Table of Contents

Course Description

Definition, Distinction, Constitutional Basis

Agencies Implementing Labor Relations Law

Jurisdiction of Implementing Agencies

Statutory Terms

10

10

National Labor Relations Commission

Jurisdiction of Labor Arbiter

14

15

Technical Rules, Appearances and Fees, Appeal

20

Execution of Decisions, Orders or Awards, Contempt Powers

21

Bureau of Labor Relations, Compromise Agreements, Indorsement

22

Subpoenas, Appointment, Registry of Unions 23

Privileged Communication, Grievance Machinery and Voluntary Arbitration, Jurisdiction of Voluntary
Arbitrators and Panel of Voluntary Arbitrators
24
Jurisdiction of other Labor Disputes, Procedure
Cost Arbitration, NCMB

25

26

Kinds of Employment/Employee Classification

28

Regular, Casual and Probationary Employment

Project Employment

63

Seasonal Employment

99

Casual Employment

103

Fixed Term Employment

110

28

Labor Union (Organization) 121

Registration, Local Chapter 121
Action, Denial, Additional Requirements, Cancellation 122
Effects, Grounds Cancellation, Voluntary Cancellation 123
Rights and Conditions
Rights

124

127

Coverage and Employees Right to Self-Organization, Public Service

128

Managerial Employees, Effect of Inclusion, Non-Abridgment or Right

129

Certification Election

130

Statutory Terms

130

References

132

Collective Bargaining Negotiations and Agreement

Procedure, Duty

134

134

Duty to Bargain, Terms, Injunction 135

Unfair Labor Practices Act/Strikes and Lockout

136

Concept, Unfair Labor Practices of Employer 136

Concept, Unfair Labor Practices of Labor Organizations 137
Termination of Employment/Post Employment (Labor Law)
Termination of Employment/Post Employment
Kinds of Dismissal, Grounds for Dismissal

142
142

139

Just Cause

142

Authorized Cause 150

COURSE OUTLINE
LABOR LAW 2: LABOR RELATIONS
Atty. Agnes Lucero De Grano
Labor Arbiter

Course Description
Labor Law II covers Labor Relations which regulates the relationship between
the employees and employer. In the Labor Code of the Philippines, it includes
Book V (Articles 211 to 277) and Book VI (Articles 278-287). The remaining
Book VII (Transitory and Final Provisions) of the Labor Code is likewise made
part of this course.
Integrated in the course is the study of establishing an organized union and
conduct a mock collective bargaining negotiations in order immerse the
students on the practical application of the provisions of the Labor Code on
labor relations.
Course Learning Objectives
At the end of this course, students will be able to:
Critically understand the provisions of the otherwise dynamic nature
of the Labor Code and related laws;
Equip them to prepare for the Bar Exams;
Intelligently apply their knowledge of labor and employment law in the
practice of profession.
Course Text/Literature
1. 1987 Constitution of the Philippines
2. Labor Code of the Philippines, P.D. No. 442, as Amended, and Omnibus
Rules Implementing the Labor Code
3. Supreme Court decisions (SCRA)
4. Special Laws related to labor relations
5. Policy Instructions, Department Orders (D0), Executive Orders
Suggested Textbooks
Labor Code of the Philippines
The 2011 NLRC Rules of Procedure
Azucena, Labor Code with Annotations, Volume II
2

Joselito Guianan Chan, The Labor Code of the Philippines Annotated,

Volume II, Labor Relations and Termination of Employment, 2009 Ed.

PART I
Introduction to Labor Relations
1. Definition of Labor Relations
Labor Relations refers to the interactions between employer and employees or
their representatives and the mechanism by which the standards and other
terms and conditions of employment are negotiated, adjusted and enforced.
This law defines of the status, rights and duties, and the institutional
mechanisms that govern the individual and collective interactions, of
employers, employees or their representatives.
Some academics use labor relations to refer to situations involving unionized
companies and to matters internal to the labor sector.
2. Distinguished Labor Relations to Labor Standards
Labor Standards refers to the minimum terms and conditions of employment
which employees are legally entitled to and employers must comply with.
In the case of Maternity Childrens vs. Secretary of Labor, G.R. No. 78909, June
30, 1989, labor standards, as defined, are the minimum requirements
prescribed by existing laws, rules and regulations relating to wages, hours of
work, cost-of-living allowance, and other monetary and welfare benefits,
including occupational, safety, and health standards.
3. Constitutional Basis of Labor Relations
Social Justice and Human Rights, Article XIII,
Section 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment
and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization,

collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They
shall be entitled to security of tenure, humane conditions of work, and
a living wage. They shall also participate in policy and decisionmaking processes affecting their rights and benefits as may be
provided by law.
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production
and the right of enterprises to reasonable returns to investments, and
to expansion and growth.
Declaration of Principles and State Policies, Article II,
Section 18. The State affirms labor as a primary social economic
force. It shall protect the rights of workers and promote their welfare.
Bill of Rights, Article. III,
Section 4. No law shall be passed abridging the freedom of speech, of
expression, or of the press, or the right of the people peaceably to
assemble and petition the government for redress of grievances.
Section 8. The right of the people, including those employed in the
public and private sectors, to form unions, associations, or societies for
purposes not contrary to law shall not be abridged.
Section 11. Free access to the courts and quasi-judicial bodies and
adequate legal assistance shall not be denied to any person by reason
of poverty.
Section 16. All persons shall have the right to a speedy disposition of
their cases before all judicial, quasi-judicial, or administrative bodies.
The Civil Service Commission, Article IX(B),
4

Section 2(3). No officer or employee of the civil service shall be

removed or suspended except for cause provided by law.
Section 2(5). The right to self-organization shall not be denied to
government employees.
Section 2(6). Temporary employees of the Government shall be given
such protection as may be provided by law.
National Economy and Patrimony, Article XII,
Section 1. The goals of the national economy are a more equitable
distribution of opportunities, income, and wealth; a sustained increase
in the amount of goods and services produced by the nation for the
benefit of the people; and an expanding productivity as the key to
raising the quality of life for all, especially the underprivileged.
Section 12. The State shall promote the preferential use of Filipino
labor, domestic materials and locally produced goods, and adopt
measures that help make them competitive.
General Provisions, Article XVI
Section 8. The State shall, from time to time, review to increase the
pensions and other benefits due to retirees of both the government and
the private sectors.
4. Agencies Implementing Labor Relations law
National Labor Relations Commission, Article 213.
There shall be a National Labor Relations Commission which shall be
attached to the Department of Labor and Employment for program and
policy coordination only, composed of a Chairman and fourteen (14)
Members.
Five (5) members each shall be chosen from among the nominees of the
workers and employers organizations, respectively. The Chairman and
the four (4) remaining members shall come from the public sector, with
the latter to be chosen from among the recommendees of the Secretary
of Labor and Employment.
5

Upon assumption into office, the members nominated by the workers

and employers organizations shall divest themselves of any affiliation
with or interest in the federation or association to which they belong.
The Commission may sit en banc or in five (5) divisions, each
composed of three (3) members. Subject to the penultimate sentence of
this paragraph, the Commission shall sit en banc only for purposes of
promulgating rules and regulations governing the hearing and
disposition of cases before any of its divisions and regional branches,
and formulating policies affecting its administration and operations.
The Commission shall exercise its adjudicatory and all other powers,
functions, and duties through its divisions. Of the five (5) divisions, the
first, second and third divisions shall handle cases coming from the
National Capital Region and the parts of Luzon; and the fourth and
fifth divisions, cases from the Visayas and Mindanao, respectively;
Provided that the Commission sitting en banc may, on temporary or
emergency basis, allow cases within the jurisdiction of any division to
be heard and decided by any other division whose docket allows the
additional workload and such transfer will not expose litigants to
unnecessary additional expense. The divisions of the Commission
shall have exclusive appellate jurisdiction over cases within their
respective territorial jurisdictions. [As amended by Republic Act No.
7700].
The concurrence of two (2) Commissioners of a division shall be
necessary for the pronouncement of judgment or resolution. Whenever
the required membership in a division is not complete and the
concurrence of two (2) commissioners to arrive at a judgment or
resolution cannot be obtained, the Chairman shall designate such
number of additional Commissioners from the other divisions as may
be necessary.
The conclusions of a division on any case submitted to it for decision
shall be reached in consultation before the case is assigned to a
member for the writing of the opinion. It shall be mandatory for the
division to meet for purposes of the consultation ordained herein. A
certification to this effect signed by the Presiding Commissioner of the

division shall be issued and a copy thereof attached to the record of the
case and served upon the parties.
The Chairman shall be the Presiding Commissioner of the first division
and the four (4) other members from the public sector shall be the
Presiding Commissioners of the second, third, fourth and fifth
divisions, respectively. In case of the effective absence or incapacity of
the Chairman, the Presiding Commissioner of the second division shall
be the Acting Chairman.
The Chairman, aided by the Executive Clerk of the Commission, shall
have administrative supervision over the Commission and its regional
branches and all its personnel, including the Executive Labor Arbiters
and Labor Arbiters.
The Commission, when sitting en banc shall be assisted by the same
Executive Clerk and, when acting thru its Divisions, by said Executive
Clerks for the second, third, fourth and fifth Divisions, respectively, in
the performance of such similar or equivalent functions and duties as
are discharged by the Clerk of Court and Deputy Clerks of Court of the
Court of Appeals. (As amended by Section 5, Republic Act No. 6715,
March 21, 1989)
Labor Arbiter, Article 217.
Jurisdiction of the Labor Arbiters and the Commission.
1. Except as otherwise provided under this Code, the Labor
Arbiters shall have original and exclusive jurisdiction to hear
and decide, within thirty (30) calendar days after the submission
of the case by the parties for decision without extension, even in
the absence of stenographic notes, the following cases involving
all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those
cases that workers may file involving wages,
rates of

pay, hours of work and other terms and conditions of

employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this
Code, including questions involving the legality of
strikes and lockouts; and
6. Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other
claims arising from employer-employee relations,
including those of persons in domestic or household
service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
2. The Commission shall have exclusive appellate jurisdiction
over all cases decided by Labor Arbiters.
3. Cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies
shall be disposed of by the Labor Arbiter by referring the
same to the grievance machinery and voluntary arbitration as
may be provided in said agreements. (As amended by Section
9, Republic Act No. 6715, March 21, 1989)

Regional Office/Bureau of Labor Relations, Article 226.

Bureau of Labor Relations. The Bureau of Labor Relations and the
Labor Relations Divisions in the regional offices of the Department of
Labor, shall have original and exclusive authority to act, at their own
initiative or upon request of either or both parties, on all inter-union and
intra-union conflicts, and all disputes, grievances or problems arising
from or affecting labor-management relations in all workplaces,
whether agricultural or non-agricultural, except those arising from the
implementation or interpretation of collective bargaining agreements
which shall be the subject of grievance procedure and/or voluntary
arbitration.
8

The Bureau shall have fifteen (15) working days to act on labor cases
before
it, subject to extension by agreement of the parties. (As
amended by Section 14, Republic Act No. 6715, March 21, 1989).
National Conciliation and Mediation Board,
Executive Order No. 126, Reorganization Act of the Ministry of
Labor and Employment.
Section 22. National Conciliation and Mediation Board. A National
Conciliation and Mediation Board, herein referred to as the "Board", is
hereby created and which shall absorb the conciliation, mediation and
voluntary arbitration functions of the Bureau of Labor Relations in
accordance with Section 29 (c) hereof. The Board shall be composed of
an Administrator and two (2) Deputy Administrators. It shall be an
attached agency under the administrative supervision of the Minister of
Labor and Employment.
The Administrator and the Deputy Administrators shall be appointed
by the President upon recommendation of the Minister of Labor and
Employment. There shall be as many Conciliators-Mediators as the
needs of the public service require, who shall have at least three (3)
years of experience in handling labor relations and who shall be
appointed by the President upon recommendation of the Minister.
The Board shall have its main office in Metropolitan Manila and its
Administrator shall exercise supervision over Conciliators-Mediators
and all its personnel. It shall establish as many branches as there are
administrative regions in the country, with as many ConciliatorsMediators as shall be necessary for its effective operation. Each branch
of the Board shall be headed by an Executive Conciliator-Mediator.
The Board shall have the following functions:
(a) Formulate policies, programs, standards, procedures, manuals of
operation and guidelines pertaining to effective mediation and
conciliation of labor disputes;
(b) Perform preventive mediation and conciliation functions;
9

(c) Coordinate and maintain linkages with other sectors or

institutions, and other government authorities concerned with
matters relative to the prevention and settlement of labor
disputes;
(d) Formulate policies, plans, programs, standards, procedures,
manuals of operation and guidelines pertaining to the promotion
of cooperative and non-adversarial schemes, grievance handling,
voluntary arbitration and other voluntary modes of dispute
settlement;
(e) Administer the voluntary arbitration program; maintain/update a
list of voluntary arbitrations; compile arbitration awards and
decisions;
(f) Provide counselling and preventive mediation assistance
particularly in the administration of collective agreements;
(g) Monitor and exercise technical supervision over the Board
programs being implemented in the regional offices; and
(h) Perform such other functions as may be provided by law or
assigned by the Minister.
Rules to Implement the Labor Code, Rule I, Book V, Section 1 (e),
as amended by D.O. No. 40-03, Series of 2003, Feb. 17, 2003
Section 1 (e). "Board" refers to the National Conciliation and Mediation
Board established under Executive Order No. 126
Grievance Machinery and Voluntary Arbitration, Article 260.
Grievance machinery and voluntary arbitration. The parties to a
Collective Bargaining Agreement shall include therein provisions that
will ensure the mutual observance of its terms and conditions. They
shall establish a machinery for the adjustment and resolution of
grievances arising from the interpretation or implementation of their
Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies.
All grievances submitted to the grievance machinery which are not
settled within seven (7) calendar days from the date of its submission

10

shall automatically be referred to voluntary arbitration prescribed in

the Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall
name and designate in advance a Voluntary Arbitrator or panel of
Voluntary Arbitrators, or include in the agreement a procedure for the
selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators,
preferably from the listing of qualified Voluntary Arbitrators duly
accredited by the Board. In case the parties fail to select a Voluntary
Arbitrator or panel of Voluntary Arbitrators, the Board shall designate
the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be
necessary, pursuant to the selection procedure agreed upon in the
Collective Bargaining Agreement, which shall act with the same force
and effect as if the Arbitrator or panel of Arbitrators has been selected
by the parties as described above.

11

PART II
Jurisdiction of Implementing Agencies
Statutory Terms:
Article 212. Employer (e) "Employer" includes any person acting in the interest
of an employer, directly or indirectly. The term shall not include any labor
organization or any of its officers or agents except when acting as employer.
Employee (f) "Employee" includes any person in the employ of an employer.
The term shall not be limited to the employees of a particular employer, unless
the Code so explicitly states. It shall include any individual whose work has
ceased as a result of or in connection with any current labor dispute or
because of any unfair labor practice if he has not obtained any other
substantially equivalent and regular employment.
Labor Organization (g) "Labor organization" means any union or association of
employees which exists in whole or in part for the purpose of collective
bargaining or of dealing with employers concerning terms and conditions of
employment.

12

Legitimate Labor Organization (h) "Legitimate labor organization" means any

labor organization duly registered with the Department of Labor and
Employment, and includes any branch or local thereof.
Company Union (i) "Company union" means any labor organization whose
formation, function or administration has been assisted by any act defined as
unfair labor practice by this Code.
Bargaining representative (j) "Bargaining representative" means a legitimate
labor organization whether or not employed by the employer.
Unfair Labor Practice (k) "Unfair labor practice" means any unfair labor practice
as expressly defined by the Code.
Labor Dispute (l) "Labor dispute" includes any controversy or matter concerning
terms and conditions of employment or the association or representation of
persons in negotiating, fixing, maintaining, changing or arranging the terms and
conditions of employment, regardless of whether the disputants stand in the
proximate relation of employer and employee.
Managerial employee (m) "Managerial employee" is one who is vested with the
powers or prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees.
Supervisory employees are those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but requires the use of independent
judgment. All employees not falling within any of the above definitions are
considered rank-and-file employees for purposes of this Book.
Voluntary Arbitrator (n) "Voluntary Arbitrator" means any person accredited by
the Board as such or any person named or designated in the Collective
Bargaining Agreement by the parties to act as their Voluntary Arbitrator, or one
chosen with or without the assistance of the National Conciliation and Mediation
Board, pursuant to a selection procedure agreed upon in the Collective
Bargaining Agreement, or any official that may be authorized by the Secretary of
Labor and Employment to act as Voluntary Arbitrator upon the written request
and agreement of the parties to a labor dispute.
Strike (o) "Strike" means any temporary stoppage of work by the concerted action
of employees as a result of an industrial or labor dispute.
Lockout (p) "Lockout" means any temporary refusal of an employer to furnish
work as a result of an industrial or labor dispute.
13

Internal Union Dispute (q) "Internal union dispute" includes all disputes or
grievances arising from any violation of or disagreement over any provision of the
constitution and by law of a union, including any violation of the rights and
conditions of union membership provided for in this Code.
Strike breaker (r) "Strike-breaker" means any person who obstructs, impedes, or
interferes with by force, violence, coercion, threats, or intimidation any peaceful
picketing affecting wages, hours or conditions of work or in the exercise of the
right of self-organization or collective bargaining.
Strike Area (s) "Strike area" means the establishment, warehouses, depots,
plants or offices, including the sites or premises used as runaway shops, of the
employer struck against, as well as the immediate vicinity actually used by
picketing strikers in moving to and fro before all points of entrance to and exit
from said establishment.
Certification Election is a process of determining through secret ballot the sole
and exclusive bargaining agent (SEBA) of all the employees in an appropriate
bargaining unit for the purpose of collective bargaining.
Article 255. Exclusive bargaining representation and workers participation in
policy and decision-making. The labor organization designated or selected by
the majority of the employees in an appropriate collective bargaining unit shall be
the exclusive representative of the employees in such unit for the purpose of
collective bargaining. However, an individual employee or group of employees
shall have the right at any time to present grievances to their employer.

Any provision of law to the contrary notwithstanding, workers shall have the
right, subject to such rules and regulations as the Secretary of Labor and
Employment may promulgate, to participate in policy and decision-making
processes of the establishment where they are employed insofar as said
processes will directly affect their rights, benefits and welfare. For this purpose,
workers and employers may form labor-management councils: Provided, that the
representatives of the workers in such labor-management councils shall be
elected by at least the majority of all employees in said establishment. (As
amended by Section 22, Republic Act No. 6715, March 21, 1989)

14

Article 256. Representation issue in organized establishments. In organized

establishments, when a verified petition questioning the majority status of the
incumbent bargaining agent is filed before the Department of Labor and
Employment within the sixty-day period before the expiration of the collective
bargaining agreement, the Med-Arbiter shall automatically order an election by
secret ballot when the verified petition is supported by the written consent of at
least twenty-five percent (25%) of all the employees in the bargaining unit to
ascertain the will of the employees in the appropriate bargaining unit. To have a
valid election, at least a majority of all eligible voters in the unit must have cast
their votes. The labor union receiving the majority of the valid votes cast shall be
certified as the exclusive bargaining agent of all the workers in the unit. When an
election which provides for three or more choices results in no choice receiving a
majority of the valid votes cast, a run-off election shall be conducted between the
labor unions receiving the two highest number of votes: Provided, that the total
number of votes for all contending unions is at least fifty percent (50%) of the
number of votes cast.

At the expiration of the freedom period, the employer shall continue to recognize
the majority status of the incumbent bargaining agent where no petition for
certification election is filed. (As amended by Section 23, Republic Act No. 6715,
March 21, 1989)

Article 257. Petitions in unorganized establishments. In any establishment

where there is no certified bargaining agent, a certification election shall
automatically be conducted by the Med-Arbiter upon the filing of a petition by a
legitimate labor organization. (As amended by Section 24, Republic Act No. 6715,
March 21, 1989)
Article 258. When an employer may file petition. When requested to bargain
collectively, an employer may petition the Bureau for an election. If there is no
existing certified collective bargaining agreement in the unit, the Bureau shall,
after hearing, order a certification election.

15

All certification cases shall be decided within twenty (20) working days.
The Bureau shall conduct a certification election within twenty (20) days in
accordance with the rules and regulations prescribed by the Secretary of Labor.

Collective Bargaining Agent means the trade union of worker(s) or federation of

trade unions which is the agent of the workers in the establishment, or group
of establishments in the matter of collectively bargaining
Collective Bargaining Unit is a group of employees with a clear and identifiable
community of interests who are represented by a single labor union
in collective bargaining and other dealings with management.
Collective Bargaining Agreement is a process where the parties agree to fix and
administer terms and conditions of employment which must not be below the
minimum standards fixed by law, and set a mechanism for resolving their
grievances.

16

A. The National Labor Relations Commission

1. National Labor Relations Commission, Article 213.
Headquarters, Branches and Provincial Extension Units, Article 214.
The Commission and its First, Second and Third divisions shall have
their main offices in Metropolitan Manila, and the Fourth and Fifth
divisions in the Cities of Cebu and Cagayan de Oro, respectively. The
Commission shall establish as many regional branches as there are
regional offices of the Department of Labor and Employment, subregional branches or provincial extension units. There shall be as many
Labor Arbiters as may be necessary for the effective and efficient
operation of the Commission. Each regional branch shall be headed by
an Executive Labor Arbiter. (As amended by Section 6, Republic Act No.
6715, March 21, 1989)
Appointment and Qualifications, Article 215.
The Chairman and other Commissioners shall be members of the
Philippine Bar and must have engaged in the practice of law in the
Philippines for at least fifteen (15) years, with at least five (5) years
experience or exposure in the field of labor-management relations, and
shall preferably be residents of the region where they are to hold office.
The Executive Labor Arbiters and Labor Arbiters shall likewise be
17

members of the Philippine Bar and must have been engaged in the
practice of law in the Philippines for at least seven (7) years, with at
least three (3) years experience or exposure in the field of labormanagement relations: Provided, However, that incumbent Executive
Labor Arbiters and Labor Arbiters who have been engaged in the
practice of law for at least five (5) years may be considered as already
qualified for purposes of reappointment as such under this Act. The
Chairman and the other Commissioners, the Executive Labor Arbiters
and Labor Arbiters shall hold office during good behavior until they
reach the age of sixty-five years, unless sooner removed for cause as
provided by law or become incapacitated to discharge the duties of their
office.
The Chairman, the division Presiding Commissioners and other
Commissioners shall be appointed by the President, subject to
confirmation by the Commission on Appointments. Appointment to any
vacancy shall come from the nominees of the sector which nominated
the predecessor. The Executive Labor Arbiters and Labor Arbiters shall
also be appointed by the President, upon recommendation of the
Secretary of Labor and Employment and shall be subject to the Civil
Service Law, rules and regulations.
The Secretary of Labor and Employment shall, in consultation with the
Chairman of the Commission, appoint the staff and employees of the
Commission and its regional branches as the needs of the service may
require, subject to the Civil Service Law, rules and regulations, and
upgrade their current salaries, benefits and other emoluments in
accordance with law. (As amended by Section 7, Republic Act No. 6715,
March 21, 1989)
Salaries, Benefits and Other Emoluments, Article 216.
The Chairman and members of the Commission shall receive an annual
salary at least equivalent to, and be entitled to the same allowances
and benefits as those of the Presiding Justice and Associate Justices of
the Court of Appeals, respectively. The Executive Labor Arbiters shall
receive an annual salary at least equivalent to that of an Assistant
Regional Director of the Department of Labor and Employment and
shall be entitled to the same allowances and benefits as that of a
18

Regional Director of said Department. The Labor Arbiters shall receive

an annual salary at least equivalent to, and be entitled to the same
allowances and benefits as that of an Assistant Regional Director of the
Department of Labor and Employment. In no case, however, shall the
provision of this Article result in the diminution of existing salaries,
allowances and benefits of the aforementioned officials. (As amended
by Section 8, Republic Act No. 6715, March 21, 1989)
2. Jurisdiction of the Labor Arbiters and the Commission, Art. 217.
Original and Exclusive Jurisdiction of Labor Arbiter
Except as otherwise provided under this Code, the Labor Arbiters shall
have original and exclusive jurisdiction to hear and decide, within thirty
(30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes,
the following cases involving all workers, whether agricultural or nonagricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wages,
rates of pay, hours of work
and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and lockouts;
and
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims arising from
employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding
five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.
Original Jurisdictions of the Commission
Exclusive Appellate Jurisdiction of the Commission
The Commission shall have exclusive appellate jurisdiction over all
19

cases decided by Labor Arbiters.

Powers of the Commission, Article 218.
The Commission shall have the power and authority:
1. To promulgate rules and regulations governing the hearing
and disposition of cases before it and its regional branches, as
well as those pertaining to its internal functions and such
rules and regulations as may be necessary to carry out the
purposes of this Code; (As amended by Section 10, Republic
Act No. 6715, March 21,1989)
2. To administer oaths, summon the parties to a controversy,
issue subpoenas requiring the attendance and testimony of
witnesses or the production of such books, papers, contracts,
records, statement of accounts, agreements, and others as
may be material to a just determination of the matter under
investigation, and to testify in any investigation or hearing
conducted in pursuance of this Code;
3. To conduct investigation for the determination of a question,
matter or controversy within its jurisdiction, proceed to hear
and determine the disputes in the absence of any party
thereto who has been summoned or served with notice to
appear, conduct its proceedings or any part thereof in public
or in private, adjourn its hearings to any time and place, refer
technical matters or accounts to an expert and to accept his
report as evidence after hearing of the parties upon due
notice, direct parties to be joined in or excluded from the
proceedings, correct, amend, or waive any error, defect or
irregularity whether in substance or in form, give all such
directions as it may deem necessary or expedient in the
determination of the dispute before it, and dismiss any matter
or refrain from further hearing or from determining the dispute
or part thereof, where it is trivial or where further proceedings
by the Commission are not necessary or desirable; and

20

4. To hold any person in contempt directly or indirectly and

impose appropriate penalties therefor in accordance with law.
A person guilty of misbehavior in the presence of or so near
the Chairman or any member of the Commission or any Labor
Arbiter as to obstruct or interrupt the proceedings before the
same, including disrespect toward said officials, offensive
personalities toward others, or refusal to be sworn, or to
answer as a witness or to subscribe an affidavit or deposition
when lawfully required to do so, may be summarily adjudged
in direct contempt by said officials and punished by fine not
exceeding five hundred pesos (P500) or imprisonment not
exceeding five (5) days, or both, if it be the Commission, or a
member thereof, or by a fine not exceeding one hundred pesos
(P100) or imprisonment not exceeding one (1) day, or both, if it
be a Labor Arbiter.
The person adjudged in direct contempt by a Labor Arbiter
may appeal to the Commission and the execution of the
judgment shall be suspended pending the resolution of the
appeal upon the filing by such person of a bond on condition
that he will abide by and perform the judgment of the
Commission should the appeal be decided against him.
Judgment of the Commission on direct contempt is
immediately executory and unappealable. Indirect contempt
shall be dealt with by the Commission or Labor Arbiter in the
manner prescribed under Rule 71 of the Revised Rules of
Court; and (As amended by Section 10, Republic Act No. 6715,
March 21, 1989)
5. To enjoin or restrain any actual or threatened commission of
any or all prohibited or unlawful acts or to require the
performance of a particular act in any labor dispute which, if
not restrained or performed forthwith, may cause grave or
irreparable damage to any party or render ineffectual any
decision in favor of such party: Provided, That no temporary or
permanent injunction in any case involving or growing out of a
labor dispute as defined in this Code shall be issued except
after hearing the testimony of witnesses, with opportunity for
21

cross-examination, in support of the allegations of a complaint

made under oath, and testimony in opposition thereto, if
offered, and only after a finding of fact by the Commission, to
the effect:
1. That prohibited or unlawful acts have been threatened
and will be committed and will be continued unless
restrained, but no injunction or temporary restraining
order shall be issued on account of any threat,
prohibited or unlawful act, except against the person or
persons, association or organization making the threat
or committing the prohibited or unlawful act or actually
authorizing or ratifying the same after actual knowledge
thereof;
2. That substantial and irreparable injury to complainants
property will follow;
3. That as to each item of relief to be granted, greater
injury will be inflicted upon complainant by the denial
of relief than will be inflicted upon defendants by the
granting of relief;
4. That complainant has no adequate remedy at law; and
5. That the public officers charged with the duty to protect
complainants property are unable or unwilling to
furnish adequate protection.
6. Such hearing shall be held after due and personal notice
thereof has been served, in such manner as the Commission
shall direct, to all known persons against whom relief is
sought, and also to the Chief Executive and other public
officials of the province or city within which the unlawful acts
have been threatened or committed, charged with the duty to
protect complainants property: Provided, however, that if a
complainant shall also allege that, unless a temporary
restraining order shall be issued without notice, a substantial
and irreparable injury to complainants property will be
unavoidable, such a temporary restraining order may be
issued upon testimony under oath, sufficient, if sustained, to
justify the Commission in issuing a temporary injunction upon
hearing after notice. Such a temporary restraining order shall
be effective for no longer than twenty (20) days and shall
22

become void at the expiration of said twenty (20) days. No

such temporary restraining order or temporary injunction shall
be issued except on condition that complainant shall first file
an undertaking with adequate security in an amount to be
fixed by the Commission sufficient to recompense those
enjoined for any loss, expense or damage caused by the
improvident or erroneous issuance of such order or injunction,
including all reasonable costs, together with a reasonable
attorneys fee, and expense of defense against the order or
against the granting of any injunctive relief sought in the same
proceeding and subsequently denied by the Commission.
The undertaking herein mentioned shall be understood to
constitute an agreement entered into by the complainant and
the surety upon which an order may be rendered in the same
suit or proceeding against said complainant and surety, upon
a hearing to assess damages, of which hearing, complainant
and surety shall have reasonable notice, the said complainant
and surety submitting themselves to the jurisdiction of the
Commission for that purpose. But nothing herein contained
shall deprive any party having a claim or cause of action
under or upon such undertaking from electing to pursue his
ordinary remedy by suit at law or in equity: Provided, further,
That the reception of evidence for the application of a writ of
injunction may be delegated by the Commission to any of its
Labor Arbiters who shall conduct such hearings in such
places as he may determine to be accessible to the parties
and their witnesses and shall submit thereafter his
recommendation to the Commission. (As amended by Section
10, Republic Act No. 6715, March 21, 1989)
Ocular Inspection, Article 219.
The Chairman, any Commissioner, Labor Arbiter or their duly
authorized representatives, may, at any time during working hours,
conduct an ocular inspection on any establishment, building, ship or
vessel, place or premises, including any work, material, implement,
machinery, appliance or any object therein, and ask any employee,
laborer, or any person, as the case may be, for any information or data
23

concerning any matter or question relative to the object of the

investigation.
Compulsory arbitration, Article 220.
The Commission or any Labor Arbiter shall have the power to ask the
assistance of other government officials and qualified private citizens to
act as compulsory arbitrators on cases referred to them and to fix and
assess the fees of such compulsory arbitrators, taking into account the
nature of the case, the time consumed in hearing the case, the
professional standing of the arbitrators, the financial capacity of the
parties, and the fees provided in the Rules of Court.] (Repealed by
Section 16, Batas Pambansa Bilang 130, August 21, 1981)

3. Technical Rules Not Binding and Prior Resort to Amicable Settlement,

Article 221.
In any proceeding before the Commission or any of the Labor Arbiters, the rules
of evidence prevailing in courts of law or equity shall not be controlling and it is
the spirit and intention of this Code that the Commission and its members and
the Labor Arbiters shall use every and all reasonable means to ascertain the
facts in each case speedily and objectively and without regard to technicalities of
law or procedure, all in the interest of due process. In any proceeding before the
Commission or any Labor Arbiter, the parties may be represented by legal
counsel but it shall be the duty of the Chairman, any Presiding Commissioner or
Commissioner or any Labor Arbiter to exercise complete control of the
proceedings at all stages.

Any provision of law to the contrary notwithstanding, the Labor Arbiter shall
exert all efforts towards the amicable settlement of a labor dispute within his
jurisdiction on or before the first hearing. The same rule shall apply to the
Commission in the exercise of its original jurisdiction. (As amended by Section
11, Republic Act No. 6715, March 21, 1989)

24

4. Appearances and Fees, Article 222.

1. Non-lawyers may appear before the Commission or any Labor Arbiter only:
1. If they represent themselves; or
2. If they represent their organization or members thereof.
2. No attorneys fees, negotiation fees or similar charges of any kind arising
from any collective bargaining agreement shall be imposed on any
individual member of the contracting union: Provided, However, that
attorneys fees may be charged against union funds in an amount to be
agreed upon by the parties. Any contract, agreement or arrangement of
any sort to the contrary shall be null and void. (As amended by
Presidential Decree No. 1691, May 1, 1980)

5. Appeal, Article 223.

Grounds for Appeal
Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties
within ten (10) calendar days from receipt of such decisions, awards, or
orders. Such appeal may be entertained only on any of the following
grounds:
1. If there is prima facie evidence of abuse of discretion on the
part of the Labor Arbiter;
2. If the decision, order or award was secured through fraud or
coercion, including graft and corruption;
3. If made purely on questions of law; and
4. If serious errors in the findings of facts are raised which
would cause grave or irreparable damage or injury to the
appellant.
Requisites for Perfection of Appeal
In case of a judgment involving a monetary award, an appeal by the
25

employer may be perfected only upon the posting of a cash or surety

bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the
judgment appealed from.
6. Execution of Decisions, Orders or Awards, Article 224.
1. The Secretary of Labor and Employment or any Regional Director, the
Commission or any Labor Arbiter, or Med-Arbiter or Voluntary Arbitrator
may, motu proprio or on motion of any interested party, issue a writ of
execution on a judgment within five (5) years from the date it becomes final
and executory, requiring a sheriff or a duly deputized officer to execute or
enforce final decisions, orders or awards of the Secretary of Labor and
Employment or regional director, the Commission, the Labor Arbiter or medarbiter, or voluntary arbitrators. In any case, it shall be the duty of the
responsible officer to separately furnish immediately the counsels of record
and the parties with copies of said decisions, orders or awards. Failure to
comply with the duty prescribed herein shall subject such responsible
officer to appropriate administrative sanctions.
2. The Secretary of Labor and Employment, and the Chairman of the
Commission may designate special sheriffs and take any measure under
existing laws to ensure compliance with their decisions, orders or awards
and those of the Labor Arbiters and voluntary arbitrators, including the
imposition of administrative fines which shall not be less than P500.00 nor
more than P10,000.00. (As amended by Section 13, Republic Act No. 6715,
March 21, 1989)

7. Contempt Powers of the Secretary of Labor, Article 225.

In the exercise of his powers under this Code, the Secretary of Labor may hold
any person in direct or indirect contempt and impose the appropriate penalties
therefor.

B. The Bureau of Labor Relations

26

8. Bureau of Labor Relations, Article 226.

The Bureau of Labor Relations and the Labor Relations Divisions in the regional
offices of the Department of Labor, shall have original and exclusive authority to
act, at their own initiative or upon request of either or both parties, on all interunion and intra-union conflicts, and all disputes, grievances or problems arising
from or affecting labor-management relations in all workplaces, whether
agricultural or non-agricultural, except those arising from the implementation or
interpretation of collective bargaining agreements which shall be the subject of
grievance procedure and/or voluntary arbitration.
The Bureau shall have fifteen (15) working days to act on labor cases before it,
subject to extension by agreement of the parties. (As amended by Section 14,
Republic Act No. 6715, March 21, 1989).

9. Compromise Agreements, Article 227.

Any compromise settlement, including those involving labor standard laws,
voluntarily agreed upon by the parties with the assistance of the Bureau or the
regional office of the Department of Labor, shall be final and binding upon the
parties. The National Labor Relations Commission or any court, shall not assume
jurisdiction over issues involved therein except in case of non-compliance thereof
or if there is prima facie evidence that the settlement was obtained through
fraud, misrepresentation, or coercion.
10. Indorsement of Cases to Labor Arbiters, Article 228.
1. Except as provided in paragraph (b) of this Article, the Labor Arbiter
shall entertain only cases endorsed to him for compulsory arbitration
by the Bureau or by the Regional Director with a written notice of such
indorsement or non-indorsement. The indorsement or non-indorsement
of the Regional Director may be appealed to the Bureau within ten (10)
working days from receipt of the notice.
2. The parties may, at any time, by mutual agreement, withdraw a case
from the Conciliation Section and jointly submit it to a Labor Arbiter,
27

except deadlocks in collective bargaining.] (Repealed by Section 16,

Batas Pambansa Bilang 130, August 21, 1981)

11. Issuance of subpoenas, Article 229.

The Bureau shall have the power to require the appearance of any person or the
production of any paper, document or matter relevant to a labor dispute under its
jurisdiction, either at the request of any interested party or at its own initiative.
12. Appointment of bureau personnel, Article 230.
The Secretary of Labor and Employment may appoint, in addition to the present
personnel of the Bureau and the Industrial Relations Divisions, such number of
examiners and other assistants as may be necessary to carry out the purpose of
the Code. (As amended by Section 15, Republic Act No. 6715, March 21, 1989).
13. Registry of unions and file of collective bargaining agreements, Article 231.
The Bureau shall keep a registry of legitimate labor organizations. The Bureau
shall also maintain a file of all collective bargaining agreements and other related
agreements and records of settlement of labor disputes and copies of orders and
decisions of voluntary arbitrators. The file shall be open and accessible to
interested parties under conditions prescribed by the Secretary of Labor and
Employment, provided that no specific information submitted in confidence shall
be disclosed unless authorized by the Secretary, or when it is at issue in any
judicial litigation, or when public interest or national security so requires.
Within thirty (30) days from the execution of a Collective Bargaining Agreement,
the parties shall submit copies of the same directly to the Bureau or the Regional
Offices of the Department of Labor and Employment for registration,
accompanied with verified proofs of its posting in two conspicuous places in the
place of work and ratification by the majority of all the workers in the bargaining
unit. The Bureau or Regional Offices shall act upon the application for registration
of such Collective Bargaining Agreement within five (5) calendar days from
receipt thereof. The Regional Offices shall furnish the Bureau with a copy of the
Collective Bargaining Agreement within five (5) days from its submission.

28

The Bureau or Regional Office shall assess the employer for every Collective
Bargaining Agreement a registration fee of not less than one thousand pesos
(P1,000.00) or in any other amount as may be deemed appropriate and
necessary by the Secretary of Labor and Employment for the effective and
efficient administration of the Voluntary Arbitration Program. Any amount
collected under this provision shall accrue to the Special Voluntary Arbitration
Fund.
The Bureau shall also maintain a file and shall undertake or assist in the
publication of all final decisions, orders and awards of the Secretary of Labor
and Employment, Regional Directors and the Commission. (As amended by
Section 15, Republic Act No. 6715, March 21, 1989)

14. Privileged communication, Article 233.

Information and statements made at conciliation proceedings shall be treated as
privileged communication and shall not be used as evidence in the Commission.
Conciliators and similar officials shall not testify in any court or body regarding
any matters taken up at conciliation proceedings conducted by them.
C. Grievance Machinery and
Voluntary Arbitration
15. Grievance Machinery and Voluntary Arbitration, Article 260.
The parties to a Collective Bargaining Agreement shall include therein provisions
that will ensure the mutual observance of its terms and conditions. They shall
establish a machinery for the adjustment and resolution of grievances arising
from the interpretation or implementation of their Collective Bargaining Agreement
and those arising from the interpretation or enforcement of company personnel
policies.
All grievances submitted to the grievance machinery which are not settled within
seven (7) calendar days from the date of its submission shall automatically be
referred to voluntary arbitration prescribed in the Collective Bargaining
Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall name and
designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, or
29

include in the agreement a procedure for the selection of such Voluntary

Arbitrator or panel of Voluntary Arbitrators, preferably from the listing of qualified
Voluntary Arbitrators duly accredited by the Board. In case the parties fail to
select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall
designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be
necessary, pursuant to the selection procedure agreed upon in the Collective
Bargaining Agreement, which shall act with the same force and effect as if the
Arbitrator or panel of Arbitrators has been selected by the parties as described
above.
16. Jurisdiction of Voluntary Arbitrators and Panel of Voluntary Arbitrators,
Article 261.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and
exclusive jurisdiction to hear and decide all unresolved grievances arising from
the interpretation or implementation of the Collective Bargaining Agreement and
those arising from the interpretation or enforcement of company personnel
policies referred to in the immediately preceding article. Accordingly, violations of
a Collective Bargaining Agreement, except those which are gross in character,
shall no longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For purposes of this
article, gross violations of Collective Bargaining Agreement shall mean flagrant
and/or malicious refusal to comply with the economic provisions of such
agreement.
The Commission, its Regional Offices and the Regional Directors of the
Department of Labor and Employment shall not entertain disputes, grievances or
matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or
panel of Voluntary Arbitrators and shall immediately dispose and refer the same
to the Grievance Machinery or Voluntary Arbitration provided in the Collective
Bargaining Agreement.
17. Jurisdiction over Other Labor Disputes, Article 262.
The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including unfair labor
practices and bargaining deadlocks.
18. Procedure, Article 262-A.
30

The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have the power to
hold hearings, receive evidences and take whatever action is necessary to
resolve the issue or issues subject of the dispute, including efforts to effect a
voluntary settlement between parties.
All parties to the dispute shall be entitled to attend the arbitration proceedings.
The attendance of any third party or the exclusion of any witness from the
proceedings shall be determined by the Voluntary Arbitrator or panel of Voluntary
Arbitrators. Hearing may be adjourned for cause or upon agreement by the
parties.
Unless the parties agree otherwise, it shall be mandatory for the Voluntary
Arbitrator or panel of Voluntary Arbitrators to render an award or decision within
twenty (20) calendar days from the date of submission of the dispute to
voluntary arbitration.
The award or decision of the Voluntary Arbitrator or panel of Voluntary
Arbitrators shall contain the facts and the law on which it is based. It shall be
final and executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties.
Upon motion of any interested party, the Voluntary Arbitrator or panel of
Voluntary Arbitrators or the Labor Arbiter in the region where the movant resides,
in case of the absence or incapacity of the Voluntary Arbitrator or panel of
Voluntary Arbitrators, for any reason, may issue a writ of execution requiring
either the sheriff of the Commission or regular courts or any public official whom
the parties may designate in the submission agreement to execute the final
decision, order or award.
19. Cost of Voluntary Arbitration and Voluntary Arbitrators Fee, Article 262B.
The parties to a Collective Bargaining Agreement shall provide therein a
proportionate sharing scheme on the cost of voluntary arbitration including the
Voluntary Arbitrators fee. The fixing of fee of Voluntary Arbitrators, whether
shouldered wholly by the parties or subsidized by the Special Voluntary
Arbitration Fund, shall take into account the following factors:
1. Nature of the case;
31

2.
3.
4.
5.

Time consumed in hearing the case;

Professional standing of the Voluntary Arbitrator;
Capacity to pay of the parties; and
Fees provided for in the Revised Rules of Court.

D. National Conciliation and Mediation Board (NCMB)

20. Executive Order No. 126, Reorganization Act of the Ministry of Labor and
Employment.
E.O. No. 126, Section 22. A National Conciliation and Mediation Board, herein
referred to as the "Board", is hereby created and which shall absorb the
conciliation, mediation and voluntary arbitration functions of the Bureau of Labor
Relations in accordance with Section 29 (c) hereof. The Board shall be composed
of an Administrator and two (2) Deputy Administrators. It shall be an attached
agency under the administrative supervision of the Minister of Labor and
Employment.
The Administrator and the Deputy Administrators shall be appointed by the
President upon recommendation of the Minister of Labor and Employment. There
shall be as many Conciliators-Mediators as the needs of the public service
require, who shall have at least three (3) years of experience in handling labor
relations and who shall be appointed by the President upon recommendation of
the Minister.
The Board shall have its main office in Metropolitan Manila and its Administrator
shall exercise supervision over Conciliators-Mediators and all its personnel. It
shall establish as many branches as there are administrative regions in the
country, with as many Conciliators-Mediators as shall be necessary for its
effective operation. Each branch of the Board shall be headed by an Executive
Conciliator-Mediator.

The Board shall have the following functions:

32

(a) Formulate policies, programs, standards, procedures, manuals of

operation and guidelines pertaining to effective mediation and
conciliation of labor disputes;
(b) Perform preventive mediation and conciliation functions;
(c) Coordinate and maintain linkages with other sectors or
institutions, and other government authorities concerned with
matters relative to the prevention and settlement of labor
disputes;
(d) Formulate policies, plans, programs, standards, procedures,
manuals of operation and guidelines pertaining to the promotion
of cooperative and non-adversarial schemes, grievance handling,
voluntary arbitration and other voluntary modes of dispute
settlement;
(e) Administer the voluntary arbitration program; maintain/update a
list of voluntary arbitrations; compile arbitration awards and
decisions;
(f) Provide counselling and preventive mediation assistance
particularly in the administration of collective agreements;
(g) Monitor and exercise technical supervision over the Board
programs being implemented in the regional offices; and
(h) Perform such other functions as may be provided by law or
assigned by the Minister.
Rules to Implement the Labor Code, Rule I, Book V, Section 1 (e), as
amended by D.O. No. 40-03, Series of 2003, Feb. 17, 2003
Section 1 (e). "Board" refers to the National Conciliation and Mediation Board
established under Executive Order No. 126

33

PART III
Kinds of Employment/Employee Classification
1. Regular, Casual Employment and Probationary Employment,

Article 280. Regular and casual employment. The provisions of written

agreement to the contrary notwithstanding and regardless of the oral agreement
of the parties, an employment shall be deemed to be regular where the employee
has been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or
where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists.

Article 281. Probationary Employment. Probationary employment shall not

exceed six (6) months from the date the employee started working, unless it is
covered by an apprenticeship agreement stipulating a longer period. The services
of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work
after a probationary period shall be considered a regular employee.
A. Regular Employment,
34

Article 280. Regular and casual employment.

Article 75 (d). A commitment to employ the learners if they so desire, as
regular employees upon completion of the learnership. All learners who have
been allowed or suffered to work during the first two (2) months shall be
deemed regular employees if training is terminated by the employer before the
end of the stipulated period through no fault of the learners.
Omnibus Rules, Book VI, Rule 1, Section 5. Regular and casual employment.
(a) The provisions of written agreements to the contrary notwithstanding and
regardless of the oral agreements of the parties, an employment shall be
considered to be regular employment for purposes of Book VI of the Labor Code
where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer except
where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season.
(b) Employment shall be deemed as casual in nature if it is not covered by the
preceding paragraph; Provided, That any employee who has rendered at least
one year of service, whether such service is continuous or not, shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.
(c) An employee who is allowed to work after a probationary period shall be
considered a regular employee.
Article 281. Probationary Employment.
Omnibus Rules, Book VI, Rule 1, Section 6. Probationary employment.
(a) Where the work for which an employee has been engaged is learnable or
apprenticeable in accordance with the standards prescribed by the Department
of Labor, the probationary employment period of the employee shall be limited to
the authorized learnership or apprenticeship period, whichever is applicable.

35

(b) Where the work is neither learnable nor apprenticeable, the probationary
employment period shall not exceed six (6) months reckoned from the date the
employee actually started working.
(c) The services of an employee who has been engaged on probationary basis
may be terminated only for a just cause or when authorized by existing laws, or
when he fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer.
(d) In all cases involving employees engaged on probationary basis, the employer
shall make known to the employee the standards under which he will qualify as
a regular employee at the time of his engagement.
A.1 By nature of work an employment is deemed regular when an
employee is engaged to perform activities which are usually necessary or
desirable to the business or trade of an employer EVEN if there is a written
or oral agreement to the contrary.
Hacienda Fatima v. National Federation of Sugarcane Workers Food and
General Trade, 396 SCRA 518
Facts: When complainant union (respondents) was certified as the
collective bargaining representative, petitioners refused to sit down with
the union for the purpose of entering into a Collective Bargaining
Agreement. The workers including complainants were not given work for
more than 1month. In protest, they staged a strike which was however
settled upon the signing of a Memorandum of Agreement (MOA).
Subsequently, alleging that complainants failed to load some wagons,
petitioners reneged on its commitment to bargain collectively & employed
all means including the use of private armed guards to prevent the
organizers from entering the premises. No work assignments were given
to complainants which forced the union to stage a strike. Due to
conciliation efforts by the DOLE, another MOA was signed by the parties
& they met in a conciliation meeting. When petitioners again reneged on
its commitment, complainants filed a complaint. Petitioner accused
respondents of refusing to work & being choosy in the kind of work they
have to perform.
The NLRC ruled that petitioners were guilty of unfair labor practice (ULP)
and that the respondents were illegally dismissed. The Court of Appeals
affirmed that while the work of respondents was seasonal in nature, they
36

were considered to be merely on leave during the off-season and were

therefore still employed by petitioners.
Issue: Whether the Court of Appeals erred in holding that respondents,
admittedly seasonal workers, were regular employees, contrary to the
clear provisions of Article 280 of the Labor Code, which categorically
state that seasonal employees are not covered by the definition of regular
employees under paragraph 1, nor covered under paragraph 2 which
refers exclusively to casual employees who have served for at least one
year
Held: No. For respondents to be excluded from those classified as
regular employees, it is not enough that they perform work or services
that are seasonal in nature. They must have also been employed only for
the duration of one season. The evidence proves the existence of the first,
but not of the second, condition. The fact that respondents repeatedly
worked as sugarcane workers for petitioners for several years is not
denied by the latter. Evidently, petitioners employed respondents for more
than one season. Therefore, the general rule of regular employment is
applicable.
If the employee has been performing the job for at least a year, even if the
performance is not continuous & merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence
of the necessity if not indispensability of that activity to the business.
Hence, the employment is considered regular, but only with respect to
such activity and while such activity exists. Seasonal workers who are
called to work from time to time and are temporarily laid off during offseason are not separated from service in said period, but merely
considered on leave until re-employed (De Leon v. NLRC).
Respondents, having performed the same tasks for petitioners every
season for several years, are considered the latter's regular employees for
their respective tasks. Petitioners' eventual refusal to use their services
even if they were ready, able and willing to perform their usual duties
whenever these were available and hiring of other workers to perform
the tasks originally assigned to respondents amounted to illegal
dismissal of the latter. The Court finds no reason to disturb the CA's
dismissal of what petitioners claim was their valid exercise of
management prerogative. The sudden changes in work assignments
37

reeked of bad faith. These changes were implemented immediately after

respondents had organized themselves into a union and started
demanding collective bargaining. Those who were union members were
effectively deprived of their jobs. Petitioners' move actually amounted to
unjustified dismissal of respondents, in violation of the Labor Code.
Association of Trade Unions (AU) v. Abella, G.R. No. 100518, Jan. 24,
2000
Facts: Respondent company is a domestic corporation engaged in road
construction projects of the government. From 1968 to 1989, it engaged
the services of the following workers to work on various projects on
different dates.
In February 1989, its workers joined petitioner union as members. They
filed a petition for certification election with the regional office of the
labor department. Respondent company opposed the petition on the
ground that the workers were project employees and therefore not
qualified to form part of the rank and file collective bargaining unit. The
Med-Arbiter dismissed the petition for certification election. On appeal,
the Secretary of Labor and Employment reversed the Med-Arbiter's
decision and ordered the immediate holding of a certification election.
The national president of petitioner union sent a demand letter to
respondent company seeking the payment of wage differentials to some
affected union members. Petitioner union and the concerned workers
filed a complaint for payment of wage differentials and other benefits
before the Regional Office of the Department of Labor and Employment.
Thereafter, respondent company terminated the employment of
aforementioned workers owing to the completion of its FOUR projects or
the expiration of workers' contracts.
The affected workers claimed that they were dismissed because of their
union activities. The workers staged a strike which Labor Arbiter declared
illegal and deemed lose their employment. The NLRC affirmed said
decision leading to appeal for certiorari. Meanwhile, the aggrieved
workers filed with the Regional Arbitration Branch of the NLRC their
individual complaints against private respondent. The cases were
consolidated and assigned to Labor Arbiter Nicolas Sayon for arbitration.
However, noting that a similar case had been filed before the regional
office of the labor department, the labor arbiter refrained from resolving
38

the issue of underpayment of monetary benefits. He also found the

charge of unfair labor practice untenable. But, on the charge of illegal
dismissal, he ruled on October 31, 1989 that favored at least four
petitioners. Others were dismissed for lack of merit.
Petitioners and private respondents separately appealed the Labor
Arbiters ruling to the NLRC. Pending appeal, Edgar Juesan, Lordito
Tatad and Ramon Tabada filed their motions claims against private
respondents. The NLRC promulgated its resolution modifying the
decision of Labor Arbiter Nicolas Sayon. It held that the labor arbiter
erred in not resolving the issue of underpayment of wages because not all
of the original complainants filed the same money claims with the labor
department. Thus, it awarded monetary benefits to qualified workers.
Issue: Whether or not the petitioners are regular or project employees of
respondent company.
Held: The contracts of employment of the petitioners attest to the fact
that they had been hired for specific projects, and their employment was
coterminous with the completion of the project for which they had been
hired. Said contracts expressly provide that the workers' tenure of
employment would depend on the duration of any phase of the project or
the completion of the awarded government construction projects in any
of their planned phases. Further, petitioners were informed in advance
that said project or undertaking for which they were hired would end on
a stated or determinable date. Besides, public respondent noted that
respondent company regularly submitted reports of termination of
services of project workers to the regional office of the labor department
as required under Policy Instruction No. 20. This compliance with the
reportorial requirement confirms that petitioners were project employees.
Considering
employment
engagement,
employment
termination
dismissal.

that petitioners were project employees, whose nature of

they were fully informed about, at the time of their
related to a specific project, work or undertaking, their
legally ended upon completion of said project. The
of their employment could not be regarded as illegal

ABS CBN Broadcasting Corp. v. Nazareno, G.R. No. 164156, Sept. 26,
2006
39

Facts: Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is

engaged in the broadcasting business and owns a network of television
and radio stations, whose operations revolve around the broadcast,
transmission, and relay of telecommunication signals. The respondents
Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs)
on different dates were employed by the Petitioner, assigned at the news
and public affairs, for various radio programs in the Cebu Broadcasting
Station, with a monthly compensation of P4, 000. They were issued ABSCBN employees identification cards and were required to work for a
minimum of eight hours a day, including Sundays and holidays. They
were under the control and supervision of Assistant Station Manager
Dante J. Luzon, and News Manager Leo Lastimosa.
On December 19, 1996, petitioner and the ABS-CBN Rank-and-File
Employees executed a Collective Bargaining Agreement (CBA) to be
effective during the period from December 11, 1996 to December 11,
1999. However, since petitioner refused to recognize PAs as part of the
bargaining unit, respondents were not included to the CBA.
On October 12, 2000, respondents filed a complaint for recognition of
regular employment status, underpayment of overtime pay, holiday pay,
premium pay, service incentive pay, sick leave pay, and 13th month pay
with damages against the petitioner before the NLRC. The Labor Arbiter
directed the parties to submit their respective position paper, however
they failed to file their position papers within the reglementary period,
Labor Arbiter Jose G. Gutierrez dismissed the complaint without
prejudice for lack of interest to pursue the case. Respondents received a
copy of the Order on May 16, 2001. Instead of re-filing their complaint
with the NLRC within 10 days from May 16, 2001, they filed, on June 11,
2001, an Earnest Motion to Refile Complaint with Motion to Admit
Position Paper and Motion to Submit Case for Resolution. The Labor
Arbiter granted this motion in an Order dated June 18, 2001, and
forthwith admitted the position paper of the complainants.
On July 30, 2001, the Labor Arbiter rendered judgment in favor of the
respondents, and declared that they were regular employees of petitioner;
as such, they were awarded monetary benefits. On appeal to the NLRC, it
ruled that respondents were entitled to the benefits under the CBA
because they were regular employees who contributed to the profits of
40

petitioner through their labor. Petitioner thus filed a petition for

certiorari under Rule 65 of the Rules of Court before the CA, raising both
procedural and substantive issues. Court of Appeals affirmed the ruling
of the NLRC.
Issue: Whether the appellate court committed palpable and serious error of
law when it affirmed the rulings of the NLRC, and entertained
respondents appeal from the decision of the Labor Arbiter despite the
admitted lapse of the reglementary period within which to perfect the
appeal.
Held: We agree with petitioners contention that the perfection of an
appeal within the statutory or reglementary period is not only
mandatory, but also jurisdictional; failure to do so renders the assailed
decision final and executory and deprives the appellate court or body of
the legal authority to alter the final judgment, much less entertain the
appeal. However, this Court has time and again ruled that in exceptional
cases, a belated appeal may be given due course if greater injustice may
occur if an appeal is not given due course than if the reglementary period
to appeal were strictly followed. The Court resorted to this extraordinary
measure even at the expense of sacrificing order and efficiency if only to
serve the greater principles of substantial justice and equity.
In the case at bar, the NLRC did not commit a grave abuse of its
discretion in giving Article 223 of the Labor Code a liberal application to
prevent the miscarriage of justice. Technicality should not be allowed to
stand in the way of equitably and completely resolving the rights and
obligations of the parties. We have held in a catena of cases that
technical rules are not binding in labor cases and are not to be applied
strictly if the result would be detrimental to the workingman.
Brent School, Inc. v. Zamora, G.R. No. 48494, Feb. 5, 1990
Facts: Employment contract in virtue of which Doroteo R. Alegre was
engaged as athletic director by Brent School, Inc. at a yearly
compensation. The contract fixed a specific term for its existence, five (5)
years, from July 18, 1971, the date of execution of the agreement, to July
17, 1976.

41

Some three months before the expiration of the stipulated period, or

more precisely on April 20, 1976, Alegre was given a copy of the report
filed by Brent School with the Department of Labor advising of the
termination of his services effective on July 16, 1976. The stated ground
for the termination was "completion of contract, expiration of the definite
period of employment." And a month or so later, on May 26, 1976, Alegre
accepted the amount of P3,177.71, and signed a receipt therefor
containing the phrase, "in full payment of services for the period May 16,
to July 17, 1976 as full payment of contract."
However, at the investigation conducted by a Labor Conciliator of said
report of termination of his services, Alegre protested the announced
termination of his employment. He argued that although his contract did
stipulate that the same would terminate on July 17, 1976, since his
services were necessary and desirable in the usual business of his
employer, and his employment had lasted for five years, he had acquired
the status of a regular employee and could not be removed except for
valid cause.
Issue: Whether or not the provisions of the Labor Code, as amended, have
anathematized "fixed period employment" or employment for a term.
Held: Respondent Alegre's contract of employment with Brent School
having lawfully terminated with and by reason of the expiration of the
agreed term of period thereof, he is declared not entitled to reinstatement
and the other relief awarded and confirmed on appeal in the proceedings
below.
The question immediately provoked by a reading of Article 319 is whether
or not a voluntary agreement on a fixed term or period would be valid
where the employee "has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer." The definition seems a non sequitur. From the premise that
the duties of an employee entail "activities which are usually necessary
or desirable in the usual business or trade of the employer the"
conclusion does not necessarily follow that the employer and employee
should be forbidden to stipulate any period of time for the performance of
those activities. There is nothing essentially contradictory between a
definite period of an employment contract and the nature of the
employee's duties set down in that contract as being "usually necessary
42

or desirable in the usual business or trade of the employer." The concept

of the employee's duties as being "usually necessary or desirable in the
usual business or trade of the employer" is not synonymous with or
identical to employment with a fixed term. Logically, the decisive
determinant in term employment should not be the activities that the
employee is called upon to perform, but the day certain agreed upon by
the parties for the commencement and termination of their employment
relationship, a day certain being understood to be "that which must
necessarily come, although it may not be known when." Seasonal
employment, and employment for a particular project are merely instances
employment in which a period, where not expressly set down, necessarily
implied.
Paraphrasing Escudero, respondent Alegre's employment was terminated
upon the expiration of his last contract with Brent School on July 16,
1976 without the necessity of any notice. The advance written advice
given the Department of Labor with copy to said petitioner was a mere
reminder of the impending expiration of his contract, not a letter of
termination, nor an application for clearance to terminate which needed
the approval of the Department of Labor to make the termination of his
services effective. In any case, such clearance should properly have been
given, not denied.
Columbus Philippines Bus Corp. v. NLRC, G.R. No. 114858-59, Sept. 7,
2001
Facts: Petitioner Columbus Philippines Bus Corporation is engaged in
the business of operating passenger buses. Private respondent Roman
Domasig started working as a driver with the petitioner on August 30,
1990 with a daily income ranging from Three Hundred Fifty Pesos
(P350.00) to Six Hundred Fifty Pesos (P650.00), while his wife and corespondent, Zenaida Domasig, was employed as a bus conductress on
October 1, 1990 with a daily income of Two Hundred Fifty Pesos
(P250.00) to Five Hundred Pesos (P500.00).The employment of private
respondents Roman and Zenaida Domasig with the petitioner was
abruptly terminated on January 21 and 22, 1992, respectively, for their
having allegedly formed a labor union.
Respondent Domasig claims that they intended to form union to address
certain challenges in their work. However, upon having knowledge of this
43

forming of union, Atty. Catabian dismissed him abruptly from his work.
The petitioner Columbus Philippines Bus Corporation alleges that the
private respondents like its other drivers and conductors are not regular
employees, that the services of private respondents were rendered on a
first come first served basis and compensated purely on commission
basis; that they worked for only about ten (10) to fifteen (15) days a
month, and only when they felt like doing so.
Labor Arbiter, ruled in favor of respondents and ordered their
reinstatement and payment of backwages but not the other money claims
for lack of merit. Upon appeal to the NLRC, it affirmed the earlier
decision of the LA and dismissed petitioners motion.
Issue: Whether or not private respondents were indeed regular employees.
Held: Private Respondents were regular employees and were illegally
dismissed. Petition denied.
Court refers to Art. 280 of the Labor Code to address the issue. The test
is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by
considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence
of the necessity if not indispensability of that activity to the business.
The employment of private respondents is regular. They perform work
necessary and desirable in the business of the petitioner. Without the
services of the bus drivers and conductors, like the private respondents,
the petitioner could not have operated and managed its business of
providing transportation services to the public.
In termination cases, like the ones before us, the burden of proving that
the dismissal of the employees was for a valid and authorized cause rests
on the employer. It was incumbent upon petitioner Columbus Philippines
Bus Corporation to show by substantial evidence that the termination of
the employment of private respondents was validly made and failure to
44

discharge that duty would mean that the dismissal is not justified and
therefore illegal.
Mere absence or failure to report for work, after notice to return, is not
enough to amount to such abandonment. For a valid finding of
abandonment, two (2) factors must be present, (a) the failure to report for
work or absence without valid or justifiable reason; and (b) a clear
intention to sever employer-employee relationship, with the second
element as the more determinative factor being manifested by some overt
acts.
Private respondents were asked to relinquish their assigned buses and
from that date forward, they were not given bus assignments. Thus,
under the circumstances, we find private respondents absences
supported with valid reason. Second, it appeared that private
respondents never intended to sever their working relationship with
petitioner. Two weeks after private respondents were not given bus
assignments, they filed their subject complaint for illegal dismissal with
the DOLE. An employee who forthwith takes steps to protest his layoff
cannot be said to have abandoned his work.
Singer Sewing Machine Company v. Drilon, G.R. No. 91307, Jan. 21,
1991
Facts: Respondent union filed a petition for direct certification as the
sole and exclusive bargaining agent of all collectors of the Singer Sewing
Machine Company, Baguio City branch. The Company opposed the
petition mainly on the ground that the union members are actually not
employees but are independent contractors as evidenced by the collection
agency agreement which they signed.
Respondent union members contend that it is asserted that they perform
the most desirable and necessary activities for the continuous and
effective operations of the business of the petitioner Company. Petitioners
meanwhile claim that under the control test, there was no sufficient
control exerted by them which does not give rise to an EmployerEmployee relationship.
The respondent Med-Arbiter, finding that there exists an employeremployee relationship between the union members and the Company,
45

granted the petition for certification election. On appeal, Secretary of

Labor Franklin M. Drilon affirmed it. The motion for reconsideration of
the Secretary's resolution was denied.
Issue: Whether or not there exists an Employer-Employee relationship
between the petitioners and that of the respondent union members or are
they mere independent contractors.
Held: Union members are independent contractors. Petition granted.
The following elements are generally considered in the determination of
the employer-employee relationship; (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of dismissal; and
(4) the power to control the employee's conduct although the latter is
the most important element.
The nature of the relationship between a company and its collecting
agents depends on the circumstances of each particular relationship. Not
all collecting agents are employees and neither are all collecting agents
independent contractors. The collectors could fall under either category
depending on the facts of each case.
The Agreement confirms the status of the collecting agent in this case as
an independent contractor not only because he is explicitly described as
such but also because the provisions permit him to perform collection
services for the company without being subject to the control of the latter
except only as to the result of his work.
Court finds that the means argued by respondents as forms or Control
are not sufficient and does not indicate control. Respondents only
highlighted selected provisions of the Agreement but ignored important
and pertinent part of it that there was no sufficient control.
Thorough examination of the facts of the case leads us to the conclusion
that the existence of an employer-employee relationship between the
Company and the collection agents cannot be sustained.
The Court finds that since private respondents are not employees of the
Company, they are not entitled to the constitutional right to join or form
a labor organization for purposes of collective bargaining.
46

 Zonsa v. ABS-CBN Broadcasting Cor., G.R. No. 1380051, June 10, 2004
Facts: Respondent ABS-CBN Broadcasting Corporation (ABS-CBN)
signed an Agreement (Agreement) with the Mel and Jay Management and
Development Corporation (MJMDC). ABS-CBN was represented by its
corporate officers while MJMDC was represented by SONZA, as President
and General Manager, and Carmela Tiangco (TIANGCO), as EVP and
Treasurer.
ABS-CBN agreed to pay for SONZAs services a monthly talent fee of
P310,000 for the first year and P317,000 for the second and third year of
the Agreement. ABS-CBN would pay the talent fees on the 10 th and 25th
days of the month. Sonza resigned over changes in his program. He wrote
a letter to respondents, informing them of his rescission of the contract
but maintains his right to recover other benefits under said agreement.
On April 1996, SONZA filed a complaint against ABS-CBN before the
Department of Labor and Employment, National Capital Region in
Quezon City. SONZA complained that ABS-CBN did not pay his salaries,
separation pay, service incentive leave pay, 13 th month pay, signing
bonus, travel allowance and amounts due under the Employees Stock
Option Plan (ESOP).Respondents claim that there was no EmployerEmployee relationship.
Labor Arbiter ruled that indeed there was no Employer-Employee
relationship. Upon appeal to the NLRC, this decision was upheld. Court
of Appeals likewise agreed with said decision.
Issue: Whether or not there exist an Employer-Employee relationship
between petitioner Sonza and respondent ABS-CBN.
Held: There
Denied.

was no Employer-Employee relationship. Petition

Independent contractors often present themselves to possess unique

skills, expertise or talent to distinguish them from ordinary employees.
The specific selection and hiring of SONZA, because of his unique
skills, talent and celebrity status not possessed by ordinary
employees, is a circumstance indicative, but not conclusive, of an
47

independent contractual relationship. If SONZA did not possess such

unique skills, talent and celebrity status, ABS-CBN would not have
entered into the Agreement with SONZA but would have hired him
through its personnel department just like any other employee.
SONZAs talent fees, amounting to P317,000 monthly in the second and
third year, are so huge and out of the ordinary that they indicate more an
independent contractual relationship rather than an employer-employee
relationship.
Applying the control test to the present case, we find that SONZA is not
an employee but an independent contractor. The control test is the most
important test our courts apply in distinguishing an employee from an
independent contractor.
ABS-CBN did not assign any other work to SONZA. To perform his work,
SONZA only needed his skills and talent. How SONZA delivered his lines,
appeared on television, and sounded on radio were outside ABS-CBNs
control. SONZA did not have to render eight hours of work per day. The
Agreement required SONZA to attend only rehearsals and tapings of the
shows, as well as pre- and post-production staff meetings. ABS-CBN
could not dictate the contents of SONZAs script. However, the Agreement
prohibited SONZA from criticizing in his shows ABS-CBN or its interest.
The clear implication is that SONZA had a free hand on what to say or
discuss in his shows provided he did not attack ABS-CBN or its interests.
Dumpit Murillo v. C.A., G.R. No. 164652, June 8, 2007
Facts: Private respondent Associated Broadcasting Company (ABC) hired
petitioner Thelma Dumpit-Murillo as a newscaster and co-anchor for
Balitang-Balita, an early evening news program. The contract was for a
period of three months. After four years of repeated renewals, petitioner
talent contract expired. Two weeks after the expiration of the last
contract, petitioner sent a letter to Mr. Jose Javier, Vice President for
News and Public Affairs of ABC, informing the latter that she was still
interested in renewing her contract subject to a salary increase.
Thereafter, petitioner stopped reporting for work.

48

A month later, petitioner sent a demand letter to ABC, demanding: (a)

reinstatement to her former position; (b) payment of unpaid wages for
services rendered from September 1 to October 20, 1999 and full
backwages; (c) payment of 13th month pay, vacation/sick/service
incentive leaves and other monetary benefits due to a regular employee
starting March 31, 1996. ABC replied that a check covering petitioner
talent fees for September 16 to October 20, 1999 had been processed and
prepared, but that the other claims of petitioner had no basis in fact or
in law.
Petitioner filed a complaint before the Labor Arbiter but this was
subsequently dismissed. On appeal, the NLRC reversed this decision by
the LA on the ground that there was indeed an employer-employee
relationship existed between petitioner and ABC; that the subject talent
contract was void; that the petitioner was a regular employee illegally
dismissed; and that she was entitled to reinstatement and backwages or
separation pay, aside from 13th month pay and service incentive leave
pay, moral and exemplary damages and attorneys fees.
ABC then elevated the case to the Court of Appeals, where the decision of
the NLRC was reversed and set aside.
Issue: Whether or not there was indeed an employer-employee relationship
between the petitioner and respondent and whether or not due process
was duly accorded the petitioners in the said dismissal.
Held: There was Employer-Employee relationship. Petition granted.
Petitioner was a regular employee under contemplation of law. The
practice of having fixed-term contracts in the industry does not
automatically make all talent contracts valid and compliant with labor
law.
Sonza Case was not applicable since there was no control in the way
Sonza handled his work.
In the case at bar, ABC had control over the performance of petitioners
work. Noteworthy too, is the comparatively low P28,000 monthly pay of
petitioner vis the P300,000 a month salary of Sonza, that all the more

49

bolsters the conclusion that petitioner was not in the same situation as
Sonza.
The elements to determine the existence of an employment relationship
are: (a) the selection and engagement of the employee, (b) the payment of
wages, (c) the power of dismissal, and (d) the employers power to control.
The most important element is the employers control of the employees
conduct, not only as to the result of the work to be done, but also as to
the means and methods to accomplish it.
As a regular employee, petitioner is entitled to security of tenure and can
be dismissed only for just cause and after due compliance with
procedural due process. Since private respondents did not observe due
process in constructively dismissing the petitioner, we hold that there
was an illegal dismissal.
ABS-CBN Broadcasting Corporation v. Marquez, G.R. No. 167638, June
12, 2005
Facts: Petitioner hired the services of respondents on various dates
starting December, 1994 to undertake the production in the Cebuano
dialect of television serial programs for petitioner's week-day afternoon
time slots in Cebu. Respondents were assigned among three (3)
production groups, each with its own set of directors, writers,
videographers, lightsmen, editors, actors and utility personnel. Each
production group was given a weekly budget, initially at P30,000.00,
which was later increased to P40,000.00 a week.
On June 15, 1999, respondents addressed a letter to petitioner asking for
a 25% increase in their weekly budget, but the same was denied by
petitioner's AVP for the Visayas Cluster, Ma. Luisa L. Ascalon. Instead,
respondents were informed of the termination of their services effective
August 13, 1999.
On August 27, 1999, respondents filed with the Regional Arbitration
Branch (RAB) at Region VII of the Department of Labor and Employment
their consolidated complaint for illegal dismissal; illegal deduction; nonpayment of overtime and holiday pay; premium pay for holiday, rest day
and night shift differential; non-payment of 13 th month pay, service
incentive leave, separation pay, backwages; and attorney's fees.
50

Labor Arbiter rendered a decision favoring herein Respondents, Marquez,

Et. Al. On appeal to the NLRC, the decision of the Labor Arbiter was
reversed and set aside. Upon the denial of the Motion for Reconsideration
by the NLRC, Marquez elevated the case to the Court of Appeals.
Respondents argued that their continued work among others rendered
them as regular employees of Petitioners while Petitioners argued that
they were just talents and thus are only contractually employed.
Court of Appeals reinstates the decision of the Labor Arbiter and ruled
on favor of Respondents in ruling that they were indeed regular
employees.
Issue: Whether or not Respondents were indeed regular employees and
not contractual in nature.
Held: They are Regular Employees. Petition Denied.
Respondents' employment with petitioner passed the "four-fold test" on
employer-employee relations, namely: (1) the selection and engagement of
the employee, or the power to hire; (2) the payment of wages; (3) the
power to dismiss; and (4) the power to control the employee.
It may be so that respondents were assigned to a particular tele-series.
However, petitioner can and did immediately reassign them to a new
production upon completion of a previous one. Hence, they were
continuously employed, the tele-series being a regular feature in
petitioner's network programs.
A project employee or a member of a work pool may acquire the status of
a regular employee when the following concur: there is continuous
rehiring of project employees even after the cessation of the project; and
the tasks performed by the alleged "project employee" are vital,
necessary, and indispensable to the usual business or trade of his
employer. It cannot be denied that the services of respondents as
members of a crew in the production of a tele-series are undoubtedly
connected with the business of the petitioner.

51

Even granting on the extreme that respondents were not performing work
that is vital, necessary and indispensable to the usual business of
petitioner, nonetheless the second paragraph of Article 280 of the Labor
Code still applies.
Art. 280. An employment shall be deemed to be casual if it is not covered
by the preceding paragraph. Provided, That, any employee who has
rendered at least one year of service whether such service is
continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment
shall continue while such activity exists.
There was no showing of compliance with the requirement that after
every engagement or production of a particular television series, the
required reports were filed with the proper government agency, as
provided no less under the very Policy Instruction invoked by the
petitioner, nor under the Omnibus Implementing Rules of the Labor Code
for project employees. This alone bolsters respondents' contention that
they were indeed petitioner's regular employees since their employment
was not only for a particular program.
Inarguably, petitioner denied them of due process. In fine, with
petitioner's failure to establish compliance with the legal requirements on
termination of employment under the Labor Code, the appellate court
was correct in declaring respondents' dismissal as tainted with illegality.
Consolidated Broadcasting System, Inc. v. Oberio, G.R. No. 168424, June
8, 2007
Facts: Respondents alleged that they were employed as drama talents by
DYWB-Bombo Radyo, a radio station owned and operated by petitioner
Consolidated Broadcasting System, Inc. They reported for work daily for
six days in a week and were required to record their drama production in
advance. Some of them were employed by petitioner since 1974, while the
latest one was hired in 1997. August 1998, petitioner reduced the
number of its drama productions from 14 to 11, but was opposed by
respondents. After the negotiations failed, the latter sought the
intervention of DOLE which conducted through its Regional Office, an
inspection of DWYB station. The results thereof revealed that petitioner is
52

guilty of violation of labor standard laws, such as underpayment of

wages, 13th month pay, non-payment of service incentive leave pay, and
non-coverage of respondents under the Social Security System. Petitioner
contended that respondents are not its employees and refused to submit
the payroll and daily time records despite the subpoena duces tecum
issued by the DOLE Regional Director. Vexed by the respondent
complaint,
petitioner
allegedly
pressured
and
intimidated
respondents. Respondents Oberio and Delta were suspended for minor
lapses and the payment of their salaries were purportedly
delayed. Eventually, on February 3, 1999, pending the outcome of the
inspection case with the Regional Director, respondents were barred by
petitioner from reporting for work; thus, the former claimed constructive
dismissal. July 8, 1999, the Regional Director order and certified the
records of the case to the NLRC, Regional Arbitration Branch VI, for
determination of employer-employee relationship. Respondents appealed
said order to the Secretary of Labor. On October 12, 1999, respondents
filed a case for illegal dismissal, underpayment/non-payment of wages
and benefits plus damages against petitioner. On April 10, 2000, the
Labor Arbiter dismissed the case without prejudice while waiting for the
decision of the Secretary of Labor on the same issue of the existence of
an employer-employee relationship between petitioner and respondents.
On appeal to the NLRC, respondents raised the issue of employeremployee relationship and submitted the following to prove the existence
of such relationship, to wit: time cards, identification cards, payroll, a
show cause order of the station manager to respondent Danny Oberio
and memoranda either noted or issued by said manager. Petitioner, on
the other hand, did not present any documentary evidence in its behalf
and merely denied the allegations of respondents. It claimed that the
radio station pays for the drama recorded by piece and that it has no
control over the conduct of respondents. On December 5, 2001, the
NLRC rendered a decision holding that respondents were regular
employees of petitioner. Hence, petitioner filed the instant recourse.
Issue: Whether or not respondents were employees of petitioner.
Held: Yes they were employees of petitioner. Petitioner failed to controvert
with substantial evidence the allegation of respondents that they were
hired by the former on various dates from 1974 to 1997. If petitioner did
not hire respondents and if it was the director alone who chose the
talents, petitioner could have easily shown, being in possession of the
53

records, a contract to such effect. However, petitioner merely relied on its

contention that respondents were piece rate contractors who were paid
by results. Note that under Policy Instruction No. 40, petitioner is obliged
to execute the necessary contract specifying the nature of the work to be
performed, rates of pay, and the programs in which they will
work. Moreover, project or contractual employees are required to be
apprised of the project they will undertake under a written contract. This
was not complied with by the petitioner, justifying the reasonable
conclusion that no such contracts exist and that respondents were in
fact regular employees. If the employee has been performing the job for at
least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not indispensability
of that activity to the business. Thus, even assuming that respondents
were initially hired as project/contractual employees who were paid per
drama or per project/contract, the engagement of their services for 2 to
25 years justify their classification as regular employees, their services
being deemed indispensable to the business of petitioner.
Orazco v. The Fifth Division of the Honorable Court of Appeals, G.R. No.
155207, August 13, 2008
Facts: In March 1990, PDI (Philippine Daily Inquirer) engaged the
services of petitioner to write a weekly column for its Lifestyle section.
She religiously submitted her articles every week, except for a six-month
stint in New York City when she, nonetheless, sent several articles
through mail. She received compensation of P250.00 later increased
to P300.00 for every column published. On November 7, 1992,
petitioners column appeared in the PDI for the last time. Petitioner
claims that her then editor, Ms. Lita T. Logarta, told her that respondent
Leticia Jimenez Magsanoc, PDI Editor in Chief, wanted to stop publishing
her column for no reason at all and advised petitioner to talk to
Magsanoc herself. Petitioner narrates that when she talked to Magsanoc,
the latter informed her that it was PDI Chairperson Eugenia Apostol who
had asked to stop publication of her column, but that in a telephone
conversation with Apostol, the latter said that Magsanoc informed her
(Apostol) that the Lifestyle section already had many columnists.
Aggrieved by the newspapers action, petitioner filed a complaint for illegal
dismissal, back wages, moral and exemplary damages, and other money
claims before the NLRC. On October 29, 1993, Labor Arbiter Arthur
54

Amansec rendered a Decision in favor of petitioner finding complainant to

be an employee of PDI. PDI appealed the Decision to the NLRC. The
NLRC also resolved the appeal on its merits. It found no error in the
Labor Arbiters findings of fact and law. It sustained the Labor Arbiters
reasoning that respondent PDI exercised control over petitioners work.
PDI then filed a Petition for Review before this Court seeking the reversal
of the NLRC Decision. However, in a Resolution dated December 2, 1998,
this Court referred the case to the Court of Appeals, pursuant to our
ruling in St. Martin Funeral Homes v. National Labor Relations
Commission. The CA rendered its assailed Decision on June 11, 2002. It
set aside the NLRC Decision and dismissed petitioners Complaint. It held
that the NLRC misappreciated the facts and rendered a ruling wanting in
substantial evidence. Petitioners Motion for Reconsideration was denied
in a Resolution dated September 11, 2002. She then filed the present
Petition for Review.
Issue: Whether or not Petitioner is an employee of PDI.
Held: No, petitioner was not respondent PDIs employee but an
independent contractor, engaged to do independent work. This Court has
constantly adhered to the four-fold test to determine whether there exists
an employer-employee relationship between parties. Of these four
elements, it is the power of control which is the most crucial and most
determinative factor, so important, in fact, that the other elements may
even be disregarded. Not all rules imposed by the hiring party on the
hired party indicate that the latter is an employee of the former. Rules
which serve as general guidelines towards the achievement of the
mutually desired result are not indicative of the power of control.
Petitioner believes that respondents acts are meant to control how she
executes her work. We do not agree. A careful examination reveals that
the factors enumerated by the petitioner are inherent conditions in
running a newspaper. In other words, the so-called control as to time,
space, and discipline are dictated by the very nature of the newspaper
business itself. The perceived constraint on petitioners column was
dictated by her own choice of her columns perspective. The column title
Feminist Reflections was of her own choosing, as she herself admitted,
since she had been known as a feminist writer. Thus, respondent PDI, as
well as her readers, could reasonably expect her columns to speak from
such perspective. Contrary to petitioners protestations, it does not
55

appear that there was any actual restraint or limitation on the subject
matter within the Lifestyle section that she could write about.
Respondent PDI did not dictate how she wrote or what she wrote in her
column. Neither did PDIs guidelines dictate the kind of research, time,
and effort she put into each column. In fact, petitioner herself said that
she received no comments on her articles except for her to shorten them
to fit into the box allotted to her column. Therefore, the control that PDI
exercised over petitioner was only as to the finished product of her
efforts, i.e., the column itself, by way of either shortening or outright
rejection of the column. Although petitioner had a weekly deadline to
meet, she was not precluded from submitting her column ahead of time
or from submitting columns to be published at a later time. More
importantly, respondents did not dictate upon petitioner the subject
matter of her columns, but only imposed the general guideline that the
article should conform to the standards of the newspaper and the
general tone of the particular section. Where a person who works for
another performs his job more or less at his own pleasure, in the manner
he sees fit, not subject to definite hours or conditions of work, and is
compensated according to the result of his efforts and not the amount
thereof, no employer-employee relationship exists. Furthermore,
respondent PDI did not supply petitioner with the tools and
instrumentalities she needed to perform her work. Petitioner only needed
her talent and skill to come up with a column every week. As such, she
had all the tools she needed to perform her work.
A.2 By period of service an employment is considered regular when an
employee has rendered at least one (1) year, whether continuous or broken,
on such activity in which he is employed and his employment shall
continue while such activity exists.
Audion Electric Co. Inc. v. NLRC, 308 SCRA 340
Facts: Complainant Nicolas Madolid was employed by respondent Audion
Electric Company on June 30, 1976 as fabricator and continuously
rendered service assigned in different offices or projects as helper
electrician, stockman and timekeeper. He has rendered thirteen (13)
years of continuous, loyal and dedicated service with a clean record. On
August 3, complainant was surprised to receive a letter informing him
that he will be considered terminated after the turnover of materials,
including respondents tools and equipments not later than August 15,
56

1989. Complainant claims that he was dismissed without justifiable

cause and due process and that his dismissal was done in bad faith
which renders the dismissal illegal. For this reason, he claims that he is
entitled to reinstatement with full back wages. He also claims that he is
entitled to moral and exemplary damages. He includes payment of his
overtime pay, project allowance, minimum wage increase adjustment,
proportionate 13th month pay and attorneys fees. On its part,
respondent merely relied on its unverified letter-communication signed
by its project manager. Labor Arbiter Cresencio R. Iniego rendered a
decision in favor of Nicolas. Petitioner appealed to the National Labor
Relations Commission which rendered the questioned Resolution dated
March 24, 1992 dismissing the appeal. The motion for reconsideration
filed by petitioner was denied by the NLRC in its Order dated July 31,
1992.
Issue: Whether or not the respondent NLRC committed grave abuse of
discretion amounting to lack or excess of jurisdiction when it ruled Nicolas
Madolid was a regular employee and not a project employee.
Held: No. Private respondents employment status was established by
the Certification of Employment dated April 10, 1989 issued by petitioner
which certified that private respondent is a bonafide employee of the
petitioner from June 30, 1976 up to the time the certification was issued
on April 10, 1989. This proves that private respondent was regularly and
continuously employed by petitioner in various job assignments from
1976 to 1989, for a total of 13 years. The alleged gap in employment
service cited by petitioner does not defeat private respondents regular
status as he was rehired for many more projects without interruption
and performed functions which are vital, necessary and indispensable to
the usual business of petitioner. We have held that where the
employment of project employees is extended long after the supposed
project has been finished, the employees are removed from the scope of
project employees and considered regular employees. Private respondent
had presented substantial evidence to support his position, while
petitioner merely presented an unverified position paper merely stating
therein that private respondent has no cause to complain since the
employment contract signed by private respondent with petitioner was
co-terminous with the project. Notably, petitioner failed to present such
employment contract for a specific project signed by private respondent
57

that would show that his employment with the petitioner was for the
duration of a particular project.
Universal Robina Corporation v. Catapang, 473 SCRA189

Facts: The respondents were hired by the petitioner company on various

dates from 1991 to 1993 to work at its duck farm. The respondents were
hired under an employment contract which provided for a five-month
period. After the expiration of the said employment contracts, the
petitioner company would renew them and re-employ the respondents.
This practice continued until sometime in 1996, when the petitioners
informed the respondents that they were no longer renewing their
employment contracts. The respondents, then, filed separate complaints
for illegal dismissal, reinstatement, backwages, damages and attorneys
fees against the petitioners.
The petitioners submit that the respondents are not regular employees.
They aver that it is of no moment that the respondents have rendered
service for more than a year since they were covered by the five-month
individual contracts to which they duly acquiesced. The petitioners
contend that they were free to terminate the services of the respondents
at the expiration of their individual contracts. The petitioners maintain
that, in doing so, they merely implemented the terms of the contracts.
The petitioners further assert that the respondents contracts of
employment were not intended to circumvent security of tenure. They
point out that the respondents knowingly and voluntarily agreed to sign
the contracts without the petitioners having exercised any undue
advantage over them. Moreover, there is no evidence showing that the
petitioners exerted moral dominance on the respondents.
Issue: Whether or not respondents are regular employees of petitioner
corporation.
Held: The SC held that the CA, the NLRC and the Labor Arbiter correctly
categorized the respondents as regular employees of the petitioner
company. The primary standard of determining regular employment is
58

the reasonable connection between the particular activity performed by

the employee in relation to the usual trade or business of the employer.
The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. The connection can be
determined by considering the nature of work performed and its relation
to the scheme of the particular business or trade in its entirety. Also, if
the employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence
of the necessity if not indispensability of that activity to the business.
Hence, the employment is considered regular, but only with respect to
such activity and while such activity exists.

It is obvious that the said five-month contract of employment was used by

petitioners as a convenient subterfuge to prevent private respondents from
becoming regular employees. Such contractual arrangement should be struck
down or disregarded as contrary to public policy or morals. To uphold the same
would, in effect, permit petitioners 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. Petitioners act of
repeatedly and continuously hiring private respondents in a span of 3 to 5 years
to do the same kind of work negates their contention that private respondents
were hired for a specific project or undertaking only.

Abesco Construction and Development Corp. v. Ramirez 487 SCRA 9

Facts: Petitioner company was engaged in a construction business where
respondents were hired on different dates from 1976 to 1992 either as
laborers, road roller operators, painters or drivers.
In 1997, respondents filed two separate complaints for illegal dismissal
against the company and its General Manager, Oscar Banzon, before the
Labor Arbiter. Petitioners allegedly dismissed them without a valid reason
and without due process of law. The complaints also included claims for
non-payment of the 13th month pay, five days service incentive leave
pay, premium pay for holidays and rest days, and moral and exemplary
damages. The LA later on ordered the consolidation of the two
complaints.
59

Petitioners denied liability to respondents and countered that

respondents were project employees since their services were necessary
only when the company had projects to be completed. Petitioners argued
that, being project employees, respondents employment was coterminous
with the project to which they were assigned. They were not regular
employees who enjoyed security of tenure and entitlement to separation
pay upon termination from work.
Issue: Whether respondents were project employees or regular employees.
Held: The SC held that respondents were regular employees. The
principal test for determining whether employees are project employees
or regular employees is whether they are assigned to carry out a
specific project or undertaking, the duration and scope of which are
specified at the time they are engaged for that project. Such duration, as
well as the particular work/service to be performed, is defined in an
employment agreement and is made clear to the employees at the time of
hiring.
Petitioners did not have that kind of agreement with respondents. Neither
did they inform respondents of the nature of the latters work at the time
of hiring. Hence, for failure of petitioners to substantiate their claim that
respondents were project employees, we are constrained to declare them
as regular employees.
A.3 By probationary employment, -an employee who is allowed to work
after a probationary period (not to exceed six (6) months shall be considered
regular.
a. Statutory definition of Probationary Employment. Article 281.
Probationary employment shall not exceed six (6) months from the date
the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who
has been engaged on a probationary basis may be terminated for a just
cause or when he fails to qualify as a regular employee in accordance
with reasonable standards made known by the employer to the employee
at the time of his engagement. An employee who is allowed to work after
a probationary period shall be considered a regular employee.
60

b. Nature of probationary employment

Philippine Federation of Credit Cooperatives, Inc. v. NLRC, G.R. 121071,
Dec. 11, 1998

Facts: Victoria Abril was employed by petitioner Philippine Federation of

Credit Cooperatives, Inc. (PFCCI), a corporation engaged in organizing
services to credit and cooperative entities, as Junior Auditor/Field
Examiner and thereafter held positions in different capacities, to wit: as
office secretary in 1985 and as cashier-designate for four (4) months
ending in April 1988. Respondent, shortly after resuming her position as
office secretary, subsequently went on leave until she gave birth to a
baby girl.
Upon her return after giving birth, she discovered that a certain Vangie
Santos had been permanently appointed to her former position. She,
nevertheless, accepted the position of Regional Field Officer as evidenced
by a contract which stipulated, among other things, that respondents
employment status shall be probationary for a period of six (6)
months. Said period having elapsed, respondent was allowed to work
until PFCCI presented to her another employment contract for a period of
one year commencing on January 2, 1991 until December 31, 1991,
after which period, her employment was terminated.
Abril filed a complaint for illegal dismissal filed by respondent against
PFCCI. Labor Arbiter dismissed for lack of merit. The NLRC reversed the
Labor Arbiters ruling and directed to reinstate Abril to her last position
held and back wages.
PFCC contented that after Abril had allegedly abandoned her secretarial
position for eight (8) months, she applied for the position of Regional
Field Officer for Region IV, became a casual or contractual employment
under Article 280 of the Labor Code.
Issue: Whether or not Abril is a regular employee

61

Held: Abril is a regular employee. The contention that respondent could

either be classified as a casual or contractual employee is utterly
misplaced.
An employment shall be deemed to be casual: Provided, That, any
employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment
shall continue while such activity exists.
The court examined the contract, while the initial statements of the
contract show that respondents employment was for a fixed period, the
succeeding provisions thereof contradicted the same when it provided
that respondent shall be under probationary status commencing on
February 17, 1990 and ending six (6) months thereafter. Petitioner
manifested that respondents employment for a period of one year, from
January until December 1991, having been fixed for a specified period,
could not have converted her employment status to one of regular
employment. Conversely, it likewise insisted that respondent was
employed to perform work related to a project funded by the World
Council of Credit Unions (WOCCU) and hence, her status is that of a
project employee. The Court is, thus, confronted with a situation under
which the terms of the contract are so ambiguous as to preclude a
precise application of the pertinent labor laws.
Regardless of the designation petitioner may have conferred upon
respondents employment status, it is, however, uncontroverted that the
latter, having completed the probationary period and allowed to work
thereafter, became a regular employee who may be dismissed only for just
or authorized causes under Articles 282, 283 and 284 of the Labor Code,
as amended. Therefore, the dismissal, premised on the alleged
expiration of the contract, is illegal and entitles respondent to the reliefs
prayed for.

c. Computation of the sixth (6) month probationary period.

Cals Poultry Supply Corp. v. Roco, G.R. No. 150660, July 30, 2002
62

Facts: CALS Poultry Supply Corporation is engaged in the business of

selling dressed chicken and other related products and managed by
Danilo Yap. On March 15, 1984, CALS hired Alfredo Roco as its driver.
On the same date, CALS hired Edna Roco, Alfredos sister, as a helper in
the dressing room of CALS. On May 16, 1995, it hired Candelaria Roco,
another sister, as helper, also at its chicken dressing plant on a
probationary basis.
On March 5, 1996, Alfredo Roco and Candelaria Roco filed a complaint
for illegal dismissal against CALS and Danilo Yap alleging that Alfredo
and Candelaria were illegally dismissed on January 20, 1996 and
November 5, 1996, respectively. Both also claimed that they were
underpaid of their wages.[5] Edna Roco, likewise, filed a complaint for
illegal dismissal, alleging that on June 26, 1996, she was reassigned to
the task of washing dirty sacks and for this reason, in addition to her
being transferred from night shift to day time duties, which she
considered as management act of harassment, she did not report for
work.
The Labor Arbiter on April 16, 1998, issued a decision dismissing the
complaints for illegal dismissal for lack of merit. The Labor Arbiter found
that Alfredo Roco applied for and was granted a leave of absence for the
period from January 4 to 18, 1996. He did not report back for work after
the expiration of his leave of absence, prompting CALS, through its Chief
Maintenance Officer to send him a letter on March 12, 1996 inquiring if
he still had intentions of resuming his work. Alfredo Roco did not
respond to the letter despite receipt thereof, thus, Alfredo was not
dismissed; it was he who unilaterally severed his relation with his
employer. The NLRC affirmed the decision of the Labor Arbiter. The CA
revered the NLRCs decision of Alfredo and Candelarias cases but
affirmed Ednas case. The Court of Appeals set aside the NLRC ruling on
the ground that at the time Candelarias services were terminated, she
had attained the status of a regular employee as the termination on
November 15, 1995 was effected four (4) days after the 6-month
probationary period had expired, hence, she is entitled to security of
tenure in accordance with Article 281 of the Labor Code.
Issue: Whether or not there was illegal dismissal
63

Held: The court affirmed the decisions of the Labor Arbiter and the
NLRC stating that Alfredo Roco has not established convincingly that he
was dismissed. No notice of termination was given to him by CALS. There
is no proof at all, except his self-serving assertion, that he was prevented
from working after the end of his leave of absence on January 18, 1996.
In fact, CALS notified him in a letter dated March 12, 1996 to resume his
work. Both the Labor Arbiter and the NLRC found that Alfredo, as well as
Candelaria Roco, was not dismissed. Their findings of fact are entitled to
great weight.
The court also ruled that Candelaria Roco is not a regular employee
because as held in Cebu Royal v. Deputy Minister of Labor the
computation of the 6-month probationary period is reckoned from the
date of appointment up to the same calendar date of the 6th month
following.
d. Application of Art. 13 of the Civil Code in the computation of sixth
month probationary period
Mitsubishi Motors Phil. Corp. v. Chrysler Phils. Labor Union, G.R. No.
148738, June 29, 2004
Facts: Private respondent Nelson Paras first worked with Mitsubishi
Philippines as a shuttle bus driver on March 19, 1976. He resigned on
June 16, 1982 because he went to Saudi Arabia and worked there as a
diesel mechanic and heavy machine operator from 1982 to 1993. Upon
his return, Mitsubishi Philippines re-hired him as a welder-fabricator at a
tooling shop from November 1, 1994 to March 3, 1995.
On May 1996, Paras was re-hired again, this time as a probationary
manufacturing trainee at the Plant Engineering Maintenance
Department. He had an orientation on May 15, 1996 and afterwhich,
with respect to the companys rules and guidelines, started reporting for
work
on
May
27,
1996.
Paras was evaluated by his immediate supervisors after six months of
working. The supervisors rating Paras performance were Lito R.
Lacambacal and Wilfredo J. Lopez, as part of the MMPCs company
policies. Upon this evaluation, Paras garnered an average rating.
64

Later, respondent Paras was informed by his supervisor, Lacambacal,

that he received an average performance rating but it is a rate which
would still qualify him to be regularized. But as part of the company
protocols, the Division Managers namely A.C. Velando, H.T. Victoria and
Dante Ong reviewed the performance evaluation made on Paras. Despite
the recommendations of the supervisors, they unanimously agreed that
the performance was unsatisfactory. As a consequence, Paras was not
considered for regularization.
Paras received a Notice of Termination on November 26, 1996 which was
dated November 25, 1996. This letters intent is to formally relieve him off
of his services and position effective the date since he failed to meet the
companys standards.
Issue: Whether or not respondent Paras termination was legal or not.
Held: The Court holds that a company employer may indeed hire an
employee on a probationary basis in order to determine his fitness to
perform work. The Court stresses the existence of the statements under
Article 281 of the Labor Code which specifies that the employer must
inform the employee of the standards they were to meet in order to be
granted regularization and that such probationary period shall not
exceed six (6) months from the date the employee started working, unless
specified in the apprenticeship agreement.
Respondent Paras was employed on a probationary basis and was
apprised of the standards upon which his regularization would be based
during the orientation. His first day to report for work was on May 27,
1996. As per the company's policy, the probationary period was from
three (3) months to a maximum of six (6) months. Applying Article 13 of
the Civil Code, the probationary period of six (6) months consists of one
hundred eighty (180) days.
The Court conform with paragraph one, Article 13 of the Civil Code
providing that the months which are not designated by their names
shall be understood as consisting of thirty (30) days each. This case,
the Labor Code pertains to 180 days. Also, as clearly provided for in the
last paragraph of Article 13, it is said that in computing a period, the
first day shall be excluded and the last day included. Thus, the one
65

hundred eighty (180) days commenced on May 27, 1996, and ended on
November 23, 1996. The termination letter dated November 25, 1996 was
served on respondent Paras only at 3:00 a.m. of November 26, 1996.
The Court held that by that time, he was actually already a regular
employee of the petitioner under Article 281 of the Labor Code. His
position as a regularized employee is thus secured until further notice.
e. Extension of probationary period relaxed by the Supreme Court
Mariwasa Manufacturing Inc. v. Leogardo,
1989

G.R. No. 74246, Jan. 26,

Facts: Joaquin A. Dequila (or Dequilla) was hired on probation by

Mariwasa Manufacturing, Inc. as a general utility worker on January 10,
1979. After 6 months, he was informed that his work was unsatisfactory
and had failed to meet the required standards. To give him another
chance, and with Dequilas written consent, Mariwasa extended Dequilas
probationary period for another three months: from July 10 to October 9,
1979. Dequilas performance, however, did not improve and Mariwasa
terminated his employment at the end of the extended period.
Dequila filed a complaint for illegal dismissal against Mariwasa and its
VP for Administration, Angel T. Dazo, and violation of Presidential
Decrees Nos. 928 and 1389.
DIRECTOR OF MINISTRY OF LABOR: Complaint is dismissed.
Termination is justified. Thus, Dequila appeals to the Minister of Labor.
MINISTER OF LABOR: Deputy Minister Vicente Leogardo, Jr. held that
Dequila was already a regular employee at the time of his dismissal,
thus, he was illegally dismissed. (Initial order: Reinstatement with full
backwages. Later amended to direct payment of Dequilas backwages
from the date of his dismissal to December 20, 1982 only.)
Issue: WON employer and employee may, by agreement, extend the
probationary period of employment beyond the six months prescribed in
Art. 282 of the Labor Code?

66

Held: YES, agreements stipulating longer probationary periods may

constitute lawful exceptions to the statutory prescription limiting
such periods to six months.
The SC in its decision in Buiser vs. Leogardo, Jr. (1984) said that
Generally, the probationary period of employment is limited to six (6)
months. The exception to this general rule is when the parties to an
employment contract may agree otherwise, such as when the same is
established by company policy or when the same is required by the
nature of work to be performed by the employee. In the latter case, there
is recognition of the exercise of managerial prerogatives in requiring a
longer period of probationary employment, such as in the present case
where the probationary period was set for eighteen (18) months, i.e. from
May, 1980 to October, 1981 inclusive, especially where the employee
must learn a particular kind of work such as selling, or when the job
requires certain qualifications, skills experience or training.
In this case, the extension given to Dequila could not have been prearranged to avoid the legal consequences of a probationary period
satisfactorily completed. In fact, it was ex gratia, an act of liberality on
the part of his employer affording him a second chance to make good
after having initially failed to prove his worth as an employee. Such an
act cannot now unjustly be turned against said employers account to
compel it to keep on its payroll one who could not perform according to
its work standards.
By voluntarily agreeing to an extension of the probationary period,
Dequila in effect waived any benefit attaching to the completion of said
period if he still failed to make the grade during the period of extension.
By reasonably extending the period of probation, the questioned
agreement actually improved the probationary employees prospects of
demonstrating his fitness for regular employment.
Petition granted. Order of Deputy Minister Leogardo reversed.
f. Repetitive probationary period
Villanueva vs. NLRC, G.R. No. 127448, Sept. 10, 1998

67

Facts: Petitioner Juanito M. Villanueva started working with respondent

Innodata Philippines, Inc.,/Innodata Processing Corporation as an
"abstractor" with a daily salary of P180.
The contract of employment provided for a period of effectivity of "one
year commencing on Feb. 21, 1994, until Aug. 21, 1995." It was also
stipulated that from 21 February 1994 to 21 August 1994, or for a period
of six months, petitioner's employment would be "contractual" and could
be terminated at whatever date within this period by mere service of
notice to that effect. However, should his employment be continued
beyond 21 August 1994, he would become a regular employee upon
demonstration of sufficient skill to meet the standards set by the
respondent company. Should he fail to demonstrate the ability to master
his task during the first six months, he could be placed on probation for
another six months; after which, he could be evaluated for promotion as
a regular employee.
On February 1995, petitioner's services were terminated by reason of
"end of contract." Three weeks thereafter, the petitioner was rehired by
the respondent corporation, this time, as a data encoder effective March
1995 to August 1995, with a lesser pay of P164.10 per day. On August
1995, the petitioner was again separated from the respondent company
also on account of "end of contract." This prompted the petitioner to file a
complaint against the respondent company and its president, Todd
Solomon, for illegal dismissal with prayer for moral and exemplary
damages and attorney's fees.
Labor Arbiter held the petitioner was a regular employee pursuant to
Article 280 of the Labor Code, who enjoyed security of tenure as an
abstractor engaged in processing, encoding of data, precoding, editing,
proofreading and scoring activities which were necessary and desirable
in the usual business of the respondent corporation. NLRC reversed the
Labor Arbiter's decision and upheld the validity of petitioner's separation
from the respondent company on the ground that his employment
contract was for a fixed period.
Issue: Whether or not the petitioner is a regular employee
Held: Yes. The termination of petitioner's employment contract on
February 1995, as well as the subsequent issuance on March 1995 of a
68

"new" contract for five months as "data encoder," was a devious, but
crude, attempt to circumvent petitioner's right to security of tenure as a
regular employee guaranteed by Article 279 of the Labor Code. Hence,
the so-called "end of contract" on February 1995 amounted to a
dismissal without any valid cause.
Notably, the respondent company prepared the contract of
employment. It was a contract of adhesion, and petitioner had only to
adhere to it by signing it. Its terms should be construed strictly against
the party who prepared it. Any ambiguity therein must be resolved
against the respondent company, especially because under Article 1702
of the Civil Code, in case of doubt, all labor contracts shall be construed
in favor of the laborer. We cannot allow the respondent company to
construe otherwise what appears to be clear from the wordings of the
contract. The interpretation which the respondent company seeks to
wiggle out is wholly unacceptable, as it would result in a violation of
petitioner's right to security of tenure guaranteed in Section 3 of Article
XIII of the Constitution and in Articles 279 and 281 of the Labor Code.
g. Stipulation in employment contract fixing the period of probationary
period
Innodata Phils., Inc. v. Quejada Lopez, G.R. No. 162839, Oct. 12, 2006.
Facts: Innodata Philippines, Inc., is engaged in the encoding/data
conversion business. It employs encoders, indexers, formatters,
programmers, quality/quantity staff, and others, to maintain its
business and do the job orders of its clients.
Estrella G. Natividad and Jocelyn L. Quejada were employed as
formatters by Innodata Philippines, Inc. They worked from March 4,
1997, until their separation on March 3, 1998. They believed that their
job was necessary and desirable to the usual business of the company
which is data processing/conversion and that their employment is
regular pursuant to Article 280 of the Labor Code, they filed a complaint
for illegal dismissal and for damages as well as for attorneys fees against
Innodata Phils., Incorporated.
Innodata contended that their employment contracts expired, having a
fixed period of one (1) year. Since the period expired, their employment
69

was likewise terminated applying the ruling in the Brent School case.
Issue: Whether the alleged fixed-term employment contracts are valid.
Held: No, Innodatas contract of employment failed to comply with the
standards set by law and by this Court. A contract of employment is
impressed with public interest. For this reason, provisions of applicable
statutes are deemed written into the contract. Hence, the parties are not
at liberty to insulate themselves and their relationships from the impact
of labor laws and regulations by simply contracting with each other.
Moreover, in case of doubt, the terms of a contract should be construed
in favor of labor.
h. Exception to probationary period exceeding six month period.
Buiser v. Hon. Leogardo, G.R. No. 63316, July 31, 1984
Facts: Petitioners Buiser, Intengan and Rilloacua were employed by
respondent GENERAL TELEPHONE DIRECTORY COMPANY as sales
representatives and charged with the duty of soliciting advertisements for
inclusion in a telephone directory. On a contract with probationary
status haich states that: "Employment Contract (On Probationary
Status)" included the following common provisions:
The company hereby employs the employee as telephone representative
on a probationary status for a period of eighteen (18) months, i.e. from
May 1980 to October 1981, inclusive. It is understood that during the
probationary period of employment, the Employee may be terminated at
the pleasure of the company without the necessity of giving notice of
termination or the payment of termination pay.
The Employee recognizes the fact that the nature of the telephone sales
representative's job is such that the company would be able to determine
his true character, conduct and selling capabilities only after the
publication of the directory, and that it takes about eighteen (18) months
before his worth as a telephone saw representative can be fully evaluated
inasmuch as the advertisement solicited by him for a particular year are
published in the directory only the following year.

70

Being the employer, the respondent prescribed them sales quotas to be

meet. But the petitioners failed to meet the prescribed quotas and were
dismissed. The petitioners failed for illegal dismissal, but the Minister of
Labor Dismissed the case for the reason that they did not achieve regular
status.
The contention of the petitioners that under Art. 281-282 of the Labor
Code that after serving the respondents company for 6 months they have
become automatically regular employees.
Issue: Whether or not the petitioners were regular employers and that the
provision of the contract was invalid?
Held: No, the court rejects the contention of the petitioners, generally the
period of employment is limited only to 6 months.
The exception when the parties to an employment contract may
agree otherwise, such as when the same is established by company
policy or when the same is required by the nature of work to be
performed by the employee. Or especially where the employee must
learn a particular kind of work such as selling, or when the job
requires certain qualifications, skills, experience or training.
In the employers line of business, it needs 18 months in order to know
the capabilities of the employee. Therefore, it is not contrary to law and
that the petitioners are probationary employees. Moreover, petitioners not
having to meet the quota prescribed constitutes a valid dismissal from
the employer company.
i. Probationary period for different workers:
1. Probationary period of Apprentices
Sec. 6, (a), Rule 1, Book VI, Implementing Rules as
amended by Art. 5, D.O. No. 10, Series of 1997
Section
6. Probationary
employment.
There
is
probationary employment where the employee, upon his
engagement, is made to undergo a trial period during
71

which the employer determines his fitness to qualify for

regular employment based on reasonable standards made
known to him at the time of engagement.
Probationary employment
following rules:

shall be

governed

by

the

(a) Where the work for which the employee has been
engaged is learnable or apprenticeable in accordance with
the standards prescribed by the Department of Labor and
Employment, the period of probationary employment shall
be limited to the authorized learnership or apprenticeship
period, which is applicable.

Nitto Enterprises v. NLRC, G.R. No. 114337, Sept. 29, 1995 effect of
apprenticeship agreement not registered with DOLE
Facts: Petitioner Nitto Enterprises, a company engaged in the sale of
glass and aluminum products, hired Roberto Capili as an apprentice
machinist under an apprenticeship agreement for 6 months for a daily
wage of 75% of the applicable minimum wage. Roberto Capili who was
handling a piece of glass which he was working on, accidentally hit and
injured the leg of an office secretary who was treated at a nearby
hospital. Further, Capili entered a workshop within the office premises
which was not his work station. There, he operated one of the power
press machines without authority and in the process injured his left
thumb. The following day he was asked to resign. Capili filed a complaint
for illegal dismissal and payment for other monetary claims. he Labor
Arbiter rendered his decision finding the termination of private
respondent as valid and dismissing the money claim for lack of merit. On
appeal, NLRC issued an order reversing the decision of the Labor Arbiter.
The NLRC declared that Capili was a regular employee of Nitto
Enterprises and not an apprentice.
Issue: Whether or not Capili is a regular employee of the company in
accordance to the NLRC decision and not an apprentice?

72

Held: Yes, the petitioner did not comply with the requirements of the law
with regard to the apprenticeship agreement that should be entered by
the employer and employee only in accordance to the apprenticeship
agreement duly approved by the Minister of Labor and Employment. The
apprenticeship agreement does not have any force or effect because it is
not duly authorized by DOLE. Hence, the contention of Capili should be
given a credit for the company hired him as kargador and pahinante as a
regular employee.
2. Probationary period of Learners
Not to exceed three (3) months,
Article 75 (2). The duration of the learnership period,
which shall not exceed three (3) month
3. Probationary period of Handicapped Learners
Impaired by age or physical and mental deficiency or
injury,
Article 78. Definition. Handicapped workers are those
whose earning capacity is impaired by age or physical or
mental deficiency or injury.
Article 81. Eligibility for apprenticeship. Subject to the
appropriate provisions of this Code, handicapped workers
may be hired as apprentices or learners if their handicap is
not such as to effectively impede the performance of job
operations in the particular occupations for which they are
hired.
4. Probationary period of Teachers
1992 Manual of Regulations for Private Schools (Sec. 92),
Art. 280, not applicable
Section 92. Probationary Period. Subject in all instances to
compliance with the Department and school requirements,
the probationary period for academic personnel shall not be
73

more than three (3) consecutive years of satisfactory service

for those in the elementary and secondary levels, six (6)
consecutive regular semesters of satisfactory service for
those in the tertiary level, and nine (9) consecutive
trimesters of satisfactory service for those in the tertiary
level where collegiate courses are offered on a trimester
basis.
5.
Requirements
regularization of Private School Teachers

for

Chang Kai Shek School v. CA, G.R. No. 58028, April 18, 1989
Facts: Fausta F. Oh worked at the petitioner school in Sorsogon for more
than 33 years on the first week of July, 1968 at her surprise she was not
given an assignment for the next year, for no apparent reason Oh was
dismissed. Oh sued the school demanding her benefits and also
demanded for damages. The petitioner contends that Chiang Kai Shek
School could not be sued. The Court of First Instance of Sorsogon, held
that the school is suable and liable for the dismissal of Oh.
Issue: Whether or not the School is liable for the dismissal and can be
sued?
Held: Yes, there should also be no question that having contracted with
the private respondent every year for thirty-two years and thus
represented itself as possessed of juridical personality to do so, the
petitioner is now estopped from denying such personality to defeat her
claim against it. According to Article 1431 of the Civil Code, "through
estoppel an admission or representation is rendered conclusive upon the
person making it and cannot be denied or disproved as against the
person relying on it. Moreover, in this case mentioned that charitable
institution is covered by the labor laws.
The Court holds, after considering the particular circumstance of Oh's
employment, she had become a permanent employee of the school and
entitled to security of tenure at the time of her dismissal. Since no cause
was shown and established at an appropriate hearing, and the notice
then required by law had not been given, such dismissal was invalid. The
74

Court takes this opportunity to pay a sincere tribute to the grade school
teachers, who are always at the forefront in the battle against illiteracy
and ignorance. If only because it is they who open the minds of their
pupils to an unexplored world awash with the magic of letters and
numbers, which is an extraordinary feat indeed, these humble mentors
deserve all our respect and appreciation.
Espiritu Santo Parochial School v. NLRC, G.R. No. 82325, Sept. 26, 1989
Facts: The 7 individual private respondents were hired by the petitionerschool on a probationary basis, but were terminated a year after. They
filed for illegal dismissal and unfair labor practices against the petitioner.
NLRC affirm the decision of the Labor Arbiter except the unfair labor
practice based on lack of evidence. Their contention in that the contracts
simply expires and the private respondent were probationary employees
only.
Issue: Whether or not the petitioner is liable for illegal dismissal and that
the complainants are entitled of damages resulting to dismissal?
Held: Yes, There is no dispute that the individual complainants were
probationary employees pursuant to the policy enunciated by the Bureau
of Private Schools extending the probationary employment of teachers to
three (3) years. Art. 282 of the Labor code state that The services of an
employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known to the
employee at the time of his engagement. But the petitioner school fails to
prove the valid grounds for the dismissal of the respondents. This
probationary principle is valid to serve as the test of the capacity and
fitness of a teacher.
6.
The Magna Carta for Public
School Teachers civil service eligibility, Sec. 4,
(Probationary Period), No. II, R.A. No. 4670)
Sections 4. Probationary Period. When recruitment takes
place after adequate training and professional preparation
in any school recognized by the Government, no
probationary period preceding regular appointment shall be
75

imposed if the teacher possesses the appropriate civil

service eligibility: Provided, however, That where, due to the
exigencies of the service, it is necessary to employ as
teacher a person who possesses the minimum educational
qualifications herein above set forth but lacks the
appropriate civil service eligibility, such person shall be
appointed on a provisional status and shall undergo a
period of probation for not less than one year from and after
the date of his provisional appointment.
7. Probationary period of Part-Time Employees
Completion of the six (6) month period for such number of
hours or days- Acting DOLE Sec. Jose S. Brillantes.
Probationary employment for part-time employees may
extend the prescribed six (6) months period to the extent
that the total number of hours work would be equal to
that of a full-time employee under probation.
The justification is anchored on the intent of the law in
allowing a probationary period prior to regularization. The
employers main reason for insisting the 6-month
probation is to test the employees fitness for employment
during that time. Thus, the number of normal working
days and hours within the probationary period should be
observed. For this reason, part-timers should become
regular in status, after working for the total number of
hours or days, which completes a six-month probationary
period of a full-time worker in the same establishment
doing the same job under normal circumstances.
2. Project Employment, Art. 280, 1st par., Sec. 5(a) Rule 1, Book VI,
Implementing Rules and Regulations as amended by Rule IV, as
amended by Art. IV, Department Order No.19, Series of 1993.amending
policy Instruction No. 20 (Guidelines Governing the Workers in the
Construction Industry)

76

Article 280(1). Regular and casual employment. The provisions of written

agreement to the contrary notwithstanding and regardless of the oral agreement
of the parties, an employment shall be deemed to be regular where the employee
has been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or
where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
Section 5(a) Rule 1, Book VI, Implementing Rules and Regulations of the
Labor Code: Regular and casual employment. (a) The provisions of written
agreements to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be considered to be regular
employment for purposes of Book VI of the Labor Code where the employee has
been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer except where the employment has
been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or
where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.

Art. IV, Department Order No. 19, Series of 1993: Guidelines Governing
the Employment of Workers in the Construction Industry
Section 2. Employment Status (1) Classification of employees.- The employees
in the construction industry are generally categorized as a) project employees
and b) non-project employees.
Project employees are those employed in connection with a particular
construction project or phase thereof and whose employment is co-terminus with
each project or phase of the project to which they are assigned.
Non-project employees, on the other hand, are those employed without reference
to any particular construction project or phase of a project.
2.A Nature of Project Employment an employment has been fixed for a
specific project or undertaking, the completion or termination of which has
77

been determined at the time of the engagement of the employee or where

the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.

a. Definition and nature of project employment

Hanjin Heavy Industries & Construction Co. v. Ibaez (2008), nature of

project employment
Facts: Felicito Ibanez (tireman), Elmer Gacula (Crane Operator),
ElmerDagotdot(Welder), Aligwas Carolino (Welder), Ruel Calda
(Warehouseman) filed a complaint at the NLRC for illegal dismissal with
prayer for reinstatement and payment of backwages. The group alleged
that the contract they have is good for three months, subject to
automatic renewal if there is no notice of termination from Hanjin, and
that the contract would automatically terminate upon the completion of
the project. They further averred that during the time they were
dismissed, the project was still ongoing and Hanjin hired people for the
positions that they had vacated. Lastly, they also allege that they are
entitled to a completion bonus as part of the industry practice and this
was substantiated by past payroll payments. Hanjin failed to furnish a
copy of the contract agreements with the dismissed group. Instead it
showed the quitclaims that had been executed by the group that released
Hanjin and its representatives from any claims with their employment. It
contained clearance certificates that show that respondents are free from
accountability.
Issue: WON the members of the dismissed group are project employees?
Held: No, Hanjin was unable to prove they were not regular employees
The rehiring of construction workers on a project to project basis does
not confer upon them regular employment status, since their re-hiring is
only a natural consequence of the fact that experienced construction
workers are preferred. Employees who are hired for carrying out a
separate job, distinct from the other undertakings of the company, the
scope and duration of which has been determined and made known to
78

the employees at the time of the employment, are properly treated as

project employees and their services may be lawfully terminated upon the
completion of a project. Should the terms of their employment fail to
comply with this standard, they cannot be considered project employees.
Hanjin was unable to show the written contracts it had with the workers.
White the absence of the contract does not grant permanent status it is
the burden of the employer to prove that the employees were aware that
their contract with the company is for per project only. While Hanjin
submitted a termination report including the workers names to prove
that the services of their services were only contracted for a per project
basis, Hanjin only submitted one report. It was unable to disprove the
allegation of the workers that they were part of a pool that Hanjin
contacts once a project is to be completed. Employers cannot mislead
their employees, whose work is necessary and desirable in the former's
line of business, by treating them as though they are part of a work pool
from which workers could be continually drawn and then assigned to
various projects and thereafter denied regular status at any time by the
expedient act of filing a Termination Report. This would constitute a
practice in which an employee is unjustly precluded from acquiring
security of tenure, contrary to public policy, morals, good customs and
public order. Hanjin alleged that per Department Order 19, Series of
1993 of DOLE, the payment of completion bonus is further proof that the
workers were only project employees as Hanjin is mandated by law to pay
it to the temporary workers whose contracts are about to end upon the
completion of the project. SC views the completion bonus terminology
here reflects the fact that the project has already been completed and
that is the premium they wished to pay. Quitclaims are viewed with
disfavor, especially when
a. There is clear proof that the waiver was wangled from an unsuspecting
or gullible person
b. Where the terms are unconscionable in its face. For quitclaims to be
valid, it must constitute a reasonable settlement commensurate to their
legal rights.
It does not preclude them from seeking benefits they were entitled to
such as back wages. The respondents were also not granted the twin
requirements of notice and hearing.

79

b. Indicators of project employment, Sec. 2.2 Department Order No. 19,

Series of 1993

Cocomangas Hotel Beach Resort v. Visca, G.R. No. 167045, Aug. 29,
2008
Facts: Visca et al (respondents) alleged that they were regular employees
of Cocomangas Hotel (petitioner) and tasked with the maintenance and
repair of resort facilities. They were informed by the Front Desk Officer
that repair has been suspended because it caused irritation to the
resorts guests. As instructed, Visca et al did not report for work. Later,
they found out that the suspension was due to budgetary constraints
and that 4 new workers were hired to do their job. Complaints for illegal
dismissal were filed. The LA found that Visca was an independent
contractor and the other respondents were hired by him. Also, there was
no illegal dismissal but only completion of projects because they were
project employees. NLRC set aside the decision and held that they were
regular employees; hence, illegally dismissed. It took into account 1)
quarterly SSS reports, 2) that all were certified and commended by
owner-manager for satisfactory performance, 3) they were paid holiday
and overtime pay, and 4) they were employed continuously for 12 years
and paid daily wages. On MR, NLRC reversed itself and held that Visca et
al were project employees. CA reinstated the original NLRC decision and
found that Visca et al were regular employees because the Hotel failed to
set specific periods when the employment relationship would be
terminated; and the repeated hiring rendered them necessary and
desirable to the business.
Issue: Whether respondents are regular or project employees?
Held: The respondents are regular employees. Cocomangas changed its
theory on appeal before the LA, Cocomangas classified Visca as an
independent contractor and other as the latters employees; while in the
motion for reconsideration, it treated all respondents as project
employees. Further, Cocomangas advanced the absence of an ER-EE
relationship before the LA; but invoked the termination of the period of
ER-EE relationship in their motion. NLRC should not have considered
80

the new theory. When a party adopts a particular theory and the case is
tried and decided upon that theory in the court below, he will not be
permitted to change his theory on appeal.
Respondents are not project employees. A project employee is one whose
employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration
of the season. Before a project employee can be dismissed, a report must
be made to the nearest employment office of the termination of the
services of the workers every time he completes a project. In this case,
Visca et al worked continuously from 3-12 years without any mention of
a project to which they were specifically assigned. There is also no
evidence of the project employment contracts covering the alleged periods
of employment nor the termination of such project employment. Lastly,
Cocomangas failed to file termination reports, which is an indication that
Visca et al were not project employees but regular employees.
The respondents were continuously rehired by Cocomangas. An
employment ceases to be coterminous with specific projects when the
employee is continuously rehired due to the demands of employers
business and re-engaged for many more projects without interruption.
The repeated and continuing need for respondents services is sufficient
evidence of the necessity, if not indispensability, of their services to
Cocomangas resort business.
The award for backwages should be computed from the time
compensation was withheld up to the time of actual reinstatement
c. Employees should be notified of their status as project employment only.

Abesco Construction and Development Corp., v. Ramirez, G.R. No.

141168, April 20, 2006

Facts: Petitioner company was engaged in a construction business where

respondents were hired on different dates from 1976 to 1992 either as
81

laborers, road roller operators, painters or drivers. Respondents filed two

separate complaints for illegal dismissal against the company
and its General Manager, before the Labor Arbiter. Respondents allegedly
dismissed them without a valid reason and without due process of law.

Petitioners denied liability to respondents and countered that

respondents were project employees since their services were necessary
only when the company had projects to be completed. Petitioners argued
that, being project employees, respondents employment was coterminous
with the project to which they were assigned. They were not regular
employees who enjoyed security of tenure and entitlement to separation
pay upon termination from work.

LA declared respondents as regular employees because they belonged to

a work pool from which the company drew workers for assignment to
different projects, at its discretion. He ruled that respondents were hired
and re-hired over a period of 18 years, hence, they were deemed to be
regular employees. He likewise found that their employment was
terminated without just cause. NLRC affirmed the decision of Labor
Arbiter. CA was not convinced and dismissed petitioners appeal.

Issue: Whether respondents were project employees or regular employees?

Held: The respondents were regular employees. Employees (like

respondents) who work under different project employment contracts for
several years do not automatically become regular employees; they can
remain as project employees regardless of the number of years they
work. Length of service is not a controlling factor in determining the
nature of ones employment. The principal test for determining whether
employees are project employees or regular employees is whether they are
82

assigned to carry out a specific project or undertaking, the duration and

scope of which are specified at the time they are engaged for that project.

In this case, petitioners did not have that kind of agreement with
respondents. Neither did they inform respondents of the nature of the
latters work at the time of hiring. Hence, for failure of petitioners to
substantiate their claim that respondents were project employees, we are
constrained to declare them as regular employees.

d. The employment contract is only signed by the president and the

manager but not the employee concerned.

Raycor Aircontrol System, Inc. v. NLRC, G.R. No. 114290, Sept. 9, 1996

Facts: Petitioner's sole line of business is installing airconditioning

systems in the buildings of its clients. Respondents worked worked in
various capacities as tinsmith, leadman, aircon mechanic, installer,
welder and painter. Respondents insist that they had been regular
employees all along, but petitioner maintains that they were project
employees who were assigned to work on specific projects of petitioner,
and that the nature of petitioner's business mere installation (not
manufacturing) of aircon systems and equipment in buildings of its
clients prevented petitioner from hiring private respondents as
regular employees.

Respondents were terminated, they filed three cases of illegal dismissal

against petitioner, alleging that the reason given for the termination of
their employment was not one of the valid grounds "due to our present

83

business status" therefor under the Labor Code. They also claimed that
the termination was without benefit of due process.

Labor Arbiter issued his decision dismissing the complaints for lack of
merit. He reasoned that the evidence showed that the individual
complainants were project employees within the meaning of Policy
Instructions No. 20 (series of 1977) of the Department of Labor and
Employment, having been assigned to work on specific projects involving
the installation of air-conditioning units as covered by contracts between
their employer and the latter's clients. Necessarily, the installation of
airconditioning systems "must come to a halt as projects come and go",
and of consequence, the petitioner cannot hire workers in
perpetuity. As project employees, private respondents would not be
entitled to termination pay, separation pay, holiday premium pay, etc.;
and neither is the employer required to secure a clearance from the
Secretary of Labor in connection with such termination. NLRC reversed
the decision of LA and found respondents are regular employees illegally
dismissed.

Issue: Whether or not respondents were regular employees?

Held: The court re-examine the nature of employment of the

respondents. The Contract Employment" presented in evidence by both
petitioner and private respondents had been signed only by petitioner's
president and general manager, Luis F. Ortega, but not by the
employees concerned, who had precisely refused to sign them. The said
contracts therefore could in no wise be deemed conclusive
evidence. Thus, private respondents faulted the labor arbiter for giving
credence and probative value to said contracts. Besides, they claimed,
only seven contracts in all were presented in evidence, pertaining to
seven individual employees, while there are fifteen employees involved in
the complaints. Moreover, these contracts, purportedly issued either in
84

July or December of 1991, except for one dated May 1992, were all oneshot contracts of short duration, the longest being for about five
months. Now, inasmuch as petitioner had not denied nor rebutted
private respondents' allegations that they had each worked several years
for the petitioner. The petitioner didnt produce in evidence similar
contracts for all the other years that private respondents had
worked as project employees.

Petitioner in this case undoubtedly could have presented additional

evidence to buttress its claim. Petitioner could have presented copies of
its contracts with its clients, to show the time, duration and scope of
past installation projects. The data from these contracts could then have
been correlated to the data which could be found in petitioner's payroll
records for, let us say, the past three years or so, to show that private
respondents had been working intermittently as and when they were
assigned to said projects, and that their compensation had been
computed on the basis of such work. But petitioner did not produce
such additional evidence, and we find that it failed to discharge its
burden of proof.

The employer always has the burden of proof, and considering further
that the law mandates that all doubts, uncertainties, ambiguities, and
insufficiencies be resolved in favor of labor, we perforce rule against
petitioner and in favor of private respondents.

e. Consent must be knowingly and voluntarily and without force, duress or

improper pressure.

Caramol v. NLRC, G.R. No. 102973, 225 SCRA 582

85

Facts: Petitioner Rogelio Caramol, a worker hired by respondent Atlantic

Gulf and Pacific Co. of Manila, Inc., (ATLANTIC GULF), on a "project-toproject" basis but whose employment was renewed forty-four (44) times
by the latter. Until the occurrence of the strike on 10 May 1986, his last
assignment was at respondent ATLANTIC GULF's plant in Batangas.
Petitioner claims that because of his involvement in unionism,
particularly in actively manning the picket lines, he was among those
who were not re-admitted after the strike. On 15 May 1986 private
respondent dispensed with the services of petitioner claiming as
justification the completion of the Nauru project to which petitioner was
assigned and the consequent expiration of the employment contract.

Issue: Whether petitioner is a regular or casual employee arises from the

conflicting interpretations by the parties of Art. 280 of the Labor Code, as
amended.

The article provides - The provisions of written agreement to the contrary

notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of
the employee or where the work or service to be performed is seasonal in
nature and the employment is for the duration of the season.

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

preceding paragraph: Provided, That, any employee who has rendered at
least one year of service, whether, such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
86

he is employed and his employment shall continue while such actually

exists.

Held: Petition is granted. There is no question that stipulation on

employment contract providing for a fixed period of employment such as
"project-to-project" contract is valid provided the period was agreed upon
knowingly and voluntarily the parties, without any force, duress or
improper pressure being brought to bear upon the employee and absent
any other circumstances vitiating his consent, or where it satisfactorily
appears that the employer and employee dealt with each other on more
or less equal terms with no moral dominance whatever being exercised
by the former over the latter. However, where from the circumstances it
is apparent that periods have been imposed to preclude the acquisition of
tenurial security by the employee, they should be struck down as
contrary tenurial security by the employee, they should be struck down
as contrary to public policy, morals, good custom or public order.

f. Exception to Art. 280, a fixed period employment, a day certain;

requisites

Brent School Inc. v. Zamora, G.R. No.48494, Feb. 5, 1990

Facts: Employment contract in virtue of which Doroteo R. Alegre was

engaged as athletic director by Brent School, Inc. at a yearly
compensation. The contract fixed a specific term for its existence, five (5)
years, from July 18, 1971, the date of execution of the agreement, to July
17, 1976.

87

Some three months before the expiration of the stipulated period, or

more precisely on April 20, 1976, Alegre was given a copy of the report
filed by Brent School with the Department of Labor advising of the
termination of his services effective on July 16, 1976. The stated ground
for the termination was "completion of contract, expiration of the definite
period of employment." And a month or so later, on May 26, 1976, Alegre
accepted the amount of P3,177.71, and signed a receipt therefor
containing the phrase, "in full payment of services for the period May 16,
to July 17, 1976 as full payment of contract."

However, at the investigation conducted by a Labor Conciliator of said

report of termination of his services, Alegre protested the announced
termination of his employment. He argued that although his contract did
stipulate that the same would terminate on July 17, 1976, since his
services were necessary and desirable in the usual business of his
employer, and his employment had lasted for five years, he had acquired
the status of a regular employee and could not be removed except for
valid cause.

Issue: Whether or not the provisions of the Labor Code, as amended, have
anathematized "fixed period employment" or employment for a term.

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

having lawfully terminated with and by reason of the expiration of the
agreed term of period thereof, he is declared not entitled to reinstatement
and the other relief awarded and confirmed on appeal in the proceedings
below.

The question immediately provoked by a reading of Article 319 is whether

or not a voluntary agreement on a fixed term or period would be valid
88

where the employee "has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer." The definition seems a non sequitur. From the premise that
the duties of an employee entail "activities which are usually necessary
or desirable in the usual business or trade of the employer the"
conclusion does not necessarily follow that the employer and employee
should be forbidden to stipulate any period of time for the performance of
those activities. There is nothing essentially contradictory between a
definite period of an employment contract and the nature of the
employee's duties set down in that contract as being "usually necessary
or desirable in the usual business or trade of the employer." The concept
of the employee's duties as being "usually necessary or desirable in the
usual business or trade of the employer" is not synonymous with or
identical to employment with a fixed term. Logically, the decisive
determinant in term employment should not be the activities that the
employee is called upon to perform, but the day certain agreed upon by
the parties for the commencement and termination of their employment
relationship, a day certain being understood to be "that which must
necessarily come, although it may not be known when." Seasonal
employment, and employment for a particular project are merely instances
employment in which a period, where not expressly set down, necessarily
implied.

Paraphrasing Escudero, respondent Alegre's employment was terminated

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

89

g. Absence of a provision in the contract of employment of specific project

or undertaking.

Price v. Innodata Phils.,/Innodata Corp., G.R. No. 178505, Sept. 30,

2008

Facts: Respondent Innodata Philippines, Inc./Innodata Corporation

(INNODATA) was a domestic corporation engaged in the data encoding
and data conversion business. It employed encoders, indexers,
formatters, programmers, quality/quantity staff, and others, to maintain
its business and accomplish the job orders of its clients. Respondent Leo
Rabang was its Human Resources and Development (HRAD) Manager,
while respondent Jane Navarette was its Project Manager. INNODATA had
since ceased operations due to business losses in June 2002.

Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera

were employed as formatters by INNODATA. The parties executed an
employment contract denominated as a "Contract of Employment for a
Fixed Period," stipulating that the contract shall be for a period of one
year.

According to INNODATA, petitioners employment already ceased due to

the end of their contract.

On 22 May 2000, petitioners filed a Complaint for illegal dismissal and

damages against respondents. Petitioners claimed that they should be
considered regular employees since their positions as formatters were
necessary and desirable to the usual business of INNODATA as an
encoding, conversion and data processing company.
90

Respondents asserted that petitioners were not illegally dismissed, for

their employment was terminated due to the expiration of their terms of
employment. Petitioners contracts of employment with INNODATA were
for a limited period only, commencing on 6 September 1999 and ending
on 16 February 2000.

Issue: Whether petitioners were illegally dismissed by INNODATA under

valid fixed-term employment contracts.

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

The employment status of a person is defined and prescribed by law and

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

Regular employment has been defined by Article 280 of the Labor Code,
as amended, which reads:

91

Art. 280. Regular and Casual Employment. The provisions of written

agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of engagement of the employee or where the work
or services to be performed is seasonal in nature and employment is for
the duration of the season.

Scrutinizing petitioners employment contracts with INNODATA, however,

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

h. No notice that employees were appraised of the nature of employment,

the specific projects or any phase thereof.

Chua v. Court of Appeals, G.R. No. 125837, Oct. 6, 2004

92

Facts: Private respondents were employees of the petitioner assigned in

his various construction projects continuously in different capacities and
the periods indicated with the correspondent basic salaries. Respondents
then filed a petition with the SSC for SSS coverage and contributions
claiming they were all regular employees of the petitioner. The
respondents then alleged that petitioner dismissed all of the without
justifiable grounds and without notice. Petitioner argues that the
respondents were project employees and that such employees were not
entitled to coverage under the Social Security Act. SSC declared that the
private respondents were petitioners regular employees. The Court of
Appeals also declared that the respondents were all regular employees
since the various projects of employment lasts for at least one year and
that their work was necessary and desirable to petitioners business.

Issue: Whether or not the private respondents were petitioners regular

employees

Held: Yes, the private respondents were petitioners regular employees.

Such relationship can be easily determined by the application of the
control test and such will hold true that they were petitioners regular
employees since the petitioner having control over the results of the
work done, as well as the means and methods by which the same were
accomplished. The petitioner cannot claim that the respondents were
merely project employees. It is not enough that an employee is hired for
a specific project or phase of work, there must also be a determination
of, or a clear agreement on, the completion or termination of the project
at the time the employee was engaged if the objectives of Article 280 of
the Labor Code are to be achieved. Petitioner was unable to show that
private respondents were appraised of the nature of their employment,
the specific projects themselves or any phase thereof undertaken by
petitioner and for which private respondents were hired, thus petitioner

93

failed to substantially give evidence that the private respondents were

his projects employee only.

i. Elements before a project employee attains the status of a regular

employment.

Maraguianot Jr v. NLRC, G.R. No. 120969, Jan. 22, 1998.

Facts: Petitioner Alejandro Maraguinot, Jr. was employed by private

respondents as part of the filming crew. He was designated as assistant
electrician and promoted as an electrician while Paulino Enero as a
member of the shooting crew. Petitioner tasks consisted of loading,
unloading and arranging movie equipment in the shooting area as
instructed by the cameraman, returning the equipment to Viva Films
warehouse, assisting in the fixing of the lighting system, and performing
other tasks that the cameraman and/or director may assign. Petitioners
asks assistance of their supervisor, Mrs. Alejandria Cesario, to facilitate
their request that private respondents adjust their salary in accordance
with the minimum wage law. Mrs. Cesario informed petitioners that Mr.
Vic del Rosario would agree to increase their salary only if they signed a
blank employment contract. As petitioners refused to sign, private
respondents forced Enero to go on leave while Maraguinot dropped from
the company payroll. On his return he still refuses to sign also the black
document. Both were terminated for their refusal which makes them to
file for illegal dismissal before the Labor Arbiter.

Private respondents assert that they contract persons called producers

also referred to as associate producer to produce or make movies for
private respondents; and contend that petitioners are project employees
of the associate producers who, in turn, act as independent
94

contractors. As such, there is no employer-employee relationship between

petitioners and private respondents.

Labor Arbiter decided in favor of the Petitioners. He ruled that

complainants are employees of the respondents. The producer cannot be
considered as an independent contractor but should be considered only
as a labor-only contractor and as such, acts as a mere agent of the real
employer, the herein respondents. Respondents even failed to name and
specify who the producers are. Also, it is an admitted fact that the
complainants received their salaries from the respondents. Private
respondents appealed to the NLRC, which however reversed the decision
of the Labor Arbiter. Petitioners filed the instant petition, claiming that
the NLRC committed grave abuse of discretion amounting to lack or
excess of jurisdiction. The OSG likewise rejects petitioner contention that
since they were hired not for one project, but for a series of projects, they
should be deemed regular employees.

Issue: Whether or not petitioners are regular employees

Held: Yes. If private respondents insist that their associate producers are
labor contractors, then these producers can only be labor-only
contractors. Thus, there is labor-only contracting where the person
supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises,
among others, and the workers recruited and placed by such persons are
performing activities which are directly related to the principal business
of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible
to the workers in the same manner and extent as if the latter were
directly employed by him.

95

The
employer-employee
relationship
between
petitioners
and
VIVA through the control test (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employers power to control the employees conduct, the most
important element is the employers control of the employees conduct, not
only as to the result of the work to be done but also as to the means and
methods to accomplish the same. The elements exist in the case at bar.

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

a regular employee when the following concur: 1) There is a continuous
rehiring of project employees even after cessation of a project; and 2) The
tasks performed by the alleged project employee are vital, necessary and
indispensable to the usual business or trade of the employer.

2.B Work Pool Employment, Policy Instruction No. 20

a.

Classification of Work Pool

1. Non project employees employees are those employed by a

construction company without reference to any particular
project.
2. Project employees those employed in connection with a
particular construction project.
3. Regular project employees

Tomas Lao Construction v. NLRC, G.R. No.116781, Sept. 5, 1997

Facts: Private respondents were hired for various periods as a
construction worker. They alternately worked for petitioners Tomas Lao
Corporation (TLC), Thomas and James Developers (T&J) and LVM
Construction Corporation (LVM), altogether informally referred to as
the Lao Group of Companies. Under joint venture agreements they
entered into among each other, they would undertake their projects
either simultaneously or successively so that, whenever necessary, they
96

would lease tools and equipment to one another. Each one would also
allow the utilization of their employees by the other two. With this
arrangement, workers were transferred whenever necessary to on-going
projects of the same company or of the others, or were rehired after the
completion of the project or project phase to which they were assigned.
Sometime, the managing director issued a memorandum requiring all
workers and company personnel to sign employment contract forms and
clearances. Except for Florencio Gomez all private respondents refused to
sign contending that the scheme was designed by their employer to
downgrade their status from regular employees to mere project
employees. With the salaries on hold, they were terminated.
The respondents filed to NLRC. NLRC dismissed the their complaint
determining finding that private respondents were project employees
whose employments could be terminated upon completion of the projects
or project phase for which they were hired. It upheld petitioners
contention that the execution of their employment contracts was to
forestall the eventuality of being compelled to pay the workers their
salaries even if there was no more work to be done due to the completion
of the projects or project phases. The decision of Labor Arbiter Gabino A.
Velasquez, Jr., was reversed on appeal by the Fourth Division of the
National Labor Relations Commission (NLRC) of Cebu City which found
that private respondents were regular employees who were dismissed
without just cause and denied due process. The petitioners cite Policy
Instruction No. 20 of the Department of Labor which defines project
employees as those employed in connection with a particular
construction project.
Issue: Whether or not the construction workers were regular employees
Held: Yes. The principal test in determining whether particular
employees are project employees distinguished from regular employees is
whether the project employees are assigned to carry out specific project
or undertaking, the duration of which are specified at the time the
employees are engaged for the project. While it may be allowed that in the
instant case the workers were initially hired for specific projects or
undertakings of the company and hence can be classified as project
employees thus held that where the employment of project employees is
extended long after the supposed project has been finished, the
97

employees are removed from the scope of project employees and

considered regular employees.
In addition, the contention that the workers were drawn in the work pool
it is clear this is beneficial to both the employer and employee for it
prevents the unjust situation of coddling labor at the expense of capital
and at the same time enables the workers to attain the status of regular
employees. Clearly, the continuous rehiring of the same set of employees
within the framework of the Lao Group of Companies is strongly
indicative that private respondents were an integral part of a work pool
from which petitioners drew its workers for its various projects. If the
workers are considered as a project employee the petitioners should have
submitted a report of termination to the nearest public employment
office every time their employment was terminated due to completion of
each construction project. The records show that they did not. Policy
Instruction No. 20 is explicit that employers of project employees are
exempted from the clearance requirement but not from the submission of
termination report. It was held that failure of the employer to file
termination reports after every project completion proves that the
employees are not project employees. Nowhere in the New Labor Code is
it provided that the reportorial requirement is dispensed with. The fact is
that Department Order No. 19 superseding Policy Instruction No. 20
expressly provides that the report of termination is one of the indicators
of project employment.
b.

Work-pool in industry other than in

c.

Application of work pool in the

construction business

business of data encoding

Imbuido v. NLRC, G.R. No. 114734, March 31, 2000

Facts: Petitioner (Imbuido) was employed as a data encoder by private
respondent (International Information Services, Inc.). From 1988 until
1991, Imbuido entered into 13 employment contracts with private
respondent, each contract for a period of three (3) months. In September
1991, petitioner and other 12 employees allegedly agreed to the filing of a
Petition for Certificate of Election of the rank and file employees of private
respondent.
98

Afterwards, Imbuido received a termination latter due to low volume of

work. Imbuido then filed a complaint for illegal dismissal. LA found in
favor of Imbuido ruling that she was a regular employee. NLRC reversed
the decision stating that although petitioner is a regular employee, she
has no tenurial security beyond the period which she was hired and only
up to the time the specific project for which she was hired was
completed. Hence the appeal.
Issue: Whether or not Imbuido as data encoder is a regular employee
Held: Yes. Even though the petitioner is a project employee, the court
held that a project employee or member of a work pool may acquire the
status of a regular employee when the following occur: 1) there is
continuous rehiring of project employees even after the cessation of a
project; 2) the tasks performed by the alleged project employee are vital,
necessary and indispensable to the usual business and trade of the
employer.
In the case at bar, petitioner was employed as a data encoder performing
duties, which are usually necessary and desirable in the usual business
or trade of the employer, continuously for a period of more than three (3)
years. Being a regular employee, petitioner is entitled to security of
tenure and could only be dismissed for a just and authorized cause; low
volume of work is not a valid cause for dismissal under Art. 282 or 283.
Having worked for more than 3 years, petitioner is also entitled to service
incentive leave benefits from 1989 until her actual reinstatement since
such is demandable after one (1) year of service, whether continuous or
broken.
2.C Two (2) types of Project Employment
1. Project that is within the regular trade or business of the
employer
Magcalas v. NLRC, G.R. No. 100333, March 13, 1997
Facts: The complainants alleged (inter alia that they were all regular
employees of the respondent company, having rendered continuous
services in various capacities, ranging from leadman, tinsmith,
99

tradeshelper to general clerk; that the respondent has been engaged in

the business of installing air conditioning and refrigeration equipment in
its different projects and jobsites where the complainants have been
assigned; that the complainants haveworked for a number of years, the
minimum of which was oneand a half years and the maximum (was)
eight years under several supervisors; that on August 30, 1988, they
were dismissed without prior notice and investigation, and that their
dismissals were effected for no other cause than their persistent
demands for payment of money claims as mandated by law.
Issue: Whether petitioners were regular workers under the contemplation
of Art. 280 of the Labor Code
Held: Petitioners were hired on different dates. Some of them worked for
eight (8) years, while others for only one and a half (1 ) years. Private
respondent, on the other hand, insisted that petitioners were hired on
per project basis. Private respondent, however, did not present any
evidence to show the termination of the employment contracts at the end
of each project. Only before public respondent and in this petition did
private respondent allege, through a photocopy of an affidavit of Mr. Jose
Lecaros, the General Manager of Koppel, Inc., that the Asian
Development Bank and the Interbank projects had been completed. This
affidavit as well as the other annexes cannot be given weight in this
petition because this Court is not a trier of facts. In any case, private
respondent had not proved, by the said affidavit, that the termination of
each project had invariably resulted in the dismissal of its alleged project
employees. Regular employees cannot at the same time be project
employees. Article 280 of the Labor Code states that regular employees
are those whose work is necessary or desirable to the usual business of
the employer. The two exceptions following the general description of
regular employees refer to either project or seasonal employees.
A project could refer to particular job or undertaking that is within the
regular or usual business of the employer company, but which is distinct
and separate, and identifiable as such, from the other undertakings of
the company. Such job or undertaking begins and ends at determined or
determinable times.
2. Project not within the regular trade or business of the
employer
100

 Villa v. NLRC, G.R. No. 117043, Jan. 14, 1998

Facts: Respondent National Steel Corporation (NSC), one of the biggest
modern steel mills in Southeast Asia, produces hot rolled products, cold
rolled products, tinplates and billets. These products are in turn
transformed by downstream industries into truss assemblies, farm
implements, pipe structures, shipbuilding and repairing materials,
automotive structures and machine parts, GI roof sheets or galvanized
iron, drums, nails, fasteners and wires. The NSC embarked on a FiveYear Expansion Program (FYEP) the first phase of which consisted of the
following projects with the corresponding timetable:
A. Major Projects
1. Billet Shop . . . . . . . . . . . . . 1983-1985
2. 5-Stand Tandem Mill, Pickling line Revamp, Batch Annealing Furnaces
and other Cold Mill Peripherals Projects . . . 1984-1988
3. Hot Mill Revamp . . . . . . . . . . . . . 1984-1987
B. Major Preparatory, Support and Post-Implementation Activities . . . . . .
. . . . . . . 1982-1988
1. Site Development
2. Engineering and Planning
3. Relocation/upgrading of Offices, drainages, fences and other facilities.
4. Administrative, clerical warehousing and logistics support.
5. Other support activities.
The second phase of the FYEP was set for 1987 to 1993. One of the
major projects of the NSC was the billet steelmaking plant. According to
the NSCs brochure, the plants product is the steel billet, a semi-finished
form of steel used as raw materials by steel rerolling mills producing steel
bars and wire rods. To produce the billets, the plant would initially use
100% scrap as its raw materials. Eventually, NSC would build a Direct
Reduced Iron (DRI) plant in line with its expansion program and
integration program. Upon the availability of DRI, the raw materials feed
mix will eventually be 20 per cent scrap and 80 per cent DRI.
In line with its program to use 100% scrap, the NSC ventured into a
shipbreaking operation. Under this operation, ships/vessels at sea would
be cut up into large chunks and brought to land to be cut further into
smaller sizes. However, due to scarcity of vessels/ships for salvaging, the
101

higher costs of operation and the unsuitability of raw materials, this

experimental project was stopped after four or five ships had been
chopped. When the project was completely phased out in November
1986, the laborers hired for said project were terminated.
Issue: Whether or not workers contracted as project employees may be
considered as regular employees on account of their performance of duties
inherent in the business of the employer.
Held: The Court then distinguished two kinds of projects which a
business or industry may undertake. First, a project could refer to a
particular job or undertaking that is within the regular or usual
business of the employer company, but which is distinct and separate,
and identifiable as such, from the other undertakings of the company.
The example given is a construction company that may undertake two or
more projects at the same time in different places. Second, a project may
refer to a particular job or undertaking that is not within the regular
business of the corporation. Such a job or undertaking must also be
identifiably separate and distinct from the ordinary or regular business
operations of the employer. The job or undertaking also begins and ends
at determined or determinable times. Classifying the NSCs project as of
the second type, the Court said:
NSC undertook the ambitious Five Year Expansion Program I and II with
the ultimate end in view of expanding the volume and increasing the
kinds of products that it may offer for sale to the public. The Five Year
Expansion Program had a number of component projects: e.g., (a) the
setting up of a `Cold Rolling Mill Expansion Project; (b) the establishment
of a `Billet Steelmaking Plant (BSP); (c) the acquisition and installation of
a `Five Stand TDM; and (d) the `Cold Mill Peripherals Project. Instead of
contracting out to an outside or independent contractor the tasks of
constructing the buildings with related civil and electrical works that
would house the new machinery and equipment, the installation of the
newly acquired mill or plant machinery and equipment and the
commissioning of such machinery and equipment, NSC opted to execute
and carry out its Five Year Expansion Projects `in house, as it were, by
administration. The carrying out of the Five Year Expansion Program (or
more precisely, each of its component projects) constitutes a distinct
undertaking identifiable from the ordinary business and activity of NSC.
Each component project, of course, begins and ends at specified times,
102

which had already been determined by the time petitioners were engaged.
We also note that NSC did the work here involved the construction of
buildings and civil and electrical works, installation of machinery and
equipment and the commissioning of such machinery only for itself.
Private respondent NSC was not in the business of constructing
buildings and installing plant machinery for the general business
community, i.e., for unrelated, third party, corporations. NSC did
not hold itself out to the public as a construction company or as an
engineering corporation.
The fact that petitioners were required to render services necessary or
desirable in the operation of NSCs business for a specified duration did
not in any way impair the validity of their contracts of employment which
stipulated a fixed duration therefor.
Extant in the record are the findings of the NLRC that the petitioners in
this case were utilized in operations other than billet making or other
components of the FYEP I and II, such as shipbreaking. We are
constrained to rule that while it is true that they performed other
activities which were necessary or desirable in the usual business of the
NSC and that the duration of their employment was for a period of more
than one year, these factors did not make them regular employees in
contemplation of Article 280 of the Labor Code, as amended. Thus, the
fact that petitioners worked for NSC under different project employment
contracts for several years cannot be made a basis to consider them as
regular employees, for they remain project employees regardless of the
number of projects in which they have worked. Length of service is not
the controlling determinant of the employment tenure of a project
employee. In the case of Mercado, Sr. v. NLRC, this Court ruled that the
proviso in the second paragraph of Article 280, providing that an
employee who has served for at least one year, shall be considered a
regular employees, relates only to casual employees and not to project
employees.

d.
undertaking

103

Definition of specific project or

 Tucor Industries, Inc. v. NLRC, G.R. No. 96608, May 20, 1991

Facts: Petitioner is a corporation principally engaged in the moving and

storage of various goods owned by military personnel residing within the
United States military facilities in the Philippines. On various dates
herein private respondents were hired as packers, drivers and utility
men/carpenters. They signed uniform company-prepared master
employment contracts. In a memorandum-leer dated July 17, 1989, the
Chief of Management of Clark Air Base reminded all agents, including
petitioner of the base policy ha "Employees who already have passes in
their possession and who fail the polygraph . . ." administered by an
acknowledged security company will be required to return their passes.
On the same day petitioner terminated the employment of private
respondents by sending them separate identical notices of termination.
All of private respondents had continuously been employed by petitioner
for more than a year before he services were terminated. On August 2,
1989, private respondents, except Pacico Dizon, led a complaint for illegal
dismissal against petitioner with the Regional Arbitration Branch No. 5 of
the National Labor Relations Commission (NLRC) in San Fernando,
Pampanga, Private respondent Dizon led a complain later.

Issue: Whether private respondents are regular or casual employees.

Held: In the case a bar, private respondents were assigned to do

carpentry work, packing and driving, activities which are usually
necessary and desirable in petitioners' usual business and which had to
be done on a regular basis. The private respondents had rendered more
than one year of service at the time of their dismissal overturned
petitioner's allegation of private respondents were hired for a specific or
undertaking for a limited period of time. The company-prepared maser
104

employment contracts placed the private respondents the mercy of those

who created the said contract. The work of the private respondents is
hardly "specific" or "seasonal." Such is one instance under the Code
"where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business." Private
respondents are therefore regular employees of petitioner he provisions of
their contract of employment. They are entitled to security of tenure. The
contention of the petitioners ha private respondents were employed on
"as needed basis" and under the principle of "no work, no pay" and ha
when such needs cease, petitioners, at their option may terminate their
contract, is certainly untenable.

e.
The absence of a definite duration
for the projects leads to no other conclusion the that the employment
is regular

PNOC-Energy Development Corp. v. NLRC, G.R. No. 169353, April 13,

2007

Facts: Petitioner PNOC-Energy Development Corporation is a

government-owned and controlled corporation engaged in the
exploration, development, and utilization of energy. It undertakes several
projects in areas where geothermal energy has been discovered. Each
geothermal project undergoes the stages of exploration, development,
and utilization or production. For each stage, several activities are
undertaken such as drilling, construction, civil works, structural works,
mechanical works, and electrical works until the project is finally
completed. Aside from its projects in Negros Oriental, petitioner also had
geothermal projects in Negros Occidental, Leyte, Albay, Sorsogon, and
North Cotabato.

105

Petitioners Southern Negros Geothermal Production Field in Negros

Oriental is divided into two phases: Palinpinon I (PAL I) and Palinpinon II
(PAL II). To augment its manpower requirement occasioned by the
increased activities in the development of PAL II, petitioner hired
employees in the Administration and Maintenance Section.

The termination/expiration of their respective employment were specified

in their initial employment contracts, which, however, were renewed and
extended on their respective expiry dates. On May 29, 1998, petitioner
submitted reports to the Department of Labor and Employment (DOLE)
Regional Sub-Branch No. VII in Dumaguete City, stating that six of its
employees were being terminated.

Petitioner thereafter furnished the employees uniformly worded notices of

termination, stating that they were being terminated from employment
effective June 30, 1998 due to the substantial completion of the civil
works phase of PAL II.

On October 29, 1998, the six employees, herein respondents, filed before
the National Labor Relations Commission (NLRC) a complaint for illegal
dismissal against petitioner. Aside from reinstatement, respondents
sought the payment of backwages, salary differential, collective
bargaining agreement benefits, damages and attorneys fees.

In their Position Paper, respondents averred that they had rendered

continuous and satisfactory services from the dates of their respective
employment until illegally dismissed

Issue: Whether respondents were project employees or regular employees

106

Held: Project employees are those workers hired (1) for a specific project
or undertaking, and (2) the completion or termination of such project or
undertaking has been determined at the time of the engagement of the
employee.[12] However, petitioner failed to substantiate its claim that
respondents were hired merely as project employees. A perusal of the
records of the case reveals that the supposed specific project or
undertaking of petitioner was not satisfactorily identified in the contracts
of respondents.

Unmistakably, the alleged projects stated in the employment contracts

were either too vague or imprecise to be considered as the specific
undertaking contemplated by law. Petitioners act of repeatedly and
continuously hiring respondents to do the same kind of work belies its
contention that respondents were hired for a specific project or
undertaking. The absence of a definite duration for the project/s has led
the Court to conclude that respondents are, in fact, regular employees.

employment is project

f.

Lack

of

evidence

to

prove

that

Olangapo Maintenance Services, Inc. v. Chantengco, G.R. No. 156146,

June 21,2007
Facts: Olongapo Maintenance Services, Inc. (OMSI), a corporation
engaged in the business of providing janitorial and maintenance services
to various clients, including government-owned and controlled
corporations, hired the respondents as janitors, grass cutters, and
degreasers on various dates beginning 1986, and assigned them at the
Ninoy Aquino International Airport (NAIA). On January 14, 1999,
Thereafter, OMSI terminated respondents' employment.
Respondents filed a complaint for illegal dismissal and non-payment of
labor standard benefits against OMSI.
107

For its part, OMSI denied the allegations in the complaint. It averred that
when OMSI hired respondents as janitors, cleaners, and degreasers to do
the services under the contract, they were them that they were hired for
the MIAA project and their employments were coterminous with the
contracts. As project employees, they were not dismissed from work but
their employments ceased when the MIAA contracts were not renewed
upon their expiration. The termination of respondents employment
cannot, thus, be considered illegal.
In a Decision, the Labor Arbiter dismissed the complaint for lack of
merit. On appeal by the respondents, the NLRC modified the Labor
Arbiters ruling. It held that respondents were regular and not project
employees. Hence, they are entitled to separation pay. OMSI sought
reconsideration of the ruling, but the NLRC denied the motion on July
30, 2001.
Petitioner went up to the Court of Appeals via a petition for certiorari,
imputing grave abuse of discretion to the NLRC for reversing the factual
findings and the decision of the Labor Arbiter. However, the Court of
Appeals dismissed the petition. The appellate court agreed with the
NLRC that the continuous rehiring of respondents, who performed tasks
necessary and desirable in the usual business of OMSI, was a clear
indication that they were regular, not project employees. The court added
that OMSI failed to establish that their employment had been fixed for a
specific project or undertaking, the completion or termination of which
had been determined at the time of their engagement or hiring. Neither
had it shown that respondents were informed of the duration and scope
of their work when they were hired. Furthermore, OMSI did not submit
to the Department of Labor and Employment (DOLE) reports of
termination of the respondents, thereby bolstering respondent claim of
regular employment. OMSI filed a motion for reconsideration, but the
Court of Appeals denied it on November 14, 2002.
Issue: Whether or not the respondents were employed as project
employees?
Held: No, the respondents are not project employees but are to be
considered as regular employees.
The Supreme Court ruled that the principal test in determining whether
an employee is a project employee is whether he/she is assigned to carry
108

out a specific project or undertaking, the duration and scope of which

are specified at the time the employee is engaged in the project or where
the work or service to be performed is seasonal in nature and the
employment is for the duration of the season. A true project employee
should be assigned to a project which begins and ends at determined or
determinable times, and be informed thereof at the time of hiring.
In the instant case, the record is bereft of proof that the respondent
engagement as project employees has been predetermined, as required by
law. We agree with the Court of Appeals that OMSI did not provide
convincing evidence that respondents were informed that they were to be
assigned to a specific project or undertaking when OMSI hired them.
Notably, the employment contracts for the specific project signed by the
respondents were never presented. All that OMSI submitted in the
proceedings a quo are the service contracts between OMSI and the MIAA.
Clearly, OMSI utterly failed to establish by substantial evidence that,
indeed, respondents were project employees and their employment was
coterminous with the MIAA contract.
Evidently cognizant of such neglect, OMSI attempted to correct the
situation by attaching copies of the application forms of the respondents
to its motion for reconsideration of the Court of Appeals' Decision. Such
practice cannot be tolerated. This practice of submitting evidence late is
properly rejected as it defeats the speedy administration of justice
involving poor workers. It is also unfair.
In termination cases, the burden of proof rests on the employer to show
that the dismissal is for a just cause. Thus, employers who hire project
employees are mandated to state and, once its veracity is challenged, to
prove the actual basis for the latter's dismissal. Unfortunately for OMSI,
it failed to discharge the burden. All that we have is OMSIs self-serving
assertion that the respondents were hired as project employees.
g.
Worker hired on a phase project can
be dismissed on completion of such phase project and not
coterminous with the completion of the whole project; termination of
phase of a project
Saberola v. Suarez, G.R. No. 151227, July 14, 2008

109

Facts: The case stemmed from a Complaint for illegal dismissal with
money claims filed by respondents against petitioner before the Regional
Arbitration Branch of Davao City. Petitioner is the owner and manager of
G.S. Saberola Electrical Services, a firm engaged in the construction
business specializing in installing electrical devices in subdivision homes
and in commercial and non-commercial buildings. in which respondents
were employed by petitioner as electricians. They worked from Monday to
Saturday and, occasionally, on Sundays, with a daily wage of P110.00.

Respondent Lirasan alleged that he was dismissed without cause and

due process. He was merely informed by petitioner that his services were
no longer needed without any explanation why he was terminated.

In his defense, petitioner averred that respondents were part-time project

employees and were employed only when there were electrical jobs to be
done in a particular housing unit contracted by petitioner. He maintained
that the services of respondents as project employees were coterminous
with each project. As project employees, the time of rendition of their
services was not fixed.

The Labor Arbiter rendered a Decision dismissing the complaint for lack
of merit. The Labor Arbiter ruled that respondents were project
employees. On appeal, the National Labor Relations Commission (NLRC)
affirmed the Labor Arbiters decision that respondents were project
employees. Petitioner filed a motion for reconsideration but the NLRC
denied the same. Thereafter, Petitioner filed a petition for certiorari under
Rule 65 of the Rules of Court before the CA. However, CA rendered a
Decision dismissing the petition for lack of merit. Petitioner filed a motion
for reconsideration which, however, was denied in a Resolution

110

Issue: Whether or not a worker hired on a phase project can be dismissed

on completion of such phase project and not coterminous with the
completion of the whole project?

Held: Yes, a worker hired on a phase project can be dismissed upon

completion of such phase project.

Petitioners business, specializing in installing electrical devices, needs

electricians only when there are electrical devices to be installed in
subdivision homes or buildings covered by an appropriate contract.
Petitioner, as an electrical contractor, depends for his business on the
contracts that he is able to obtain from real estate developers and
builders of buildings. Thus, the work provided by petitioner depends on
the availability of such contracts or projects. The duration of the
employment of his work force is not permanent but coterminous with the
projects to which the workers are assigned. Viewed in this context, the
respondents are considered as project employees of petitioner. Indeed,
the status of respondents as project employees was upheld by the Court
of Appeals based on the findings of facts of the Labor Arbiter and the
NLRC.

However, respondents, even if working as project employees, enjoy

security of tenure. Section 3, Article XIII, of the Constitution guarantees
the right of workers to security of tenure, and because of this, an
employee may only be terminated for just [15] or authorized[16] causes that
must comply with the due process requirements[17] mandated by law.

In Archbuild Masters and Construction, Inc. v. NLRC,[18] we held that the

employment of a project worker hired for a specific phase of a
construction project is understood to be coterminous with the completion
111

of such phase and not upon the accomplishment of the whole project. A
worker hired for a particular phase of a construction project can be
dismissed upon the completion of such phase. Project workers in the
construction industry may also be terminated as the phase of a
construction project draws nearer to completion when their services are
no longer needed, provided they are not replaced.

Nonetheless, when a project employee is dismissed, such dismissal must

still comply with the substantive and procedural requirements of due
process. Termination of his employment must be for a lawful cause and
must be done in a manner which affords him the proper notice and
hearing.

In this regard, we hold that respondent Suarez was illegally terminated

by petitioner. A project employee must be furnished a written notice of
his impending dismissal and must be given the opportunity to dispute
the legality of his removal.[21] In termination cases, the burden of proof
rests on the employer to show that the dismissal was for a just or
authorized cause. Employers who hire project employees are mandated to
state and prove the actual basis for the employees dismissal once its
veracity is challenged.

Petitioner failed to present any evidence to disprove the claim of illegal

dismissal. It was uncontested that the last work of the respondents with
petitioners company was the electrical installation in some housing units
at the Ciudad Esperanza Housing Project. No evidence was presented by
petitioner to show the termination of the project which would justify the
cessation of the work of respondents. Neither was there proof that
petitioner complied with the substantive and procedural requirements of
due process.

112

h.

Project

to

project

basis

of

employment

Sandoval Shipyard Inc. v. NLRC, G.R. No. L-65689 and 66119, May 31
1985

Facts: Rogelio Diamante, Manuel Pacres, Macario Saputalo, Rolando

Cervales and Dionisio Cervales were assigned to the construction of the
LCT Catarman, Project No. 7511. After three months of work, the project
was completed on July 26, 1979. The five workers were served a
termination notice. The termination was reported to the Ministry of Labor
on August 3, 1979. They filed a complaint for illegal dismissal.
The National Labor Relations Commission affirmed the decision of the
Labor Arbiter ordering the reinstatement of the five complainants with
backwages from July 27, 1979.
Issue: Whether or not respondents are project employees whose
employment are coterminous with the project for which they were hired?
Held: Yes, the respondents are project employees. The Supreme Court
held that private respondents were project employees whose work was
coterminous with the project for which they were hired. Project
employees, as distinguished from regular or non-project employees, are
mentioned in section 281 of the Labor Code as those "where the
employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of
the engagement of the employee."
Policy Instructions No. 20 of the Secretary of Labor, which was issued to
stabilize employer-employee relations in the construction industry,
provides: Project employees are those employed in connection with a
particular construction project. Non-project (regular) employees are those
employed by a construction company without reference to any particular
project.
113

Project employees are not entitled to termination pay if they are

terminated as a result of the completion of the project or any phase
thereof in which they are employed, regardless of the number of projects
in which they have been employed by a particular construction company.
Moreover, the company is not required to obtain clearance from the
Secretary of Labor in connection with such termination.
i.
Engaged in contracting electrical
services depending on the availability of projects or works
Cartagenas v. Romago Electric Co. Inc., G.R. No. 82973, Sept. 15, 1989
Facts: Respondent Romago is a general contractor engaged in
contracting and sub-contracting of specific building construction projects
or undertaking such as electrical, mechanical and civil engineering
aspects in the repair of buildings and from other kindred services.
Individual complainants are employed by the respondent in connection
with particular construction projects.
Effective July 12, 1986, individual complainants and Lawrence Deguit
were temporarily laid-off by virtue of a memorandum issued by the
respondent. In said memorandum they were also informed that a
meeting regarding the resumption of operation will be held on July 16,
1986 and that they will be notified as to when they will resume work.
On July 28, 1986, complainants filed the instant case for illegal
dismissal but before the respondent could receive a copy of the complaint
and the notification and summons issued by the NLRC National Capital
Region (actually received only on August 22, 1986, page 4, records)
individual complainants re-applied with the respondent and were
assigned to work with its project at Robinson-EDSA.
The NLRC held that the complainants were project employees because
their appointments were "co-terminus with the phase or item of work
assigned to them in said project,"
Issue: Whether or not petitioners were project employees?

114

Held: Yes, the petitioners were project employees. As an electrical

contractor, the private respondent depends for its business on the
contracts it is able to obtain from real estate developers and builders of
buildings. Since its work depends on the availability of such contracts or
"projects," necessarily the duration of the employment of its work force is
not permanent but co-terminus with the projects to which they are
assigned and from whose payrolls they are paid. It would be extremely
burdensome for their employer who, like them, depends on the
availability of projects, if it would have to carry them as permanent
employees and pay them wages even if there are no projects for them to
work on. We hold, therefore, that the NLRC did not abuse its discretion in
finding, based on substantial evidence in the records, that the petitioners
are only project workers of the private respondent.
j.
project employment. (44 times)

Repeated

rehiring

of

project

to

Samson v. NLRC, G.R. No. 113166, Feb. 1, 1996

Facts: Petitioner has been employed with private respondent Atlantic
Gulf and Pacific Co., Manila, Inc. (AG & P) in the latters various
construction projects since April, 1965, in the course of which
employment he worked essentially as a rigger, from laborer to rigger
foreman. From 1977 up to 1985, he was assigned to overseas projects of
AG & P, particularly in Kuwait and Saudi Arabia.
On November 5, 1989, petitioner filed a complaint for the conversion of
his employment status from project employee to regular employee, which
complaint was later amended to include claims for underpayment, nonpayment of premium pay for holiday and rest day, refund of reserve fund,
and 10% thereof as attorneys fees. Petitioner alleged therein that on the
basis of his considerable and continuous length of service with AG & P.
he should already be considered a regular employee and, therefore,
entitled to the benefits and privileges appurtenant thereto.
The labor arbiter declared that petitioner should be considered a regular
employee on the ground that it has not been shown that AG & P had
made the corresponding report to the nearest Public Employment Office
every time a project wherein petitioner was assigned had been completed
and his employment contract terminated, as required under DOLE Policy
115

Instruction No. 20. Furthermore, pursuant to the same policy

instruction, the labor arbiter found that since petitioner was not free to
leave anytime and to offer his services to other employers, he should be
considered an employee for an indefinite period because he is a member
of a work pool from which AG & P draws its project employees and is
considered an employee thereof during his membership therein, hence
the completion of the project does not mean termination of the employeremployee relationship.
In refutation of the allusion of AG & P to the maxims of no work, no pay
and a fair days wage for a fair days labor, the labor arbiter held that there
is no evidence that at one point in time the respondent has not secured
any contract and, further, that complainant has been continuously
rendering service in the corporation since 1965 up to the date of his
aforesaid decision. Consequently, the labor arbiter ordered that
petitioners employment status be changed from project to regular
employee effective November 5, 1989 and that he be given other benefits
accorded regular employees plus 10% thereof as attorneys fees. The
claim against petitioners reserve fund was denied on the ground of
prescription.
On appeal, public respondent NLRC reversed the decision of the labor
arbiter and dismissed the complaint for lack of merit. It ruled that the
evidence shows that petitioner was engaged for a fixed and determinable
period, which thereby made him a project employee; that there was no
evidence presented nor any allegation made by petitioner to support the
labor arbiters finding that the former was not free to leave and offer his
services to other employers; that Policy Instruction No. 20 has been
superseded by Department Order No. 19, Series of 1993, which provides
that non-compliance with the required report to the nearest Public
Employment Office no longer affixes a prescription of regular
employment; and that the repeated or constant re-hiring of project
workers for subsequent projects is permitted without such workers being
considered regular employees.
Finally, it ratiocinated that length of service, while such may be used as
a yardstick for other types of employees in other endeavor(s), does not
apply to workers in the construction industry, particularly to project
employees. In the case at bar, the characteristics peculiar to the
construction business make it imperative for construction companies to
116

hire workers for a particular project as the need arises and it would be
financially disadvantageous to owners of construction companies to
retain in its payrolls employees and/or workers whose services are no
longer required in the particular project to which they have been
assigned. Hence this petition.
Issue: Whether petitioner is a project employee
Held: When the present action for regularization was filed on November
5, 1989 and during the entire period of petitioners employment with
private respondent prior to said date, the rule in force then was Policy
Instruction No. 20 which, in the fourth paragraph thereof, required the
employer company to report to the nearest Public Employment Office the
fact of termination of a project employee as a result of the completion of
the project or any phase thereof in which he is employed. Furthermore,
contrary to private respondents asseveration, Department Order No. 19,
which was issued on April 1, 1993, did not totally dispense with the
notice requirement but, instead, made provisions therefore and
considered it as one of the indicators that a worker is a project employee.
Perforce, we agree with the labor arbiter that private respondents failure
to report the termination of petitioners services to the nearest Public
Employment Office, after completion of every project or a phase thereof to
which he is assigned, is a clear indication that petitioner was not and is
not a project employee.
It is not disputed that petitioner had been working for private respondent
for approximately twenty-eight (28) years as of the adjudication of his
plaint by respondent NLRC, and that his project-to-project employment
was renewed several times. With the successive contracts of employment
wherein petitioner continued to perform virtually the same kind of work,
i.e., as rigger, throughout his period of employment, it is manifest that
petitioners assigned tasks were usually necessary or desirable in the
usual business or trade of private respondent. The repeated re-hiring
and continuing need for his services are sufficient evidence of the
necessity and indispensability of such services to private respondents
business or trade.
Where from the circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security by the employee,
they should be struck down as contrary to public policy, morals, good
117

customs or public order. As observed by the Solicitor General, the record

of this case discloses, as part of petitioners position paper, a certification
duly issued by private respondent clearly showing that the formers
services were engaged by private respondent on a continuing basis since
1965. The certification indubitably indicates that after a particular
project has been accomplished, petitioner would be re-hired immediately
the following day saves for a gap of one (1) day to one (1) week from the
last project to the succeeding one. There can, therefore, be no escape
from the conclusion that petitioner is a regular employee of private
respondent.
k.
The length of service of project
employees is not the controlling factor.
D.M. Consunji, Inc. v. NLRC, G.R. No. 116572, Dec. 18, 2000
Facts: Yes. Private respondents were hired by petitioner as project
employees to work on its Cebu Super Block Project in Cebu City. On
March 2, 1993, private respondent's services were terminated allegedly
without regard to the date of termination as specified in their contracts of
employment. Petitioner reported the termination of their services to the
nearest Regional Office of the Department of Labor alleging that the term
of the contracts of employment had expired.
The private respondents then filed their respective complaints for illegal
dismissal. Labor Arbiter rendered a decision finding the dismissal of the
private respondents without just cause and ordering petitioner to
reinstate them to their former positions without loss of benefits and
seniority rights and to pay them as their back wages. In ruling that the
dismissals were illegal, the Labor Arbiter explained that while the private
respondents voluntarily signed the employment contract which fixed the
term of their employment, their dismissal was not actually based on the
expiration of the term of their employment because some of them were
dismissed before the end of the contract and there were those dismissed
even long after its expiration. The Labor Arbiter, thus, concluded that the
contracts of employment of the private respondents should not be
honored because they were made more for breach rather than for
observance.
The NLRC affirmed the decision of the Labor Arbiter. It ruled that the
employment period need not reach six months in order that the private
118

respondents attain the status of regular employees citing Article 280 of

the Labor Code. It agreed with the Labor Arbiter that the private
respondents could not be considered contract workers because they
worked
even
after
the
expiration
of
their
contracts
of
employment.Dissatisfied with the decision of the respondent NLRC,
petitioner appealed to this Court.

Issue: Whether or not the private respondents were project employees

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

We hold that the private respondents are project employees. Their

contracts of employment readily show that the private respondents were
employed with respect to a specific project. The private respondents in
this case were workers in a construction project of the petitioner. While
employed with respect to a specific project, the contracts of employment
between the private respondents and the petitioner provide that the
former were employed for a term of one (1) month which was the
estimated period for the project to be finished. The private respondents
do not even claim to be regular employees but merely that, as employees
at the Cebu Super Block, they were terminated before the completion of
the project without just cause and due process. As project employees,
there is no showing that they were part of the work pool of the petitioner
119

construction company. Hence, in their memorandum, private

respondents admit that they are not unaware that as project employees
their employment can be terminated upon the completion of the project.

l.
Rehiring of the employees on a
project to project basis does not ipso facto make their employment
regular

Cioco v. C.E Construction Corp., G.R. No. 156748, Sept. 8, 2004

Facts: Isaac Cioco, Jr., Rebie A. Mercado, Benito V. Galvadores, Cecilio

Solver, Carmelo Juanzo, Benjamin Baysa, and Rodrigo Napoles
(WORKERS) were hired by C.E. Construction Corporation (COMPANY), a
domestic corporation engaged in the construction businesS. They were
hired as carpenters and laborers in various construction projects from
1990 to 1999, the latest of which was the GTI Tower in Makati. Prior to
the start of every project, the WORKERS signed individual employment
contracts. Sometime in May and June 1999, the WORKERS, along with
sixty-six (66) others, were terminated by the COMPANY on the ground of
completion of the phases of the GTI Tower project for which they had
been hired. Alleging that they were regular employees, the WORKERS
filed complaints for illegal dismissal with the Arbitration Branch of the
NLRC. Claims for underpaid wages and unpaid overtime pay, premium
for holiday and rest days, service incentive leave pay, night shift
differential, and 13th month pay were likewise demanded.

Labor Arbiter rendered judgment in favor of the COMPANY. He ruled that

the WORKERS were project employees as evident from their individual
employment contracts; that due notices of termination were given to
them; and, that the required termination reports were submitted to the
120

Department of Labor and Employment (DOLE). The money claims were

dismissed for lack of basis.The NLRC affirmed the labor arbiters decision
on appeal. After their motion for reconsideration was denied, the
WORKERS filed a special civil action for certiorari with the CA and
modified the decision of the NLRC directing the COMPANY to pay back
wages. Hence this petition.

Issue: Whether or not the Workers were regular or project employees of

the Company

Held: The issue of whether the WORKERS were regular or project

employees of the COMPANY is a question of fact which shall no longer be
dealt with in this petition for review, the Courts jurisdiction being limited
to questions of law. The Labor Arbiter, the NLRC, and the CA,
unanimously found that the WORKERS were project employees of the
COMPANY. This finding is binding on this Court.

We again hold that the fact that the WORKERS have been employed with
the COMPANY for several years on various projects, the longest being
nine (9) years, did not automatically make them regular employees
considering that the definition of regular employment in Article 280 of
the Labor Code, makes specific exception with respect to project
employment. The re-hiring of petitioners on a project-to-project basis did
not confer upon them regular employment status. The practice was
dictated by the practical consideration that experienced construction
workers are more preferred. It did not change their status as project
employees.

m.
basis.
121

Employees were rehired on interval

 Caseres v. Universal Robina Sugar Milling Corp., G.R. No. 159343, Sept.
28, 2007

Facts: Universal Robina Sugar Milling Corporation (respondent) is a

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

The Labor Arbiter (LA) dismissed the complaint for not being
substantiated with clear and convincing evidence. The National Labor
Relations Commission (NLRC) affirmed the LA's dismissal, and the Court
of Appeals (CA) dismissed the petition filed before it. Hence, herein
Petition for Review on Certiorari.

Issue: Whether or not the petitioners are seasonal/ project/ term

employees not regular employees of the respondents

Ruling: The principal test for determining whether an employee is a

project employee or a regular employee is whether the employment has
been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement
of the employee. A project employee is one whose employment has been
122

fixed for a specific project or undertaking, the completion or termination

of which has been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in
nature and the employment is for the duration of the season. A true
project employee should be assigned to a project which begins and ends
at determined or determinable times, and be informed thereof at the time
of hiring.

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

Moreover, even if petitioners were repeatedly and successively re-hired,

still it did not qualify them as regular employees, as length of service is
not the controlling determinant of the employment tenure of a project
employee, but whether the employment has been fixed for a specific
project or undertaking, its completion has been determined at the time of
the engagement of the employee. Further, the proviso in Article 280,
stating that an employee who has rendered service for at least one (1)
year shall be considered a regular employee, pertains to casual employees
and not to project employees.
123

n. Repeated
contracts make the employment regular

extension

of

employment

Tomas Lao Construction v. NLRC, G.R. No. 11678

Facts: Private respondents were filed complaints for illegal dismissal

against petitioners with NLRC. Respondents were hired for various
periods as construction workers in different capacities they described in
the terms. They alternately worked for Tomas Lao Corp., Tomas and
James Developer, LVM Construction, altogether as Lao Group of
Companies. They engaged in construction of public roads and bridges.
With the arrangement workers were transferred whenever necessary to
on-going projects of the same company or rehired after the completion of
the project or project phase which they were assigned. In 1989 issued
memorandum requiring all workers and company personnel to sign
employment contracts forms and clearances. To ensure compliance with
the directive, the company ordered the withholding of the salary of any
employee who refused to sign. All respondents refused to sign
contending that this scheme was designed by their employer to
downgrade their status from their regular employees to mere project
employees. Their salaries were withheld. Since the workers stood firm in
their refusal to comply with the directives their services were terminated.
The NLRC dismissed the complaint finding that respondents were project
employees whose employees could be terminated upon the completion of
the project. However the decision of LA was reversed on appeal finding
that respondents were regular employees who were dismissed without
just cause and denied due process.

Issue: Whether or not the private respondents were regular employees?

124

Held: The court ruled that, the principal test in determining whether
particular employees are project employees distinguished from regular
employees is whether the project employees are assigned to carry out
specific project or undertaking, the duration of which are specified at the
time of the employees are engaged for the project. Length of time may
not be a controlling test for project employment, it can be a strong factor
in determining whether the employee was hired for a specific undertaking
or in fact tasked to perform functions which are vital, necessary and
indispensable to the usual business or trade of the employer. Private
respondents had already gone through the status of project employees.
But their employments became non-coterminous with specific projects
when they started to be continuously re-hired due to demands of
petitioners business and were re-engaged for many more projects without
interruption. The court finds that the continuous re- hiring of the same
set of employees within the framework is strongly indicative that private
respondents were an integral part of a work pool in which petitioners
drew its workers for its various projects.

3. Seasonal Employment, Art. 280, LCP, Sec. 5, Rule 1, Book VI,

Implementing Rules

a.
Seasonal workers do not become
regular employees even after one (1) year of service

Mercado v. NLRC, G.R. No. 79869, Sept. 5, 1991

Facts: Petitioners alleged in their complaint that they were agricultural

workers utilized by private respondents in all the agricultural phases of
125

work on the 7 1/2 hectares of ace land and 10 hectares of sugar land
owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan
worked in the farm of private respondents since 1949, Fortunato
Mercado, Jr. and Antonio Mercado since 1972 and the rest of the
petitioners since 1960 up to April 1979, when they were all allegedly
dismissed from their employment; and that, during the period of their
employment, petitioners received daily wages. The other private
respondents denied having any relationship whatsoever with the
petitioners and state that they were merely registered owners of the land
in question included as correspondents in this case. As a result, the
petitioners filed a complaint for illegal dismissal. The Labor Arbiter held
that the petitioners were not regular employees and the NLRC affirmed
this ruling.

Issue: Whether or not the petitioners are regular workers?

Held: The Court held that, the petitioners are project/seasonal

employees. Clearly, petitioners being project employees, seasonal
employees, their employment legally ends upon completion of the project
or the season. The termination of their employment cannot and should
not constitute an illegal dismissal. As such, the termination of
employment cannot be considered as illegal dismissal. The petitioners are
free to contract their services to work for other farm owners.

b.
Seasonal workers become regular
employees after one (1) year of service

Tacloban Sagkahan Rice and Corn Mills, Co. v. NLRC, G.R. No. 73806,
March 21, 1990

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Facts: Private respondents, before their termination on July 25, 1983,

were all regular employees of petitioners. Carlito Codilan and Maximo
Docena started working in 1958; Eugenio Go in 1961; Teofilo Trangria in
1968; and Reynaldo Tulin in 1977. On July 25, 1983, petitioner Tan
Cheng Pian alias "Piana" told private respondents "to look for another
job" without giving any reason. Private respondents thus filed their
complaint for illegal dismissal with the Regional Office, NLRC at Tacloban
City on August 23, 1983. At the hearing of September 28, 1983, private
respondents, who had been employed elsewhere, demanded payment of
separation pay instead of seeking reinstatement. After submission of
private respondents' joint affidavit and petitioners' position paper,
Executive Labor Arbiter' Armando Polintan rendered the Decision of April
11, 1984 ordering petitioners to pay private respondents their separation
pay as specifically indicated in the said decision.

Issue: Whether or not the private respondents are regular employees?

Held: The Court held that the private respondents are indeed regular
employees. The evidence on record has established that private
respondents had been working for petitioners for number of years. Aside
from their lengthy service, the private respondents' employment was not
fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of their appointment or hiring.
The petitioners never rebutted private respondents' claim that they
performed activities usually necessary or desirable in the usual business
of the former.

Furthermore, the services performed or to be performed by private

respondents are not seasonal in nature. While it may be true that the
harvest of palay is seasonal, the milling operations, which are the main
127

business of petitioners is not seasonal. The fact is that big rice mills such
as the one owned by petitioners continue to operate and do business
throughout the year even if there are only two or three harvest seasons
within the year. It is a common practice among farmers and rice dealers
to store their palay and to have the same milled as the need arises.
Finally, considering the number of years that they have worked for
petitioners, private respondents have long attained the status of regular
employees.

c.
Requisites in order that seasonal
employment may be regular employment

Hacienda Fatima v. National Federation of Sugarcane Workers-Food and

General Trade, Jan. 28, 2003

Facts: When respondents were certified as the collective bargaining

representative, petitioners refused to have a meeting with the union for
the purpose of entering into a Collective Bargaining Agreement. The
workers including complainants were not given work for more than a
month. In protest, they staged a strike which was however settled upon
the signing of a Memorandum of Agreement. Subsequently, alleging that
complainants failed to load some wagons, petitioners reneged on its
commitment to bargain collectively & employed all means including the
use of private armed guards to prevent the organizers from entering the
premises. No work assignments were given to complainants which forced
the union to stage a strike. Due to the efforts of the Department of
Labor and Employment, another MOA was signed by the parties and they
met in a conciliation meeting. When petitioners again refused to honor
its commitment, complainants filed a complaint. Petitioner accused
respondents of refusing to work & being choosy in the kind of work they
have to perform.

128

The NLRC ruled that the respondents were illegally dismissed. The CA
affirmed that while the work of respondents was seasonal in nature, they
were considered to be merely on leave during the off-season and were
therefore still employed by petitioners.

Issue: Whether or not the Court of Appeals erred in holding that

respondents were regular employees?

Held: For respondents to be excluded from those classified as regular

employees, it is not enough that they perform work or services that are
seasonal in nature. They must have also been employed only for the
duration of one season. The evidence proves the existence of the first, but
not of the second, condition. The fact that respondents repeatedly worked
as sugarcane workers for petitioners for several years is not denied by the
latter. Evidently, petitioners employed respondents for more than one
season.

If the employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems
the repeated and continuing need for its performance as sufficient
evidence of the necessity if not indispensability of that activity to the
business. The employment is considered regular, but only with respect to
such activity and while such activity exists. Seasonal workers who are
called to work from time to time and are temporarily laid off during offseason are not separated from service in said period, but merely
considered on leave until re-employed.

129

Respondents, having performed the same tasks for petitioners every

season for several years, are considered the latter's regular employees for
their respective tasks. Petitioners' eventual refusal to use their services,
even if they were ready, able and willing to perform their usual duties
whenever these were available and hiring of other workers to perform the
tasks originally assigned to respondents amounted to illegal dismissal of
the latter.

Abasolo v. NLRC, G.R. No. 118475, Nov. 29, 2000

Facts: The petitioners on this case are the employees of the former
LUTORCO who engages in the drying of Tobacco leaves as their primary
business. LUTORCO handed over the business to TABACALERA in 1993.
With the change of management, TABACALERA required the
resubmission of the application of the current employees. The employees,
aggrieved, sought a petition with the NLRC demanding separation pay
from LUTORCO. LUTORCO contended that they were exempt from
separation pay because there was no dismissal that have happened and
that they were forced to halt operations because of dire business losses
and have tasked TABACALERA to assume operations so that petitioners
would continue to have a source of income.

The Labor Arbiter and the NLRC denied the petition alleging that there
was no actual termination of services by LUTORCO for the petitioners.

Issues: Are the petitioners, the employees of LUTORCO, entitled for

separation pay? Were the petitioners illegally terminated? Are the
employees regular employees?

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Held: The Supreme court held that the petitioners are entitled for
separation pay under Article 283 of the Labor code because there was
actual termination. The case at bar is factual so the Supreme Court
based their findings on the facts gathered by the Labor Arbiter and the
NLRC. The court found the petitioners were not notified of the impending
change of administration and were unaware of the transaction that
LUTORCO and TABACALERA were having. They were caught by surprise
when the alleged sale or turnover was already consummated. With that
the termination had transpired because there is no law requiring a new
administration to re-hire the employees of the former owner, and what
LUTORCO and TABACALERA only agreed was a courtesy on part of
TABACALERA that gives priority to the employment of former employees.
It was confirmed when TABACALERA required the former employees to
resubmit their application for TABACALERA to hire them.

It is clear that the employees are regular employees under the code. Even
though their employment exists during the Tobacco season, their
employment, even though broken, have accumulated the required
amount to be considered as regular employees. There is also no doubt
that the employees are a necessity for the nature of business of the
employer.

Thus, once terminated, the employees can now avail Article 283 of the
Labor Code which gives them the right for separation pay.

4. Casual Employment, Art. 280, Sec. 5(b), Rule 1, Book VI, (amended by
Art, IV, D.O. No. 10, Series of 1997
a. Casual employee needs no appointment paper to be a regular
employee after one (1) year of service
Kimberly Clark (Phils.) v. Secretary of Labor, G.R.No. 156668, Nov. 23,
2007
131

Facts: Kimberly Clark Phils. or Kimberly and UKCEO-PTGWO the labor

union of Kimberly has ongoing CBA that has just expired. Afterwards,
the some members UKCEO formed another union named KILUSANOLALIA and has filed for the certification of their union and demanded
that they be the bargaining unit for Kimberly. Kimberly and UKCEO did
not challenge the certification election but has questioned the inclusion
of the so-called casual employees for their inclusion in voting, contending
that they are not regular employees. The outcome of whether the 64
questioned casual employees if they are regular employees or not would
make or break the certification for KILUSAN-OLALIA.
Issue: Whether the 64 questioned employees under OLALIA are regular
employees.
Held: There are two kinds of employees under the Labor Code: 1) Those
that are necessary to the nature of business of the employer; and 2)
those that have rendered at least (1) year of service whether continuous
or broken. Clearly the employees are regular employees because they
have rendered at least one year of service even though broken under
Kimberly. Thus, they are regular employees.
Being regular employees they are entitled to the rights and benefits that
come with being regular employees. As such they are entitled to vote for
certification of the union that they belong to.

b. Repeated rehiring of casual employees makes him are regular

employee.
Tan v. Lagrama, G.R. No. 151228, Aug. 15, 2002
Facts: Tan is the owner of Supreme Theater corporation and general
manager of Crown and empire theaters in Butuan City. Lagrama is an
employee that does murals or drawings for the theaters and cinemas
under the company for 10 years. Tan dismissed Lagrama over an alleged
incident where Lagrama allegedly peed on the work place. Tan called
Lagrama in his office and there and then dismissed him without giving

132

Lagrama the chance to explain himself. No discussion or evidence was

given to warrant his dismissal.
Lagrama then filed for illegal dismissal with the labor arbiter seeking
reinstatement, 13th month pay, plus damages for illegal dismissal. Tan
contends that Lagrama was an independent contractor wherein he was
only paid for every piece that he has accomplished with relation to
drawings and murals. The labor arbiter sided with Lagrama saying that
he was illegally dismissed. The NLRC reversed the decision of the Labor
arbiter, but the CA found that Lagrama was indeed illegally dismissed
and that Lagrama was an employee of Tan. Hence this petition.
Issues: Whether Lagrama is an employee of Tan and if he was illegally
dismissed.
Held: The Supreme court found that Lagrama is indeed an employee of
Tan by using the four fold test, focusing on the control test. The control
test showed that Lagrama is an employee because not only his conduct of
work was checked and supervised, but also that output of the work done.
In addition to the required time that he has to be at work, and the
special use of the workplace are indicators that Lagrama is indeed an
employee of Tan.
Being a regular employee, Lagrama was entitled to due process before he
can be legally dismissed. It was shown in the facts gathered by the Labor
Arbiter that Lagrama was not given a chance for due process because he
was summarily tried and dismissed by Tan without being given the
chance to explain himself and that here was no evidence that proved the
infraction that was being accused of him.
Lagrama is illegally dismissed by Tan and deserves the payment of his 13
month pay, his back wages, plus damages that was incurred by Tan
because of the malicious dismissal of Lagrama.
5. Fixed term employment
Brent School Inc. v. Zamora and Alegre, G.R. No. 48494, Feb. 5, 1990

133

Facts: Employment contract in virtue of which Doroteo R. Alegre was

engaged as athletic director by Brent School, Inc. at a yearly
compensation. The contract fixed a specific term for its existence, five (5)
years, from July 18, 1971, the date of execution of the agreement, to July
17, 1976.

Some three months before the expiration of the stipulated period, or

more precisely on April 20, 1976, Alegre was given a copy of the report
filed by Brent School with the Department of Labor advising of the
termination of his services effective on July 16, 1976. The stated ground
for the termination was "completion of contract, expiration of the definite
period of employment." And a month or so later, on May 26, 1976, Alegre
accepted the amount of P3,177.71, and signed a receipt therefor
containing the phrase, "in full payment of services for the period May 16,
to July 17, 1976 as full payment of contract."

However, at the investigation conducted by a Labor Conciliator of said

report of termination of his services, Alegre protested the announced
termination of his employment. He argued that although his contract did
stipulate that the same would terminate on July 17, 1976, since his
services were necessary and desirable in the usual business of his
employer, and his employment had lasted for five years, he had acquired
the status of a regular employee and could not be removed except for
valid cause.

Issue: Whether or not the provisions of the Labor Code, as amended, have
anathematized "fixed period employment" or employment for a term.

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

having lawfully terminated with and by reason of the expiration of the
134

agreed term of period thereof, he is declared not entitled to reinstatement

and the other relief awarded and confirmed on appeal in the proceedings
below.

The question immediately provoked by a reading of Article 319 is whether

or not a voluntary agreement on a fixed term or period would be valid
where the employee "has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer." The definition seems a non sequitur. From the premise that
the duties of an employee entail "activities which are usually necessary
or desirable in the usual business or trade of the employer the"
conclusion does not necessarily follow that the employer and employee
should be forbidden to stipulate any period of time for the performance of
those activities. There is nothing essentially contradictory between a
definite period of an employment contract and the nature of the
employee's duties set down in that contract as being "usually necessary
or desirable in the usual business or trade of the employer." The concept
of the employee's duties as being "usually necessary or desirable in the
usual business or trade of the employer" is not synonymous with or
identical to employment with a fixed term. Logically, the decisive
determinant in term employment should not be the activities that the
employee is called upon to perform, but the day certain agreed upon by
the parties for the commencement and termination of their employment
relationship, a day certain being understood to be "that which must
necessarily come, although it may not be known when." Seasonal
employment, and employment for a particular project are merely instances
employment in which a period, where not expressly set down, necessarily
implied.

Paraphrasing Escudero, respondent Alegre's employment was terminated

upon the expiration of his last contract with Brent School on July 16,
1976 without the necessity of any notice. The advance written advice
given the Department of Labor with copy to said petitioner was a mere
reminder of the impending expiration of his contract, not a letter of
135

termination, nor an application for clearance to terminate which needed

the approval of the Department of Labor to make the termination of his
services effective. In any case, such clearance should properly have been
given, not denied.

a. Requisites for a valid fixed term contract of employment

PNOC v. NLRC, G.R. No. 97747, March 31, 1993
Facts: On November 11, 1980, petitioners hired private respondent
Francisco Mata as Service Driver on a daily wage of P39.74. Assigned to
the PNOC-EDA Bacon-Manito Geothermal Project in Bonga, Sorsogon,
Sorsogon, he worked there until September 1, 1985. On this day, his
employment was terminated through a letter advice dated September 1,
1985, signed by his supervisor, B.B. Balista, allegedly for "contract
expiration", even when the project was still a continuing one.
On November 8, 1985, private respondent complained of illegal dismissal,
and accused petitioners of withholding his backwages, overtime pay, and
separation pay (p. 1, Records). A dismissal of the complaint was sought
on jurisdictional ground, petitioner company asserting that it is a
government-owned and controlled corporation, hence, its employees
must be governed by the Civil Service Law and not by the Labor Code,
and citing National Housing Corporation v. Benjamin Juco and the NLRC
(134 SCRA 176).
On February 26, 1987, Labor Arbiter Voltaire A. Balitaan dismissed the
complaint for lack of jurisdiction. On appeal to public respondent,
however, the First Division, on September 16, 1988, set aside the Labor
Arbiter's decision, assumed jurisdiction over the case, and directed the
Arbitration Branch to conduct further proceedings.
Petitioners maintained that private respondent was a project employee
whose employment was for a definite period and coterminous with the
project for which he was hired. It was for this reason that his
employment was terminated. Labor Arbiter Vito C. Bose ruled that Mata
is a regular employee. The NLRC reversed.
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Issue: Whether or not Mata is a regular employee

Held: The Court ruled that he is not a regular employee. The two
guidelines, by which fixed contracts of employments can be said NOT to
circumvent security of tenure, are either:
1. The fixed period of employment was knowingly and voluntarily agreed
upon by the parties, without any force, duress or improper pressure
being brought to bear upon the employee and absent any other
circumstances vitiating his consent;
2. It satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance
whatever being exercised by the former on the latter.
A careful examination of the last Employment Contract signed by
respondent Mata shows that he indeed signed the same. In fact
petitioners claim that all the previous employment contracts were also
translated for the benefit of private respondent, and it was only when he
understood the same that he signed said contracts. As per Guideline No.
1, given the circumstances behind private respondent Mata's
employment, private respondent is a project employee. It is clear that
private respondent Mata is a project employee considering that he does
not belong to a "work pool" from which petitioner PNOC would draw
workers for assignment to other projects at its discretion. It is likewise
apparent from the facts of the case that private respondent Mata was
utilized only for one particular project, the well-completion project which
was part of the exploration stage of the PNOC Bacon-Manito Geothermal
Project. Hence, private respondent Mata can be dismissed upon the
termination of the projects as there would be no need for his services. We
should not expect petitioner to continue on hiring private respondent in
the other phases of the project when his services will no longer be
needed.
b. Duties (need not) are usually necessarily or desirable in the
employers usual business or trade
AMA Computer College Paranaque v. Austria, G.R. No. 164078, Nov. 25,
2007
137

Facts: Petitioner hired Rolando Austria as dean of AMA Computer

College on a probationary employment. In view of this, he was entitled to
a transportation allowance of One Thousand Five Hundred Sixty Pesos
and in the event, that he gives up the position of dean or fails to meet the
standards of the College, he shall be considered for a faculty position and
shall lose the transportation allowance and be entitled to his faculty rate.
Sometime in August 2000 he was charged with violating AMAs
Employees Conduct and Discipline as follows: 1) leaking of test
questions; 2) failure to monitor general requirements vital to the
operations of the company; and 3) gross inefficiency. He was then
terminated as dean. Respondent then filed a complaint for illegal
dismissal, non-payment of salary and 13th month pay. The Labor Arbiter
ruled that he was accorded due process but was granted transportation
allowance and salary benefits withheld. The NLRC ruled that he was a
regular employee and thus was illegally dismissed. The CA affirmed the
NLRC decision.
Issue: Whether or not respondent is a regular employee
Held: The Court ruled that he is an employee with a fixed term. We held
that Article 280 of the Labor Code does not proscribe or prohibit an
employment contract with a fixed period. Even if the duties of the
employee consist of activities necessary or desirable in the usual
business of the employer, the parties are free to agree on a fixed period.
The fact that respondent voluntarily accepted the employment, assumed
the position, and performed the functions of dean is clear indication that
he knowingly and voluntarily consented to the terms and conditions of
the appointment, including the fixed period of his deanship. Other than
the handwritten notes made in the letter of appointment, no evidence
was ever presented to show that respondents consent was vitiated, or
that respondent objected to the said appointment or to any of its
conditions. Furthermore, in his status as dean, there can be no valid
inference that he was shackled by any form of moral dominance
exercised by AMA and the rest of the petitioners.
Pantranco North Express Inc. v. NLRC, G.R. No. 106654, Dec. 16, 1994

138

Facts: It appears on the record that sometime in 1971, private

respondent Peronila was employed as a driver of Pantranco North
Express, Inc., a domestic corporation engaged in the public
transportation business as a common carrier, and of which its copetitioner Abelardo de Leon is a manager.
In 1973, Peronila was administratively investigated by the corporation for
his absence from work of more than two and one-half months without
leave. According to an investigation report of petitioners' area manager,
dated March 10, 1973, Peronila claimed that he went on absence without
leave from his work from November 1, 1972 up to February 16, 1973
which was date of the investigation, or one hundred seven calendar days
continuously, because "he went to Cotabato, Mindanao to visit his dead
grandfather during the period of his unofficial absence." Petitioner
declared that private respondent had grossly violated the provisions of its
existing company policies and it consequently dismissed the respondent
from service.
Fifteen years after such termination of his employment, Peronila
reappeared in 1988 and implored petitioner to reconsider his dismissal,
which plea was initially denied by petitioner. However, due to insistent
appeals by Peronila, petitioner eventually acceded and hired him as a
driver, but on a contractual basis for a fixed period of one month.
Barely fifteen days from such employment as a contractual driver, or on
April 20, 1988, private respondent was involved in a vehicular mishap in
Nueva Vizcaya wherein the bus he was driving hit another vehicle. 7 After
an administrative investigation conducted by petitioner corporation,
Peronila was found guilty thereof, hence his employment contract was
terminated and was no longer renewed thereafter. Peronila then filed a
case for illegal dismissal against petitioner. The Labor Arbiter dismissed
the case. The NLRC set aside the decision declaring that the dismissal
was illegal.
Issue: Whether or not the employment contract which stipulates that
there is no employer-employee relationship between the parties is valid
Held: Although we have ruled in a number of cases applying Article 280
of the Labor Code that when the activities performed by the employee are
usually necessary or desirable in the usual trade of the employer, the
139

employment is deemed regular notwithstanding a contrary agreement,

there are exceptions to this rule especially if circumstances peculiar to
the case warrant a departure therefrom.
What said Article 280 seeks to prevent is the practice of some
unscrupulous and covetous employers who wish to circumvent the law
that protects lowly workers from capricious dismissal from their
employment. The aforesaid provision, however, should not be interpreted
in such a way as to deprive employers of the right and prerogative to
choose their own workers if they have sufficient basis to refuse an
employee a regular status. Management has rights which should also be
protected.
The petitioner had validly dismissed Peronila long before he entered into
the contested employment contract. It was Peronila who earnestly
pleaded with petitioner to give him a second chance. The re-hiring of
private respondent was out of compassion and not because the petitioner
was impressed with the credentials of Peronila. Peronila's previous
violations of company rules explains the reluctant attitude to the
petitioner in re-hiring him. When the bus driven by Peronila figured in a
road mishap, that incident finally prompted petitioner to sever any
further relationship with said private respondent.
In upholding the validity of a contract of employment with fixed or
specific period in a number of cases, we explained therein that "the
decisive determinant in term employment should not be the activities
that the employee is called upon to perform, but the day certain agreed
upon the parties for the commencement and termination of their
employment relationship, a day certain being understood to be that
which must necessarily come, although it may not be known when. This
ruling is only in consonance with Article 280 of the Labor Code."
c. Fixed term employment for less than six (6) months same with
probationary employment
Caparoso v. NLRC, G.R. No. 155505, 02.15.2007
Facts: Composite Enterprises Inc. is engaged in the distribution and
supply of confectioneries to various retail establishments within the
Philippines. Caparoso and Quindipan were Composites delivery men.
140

Caparoso allege that he was hired on 1998 while Quindipan alleged that
he was hired on intermittent basis since 1997. On 1999 they were
dismissed from service. They then filed a complaint against Composite for
Illegal Dismissal. Composite alleged that petitioners termination from
employment resulted from the expiration of their contracts of
employment. The labor arbiter ruled that petitioners were regular
employees and thus were illegally dismissed. The NLRC reversed and
ruled that petitioners contracts of employment are valid and binding
between the contracting parties and shall be considered as the law
between them. The CA affirmed the decision of the NLRC.
Issue: Whether or not petitioners are regular employees
Held: The petitioners are not regular employees. Under Article 280 of the
Labor Code, a regular employee is (1) one who is engaged to perform
activities that are necessary or desirable in the usual trade or business
of the employer, or (2) a casual employee who has rendered at least one
year of service, whether continuous or broken, with respect to the
activity in which he is employed. However, even if an employee is engaged
to perform activities that are necessary or desirable in the usual trade or
business of the employer, it does not preclude the fixing of employment
for a definite period.
The Court thus laid down the criteria under which fixed-term
employment could not be said to be in circumvention of the law on
security of tenure, thus:
1. The fixed period of employment was knowingly and voluntarily agreed
upon by the parties without any force, duress, or improper pressure
being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance
exercised by the former or the latter.
The Court of Appeals noted that there was no indication of force, duress,
or improper pressure exerted on petitioners when they signed the
contracts. Further, there was no proof that respondents were regularly
engaged in hiring workers for work for a minimum period of five months
141

to prevent the regularization of their employees. Petitioners Employment

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

d. Employees employment contract on a five (5) month period.

Pure Foods Corp. v. NLRC, G.R. No. 122653, Dec. 12, 1997

Facts: The private respondents (numbering 906) were hired by petitioner

Pure Foods Corporation to work for a fixed period of five months at its
tuna cannery plant in Tambler, General Santos City. After the expiration
of their respective contracts of employment in June and July 1991, their
services were terminated. They forthwith executed a Release and
Quitclaim stating that they had no claim whatsoever against the
petitioner.

Private respondents filed before the National Labor Relations Commission

(NLRC) Sub-Regional Arbitration Branch No. XI, General Santos City, a
complaint for illegal dismissal against the petitioner and its plant
manager, Marciano Aganon. This case was docketed as RAB-11-0850284-91.
142

Labor Arbiter handed down a decision dismissing the complaint on the

ground that the private respondents were mere contractual workers, and
not regular employees. NLRC affirmed the Labor Arbiter's decision.
However, on private respondent motion for reconsideration, the NLRC
reversed its decision. 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.

Petitioner submits that according to Article 280 of the Labor Code:

Except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined
at the time of the engagement of the employee.

First paragraph of the said article must be read and interpreted in

conjunction with the proviso in the second paragraph, which reads:
Provided that any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed....
In the instant case, the private respondents were employed for a
period of five months only. In any event, private respondents' prayer for
reinstatement is well within the purview of the Release and Quitclaim they
had executed wherein they unconditionally released the petitioner from
any and all other claims which might have arisen from their past
employment with the petitioner.

Issue: Whether the respondents are regular employees.

143

Held: Yes. Respondents are regular employees.

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

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

In the instant case, the private respondents activities consisted in the

receiving, skinning, loining, packing, and casing-up of tuna fish which
were then exported by the petitioner. Indisputably, they were performing
activities which were necessary and desirable in petitioners business or
trade.

Contrary to petitioner's submission, the private respondents could not be

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

Now on the validity of private respondents' five-month contracts of

employment, it is apparent that the periods have been imposed to
preclude acquisition of tenurial security by the employee. Thus they
should be struck down or disregarded as contrary to public policy and
morals.

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

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

upon by the parties without any force, duress, or improper pressure
being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance
exercised by the former or the latter.

None of these criteria had been met in the present case. As pointed out
by the private respondents: 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.

145

 Universal Robina Corp. v. Catapang, G.R. No. 164736, Oct. 14, 2005
Facts: The respondents were hired by the petitioner company on various
dates from 1991 to 1993 to work at its duck farm. The respondents were
hired under an employment contract which provided for a five-month
period. After the expiration of the said employment contracts, the
petitioner company would renew them and re-employ the respondents.
This practice continued until sometime in 1996, when the petitioners
informed the respondents that they were no longer renewing their
employment contracts. The respondents, then, filed separate complaints
for illegal dismissal, reinstatement, backwages, damages and attorneys
fees against the petitioners.
The petitioners submit that the respondents are not regular employees.
They aver that it is of no moment that the respondents have rendered
service for more than a year since they were covered by the five-month
individual contracts to which they duly acquiesced. The petitioners
contend that they were free to terminate the services of the respondents
at the expiration of their individual contracts. The petitioners maintain
that, in doing so, they merely implemented the terms of the contracts.
The petitioners further assert that the respondents contracts of
employment were not intended to circumvent security of tenure. They
point out that the respondents knowingly and voluntarily agreed to sign
the contracts without the petitioners having exercised any undue
advantage over them. Moreover, there is no evidence showing that the
petitioners exerted moral dominance on the respondents.
Issue: Whether or not respondents are regular employees of petitioner
corporation.
Held: The SC held that the CA, the NLRC and the Labor Arbiter correctly
categorized the respondents as regular employees of the petitioner
company. The primary standard of determining regular employment is
the reasonable connection between the particular activity performed by
the employee in relation to the usual trade or business of the employer.
146

The test is whether the former is usually necessary or desirable in the

usual business or trade of the employer. The connection can be
determined by considering the nature of work performed and its relation
to the scheme of the particular business or trade in its entirety. Also, if
the employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence
of the necessity if not indispensability of that activity to the business.
Hence, the employment is considered regular, but only with respect to
such activity and while such activity exists.
It is obvious that the said five-month contract of employment was used by
petitioners as a convenient subterfuge to prevent private respondents
from becoming regular employees. Such contractual arrangement should
be struck down or disregarded as contrary to public policy or morals. To
uphold the same would, in effect, permit petitioners 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. Petitioners act of repeatedly and continuously hiring private
respondents in a span of 3 to 5 years to do the same kind of work
negates their contention that private respondents were hired for a
specific project or undertaking only.
e. Employees allowed to work after the fixed period of employment
becomes regular.
Viernes v. NLRC, G.R. No. 108405, April 4, 2003
Facts: Fifteen (15) in all, these are consolidated cases for illegal
dismissal, underpayment of wages and claim for indemnity pay against a
common respondent, the Benguet Electric Cooperative, Inc., (BENECO
for short) represented by its Acting General Manager, Gerardo P. Versoza.
Complainant services as meter readers were contracted for hardly a
month duration, or from October 8 to 31, 1990. Their employment
contracts, couched in identical terms, read:

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You are hereby appointed as METER READER (APPRENTICE) under

BENECO-NEA Management with compensation at the rate of SIXTY-SIX
PESOS AND SEVENTY-FIVE CENTAVOS (P66.75) per day from October
08 to 31, 1990.
The said term notwithstanding, the complainants were allowed to work
beyond October 31, 1990, or until January 2, 1991. On January 3,
1991, they were each served their identical notices of termination dated
December 29, 1990. The same read: Please be informed that effective at
the close of office hours of December 31, 1990, your services with the
BENECO will be terminated. Your termination has nothing to do with
your performance. Rather, it is because we have to retrench on personnel
as we are already overstaffed.
On the same date, the complainants filed separate complaints for illegal
dismissal. And following the amendment of said complaints, they
submitted their joint position paper on April 4, 1991. Respondent filed
its position paper on April 2, 1991.
It is the contention of the complainants that they were not apprentices
but regular employees whose services were illegally and unjustly
terminated in a manner that was whimsical and capricious. On the other
hand, the respondent invokes Article 283 of the Labor Code in defense of
the questioned dismissal.
The Labor Arbiter dismissed the complaints for illegal dismissal filed by
the complainants for lack of merit. However in view of the offer of the
respondent to enter into another temporary employment contract with
the complainants, the respondent is directed to so extend such contract
to each complainant, with the exception of Jaime Viernes, and to pay
each the amount of P2,590.50, which represents a months salary, as
indemnity for its failure to give complainants the 30-day notice mandated
under Article 283 of the Labor Code; or, at the option of the
complainants, to pay each financial assistance in the amount of
P5,000.00 and the P2,590.50 above-mentioned.The NLRC modified the
decision, declaring complainants dismissal illegal and ordering their

148

reinstatement to their former position as meter readers (probationary

status)
Issue: Whether the respondent NLRC committed grave abuse of discretion
in ordering the reinstatement of petitioners to their former position as meter
readers on probationary status in spite of its finding that they are regular
employees under Article 280 of the Labor Code.
Held: It sustains petitioners claim that they should be reinstated to their
former position as meter readers, not on a probationary status, but as
regular employees.
A review of the records shows that petitioners have never been
probationary employees. There is nothing in the letter of appointment, to
indicate that their employment as meter readers was on a probationary
basis. It was not shown that petitioners were informed by the private
respondent, at the time of the latters employment, of the reasonable
standards under which they could qualify as regular employees. Instead,
petitioners were initially engaged to perform their job for a limited
duration, their employment being fixed for a definite period, from October
8 to 31, 1990.
Private respondent reliance on the case of Brent School, Inc. vs. Zamora is
misplaced.
The principle we have enunciated in Brent applies only with respect to
fixed term employments. While it is true that petitioners were initially
employed on a fixed term basis as their employment contracts were only
for October 8 to 31, 1990, after October 31, 1990, they were allowed to
continue working in the same capacity as meter readers without the
benefit of a new contract or agreement or without the term of their
employment being fixed anew. After October 31, 1990, the employment of
petitioners is no longer on a fixed term basis. The complexion of the
employment relationship of petitioners and private respondent is thereby
totally changed. Petitioners have attained the status of regular
employees.

149

Under Article 280 of the Labor Code, a regular employee is: 1) one who is
engaged to perform activities which are necessary or desirable in the
usual business or trade of the employer; or 2) a casual employee who
has rendered at least one year of service, whether continuous or
broken, with respect to the activity in which he is employed.
Herein petitioners fall under the first category. They were engaged to
perform activities that are necessary to the usual business of private
respondent. We agree with the labor arbiter pronouncement that the job
of a meter reader is necessary to the business of private respondent
because unless a meter reader records the electric consumption of the
subscribing public, there could not be a valid basis for billing the
customers of private respondent. The fact that the petitioners were
allowed to continue working after the expiration of their employment
contract is evidence of the necessity and desirability of their service to
private respondents business. In addition, during the preliminary
hearing of the case on February 4, 1991, private respondent even offered
to enter into another temporary employment contract with petitioners.
This only proves private respondents need for the services of herein
petitioners. With the continuation of their employment beyond the
original term, petitioners have become full-fledged regular employees. The
fact alone that petitioners have rendered service for a period of less than
six months does not make their employment status as probationary.
Since petitioners are already regular employees at the time of their illegal
dismissal from employment, they are entitled to be reinstated to their
former position as regular employees, not merely probationary.
f. Employees allowed to work for more than one (1) year becomes
regular.

Megascope General Services v. NLRC, G.R. No. 109224, June 19, 1997
Facts: Petitioner questions the award of separation pay to respondent
workers after their employment was terminated when the company
ceased operations.

150

Petitioner Megascope is a sole proprietorship engaged in contracting out

general services. In 1977, it entered into a landscaping contract with SSI
which subcontracted the construction of the National Power Corporation
Housing Village in Bagac, Bataan. In hiring laborers, petitioner would
give them work from five (5) to ten (10) days as the need arose and there
were periodical gaps in the hiring of employees.
Consequently, private respondents filed before Regional Arbitration
Branch No. III in San Fernando, Pampanga, a complaint for illegal
dismissal, underpayment of salaries, nonpayment of five-day service
incentive leave credits and holiday pay against petitioner and Andres M.
David.
On October 7, 1992, Labor Arbiter Ariel C. Santos promulgated his
decision finding that, by the nature of their employment, private
respondents were "usually contractual employees."Nonetheless, he
opined, in view of the length of their service, that private respondents
had attained the status of "regular contractual employees" who, pursuant
to Policy Instruction No. 20 issued by then Labor Secretary Blas Ople,
"cannot just be terminated after the expiration of a contract in an area to
where they are assigned without paying them the corresponding
separation pay from the time they have served respondent's company."
Issue: Whether or not the employees herein are regular employees
Held: The Supreme Court ruled that respondents are regular employees.
SC have reiterated time and again that the yardstick in the determination
of the existence of an employer-employee relationship consists of these
four (4) elements: (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal, and (4) the power to
control the employee's conduct. All these elements are present in this
case.
In addition, Article 280 paragraph 2 provides that An employment shall
be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such actually exists.
151

 Agusan del Norte Electric Coop, Inc. v. Cagampang and Garzon, G.R. No.
167627, Oct. 10, 2008
Facts: Respondents Joel Cagampang and Glenn Garzon started working
as linemen for petitioner Agusan del Norte Electric Cooperative, Inc.
(ANECO) on October 1, 1990, under an employment contract which was
for a period not exceeding three months. They were both allegedly
required to work eight hours a day and sometimes on Sundays, getting a
daily salary of P122.00. When the contract expired, the two were laid-off
for one to five days and then ordered to report back to work but on the
basis of job orders.
After several renewals of their job contracts in the form of job orders for
similar employment periods of about three months each, the said
contracts eventually expired onApril 31, 1998 and July 30, 1999.
Respondent contracts were no longer renewed, resulting in their loss of
employment. Thus, on January 11, 2001, respondents filed an illegal
dismissal case against petitioners before the Honorable Labor Arbiter
Alim D. Pangandaman, Regional Arbitration Branch No. XIII, Butuan
City. They prayed for payment of backwages, salary differential,
allowances, premium for alleged work during holidays and rest days,
service incentive leave, and separation pay.
Issue: Whether or not private respondents are regular employees
Held: YES. Court said that the test to determine whether employment is
regular or not is the reasonable connection between the particular
activity performed by the employee in relation to the usual business or
trade of the employer. Also, if the employee has been performing the job
for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not indispensability
of that activity to the business. Thus, the Supreme Court held that
where the employment of project employees is extended long after the
supposed project has been finished, the employees are removed from the
scope of project employees and are considered regular employees. While
length of time may not be the controlling test for project employment, it is
152

vital in determining if the employee was hired for a specific undertaking

or tasked to perform functions vital, necessary and indispensable to the
usual business or trade of the employer. Here, private respondent had
been a project employee several times over. His employment ceased to be
coterminous with specific projects when he was repeatedly re-hired due
to the demands of petitioners business. Where from the circumstances it
is apparent that periods have been imposed to preclude the acquisition of
tenurial security by the employee, they should be struck down as
contrary to public policy, morals, good customs or public order.
g. Successive renewals of fixed period employment contract becomes
regular.
Philips Semiconductors v. Fadriquela, G.R. No. 141717, 04.14, 2004
Facts: On May 8, 1992, respondent Eloisa Fadriquela executed a
Contract of Employment with the petitioner in which she was hired as a
production operator with a daily salary of P118. Her initial contract was
for a period of three months up to August 8, 1992, but was extended for
two months when she garnered a performance rating of 3.15. Her
contract was again renewed for two months or up to December 16, 1992,
when she received a performance rating of 3.8. After the expiration of her
third contract, it was extended anew, for three months, that is, from
January 4, 1993 to April 4, 1993.
After garnering a performance rating of 3.4, the respondents contract
was extended for another three months, that is, from April 5, 1993 to
June 4, 1993. She, however, incurred five absences in the month of
April, three absences in the month of May and four absences in the
month of June. Line supervisor Shirley F. Velayo asked the respondent
why she incurred the said absences, but the latter failed to explain her
side. The respondent was warned that if she offered no valid justification
for her absences, Velayo would have no other recourse but to recommend
the non-renewal of her contract. The respondent still failed to respond,
as a consequence of which her performance rating declined to 2.8. Velayo
recommended to the petitioner that the respondent employment be
terminated due to habitual absenteeism, in accordance with the
153

Company Rules and Regulations. Thus, the respondents contract of

employment was no longer renewed.
Labor Arbiter dismissed complaint for lack of merit. NLRC affirmed LA
decision and holding that the respondent was a contractual employee
whose period of employment was fixed in the successive contracts of
employment she had executed with the petitioner. Thus, upon the
expiration of her contract, the respondents employment automatically
ceased. The respondents employment was not terminated; neither was
she dismissed. CA reversed LA and NLRC decision.
Issue: Whether or not the respondent was still a contractual employee of
the petitioner as of June 4, 1993
Held: NO. In this case, the respondent was employed by the petitioner on
May 8, 1992 as production operator. She was assigned to wire building at
the transistor division. There is no dispute that the work of the
respondent was necessary or desirable in the business or trade of the
petitioner. She remained under the employ of the petitioner without any
interruption since May 8, 1992 to June 4, 1993 or for one (1) year and
twenty-eight (28) days. The original contract of employment had been
extended or renewed for four times, to the same position, with the same
chores. Such a continuing need for the services of the respondent is
sufficient evidence of the necessity and indispensability of her services to
the petitioners business. By operation of law, then, the respondent had
attained the regular status of her employment with the petitioner, and is
thus entitled to security of tenure as provided for in Article 279 of the
Labor Code.

PART IV
154

4.A LABOR UNION (ORGANIZATION)

1. Requirements of Registration, Article 234.
Any application labor organization, association or group of unions or workers
shall acquire legal personality and shall be entitled to the rights and privileges
granted by law to legitimate labor organizations upon issuance of the certificate
of registration, based on the following requirements:
(a) Fifty-peso (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meetings and the list
of the workers who participated in such meetings;
(c) The names of all its members comprising at least thirty (30%) per cent
of all the employees in the bargaining unit where it seeks to operate;
(d) If the applicant has been in existence for one or more years, copies of
its annual financial reports; and
(e) Four (4) copies of the constitution and by-laws of the applicant union,
the minutes of its adoption or ratification, and the list of the members who
participated in it.

2. Chartering and Creation of a Local Chapter, Article 234-A.

A duly registered federation or national union may directly create a local chapter
by issuing a charter certificate indicating the establishment of the local chapter.
The chapter shall acquire legal personality only for purposes of filing a petition
for certification election from the date it was issued a charter certificate.
The chapter shall be entitled to all other rights and privileges of a legitimate labor
organization only upon the submission of the following documents in addition to
its charter certificate:

155

(a) The names of the chapter officers, their addresses, and the principal
office of the chapter; and
(b) The chapter constitution and by-laws: Provided, That where the chapter
constitution and by-laws are the same as that of the federation or the
national union, this fact shall be indicated accordingly.
The additional supporting requirements shall be certified under oath by the
secretary or treasurer of the chapter and attested by its president. (As
inserted by Section 2, Republic Act No. 9481 which lapsed into law on May
25, 2007 and became effective on June 14, 2007).

3. Action on Application, Article 235.

The Bureau shall act on all applications for registration within thirty (30) days
from filing.

All requisite documents and papers shall be certified under oath by the secretary
or the treasurer of the organization, as the case may be, and attested to by its
president.

4. Denial of Registration; Appeal, Article 236.

The decision of the Labor Relations Division in the regional office denying
registration may be appealed by the applicant union to the Bureau within ten (10)
days from receipt of notice thereof.
5. Additional Requirements for Federations or National Unions, Article 237.
Subject to Article 238, if the applicant for registration is a federation or a national
union, it shall, in addition to the requirements of the preceding Articles, submit
the following:
156

1. Proof of the affiliation of at least ten (10) locals or chapters, each of

which must be a duly recognized collective bargaining agent in the
establishment or industry in which it operates, supporting the
registration of such applicant federation or national union; and
2. The names and addresses of the companies where the locals or
chapters operate and the list of all the members in each company
involved.
6. Cancellation of Registration, Article 238.

The certificate of registration of any legitimate labor organization, whether

national or local, shall be cancelled by the Bureau if it has reason to believe,
after due hearing, that the said labor organization no longer meets one or more of
the requirements herein prescribed.

[The Bureau upon approval of this Code shall immediately institute cancellation
proceedings and take such other steps as may be necessary to restructure all
existing registered labor organizations in accordance with the objective
envisioned above.] (Repealed by Executive Order No. 111, December 24, 1986)
7. Effect of a Petition for Cancellation of Registration, Article 238-A.
A petition for cancellation of union registration shall not suspend the proceedings
for certification election nor shall it prevent the filing of a petition for certification
election.
In case of cancellation, nothing herein shall restrict the right of the union to seek
just and equitable remedies in the appropriate courts
8. Grounds for Cancellation of Union Registration, Article 239.
The following shall constitute grounds for cancellation of union registration:
1. Misrepresentation, false statement or fraud in connection with the
adoption or ratification of the constitution and by-laws or amendments
157

thereto, the minutes of ratification and the list of members who took
part in the ratification;
2. Failure to submit the documents mentioned in the preceding paragraph
within thirty (30) days from adoption or ratification of the constitution
and by-laws or amendments thereto;
3. Misrepresentation, false statements or fraud in connection with the
election of officers, minutes of the election of officers, the list of voters, or
failure to submit these documents together with the list of the newly
elected/appointed officers and their postal addresses within thirty (30)
days from election;
4. Failure to submit the annual financial report to the Bureau within thirty
(30) days after the closing of every fiscal year and misrepresentation,
false entries or fraud in the preparation of the financial report itself;
5. Acting as a labor contractor or engaging in the "cabo" system, or
otherwise engaging in any activity prohibited by law;
6. Entering into collective bargaining agreements which provide terms and
conditions of employment below minimum standards established by
law;
7. Asking for or accepting attorneys fees or negotiation fees from
employers;
8. Other than for mandatory activities under this Code, checking off
special assessments or any other fees without duly signed individual
written authorizations of the members;
9. Failure to submit list of individual members to the Bureau once a year
or whenever required by the Bureau; and
10.

Failure to comply with requirements under Articles 237 and 238.

9. Voluntary Cancellation of Registration, Article 239-A.

The registration of a legitimate labor organization may be cancelled by the
organization itself. Provided, That at least two-thirds of its general
membership votes, in a meeting duly called for that purpose to dissolve the
158

organization: Provided, further, That an application to cancel registration is

thereafter submitted by the board of the organization, attested to by the
president thereof.
10. Rights and Conditions of Membership in a Labor Organization, Article
241.

The following are the rights and conditions of membership in a labor

organization:
1. No arbitrary or excessive initiation fees shall be required of the
members of a legitimate labor organization nor shall arbitrary,
excessive or oppressive fine and forfeiture be imposed;

2. The members shall be entitled to full and detailed reports from their
officers and representatives of all financial transactions as provided for
in the constitution and by-laws of the organization;

3. The members shall directly elect their officers, including those of the
national union or federation, to which they or their union is affiliated,
by secret ballot at intervals of five (5) years. No qualification
requirements for candidacy to any position shall be imposed other than
membership in good standing in subject labor organization. The
secretary or any other responsible union officer shall furnish the
Secretary of Labor and Employment with a list of the newly-elected
officers, together with the appointive officers or agents who are
entrusted with the handling of funds, within thirty (30) calendar days
after the election of officers or from the occurrence of any change in the
list of officers of the labor organization; (As amended by Section 16,
Republic Act No. 6715, March 21, 1989)

159

4. The members shall determine by secret ballot, after due deliberation,

any question of major policy affecting the entire membership of the
organization, unless the nature of the organization or force majeure
renders such secret ballot impractical, in which case, the board of
directors of the organization may make the decision in behalf of the
general membership;

5. No labor organization shall knowingly admit as members or continue in

membership any individual who belongs to a subversive organization or
who is engaged directly or indirectly in any subversive activity;

6. No person who has been convicted of a crime involving moral turpitude

shall be eligible for election as a union officer or for appointment to any
position in the union;

7. No officer, agent or member of a labor organization shall collect any

fees, dues, or other contributions in its behalf or make any
disbursement of its money or funds unless he is duly authorized
pursuant to its constitution and by-laws;

8. Every payment of fees, dues or other contributions by a member shall

be evidenced by a receipt signed by the officer or agent making the
collection and entered into the record of the organization to be kept and
maintained for the purpose;

9. The funds of the organization shall not be applied for any purpose or
object other than those expressly provided by its constitution and bylaws or those expressly authorized by written resolution adopted by the
160

majority of the members at a general meeting duly called for the

purpose;

10.
Every income or revenue of the organization shall be evidenced
by a record showing its source, and every expenditure of its funds shall
be evidenced by a receipt from the person to whom the payment is
made, which shall state the date, place and purpose of such payment.
Such record or receipt shall form part of the financial records of the
organization.

Any action involving the funds of the organization shall prescribe

after three (3) years from the date of submission of the annual
financial report to the Department of Labor and Employment or from
the date the same should have been submitted as required by law,
whichever comes earlier: Provided, That this provision shall apply
only to a legitimate labor organization which has submitted the
financial report requirements under this Code: Provided, further,
that failure of any labor organization to comply with the periodic
financial reports required by law and such rules and regulations
promulgated thereunder six (6) months after the effectivity of this
Act shall automatically result in the cancellation of union
registration of such labor organization; (As amended by Section 16,
Republic Act No. 6715, March 21, 1989)

11.
The officers of any labor organization shall not be paid any
compensation other than the salaries and expenses due to their
positions as specifically provided for in its constitution and by-laws, or
in a written resolution duly authorized by a majority of all the members
at a general membership meeting duly called for the purpose. The
minutes of the meeting and the list of participants and ballots cast shall
be subject to inspection by the Secretary of Labor or his duly authorized

161

representatives. Any irregularities in the approval of the resolutions

shall be a ground for impeachment or expulsion from the organization;

12.
The treasurer of any labor organization and every officer thereof
who is responsible for the account of such organization or for the
collection, management, disbursement, custody or control of the funds,
moneys and other properties of the organization, shall render to the
organization and to its members a true and correct account of all
moneys received and paid by him since he assumed office or since the
last day on which he rendered such account, and of all bonds,
securities and other properties of the organization entrusted to his
custody or under his control. The rendering of such account shall be
made:

1. At least once a year within thirty (30) days after the close of its
fiscal year;
2. At such other times as may be required by a resolution of the
majority of the members of the organization; and
3. Upon vacating his office.

The account shall be duly audited and verified by affidavit and a

copy thereof shall be furnished the Secretary of Labor.

13.
The books of accounts and other records of the financial activities
of any labor organization shall be open to inspection by any officer or
member thereof during office hours;

162

14.
No special assessment or other extraordinary fees may be levied
upon the members of a labor organization unless authorized by a
written resolution of a majority of all the members in a general
membership meeting duly called for the purpose. The secretary of the
organization shall record the minutes of the meeting including the list of
all members present, the votes cast, the purpose of the special
assessment or fees and the recipient of such assessment or fees. The
record shall be attested to by the president.

15.
Other than for mandatory activities under the Code, no special
assessments, attorneys fees, negotiation fees or any other
extraordinary fees may be checked off from any amount due to an
employee without an individual written authorization duly signed by
the employee. The authorization should specifically state the amount,
purpose and beneficiary of the deduction; and

16.
It shall be the duty of any labor organization and its officers to
inform its members on the provisions of its constitution and by-laws,
collective bargaining agreement, the prevailing labor relations system
and all their rights and obligations under existing labor laws.
For this purpose, registered labor organizations may assess
reasonable dues to finance labor relations seminars and other labor
education activities.
Any violation of the above rights and conditions of membership shall
be a ground for cancellation of union registration or expulsion of
officers from office, whichever is appropriate. At least thirty percent
(30%) of the members of a union or any member or members specially
concerned may report such violation to the Bureau. The Bureau shall
have the power to hear and decide any reported violation to mete the
appropriate penalty.

163

Criminal and civil liabilities arising from violations of above rights

and conditions of membership shall continue to be under the
jurisdiction of ordinary courts.
11. Rights of Legitimate Labor Organizations, Article 242 (now Article 251).
A legitimate labor organization shall have the right:
1. To act as the representative of its members for the purpose of
collective bargaining;
2. To be certified as the exclusive representative of all the employees in
an appropriate bargaining unit for purposes of collective bargaining;
3. To be furnished by the employer, upon written request, with its
annual audited financial statements, including the balance sheet
and the profit and loss statement, within thirty (30) calendar days
from the date of receipt of the request, after the union has been duly
recognized by the employer or certified as the sole and exclusive
bargaining representative of the employees in the bargaining unit, or
within sixty (60) calendar days before the expiration of the existing
collective bargaining agreement, or during the collective bargaining
negotiation;
4. To own property, real or personal, for the use and benefit of the labor
organization and its members;
5. To sue and be sued in its registered name; and
6. To undertake all other activities designed to benefit the organization
and its members, including cooperative, housing, welfare and other
projects not contrary to law.
Notwithstanding any provision of a general or special law to the contrary, the
income and the properties of legitimate labor organizations, including grants,
endowments, gifts, donations and contributions they may receive from fraternal
and similar organizations, local or foreign, which are actually, directly and
exclusively used for their lawful purposes, shall be free from taxes, duties and
other assessments. The exemptions provided herein may be withdrawn only by a
special law expressly repealing this provision. (As amended by Section 17,
Republic Act No. 6715, March 21, 1989)
12. Reportorial Requirements, Article 242-A.

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The following are documents required to be submitted to the Bureau by the

legitimate labor organization concerned:
(a) Its constitution and by-laws, or amendments thereto, the minutes
of ratification, and the list of members who took part in the
ratification of the constitution and by-laws within thirty (30) days
from adoption or ratification of the constitution and by-lam or
amendments thereto;
(b) Its list of officers, minutes of the election of officers, and list of
voters within thirty (30) days from election;
(c) Its annual financial report within thirty (30) days after the close
of every fiscal year; and
(d) Its list of members at least once a year or whenever required by
the Bureau.
Failure to comply with the above requirements shall not be a ground for
cancellation of union registration but shall subject the erring officers or members
to suspension, expulsion from membership, or any appropriate penalty." (As
amended by Sec. 7, RA 9481)
13. Coverage and Employees Right to Self-Organization, Article 243 (now
Article 253).
All persons employed in commercial, industrial and agricultural enterprises and
in religious, charitable, medical, or educational institutions, whether operating for
profit or not, shall have the right to self-organization and to form, join, or assist
labor organizations of their own choosing for purposes of collective bargaining.
Ambulant, intermittent and itinerant workers, self-employed people, rural
workers and those without any definite employers may form labor organizations
for their mutual aid and protection. (As amended by Batas Pambansa Bilang 70,
May 1, 1980)
14. Right of Employees in the Public Service, Article 244 (now Article 254).
Employees of government corporations established under the Corporation Code
shall have the right to organize and to bargain collectively with their respective
employers. All other employees in the civil service shall have the right to form
associations for purposes not contrary to law. (As amended by Executive Order
No. 111, December 24, 1986)
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15. Ineligibility of Managerial Employees to Join any Labor Organization; right

of supervisory employees. Article 245.
Managerial employees are not eligible to join, assist or form any labor
organization. Supervisory employees shall not be eligible for membership in a
labor organization of the rank-and-file employees but may join, assist or form
separate labor organizations of their own. (As amended by Section 18, Republic
Act No. 6715, March 21, 1989).
16. Effect of Inclusion as Members of Employees Outside the Bargaining Unit,
Article 245-A.
The inclusion as union members of employees outside the bargaining unit shall
not be a ground for the cancellation of the registration of the union. Said
employees are automatically deemed removed from the list of membership of said
union.
17. Non-Abridgment of Right to self-Organization, Article 246.
It shall be unlawful for any person to restrain, coerce, discriminate against or
unduly interfere with employees and workers in their exercise of the right to selforganization. Such right shall include the right to form, join, or assist labor
organizations for the purpose of collective bargaining through representatives of
their own choosing and to engage in lawful concerted activities for the same
purpose or for their mutual aid and protection, subject to the provisions of Article
264 of this Code. (As amended by Batas Pambansa Bilang 70, May 1, 1980)

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4.B CERTIFICATION ELECTION

Statutory Terms: certification election; voluntary recognition; consent
election; run-off election; certification year-bar rule; bargaining
deadlock-bar
rule;
contract-bar
rule;
organized
establishment;
unorganized establishment; collective bargaining unit; collective
bargaining agent/representative; collective bargaining agreement;
freedom period.
Certification Election
"Certification Election" means the process of determining through secret ballot the
sole and exclusive bargaining representative of the employees in an appropriate
bargaining unit, for purposes of collective bargaining.
Voluntary Recognition
"Voluntary Recognition" refers to the process by which a legitimate labor union is
recognized by the employer as the exclusive bargaining representative or agent in
a bargaining unit, reported with the Regional Office in accordance with Rule VII,
Section 2 of these Rules.
Consent Election
"Consent Election" means the election voluntarily agreed upon by the parties,
with or without the intervention of the Department, to determine the issue of
majority representation of all the workers in the appropriate collective bargaining
unit.
Run-off Election
"Run-Off Election" refers to an election between the labor unions receiving the two
(2) highest number of votes when a certification election which provides for three
(3) or more choices results in no choice receiving a majority of the valid votes cast;
provided, that the total number of votes for all contending unions is at least fifty
percent (50%) of the number of votes cast.

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Certification Year-bar Rule

Under the certification year-bar rule, a certification election petition may not be
filed within one (1) year: (1) from the date of a valid certification, consent or runoff election; or (2) from the date of voluntary recognition.
Bargaining Deadlock-bar Rule
Under the bargaining deadlock-bar rule, neither may a representation question be
entertained if:
1. before the filing of a petition for certification election, the duly
recognized or certified union has commenced negotiations with the
employer within the one-year period from the date of a valid
certification, consent or run-off election or from the date of voluntary
recognition; or
2. a bargaining deadlock to which an incumbent or certified bargaining
agent is a party had been submitted to conciliation or arbitration or
had become the subject of valid notice of strike or lockout.
Contract-bar Rule
Under the contract-bar rule, the Bureau of Labor Relations shall not entertain any
petition for certification election or any other action which may disturb the
administration of duly registered existing collective bargaining agreements
affecting the parties.
Organized Establishment
"Organized Establishment" refers to an enterprise where there exists a recognized
or certified sole and exclusive bargaining agent.
Unorganized Establishment
Unorganized Establishment refers to an enterprise where there is no certified or
duly recognized bargaining representative/agent.
Collective Bargaining Unit
Collective Bargaining Unit refers to all the employees of a single employer unless
the employees of a particular department or division shall have voted otherwise.
Collective Bargaining Agent/Representative
Collective Bargaining Agent/ Representative" refers to the a person or entity
tasked by a legitimate labor union to contract with the employer on issues
concerning wages, hours of work, and all other terms and conditions of
employment in a bargaining unit.
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Collective Bargaining Agreement

Collective Bargaining Agreement" or "CBA" refers to the contract between a
legitimate labor union and the employer concerning wages, hours of work, and
all other terms and conditions of employment in a bargaining unit.
Freedom Period
Freedom period is the last sixty (60) days of the lifetime of a collective
bargaining agreement immediately prior to its expiration It is so called because it
is the only time when the law allows the parties to serve notice to terminate, alter
or modify the existing agreement.

References:

1. Exclusive Bargaining Representation and Workers Participation in Policy

and Decision-Making, Article 255.

The labor organization designated or selected by the majority of the employees in

an appropriate collective bargaining unit shall be the exclusive representative of
the employees in such unit for the purpose of collective bargaining. However, an
individual employee or group of employees shall have the right at any time to
present grievances to their employer.

Any provision of law to the contrary notwithstanding, workers shall have the
right, subject to such rules and regulations as the Secretary of Labor and
Employment may promulgate, to participate in policy and decision-making
processes of the establishment where they are employed insofar as said
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processes will directly affect their rights, benefits and welfare. For this purpose,
workers and employers may form labor-management councils: Provided, that the
representatives of the workers in such labor-management councils shall be
elected by at least the majority of all employees in said establishment. (As
amended by Section 22, Republic Act No. 6715, March 21, 1989)

2. Representation Issue in Organized Establishments, Article 256.

In organized establishments, when a verified petition questioning the majority

status of the incumbent bargaining agent is filed before the Department of Labor
and Employment within the sixty-day period before the expiration of the collective
bargaining agreement, the Med-Arbiter shall automatically order an election by
secret ballot when the verified petition is supported by the written consent of at
least twenty-five percent (25%) of all the employees in the bargaining unit to
ascertain the will of the employees in the appropriate bargaining unit. To have a
valid election, at least a majority of all eligible voters in the unit must have cast
their votes. The labor union receiving the majority of the valid votes cast shall be
certified as the exclusive bargaining agent of all the workers in the unit. When an
election which provides for three or more choices results in no choice receiving a
majority of the valid votes cast, a run-off election shall be conducted between the
labor unions receiving the two highest number of votes: Provided, that the total
number of votes for all contending unions is at least fifty percent (50%) of the
number of votes cast.

At the expiration of the freedom period, the employer shall continue to recognize
the majority status of the incumbent bargaining agent where no petition for
certification election is filed. (As amended by Section 23, Republic Act No. 6715,
March 21, 1989)

3. Petitions in Unorganized Establishments, Article 257.

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In any establishment where there is no certified bargaining agent, a certification

election shall automatically be conducted by the Med-Arbiter upon the filing of a
petition by a legitimate labor organization. (As amended by Section 24, Republic
Act No. 6715, March 21, 1989)

4. When an Employer May File Petition, Article 258.

When requested to bargain collectively, an employer may petition the Bureau for
an election. If there is no existing certified collective bargaining agreement in the
unit, the Bureau shall, after hearing, order a certification election.

All certification cases shall be decided within twenty (20) working days.

The Bureau shall conduct a certification election within twenty (20) days in
accordance with the rules and regulations prescribed by the Secretary of Labor.

6. Appeal from Certification Election, Article 259.

Any party to an election may appeal the order or results of the election as
determined by the Med-Arbiter directly to the Secretary of Labor and Employment
on the ground that the rules and regulations or parts thereof established by the
Secretary of Labor and Employment for the conduct of the election have been
violated. Such appeal shall be decided within fifteen (15) calendar days. (As
amended by Section 25, Republic Act No. 6715, March 21, 1989)
7. Prohibition on Certification Election, Article 232.
The Bureau shall not entertain any petition for certification election or any other
action which may disturb the administration of duly registered existing collective
bargaining agreements affecting the parties except under Articles 253, 253-A
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and 256 of this Code. (As amended by Section 15, Republic Act No. 6715, March
21, 1989)
8. Equity of the Incumbent, Article 240.
All existing federations and national unions which meet the qualifications of a
legitimate labor organization and none of the grounds for cancellation shall
continue to maintain their existing affiliates regardless of the nature of the
industry and the location of the affiliates.
PART V
COLLECTIVE BARGAINING NEGOTATIONS AND
COLLECTIVE BARGAINING AGREEMENT

1. Procedure in Collective Bargaining, Article 250.

The following procedures shall be observed in collective bargaining:
1. When a party desires to negotiate an agreement, it shall serve a
written notice upon the other party with a statement of its proposals.
The other party shall make a reply thereto not later than ten (10)
calendar days from receipt of such notice;
2. Should differences arise on the basis of such notice and reply, either
party may request for a conference which shall begin not later than
ten (10) calendar days from the date of request.
3. If the dispute is not settled, the Board shall intervene upon request
of either or both parties or at its own initiative and immediately call
the parties to conciliation meetings. The Board shall have the power
to issue subpoenas requiring the attendance of the parties to such
meetings. It shall be the duty of the parties to participate fully and
promptly in the conciliation meetings the Board may call;
4. During the conciliation proceedings in the Board, the parties are
prohibited from doing any act which may disrupt or impede the early
settlement of the disputes; and
5. The Board shall exert all efforts to settle disputes amicably and
encourage the parties to submit their case to a voluntary arbitrator.
(As amended by Section 20, Republic Act No. 6715, March 21, 1989)

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2. Duty to Bargain Collectively in the Absence of Collective Bargaining

Agreements, Article 251.
In the absence of an agreement or other voluntary arrangement providing for a
more expeditious manner of collective bargaining, it shall be the duty of employer
and the representatives of the employees to bargain collectively in accordance
with the provisions of this Code.
3. Meaning of Duty to Bargain Collectively, Article 252.
The duty to bargain collectively means the performance of a mutual obligation to
meet and convene promptly and expeditiously in good faith for the purpose of
negotiating an agreement with respect to wages, hours of work and all other
terms and conditions of employment including proposals for adjusting any
grievances or questions arising under such agreement and executing a contract
incorporating such agreements if requested by either party but such duty does
not compel any party to agree to a proposal or to make any concession.
4. Duty to Bargain Collectively When There Exists a Collective Bargaining
Agreement, Article 253.
When there is a collective bargaining agreement, the duty to bargain collectively
shall also mean that neither party shall terminate nor modify such agreement
during its lifetime. However, either party can serve a written notice to terminate
or modify the agreement at least sixty (60) days prior to its expiration date. It
shall be the duty of both parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing agreement during the 60day period and/or until a new agreement is reached by the parties.
5. Terms of a Collective Bargaining, Article 253-A.
Any Collective Bargaining Agreement that the parties may enter into shall,
insofar as the representation aspect is concerned, be for a term of five (5) years.
No petition questioning the majority status of the incumbent bargaining agent
shall be entertained and no certification election shall be conducted by the
Department of Labor and Employment outside of the sixty-day period
immediately before the date of expiry of such five-year term of the Collective
Bargaining Agreement. All other provisions of the Collective Bargaining
Agreement shall be renegotiated not later than three (3) years after its execution.
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Any agreement on such other provisions of the Collective Bargaining Agreement

entered into within six (6) months from the date of expiry of the term of such
other provisions as fixed in such Collective Bargaining Agreement, shall retroact
to the day immediately following such date. If any such agreement is entered into
beyond six months, the parties shall agree on the duration of retroactivity thereof.
In case of a deadlock in the renegotiation of the Collective Bargaining Agreement,
the parties may exercise their rights under this Code. (As amended by Section
21, Republic Act No. 6715, March 21, 1989)
6. Injunction Prohibited, Article 254.
No temporary or permanent injunction or restraining order in any case involving
or growing out of labor disputes shall be issued by any court or other entity,
except as otherwise provided in Articles 218 and 264 of this Code. (As amended
by Batas Pambansa Bilang 227, June 1, 1982)

PART VI
UNFAIR LABOR PRACTICES ACT/STRIKES AND
LOCKOUT
1. Concept of Unfair Labor Practice and Procedure for Prosecution Thereof,
Article 247.
Unfair labor practices violate the constitutional right of workers and employees to
self-organization, are inimical to the legitimate interests of both labor and
management, including their right to bargain collectively and otherwise deal with
each other in an atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labor-management
relations.

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Consequently, unfair labor practices are not only violations of the civil rights of
both labor and management but are also criminal offenses against the State
which shall be subject to prosecution and punishment as herein provided.
Subject to the exercise by the President or by the Secretary of Labor and
Employment of the powers vested in them by Articles 263 and 264 of this Code,
the civil aspects of all cases involving unfair labor practices, which may include
claims for actual, moral, exemplary and other forms of damages, attorneys fees
and other affirmative relief, shall be under the jurisdiction of the Labor Arbiters.
The Labor Arbiters shall give utmost priority to the hearing and resolution of all
cases involving unfair labor practices. They shall resolve such cases within thirty
(30) calendar days from the time they are submitted for decision.
Recovery of civil liability in the administrative proceedings shall bar recovery
under the Civil Code.
No criminal prosecution under this Title may be instituted without a final
judgment finding that an unfair labor practice was committed, having been first
obtained in the preceding paragraph. During the pendency of such administrative
proceeding, the running of the period of prescription of the criminal offense
herein penalized shall be considered interrupted: Provided, however, that the
final judgment in the administrative proceedings shall not be binding in the
criminal case nor be considered as evidence of guilt but merely as proof of
compliance of the requirements therein set forth. (As amended by Batas
Pambansa Bilang 70, May 1, 1980 and later further amended by Section 19,
Republic Act No. 6715, March 21, 1989)
2. Unfair Labor Practices of Employers, Article 248.
It shall be unlawful for an employer to commit any of the following unfair labor
practice:
1. To interfere with, restrain or coerce employees in the exercise of their
right to self-organization;
2. To require as a condition of employment that a person or an
employee shall not join a labor organization or shall withdraw from
one to which he belongs;
3. To contract out services or functions being performed by union
members when such will interfere with, restrain or coerce employees
in the exercise of their rights to self-organization;
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4. To initiate, dominate, assist or otherwise interfere with the formation

or administration of any labor organization, including the giving of
financial or other support to it or its organizers or supporters;
5. To discriminate in regard to wages, hours of work and other terms
and conditions of employment in order to encourage or discourage
membership in any labor organization. Nothing in this Code or in
any other law shall stop the parties from requiring membership in a
recognized collective bargaining agent as a condition for
employment, except those employees who are already members of
another union at the time of the signing of the collective bargaining
agreement. Employees of an appropriate bargaining unit who are not
members of the recognized collective bargaining agent may be
assessed a reasonable fee equivalent to the dues and other fees
paid by members of the recognized collective bargaining agent, if
such non-union members accept the benefits under the collective
bargaining agreement: Provided, that the individual authorization
required under Article 242, paragraph (o) of this Code shall not apply
to the non-members of the recognized collective bargaining agent;
6. To dismiss, discharge or otherwise prejudice or discriminate against
an employee for having given or being about to give testimony under
this Code;
7. To violate the duty to bargain collectively as prescribed by this Code;
8. To pay negotiation or attorneys fees to the union or its officers or
agents as part of the settlement of any issue in collective bargaining
or any other dispute; or
9. To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the officers and
agents of corporations, associations or partnerships who have actually
participated in, authorized or ratified unfair labor practices shall be held
criminally liable. (As amended by Batas Pambansa Bilang 130, August 21, 1981)
3. Unfair Labor Practices of Labor Organizations, Article 249.
It shall be unfair labor practice for a labor organization, its officers, agents or
representatives:
1. To restrain or coerce employees in the exercise of their right to selforganization. However, a labor organization shall have the right to
176

2.

3.
4.

5.

6.

prescribe its own rules with respect to the acquisition or retention of

membership;
To cause or attempt to cause an employer to discriminate against an
employee, including discrimination against an employee with respect
to whom membership in such organization has been denied or to
terminate an employee on any ground other than the usual terms
and conditions under which membership or continuation of
membership is made available to other members;
To violate the duty, or refuse to bargain collectively with the
employer, provided it is the representative of the employees;
To cause or attempt to cause an employer to pay or deliver or agree
to pay or deliver any money or other things of value, in the nature of
an exaction, for services which are not performed or not to be
performed, including the demand for fee for union negotiations;
To ask for or accept negotiation or attorneys fees from employers as
part of the settlement of any issue in collective bargaining or any
other dispute; or
To violate a collective bargaining agreement.

The provisions of the preceding paragraph notwithstanding, only the officers,

members of governing boards, representatives or agents or members of labor
associations or organizations who have actually participated in, authorized or
ratified unfair labor practices shall be held criminally liable. (As amended by
Batas Pambansa Bilang 130, August 21, 1981)

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PART VII
TERMINATION OF EMPLOYMENT/
POST EMPLOYMENT
1. Security of Tenure, Article 278.
Coverage. The provisions of this Title shall apply to all establishments or
undertakings, whether for profit or not.

2. Termination by Employer, Article 282.

An employer may terminate an employment for any of the following causes:
1. Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work;
2. Gross and habitual neglect by the employee of his duties;
3. Fraud or willful breach by the employee of the trust reposed in him
by his employer or duly authorized representative;
4. Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his
duly authorized representatives; and
5. Other causes analogous to the foregoing.

3. Closure of Establishment and Reduction of Personnel, Article 283.

The employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the provisions of this Title,
by serving a written notice on the workers and the Ministry of Labor and
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Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the
worker affected thereby shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for every
year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
4. Disease as a Ground for Termination, Article 284.
An employer may terminate the services of an employee who has been found to
be suffering from any disease and whose continued employment is prohibited by
law or is prejudicial to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1) month
salary or to one-half (1/2) month salary for every year of service, whichever is
greater, a fraction of at least six (6) months being considered as one (1) whole
year.
5. Termination by Employee, Article 285.
1. An employee may terminate without just cause the employee-employer
relationship by serving a written notice on the employer at least one (1)
month in advance. The employer upon whom no such notice was served
may hold the employee liable for damages.
2. An employee may put an end to the relationship without serving any
notice on the employer for any of the following just causes:
1. Serious insult by the employer or his representative on the honor
and person of the employee;
2. Inhuman and unbearable treatment accorded the employee by
the employer or his representative;
3. Commission of a crime or offense by the employer or his
representative against the person of the employee or any of the
immediate members of his family; and
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4. Other causes analogous to any of the foregoing.

6. When Employment not Deemed Terminated, Article 286.
The bona-fide suspension of the operation of a business or undertaking for a
period not exceeding six (6) months, or the fulfillment by the employee of a
military or civic duty shall not terminate employment. In all such cases, the
employer shall reinstate the employee to his former position without loss of
seniority rights if he indicates his desire to resume his work not later than one (1)
month from the resumption of operations of his employer or from his relief from
the military or civic duty.
7. Retirement, Article 287.
Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective
bargaining agreement and other agreements: Provided, however, That an
employees retirement benefits under any collective bargaining and other
agreements shall not be less than those provided therein.
In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least
six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2) month
salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month
pay and the cash equivalent of not more than five (5) days of service incentive
leaves.

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Retail, service and agricultural establishments or operations employing not more

than ten (10) employees or workers are exempted from the coverage of this
provision.
Violation of this provision is hereby declared unlawful and subject to the penal
provisions under Article 288 of this Code.

PART VII
TERMINATION OF EMPLOYMENT/
POST EMPLOYMENT
1. Kinds of Dismissal
a. Actual - Dismissal where the employer has terminated the
employment contract
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b. Constructive - Constructive dismissal is an involuntary resignation

resulting in cessation of work resorted to when continued
employment becomes impossible, unreasonable or unlikely; when
there is a demotion in rank or a diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes
unbearable to an employee.
In Globe Telecom, Inc. v. Florendo-Flores, it was held that where an
employee ceases to work due to a demotion of rank or a diminution
of pay, an unreasonable situation arises which creates an adverse
working environment rendering it impossible for such employee to
continue working for her employer. Hence, her severance from the
company was not of her own making and therefore amounted to an
illegal termination of employment. (Cited in Francisco vs. NLRC,
G.R. No. 170087, August 21, 2006.
2. Grounds for Termination/Dismissal
a. Just Cause - Just causes for dismissal of employee may be defined
as those lawful or valid grounds for termination of employment
which arise from causes directly attributable to the fault or
negligence of the erring employee. Just causes are usually serious
or grave in nature and attended by willful or wrongful intent or
they reflected adversely on the moral character of the employees.
b. Authorized Cause - Authorized causes for dismissal of employee
refer to those lawful grounds for termination which in general do
not arise from fault or negligence of the employee.
JUST CAUSE
1.

Serious
Misconduct,
elements/requisites;
Willful
disobedience of the lawful order of his employer or representative in
connection with his works; requisites:

a. Concept of Serious Misconduct - Misconduct has been defined as improper

or wrong conduct. It is the transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in character,
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and implies wrongful intent and not mere error in judgment. (Austria vs.
NLRC, G.R. No. 124382, August 16, 1999.)
b. Requisites for Serious Misconduct as a ground for dismissal - To be a valid
ground for termination of employment, the following elements must be
present:
2. The misconduct must be serious;
3. It must relate to the performance of the employees duties;
4. Must show that the employee has become unfit to continue
working for the employer.
5. It must performed with wrongful intent.
c. Series of irregularities, when put together, may constitute serious
misconduct - An employee who habitually takes unauthorized absences
with several infractions for tardiness was validly dismissed. The
employees unauthorized absences as well as tardiness are habitual
despite having been penalized for past infractions. (Quiambao v. Manila
Electric Company)
d. Use and possession of shabu; Intoxication - In the ultimate analysis, a
vessel is only as seaworthy as the men who sail it, so that it is necessary
to maintain at every moment the efficiency and competence of the
crew. Without an effective no alcohol, no drug policy on board the ship,
the vessels safety will be seriously compromised. The policy is, therefore,
a reasonable and lawful order or regulation that, once made known to
the employee, must be observed by him, and the failure or refusal of a
seaman to comply with it should constitute serious misconduct or willful
disobedience that is a just cause for the termination of employment
under the Labor Code (Bernado Jose vs Michaelmal Phils.) (DOLE D.O.
No. 53, Series of 2003 in relation to the IRR of R.A. 9165)
e. Immorality- The respondent was dismissed from his employment as a
bookkeeper of petitioner cooperative for engaging in extra-marital affairs,
which is a ground for termination of employment stated in petitioner
cooperatives Personnel Policy. The Supreme Court said that while
respondents act of engaging in extra-marital affairs may be considered
personal to him and does not directly affect the performance of his
assigned task as bookkeeper, aside from the fact that the act was
specifically provided for by petitioners Personnel Policy as one of the
grounds for termination of employment, said act raised concerns to
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petitioner as the Board received numerous complaints and petitions from

the cooperative members themselves asking for the removal of
respondent because of his immoral conduct. (Alilem Credit Cooperative,
Inc. vs. Bandiola)
f. Sexual intercourse inside the company premises Petitioner validly
exercised its prerogative as employer to dismiss the respondentsemployees who, within company premises and during work hours,
engaged in sexual intercourse.
Sexual acts and intimacies between two consenting adults belong, as a
principled ideal, to the realm of purely private relations. Whether
aroused by lust or inflamed by sincere affection, sexual acts should be
carried out at such place, time and circumstance that, by the generally
accepted norms of conduct, will not offend public decency nor disturb
the generally held or accepted social morals. Under these parameters,
sexual acts between two consenting adults do not have a place in the
work environment. (Imasen Philippine Manufucturing Corporation vs.
Alcon and Papa)
g. The act of teacher falling in love with a student, not immoral - If the two
eventually fell in love, despite the disparity in their ages and academic
levels, this only lends substance to the truism that the heart has reasons
of its own which reason does not know. But, definitely, yielding to this
gentle and universal emotion is not to be so casually equated with
immorality. (Evelyn Chua-Qua vs Clave)
h. Fighting within the work premises - The Supreme Court favored the
management against an employee who was found guilty of starting a fist
fight with another worker inside company premises in connection with an
intra-union politics.
It was emphasized that the act of assaulting another employee
constitutes serious misconduct which, under Article 282, now 296 of the
Labor Code, is a just cause for the termination of employment. (Cesar
Naguit versus San Miguel Corporation)
i. Challenging superior to a fight; sleeping while on duty - Sleeping in post,
gross insubordination, dereliction of duty and challenging superior
officers to a fight are grave offenses, considering the function of a
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security guard which is to protect company property from pilferage or

loss. Challenging superior officers to a fight and insubordination on the
part of the employee are acts inimical to the interest of his
employer. (Luzon Stevedoring Corporation vs CIR)
j. Rendering service to a business rival; Selling product of competitor Rendering his services to a business rival, petitioner was not only guilty
of acts of disloyalty but also of serious misconduct and willful breach of
trust which under the Labor Code, as amended, are valid and just
grounds for the termination of an employment. (ABS-CBN Employees
Union and Jose Entrandicho vs NLRC and ABS-CBN Broadcasting
Corporation)
k. The act of teacher in pressuring a co-teacher to change a failing grade of a
student to a passing one is a serious misconduct - This Court is convinced
that the pressure and influence exerted by the petitioner on his colleague
to change a failing grade to a passing one, as well as his
misrepresentation that Santos is his nephew, constitute serious
misconduct, which is a valid ground for dismissing an employee.
(Wilfredo Padilla vs NLRC and San Beda College)
l. Obtaining copies of pay slips not a serious misconduct Respondent was
dismissed for alleged serious misconduct due to her act of obtaining
copies of payslip. Such act however cannot be characterized as a
misconduct, much less a grave misconduct. On the contrary it was
incumbent upon the hotel, as her employer, to give her copies of her
payslip as a matter of course. So it is absurd that she had to resort to
her own resourcefulness to get hold of these documents. Clearly
her dismissal was not based on a just cause. (Peninsula Manila vs.
Alipio)

2. Gross and habitual neglect of duty by the employee of his duties;

a. Concept of Negligence must be both gross and habitual - Gross and
habitual neglect of duties. Gross negligence has been defined as the want
or absence of or failure to exercise slight care or diligence, or the entire
absence of care. It evinces a thoughtless disregard of consequences
without exerting any effort to avoid them.
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To be a valid ground for termination: (a) there must be neglect of duty;

and (2) The negligence must be both gross and habitual in character
b. Element of habituality may be disregarded where damage or loss is
substantial - SC upheld the validity of dismissal on the ground of gross
negligence even if the act complained of was not habitual. Thus, a bank
employee was found grossly negligent when she delivered newly approved
credit cards to a person she had not even seen before and she did not
even ask for receipts, thereby enabling fictitious persons to use these
cards, causing P740,000.00 loss to the bank. (Citibank vs. Gatchalian,
1995)
c. Actual damage, loss or injury, not an essential requisite
d. Tardiness and absences, if not habitual is not a ground for termination
-Habitual absenteeism and tardiness constitute gross and habitual
neglect of duty. Repeated acts of absences without leave and frequent
tardiness reflect indifferent attitude to and lack of motivation in his work.
(Valiao vs. CA, 2004)
e. Totality of infractions principle The totality of infractions or the number
of violations committed during the period of employment shall be
considered in determining the penalty to be imposed upon an erring
employee. The offenses committed by petitioner should not be taken
singly and separately. Fitness for continued employment cannot be
compartmentalized into tight little cubicles of aspects of character,
conduct and ability separate and independent of each other. While it may
be true that petitioner was penalized for his previous infractions, this
does not and should not mean that his employment record would be
wiped clean of his infractions. After all, the record of an employee is a
relevant consideration in determining the penalty that should be meted
out since an employees past misconduct and present behavior must be
taken together in determining the proper imposable penalty. (Merin v.
National Labor Relations Commission 2008)
f. Unsatisfactory or poor performance, inefficiency or incompetence,
considered a just cause if it amounts to gross and habitual neglect of
duties - The dismissal of employees who failed to meet their sales quotas
was upheld by the Supreme Court. It explained in an obiter that failure
to meet the sales quota constitutes a just cause for dismissal regardless
186

of the permanent or probationary status of employment. The failure to

observe prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for dismissal.
The court added that such inefficiency is understood to mean failure to
attain work goals or work quotas, either by failisng to complete the same
within the allotted reasonable period, or by producing unsatisfactory
results. (Buiser, vs Leogardo Jr., 1984)
g. Abandonment of Work, requisites as a form of neglect of duty - To
constitute abandonment, however, there must be a clear and deliberate
intent to discontinue one's employment without any intention of
returning. In this regard, two elements must concur: (1) failure to report
for work or absence without valid or justifiable reason, and (2) a clear
intention to sever the employer-employee relationship, with the second
element as the more determinative factor and being manifested by some
overt acts. (Columbus Philippine Bus Corp. v. NLRC)
h. Requirement of notice before declaring abandonment - Procedurally, if the
dismissal is based on a just cause under Article 282 of the Labor Code,
the employer must give the employee two written notices and a hearing or
opportunity to be heard is requested by the employee before terminating
the employment. The notices must consist of the following: a notice
specifying the grounds for which dismissal is sought, a hearing or an
opportunity to be heard, and after hearing or opportunity to be heard, a
notice of the decision to dismiss. (Paulino Aliten vs U-need Lumber &
Hardware, 2006)
i. Notices in abandonment cases must be sent to the employees last known
address Sending private respondent a notice or show-cause letter at his
last known address requiring him to report for work, or to explain his
absence with a warning that his failure to do so would be construed as
abandonment of his work. A failure in part of employer will constitute
illegal dismissal.
Petitioners should have afforded him due process by serving him written
notices, as well as a chance to explain his side, as required by law. It is
settled that, procedurally, if the dismissal is based on a just cause under
Article 282 of the Labor Code, the employer must give the employee two
written notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice specifying the
187

grounds for which dismissal is sought, a hearing or an opportunity to be

heard and, after hearing or opportunity to be heard, a notice of the
decision to dismiss. (DUP Sound Phils. vs CA and Cirilo Pial, 2011)
j. Immediate filing of illegal dismissal case praying for reinstatement negates
abandonment - The immediate filing of a complaint for illegal dismissal
more so when it includes a prayer for reinstatement has been held to be
totally inconsistent with a charge of abandonment. (Tan Borthers
Corporation vs Edna Escudero, 2013)
k. Lapse of time between dismissal and filing of a case, not material
l. When refusal to return to work not abandonment, where there is already a
case filed for illegal dismissal - The true reason why respondent did not
report for work for about 50 days was that he had been told by
petitioners to lie low. This is a finding of fact, which we shall no longer
disturb. Thus, when respondent realized that he was no longer going to
receive work assignments, he wasted no time in filing a case for illegal
dismissal against petitioners. Employees who take steps to protest their
dismissal cannot logically be said to have abandoned their work. A
charge of abandonment is totally inconsistent with the immediate filing of
a complaint for illegal dismissal. The filing thereof is proof enough of ones
desire to return to work, thus negating any suggestion of abandonment.
(Josan, JPS, Santiago Cargo Movers vs Eduardo Aduna, 2012)
3. Fraud or breach of trust (or confidence) by the employee against the
employer or his duly authorized representative
a. Two acts: 1. Fraud and
2. Willful breach of the trust reposed in him by his employer or duly
authorized representative Fraud is any act, omission, or concealment
which involves a breach of legal duty, trust, or confidence justly reposed
and is injurious to another.
To be valid ground for termination, the following must be present: (a)
there must be an act, omission, or concealment; (b) the act, omission or
concealment involves a breach of duty, trust, or confidence justly
reposed; (c) it must be committed against the employer or his/her
representative; and (d) it must be in connection with the employees
work.
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b. There could be breach of

trust without fraud but commission of fraud always result to breach of
trust;
c. Lack of damages or
losses not necessary in fraud cases - Although the amount of discrepancy
or money misappropriated may be considered minimal and even
inconsequential to an established company such as Meralco, it is the
anomalous practice of requiring applicants for electric service connection
to pay amounts higher than required that is the crux of Villanuevas
offense. (Vicente Villanueva vs NLRC, 2012)
d. Failure
to
deposit
collection constitutes fraud - Respondents stopped reporting from work and
misappropriated their sales collection. Petitioners initiated an investigation by
sending one of their trusted salesmen, in the route being serviced by
respondents. To prevent a possible cover up, respondents were temporarily
reassigned to a new route to service. They got wind of the fact that they were
being investigated for misappropriation of their sales collection, and
respondents filed the subject illegal dismissal case to pre-empt the outcome of
the ongoing investigation.
Bagasala returned from his month-long
investigation in the far-flung areas previously serviced by respondents and
reported that respondents indeed failed to remit P2,257.03 in sales
collections. (New Puerto Commecial vs Rodel Lopez and Felix Gavan,
2010)
e. Willful breach of trust
and confidence, requisites - To be valid ground for termination, the
following must be present: (a) there must be an act, omission, or
concealment; (b) the act, omission or concealment involves a breach of
duty, trust, or confidence justly reposed; (c) it must be committed against
the employer or his/her representative; and (d) it must be in connection
with the employees work
f. Breach must be willful
and without justifiable cause - The Court has repeatedly emphasized that
the act that breached the trust must be willful such that it was done
intentionally, knowingly, and purposely, without justifiable excuse, as
189

distinguished from an act done carelessly, thoughtlessly, heedlessly or

inadvertently.
The conditions under which the clearance was issued exclude any
finding of deliberate or conscious effort on the part of the petitioner to
prejudice his employer. (Torres v. Rural Bank of San Juan, 2013)
g. Breach must be work
related - In order to constitute a just cause for dismissal, the act complained
of must be work-related and shows that the employee concerned is unfit to
continue to work for the employer. (Sulpicio Lines, Inc. v. Gulde, 2002)
h. Loss of confidence must
not be an afterthought - Loss of confidence as a ground for dismissal does
not entail proof beyond reasonable doubt of the employee's misconduct.
It is enough that there be "some basis" for such loss of confidence or that
"the employer has reasonable grounds to believe, if not to entertain the
moral conviction that the employee concerned is responsible for the
misconduct and that the nature of his participation therein rendered him
absolutely unworthy of the trust and confidence demanded by his
position". (Reyes vs. Zamora, 1979)
i. Employees
position
must be reposed with trust and confidence such as supervisor, salesman,
teller, cashier, engineers, security guards or security officer, roomboy or
chambermaid, assistant cook or chief cook, confidential employees;Long
years of service, absence of derogatory record and small amount involved
when deemed inconsequential for loss of trust and confidence
4. Commission of a crime or offense against the person of 1) his
employer, 2) immediate member of his family; and 3) authorized
representative;
Article 282. Termination by employer. - An employer may terminate an
employment for any of the following causes:
(d) Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly authorized
representative
190

Committed against the specific persons Members of the family (Art. 150 of
the FCP) includes between husband and wife; between parents and
children; among other ascendants and descendants; among brothers and
sisters, whether of the full or half blood;
5. Other causes analogous to the foregoing
a. Theft of property of co-employee
b. Violation of company rules and regulations
c. Inefficiency or failure to attain work quota
AUTHORIZED CAUSE
1. Installation of Labor Saving Devices
The law authorizes an employer to terminate the employment of any
employee due to the installation of labor saving devices. The installation
of these devices is a management prerogative, and the courts will not
interfere with its exercise in the absence of abuse of discretion,
arbitrariness, or maliciousness on the part of management. (Magnolia
Dairy Products Corporation vs. NLRC, 1996)
The installation of labor-saving devices contemplates the installation of
machinery to effect economy and efficiency in the method of production.
a. Requisites; Separation pay Article 283. Closure of establishment and
reduction of personnel. In case of termination due to the installation of
labor-saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least his one (1) month pay or
to at least one (1) month pay for every year of service, whichever is higher.
b. Modernization program through introduction of machines;Installation of
machines for more economy and efficiency
2.

Redundancy
Redundancy exists where the services of an employee are in excess of
what is reasonably demanded by the actual requirements of the
191

enterprise. A position is redundant where it superfluous, and superfluity

of a position or positions may be the outcome of a number of factors,
such as over hiring of workers, decreased of volume business, or
dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise. (Tierra International
Construction Corporation vs. NLRC, 1992)
a. Requisites;
Separation
pay Article 283. Closure of establishment and reduction of personnel.
In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least his one (1) month pay or to at least one (1) month
pay for every year of service, whichever is higher.
b. Fair and reasonable
standard basis for redundancy - It is the employers burden to show that
redundancy exists. It is not enough for a company to merely declare that
it has become overmanned. It must produce adequate proof of such
redundancy to justify the dismissal of the affected employees (Asufrin vs.
San Miguel Corporation, 2004).
Evidence must be presented to substantiate redundancy such as but not
limited to the new staffing pattern, feasibility studies/proposal, on the
viability of the newly created positions, job description and the approval
by the management of the restructuring (Panlilio vs. NLRC, 1997).
c. Reorganization
We
must acknowledge the prerogative of the employer to adopt such
measures as will promote greater efficiency, reduce overhead costs and
enhance prospects of economic gains, albeit always within the framework
of existing laws. Accordingly, we sustain the reorganization and
redundancy program undertaken by SMART. (Smart Communications
Inc, vs Astorga, 2006)
d. Use of high technology

equipment

e. Hiring of contractual
employees after redundancy program - We must acknowledge the
prerogative of the employer to adopt such measures as will promote
192

greater efficiency, reduce overhead costs and enhance prospects of

economic gains, albeit always within the framework of existing
laws. Accordingly, we sustain the reorganization and redundancy
program undertaken by SMART. (Smart Communications Inc, vs Astorga,
2006)
f. Last in First Out (LIFO);
Exceptions - In addition to redundancy, is installation of labor-saving
devices and retrenchment, the Last-In, First-Out rule shall be applied,
unless an employee voluntarily asks to be separated. (Maya Farms
Employees Organization v. MLRC, 1994)
3. Retrenchment
Retrenchment is an economic ground to reduce the number of
employees. Retrenchment is the reduction of personnel for the purpose of
cutting down on costs of operations in terms of salaries and wages
resorted to by an employer because of losses in operation of a business
occasioned by lack of work and considerable reduction in the volume of
business. It is sometimes also referred to as downsizing. It is aimed at
saving a financially ailing business establishment from eventually
collapsing. (Alabang Country Club vs NLRC. 2005)
a. Requisites - To justify retrenchment, the following requisites must be
complied with:
a. The retrenchment must be necessary to prevent business
losses; and
b. The business losses sought to be prevented are serious,
actual and real.
b. Standards to determine the validity of losses to justify retrenchment - The
phrase to prevent losses means that retrenchment is authorized to be
undertaken by the employer sometime before the losses anticipated are
actually sustained or realized. Actual losses need not set in prior to
retrenchment. (Lopez Sugar Corporation vs. Federation of Free Workers,
1990.)
c. Standards in the selection of employees to be retrenched - The Last-In,
First-Out rule shall be applied, unless an employee voluntarily asks to
be separated. (Maya Farms Employees Organization v. MLRC, 1994)
193

d. Valid justifications for retrenchment: actual losses or to minimize or prevent

losses; financial reverses; lack of work; reduction in the volume of
business; reorganization of the company made in good faith; phasing out
or abolition of a section, division, branch or department; fire which is
resulted in considerate decrease in business; streamlining in the company
into a lean and trim centralized organization by shedding off marginal
business activities.
e. Separation pay Article 283. In case of retrenchment to prevent losses,
the separation pay shall be equivalent to one month pay or at least onehalf month pay for every year of service, whichever is higher. A fraction of
at least six months shall be considered one whole year.

4. Closure or cessation business of an establishment

The closure of a business establishment is a ground for the termination of
the services of an employee unless the closing is for the purpose of
circumventing pertinent provisions of the Labor Code.
Closure of business is the reversal of fortune of the employer whereby there
is a complete cessation of business operations and/or an actual locking-up
of the doors of establishment, usually due to financial losses. Closure of
business as an authorized cause for termination of employment aims to
prevent further financial drain upon an employer who cannot pay anymore
his employees since business has already stopped. (JAT General Services vs.
NLRC, 2004.)
a.

Requisites To be valid ground

for termination, the following must be present:
1.
There
must
be
a
decision to close or cease operation of the enterprise by the
management;
2.
The decision was made
in good faith; and
3.
There is no other option
available to the employer except to close or cease operations.

194

b. Employer may close its business whether it is suffering from business

losses or not - The reason for cessation need not be financial losses or
drain, as long as it is done in good faith and not for the purpose of
defeating or circumventing the rights of employees under the law or a
valid agreement. Article 283 of the Labor Code does not require that the
cessation be due to serious business reverses.
c. Applies to both partial and total closure - Closure or cessation of business
may mean either total closure or partial closure, as in the case of
abolition of only a department or section of the establishment or of only a
part of company activities. In either case, the right of the employer to
terminate employee affected by the closure has been recognized. (Dangan
vs. NLRC, 1984)
d. When closure amounts to ULP - Petitioner did not actually close its entire
business. It merely transferred or relocated its tobacco processing and
redrying operations. Moreover, it was also engaged in, among others,
corn and rental operations, which were unaffected by the closure of its
Balintawak plant.
Tested against the aforecited standards, we hold that herein petitioner
was not able to prove serious financial losses arising from its tobacco
operations. A close examination of its Statement of Income and Expenses
and its recasted version thereof, which were presented in support of its
contention, suggests its failure to show business losses. (Phils. Tobacco
Flue-Curing vs NLRC, 1998)
e. Separation pay - In case of retrenchment and closures not due to serious
financial reverses, the employee shall be entitled to separation pay
equivalent to one month pay or at least one-half month pay for every year
of service, whichever is higher.
If the closure is due to business losses, there is no obligation on the part
of the employer to pay separation benefits to employees.
5. Sale or transfer of business
Change of ownership of business, not an authorized cause but may be
treated as closure or cessation of business; Liability of buyer or transferee;
Obligations to hire employees when provided in contract of sale or transfer
195

of assets; Previous owners remains liable to its employees even if there is

an undertaking to assume responsibility as new owner; New owner is not
assignee of CB sale in good faith;
6. Merger
The employees of merged companies are deemed absorbed by the new
company; Surviving or consolidated corporations area liable for all the
liabilities and obligations of each of the constituent corporations in the
same manner as if such surviving or consolidated corporation had itself
incurred such liabilities or obligations; Transfer of business in case of
death of the owner, the heir is not liable by the labor contracts between the
deceased and his employees, file claims at the intestate proceedings.
7. Disease
Article 284. An employer may terminate the services of an employee who
has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as
the health of his co-employees.
a. Requirements; Separation pay - Article 284. Provided, That he is paid
separation pay equivalent to at least one (1) month salary or to one-half
(1/2) month salary for every year of service, whichever is greater, a
fraction of at least six (6) months being considered as one (1) whole year.
Requisites for termination on the ground of disease.
1. The employee suffers from a disease;
2. His continued employment is prohibited by law or prejudicial
to his health or to the health of his co-employees; and
3. The disease is of such nature and at such a stage that it
cannot be cured within a period of six months even with
proper medical treatment.
b. The medical certificate should be procured by the employer - Certification
by competent public health authority that the disease is of such nature
and of at such a stage that it cannot be cured within a period of six
months even with proper medical treatment.
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c. Notice to DOLE - For authorized causes of termination under Article 289,

due process consists of notices furnished to the Department of Labor and
Employment (DOLE) and the employee 30 days prior to the effective date
of termination.

LABOR LAW 2
LABOR
RELATIONS

197

Atty. Agnes Lucero De Grano

Labor Arbiter

Labor is prior to and independent of capital. Capital is

only the fruit of labor, and could never have existed if
labor had not first existed. Labor is the superior of
capital, and deserves much the higher consideration.
- Abraham Lincoln

Amaro, John Domingo G.

Collado, Elijah Karl L.
Cuerdo, Ronald Joseph G.
Enriquez, Ezekiel V.
Enriquez, Francis Xavier N.
1

Erodias, Dominador III D.

Esplago, Michael John R.
Garcia, Justin Ivan A.
Garcia, Reginald T.
Gatus, Jerome N.
Guillen, Joseph Angelo J.
Meneses, Rosendo IV D.
Peralta, Jose III T.
Ramoso, Kim Andrei G.
Salamero, Jeremiah T.
Sebrio, Jan Gabriel L.