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[G.R. No. 122653 December 12, 1997]

FACTS: The private respondents were hired by petitioner Pure Foods to work for a fixed period of
five months at its tuna cannery plant in General Santos City. After the expiration of their respective
contracts of employment, their services were terminated. They forthwith executed a "Release and
Quitclaim" stating that they had no claim whatsoever against the petitioner. Private respondents then
filed before the NLRC-Sub-RAB a complaint for illegal dismissal against the petitioner.
The Labor Arbiter dismissed the complaint on the ground that the private respondents were mere
contractual workers, and not regular employees; hence, they could not avail of the law on security of
tenure. The termination of their services by reason of the expiration of their contracts of employment
was, therefore, justified.
The private respondents appealed the decision to the NLRC which affirmed the LAs decision.
However, on private respondents' motion for reconsideration, the NLRC rendered another decision
holding that the private respondent and their co-complainants were regular employees. It declared
that the contract of employment for five months was a "clandestine scheme employed by the
petitioner to stifle private respondents' right to security of tenure" and should therefore be struck
down and disregarded for being contrary to law, public policy, and morals. Hence, their dismissal on
account of the expiration of their respective contracts was illegal. Its motion for reconsideration
having been denied, the petitioner came to this Court contending that respondent NLRC committed
grave abuse of discretion amounting to lack of jurisdiction in reversing the decision of the Labor
ISSUE: Whether or not private respondents are regular employees of petitioner company or mere
contractual employees.
HELD: The SC held that the petition devoid of merit. Under Art. 280, there are two kinds of regular
employees are (1) those who are engaged to perform activities which are necessary or desirable in
the usual business or trade of the employer; and (2) those casual employees who have rendered at
least one year of service, whether continuous or broken, with respect to the activity in which they are
In the instant case, the private respondents' activities consisted in the receiving, skinning, loining,
packing, and casing-up of tuna fish which were then exported by the petitioner. Indisputably, they
were performing activities which were necessary and desirable in petitioner's business or trade.
Contrary to petitioner's submission, the private respondents could not be regarded as having been
hired for a specific project or undertaking. The term "specific project or undertaking" under Article
280 of the Labor Code contemplates an activity which is not commonly or habitually performed or
such type of work which is not done on a daily basis but only for a specific duration of time or until
completion; the services employed are then necessary and desirable in the employer's usual
business only for the period of time it takes to complete the project. The fact that the petitioner
repeatedly and continuously hired workers to do the same kind of work as that performed by those
whose contracts had expired negates petitioner's contention that those workers were hired for a
specific project or undertaking only.
Although, this Court has upheld the legality of fixed-term employment, none of the criteria had been
met in the present case. It could not be supposed that private respondents and all other so-called

"casual" workers of the petitioner KNOWINGLY and VOLUNTARILY agreed to the 5-month
employment contract. 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.
The petitioner does not deny or rebut private respondents' averments (1) that the main bulk of its
workforce consisted of its so-called "casual" employees; (2) that as of July 1991, "casual" workers
numbered 1,835; and regular employee, 263; (3) that the company hired "casual" every month for
the duration of five months, after which their services were terminated and they were replaced by
other "casual" employees on the same five-month duration; and (4) that these "casual" employees
were actually doing work that were necessary and desirable in petitioner's usual business. This
scheme of the petitioner was apparently designed to prevent the private respondents and the other
"casual" employees from attaining the status of a regular employee. It was a clear circumvention of
the employees' right to security of tenure and to other benefits like minimum wage, cost-of-living
allowance, sick leave, holiday pay, and 13th month pay. Indeed, the petitioner succeeded in evading
the application of labor laws. Also, it saved itself from the trouble or burden of establishing a just
cause for terminating employees by the simple expedient of refusing to renew the employment
The five-month period specified in private respondents' employment contracts having been imposed
precisely to circumvent the constitutional guarantee on security of tenure should, therefore, be struck
down or disregarded as contrary to public policy or morals. To uphold the contractual arrangement
between the petitioner and the private respondents would, in effect, permit the former to avoid hiring
permanent or regular employees by simply hiring them on a temporary or casual basis, thereby
violating the employees' security of tenure in their jobs.
Petition is dismissed.

Case Title: Philippine Banks of Communication v NLRC

GR No.: L-66598
Date: December 19, 1986
Ponente: Feliciano
Petitioner Philippine Bank of Communications and the Corporate Executive Search Inc. (CESI) entered
into a letter agreement dated January 1976 under which (CESI) undertook to provide "Tempo[rary]
Services" to petitioner Consisting of the "temporary services" of eleven (11) messengers. The contract
period is described as being "from January 1976." The petitioner in truth undertook to pay a "daily
service rate of P18, " on a per person basis.
Attached to the letter agreement was a "List of Messengers assigned at Philippine Bank of
Communications" which list included, as item No. 5 thereof, the name of private respondent Ricardo
Orpiada. He rendered messengerial services to the bank within its premise, together with others doing
similar job. In or about October 1976, the bank requested CESI to withdraw Opriadas assignment

because his service were no longer needed. He filed a complaint against the bank for illegal dismissal
and failure to pay the 13th month pay.
During the arbitration the Bank impleaded CESI as additional respondent. Both the bank and CESI
maintained that CESI (and not the bank) was Opriadas employer.
Whether or not an Employer-Employee relationship existed between the bank and private respondent
The Court held that, in the circumstances 'instances of this case, (CESI) was engaged in
"labor-only" or attracting vis-a-vis the petitioner and in respect c Ricardo Orpiada, and that
consequently, the petitioner bank is liable to Orpiada as if Orpiada had been directly,
employed not only by (CESI) but also by the bank. It may well be that the bank may in turn
proceed against (CESI) to obtain reimbursement of, or some contribution to, the amounts
which the bank will have to pay to Orpiada; but this it is not necessary to determine here.

Case Digest: GSIS v. NLRC, et al.

G.R. No. 180045: November 17, 2010
ESCOBAL, and ROSAURO PANIS, Respondents.
Respondents were hired DNL Security Agency. By virtue of the service contract
entered into by DNL Security and petitioner Government Service Insurance System
on May 1, 1978, respondents were assigned to petitioners Tacloban City office, each
receiving a monthly income of P1,400.00. Sometime in July 1989, petitioner
voluntarily increased respondents monthly salary to P3,000.00.
In February 1993, DNL Security informed respondents that its service contract with
petitioner was terminated. This notwithstanding, DNL Security instructed
respondents to continue reporting for work to petitioner. Respondents worked as
instructed until April 20, 1993, but without receiving their wages; after which, they
were terminated from employment.
Respondents filed with the NLRC a complaint against DNL Security and petitioner
for illegal dismissal, separation pay, salary differential, 13th month pay, and payment
of unpaid salary.

The LA found that respondents were not illegally terminated from employment
because the employment of security guards is dependent on the service contract
between the security agency and its client. However, considering that respondents
had been out of work for a long period, and consonant with the principle of social
justice, the LA awarded respondents with separation pay equivalent to one (1)
month salary for every year of service, to be paid by DNL Security. Because DNL
Security instructed respondents to continue working for petitioner from February
1993 to April 20, 1993, DNL Security was also made to pay respondents wages for
the period.
DNL Security filed a motion for reconsideration, while petitioner appealed to the
NLRC. NLRC treated DNL Securitys motion for reconsideration as an appeal, but
dismissed the same, as it was not legally perfected. It likewise dismissed petitioners
appeal, having been filed beyond the reglementary period.
Undaunted, petitioner filed a petition for certiorari under Rule 65 of the Rules of
Court before the CA. The CA affirmed the NLRC decision. Petitioner filed a motion
for reconsideration but the same was denied. Hence, this petition.
Whether or not the CA erred in ruling that the appeal was not filed on time and in
ruling that petitioner GSIS is jointly and severally liable with DNL Security Agency for
payment of the unsubstantiated amounts of Salary Differentials
The fact that there is no actual and direct employer-employee relationship between petitioner
and respondents does not absolve the former from liability for the latters monetary claims.
When petitioner contracted DNL Securitys services, petitioner became an indirect employer
of respondents, pursuant to Article 107 of the Labor Code
ART. 107. Indirect employer. The provisions of the immediately preceding Article shall
likewise apply to any person, partnership, association or corporation which, not being an
employer, contracts with an independent contractor for the performance of any work, task,
job or project.
After DNL Security failed to pay respondents the correct wages and other monetary benefits,
petitioner, as principal, became jointly and severally liable, as provided in Articles 106 and
109 of the Labor Code, which state:
ART. 106. Contractor or subcontractor. Whenever an employer enters into a contract with
another person for the performance of the formers work, the employees of the contractor and
of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this
In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent of the work performed under the

contract, in the same manner and extent that he is liable to employees directly employed by
ART. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding,
every employer or indirect employer shall be held responsible with his contractor or
subcontractor for any violation of any provision of this Code. For purposes of determining
the extent of their civil liability under this Chapter, they shall be considered as direct
Petitioners liability covers the payment of respondent's salary differential and 13th month
pay during the time they worked for petitioner. In addition, petitioner is solidarily liable with
DNL Security for respondents unpaid wages from February 1993 until April 20, 1993. While
it is true that respondents continued working for petitioner after the expiration of their
contract, based on the instruction of DNL Security, petitioner did not object to such
assignment and allowed respondents to render service. Thus, petitioner impliedly approved
the extension of respondents services.
Accordingly, petitioner is bound by the provisions of the Labor Code on indirect
employment. Petitioner cannot be allowed to deny its obligation to respondents after it had
benefited from their services. So long as the work, task, job, or project has been performed
for petitioners benefit or on its behalf, the liability accrues for such services. The principal is
made liable to its indirect employees because, after all, it can protect itself from irresponsible
contractors by withholding payment of such sums that are due the employees and by paying
the employees directly, or by requiring a bond from the contractor or subcontractor for this
Petitioner's liability, however, cannot extend to the payment of separation pay. An order to
pay separation pay is invested with a punitive character, such that an indirect employer
should not be made liable without a finding that it had conspired in the illegal dismissal of
the employees.
It should be understood, though, that the solidary liability of petitioner does not preclude the
application of Article 1217 of the Civil Code on the right of reimbursement from its codebtor.