TABACALERA. Petitioners were caught
unaware of the sudden change of ownership and its effect on the status of
their employment, though it was alleged that TABACALERA would
assume and respect the seniority rights of the petitioners.
On March 17, 1993, the disgruntled employees instituted before the NLRC
Regional Arbitration Branch No. 1, San Fernando, La Union a complaint
for separation pay against private respondent LUTORCO on the ground that
there was a termination of their employment due to the closure of
LUTORCO as a result of the sale and turnover to TABACALERA.

Respondents argument: Private respondent corporation raised as its

defense that it is exempt from paying separation pay and denied that it
terminated the services of the petitioners; and that it stopped its operations
due to the absence of capital and operating funds caused by losses incurred
from 1990 to 1992 and absence of operating funds for 1993, coupled with
adverse financial conditions and downfall of prices. It alleged further that
LUTORCO entered into an agreement with TABACALERA to take over
LUTORCOs tobacco operations for the year 1993 in the hope of recovering
from its serious business losses in the succeeding tobacco seasons and to
create a continuing source of income for the petitioners. Lastly, it
manifested that LUTORCO, in good faith and with sincerity, is willing to
grant reasonable and adjusted amounts to the petitioners, as financial
assistance, if and when LUTORCO could recover from its financial crisis.
Issue: WoN Petitioners are regular employees of herein respondent
Held: In the case at bar, while it may appear that the work of petitioners is
seasonal, inasmuch as petitioners have served the company for many years,
some for over 20 years, performing services necessary and indispensable to
LUTORCOs business, serve as badges of regular employment. Moreover,
the fact that petitioners do not work continuously for one whole year but
only for the duration of the tobacco season does not detract from
considering them in regular employment since in a litany of cases this Court
has already settled that seasonal workers who are called to work from time
to time and are temporarily laid off during off-season are not separated from
service in said period, but are merely considered on leave until reemployed.
Private respondents reliance on the case of Mercardo v. NLRC is misplaced
considering that since in said case of Mercado, although the respondent
company therein consistently availed of the services of the petitioners
therein from year to year, it was clear that petitioners therein were not in
respondent companys regular employ. Petitioners therein performed
different phases of agricultural work in a given year. However, during that
period, they were free to contract their services to work for other farm
owners, as in fact they did. Thus, the Court ruled in that case that their
employment would naturally end upon the completion of each project or
phase of farm work for which they have been contracted.

4. Casual Employment
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.
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.
SECTION 5. Regular and casual employment.
(b) Employment shall be deemed as casual in nature 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 not, 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.
a.

Casual Employee needs no appointment paper to be a regular

employee after one (1) year of service

Kimberly Clark vs Secretary of Labor

Doctrine: Owing to their length of service with the company, these workers
became regular employees, by operation of law, one year after they were
employed by KIMBERLY through RANK. While the actual regularization
of these employees entails the mechanical act of issuing regular
appointment papers and compliance with such other operating procedures as
may be adopted by the employer, it is more in keeping with the intent and
spirit of the law to rule that the status of regular employment attaches to the
casual worker on the day immediately after the end of his first year of
service. To rule otherwise, and to instead make their regularization

dependent on the happening of some contingency or the fulfillment of

certain requirements, is to impose a burden on the employee which is not
sanctioned by law.
Facts: On June 30, 1986, the Collective Bargaining Agreement (CBA)
executed by and between Kimberly-Clark (Phils.), Inc., (Kimberly), a
Philippine-registered corporation engaged in the manufacture, distribution,
sale and exportation of paper products, and United Kimberly-Clark
Employees Union-Philippine Transport and General Workers Organization
(UKCEO-PTGWO) expired. Within the freedom period, on April 21, 1986,
KILUSAN-OLALIA, then a newly-formed labor organization, challenged
the incumbency of UKCEO-PTGWO, by filing a petition for certification
election with the Ministry (now Department) of Labor and Employment
(MOLE), Regional Office No. IV, Quezon City.

A certification election was subsequently conducted on July 1,

1986 with UKCEO-PTGWO winning by a margin of 20 votes over
KILUSAN-OLALIA. Remaining as uncounted were 64 challenged ballots
cast by 64 casual workers whose regularization was in question. KILUSANOLALIA filed a protest.
On November 13, 1986, MOLE issued an Order stating, among
others, that the casual workers not performing janitorial and yard
maintenance services had attained regular status on even date. UKCEOPTGWO was then declared as the exclusive bargaining representative of
Kimberlys employees, having garnered the highest number of votes in the
certification election.

On March 16, 1987, KILUSAN-OLALIA filed with this Court a

petition for certiorari which was docketed as G.R. No. 77629 assailing the
Order of the MOLE with prayer for a temporary restraining order (TRO).
During the pendency of G.R. No. 77629, Kimberly dismissed from service
several employees and refused to heed the workers grievances, impelling
KILUSAN-OLALIA to stage a strike on May 17, 1987. Kimberly filed an
injunction case with the National Labor Relations Commission (NLRC),

which prompted the latter to issue temporary restraining orders (TROs). The
propriety of the issuance of the TROs was again brought by KILUSANOLALIA to this Court via a petition for certiorari and prohibition which
was docketed as G.R. No. 78791.

21, 1986 that the one-year period should be counted. While it is a fact that
the issue of regularization came about only when KILUSAN-OLALIA filed
a petition for certification election, the concerned employees attained
regular status by operation of law.

Petitioners argument: Kimberly, in this case, contends that the reckoning

We do not agree. In G.R. No. 77629, we ruled as follows:

point in determining who among its casual employees are entitled to

regularization should be April 21, 1986, the date KILUSAN-OLALIA filed
a petition for certification election to challenge the incumbency of UKCEOPTGWO. It posits that in the implementation of the May 9, 1990 Decision in
G.R. No. 77629, the DOLE should then exclude the employees who had not
rendered at least one (1) year of service from the said date.
Kimberly also argues that the employees who are not parties in G.R. No.
77629 should not be included in the implementation orders. For DOLE to
declare this group of employees as regular and to order the payment of
differential pay to them is to amend a final and executory decision of this

The law [thus] provides for 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 activity in which
they are employed. The individual petitioners herein who
have been adjudged to be regular employees fall under the
second category. These are the mechanics, electricians,
machinists, machine shop helpers, warehouse helpers,
painters, carpenters, pipefitters and masons. It is not
disputed that these workers have been in the employ of
KIMBERLY for more than one year at the time of the filing
of the petition for certification election by KILUSANOLALIA.

Court.
Kimberly also argues that the employees who are not parties in G.R. No.
77629 should not be included in the implementation orders. For DOLE to
declare this group of employees as regular and to order the payment of
differential pay to them is to amend a final and executory decision of this
Court.
Issue: WoN
Held: Considering that an employee becomes regular with respect to the
activity in which he is employed one year after he is employed, the
reckoning date for determining his regularization is his hiring date.
Therefore, it is error for petitioner Kimberly to claim that it is from April

Owing to their length of service with the

company, these workers became regular employees, by
operation of law, one year after they were employed by
KIMBERLY through RANK. While the actual
regularization of these employees entails the mechanical
act of issuing regular appointment papers and compliance
with such other operating procedures as may be adopted by
the employer, it is more in keeping with the intent and spirit
of the law to rule that the status of regular employment
attaches to the casual worker on the day immediately after
the end of his first year of service. To rule otherwise, and
to instead make their regularization dependent on the
happening of some contingency or the fulfillment of certain
requirements, is to impose a burden on the employee which
is not sanctioned by law.

Further, the grant of the benefit of regularization should not be

limited to the employees who questioned their status before the labor
tribunal/court and asserted their rights; it should also extend to those
similarly situated. There is, thus, no merit in petitioner's contention that
only those who presented their circumstances of employment to the courts
are entitled to regularization.
b.

Repeated rehiring of casual employees makes him a regular

employee

Tan vs Lagrama
Doctrine: This Court has held that if the employee has been performing the
job for at least one year, even if not continuously but intermittently, the
repeated and continuing need for its performance is sufficient evidence of
the necessity, if not indispensability, of that activity to the business of his
employer. Hence, the employment is also considered regular, although with
respect only to such activity, and while such activity exists
Facts: Petitioner Rolando Tan is the president of Supreme Theater
Corporation and the general manager of Crown and Empire Theaters in
Butuan City. Private respondent Leovigildo Lagrama is a painter, making
ad billboards and murals for the motion pictures shown at the Empress,
Supreme, and Crown Theaters for more than 10 years, from September 1,
1988 to October 17, 1998.
On October 17, 1998, private respondent Lagrama was summoned by Tan
and upbraided: Nangihi na naman ka sulod sa imong drawinganan. (You
again urinated inside your work area.) When Lagrama asked what Tan was
saying, Tan told him, Ayaw daghang estorya. Dili ko gusto nga mo-drawing
ka pa. Guikan karon, wala nay drawing. Gawas. (Dont say anything
further. I dont want you to draw anymore. From now on, no more drawing.
Get out.)
Lagrama denied the charge against him. He claimed that he was not the
only one who entered the drawing area and that, even if the charge was true,
it was a minor infraction to warrant his dismissal. However, everytime he
spoke, Tan shouted Gawas (Get out), leaving him with no other choice but
to leave the premises.

Lagrama filed a complaint with the Sub-Regional Arbitration Branch No. X

of the National Labor Relations Commission (NLRC) in Butuan City. He
alleged that he had been illegally dismissed and sought reinvestigation and
payment of 13th month pay, service incentive leave pay, salary differential,
and damages.
Petitioners argument: Petitioner Tan denied that Lagrama was his
employee. He asserted that Lagrama was an independent contractor who did
his work according to his methods, while he (petitioner) was only interested
in the result thereof. He cited the admission of Lagrama during the
conferences before the Labor Arbiter that he was paid on a fixed piece-work
basis, i.e., that he was paid for every painting turned out as ad billboard or
mural for the pictures shown in the three theaters, on the basis of a no
mural/billboard drawn, no pay policy. He submitted the affidavits of other
cinema owners, an amusement park owner, and those supervising the
construction of a church to prove that the services of Lagrama were
contracted by them. He denied having dismissed Lagrama and alleged that
it was the latter who refused to paint for him after he was scolded for his
habits.
Respondents argument: Contends that he is a regular employee
Labor Arbiter ruled in favor of respondent, NLRC affirmed Labor arbiter
The Court of Appeals found that petitioner exercised control over
Lagramas work by dictating the time when Lagrama should submit his
billboards and murals and setting rules on the use of the work area and rest
room. Although it found that Lagrama did work for other cinema owners,
the appeals court held it to be a mere sideline insufficient to prove that he
was not an employee of Tan.
Issue: WoN respondent is a regular employee
Held: Lagrama had been employed by petitioner since 1988. Under the law,
therefore, he is deemed a regular employee and is thus entitled to security of
tenure
Note: It is claimed that Lagrama abandoned his work. There is no evidence
to show this. Abandonment requires two elements: (1) the failure to report
for work or absence without valid or justifiable reason, and (2) a clear

intention to sever the employer-employee relationship, with the second

element as the more determinative factor and being manifested by some
overt acts. Mere absence is not sufficient. What is more, the burden is on
the employer to show a deliberate and unjustified refusal on the part of the
employee to resume his employment without any intention of returning. In
the case at bar, the Court of Appeals correctly ruled:

(2) the legality in the manner of dismissal.

Neither do we agree that Petitioner abandoned his job. In order for

abandonment to be a just and valid ground for dismissal, the employer must
show, by clear proof, the intention of the employee to abandon his job. . . .

BRENT SCHOOL, INC.DIMACHE vs. RONALDO ZAMORA and

DOROTEO R. ALEGRE
G.R. No. L-48494 February 5, 1990 en banc

In the present recourse, the Private Respondent has not established clear
proof of the intention of the Petitioner to abandon his job or to sever the
employment relationship between him and the Private Respondent. On the
contrary, it was Private Respondent who told Petitioner that he did not want
the latter to draw for him and thereafter refused to give him work to do or
any mural or billboard to paint or draw on.

Doctrine: stipulations in employment contracts providing for term

employment or fixed period employment are valid when the period were
agreed upon knowingly and voluntarily by the parties without 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.

More, after the repeated refusal of the Private Respondent to give Petitioner
murals or billboards to work on, the Petitioner filed, with the Sub-Regional
Arbitration Branch No. X of the National Labor Relations Commission, a
Complaint for Illegal Dismissal and Money Claims. Such act has, as the
Supreme Court declared, negate any intention to sever employment
relationship
DISMISSAL
The second issue is whether private respondent Lagrama was illegally
dismissed. To begin, the employer has the burden of proving the lawfulness
of his employees dismissal. The validity of the charge must be clearly
established in a manner consistent with due process.
The Implementing Rules of the Labor Code provide that no worker shall be
dismissed except for a just or authorized cause provided by law and after
due process. This provision has two aspects:
(1) the legality of the act of dismissal, that is, dismissal under the grounds
provided for under Article 282 of the Labor Code and

The illegality of the act of dismissal constitutes discharge without just

cause, while illegality in the manner of dismissal is dismissal without due
process.
5. Fixed-term Employment

FACTS: Private respondent Doroteo R. Alegre was engaged as athletic

director by petitioner Brent School, Inc. at a yearly compensation of
P20,000.00. The contract fixed a specific term for its existence, five (5)
years, i.e., from July 18, 1971, the date of execution of the agreement, to
July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973,
August 28, 1973, and September 14, 1974 reiterated the same terms and
conditions, including the expiry date, as those contained in the original
contract of July 18, 1971.
On April 20,1976, Alegre was given a copy of the report filed by Brent
School with the Department of Labor advising of the termination of his
services effective on July 16, 1976. The stated ground for the termination
was "completion of contract, expiration of the definite period of
employment." Although protesting the announced termination stating that
his services were necessary and desirable in the usual business of his
employer, and his employment lasted for 5 years - therefore he had acquired
the status of regular employee - Alegre accepted the amount of P3,177.71,
and signed a receipt therefor containing the phrase, "in full payment of
services for the period May 16, to July 17, 1976 as full payment of

contract."
The Regional Director considered Brent School's report as an application
for clearance to terminate employment (not a report of termination), and
accepting the recommendation of the Labor Conciliator, refused to give
such clearance and instead required the reinstatement of Alegre, as a
"permanent employee," to his former position without loss of seniority
rights and with full back wages.
ISSUE: Whether or not the provisions of the Labor Code, as amended,
have anathematized "fixed period employment" or employment for a term.
Held: Respondent Alegre's contract of employment with Brent School
having lawfully terminated with and by reason of the expiration of the
agreed term of period thereof, he is declared not entitled to reinstatement.
The employment contract between Brent School and Alegre was executed
on July 18, 1971, at a time when the Labor Code of the Philippines (P.D.
442) had not yet been promulgated. At that time, the validity of term
employment was impliedly recognized by the Termination Pay Law, R.A.
1052, as amended by R.A. 1787. Prior, thereto, it was the Code of
Commerce (Article 302) which governed employment without a fixed
period, and also implicitly acknowledged the propriety of employment with
a fixed period. The Civil Code of the Philippines, which was approved on
June 18, 1949 and became effective on August 30,1950, itself deals with
obligations with a period. No prohibition against term-or fixed-period
employment is contained in any of its articles or is otherwise deducible
therefrom.
It is plain then that when the employment contract was signed between
Brent School and Alegre, it was perfectly legitimate for them to include in it
a stipulation fixing the duration thereof Stipulations for a term were
explicitly recognized as valid by this Court.
The status of legitimacy continued to be enjoyed by fixed-period
employment contracts under the Labor Code (PD 442), which went into
effect on November 1, 1974. The Code contained explicit references to
fixed period employment, or employment with a fixed or definite period.
Nevertheless, obscuration of the principle of licitness of term employment
began to take place at about this time.

Article 320 originally stated that the "termination of employment of

probationary employees and those employed WITH A FIXED PERIOD
shall be subject to such regulations as the Secretary of Labor may
prescribe." Article 321 prescribed the just causes for which an employer
could terminate "an employment without a definite period." And Article
319 undertook to define "employment without a fixed period" in the
following manner: where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where
the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
Subsequently, the foregoing articles regarding employment with "a definite
period" and "regular" employment were amended by Presidential Decree
No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was
altered by eliminating the reference to persons "employed with a fixed
period," and was renumbered (becoming Article 271).
As it is evident that Article 280 of the Labor Code, under a narrow and
literal interpretation, not only fails to exhaust the gamut of employment
contracts to which the lack of a fixed period would be an anomaly, but
would also appear to restrict, without reasonable distinctions, the right of an
employee to freely stipulate with his employer the duration of his
engagement, it logically follows that such a literal interpretation should be
eschewed or avoided. The law must be given a reasonable interpretation, to
preclude absurdity in its application. Outlawing the whole concept of term
employment and subverting to boot the principle of freedom of contract to
remedy the evil of employer's using it as a means to prevent their employees
from obtaining security of tenure is like cutting off the nose to spite the face
or, more relevantly, curing a headache by lopping off the head.
Such interpretation puts the seal on Bibiso upon the effect of the expiry of
an agreed period of employment as still good rulea rule reaffirmed in the
recent case of Escudero vs. Office of the President (G.R. No. 57822, April
26, 1989) where, in the fairly analogous case of a teacher being served by

her school a notice of termination following the expiration of the last of

three successive fixed-term employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact
that her employment was probationary, contractual in nature, and one with a
definitive period. At the expiration of the period stipulated in the contract,
her appointment was deemed terminated and the letter informing her of the
non-renewal of her contract is not a condition sine qua non before Reyes
may be deemed to have ceased in the employ of petitioner UST. The notice
is a mere reminder that Reyes' contract of employment was due to expire
and that the contract would no longer be renewed. It is not a letter of
termination.

Facts:

Paraphrasing Escudero, respondent Alegre's employment was terminated

upon the
expiration of his last contract with Brent School on July 16, 1976 without
the necessity of any notice. The advance written advice given the
Department of Labor with copy to said petitioner was a mere reminder of
the impending expiration of his contract, not a letter of termination, nor an
application for clearance to terminate which needed the approval of the
Department of Labor to make the termination of his services effective. In
any case, such clearance should properly have been given, not denied.

Issue: whether or not an employee contracted to drive for petitioner during

the construction of the steam wells is considered a project employee or a
regular employee.

a.

Petitioners argument: Private respondent, while admitting such fixed

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

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

Requisites for a valid fixed-term contract of employment

PNOC vs NLRC
Doctrine: the two guidelines, by which fixed contracts of employments can
be said NOT to circumvent security of tenure, are either:
1. The fixed period of employment was knowingly and
voluntarily agreed upon by the parties, without any force,
duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating
his consent;or:
2. It satisfactorily appears that the employer and
employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised
by the former on the latter.

Accordingly, and since the entire purpose behind the

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

employee dealt with each other on more or less equal

terms with no moral dominance whatever being exercised
by the former over the latter. Unless thus limited in its
purview. the law would be made to apply to purposes
other than those explicitly stated by its framers; it thus
becomes pointless and arbitrary, unjust in its effects and
apt to lead to absurd and unintended consequences.
b.

Duties (need not) be usually necessary or desirable in the

employers usual business or trade

AMA computer college vs Austria

Doctrine: Some familiar examples may be cited of employment contracts
which may be neither for seasonal work nor for specific projects, but to
which a fixed term is an essential and natural appurtenance: overseas
employment contracts, for one, to which, whatever the nature of the
engagement, the concept of regular employment with all that it implies does
not appear ever to have been applied, Article 280 of the Labor Code
notwithstanding; also appointments to the positions of dean, assistant
dean, college secretary, principal, and other administrative offices in
educational institutions, which are by practice or tradition rotated
among the faculty members, and where fixed terms are a necessity
without which no reasonable rotation would be possible

from September 8, 2000 to October 10, 2000. Notices of Investigation were

sent to respondent. Eventually, on September 29, 2000, respondent was
informed of his dismissal
On October 27, 2000, respondent filed a Complaint for Illegal Dismissal
Petitioners argument: Petitioners argue that respondent, as college dean,
was an academic personnel of AMA under Section 4(m) (4)(c) of the
Manual of Regulations for Private Schools (Manual) and, as such, his
probationary employment is governed by Section 92 thereof and not by the
Labor Code or AMA's Handbook; that under the circumstances, respondent
has not yet attained the status of a regular employee; that respondent's
employment was for a fixed term as found by the Labor Arbiter but the
same was terminated earlier due to just causes; that the respondent, whether
he may be considered as a probationary or a regular employee, was
dismissed for just causes; and that the award of backwages in favor of the
respondent, up to the finality of the decision, is oppressive to the petitioners,
considering the absence of an order of reinstatement and the respondent's
fixed period of employment.
Respondents argument: respondent counters that both the NLRC and the
CA found that respondent was a regular employee and that he was illegally
dismissed; that the instant Petition raises questions of fact - such as whether

Facts: Petitioner AMA Computer College, Paraaque (AMA) is an

educational institution duly organized under the laws of the Philippines. The
rest of the petitioners are principal officers of AMA. Respondent Rolando
A. Austria (respondent) was hired by AMA on probationary employment as
a college dean on April 24, 2000 On August 22, 2000, respondents
appointment as dean was confirmed by AMAs Officer-in-Charge (OIC),
Academic Affairs, in his Memorandum

or not respondent is a regular employee and whether or not circumstances

Sometime in August 2000, respondent was charged with violating AMAs

Employees Conduct and Discipline provided in its Orientation Handbook
(Handbook)

Held: We held that Article 280 of the Labor Code does not proscribe or

In a Memorandum dated August 29, 2000, respondent refuted the charges

against him. Thereafter, respondent was placed on preventive suspension

the employer, the parties are free to agree on a fixed period of time for the

existed warranting his dismissal - which can no longer be inquired into by

this Court
Issue: WoN respondent is a regular employee

prohibit an employment contract with a fixed period. Even if the duties of the
employee consist of activities necessary or desirable in the usual business of

performance of such activities. There is nothing essentially contradictory

between a definite period of employment and the nature of the employees

duties.
The instant case involves respondent's position as dean, and comes within the
purview of the Brent School doctrine.
The letter of appointment was clear. Respondent was confirmed as Dean of
AMA College, Paraaque, effective from April 17, 2000 to September 17,

common carrier, and of which its co-petitioner Abelardo de Leon is a

manager.
In 1973, Peronila was administratively investigated by the corporation for
his absence from work of more than two and one-half months without leave.
According to an investigation report of petitioners' area manager, dated
March 10, 1973, Peronila claimed that he went on absence without leave
from his work from November 1, 1972 up to February 16, 1973 which was
date of the investigation, or one hundred seven calendar days continuously,
because "he went to Cotabato, Mindanao to visit his dead grandfather
during the period of his unofficial absence."

2000. In numerous cases decided by this Court, we had taken notice, that by
way of practice and tradition, the position of dean is normally an employment
for a fixed term. Although it does not appear on record and neither was it
alleged by any of the parties that respondent, other than holding the position

Finding the belated explanation of Peronila insufficient, the petitioner

declared that private respondent had "grossly violated the provisions of (its)
existing company policies, CVT Policy No. 71-102" and it consequently
"dismissed the respondent from service upon receipt of the approved
clearance from the NLRC."

of dean, concurrently occupied a teaching position, it can be deduced from

the last paragraph of said letter that the respondent shall be considered for a
faculty position in the event he gives up his deanship or fails to meet AMA's
standards. Such provision reasonably serves the intention set forth in Brent

Fifteen years after such termination of his employment, Peronila reappeared

in 1988 and implored petitioner to reconsider his dismissal, which plea was
initially denied by petitioner. However, due to insistent appeals by Peronila,
petitioner eventually acceded and hired him as a driver, but on a contractual
basis for a fixed period of one month

School that the deanship may be rotated among the other members of the
faculty.
Pantranco North Express vs NLRC
Doctrine: "the decisive determinant in term employment should not be the
activities that the employee is called upon to perform, but the day certain
agreed upon the parties for the commencement and termination of their
employment relationship, a day certain being understood to be that which
must necessarily come, although it may not be known when. . . . This ruling
is only in consonance with Article 280 of the Labor Code."
Facts: It appears on the record that sometime in 1971, private respondent
Peronila was employed as a driver of Pantranco North Express, Inc., a
domestic corporation engaged in the public transportation business as a

Barely fifteen days from such employment as a contractual driver, or on

April 20, 1988, private respondent was involved in a vehicular mishap in
Nueva Vizcaya wherein the bus he was driving hit another vehicle. 7 After
an administrative investigation conducted by petitioner corporation,
Peronila was found guilty thereof, hence his employment contract was
terminated and was no longer renewed thereafter.
On January 18, 1989, private respondent filed a case for illegal dismissal
against petitioner
Issue: WoN respondent is a regular employee
Held: The petitioner had validly dismissed Peronila long before he entered
into the contested employment contract. It was Peronila who earnestly
pleaded with petitioner to give him a second chance. The re-hiring of

private respondent was out of compassion and not because the petitioner
was impressed with the credentials of Peronila. Peronila's previous
violations of company rules explains the reluctant attitude to the petitioner
in re-hiring him. When the bus driven by Peronila figured in a road mishap,
that incident finally prompted petitioner to sever any further relationship
with said private respondent.
We have recently held in Philippine Village Hotel vs. National Labor
Relations Commission, et al. 16 that the fact that the private respondents
therein were required to render services necessary or desirable in the
operation of the petitioner's business for a duration of the one month dryrun operation period did not in any way impair the validity of the
contractual nature of private respondents' contracts of employment which
specifically stipulated that their employment was only for one month.
c.

Fixed-term employment for less than six(6) months same with

probationary employment

Caparoso vs NLRC
Doctrine: At most, petitioners employment for less than six months can be
considered probationary. Article 281 of the Labor Code provides:
Facts: Composite Enterprises Incorporated (Composite) is engaged in the
distribution and supply of confectioneries to various retail establishments
within the Philippines. Emilio M. Caparoso (Caparoso) and Joeve P.
Quindipan (Quindipan) were Composites deliverymen. Caparoso alleged
that he was hired on 8 November 1998 while Quindipan alleged that he was
hired on intermittent basis since 1997. Quindipan further alleged that he had
been working continuously with Composite since August 1998.
On 8 October 1999, Caparoso and Quindipan (petitioners) were dismissed
from the service. They filed a consolidated position paper before the Labor
Arbiter charging Composite and its Personnel Manager Edith Tan (Tan)
with illegal dismissal.
Composite and Tan (respondents) alleged that petitioners were both hired
on 11 May 1999 as deliverymen, initially for three months and then on a
month-to-month basis. Respondents alleged that petitioners termination

from employment resulted from the expiration of their contracts of

employment on 8 October 1999.
The Labor Arbiter ruled that petitioners are regular employees of
respondents.
Respondents appealed to the National Labor Relations Commission
(NLRC). In its 9 May 2001 Decision, the NLRC set aside the Labor
Arbiters Decision and dismissed petitioners complaint for illegal
dismissal. The NLRC ruled that the mere fact that the employees duties are
necessary or desirable in the business or trade of the employer does not
mean that they are forbidden from stipulating the period of employment.
In its 27 June 2002 Decision, the Court of Appeals dismissed the petition
and affirmed the NLRCs 9 May 2001
Issue: WoN respondents are Regular employees
Held: We agree with the Court of Appeals that in this case, the fixed period
of employment was knowingly and voluntarily agreed upon by the parties.
The Court of Appeals noted that there was no indication of force,
duress, or improper pressure exerted on petitioners when they signed
the contracts. Further, there was no proof that respondents were
regularly engaged in hiring workers for work for a minimum period of
five months to prevent the regularization of their employees.
Petitioners Employment is akin to Probationary Employment
At most, petitioners employment for less than six months can be
considered probationary. Article 281 of the Labor Code provides:
Art. 281. Probationary Employment. - Probationary employment shall not
exceed six (6) months from the date the employee started working, unless it
is covered by an apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary basis may
be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An employee who
is allowed to work after a probationary period shall be considered a regular
employee.

Petitioners were hired on 11 May 1999, initially for three months. After the
expiration of their contracts, petitioners were hired on a month-to-month
basis. Their contracts of employment ended on 8 October 1999. Hence,
they were employed for a total of five months. Their employment did not
even exceed six months to entitle them to become regular employees.
d.

Employee employment contract on a five (5) month period

Purefoods vs NLRC
Doctrine: The five-month period specified in private respondents
employment contracts having been imposed precisely to circumvent the
constitutional guarantee on security of tenure should, therefore, be struck
down or disregarded as contrary to public policy or morals.
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.
Petitioners argument: The petitioner submits that the private respondents
are now estopped from questioning their separation from petitioners employ
in view of their express conformity with the five-month duration of their
employment contracts. Besides, they fell within the exception provided in
Article 280 of the Labor Code which reads: [E]xcept 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.
Respondents argument: The private respondents, on the other hand, argue
that contracts with a specific period of employment may be given legal
effect provided, however, that they are not intended to circumvent the

constitutional guarantee on security of tenure. They submit that the practice

of the petitioner in hiring workers to work for a fixed duration of five
months only to replace them with other workers of the same employment
duration was apparently to prevent the regularization of these so-called
casuals, which is a clear circumvention of the law on security of tenure.
Issue: The crux of this petition for certiorari is the issue of 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.
Held: 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 petitioners 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 employers 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 petitioners contention that those workers were hired for a
specific project or undertaking only.
Now on the validity of private respondents' five-month contracts of
employment. In the leading case of Brent School, Inc. v. Zamora, which
was reaffirmed in numerous subsequent cases, this Court has upheld the
legality of fixed-term employment. It ruled that the decisive determinant in
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. But, this
Court went on to say that where from the circumstances it is apparent that

the periods have been imposed to preclude acquisition of tenurial security

by the employee, they should be struck down or disregarded as contrary to
public policy and morals.

policy and are held to be ineffective to bar recovery for the full measure of
the workers rights. The reason for the rule is that the employer and the
employee do not stand on the same footing.

Brent also laid down the criteria under which term employment cannot be
said to be in circumvention of the law on security of tenure:

Notably, the private respondents lost no time in filing a complaint for illegal
dismissal. This act is hardly expected from employees who voluntarily and
freely consented to their dismissal.

1) The fixed period of employment was knowingly and voluntarily agreed

upon by the parties without any force, duress, or improper pressure being
brought to bear upon the employee and absent any other circumstances
vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance exercised
by the former or the latter.
None of these criteria had been met in the present case. As pointed out by
the private respondents:
[I]t could not be supposed that private respondents and all other so-called
casual workers of [the petitioner] KNOWINGLY and VOLUNTARILY
agreed to the 5-month employment contract. Cannery workers are never on
equal terms with their employers. Almost always, they agree to any terms of
an employment contract just to get employed considering that it is difficult
to find work given their ordinary qualifications. Their freedom to contract is
empty and hollow because theirs is the freedom to starve if they refuse to
work as casual or contractual workers. Indeed, to the unemployed, security
of tenure has no value. It could not then be said that petitioner and private
respondents "dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter.
Note:

ILLEGAL DISMISSAL
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.
However, since reinstatement is no longer possible because the petitioner's
tuna cannery plant had, admittedly, been closed in November 1994, the
proper award is separation pay equivalent to one month pay or one-half
month pay for every year of service, whichever is higher, to be computed
from the commencement of their employment up to the closure of the tuna
cannery plant. The amount of back wages must be computed from the time
the private respondents were dismissed until the time petitioner's cannery
plant ceased operation.
Universal Robina Corp. vs CATAPANG
DOCTRINE: The 5-month contract was only used to prevent respondents
from being regulars. This is contrary to public policy or morals. 3-5 years of
continuous hiring negates petitioners argument that they are only for a
specific project

QUITCLAIM
The execution by the private respondents of a Release and Quitclaim did
not preclude them from questioning the termination of their services.
Generally, quitclaims by laborers are frowned upon as contrary to public

FACTS:
Pet:
Universal Robina Corporation- company
Randy Gregorio manager of companys duck farm in Calauan,
Laguna
Resp: 30 people

Respondents were hired by the company on various dates from

1991-1993 to work at its duck farm. Their contracts were only for
a 5-month period, renewed every expiration/ in 1996, the company
told the respondents that their contract wont be renewed anymore.
Respondents filed complaints for illegal dismissal, reinstatement,
backwages, damages and attorneys fees against petitioners.
LA: illegal dismissal. Respondents must be reinstated to former
positions without loss of seniority rights and must pay backwages
Petitioners appealed to NLRC while respondents filed Writ of
Execution with LA
Petitioners told LA that they can only reinstate 17 of the 30
respondents (reason: phase out). For the 13, there are no other
positions similar to their previous ones but 10 may be
accommodated for a 3-day-per-week work
Petitioners initially failed to comply with LAs order but the 17
were eventually reinstated. The duck farm was closed.
The 13 respondents wanted garnishment to collect the wages
awarded by the LA. Petitioners wanted to quash, saying that they
cant accommodate the 13 anymore because of phase out and their
previous positions were already filled up
NLRC: affirm LA decision
CA: respondents were regular employees. Their being hired for
more than 1 year doing the same work made them regular and not
just project employees. 5-month contracts are only a means to
refuse them security of tenure. The 13 should have been paid even
if they were not reinstated.

ISSUE and HELD: WON respondents are regular employees--- YES.

RATIO:
-

Abasolo vs. NLRC: test in determining whether one is a regular

employee:
o Primary standard: reasonable connection between the
particular activity performed by the employee in relation
to the usual trade or business of the employer.
o Is the activity usually necessary or desirable to
employers trade or business?

e.

Must consider the nature of work performed and its

relation to the scheme of the particular business or trade
in its entirety
o If employee has been performing the work for at least a
year, even if intermittently, this is sufficient to say that the
work is necessary and indispensable to the business. Thus,
he is regular with respect to that work and while it lasts.
Affirm CAs findings. The 5-month contract was only used to
prevent respondents from being regulars. This is contrary to public
policy or morals. 3-5 years of continuous hiring negates
petitioners argument that they are only for a specific project
Factual findings of labor officials who have expertise are accorded
not only respect but even finality and is binding on SC when
supported by substantial evidence
Employees allowed to work after the fixed period of
employment become regular

Viernes vs NLRC
Doctrine: The principle we have enunciated in Brent applies only with
respect to fixed term employments. While it is true that petitioners were
initially employed on a fixed term basis as their employment contracts were
only for October 8 to 31, 1990, after October 31, 1990, they were allowed
to continue working in the same capacity as meter readers without the
benefit of a new contract or agreement or without the term of their
employment being fixed anew. After October 31, 1990, the employment of
petitioners is no longer on a fixed term basis. The complexion of the
employment relationship of petitioners and private respondent is thereby
totally changed. Petitioners have attained the status of regular employees.
Facts: Fifteen (15) in all, these are consolidated cases for illegal dismissal,
underpayment of wages and claim for indemnity pay against a common
respondent, the Benguet Electric Cooperative, Inc., (BENECO for short)
represented by its Acting General Manager, Gerardo P. Versoza.
Complainants services as meter readers were contracted for hardly a months
duration, or from October 8 to 31, 1990. Their employment contracts,
couched in identical terms, read:

You are hereby appointed as METER READER (APPRENTICE) under

BENECO-NEA Management with compensation at the rate of SIXTY-SIX
PESOS AND SEVENTY-FIVE CENTAVOS (P66.75) per day from
October 08 to 31, 1990.
The said term notwithstanding, the complainants were allowed to work
beyond October 31, 1990, or until January 2, 1991. On January 3, 1991,
they were each served their identical notices of termination dated December
29, 1990. The same read:
Please be informed that effective at the close of office hours of December
31, 1990, your services with the BENECO will be terminated. Your
termination has nothing to do with your performance. Rather, it is because
we have to retrench on personnel as we are already overstaffed.

public, there could not be a valid basis for billing the customers of private
respondent.
With the continuation of their employment beyond the original term,
petitioners have become full-fledged regular employees. The fact alone that
petitioners have rendered service for a period of less than six months does
not make their employment status as probationary.

f.

Employees allowed to work for more than one (1) year become
regular

Megascope General Services vs NLRC

On the same date, the complainants filed separate complaints for illegal
dismissal.
Petitioners argument: It is the contention of the complainants that they
were not apprentices but regular employees whose services were illegally
and unjustly terminated in a manner that was whimsical and capricious.
Respondents argument: On the other hand, the respondent invokes
Article 283 of the Labor Code in defense of the questioned dismissal.
Issue: WoN petitioners are regular employees
Held: Clearly therefrom, there are two separate instances whereby it can be
determined that an employment is regular: (1) The particular activity
performed by the employee is necessary or desirable in the usual business
or trade of the employer; or (2) if the employee has been performing the job
for at least a year.
Herein petitioners fall under the first category. They were engaged to
perform activities that are necessary to the usual business of private
respondent. We agree with the labor arbiters pronouncement that the job of
a meter reader is necessary to the business of private respondent because
unless a meter reader records the electric consumption of the subscribing

Doctrine: Granting arguendo that private respondents were initially

contractual employees, by the sheer length of service they had rendered for
petitioner, they had been converted into regular employees by virtue of the
aforequoted proviso in the second paragraph of Art. 280 since they all
served petitioner's client for more than a year.
Facts: Petitioner Megascope General Services is a sole proprietorship
engaged in contracting out general services. In 1977, it entered into a
landscaping contract with the System and Structures, Inc. (SSI) which
subcontracted the construction of the National Power Corporation Housing
Village in Bagac, Bataan. In hiring laborers, petitioner would give them
work from five (5) to ten (10) days as the need arose and there were
periodical gaps in the hiring of employees.
Between February 15, 1977 and January 1, 1989, it contracted the services
of the herein nineteen (19) private respondents as gardeners, helpers and
maintenance workers. They were deployed at the National Power
Corporation (NPC) in Bagac, Bataan. Except for Gener J. del Rosario
whose employment ended on April 30, 1989, the work of the other workers
ceased on January 31, 1991. At the time, private respondents Nestor Seril
and Gener J. del Rosario were receiving P65.00 a day; private respondent
Reynaldo Magtanong, P56.00 a day, and the rest of the private respondents,
P54.00 a day.

Consequently, private respondents filed before Regional Arbitration Branch

No. III in San Fernando, Pampanga, a complaint for illegal dismissal,
underpayment of salaries, nonpayment of five-day service incentive leave
credits and holiday pay against petitioner and Andres M. David
Petitioners argument: Petitioner and David countered that private
respondents were hired for a definite period of employment, the
commencement and termination of which were already known to them; that
the two-year period stipulated in the private respondents' contract with NPC
had expired; that it was the NPC which requested petitioner and David for
an extension on a monthly basis of the employment of some of the private
respondents; and that the reason for the termination of private respondents'
employment was the termination itself of petitioner's contract with NPC
Issue: WoN Respondents are regular employees
Held: Undeniably, private respondents had been performing activities
which were necessary or desirable in the usual trade or business of
petitioner. Their services as gardeners, helpers and maintenance workers
were continuously availed of by petitioner in the conduct of its business as
supplier of such services to clients. Thus, even if there were a contrary
agreement between the parties, if the worker has worked for more than a
year and there is a reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the
employer, an employer-employee relationship is deemed to exist between
the parties.
Granting arguendo that private respondents were initially contractual
employees, by the sheer length of service they had rendered for petitioner,
they had been converted into regular employees by virtue of the aforequoted
proviso in the second paragraph of Art. 280 since they all served petitioner's
client for more than a year.
Agusan Del Norte Electric Coop, Inc. vs Cagampang
Doctrine: 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.

Facts: Respondents Joel Cagampang and Glenn Garzon started working as

linemen for petitioner Agusan del Norte Electric Cooperative, Inc.
(ANECO) on October 1, 1990, under an employment contract which was
for a period not exceeding three months. They were both allegedly required
to work eight hours a day and sometimes on Sundays, getting a daily salary
of P122.00. When the contract expired, the two were laid-off for one to five
days and then ordered to report back to work but on the basis of job orders.
After several renewals of their job contracts in the form of job orders for
similar employment periods of about three months each, the said contracts
eventually expired on April 31, 1998 and July 30, 1999.
Respondents contracts were no longer renewed, resulting in their loss of
employment.
Thus, on January 11, 2001, respondents filed an illegal dismissal case against
petitioners before the Honorable Labor Arbiter Alim D. Pangandaman
Petitioners argument: Petitioners claim that the respondents were
individually hired only as emergency workers on a contractual basis and for
a fixed or definite term/period of employment. Said contracts were never
intended to circumvent the law on security of tenure, and that the
contractual employment with a fixed period or term that existed between
ANECO and respondents should have been considered rightly falling within
the legally recognized and accepted concept of management prerogative.
Respondents argument: Respondents, for their part, counter that there is
no legal basis for an inference that they were not dismissed and that their
employment contract merely expired.
the Labor Arbiter declared the dismissal illegal
the NLRC set aside the decision of the Labor Arbiter
the Court of Appeals granted the petition and set aside the decision of the
NLRC
Issue: WoN respondents are regular employees
Held: After considering the facts and the submissions of the parties, we are
in agreement that respondents were illegally dismissed, and that the petition
by the employer lacks merit.

There is no dispute that the 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.
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. 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. Thus, we held that
where the employment of project employees is extended long after
the supposed project has been finished, the employees are removed
from the scope of project employees and are considered regular
employees.
While length of time may not be the controlling test for project
employment, 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 petitioners 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.
g.

Successive renewals of fixed period employment

contract become regular

Philips Semiconductors vs Fadriquela

Doctrine: The respondents re-employment under contracts ranging from
two to three months over a period of one year and twenty-eight days, with

an express statement that she may be reassigned at the discretion of the

petitioner and that her employment may be terminated at any time upon
notice, was but a catch-all excuse to prevent her regularization. Such
statement is contrary to the letter and spirit of Articles 279 and 280 of the
Labor Code.
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 petitioners 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
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 contract was for a period of
three months up to August 8, 1992, but was extended for two months when
she garnered a performance rating of 3.15. Her contract was again renewed
for two months or up to December 16, 1992, when she received a
performance rating of 3.8. After the expiration of her third contract, it was
extended anew, for three months, that is, from January 4, 1993 to April 4,
1993.
After garnering a performance rating of 3.4, the respondents contract was
extended for another three months, that is, from April 5, 1993 to June 4,
1993. She, however, incurred five absences in the month of April, three
absences in the month of May and four absences in the month of June. Line

supervisor Shirley F. Velayo asked the respondent why she incurred the
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 respondents employment be terminated due to habitual
absenteeism, in accordance with the Company Rules and Regulations. Thus,
the respondents contract of employment was no longer renewed.
The respondent filed a complaint before the National Capital Region
Arbitration Branch of the National Labor Relations Commission (NLRC)
for illegal dismissal against the petitioner
Petitioners argument:
Respondents argument:
The Labor Arbiter declared that the respondent, who had rendered less
than seventeen months of service to the petitioner, cannot be said to have
acquired regular status.
The petitioner and the Philips Semiconductor Phils., Inc., Workers Union
had agreed in their Collective Bargaining Agreement (CBA) that a
contractual employee would acquire a regular employment status only upon
completion of seventeen months of service. This was also reflected in the
minutes of the meeting of April 6, 1993 between the petitioner and the
union. Further, a contractual employee was required to receive a
performance rating of at least 3.0, based on output, quality of work,
attendance and work attitude, to qualify for contract renewal. In the
respondents case, she had worked for the petitioner for only twelve months.
In the last extension of her employment contract, she garnered only 2.8
points, below the 3.0 required average, which disqualified her for contract
renewal, and regularization of employment. The Labor Arbiter also ruled
that the respondent cannot justifiably complain that she was deprived of her
right to notice and hearing because her line supervisor had asked her to
explain her unauthorized absences. Accordingly, these dialogues between
the respondent and her line supervisor can be deemed as substantial
compliance of the required notice and investigation.

The NLRC explained that the respondent was a contractual employee

whose period of employment was fixed in the successive contracts of
employment she had executed with the petitioner.
the appellate court rendered a decision reversing the decisions of the
NLRC and the Labor Arbiter and granting the respondents petition.
Issue: WoN respondent is a regular employee
Held: In this case, the respondent was employed by the petitioner on May
8, 1992 as production operator. She was assigned to wirebuilding at the
transistor division. 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 petitioners 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
Note: The CBA, during its lifetime, constitutes the law between the parties.
Such being the rule, the aforementioned CBA should be binding only upon
private respondent and its regular employees who were duly represented by
the bargaining union. The agreement embodied in the Minutes of Meeting
between the representative union and private respondent, providing that
contractual employees shall become regular employees only after seventeen
months of employment, cannot bind petitioner. Such a provision runs
contrary to law not only because contractual employees do not form part of
the collective bargaining unit which entered into the CBA with private
respondent but also because of the Labor Code provision on regularization.
The law explicitly states that an employee who had rendered at least one
year of service, whether such service is continuous or broken, shall be
considered a regular employee. The period set by law is one year. The
seventeen months provided by the Minutes of Meeting is obviously much
longer. The principle is well settled that the law forms part of and is read
into every contract without the need for the parties expressly making
reference to it.