Kinds of Employees - Notes and Case Digests

8/10/2019 Kinds of Employees - Notes and Case Digests

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B. Project Employees3. Application of Rule on Reportial Requirement

144. Rod D. Pasos v. Phil. National Construction Corp (2013)

Facts: Pasos started working for PNCC on April 26, 1996. Hewas designated as Clerk II (Accounting) and was assignedto the NAIA-II Project. It was stated in his Personnel ActionForm Appointment for Project Employment: duration is from April 26, 1996 to July 25, 1996; contract may be terminated atanytime for causes as provided for by law and/or existingcompany policy; maybe terminated if services areunsatisfactory, or when no longer needed, as determined by theCompany. If services are still needed beyond the validity of thecontract, the company shall extend your services. After servicesare terminated, the employee shall be under no obligation to re-employ the employee. But Ps employment was extended untilAugust 4, 1998 (more than 2 years later).

P was rehired on Nov. 11, 1998 as Accounting Clerk(Reliever) and assigned to PCSO QI Project. Hisemployment shall end on February 11, 1999 and may beterminated for cause or in accordance with Art. 282 of LC. Buthis employment was again extended until February 19, 1999.

On February 23, 1999, he was again hired as AccountingClerk and was assigned to the SM -Project. It did notspecify the date when his employment will end, but it wasstated that it will be co -terminus with the completion of theproject. Employment su pposedly ended on August 19, 1999since the assigned phase/stage of work was completed. Butemployment was again extended as petitioner was againappointed as Accounting Clerk for SM Project (PackageII). There was no specific date up to when his exten dedemployment will be, but it was provided that it will be co-terminus with the project.

Despite termination of his employment on October 19, 2000,P claims that his superior told him to report for work thefollowing day saying that he will again be employed forsucceeding SM projects. Thus P underwent a medical examwhich revealed that he had pneumonitis . He was advised totake a 14-day sick leave. On Nov. 27, after his leave, P claimed

that he was again referred for med exam where it wasrevealed that he has Kochs disease. He was required to takea 60-day leave of absence. He submitted his application forsick leave the next day but PNCCs personnel officer Sancheztold him that he was not entitled to sick leave because he wasnot a regular employee. He served a 60-day sick leave, andwas given a clean bill of health and medical clearance that hewas fit to work. He presented his medical clearance topersonnel officer but he was informed that his services were

already terminated on October 19, 2000 and he was alreadyreplaced since his contract has already expired.

P filed a complaint for ID with prayer for reinstatement andback wages. He argued that he is deemed a regular employeedue to his prolonged employment as a project employee, andthe failure on the part of PNCC to report his termination everytime a project is completed. Also his termination withoutadmin investigation was tantamount to ID.

PNCC said that P was hired as project employe for severalprojects with specific dates of engagement and terminationand had full knowledge and consent that his appointmentwas only for the duration of each project. It said that it hadcomplied with the reportorial requirements to the DOLE. Itsubmitted photox of 3 Establishment Termination Reportsthat it filed with DOLE: 1) PCSO-QI Project; 2) SM Project in1999; and 3) SM Project in 2000, all of which included P as

among the affected employees. DOLE verified that P wasNOT among the affected employees listed in the reports.

LA: in favour of P. He had attained regular employment,making his termination illegal since it was not valid or forauthorized causes. Payment of full backwages, less sixmonths.Became regular because he was repeatedly hired and rehired.His services were usual and necessary to P NCCs business.Also, he was made to work not only in the project he wasassigned, but on other projects as well. Subsequent contractsdid not indicate the date of completion of the contract, andhis first contract was extended way beyond the supposedcompletion date.

NLRC: reversed LAs decision. Ordered PNCC to paycompletion bonus to P for P25k. It noted the presence ofproject employment indicators: duration of the project forwhich P was engaged was determinable and was known to P;specific service that P rendered in the projects was that of anaccounting clerk and that was made clear to him and theservice was connected with the projects; and PNCC submittedtermination reports to the DOLE and petitioners name wasincluded in the list of affected employees.

CA:dismissed appeal for lack of merit.

Issue: WON P has become a regular employee. YES

Duration of project employment should be determined at thetime of hiring See Art. 280 for definition. The principal test todetermine whether employees are project employees is WONthe employees were assigned to carry out a specific project orundertaking, the duration or scope of which was specified at


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the time the employees were engaged for that project. Pworked for more than 2 years after the supposed 3-monthduration of his project employment for the NAIA II project.While his appointment for the project allowed extension(since its provided in the contract), there was no subsequentcontract or appointment that specified a particular durationfor the extension. While for the first 3 months, hes a projectemployee, his employment thereafter, when his services wereextended without any specification of as to the duration,made him a regular employee. His status as a regularemployee was not affected by the fact that he was assigned toseveral other projects and there were intervals in between said projects since he enjoys security of tenure.

Failure of an employer to file termination reports after everyproject completion proves that an employee is not a projectemployee PNCC DID NOT report Ps supposed projectemployment for the NAIA II Project to the DOLE. DO No. 19

(Guidelines Governing the Employment of Workers in theConstruction Industry) requires employers to submit a report ofan employees termination to the nearest public employmentoffice every time an employees employment is terminated dueto a completion of a project . DOLE verified that P was notincluded in the list of affected workers based on thetermination reports filed by NAIA II Project.

In Tomas Lao Construction v. NLRC, the court emphasizedthe indispensability of the reportorial requirement. Policyinstruction no. 20 is explicit that employers of projectemployees are exempted from the clearance requirement butnot from the submission of termination report. Failure to filethese reports after every project completion proves that theemployees are not project employees.

A regular employee dismissed for a cause other than the just orauthorized causes provided by law is illegally dismissed Psregular employment was terminated due to expiration orproject completion, which were not among the just orauthorized causes provided in the LC.

There was no basis for L s finding of strained relations andorder of separation pay in lieu of reinstatement The doctrine ofstrained relations should be strictly applied so as not to

deprive an illegally dismissed employee of his right toreinstatement.

Other issues: Substantial compliance with appeal bond requirement. The

perfection of an appeal within the reglementary period andin the manner prescribed by law is jurisdictional andnoncompliance is fatal and effectively renders the judgment final and executory. But the Court relaxed this

requirement in order to bring about the immediate andappropriate resolution of cases on the merits. The Courtheld that the bond requirement on appeals may be relaxedwhen there is substantial compliance with the rules ofprocedure of the NLRC, or when the appellant showswillingness to post a partial bond.

Validity of the verification and certification signed by acorporate officer on behalf of the corporation without therequisite board resolution or secretarys certificate. We havein many cases recognized the authority of some corporateofficers to sign the verification and certification againstforum-shopping. Mr. Erece, as head of the PersonnelServices Department of PNCC was in a position to assurethat the allegations in the pleading have been prepare d ingood faith and are true and correct.

4. Application of Rule in Non-Construction Industries

145. MacArthur Malicdem and Hermenigildo Flores v. MarulasIndustrial Corp (2014)

Facts: M and F were hired by Marulas (sack-making business)as extruder operators in 2006. They were responsible for thebagging of filament yarn, the quality of pp yarn package andthe cleanliness of the work place area. Employment contractswere for a period of 1 year. Every year thereafter, they wouldsign a Resignation/Quitclaim in favour of Marulas a day aftertheir contracts ended, and then sign another contract for oneyear.

On December 16, 2010, F was told not to report for workanymore after being asked to sign a paper by the HR head tothe effect that he acknowledged the completion of hiscontractual status. On February 1, 2011, M was alsoterminated after signing a similar document. Thus, bothclaimed to have been ID.

Marulas said that their contracts show that they were fixed-term employees for a specific undertaking which was to workon a particular order of a customer for a specific period.Severance from employment was due to expiration ofcontracts.

LA: no ID. M and F were not terminated and theiremployment naturally ceased when contracts expired. LAordered Marulas to pay M&F their respective wagedifferentials.

NLRC: modified LAs decision; 13 th month pay, SIL and holidaypay for 3 years.


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CA (rule 65): denied petition; no gadalej; issue of WON theywere project employees was factual in nature and is notwithin the ambit of a petitioner for certiorari; repeated andsuccessive rehiring do not qualify them as regulars , as length ofservice is not the controlling determinant of the employmenttenure of a project employee, but whether the employment hasbeen fixed for specific project or undertaking, its completion hasbeen determined at the time of the engagement of theemployee (William Uy Const. Corp. v Trinidad). The monetaryclaims cannot be awarded.

Issue: WON M&F became regular employees. YES

A reading of their Project Employment Agreement revealedthat there was a stipulated 6-month probationary periodfrom its commencement. If theyre able to comply with thecompanys standards and criteria within such period, theyshall be reclassified as project employees with respect to the

remaining period of the effectivity of the contract.

Art. 281 LC: an employee who is allowed to work after aprobationary period shall be considered a regular employee.When employer renews a contract of employment after thelapse of the six-month probi period, the employee becomesregular. No employer is allowed to determine indefinitely thefitness of its employees. While length of time is not thecontrolling test for project employment, it is vital indetermining if the employee was hired for specificundertaking or tasked to perform functions vital, necessaryand indispensable to the usual business of trade of theemployer.

Maraguinot Jr v. NLRC: Project or work pool employee whohas been: 1) continuously, as opposed to intermittently,rehired by the same employer for the same tasks or nature oftasks; and 2) those tasks are vital, necessary andindispensable to the usual business or trade of the employer,must be deemed a regular employee. To rule otherwise wouldallow circumvention of labor laws in industries not fallingwithin the ambit of PI No. 20/DO NO. 19, thus allowing theprevention of acquisition of security of tenure by project orwork pool employees who have already gained the status ofregular employee s by the employers conduct.

The test to determine whether employment is regular or notis the reasonable connection between the particular activityperformed by the employee in relation to the usual businessor trade of the employer. If the employee has beenperforming the job for at least one year, even if theperformance is not continuous or merely intermittent, the lawdeems the repeated and continuing need for its performance

as sufficient evidence of the necessity, if not indispensabilityof that activity to the business.

Here, there is a deliberate intent to prevent regularization: There is no actual project. The only stipulations were dates

of their effectivity, duties and responsibilities, rights andobligations and compensation and allowances. Since therewas no specific project or undertaking to speak of, Marulascannot invoke the exception in Art. 280 LC.

Granting that they were PEs, M&F could only be consideredas regulars as the two factors enumerated in Maraguinot,Jr case are present here. They were hired and rehiredcontinuously for the same positions. They were responsiblefor the operation of machines that produced the sacks work is vital, necessary and indispensable to the usualbusiness or trade. Employment cease to be coterminouswith specific projects when the employee is continuouslyrehired due to the demands of the employers business and

re-engaged for many more projects without interruption.

Invocation of the William Uy case is misplaced because it isapplicable only in cases involving the tenure of PEs in theconstruction industry.

Termination is illegal since it lacks just/authorized causes.Thus they are entitled to reinstatement without loss ofseniority rights and other privilege and to full backwages,inclusive of allowances, and to other benefits.

146. Maraguinot v. NLRC (1998)

Facts: Petitioners Alejandro and Paulino worked forrespondent VIVA Films (VIVA). Alejandro was first anAssistant Electrician with a weekly salary of P450.00 but wasthen promoted to an Electrician with a weekly salary ofP593.00 on September 1991. Paulino was a member of theshooting crew who started with a weekly salary of P375.00,which was eventually increased to P475.00 on 21 December1991.

Tasks: loading, unloading and arranging movie equipment inthe shooting area as instructed by the cameraman, returningthe equipment to Viva Films warehouse, assisting in the

fixing of the lighting s ystem, and performing other tasksthat the cameraman and/or director may assign.

In May 1992, petitioners sought assistance from theirsupervisor, Alejandria Cesario, to facilitate their request totheir employers to adjust their salary in accordance withminimum wage law. A month after, she informed them thattheir superior, herein respondent Vic Del Rosario, would agree


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to increase their salary only if they signed a blank employmentcontract. Both petitioners refused to comply with this request.

Because of this refusal, Paulino was first forced to go onleave, then was eventually refused to be taken back for workon 20 July 1992. Meanwhile, Alejandro was first dropped fromthe company payroll. He was then taken back but was askedonce again to sign a blank employment contract, which herefused a second time. He was promptly terminated from hisservices. Both of them got terminated . Petitioners filed forillegal dismissal before the LA.

Respondent: 1. claim that Viva Films is the trade name of VivaProductions, Inc., and that it is primarily engaged in thedistribution and exhibition of movies but not in thebusiness of making movies; private respondent del Rosario ismerely an executive producer, i.e., the financier who invests acertain sum of money for the production of movies distributed

and exhibited by VIVA.

2. They contract persons called producers -- also referred toas associate producers -- to produce or make movies forprivate respondents; and contend that petitioners are projectemployees of the associate producers who, in turn, act asindependent contractors. As such, there is no employer-employee relationship between petitioners and privaterespondents.

3. It was the associate producer of the film Mahirap MagingPogi, who hired Alejandro . The movie shot from 2 July up to22 July 1992, and it was only then that Alejandro wasreleased upon payment of his last salary, as his services wereno longer needed. Paulino was hired for the movie Naritoang Puso. He went on vacation on 8 June 1992, and by thetime he reported for work on 20 July 1992, shooting for themovie had already been completed.

LA: favor of petitioners. They are employees of VIVA . Theproducer cannot be considered as an independent contractorand they instead act as a mere agent to VIVA. Also, theyreceive their salaries from VIVA. Finally, the tasks theyperform are necessary and essential to the business of VIVA,that of movie-making.

NLRC: Reversed LA. Ruled that based on the circumstances,petitioners were project employees. 1) they were hired forspecific movie projects and their employment was co-terminus with each movie. 2) each shooting unit works on onemovie project at a time, which are not continuous in nature. 3)Because of this non-continuous nature of shooting, their totalworking hours show extreme variations (For instance,Alejandro worked for 1.45 hours in June 1991 but worked 183

hours in January 1992). 4) they have irregular working days,which explains the lump sum payments they receive for theirservices. This means that they were paid a standard weeklysalary regardless of the number of working days and hoursthey logged in. 5) petitioners were never prohibited to workfor other movie companies such as Regal, Seiko, and FPJProductions whenever they are not working for VIVA.

Issue: WON there is an ER-EE relationship betweenpetitioners and respondents. YES. Therefore, petitioners wereillegally dismissed by VIVA.

Ratio

1) Respondents are engaged in the business of movie-making.VIVAs contention that it does not make movies, but merelydistributes and exhibits them, is untenable and not supportedby evidence.

2) Associate producers are not independent contractors ofpetitioners. VIVA has control over Petitioners.

They do not meet the two requisites to be a propercontractor (Substantial capital and independent work fromprincipal). They do not have the tools and equipmentneeded to make movies. The evidence shows that it is VIVAwho possesses movie-making equipment such asgenerators, cables, and cameras. Associate producersmerely lease the equipment of VIVA. If they are to bedeemed contractors, they would fall under labor-onlycontracting and are merely VIVAs agent.

using the four-fold test, it is clear that VIVA has controlover the final product of these associate producers. Lookingat the position paper of VIVA before the LA, it is clear thatthe final product of these producers has to be accepted bythem. They also exercise supervision through a supervisingproducer to monitor the progress of these projects withoutexceeding budget.

Ps are not under the control of their movie director. It ismore correct to say that the movie director merely instructsthe petitioners on how to better comply with VIVAsrequirements.

Moreover, the appointment slips of petitioners containVIVAs corporate name on the header. These slips alsoshow that it is VIVA who pays their salaries. All thecircumstances indicate an employment relationshipbetween petitioners and VIVA alone, thus the inevitableconclusion is that petitioners are employees only of VIVA.

3) Petitioners had attained status as regular employees, andare not merely project employees.


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A project employee or a member of a work pool may acquirethe status of a regular employee when the following concur:1) There is a continuous rehiring of project employees evenafter cessation of a project; 2) The tasks performed by thealleged project employee are vital, necessary andindispensable to the usual business or trade of the employer.However, the length of time during which the employee wascontinuously re-hired is not controlling, but merely serves asa badge of regular employment.Here, Paulino was employed for 2 years and for at least 18projects, while Alejandro was employed for 3 years and 23projects. Moreover, their tasks were necessary to the usualbusiness of VIVA.

4) The ruling in the case of Lao Construction v NLRC regardingwork pool/project employees applies to this case. (important) In that case, the court ruled: A work pool may exist

although the workers in the pool do not receive salaries

and are free to seek other employment during temporarybreaks in the business, provided that the worker shall beavailable when called to report for a project. Althoughprimarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as theeffect of temporary cessation of work is concerned. This isbeneficial to both the employer and employee for itprevents the unj ust situation of coddling labor at theexpense of capital and at the same time enables theworkers to attain the status of regular employees.

Also ruled in that case is that even though the end of aproject results in the cessation of work activities, this doesnot mean that employees are separated from their service,but are merely on leave of absence until they arereemployed for a new project.

In this case, the case of Lao can be applied despiteinvolving a different business (construction). Even thoughPolicy Instruction No. 20/D.O. No. 19 regarding work poolsspecifically applies to construction businesses, there seemsto be no impediment to applying the underlying principlesto industries other than the construction industry. Neithermay it be argued that a substantial distinction existsbetween the projects undertaken in the constructionindustry and the motion picture industry. On the contrary,the raison d' etre of both industries concern projects with aforeseeable suspension of work.

The import of this decision is not to impose a positive andsweeping obligation upon the employer to re-hire projectemployees. What this decision merely accomplishes is a judicial recognition of the employment status of a projector work pool employee in accordance with what is faitaccompli , i.e., the continuous re-hiring by the employer ofproject or work pool employees who perform tasks

necessary or desirable to the employers usual business ortrade.

This ruling does not mean that simply because an employeeis a project or work pool employee even outside theconstruction industry, he is deemed, ipso jure, a regularemployee. All that was held was that once a project or workpool employee has been: (1) continuously, as opposed tointermittently, re-hired by the same employer for the sametasks or nature of tasks; and (2) these tasks are vital,necessary and indispensable to the usual business or tradeof the employer, then the employee must be deemed aregular employee, pursuant to Article 280 of the LaborCode and jurisprudence.

Conclusion: Petitioners are regular employees and there wasillegal dismissal because the cause of their dismissal(completion of project) was not a valid cause under Art. 282of the LC. They are entitled to receive full back wages and

reinstatement.

Procedural issue:

1) Special civil action for certiorari under Rule 65 is the properremedy for one who complains that the NLRC acted in totaldisregard of evidence. In this case, petitioners allege that theNLRCs conclusions have no basis in fact and in law, andtherefore this was the proper remedy.

C. Casual Employees

Art. 280 2 nd par : An employment shall be deemed to becasual if it is not covered by the preceding paragraph:Provided, That any employee who has rendered at least oneyear of service, whether such service is continuous or broken,shall be considered as regular employee with respect to theactivity in which he is employed and his employment shallcontinue which such activity exists.

OR Book VI Rule 1, Sec. 5 (b): There is casual employmentwhere an employee is engaged to perform a job, work orservice which is merely incidental to the business of theemployer, and such job, work or service is for a definite period

mad known to the employee at the time of engagement:Provided, That any employee who has rendered at least oneyear of service, whether such service is continuous or not,shall be considered a regular employee with respect to theactivity in which he is employed and his employment shallcontinue while such activity exists.

1. Nature of Work


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146. Maranaw Hotels and Resort Corp. v. CA (2009)

Facts: Sheryl Oabel was hired by Maranaw as an extrabeverage attendant on April 24, 1995 which lasted untilFebruary 7, 1997. She worked in Century Park Hotel, anestablishment owned by M.

On September 16, 1996, Maranaw contracted with ManilaResource Development Corp where O was subsequentlytransferred. MANRED deported itself as Os employer. For theduration of her employment, O performed the functions of:Secretary of PR Dept (Feb 10 to March 6, 1997); Gift ShopAttendant (April 7-21, 1997); Waitress (April 22-May 20, 1997)and Shop Attendant (May 21, 1997-July 30, 1998).

On Jul 20, 1998, O filed before the LA a petition forregularization of employment against M. On August 1, O wasdismissed from employment, thus she converted her petition

into a complaint for ID.

LA dismissed Os complaint. It said that Os work was on a perfunction basis or on a need basis co-terminus with thefunction she was hired for. The hotel considers complainant aproject employee which did not ripen into regular employee.

NLRC: reversed LA decision. 1) MANRED is a labor-onlycontractor, and 2) ID

CA: dismissed Ms petition because of failure to append theboard resolution authorizing the counsel for petitioner to filethe petition before CA.

Petition before the SC: filing of MR with the certificate of non-forum shopping attached constitutes substantial compliancewith the requirement.

Issues:1. Procedural.2. Important: WON MANRED is Os employer. (NO) 3. WON O became a regular employee (YES)

Ratio:1. Certificate of NFS is a mandatory requirement. Substantial

compliance applies only with respect to the contents of thecertificate but not as to its presence in the pleading wherein itis required. The purpose of the certificate is to inform thecourt of the pendency of any other case which may presentsimilar issues and involve similar parties as the one before it.This applies to both natural and juridical persons.

In BPI Leasing Corp v. CA, the Court said that the lawyeracting for the corporation must be specifically authorized to

sign pleadings for the corporation. This could only come inthe form of a board resolution.

*even if this procedural infirmity is set aside, the petition isstill bound to fail *

2. Os purported employment with MANRED commencedonly in 1996, way after she was hired by M as extra beverageattendant in April 24, 1995. The service agreement betweenM and Manred is a mere ploy to circumvent the law onemployment with respect to regularization.

Also, the operations of the hotel itself do not cease with theend of each event or function and that there is an everpresent need for individuals to perform certain tasksnecessary for its business. Thus, although the tasksthemselves may vary, the need for sufficient manpower tocarry them out does not.

MANRED is a labor-only contractor. Real employer of O is M.

3. Shes a regular employee. She has already rendered morethan one year of service to M (1995-1998). Art. 280 LC.

2. One-year Service

147. Mercado Sr. v. NLRC (1991)

Facts: Petitioners Fortunato Mercado, Sr and 15 others wereagricultural workers utilized by private respondents AuroraCruz, Francisco and Leticia Borja in all the agricultural phasesof work on the 7.5 ha of rice land and 10 ha of sugar landowned by the latter.

Fortunato and Leon have worked since 1949; Fortunato, Jrand Antonio since 1972; and the rest since 1960 up to 1979.They were allegedly dismissed from their employment.

Aurora Cruz denied that Ps were her regular employees. Shesaid that she engaged their services through the Borjas whowere their mandarols ( persons who take charge in supplyingthe number of workers needed by owners of farms), but only

to do a particular phase of work necessary in rice and/orsugar cane production, after which they would be free torender services to other farm owners.

LA: ruled in favour of the private respondents; Ps were notregular workers for the nature of terms and conditions of theirhiring reveal that they were required to perform phases ofagricultural work for definite period of time after which theirservices would be available to any other farm owner.


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Ps contention of working 12 hours a day the whole yearwas an exaggeration because planting of rice and sugarcane does not entail a whole year.

The sworn statement of Fortunato Jr shows that Ps werehired only as casuals, thus it was within the prerog ofrespondent Cruz either to take them in to do further workor not after any single phase of agricultural work had beencompleted by them.

The real cause of this complaint was the criminal complaintfor theft filed against Reynaldo Mercado, a family memberof the Ps

Only the money claims from years 76 -77, 77-78 and 78-79 may be considered since all other money claims haveprescribed for having accrued beyond the three year periodprescribed by law.

For equitys sake, LA awarded Ps financial assistance ofP10k

NLRC affirmed the decision of LA, with modifications of thedeletion of the award for financial assistance.

Present petition: Ps argue that LA and NLRC erred in rulingthat they are not regular and permanent employees. PolicyInstruction No. 12 of DOLE supports their contention: Whatdetermines regularity or casualness is not the employmentcontract, but the nature of the job. If the job is usually necessaryor desirable to the main business regular. If not, casual.Employment for a definite period which exceeds one year shallbe considered regular for the duration of the definite period.They have been doing all phases of agricultural work for somany years, activities were necessary, desirable and

indispensable in the rice and sugar cane production business.

Rs contend that Ps were only hired as casuals. This is basedon solid evidence presented by the parties and by the Chief ofthe Specia l Task Force of the NLRC Regl Office.

Issue: WON Ps are regular employees. NO.

see LAs decision above) The findings of LA are ably supported by evidence. Theres noreason to reverse the decisions of LA and NLRC.

Re: the contention of Ps that 2 nd par of Art. 280 LC should beapplied.An employee is deemed regular where he is engaged innecessary or desirable activities in the usual business or tradeof the employer, except for project employees. A PE is onewhose employment has been fixed for a specific project orundertaking, the completion or termination of which has beendetermined 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,as in the present case.

The 2 nd paragraph defines casual employees as all otheremployees who do not fall under the definition in the 1 st par. Acasual employee becomes a regular employee if he/she hasrendered at least one year of service regardless of the factthat such statement is broken or continuous.

This proviso qualifies or modifies the phrase it immediatelyfollows, and not the statute itself or to other sections. Theonly exception to this rule is where the clear legislative intentis to restrain or qualify not only the phrase immediatelypreceding it, but also earlier provisions of the statute or eventhe statute itself.

PI No. 12 of DOLE show that the proviso in the 2 nd par of Art.280 was not designed to stifle small-scale businesses nor to

oppress agricultural land owners to further the interests oflabourers, whether agricultural or industrial. It seeks toeliminate abuses of employers against their employees andnot to prevent small-scale businesses from engaging inlegitimate methods to realize profit. Hence, this proviso isapplicable only to casual employees, not to projectemployees nor regular employees.

Petitioners are seasonal employees, their employment legallyends upon completion of the project or the season. Theirtermination was not illegal dismissal.

D. Fixed-term Employees

148. Brent School v. Zamora (1990)

Summary: Alegre was working for Brent. In their contract, itsaid that there is a period of employment. After completion ofperiod, he was terminated. He now assails the validity of thetermination because he was saying he already had the statusof a regular employee hence cannot be terminated withoutreason. Court held that LC recognizes the stipulation ofemployment with a period, especially those contracted beforethe enactment of the LC which expressly mentioned such

contracts.

Facts: Private respondent Doroteo R. Alegre was the athleticdirector of petitioner Brent School, Inc. at a yearlycompensation of P20,000.00.CONTRACT: fixed a specific term for its existence, five (5)years, from the date of execution (July 18, 1971 to July 17,1976). Subsequent subsidiary agreements dated March 15,1973, August 28, 1973, and September 14, 1974 reiterated the


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same terms and conditions, including the expiry date, asthose contained in the original contract of July 18, 1971.

April 20,1976: Alegre was given a copy of the report filed byBrent School with the Department of Labor advising of thetermination of his services effective on July 16, 1976. Theground for the termination was completion of contract,expiration of the definite period of employment. Alegreaccepted the amount of P3,177.71, and signed a receipttherefor containing the phrase, "in full payment of services forthe period May 16, to July 17, 1976 as full payment ofcontract". In the Labor Conciliator, he protested theannounced termination saying that that his services werenecessary and desirable in the usual business of his employer,and his employment lasted for 5 years - therefore he hadacquired the status of regular employee.

The Regional Director considered Brent School's report as an

application for clearance to terminate employment (not areport of termination), and accepting the recommendation ofthe Labor Conciliator, refused to give such clearance andinstead required the reinstatement of Alegre, as a"permanent employee," to his former position without loss ofseniority rights and with full back wages. It said that as apermanent employee, he could not be dismissed except for just cause, and expiration of the employment contract wasnot one of the just causes provided in the Labor Code fortermination of services.

Issue: Whether or not the provisions of the Labor Code, asamended, has already set aside the "fixed periodemployment" or employment for a term.

Ratio: Respondent Alegre's contract of employment withBrent School having lawfully terminated with and by reasonof the expiration of the agreed term of period thereof, he isdeclared not entitled to reinstatement .

The employment contract between Brent School and Alegrewas executed on July 18, 1971, when the Labor Code of thePhilippines (P.D. 442) had not yet been promulgated. Thevalidity of term employment was impliedly recognized by theTermination Pay Law, R.A. 1052, as amended by R.A. 1787.

Prior, it was the Code of Commerce (Article 302) whichgoverned employment without a fixed period, and alsoimplicitly acknowledged the propriety of employment with afixed period . The Civil Code of the Philippines , which becameeffective on August 30,1950 even deals with obligations witha period. No prohibition against term-or fixed-periodemployment is contained in any of its articles or is otherwisededucible therefrom.

It is plain then that when the employment contract wassigned between Brent School and Alegre, it was perfectlylegitimate for them to include in it a stipulation fixing theduration thereof. Stipulations for a term were explicitlyrecognized as valid by this Court.

Even under the Labor Code, the status of legitimacy iscontinued to be enjoyed by fixed-period employmentcontracts. The Code contained explicit references to fixedperiod employment, or employment with a fixed or definiteperiod. Nevertheless, obscuration of the principle of licitnessof term employment began to take place at about this time.

Article 320 originally stated that the " termination ofemployment of probationary employees and those employedWITH A FIXED PERIOD shall be subject to such regulations asthe Secretary of Labor may prescribe ." Article 321 prescribedthe just causes for which an employer could terminate "an

employment without a definite period." And Article 319undertook to define " employment without a fixed period " inthe following manner: where the employee has beenengaged to perform activities which are usually necessary ordesirable in the usual business or trade of the employer,except where the employment has been fixed for a specificproject or undertaking the completion or termination of whichhas been determined at the time of the engagement of theemployee or where the work or service to be performed isseasonal in nature and the employment is for the duration ofthe season.

Subsequently, the foregoing articles regarding employmentwith "a definite period" and "regular" employment wereamended by Presidential Decree No. 850 (this was onDecember 16, 1975). Article 320, dealing with "Probationaryand fixed period employment," was altered by eliminating thereference to persons "employed with a fixed period," and wasrenumbered to Article 271.

As it is evident that Article 280 of the Labor Code, under anarrow and literal interpretation, not only fails to exhaust thegamut of employment contracts to which the lack of a fixedperiod would be an anomaly, but would also appear torestrict, without reasonable distinctions, the right of an

employee to freely stipulate with his employer the duration ofhis engagement, it logically follows that such a literalinterpretation should be eschewed or avoided. The law mustbe given a reasonable interpretation, to preclude absurdity inits application. Outlawing the whole concept of termemployment and subverting to boot the principle of freedomof contract to remedy the evil of employer's using it as ameans to prevent their employees from obtaining security of


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tenure is like cutting off the nose to spite the face or, morerelevantly, curing a headache by lopping off the head.

Such interpretation puts the seal on Bibiso upon the effect ofthe expiry of an agreed period of employment as still goodrule a rule reaffirmed in the recent case of Escudero vs.Office of the President where, in the fairly analogous case of ateacher being served by her school a notice of terminationfollowing the expiration of the last of three successive fixed-term employment contracts, the Court held:

Reyes (the teacher's) argument is not persuasive. It losessight of the fact that her employment was probationary,contractual in nature, and one with a definitive period. At theexpiration of the period stipulated in the contract, herappointment was deemed terminated and the letterinforming her of the non-renewal of her contract is not acondition sine qua non before Reyes may be deemed to have

ceased in the employ of petitioner UST. The notice is a merereminder that Reyes' contract of employment was due toexpire and that the contract would no longer be renewed. It isnot a letter of termination.

Paraphrasing Escudero, respondent Alegre's employmentwas terminated upon the expiration of his last contract withBrent School on July 16, 1976 without the necessity of anynotice. The advance written advice given the Department ofLabor with copy to said petitioner was a mere reminder of theimpending expiration of his contract, not a letter oftermination, nor an application for clearance to terminatewhich needed the approval of the Department of Labor tomake the termination of his services effective. In any case,such clearance should properly have been given, not denied.

149. Lynvil Fishing Enterprises Inc. v. Andres G. Ariola (2012)

FactsLynvils version

Lynvil is a deep sea fishing business. On Aug 1, 1998, theyreceived a report from one of their employees Romanito thaton July 31, 1998, that while on board the company vesselAnalyn VIII, he witnessed the respondents Andres (Captain),Jessie (Chief Mate), Jimmy (Chief Engineer), Leopoldo

(bodegero) and others conspire with one another and stole 8tubs of pompano and taguigue fish and delivered it toanother vessel, to the prejudice of Lynvil.

The respondent employees were engaged on a per tripbasis which ends after every trip. Andres, Jessie and Jimmywere managerial field personnel while the others were fieldpersonnel. After the initial investigation the respondents wererequired to explain why they should not be dismissed fromservice. Everyone except Jessie and another refused to sign

the receipt of notice. Their failure to provide an explanationterminated their employment. Subsequently Lynvil filed acase against them for violation of the Anti Piracy and Anti-Highway Robbery Law.

Respondents version They were crewmembers of the vessel Analyn VIII. On

July 31, 1998 they arrived at the Navotas Fishport on boardAnalyn VIII loaded with 1,241 baeras of different kinds offishes. These baeras were delivered to a consignee namedSAS and Royale. When they reported back to Lynvil the nextday they were told to wait for further advice regarding theirnew job assignment. On Aug 5, only Jessie and one otherreceived a memorandum asking them to explain the incidenton July 31, 1998. When all of them arrived at the office theywere informed that their employment was alreadyterminated.

They filed for a complaint for illegal dismissal with

claims for backwages and damages etc. They assert that theallegation of theft came about as a result of their oraldemand of salary increase and that they not be required tosign blank payrolls and vouchers.

LA: In favor of respondents. No evidence of the theft,disregarded resolution of asst city prosecutor because thelabor office is governed by different rules for thedetermination of the valid dismissal of an employee. The pertrip basis of their employment did not make their dismissallegal.NLRC: Reversed LA decision.CA: Reinstated LA decision.

Issues1. WON the filing of a crim case constitutes sufficient

basis for a valid termination on the grounds ofserious misconduct or loss of trust/confidence? NO

2. WON they were REGULAR or FIXED-TERMemployees? REGULAR but they were dismissed forjust cause

Ratio

The Court cited the Nasipit case and Nicolas v NLRC . The

former explained that proof beyond reasonable doubt is notrequired when loss of confidence is the grounds for dismissal,it being sufficient that the employer has some basis. Thelatter explained that whichever way that the publicprosecutor disposes of a complaint, it is not binding to thelabor tribunal. The Court stated that the finding of probablecause by the office of the prosecutor does not need to beautomatically followed by the LA as a valid cause fortermination of employment.


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But still, the Court held that there was a valid cause for therespondents dismissal . They found that there was actualbreach of trust present in the case. Despite the finding thatthe quantity of the tubs of fish was similar, the Court pointedout that the kind of fish loaded and unloaded was material tothe issue. The witnesses corroborated stories show that asmall boat approached the ship. Jessie went into thestockroom while Leopoldo pushed 4 tubs away from it.Andres served as lookout and negotiator of the transactionwhile Jimmy and one other loaded the tubs on the smallboat. It was even stated that Jessie told everyone to be quietabout the incident.

Lynvil contends that it cannot be guilty of illegal dismissal byvirtue of the fixed- term por viaje contract between them andthe respondents, citing the applicability of the Brent Schoolcase. Respondents on the other hand contend otherwise.

Jurisprudence provides the 2 conditions for the validity of afixed-term contract:First, 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 theemployee and absent any other circumstances vitiating hisconsent; or

Second, it satisfactorily appears that the employer andthe employee dealt with each other on more or less equalterms with no moral dominance exercised by the former orthe latter.

The text of the contract is for a fixed term, but within thecontext of facts that (1) the respondents were doing tasksnecessarily to Lynvils fishing business with positions rangingfrom captain of the vessel to bodegero ; (2) after the end of atrip, they will again be hired for another trip with newcontracts; and (3) this arrangement continued for more thanten years, the clear intention is to go around the security oftenure of the respondents as regular employees . And byvirtue of the 2 nd paragraph of Art 280 of the LC, they wereregular employees. Because of economic reasons, therespondents were forced to accede to such an arrangement.

Thus it becomes clear that the first requirement of theconditions for a valid fixed term contract is missing. Therespondents are therefore deemed regular employees. They

are however dismissed for just cause. Procedurally though,Lynvil was lacking as the facts show that they were remiss inproviding final notices to the respondents.

With regard to the joint and several liability of de Borjawith Lynvil being the general manager, the court held thatbecause of lack of bad faith on his part, he did not have such.

1. Project Employment and Fixed-term Employment,distinguished

150. GMA Network, Inc. v. Carlos P. Pabriga et. al (2013)

2. No implied renewal of employment contract

151. Antonio e. Unica v. ANscor Swire Ship Management Corp.(2014)

E. Seasonal Employees

Art. 286. Regular and casual employment. The provisions ofwritten agreement to the contrary notwithstanding andregardless of the oral agreement of the parties, anemployment shall be regular where the employee has beenengaged to perform activities which are usually necessary ordesirable 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 beendetermined at the time of the engagement of the employee orwhere the work or service to be performed is seasonal in natureand the employment is for the duration of the season.

152. Phil. Tobacco v. NLRC (1998)

Facts:On August 1, 1994, due to supposed serious financial reversesand losses suffered by respondent and its desire to preventfurther losses, a notice of permanent closure of its redryingoperations at Balintawak, Quezon City and transfer of thesame to Candon, Ilocos Sur was served to the DOLE.

August 3, 1994: complainants were also notified of the saiddecision to close and transfer

On August 16, 1994, their separation benefits were given tothem but allegedly [based on] wrong computation whenmanagement did not consider 3/4 of their length of service asclaimed by complainants (Luris group).While the Lubat groupwere not granted xxx separation pay as their previousseasonal service [was] not continuous, and as of August,1994, they were not employed there with as declared byrespondent.

In its position paper respondent maintains that the Lubatgroup are not entitled to separation pay for the reason thatthey were not among those separated or could not have beenseparated from employment on August 3, 1994 due to suchclosure and transfer as they were not employed or did notreport for work at the plant for the 1994 tobacco season asshown by the companys records.


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- As to the Luris group, although being questioned by thisgroup, respondent considers the following formula indetermining the length of service in years as basis forcomputing the separation pay of this group to be fair andreasonable and xxx supported by Article 283 of the LaborCode, as amended, such as the total number of working daysactually worked over total number of working days in a year(303 days), multiplied by the daily rate and further multipliedby 15 days.

- Respondent explains that this is so because complainantsnature of work is seasonal as they are employed every yearonly during the tobacco season which may fall within themonths of February to November but actually work for aperiod of less than six (6) months for each season. The lawqualifies tenure for purposes of separation benefits as basedon service and not employment.

- On the charge of illegal dismissal by the Luris group,respondent asserts that complainants were separated fromemployment for ajust cause that is the closure of itsREDRYING operations at the Balintawak plant and thetransfer of the same to Candon, Ilocos Sur which wasauthorized by the law and the parties CBA.

- The decision of management to close and transfer itstobacco processing and REDRYING operations was based onthe fact that it had consistently incurred a net loss from theseoperations, its principal line of business, although its auditedfinancial statement showed a net profit after tax from 1990 to1993 based on over-all operations. Moreover, respondent

points out that as the Luris group and the DOLE were serveda written notice at least one (1) month before the intendeddate of closure effective on Sept. 15, 1994, the due processrequirement was met.

- Lubat group: is composed of petitioners seasonalemployees who were not rehired for the 1994 tobaccoseason. At the start of that season, they were merelyinformed that their employment had been terminated at theend of the 1993 season. They claimed that petitioners refusalto allow them to report for work without mention of any justor authorized cause constituted illegal dismissal. In theirComplaint, they prayed for separation pay, back wages,attorneys fees and moral damages.

- Luris Group: made up of seasonal employees who workedduring the 1994 season. On August 3, 1994, they received anotice informing them that, due to serious business losses,petitioner planned to close its Balintawak plant and transferits tobacco processing and redrying operations to IlocosSur. Although the closure was to be effective September 15,1994, they were no longer allowed to work starting August 4,

1994. Instead, petitioner awarded them separation paycomputed according to the following formula:

total no. of days actually worked------------------------------- x daily rate x 15 daystotal no. of working days in one year

- In their Complaint, they claimed that the computationshould be based not on the above mathematical equation,but on the actual number of years served. In addition, theycontended that they were illegally dismissed, and thus theyprayed for back wages.

LA: ordered the petitioner to pay complainants separationpay differential plus attorneys fees in the total amount ofP3,092,896.76.

NLRC: agreed with the labor arbiter that the closure bypetitioner herein of its operations at Balintawak and itstransfer thereof to Ilocos Sur were due to serious financiallosses. Nonetheless, both labor agencies held that the Lurisand Lubat groups were entitled to separation pay equivalentto one-half (1/2) month salary for every year of service,provided that the employee worked at least one month in agiven year.The NLRC further ruled that private respondentswere not entitled to back wages and damages, since theclosure of the factory and the termination of theiremployment were due to a legally recognized cause.

IssuesWON there was substantial and undisputed evidence that the

closure of the petitioners business operation was due toserious business losses and financial reverses? NO; Thereforenot entitled to pay separation pay? NO

WON petitioners closure was not due to serious businesslosses and financial reverses, the Lubat group are still notentitled to separation pay? NO

WON the Luris group is entitled to separation pay? YES

ratio1. Petitioner asserts that it submitted before the labor arbitera Statement of Income and Expenses, as well as a recastedversion thereof, showing that it had suffered serious businesslosses in its tobacco processing and redryingoperations. Citing Article 283 of the Labor Code, it concludesthat it is not obligated to award separation pay to itsdismissed workers (whether belonging to the Lubat or theLuris group), because the closure of its tobacco business wasdue to an authorized cause.


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The present case involves the closure of merely a unit ordivision, not the whole business of an otherwise viableenterprise. Although Article 283 uses the phrase closure orcessation of operation of an establishment or undertaking,this Court previously ruled in Coca-Cola Bottlers (Phils.), Inc.v. NLRC that said statutory provision applies in cases of bothcomplete and partial cessation of the business operation:x x x Ordinarily, the closing of a warehouse facility and thetermination of the services of employees there assigned is amatter that is left to the determination of the employer in thegood faith exercise of its management prerogatives. Theapplicable law in such a case is Article 283 of the Labor Codewhich permits closure or cessation of operation of anestablishment or undertaking not due to serious businesslosses or financial reverses, which, in our reading, includesboth the complete cessation of operations and the cessationof only part of a companys business.

- Petitioner did not actually close its entire business. It

merely transferred or relocated its tobacco processing andredrying operations. Moreover, it was also engaged in,among others, corn and rental operations, which wereunaffected by the closure of its Balintawak plant.

- Tested against the aforecited standards, we hold that hereinpetitioner was not able to prove serious financial lossesarising from its tobacco operations. A close examination ofits Statement of Income and Expenses and its recastedversion thereof, which were presented in support of itscontention, suggests its failure to show business losses.In therecasted Statement, petitioner tried to prove that there was anet loss from its tobacco processing and redrying

operations. It did so by subtracting all of its selling,administrative and interest expenses for a given year from theearnings in its tobacco sales for the corresponding year. Thisformula, however, is at best illogical andmisleading. Petitioner would have us believe that all of itsexpenses -- selling, administrative and interest expenses --resulted only from its tobacco processing and redryingoperations, and that it incurred no expense in its other profitcenters.

Defective Notice: Article 283 of the Labor Code also requiresthe employer to furnishboth the employee and the Department of Labor andEmployment a written Notice of Closure at least one monthprior to closure. True, in the present case the Notices ofTermination were given to the employees on August 3, 1994,and the intended date of closure was September 15,1994. However, the employees were in fact not allowed towork after August 3, 1994. Therefore, the termination noticesto the employees were given in violation of the requisite one-month prior notice under Article 283 of the Labor Code.

2. Petitioner argues that it was not obliged to rehire themembers of the Lubat group for the 1994 season, becausetheir employment had been terminated at the end of the 1993season. Since they were not employed for the 1994 seasonwhen the Balintawak plant was closed, it follows thatpetitioner has no obligation to award them separation paydue to the said closure. Petitioner illegally dismissed themembers of the Lubat group when it refused to allow them towork during the 1994 season.

- From the foregoing, it follows that the employer-employeerelationship between herein petitioner and members of theLubat group was not terminated at the end of the 1993season. From the end of the 1993 season until the beginningof the 1994 season, they were considered only on leave butnevertheless still in the employ of petitioner.

- Petitioner is liable for illegal dismissal and should be

responsible for the reinstatement of the Lubat group and thepayment of their back wages. However, since reinstatementis no longer possible as petitioner has already closed itsBalintawak plant, respondent members of the said groupshould instead be awarded normal separation pay (in lieu ofreinstatement) equivalent to at least one month pay, orone month pay for every year of service, whichever ishigher. It must be stressed that the separation pay beingawarded to the Lubat group is due to illegal dismissal; hence,it is different from the amount of separation pay provided forin Article 283 in case of retrenchment to prevent losses or incase of closure or cessatio n of the employers business, ineither of which the separation pay is equivalent to at least one(1) month or one-half (1/2) month pay for every year of service,whichever is higher.

- However, despite the fact that the respondent members ofthe Lubat group were entitled to separation pay equivalent toat least one (1) month pay, or one (1) month pay for every yearof service, whichever is higher, they cannot receive more thanthe amount awarded to them in the NLRC Decision -- at leastone (1) month or one-half (1/2) month pay for every year ofservice, whichever is higher -- because they did not appealfrom the said Decision. Therefore, no affirmative award canbe given to them. In the same manner, although respondents

should have been entitled to back wages because petitionerillegally deprived them of work during the 1994 season, nosuch award can be given to them, since they did not appealthe NLRC Decision. The elementary norms of due processprevent the grant of such awards, as the employer was notgiven notice that its filing of its own Petitionfor Certiorari would put it in jeopardy of such relief.


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3. Petitioner posits that the separation pay of a seasonalworker, who works for only a fraction of a year, should not beequated with that of a regular worker. Positing that the totalnumber of working days in one year is 303 days, petitionersubmits the following formula for the computation of aseasonal workers separation pay:

Total No. of Days Actually WorkedX Daily Rate X 15 days

Total No. Of Working Days In One Year

- The amount of separation pay is based on two factors: theamount of monthly salary and the number of years ofservice. Although the Labor Code provides differentdefinitions as to what constitutes one year of service, BookSix does not specifically define one year of service forpurposes of computing separation pay. However, Articles283 and 284 both state in connection with separation pay

that a fraction of at least six months shall be considered onewhole year. Applying this to the case at bar, we hold that theamount of separation pay which respondent members of theLubat and Luris groups should receive is one-half (1/2) theirrespective average monthly pay during the last season theyworked multiplied by the number of years they actuallyrendered service, provided that they worked for at least sixmonths during a given year.

- The formula that petitioner proposes, wherein a year of workis equivalent to actual work rendered for 303 days, is bothunfair and inapplicable, considering that Articles 283 and284 provide that in connection with separation pay, a fractionof at least six months shall be considered one wholeyear. Under these provisions, an employee who worked foronly six months in a given year -- which is certainly less than303 days -- is considered to have worked for one whole year.

- Finally, Manila Hotel Company v. CIR did not rule thatseasonal workers are considered at work during off-seasonwith regard to the computation of separation pay. Said casemerely held that, in regard to seasonal workers, theemployer-employee relationship is not severed during off-season but merely suspended.

the decision NLRC is AFFIRMED WITH THEMODIFICATION that private respondents are hereby awardedseparation pay equivalent to one (1) month, or to one-half(1/2) month payfor each year that they rendered service,whichever is higher, provided that they rendered service for atleast six (6) months in a given year. The separation pay to beawarded to members of the Luris group shall be taken fromthe amount which petitioner has already awarded to them,and any excess need not be refunded by the workers. The ten

percent (10%) attorneys fees given by the NLRC and thelabor arbiter shall be based on the award modified herein.

153. Universal Robina Sugar Milling Corp. and Rene Cabati v.Fernando Acibo, et. al (2014)

F. Probationary Employees

Art. 287. Probationary employment. PE shall not exceed 6months from the date the employee started working, unless itis covered by an apprenticeship agreement stipulating alonger period. The services of an employee who has beenengaged on a probationary basis may be terminated for a justcause or when he fails to qualify as a regular employee inaccordance with reasonable standards made known by theemployer to the employee at the time of his engagement. Anemployee who is allowed to work after a probationary period

shall be considered a regular employee.

Book VI, Rule 1, Sec. 6. Probationary employment. see codalpp. 399-400

Art. 75. Learnership Agreement. Any employer desiring toemploy learners shall enter into a learnership agreement withthem, which agreement shall include:(d) A commitment to employ the learners if they so desire, asregular employees upon completion of the learnership. Alllearners who have been allowed or suffered to work duringthe first two months shall be deemed regular employees iftraining is terminated by the employer before the end of thestipulated period through no fault of the learners.

1. Definition/Purpose

154. Robinsons Galleria et. al v. Ranchez 2011)

Facts: Irene was a probationary employee of RobinsonsGalleria/Robinsons Supermarket Corp. for 5 months (October15, 1997 March 14, 1998). Two weeks after she was hired,Irene reported to her supervisor the loss of P20,299 in cash,which she had placed inside the company locker. Jess Manuel(Operations Manager) ordered that Irene be strip-searched by

the company guards. The search yielded nothing.

Irene acknowledged her responsibility and requested that shebe allowed to settle the amount but Manuel denied therequest and subsequently filed a complaint for QualifiedTheft. Irene was sent to jail for failure to immediately postbail.


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Procedural : Irene filed a complaint for illegal dismissal anddamages. On March 12, 1998, petitioners sent to Irene anotice of termination and/or notice of expiration ofprobationary employment dated March 9, 1998.LA dismissed complaint. When Irene filed the complaint forillegal dismissal, she was not yet dismissed by petitioners.NLRC reversed LA. Irene was denied due process. The strip-search and sending her to jail for two weeks amounted toconstructive dismissal since continued employment had beenrendered impossible, unreasonable and unlikely. AlthoughIrene was only a probationary employee, the subsequentlapse of her probationary employment contract did not havethe effect of validly terminating her employment becauseconstructive dismissal had already been effected earlier bypetitioners.CA affirmed NLRC

issue

WON Irene was illegally terminated from employment. YES.NLRC and CA affirmed.[minor] How should backwages be computed? Time betweenher constructive dismissal until the date of the termination ofher probationary employment.

RatioThere is probationary employment when the employee,

upon his engagement, is made to undergo a trial periodduring which the employer determines his fitness to qualifyfor regular employment based on reasonable standardsmade known to him at the time of the engagement. Aprobationary employee, like a regular employee, enjoyssecurity of tenure. A probationary employee may beterminated for any of the following: (1) a just cause, (2) anauthorized cause), and (3) when he fails to qualify as aregular employee in accordance with reasonable standardsprescribed by the employer. 1

This also means that the employer shall furnish theworker, whose employment is sought to be terminated, awritten notice containing a statement of the causes oftermination, and shall afford the latter an opportunity to beheard and to defend himself with the assistance of arepresentative if he so desires.

Robinsons failed to accord Irene substantive andprocedural due process. The haphazard manner in theinvestigation, which was left to the determination of thepolice authorities and the Prosecutors Office, left respondentbut to cry foul. The company already pre-judged her guilt

1Omnibus Rules Implementing the Labor Code, Book VI, RuleI, Sec 6(c)

without proper investigation, and instantly reported her to thepolice as the suspected thief, which resulted her being in jailfor two weeks.

The due process requirements under the Labor Code aremandatory and may not be supplanted by policeinvestigation or court proceedings. The criminal aspect of thecase is considered independent of the administrative aspect.Thus, employers should not rely solely on the findings of theProsecutors Office. They are mandated to conduct their ownseparate investigation, and to accord the employee everyopportunity to defend herself. Irene was not represented bycounsel when she was strip-searched inside the companypremises or during the police investigation and in thepreliminary investigation before the Prosecutors Office.

Irene was constructively dismissed. It was unreasonablefor Robinsons to charge her with abandonment for not

reporting for work upon her release in jail. Work has beenrendered unreasonable, unlikely, and definitely impossible,considering the treatment that was accorded to Irene byRobinson.

RE: damages the backwages that should be awardedto Irene shall be reckoned from the time of her constructivedismissal until the date of the termination of her employment(Oct. 30, 1997 to Mar. 14, 1998). This is because Irene was aprobationary employee, and the lapse of her probationaryemployment without her appointment as a regular employeeof Robinsons effectively severed the employer-employeerelationship between parties.

In all cases involving probationary employment, theemployer shall make known to its employees the standardsunder which they will qualify as regular employees at the timeof their engagement. When no standards are made known toan employee at the time, he shall be deemed a regularemployee, unless the job is self-descriptive. Naturally,Robinsons cannot be expected to retain Irene as a regularemployee considering that she lost money while acting as acashier during the probationary period. The rules onprobationary employment should not be used to exculpate aprobationary employee who acts in a manner contrary to

basic knowledge and common sense, in regard to which,there is no need to spell out a policy or standard to be met.

155. Espina v. CA (2007)

Facts: Dec 27, 2000: in a conciliation proceeding beforeDOLE NCMB-NCR Director de Jesus, the duly authorizedrepresentative of M.Y. San Workers Union -PTGWO and M.Y.San Sales Force Union-PTGWO was informed of the cessation


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of business operations ofM.Y. San as a result of the intendedsale of the business and all the assets of respondent M.Y. SantoMonde M.Y. San Corporation (Monde) and was notified oftheir termination , effective 31 January 2001. In line with this, the union and mgmt. agreed (in the

interest of industrial peace) that in the payment of theirseparation packages it will be tax-free, and that there willbe a grant of 9 days per year of service on top of what wasprovided in their CBA. Also, the cash equivalent of thevacation and sick leaves are agreed upon. In addition, MYSan promised to submit the list of all employeesto Mondefor purposes of rehiring(they will be given hiringpreference), however, subject to thenew qualifications thatthe latter may impose.

Dec 28, 2000: the written notice of the sale and purchaseof the assets of M.Y San toMonde and of the termination ofall the employees of respondent M.Y. San were filed beforethe DOLERegional Office No. IV.

Jan 31, 2001: all the employees of respondent M.Y. Sanreceived their separation pay and the cashequivalent of theirvacation and sick leaves. Thereafter, they signed theirrespective Quitclaims .

Feb 1, 2001: Asset Purchase Agreement was executedbetween MY San and Monde.

Feb 2, 2001: Monde commenced its operations. All theformer employees of M.Y.San who were terminated uponits closure and who applied and qualified for probationaryemployment, includingpetitioners herein, started workingfor Monde on a contractual basis for a period of six months.

Subsequently, petitioners were terminated on various

dates . They then filed a complaint for illegal dismissal plusdamages with the NLRC.

o Pilar et al: The same top mgmt is running the business(3 days after the stoppage of operations in Jan 31); theunion officers acceded to bust the union in exchangeof being re-hired; and the sale of M.Y. San to Mondewas merelya ploy to circumvent the provisions of LC.

o MY San: ER-EE relationship had ceased to exist; thecomplaint for illegal dismissal could no longer prosperagainst it.

o Monde: the probationary EEswere subjected toperformance appraisal by their supervisors. Those whopassed and who qualifiedas regular EEs wereaccordingly appointed as such. Out 116 probationaryEEs, 74 EEs qualified for regular employment on May2, 2001.

For those who did not qualify for regularemployment, including Pilar, et al., Monde gavethem the remainder of their probationary period(until July 2, 2001), withinwhich to prove theirqualification for regularemployment.Notwithstanding the opportunity

given to them to improve their performance,complainants either:(a) resigned from their employment withMonde ;(b) refused to report for work on 02 May 2001 andon the days following - includes Pilar [theydeliberately failed to explain their absences dismissal due to AWOL & habitual neglect ofduties]; or(c) failed to qualify for regularemployment at theexpiration of the period of their probationaryemployment.

LA: dismissed the case for lack of merit.M.Y. Sans Decisionto shut down its operations by selling itsassets is its sole prerogative which must be respected, and that it hadfaithfully complied with the requirements ofthe law, i.e., thenotice and payment of separation pay. As to Monde, the LAruled that it satisfactorily discharged the burden ofestablishing a just and authorized cause for terminating the

servicesof petitioners. NLRC: affirmed LA. CA: dismissed the petition lack of the signatures of 3 co-

petitioners in their SPA. Their MR plus motion to drop thenames of the 3 co-petitioners was likewise denied forsubsequent compliance does not warrant a reconsiderationof the order of dismissal .There was also no prima facie errorin the NLRC ruling. They filed a 2 nd MR it was denied forbeing a prohibited pleading under ROC. Hence, this appealto SC.

Issues1. WON the CA was correct in dismissing their petition due tothe lack of signatures. NO.2. (termination of employment topic)WON the closure ofbusiness by MY San is valid. YES.Hence,there was noillegaldismissal of petitioners by MY San to speak of. 3. (probationary EEs topic) WON the petitioners were illegallyterminated from work. NO Monde exercised in good faith itsmanagement prerogative as there is no dispute that petitionershad been habitually absent, neglectful of their work, andrendered unsatisfactory service, to the damage and prejudice ofthe company.4. WON the quitclaims signed by petitioners are valid. YES.

Ratio1. The rules on forum shopping, which were designed topromote and facilitate the orderly administration of justice,should not be interpreted with such absolute literalness as tosubvert its own ultimate and legitimate objective. Thesignatures of 25 out of the 28 employees who filed thePetition for Certiorari in the CA constitute substantialcompliance with the Rules. Petitioners raised one commoncause of action against M.Y. San and Monde, i.e., the illegal


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closure of respondent M.Y. San and its subsequent saletorespondent Monde, which resulted in the termination of theirservices. They share a common interest andcommon defense in the Complaint for illegal dismissal. Thus, when theyappealedtheir case to the CA, they pursued the same as acollective body, raising only one argument in supportof theirrights against the illegal dismissal allegedly committed byrespondents M.Y. San and Monde.

Ordinarily, SC would have remanded the case to the CAfor disposition on the merits. However, in the interest of justice and equity, they decided to rule on its merits.

2. The ERs are given mass of privileges called managementprerogatives. Although they may be broad and unlimited inscope, the State has the right to determine whether anERsprivilege is exercised in a manner that complies with thelegal requirements and does not offend the protectedrightsof labor.

One of the rights accorded an employer is the right toclose an establishment or undertaking. Just as no law forcesanyone to go into business, no law can compel anybody tocontinue the same. It is explicitly recognized under the LC (Art.283) as one of the authorized causes in terminatingemployment of workers, the only limitation being that theclosuremust not be for the purpose of circumventing theprovisions on terminations of employment embodied in theLC.

The phrase "closure or cessation of operations ofestablishment or undertaking" includes a partial or totalclosure or cessation. It also recognizes the right of theemployer to close or cease its business operations orundertaking even in the absence of serious business losses orfinancial reverses, as long as he pays his employees theirtermination pay in the amount corresponding to their lengthof service.

The determination to cease operations is a prerogative ofmanagement which the State does not usually interfere with ,as no business or undertaking must be required to continueoperating simply because it has to maintain its workers inemployment, and such act would be tantamount to a takingof property without due process of law. As long as thecompanys exercise of the same is in good faith to advanceitsinterest and not for the purpose of circumventing the rights

of employees under the law or a valid agreement, suchexercisewill be upheld.

The 3 requirements necessary for the cessation ofbusiness operations are adequately complied by MY Sanbased on the records:

(1) service of a written notice to the employees and to theDOLE at least 1 month before the intended date thereof theEEs are adequately informed of the intended business closureand a written notice was sent to DOLE Regional Director.

(2) the cessation must be bona fide in character MYSan in good faith complied with the requirements for closure;sold and conveyed all its assets torespondent Monde forvaluable consideration; and there were no previous laborproblems.

(3) payment to the employees of termination payamounting to at least 1/2 month pay for every year of service,or 1 month pay, whichever is higher Petitioners receivedtheir termination pay which was even beyond the amountrequired by law. Thecomputation of their separation pay was15 days for every year of service plus an additional nine daysfor everyyear of service, and cash equivalent of their vacationand sick leaves.

The closure, therefore, of the business operation ofrespondent MY San was not tainted with bad faith orothercircumstance that would give rise to suspicions ofmalicious intent. Other than their mere allegations ,petitionersfailed to present independent evidence that would

otherwise show that the closure of MY San was withoutfactualbasis and done in utter bad faith. It is a basic rule inevidence that each partymust prove his affirmative allegation.Since MY Sans closure and cessation of business was lawful,there was no illegaldismissal of petitioners to speak of.

3. The petitioners were probationary employees as stated intheir individual contracts ofemployment with Monde. Art. 281LC governs probationary employment.

While petitioners were only probationary employees whodo not enjoy permanent status, nonetheless, they werestillentitled to the constitutional protection of security of tenure ;their employment may only be terminated for a valid and justcause or for failing to qualify as a regular employeeinaccordance with the reasonable standards made known tohim by the employer at the time of engagement andafterbeing accorded due process. Procedural due process requiresthe twin notices before the EE can be terminated (noticewhich apprises the employee of the particular acts/omissionsfor which the dismissal issought and the subsequent noticewhich informs the employee of the employers decision todismiss him).

In the case at bar, petitioners were notified of thestandards they have to meet to qualify as regular employees of

Monde when the latter apprised them, at the start of theiremployment, that:

1. You shall be under probation for amaximum period of six (6) months or untilJul. 03, 2001. During this period, you areexpected to learn your job, perform yourduties and responsibilities to the best ofyour ability, and observe all company rulesand regulations; if during this period, you


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fail to meet companystandards, yourappointment may be terminated earlier or atthe expiration of your probationary periodatthe discretion of the company.x xxx5. To determine your fitness to assumeyour position on a permanent status, whenconsidered due, yoursupervisor shall rateyour performance during your probationaryperiod.

Significantly, some of the petitioners indeed voluntarilyresigned from the company. Also, Monde had exercised itsmanagement prerogative in good faith when it dismissed other petitioners including Pilar, due to absence without leave(AWOL), gross and habitual neglect of duties, and only after the personal delivery ofthe notices to their respective addresses orby registered mail . Moreover, some did not qualify as regularEEs the twin notices are sent to them individually.

It must be noted that petitioners were terminated prior tothe expiration of their probationary contracts . As probationaryemployees, they enjoyed only temporary employment status.In general terms, this meantthat they were terminableanytime, permanent employment not having been attained inthe meantime.

During the probationary period,the employer is given theopportunity to observe the skill, competence and attitude ofthe employee to determine ifhe has the qualification to meetthe reasonable standards for permanent employment. Thelength of time is immaterial in determining the correlativerights of both the employer and the employee in dealing witheach other during said period. Thus, as long as thetermination was made before the expiration of the six-monthprobationary period, the employer was well within his rights tosever the employer-employee relationship . A contraryinterpretation would defeat the clear meaning of the term"probationary.

Terminating employment is one of Mondes prerogatives.As an employer, respondent Monde has the right to regulate,according to its discretion and best judgment, including workassignment, working methods, processes to be followed,working regulations, transfer of employees, work supervision,lay-off of workers and the discipline, dismissal and recall ofworkers .SC has consistently upheld a companys management

prerogatives so long as they are exercised in good faith for theadvancement of the employers interest and not for thepurpose of defeating or circumventing the rights of theemployees under special laws and valid agreements.

Monde exercised in good faith its managementprerogative as there is no dispute that petitioners had beenhabitually absent, neglectful of their work, and renderedunsatisfactory service, to the damage and prejudice of thecompany.

4. Quitclaims andreleases are not per se invalid.In the case atbar, there is no showing that petitioners were coerced intosigning the quitclaims; they freely declared that they receivedto their satisfaction all that are due them by reason oftheiremployment and that they were voluntarily releasingrespondents M.Y. San and Monde, for any liability inrelationto their employment. Nothing on the face of theirquitclaims would show that they were unconscionable.Further,petitioners did not present evidence that they had beenforced or intimidated in signing the same .

Finally, it is significant to note that both the LA and the NLRCwere unanimous in their findings that theclosure ofrespondent M.Y. San is valid and that the employees ofrespondents M.Y. San and Monde were notillegally dismissed(issue of whether there was a valid ground for petitionersdismissal is factual innature). The factual findings of the

NLRC affirming those of the LA, who aredeemed to haveacquired expertise in matters within their jurisdiction, whensufficiently supported by evidence onrecord, are accordedrespect if not finality, and are considered binding on this Court .As long as their Decisions are devoid of any unfairness orarbitrariness in the process of their deduction from the evidence proffered by the parties before them , all that is left is theCourts stamp of finality by affirming the factual findings madeby the NLRC and the LA.

Documents

Kinds of Employees - Notes and Case Digests