PRICE v. INNODATA PHILS. INC.

1
September 30, 2008| CHICO-NAZARIO
By: Justin
SUMMARY: Price were hired as formatters by Innodata. Under their employment
contract they were hired only for a fixed period. When last day of said period came,
innodata informed them of the termination of their services. Employees filed a
complaint for illegal dismissal. They argued that they are regular employees due to
the fact that their work was necessary and desirable for the business of Innodata. SC
held that the fixed-term contract was invalid. An employee may be considered a
regular employee if his work was necessary and desirable to the usual business of
the employer or if s/he already worked for more than a year. In this case the court
found that their job as formatters was necessary for the data encoding business of
Innodata. Court also found that the fixed term in the contract was a way for Innodata
to deprive the employees of security of tenure. SC held that they are regular
employees, entitled to security of tenure and could not be removed except for just or
authorized cause. Entitled to backwages and separation pay, instead of reinstatement
since Innodata ceased its operations already.
DOCTRINE:

Regular employees:
o (1) those who are engaged to perform activities which are
necessary or desirable in the usual business or trade of the
employer regardless of length of their employment
o (2) those who were initially hired as casual employees, but have
rendered at least 1 year service, whether continuous or broken,
with respect to the activity in which they are employed.

test to determine whether an employment should be considered regular or

non-regular is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the
employer

FACTS:

Innodata, a company that deals with data encoding and data conversion
hired the Price and the others as formatters.

Under the employment contract they were hired for a fixed period (one year)
which would end on Feb 16, 2000

On Feb 16, 2000 the HR Manager informed them of their last day of work
due to the end of their contract

Price et al filed a complaint for illegal dismissal and damages against

Innodata. That they should be considered regular employees since their
positions as formatters were necessary and desirable to the usual
business of Innodata. That they could not be considered project employees
1

CHERRY J. PRICE, STEPHANIE G. DOMINGO AND LOLITA

ARBILERA, v. INNODATA PHILS. INC.,/ INNODATA
CORPORATION, LEO RABANG AND JANE NAVARETTE

since there employment was not coterminous with any project or

undertaking.

Innodata argued that almost half of the employees was engaged in data
encoding. Due to the wide range of services rendered to its clients, it was
constrained to hire new employees for a fixed period of not more than one
year (started on Sept 1999 and ended on feb 16 2000). That Price and the
others were not illegally dismissed for their employment was merely
terminated. That Price et al are estopped from a position contrary to the
contracts which they signed knowingly, voluntarily and willfully.

LA ruled in favor of Price. That their jobs were necessary, desirable, and
indispensable to the data processing and encoding business of INNODATA.
They were entitled to security of tenure and thus should only be terminated
for just or authorized cause.

NLRC reversed. They were not regular employees but fixed-term

employees. The determining factor of such contracts(fixed term contracts) is
not the duty of the employee but the day certain agreed upon by the parties
for the commencement and termination of the employment relationship.
Price entered into the contract freely hence there was no illegal dismissal.

CA sustained NLRC ruling. Only employed for a year and for a project called
earthweb. That there was no showing that they entered into the contracts
unknowingly and involuntarily or that innodata forced them into it.
ISSUES/HELD:
1. Whether petitioners were hired by INNODATA under valid fixed-term employment
contracts. NO
RATIO:
1. NO. They were regular employees of Innodata who could not be dismissed
except for just or authorized cause.

employment status of a person is defined and prescribed by law and not by

what the parties say it should be. A contract of employment is impressed
with public interest such that labor contracts must yield to the common good.

Regular employment has been defined by Article 280 of the Labor Code
o

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.
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
1

respect to the activity in which he is employed and his employment

shall continue while such activity exists

Regular employees:
o

test to determine whether an employment should be considered regular or

non-regular is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the
employer

they were hired as formatters. The primary business of Innodata is data

encoding, and the formatting of the data entered into the computers is an
essential part of the process of data encoding. They make it easier for
clients to understand the data. The work performed by petitioners was
necessary or desirable.

The date of their employment was originally Feb 17, 1999 but was
crossed out and replaced with sept. 6 1999. Innodata alleged that
the original project for which they were hired in Feb, was completed
earlier than expected and that the sept employment was for a new
project.

SC: if these were truly fixed term contracts then a change in the
term or period would already constitute a novation of the original
contract.

Innodata wanted to make it appear that petitioners worked for less than a
year to preclude them from gaining regular status. But the SC already ruled
that they are regular employees under the first type of regular employees.
Even if we assume otherwise, the fact that the contract of employment was
ambiguous it would be construed strictly against the party who prepared it. \

Innodata also argued that they are project employees

But there are also forms of employment which although necessary and
desirable, and exceed one year would still not result in regular employment.
Fixed-term employment contracts: seasonal or for specific projects with
predetermined dates of completion AND wherein parties by free choice have
assigned a specific date of termination
The decisive determinant in term employment is the day certain agreed
upon by the parties for the commencement and termination of their
employment relationship, day certain: that which must necessarily come,
although it may not be known when (ex. Seasonal employment and
employment for a particular project)

Fixed-term contracts: exception rather than the general rule.

Some examples wherein a fixed-term is essential and natural: overseas

employment contracts; dean, assistant dean, college secretary, principal,
and other administrative offices in educational institutions; certain company
officials may be elected for what would amount to fixed periods, they may
lose their jobs as president, executive vice-president or vice president, etc.
because the stockholders or the board of directors for one reason or another
did not re-elect them

In this case, the court is convinced that the term was meant only to
circumvent the rights of Price et al to security of tenure and is therefore
invalid. The contracts of employment were ambiguous and tampered with

(2) those who were initially hired as casual employees, but have
rendered at least 1 year service, whether continuous or broken,
with respect to the activity in which they are employed.

Price et al belong to the first type.

(1) those who are engaged to perform activities which are

necessary or desirable in the usual business or trade of the
employer regardless of length of their employment

down as being contrary to law, morals, good customs, public order and
public policy

In Brent School v. Zamora: the court issued an admonition that where, from
the circumstances, it is apparent that the period was imposed to preclude
the acquisition of tenurial security by the employee, then it should be struck

Project employees: those workers hired (1)for a specific project or

undertaking and wherein (2) the completion or termination of such
project has been determined at the time of the engagement of the
employee.

SC; Innodata failed to name nor describe the project. Also there
was no evidence to prove that such project has already been
completed or terminated to justify dismissal.

SC also noted the provisions in the contract wherein petitioners have no

right at all to expect security of tenure, even for the supposedly one-year
period of employment provided in their contracts, because they can still be
pre-terminated (1) upon the completion of an unspecified project; or (2) with
or without cause, for as long as they are given a three-day notice. Such
contract provisions are repugnant to the basic tenet in labor law that no
employee may be terminated except for just or authorized cause
o

This would be against the state policy to assure workers of security

of tenure and free them from the bondage of uncertainty of tenure
woven by some employers into their contracts of employment. This
was the purpose of Art. 280 of the Labor Code

Petitioners have security of tenure. Illegally dismissed employees are

entitled to reinstatement without loss of seniority rights and other privileges
with full backwages. In this case since Innodata ceased its operations,
separation pay equivalent to 1 month pay for every year of service instead.
2

The Petition for Review on Certiorari is GRANTED

SMC v. NLRC and Rafael Maliksi

December 6, 2006 || Garcia, J.
By: Rose Ann
SUMMARY:
Maliksi filed a complaint against SMC and PHILSSEC to compel the companies to
recognize him as a regular employee. SMC denied liability, asserting that PHILSSEC
is an independent contractor. SC found for Maliksi, stating that hiring and re-hiring in
a span of two to four years to do the same type of work conclusively shows the
necessity of petitioners service to the respondent companys business, and that the
act of hiring and re-hiring the petitioners over a period of time without considering
them as regular employees evidences bad faith on the part of the principal/employer.
DOCTRINE:
When the activity/job that the employee does is necessary/desirable to the business
of the employer that the employee is hired and rehired over a period of time, such
employee is considered as a regular employee.
FACTS:
On October 16, 1990, Rafael Maliksi filed a complaint against SMC-Magnolia Division
and Phil. Software Services and Education Center (PHILSSEC) to compel both
companies to recognize him as a regular employee, later amending it to include a
charge of illegal dismissal due to his termination 14 days after filing the original
complaint.
The employment record of Maliksi showed that he rendered service:

with Lipercon Services from April 1981 to February 1982 (10 mos.) as
budget head assigned to SMC-Beer Division,

with Skillpower, Inc. from July 1983-April 1985 as accounting clerk assigned
to SMC-Magnolia Division

with Skillpower Services from October 1988-1989 (1 year) with SMCMagnolia Finance as accounting clerk.

With PHILSSEC from Oct. 1989 to October 1990 with SMC-Magnolia

Finance as accounting clerk

Overall total: 3 years, 7mos.

Maliksi considered himself as a regular employee of SMC-Magnolia, alleging that
Lipercon, Skillpower and PHILSSEC were all labor-only contractors and were
therefore not his employers. According to him, he was dismissed in retaliation for his
filing of the complaint for regularization in service. His dismissal was illegal as there
was no cause of action against him. Furthermore, he alleged that he was not
accorded due process, and neither was his dismissal reported to DOLE.
PHILSSEC denied liability, as it was catering to servicing computer systems and
programs for business enterprise. According to them, Maliksi was one of those
employed by PHILSSEC to provide manual controlling of data during the
computerization. They alleged that PHILSSEC supervisors controlled Maliksis work,

his salary was paid by the agency and he reported directly to PHILSSEC. The
computerization project was completed on October 1990, and therefore, Maliksi was
terminated on that date.
SMC, on the other hand, alleged that it entered in a contract with PHILSSEC, where
the latter undertook to set up the computerization of the provincial sales reporting
system of Magnolia. To carry out the task, PHILSSEC utilized 3 computer
programmers and the rest were data encoders, one of which was Maliksi. Also, SMC
alleged that PHILSSEC exercised exclusive managerial prerogative over the
complainant as to hiring, payment of salary, dismissal and most importantly, the
control over his work. SMC was interested only in the result of the work specified in
the contract but not as to the means and methods of accomplishing the same.
Moreover, PHILSSEC has substantial capital of its own.
LA: Maliksi was a regular employee of PHILSSEC, and absolved SMC from liability.
NLRC: Reversed LA decision, holding Maliksi as a regular employee.
CA: Affirmed NLRC decision in toto, stating that on account of his past employment
contracts with SMC under Lipercon and Skillpower, Maliksi was already a regular
employee of SMC when he entered into SMCs computerization project as part of the
PHILSSEC project complement.
Hence, the appeal to the SC.
ISSUES/HELD:
WON Maliksi is a regular employee of SMCYES. Petition of SMC denied. Case is
remanded to LA for computation of backwages, 13 th month, sep.pay, Attys fees
and other monetary awards.
RATIO:
In finding for Maliksi, the Court took judicial notice of the fact that both Lipercon and
Skillpower were already declared to be labor-only contractors from previous cases2 in
the Supreme Court.
The Court gave due deference to the factual findings of both the NLRC and the CA
that an employer-employee relationship existed between SMCs subsidiaries and
Maliksi. Having served SMC for an aggregate period of more than three (3) years
through employment contracts with these two labor-only contractors, Maliksi should
be considered as SMCs regular employee. It must also be considered that he was
hired and re-hired by SMC to perform administrative and clerical work that was
necessary to SMCs business on a daily basis.

. Madriaga v. Court of Appeals, G.R. No. 142001, July 14, 2005, 463 SCRA 298; Palmeria v.
National Labor Relations Commission, G.R. Nos. 113290-91, August 3, 1995, 247 SCRA 57;
Shoppers Gain Supermart v. National Labor Relations Commission, G.R. No. 110731, July 26,
1996, 259 SCRA 411; Guarin v. Lipercon, G.R. No. 86010, October 3, 1989, 178 SCRA 267;
Magnolia Dairy Products v. National Labor Relations Commission, G.R. No. 114952, January 29,
1996, 252 SCRA 483; Philippine Fuji Xerox Corporation v. National Labor Relations Commission,
G.R. No. 111501, March 5, 1996, 254 SCRA 294; Bantolino v. Coca-Cola Bottlers Phils., G.R. No.
153660, June 10, 2003, 403 SCRA 699.
3

As found in the case of Bustamante v. NLRC, hiring and re-hiring in a span of two
to four years to do the same type of work conclusively shows the necessity of
petitioners service to the respondent companys business, and that the act of
hiring and re-hiring the petitioners over a period of time without considering them as
regular employees evidences bad faith on the part of the principal/employer.
It was also found by the Court that, except for the computerization project of
PHILSSEC, SMC did not make any insinuation that the services of Maliksi with SMC
was project-related such that an employment contract with Lipercon and Skillpower
was necessary.
The Court also cited the case of Madriaga v. Court of Appeals, which involved SMC,
Lipercon and Skillpower. In that case, the Court found that Lipercon and Skillpower
were involved in labor-only contracting, and therefore the Court, in this case, was
inclined to believe that these two contracting agencies were also involved in laboronly contracting with respect to Maliksi. Therefore, the Court held that that the finding
of the NLRC and the CA as to SMCs resorting to labor-only contracting is entitled to
consideration in its full weight.
SC also found that there was no need for Maliksi to be employed under PHILSSECs
computerization program to be considered a regular employee of SMC at the time.
Moreover, SMC itself admits that Maliksis work under the computerization program
did "not require the operation of a computer system, such as the software program
being developed by PHILSSEC. Given such admission, Maliksis placement in the
project was for the purpose of circumventing labor laws.
Furthermore, Maliksis work under the PHILSSEC project was mainly administrative in
nature and necessary to the development of SMCs business (ie. Posting manually
the daily account balances in the worksheet, fitting the daily totals into the monthly
totals, comparing manual totals with the computer generated totals, etc.).
SMCs act of juggling Maliksi from one employment contract to another was a
continuous bid to circumvent labor laws, and that the act of hiring and re-hiring
workers over a period of time without considering them as regular employees
evidences bad faith on the part of the employer.

SUMMARY:
Petitioners were hired as field personnel by TNS. At the beginning of their
employment, they signed project employment contracts and upon termination, TNS
filed termination reports. They were repeatedly hired under this scheme by TNS from
1996-2008. Upon filing a complaint for regularization, TNS informed them not to
report to work anymore since they were being pulled out from their projects. They
filed a complaint for illegal dismissal. NLRC held that they have become regular
employees. SC affirmed.
DOCTRINE: (4-fold Test)
A project employee is one (1) 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 AND (2) whose termination of employment contract is reported to
DOLE everytime the project he was engaged in is completed.
Once a project or work pool employee has been (1) continuously, as opposed to
intermittently, rehired by the same employer for the same tasks or nature of tasks;
and (2) these tasks are vital, necessary and indispensable to the usual business or
trade of the employer, then the employee must be deemed a regular employee.
Project employment and probationary employment are distinct from one another and
cannot co-exist with each other.
FACTS:
TNS Phils Inc. Is engaged primarily in the business of marketing research and
information. As a market research facility, it conducts public sureys about consumer
goods, products, merchandise and service of its clients.

TNS hires persons as field personnel on project-to-project basis whose

functions are: 1) to gather data on consumer goods, commodities,
merchandise, and such other products as requested by clients, through
personal interviews, telephone interviews and/or such other modes akin to
the foregoing; and b) to submit the gathered data to the company for
evaluation and/or analysis.

Where it is apparent that periods have been imposed to preclude the acquisition of
tenurial security by the employee, the policy, agreement or practice should be struck
down as contrary to public policy, morals, good customs or public order. In point of
law, any person who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall be liable for the damage.

Starting 1996 and subsequently on various dates petitioners Jeanette Manalo,

Vilma Barrios, Lourdes Fernandez, and Leila Taino were hired by TNS as field
personnel.

They were made to sign a project to project employment contract.

Likewise, everytime their contract ends, TNS files with the DOLE the
corresponding termination report.

However, they were also assigned officed-based tasks not on a per

project basis that required them to be in the office from 9 am to 6 pm
(sometimes beyond) with no corresponding overtime pay and which were
not reported to DOLE.

Manalo et al. v. TNS Phils Inc.

Nov. 14, 2014, | Mendoza J
by: Paola

August 2008 TNS met with its Field Interviewers (FI) where they were informed
that old FIS would be pulled out eventually and replaced with new Fis. Old FIs would
4

be assigned only to seasonal ad hocprojects. Pursuant to this, petitioners then filed

with the Labor Arbiter complaint for regularization against TNS.

Oct. 20, 2008 - the LA required the parties to submit their position papers.
Oct 21, 2008 TNS informed petitioners to not report to work anymore because they
have been pulled out from their asignment and were not being lined up for any
continuing or new projects because TNS no longer needed their services.
Petitioners filed a complaint for illegal dismissal which was consolidated with the
complaint for regularization.

II.

LA Project Employees petitioners at the time of their employment knew and

agreed with full understanding that the contracts they signed would lapse upon
completion of projects stated in their contracts. Their repeated hiring by TNS does not
make
them
regular
because determining
factor
was whether, at the time of hiring, the employment was fixed for a specific project
or undertaking and its completion was predetermined.

ISSUES/HELD:
WON petitioners were still project employees of TNS No. Petitioners are deemed to
have become regular employees
RATIO:

I.

THEY HAVE BECOME REGULAR EMPLOYEES:

Article 280 of the Labor Code, as amended, clearly defined a project employee as
one whose employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season. Additionally,
a project employee is one whose termination of his employment contract is reported
to the DOLE everytime the project for which he was engaged has been completed.

TNS claims that NLRC acnhored its decision on the supposed lack of
compliance of TNS with the termination report requirement. On its MR to
NLRC TNS attached its belated termination report dated Nov. 2008

AS TO THE CONTINUOUS REHIRING OF PETITIONERS:

In Maraguinot, Jr. v. NLRC, the Court held that once a project or work pool
employee has been: (1) continuously, as opposed to intermittently, rehired by the
same employer for the same tasks or nature of tasks; and (2) these tasks are vital,
necessary and indispensable to the usual business or trade of the employer, then the
employee must be deemed a regular employee
Althoughit is true that the length of time of the employees service is not a
controlling determinant of project employment, it is vital in determining whether he
was hired for a specific undertaking or in fact tasked to perform functions vital,
necessary and indispensable to the usual business or trade of the employer.
Petitioners successive re-engagement in order to perform the same kind of work
firmly manifested the necessity and desirability of their work in the usual business of
TNS as a market research facility. Undisputed also is the fact that the petitioners were
assigned office-based tasks from 9:00 oclock in the morning up to 6:00 oclock in the
evening, at the earliest, without any corresponding remuneration.

TNSs use of project empolyement scheme circumvented the law and

precluded petitioners from retaiing regular status despite performing exacty
the same function which were vital and necessary to the business of TNS
over several years.

NLRC Initially regular employees but subsequently became regular. Dismissal is

therefore illegal .

Case records show that the last termination report filed by TNS was in Nov.
2007 indicating that project ended on Nov. 30, 2007. BUT petitioners
were allowed to continue working even after Nov. 30 2007.

No project contracts were adduced by TNS. Absent proof that they were
hired on a project-to-project basis after that date petitioners are
considered to have become regular employees after Nov. 30, 2007.
CA Project employees. They were required to sign project-to-project employment
contracts; and that a corresponding termination report was made to DOLE for every
accomplished project. Further, CA stated that the repeated re-hiring of petitioners for
at least one (1) year did not ipso facto convert their status to regular employees.

HOWEVER, despite this belated termination reports TNS failed to show

corresponding project employment contracts of petitioners covering
the period indicated in that report. NLRC is therefore correct in saying
that absent proof that subsequent employment of petitioners were on
a project-to-project basis, then they are considered to have become
regular employees.

III.

CONTRACT SIGNED BY PETITIONERS ESSENTIALLY NOT FOR PROJECT

EMPLOYMENT
One of the terms and conditions in the said contract stated that:
1. The need for your services being determinable and for a specific
project starting ____________ your employment will be for the
duration of said project of the Company, namely Project
___________ which is expected to be finished on _____________.
The Company shall have the option of renewing or extending the
period of this agreement for such time as it may be necessary to
complete the project or because we need further time to determine
your competence on the job.
The last phrase refers to probationary employment and runs counter to the very
nature of project employment. Under this provision TNS can extend or pre-terminate
the contract not because of the project but because of the employees ability to qualify
or not for the job.

Contract is therefore highly doubtful. Though there is a rule that provisions of

contract should be harmonzed, harmonization is impossible because project
employment and probationary employment are distinct from one
another and cannot co-exist with each other.
5

IN SUM:

Petitioners are deemd to have becomer regular employees of TNS

TNS not being able to prove legality of their dismissal it is liable for illegal
dismissal.

Petitioners are therefore entitled to 1) backwages from time of dismissal up

to finality of this decision; and 2) separation pay

forced to file a complaint against GMA before the NLRC assailing theur respective
employment circumstances. Upon receipt of the complaint, GMAs Engineering
Manager (Villacastin) confronted the respondents.
On August 9, 2009, respondents were summoned to the office of the GMA Area
Manager (Alino) and were made to explain why they filed the complaint. The next day
they were barred from entering and reporting for work without any notice stating the
reasons.
Respondents through their counsel wrote a letter to Alino requesting that they be
recalled back to work. GMAs head of Personnel and Labor Relations (Bustria)
replied, admitting non-payment of benefits but didnt mention the request to be
allowed to go back to work. Respondents sent another letter to Bustria reiterating the
same but this was ignored. On October 8, 2009, respondents filed an amended
complaint raising the following: 1) Unfair Labor Practice; 2) Illegal Dismissal; and 3)
Damages and Attorneys fees.

GMA Network v. Carlos Pabriga, Geoffrey Arias et al

November 27, 2013 | Leonardo-De Castro, J.
By: Cate Alegre
SUMMARY:
Respondents filed a complaint for illegal dismissal against GMA claiming they are
regular employees. GMA denies this. SC ruled that respondents are regular
employees.
DOCTRINE:
A regular employee performs activities that are usually necessary or desirable in the
employers usual business or trade. A project employee performs activities that may
or may not be usually necessary or desirable in the usual business or trade of the
employer. The services of the project employees are legally and automatically
terminated when the project ends or is completed.
FACTS:
Respondents were employed by GMA Network as TV Technicians performing various
tasks3. On July 19, 1999 due to miserable working conditions, respondents were
3

1) Manning of Technical Operations Center:

(a) Responsible for the airing of local commercials; and
(b) Logging/monitoring of national commercials (satellite)
2) Acting as Transmitter/VTR men:
(a) Prepare tapes for local airing;
(b) Actual airing of commercials;
(c) Plugging of station promo;
(d) Logging of transmitter reading; and
(e) In case of power failure, start up generator set to resume program;
3) Acting as Maintenance staff;
(a) Checking of equipment;
(b) Warming up of generator;
(c) Filling of oil, fuel, and water in radiator; and
4) Acting as Cameramen

LA: dismissed the complaint for illegal dismissal and ULP but held GMA liable for 13 th
month pay
NLRC: reversed LA stating that the respondents were regular employees with respect
to the particular activity to which they were assigned until it ceased to exist and thus
entitled to separation pay. They are also entitled to 13 th month pay, night shift
differential and service incentive leave pay.
CA: denied GMAs Petition for Certiorari
ISSUES/HELD:
1. WON respondents are regular employees and thus entitled to separation
pay YES. Regular Employees and were illegally dismissed
2. WON respondents were entitled to night shift differential pay - YES
RATIO:
1. They are regular employees and entitled to security of tenure.
Therefore, their services may be terminated only for just or authorized
causes

The nature of employment is determined by law, regardless of any contract

expressing otherwise. Regular employment and project employment are taken
from Article 2804 of the Labor Code which also speaks of casual and seasonal
4

ARTICLE 280. Regular and casual employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is
seasonal in nature and 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 actually exist.
6

employment. The 5th classification (fixed term employment) is not expressly

mentioned in the Code but in Brent School v. Zamora, the Court said that it is a
contract which specifies that employment will last only for a definite period.
Employees performing activities which are usually necessary or desirable in the
employers usual business or trade can either be regular, project or seasonal
employees, while, as a general rule, those performing activities not usually
necessary or desirable in the employers usual business or trade are casual
employees. The reason for the distinction is found in Article 279 of the LC on
Security of Tenure.
The activities of project employees may or may not be usually necessary or
desirable in the usual business or trade of the employer. The principal test is
whether or not the "project employees" were assigned to carry out a
"specific project or undertaking," the duration (and scope) of which were
specified at the time the employees were engaged for that project.
o Project could either be (1) a particular job or undertaking that is within
the regular or usual business of the employer company, but which is
distinct and separate, and identifiable as such, from the other
undertakings of the company; or (2) a particular job or undertaking that
is not within the regular business of the corporation.
o The purpose of this requirement is to delineate whether or not the
employer is in constant need of the services of the specified employee.
AS APPLIED: the jobs of the respondents are clearly within the regular or usual
business of the employer company and are not identifiably distinct or separate
from the other undertakings of the company.
o The manning of the operations center to air commercials, acting as
transmitter/VTR men, maintaining the equipment, and acting as cameramen
are not undertakings separate or distinct from the business of a broadcasting
company.
o Even if Pabriga and his co-workers are to be considered as project
employees, they attained regular employment status because GMA
continuously rehired them.
o GMA did not report the completion of its projects and the dismissal of
Pabriga and his co-workers in its finished projects to the nearest Public
Employment Office as required by Policy Instruction No. 20 of the
Department of Labor and Employment. Based on jurisprudence, the failure
of an employer to report to the nearest Public Employment Office the
termination of its workers services every time a project or a phase is
completed indicates that the workers are not project employees.
o GMAs practice of hiring and rehiring of workers on fixed terms, without end,
is unjustifiable.

GMA also cant claim that they employed respondents on a fixed period allegedly
designated in employment contracts and reflected in vouchers. The decisive
determinant in fixed-term employment is not the activity that the employee is
called upon to perform but the day certain agreed upon by the parties for the
employment relationship to commence and terminate.

Indications or criteria under which "term employment" cannot be said to be in

circumvention of the law on security of tenure, namely:
1) The fixed period of employment was knowingly and voluntarily agreed
upon by the parties without any force, duress, or improper pressure being
brought to bear upon the employee and absent any other circumstances
vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance exercised
by the former or the latter.
o To prove the fixed term contracts, GMA7 presented cash disbursement
vouchers signed by Pabriga and his co-workers, stating that they were
merely hired as pinch-hitters. The Court observed that Pabriga and his coworkers were in no position to refuse to sign these vouchers, as refusal
would entail not getting paid for their services. Plainly, Pabriga and his coworkers as pinch-hitters cannot be considered to be on equal footing
as GMA in the negotiation of their employment contract.
2. Respondents are entitled to Separation Pay and Night Shift Differential
Since respondents were illegally dismissed they are entitled to separation pay
equivalent to one (1) month pay for every year of service.
They are entitled to night shift differential ((10%) of his regular wage for each
hour of work performed between ten oclock in the evening and six oclock in the
morning) but the computation will be determined by the Regional Arbitration
Branch.

A project employee 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
2. The tasks performed by the alleged project employee are vital, necessary
and indispensable to the usual business or trade of the employer.
Both elements are present in this case.

SOLE- affirmed Regional Director. Brent appealed to the Office of the President.
BRENT SCHOOL vs. ZAMORA

Office of the President- denied appeal for lack of merit and upheld SOLE.

G.R. No. 48494| February

By: Ian

Issue: WON Alegre is a regular employee despite the fixed period of employment
stipulated in the employment contract.

Summary: Doroteo R. Alegre was engaged as athletic director by Brent School, Inc.
for a fixed period of 5 years.. When he was about to be terminated, he contested the
forthcoming termination claiming that his services were necessary and desirable in
the usual business of the employer and in the course of 5 years he already acquired
the status of a regular employee. The SC ruled that the employment contract should
be followed because the parties have stipulated the fixed term during its execution, it
was voluntarily entered into by Alegre, and it was not meant to circumvent the security
of tenure of Alegre.

Facts: Alegre was engaged as athletic director by Brent School, Inc. for a fixed period
of 5 years (July 18, 1971-July 17, 1976) at P20K/yr. On April 20, 1976, some three
months before the expiration of the 5-yr. employment, he was given a report
reminding him of his termination by July by reason of completion of contract,
expiration of the definite period of employment. On May 26, 1976, he accepted the
amount of P3,177.71, and signed a receipt containing the phrase in full payment of
services for the period May 16, to July 17, 1976 as full payment of contract."
At the investigation of the Labor Conciliator of the report of termination,
Alegre protested his termination. He argued that despite the stipulation of the fixed
period:
His services were necessary and desirable in the usual business of his
employer, and his employment had lasted for 5 years; and
b. He has acquired the status of a regular employee because his
employment already lasted for five years. Hence, he could not be
removed except for valid cause.
Regional Director- ruled in favor of Alegre:

Held: No.

Ratio: The law weighed the Labor Code and the general right of parties to freely
contract.

a.

Considered the report as an application for clearance to terminate

employment (not a report of termination), and accepting the
recommendation of the Labor Conciliator, refused to give such clearance
and instead required the reinstatement of Alegre, as a "permanent
employee," to his former position without loss of seniority rights and with full
back wages.
The Director pronounced "the ground relied upon by the respondent (Brent)
in terminating the services of the complainant (Alegre) . . . (as) not
sanctioned by P.D. 442," and, quite oddly, as prohibited by Circular No. 8,
series of 1969, of the Bureau of Private Schools.
Brent School filed MR. Denied by Regional Director and forwarded the case to the
Secretary of Labor for review.

There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck down
or disregarded as contrary to public policy, morals, etc.
But the period should be upheld where, among other circumstances:
o no such intent to circumvent the law is shown, or stated otherwise;
o the reason for the law does not exist, e.g., where it is indeed the
employee himself who insists upon a period; or
o where the nature of the engagement is such that, without being
seasonal or for a specific project, a definite date of termination is a
sine qua non.
As it is evident from even only the three examples already given that Article
280 of the Labor Code, under a narrow and literal interpretation, not only
fails to exhaust the gamut of employment contracts to which the lack of a
fixed period would be an anomaly, but would also appear to restrict, without
reasonable distinctions, the right of an employee to freely stipulate with his
employer the duration of his engagement, it logically follows that such a
literal interpretation should be eschewed or avoided. The law must be given
a reasonable interpretation, to preclude absurdity in its application.
Outlawing the whole concept of term employment and subverting to
boot the principle of freedom of contract to remedy the evil of
employers' using it as a means to prevent their employees from
obtaining security of tenure is like cutting off the nose to spite the face
or, more relevantly, curing a headache by lopping off the head.
It is a salutary principle in statutory construction that there exists a valid
presumption that undesirable consequences were never intended by a
legislative measure, and that a construction of which the statute is fairly
susceptible is favored, which will avoid all objectionable, mischievous,
undefensible, wrongful, evil, and injurious consequences.
The entire purpose behind the development of legislation culminating in the
present Article 280 of the Labor Code clearly appears to have been, as
already observed, to prevent circumvention of the employee's right to be
secure in his tenure, the clause in said article indiscriminately and
completely ruling out all written or oral agreements conflicting with the
8

concept of regular employment as defined therein should be construed to

refer to the substantive evil that the Code itself has singled out: agreements
entered into precisely to circumvent security of tenure. It should have no
application to instances where a fixed period of employment was agreed
upon knowingly and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent, or where it satisfactorily appears
that the employer and employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the former over
the latter. Unless thus limited in its purview, the law would be made to apply
to purposes other than those explicitly stated by its framers; it thus becomes
pointless and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences.
Some history:
The SC engaged in a historical survey on how fixed period employment vis-vis freedom to contract has been treated under our laws/jurisprudence.
Note that in employment contract in the case at bar was executed in 1971, prior
to the Labor Code, promulgated in 1974.

1971 (contract was executed)- Termination Pay law and New Civil Code
(NCC) applicable and both recognized the validity of term employment/
freedom to contract in the case of NCC. Prior to the Termination Pay Law,
the Code of Commerce. The Code of Commerce was repealed by the NCC.
Hence, when the contract was executed, it was perfectly valid to stipulate a
fixed period, consistent with civil law and labor law.
1974- Labor Code recognized fixed employment under Art. 319:
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
1975- PD 850 amended the Labor Code but it still contained provisions
implying the validity of fixed term employment.
1977- case of Biboso vs. Victorias Milling also pertain to teachers in private
school held that fixed period employment was valid
"What is decisive is that petitioners (teachers) were well aware all the
time that their tenure was for a limited duration. Upon its termination, both
parties to the employment relationship were free to renew it or to let it lapse."
In 1983, the J. Walter Thompson Co. vs. NLRC affirmed the validity of fixed
employment.

1981- BP 130 amended the Labor Code following PD 850 this time
eliminating all together the reference to employment without a definite
period.
Note that all these amendments are being applied, the NCC continues to
recognize the freedom to contract of parties.

Daquital v. Camus
September 1, 2010 | Nachura, J.
By: Jadd
SUMMARY:
Judy Daquital and the other petitioners sue LM Camus Engineering Corporation for
illegal dismissal, for terminating them after they did not comply with the companys
order to surrender their Ids and ATM cards and execute contracts of employment. The
LA held that they were illegally dismissed. The NLRC affirmed, adding reinstatement
with backwages. The CA reversed the NLRC, holding that the dismissal was legal. On
Daquitals petition for review, the SC reversed the CA, holding that Daquital et al.
were presumed to be regular employees since the employment contract did not show
that they were informed of their employments nature and duration, and there was no
showing that the company filed the required termination reports each time an
employment was terminated due to a projects completion. Since they were regular
employees, they were entitled to security of tenure.
DOCTRINE:
Non-presentation of an employment contract raises the presumption that an
employee was not informed of the nature and duration of their employment.
FACTS:

Petitioners (Judy Dacuital/Daquital, Eugenio Mondano Jr., Mariano Morales,

Roberto Ruance, Joseph Porcadilla, Raulito Palad, Ricardo Digamon, Nonito
Prisco, Eulogio Tutor, Melvin Pepito, Helyto Reyes, Randolf Baludo, Alberto
Epondol, Rodelo Susper, Evaristo Vigori, Jonathan Ayaay, Felipe Erilla, Aris
Garcia, Roy Garcia, and Restituto Tapanan) are welders, tinsmiths,
pipefitters, and mechanical employees of LMCEC (LM Camus Engineering
Corporation.)

January March, 2001 LMCEC required Daquital et al. To surrender their

IDs and ATM cards, and ordered them to execute contracts of employment.
Most did not comply. They were terminated.

Daquital et al. filed a complaint for illegal dismissal and non-payment of

monetary benefits (holiday pay, premium pay for holiday, rest day, service
incentive leave pay, and 13th month pay.

LA sustained Petitioners.

NLRC modified Ordered reinstatement with backwages.

Daquital et al. Moved for execution of the NLRC decision.

LMCEC filed a Clarificatory Motion and Opposition to the motion for

execution based on its petition with the CA and the reinstatement of some
employees involved.

NLRC granted LMCECs motion.

Meanwhile, the CA found for LMCEC, holding that the dismissal was valid
and legal, setting aside the backwages award.

Daquital goes to the SC through a petition for review.

ISSUES/HELD:
1) WON the petitioners are project employees. NO, they are regular
employees. [TOPICAL]
2) WON the dismissal was legal. NO
9

3)
4)
5)

WON backwages should be computed from unjust dismissal up to actual

reinstatement to former position. YES
WON the LAs decision attained finality because of the petitioners failure to
appeal, except as to Palad. NO
WON Camus is personally liable as the President of the corporation. NO

RATIO:
1) Daquital et al. are regular employees, not project employees, because the
employment contract did not show that they were informed of their
employments nature and duration, raising the presumption that they were
regular employees. Additionally, there was no showing that LMCEC filed the
requisite termination reports each time an employment was terminated due
to the fact that a project was completed.
A) Definition of project employee Assigned to project beginning and
ending at determined or determinable times. (Citing Goma v. Pamplona
Plantation, 2008)
B) Employees working under different employment contracts for several
years do not automatically become regular employees.
1. Rationale Length of service is not a controlling factor in
determining the nature of employment. (Citing Abesco Construction
and Development Corporation v. Ramirez, 2006)
C) Possible rationale for rehiring Natural consequence that experienced
construction workers are preferred. (Citing Hanjin Heavy Industries and
Construction Co. v. Ibaez, 2008)
D) In relation to work pool membership Employees part of a work pool
from which a company draws workers for deployment to projects do not
become regular employees due to this factor alone, work pool members
can be either project or regular employees. (Citing Abesco Construction
and Development Corporation v. Ramirez, 2006)
E) Test of determining whether an employee is a project employee
Whether the employee is (citing Goma v. Pamplona Plantation, 2008):
(1) assigned to carry out a specific project or undertaking;
(2) the duration or scope of which was specified at the time the
employee was engaged for the project.
F) A written employment contract may prove that an employee was
informed of the nature and scope of their work and their status as
project employees. (Citing Hanjin Heavy Industries and Construction
Co. v. Ibaez, 2008)
1. Not presenting employment contracts raises a serious question of
whether employees were properly informed of their status as
project employees at the beginning of their employment.
G) It is presumed that employees were not informed of the nature and
duration of their employment due to the non-presentation of the
employment contracts. (Court cited no authorities for this statement.)
1. Possible basis: In illegal dismissal cases, the employer has the
burden of proving the dismissals validity with clear, accurate,
consistent, and convincing evidence.
2. Effect of presumption presumed to be regular employees. (Citing
Hanjin Heavy Industries and Construction Co. v. Ibaez, 20068)
H) DO 19 and Policy Instructions 20 require employers to submit
termination reports to the nearest public office every time employment is

2)

3)
4)

5)

terminated due to a projects completion. (Citing Goma v. Pamplona

Plantation, 2008)
I) In this case:
1. LMCEC only presented Daquitals employment contract.
2. The employment contract did not show that Daquital was informed
of the nature and duration of the employment.
3. The duration of the employment was not even specified.
4. Assuming the contract informed Daquital of the nature and duration
of the employment, there is insufficient evidence to show that the
other employees were also informed. The others also had
employment contracts but LMCECs lame excuse was that they
were similarly situated.
5. There was no showing that LMCEC filed the required termination
reports.
The dismissal was illegal.
A) Regular employees enjoy security of tenure so they can only be
dismissed:
1) For just or authorized cause;
2) Upon compliance with due process (notice and hearing.)
B) In this case: LMCEC failed to prove the dismissal was legal.
Backwages should be computed from unjust dismissal until actual
reinstatement to the former position.
1. Basis: LC 279.
The SC is not barred from ordering the NLRC decisions modification.
A) Basis: Exception to general rule that party that has not appealed is not
entitled to affirmative relief other than what was granted in the assailed
decision.
B) Rationale: (Citing Cocomangas Hotel Beach Resort v. Visca, 2008)
1. The Court has authority and discretion to review matters not
otherwise assigned as errors on appeal if this:
(1) Completely and justly resolves a case; or
(2) Serves the interest of justice; or
(3) Avoids dispensing piecemeal justice
2. Substantive rights (such as the award of backwages in illegal
dismissal cases) should not be prejudiced by a rigid and technical
application of the rules.
No, Camus is not personally liable as LMCECs president because there is
no malice, bad faith, or specific provision of law making him personally
liable. Thus, his personality is considered as distinct and separate from
LMCEC.
A) Rule on personal liability of corporate directors, trustees, or officers
(Citing Lowe v. CA, 2009) Attaches only when:
1. They assent to a corporations patently unlawful act, or are guilty of
bad faith or gross negligence in directing its affairs, or when there is
a conflict of interest resulting in damages to the corporation, its
stockholders, or other persons;
2. They consent to the issuance of watered down stocks or do not file
their written objection to the issuance of such;
3. They agree to hold themselves personally and solidarily liable;
4. A specific provision of law makes them liable.
10

B)
6)

In this case: There is no showing of any of the circumstances that would

make Camus personally liable.
Miscellaneous discussion on the other parties:
A) Tapanan Not a party to this case since he was not a complainant with
the NLRC
B) Reyes Voluntarily withdrawn his case so not affected by this decision

11

D.M. CONSUNJI, INC. AND/OR DAVID M. CONSUNJI

v. ESTELITO JAMIN
April 18, 2012 | Brion, J.
By: Kiko
SUMMARY: Jamin was continuously hired and rehired by DMCI through successive
employment contracts from 1968 to 1999. In March 1999, his work at DMCI was
terminated due to the completion of an on-going project. Jamin filed for illegal
dismissal.
LA dismissed the complaint on the finding that Jamin is a regular employee. NLRC
dismissed the appeal. CA however found for Jamin, ruling that he was a project
employee. SC upheld the CA decision, finding that Jamins employment history with
DMCI stands out for his continuous, repeated and successive rehiring in the
companys construction projects.
DOCTRINE: Jamins continuous rehiring and the nature of his work unmistakably
made him a regular employee. Jamins employment ceased to be coterminous with
specific projects when he was repeatedly re-hired for 31 years due to the demands of
DMCIs business.
FACTS:
On December 17, 1968, D.M. Consunji, Inc. (DMCI), a construction company, hired
respondent Estelito L. Jamin as a laborer. Sometime in 1975, Jamin became a helper
carpenter. Since his initial hiring, Jamins employment contract had been renewed a
number of times.
On March 20, 1999, his work at DMCI was terminated due to the completion of the
SM Manila project. This termination marked the end of his employment with DMCI as
he was not rehired again.
Jamin filed a complaint for illegal dismissal, with several money claims, against DMCI
and its President/General Manager, David M. Consunji.

Jamin alleged that DMCI terminated his employment without a just and
authorized cause.

He claimed that he rendered service to DMCI continuously for almost 31

years. In addition to the schedule of projects (where he was assigned)
submitted by DMCI to the labor arbiter, he alleged that he worked for three
other DMCI projects
DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from
the start of his engagement in 1968 until the completion of its SM Manila project. With
the completion of the project, it terminated Jamins employment. It alleged that it
submitted a report to DOLE everytime it terminated Jamins services.
LA Robles dismissed the complaint, ruling that Jamin was a project employee whose
services had been terminated due to the completion of the project where he was
assigned. The labor arbiter also noted that Jamin had to file an application if he
wanted to be re-hired.
NLRC dismissed the appeal. MR denied.

CA reversed the NLRCs ruling and held that Jamins dismissal was illegal as it was
without a valid cause and without due process. It based its conclusion on: (1) Jamins
repeated and successive rehiring in DMCIs various projects; and (2) the nature of his
work in the projects he was performing activities necessary or desirable in DMCIs
construction business. CA declared that:

The pattern of Jamins rehiring and the recurring need for his services are
sufficient evidence of the necessity and indispensability of such services to
DMCIs business or trade, a key indicator of regular employment. It opined
that although Jamin started as a project employee, the circumstances of his
employment made it regular or, at the very least, has ripened into a regular
employment.

DMCI failed to submit a report to the DOLE Regional Office everytime

Jamins employment was terminated, as required by DOLE Policy
Instructions No. 20. The CA opined that DMCIs failure to submit the reports
to the DOLE is an indication that Jamin was not a project employee. It
further noted that DOLE Department Order No. 19, Series of 1993, which
superseded DOLE Policy Instructions No. 20, provides that the termination
report is one of the indicators of project employment.
On appeal, DM Consunji argues:

CA misapplied the phrase usually necessary or desirable in the usual

business or trade of the employer when it considered Jamin a regular
employee. The definition of a regular employee under Article 280 of theLabo
r
Code
does
not
apply
to
project
employment
or employment which has been fixed for a specific project,

There is no work pool in DMCIs roster of project employees.

While the report is an indicator of project

employment, as noted by the CA, it is only one of several indicators
under
the rules.

Jamin was not dismissed for cause. He actually has no more job because of
the completion of the project. There was no need to furnish him a written
notice of the grounds for the dismissal and neither is there a need for a heari
ng.
Jamin argues for the dismissal of the petition:

DMCIs appeal was filed three days beyond the 15-day reglementary period
for filing an appeal.

CA committed no error in
nullifying
the
rulings
of
the labor arbiter and the NLRC.

In a
previous
case, the Court explained that the proviso in the
second paragraph of Article 280 of the Labor Code relates to casual
employees who shall be considered regular employees
if
they
have
rendered
at
least
one
year
of
service, whether such service is continuous or broken.

Jamin disputes DMCIs submission that it committed only few lapses in the
reportorial requirement. He maintains that even the NLRC noted that there
were no termination reports with the DOLE Regional Office after every
completion of a phase of work.
ISSUES/HELD:
WON Jamin was a regular employee and was thus illegally dismissed? Yes.
12

RATIO:
CA decision has become final and executory
The deadline for the filing of the motion for reconsideration was on March 19, 2010
(15 days from March 4, 2010, DMCIs date of receipt of a copy of the decision), but it
was filed only on March 22, 2010 or three days late. Clearly, the motion for
reconsideration was filed out of time, thereby rendering the CA decision final and
executory. Necessarily, DMCIs petition for review on certiorari is also late as it had
only fifteen (15) days from notice of the CA decision to file the petition or the denial of
its motion for reconsideration filed in due time.
Jamin was a regular employee and he was illegally dismissed
The SC agrees with the CA. In Liganza v. RBL Shipyard Corporation, the Court
held that assuming, without granting, that the petitioner was initially hired for specific
projects or undertakings, the repeated re-hiring and continuing need for his services
for over eight (8) years have undeniably made him a regular employee.
The Liganza ruling squarely applies to this case, considering that for almost 31
years, DMCI had repeatedly, continuously and successively engaged Jamins
services since he was hired on December 17, 1968 or for a total of 38 times (35 as
shown by the schedule of projects submitted by DMCI to the labor arbiter and three
more projects or engagements added by Jamin, which he claimed DMCI intentionally
did not include in its schedule).

While length of time is not the controlling test for project employment. Nevertheless, it
is vital in determining if the employee was hired for a specific undertaking or tasked to
perform functions vital, necessary and indispensable to the usual business or trade of
the employer. Jamins employment ceased to be coterminous with specific projects
when he was repeatedly re-hired for 31 years due to the demands of DMCIs
business.
Re: termination reports
By the finding that Jamin is a regular employee, the issue of submission of
termination reports has become academic. SC noted however that DMCI indeed
submitted reports to the DOLE but as pointed out by Jamin, the submissions started
only in 1992.
David M. Consunji, DMCIs President/General Manager, is not liable
As there is no express finding of Mr. Consunjis involvement in Jamins dismissal, the
SC deemed it proper to absolve him of liability in this case.

While Jamins employement contracts indeed show that Jamin had been engaged as
a project employee, there was an almost unbroken string of Jamins rehiring from
December 17, 1968 up to the termination of his employment on March 20, 1999.
While the history of Jamins employment (schedule of projects) relied upon by DMCI
shows a gap of almost four years in his employment for the period between July 28,
1980 (the supposed completion date of the Midtown Plaza project) and June 13, 1984
(the start of the IRRI Dorm IV project), the gap was caused by the companys
omission of the three projects. As Jamin explains, the Ritz Tower Project (July 29,
1980 to June 12, 1982) and the New Istana Project (June 23, 1982 to February 16,
1984) would explain the gap.
Jamins employment history with DMCI stands out for his continuous, repeated and
successive rehiring in the companys construction projects. In all the 38 projects
where DMCI engaged Jamins services, the tasks he performed as a carpenter were
indisputably necessary and desirable in DMCIs construction business. He might not
have been a member of a work pool as DMCI insisted that it does not maintain a work
pool, but his continuous rehiring and the nature of his work unmistakably made him a
regular employee.
In Maraguinot v. NLRC, a project or work pool employee must be deemed a regular
employee once:
(1) continuously, as opposed to intermittently, rehired by the same employer for
the same tasks or nature of tasks
(2) these tasks are vital, necessary and indispensable to the usual business or
trade of the employer

13

SS Ventures International v. SS Ventures Union

29 October 2008 | Nachura, J.
By: Jocs Dilag
SUMMARY:
Union was a legitimate labor union inside Ps premises. Union filed petition for
certification election. P filed a patition to cancel Unions certificate of registration.
Court ruled that the EEs right to self-org, according to the Constitution, shall be
protected and shall not be abridged. Hence, absent a showing of fraud on the part of
the Union in its application, its registration cannot be cancelled.
DOCTRINE: (Basis of Right to self-organization)
The right to form, join, or assist a union is specifically protected by Art. XIII,
Section 3 of the Constitution and such right, according to Art. III, Sec. 8 of the
Constitution and Art. 246 of the Labor Code, shall not be abridged. Once registered
with the DOLE, a union is considered a legitimate labor organization endowed with
the right and privileges granted by law to such organization.
While a certificate of registration confers a union with legitimacy with the concomitant
right to participate in or ask for certification election in a bargaining unit, the
registration may be canceled or the union may be decertified as the bargaining unit, in
which case the union is divested of the status of a legitimate labor organization.
FACTS:
Petitioner is a PEZA-registered export firm which does business in Mariveles,
Bataan. It manufactures sports shoes. SS Ventures Labor Union (Union) is labor org
registered with the DOLE.
March 21, 2000: Union filed with the DOLE-Region III a PCE in behalf of the rankand-file EEs of SS Ventures. 542 signatures, 82 of which belong to terminated
Ventures EEs, appeared on the docs supporting the petition.
August 2000: Petitioner filed a Petition to cancel the Unions certificate of
registration invoking Article 239(a) of the LC. They alleged that:
a) The Union deliberately and maliciously included the names of more or less
82 EEs no longer connected with SS Ventures as in its list of members who
attended the organizational meeting;
b) Entering twice the signatures of 3 of its members;
c) No organizational meeting and ratification too place; and
d) The Unions application for registration was not supported by at least 20% of
the rank-and-file EEs.
April 6, 2001: Regional Director Ana Dione of DOLE-Region III ruled for
Petitioner.
Union filed MR but filed it to the Bureau of Labor Relations. Although it would later
rule that such MR was filed late, it still gave due course to the MR and treated it as an
appeal.
BLR Director grated the Unions appeal. Reversed Diones decision.
ISSUES/HELD:
Should the Unions certificate of registration be cancelled? NO.
RATIO:
The Court first discussed the basis of the right to self-organization:

1.

2.
3.
4.

The right to form, join or assist a union is specifically protected by Article

XIII of the Constitution and such right, according to Art III, Sec 8 shall not
be abridged.
Once registered with the DOLE, a Union is considered a legit labor org
endowed with the right and privileges granted by law to such organization.
However, the certificate of registration may be cancelled or the Union may be
decertified as a bargaining unit (not legit labor org anymore)
Among the grounds for cancellation is set forth in 239(a) LC, such as fraud and
misrepresentation in documents. In previous cases, the Ct has ruled that
besides showing that the Union includes ineligible EEs in its membership, it
must also be shown that there was misrepresentation, false statement, or fraud
in connection with the application for registration and the supporting documents,
(adoption or ratification of the Constitution and by-laws)

Was there fraud or misrepresentation on the part of the Union? NO

1. The written statements submitted by Petitioner were actually proof of withdrawal
of union membership of the 82 EEs. But such were executed after the Unions
filing of a PCE on Mar. 21, 2000. Also, the written statements were submitted by
SS Ventures 7 months after filing its petition for cancellation of registration.
2. The Court is of the view that withdrawal made before the filing of a PCE is
presumed voluntary; withdrawal after the filing of the petition is involuntary and
does not affect the petition. (if it does not affect the petition, then the Court
assumed that such cannot nullify the registration of the org)
3. The Court emphasized that the registration/recognition of a labor union after it
has submitted the papers is not ministerial on the part of the Bureau of Labor
Relations. It becomes mandatory for the BLR to check if the requirements under
Art 2345 of the LC have been SEDULOUSLY complied with. The issuance of the
certificate of registration necessarily implies that its application for registration
and the supporting docs thereof are prima facie free from any vitiating
irregularities.
What about the participation of the 82 members in the organizational meeting?
1. Such is not fatal to the Unions cause. In the 1 st place, the Court has already
ruled that the alleged falsification of their signatures are without basis. Suffice
it to say, the procedure for acquiring or losing union membership and the
determination of who are qualified or disqualified to be members are matters
internal to the union and flow from its right to self-organization.

Art. 234. Requirements of registration.Any applicant labor

organization x x x 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 pesos (P50.00) registration fee; (b) The names of its
officers, x x x 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 twenty percent (20%) of the employees in
the bargaining unit where it seeks to operate; (d) x x x; and (e) Four (4)
copies of the constitution and by-laws of the applicant union, minutes of its
adoption or ratification, and the list of the members who participated in it.
14

2.
3.
4.

What is important to consider is even in the absence of the 82 members, did

the Union meet the requirements of submitting the signatures of 20% of its
members.
Here, the Bureau of Labor Relations looked into the records of the Union,
since the former is the central registry of union and CBA records (231 LC).
Even if there are 1,928 or 2,202 EEs in the establishment, the Union submitted
enough names. The Union submitted 542 names. Even if 82 was subtracted,
460 would still be within 20% of the total number of rank-and-file EEs.

What about the three signatures that twice appeared in the list of those who
participated?
1. These are mere human errors effected without malice.
2. For fraud and misrepresentation to be grounds for cancellation of union
registration, the nature of the fraud and misrepresentation must be grave and
compelling enough to vitiate the consent of a majority of the union members.
Lastly, the Court observed that no certification election has taken place for almost 7
years. Petitioner should not interfere in such. A certification election is exclusively the
concern of EEs and the ER lacks the legal personality to challenge it.

15

UST FACULTY UNION v. BITONIO OF BUREAU OF LABOR RELATIONS

G.R. No. 131235. | November 16, 1999 | Panganiban, J.
SUMMARY: In a general faculty assembly attended by members and non-members
of the UST Faculty Union, the CBL and election rules were suspended in order to hold
an election for USTFUs new set of officers. SC held that it was not a forum
appropriate for transacting union matters.
DOCTRINE:
The general faculty assembly was not the proper forum to conduct the election of
USTFU officers. Not all who attended the assembly were members of the union;
some, apparently, were even disqualified from becoming union members, since they
represented management.
The election of union officers should be conducted in accordance with the provisions
of the union's constitution and bylaws, as well as the Philippine Constitution and the
Labor Code.
FACTS:
Private respondents are the duly-elected officers of the UST Faculty Union (USTFU),
which has a subsisting 5-yr CBA with UST. The CBA was registered on 20 February
1995, and set to expire on 31 May 1998.
On 21 September 1996, the Secretary General of USTFU, posted a notice addressed
to all USTFU members announcing a general assembly to be held on 05 October
1996 to elect USTFU's next set of officers. Also mentioned Constitution of a
COMELEC to oversee the elections.
On 01 October 1996, some of petitioners filed a separate petition with the MedArbiter, DOLE-NCR, alleging that the COMELEC was not constituted in accordance
with USTFU's constitution and by-laws (CBL) and that no rules had been issued to
govern the conduct of the election.
On 02 October 1996, the Secretary General of UST, upon the request of the various
UST faculty club presidents, issued notices allowing all faculty members to hold a
convocation on 04 October (General Faculty Assembly).
Med-arbiter issued a TRO against private respondents enjoining them from
conducting the election.
04 October 1996 the general faculty assembly was held. It was attended by
members of the USTFU and non-USTFU members who are members in good
standing of the UST Academic Community Collective Bargaining Unit.
In the GA, Atty. Lopez (non-member) moved that the USTFU CBL and election rules
be suspended, and that election be held that day.
Petitioners were elected as USTFU's new set of officers by acclamation and clapping
of hands.

Hence private respondents filed the instant petition seeking injunctive reliefs and the
nullification of the results of the 04 October 1996 election, alleging that the election
was spurious for being violative of USTFU's CBL:
Private respondents filed another urgent ex-parte motion for a TRO, this time alleging
that petitioners had served them a notice to vacate the union office.
Petitioners moved to dismiss the original petition and the subsequent motion on
jurisdictional grounds.
Meanwhile on 03 December 1996, petitioners and UST allegedly entered into another
CBA covering the period from 01 June 1996 to 31 May 2001.
Private respondents again moved for the issuance of a TRO to prevent petitioners
from making further representations that they had entered into a new agreement with
UST. Also reiterated that petitioners were usurping the former's duties and functions
and should be stopped from continuing such acts.
Med-arbiter issued a TRO directing the respondents to cease and desist from
performing any and all acts pertaining to the duties and functions of the officers and
directors of USTFU.
In the meantime, petitioners claimed that the new CBA was purportedly ratified by an
overwhelming majority of UST's academic community on 12 December 1996. They
moved for the dismissal of private respondents petition for prohibition on the ground
that this had become moot and academic.
Petitioners appealed the med-arbiter's Decision to the labor secretary, who
transmitted the records of the case to the Bureau of Labor Relations.
BLR Director Bitonio agreed with med-arbiter.

USTFU officers' purported election held on October 4, 1994 was void for
having been conducted in violation of the union's CBL.

The CBL could not be suspended during the October 4, 1996 GA of all
faculty members, since that assembly had not been convened or authorized
by the USTFU.

The October 4, 1996 election could not be legitimized by the recognition of

the newly "elected" set of officers by UST or by the alleged ratification of the
new CBA by the general membership of the USTFU.
Hence, this Petition.
ISSUES/HELD:
1) WON the Collective Bargaining Unit of all the faculty members in that
General Faculty Assembly had the right to suspend the provisions of the
Constitution and By-Laws of the USTFU regarding the elections of officers of
the union NO

16

Petitioners claim that the numerous anomalies allegedly committed by the private
respondents during the latter's incumbency impelled the October 4, 1996 election of
the new set of USTFU officers. They assert that such exercise was pursuant to their
right to self-organization.

member of the union, cannot vote in the union election, unless otherwise authorized
by the CBL.
The October 4, 1996 election was tainted with irregularities because of the
following reasons:

SC: Petitioners method not justified

Self-organization is a fundamental right guaranteed by the Philippine
Constitution and the Labor Code.
Employees have the right to form, join or assist labor organizations for the purpose of
collective bargaining or for their mutual aid and protection. Corollary to this right is the
prerogative not to join, affiliate with or assist a labor union.
To to become a union member, an employee must, as a rule, not only signify the
intent to become one, but also take some positive steps to realize that intent. The
procedure for union membership is usually embodied in the union's CBL. An
employee who becomes a union member acquires the rights and the concomitant
obligations that go with this new status and becomes bound by the union's rules and
regulations.
If a member of a union dislikes the provisions of the by-laws, he may seek to have
them amended or may withdraw from the union; otherwise, he must abide by them. It
is not the function of courts to decide the wisdom or propriety of legitimate by-laws of
a trade union.
Article 3, ILO Convention No. 87 (Freedom of Association and Protection of Right to
Organize), provides that workers' organizations shall have the right to draw up their
constitution and rules and to elect their representatives in full freedom, free from any
interference from public authorities. The freedom conferred by the provision is
expansive; the responsibility imposed on union members to respect the constitution
and rules they themselves draw up equally so.

It was not called by the USTFU. It was merely a convocation of faculty clubs,
as indicated in the memorandum sent to all faculty members by USTs
secretary general. It was not convened in accordance with the provision on
general membership meetings as found in the USTFU's CBL.
The assembly was merely a gathering that was called and participated in by
management and non-union members. By no legal fiat was such assembly
transformed into a union activity by the participation of some union
members.

There was no COMELEC to oversee the election, as mandated by Sections

1
and
2
of
Article
IX
of
the
USTFU's
CBL.

The purported election was not done by secret balloting, in violation of

Section 6, Article IX of the USTFU's CBL, as well as Article 241 (c) of the
Labor Code.

2) WON the overwhelming ratification of the new CBA has rendered moot and
academic the issue as to the validity of the suspension of the

The CBL is the fundamental law that governs the relationship between and
among the members of the union.
It is where the rights, duties and obligations, powers, functions and authority of the
officers as well as the members are defined. It is the organic law that determines the
validity of acts done by any officer or member of the union.
Union Election vs. Certification Election
A union election is held pursuant to the union's constitution and bylaws, and the right
to vote in it is enjoyed only by union members.
A certification election is the process of determining, through secret ballot, the sole
and exclusive bargaining agent of the employees in the appropriate bargaining unit,
for purposes of collective bargaining. The purpose of a certification election is to
ascertain whether or not a majority of the employees wish to be represented by a
labor organization and, in the affirmative case, by which particular labor organization.
In a certification election, all employees belonging to the appropriate bargaining unit
can vote. But an employee belonging to the appropriate bargaining unit but non17

Standard Chartered Bank Employees Union (NUBE) v. Hon. Ma. Nieves Confesor
(SOLE) and The Standard Chartered Bank

as a "family affair" was tantamount to suggesting that Federation

President Jose Umali, Jr. be excluded from the Unions negotiating
panel.

16 June 2004; Callejo, J.

Digest prepared by Jethro Koon

Contrary to the ruling of the SOLE, damage or injury to the public

interest need not be present in order for unfair labor practice to
prosper.

SOLE failed to rule on the ULP charges arising from the Banks
surface bargaining. The Bank merely went through the motions of
collective bargaining without the intent to reach an agreement, and
made bad faith proposals when it announced that the parties
should begin from a clean slate. It argued that the Bank opened the
political provisions "up for grabs," which had the effect of
diminishing or obliterating the gains that the Union had made.

The Union also accused the Bank of refusing to disclose material

and necessary data, even after a request was made by the Union
to validate its "guestimates."

I. Facts
1.

Prior to the expiration of the three-year period but within the sixty-day
freedom period, the Union/SEBA initiated the negotiations on the next CBA.

2.

Before the commencement of the negotiation, the Union, through its

President Divinagracia, suggested to the Banks HR Manager and head of
the negotiating panel, Cielito Diokno, that the bank lawyers should be
excluded from the negotiating team. The Bank acceded. Meanwhile, Diokno
suggested to Divinagracia that Jose Umali, the President of the National
Union of Bank Employees (NUBE), be excluded as well. However, Umali
was retained as a member of their panel.

3.

4.

Except for the provisions on signing bonus and uniforms, the Union and the
Bank failed to agree on the remaining economic provisions of the CBA. The
Union declared a deadlock and filed a Notice of Strike before the NCMB.

6.

7.

The Bank prayed that the petition be dismissed as the Union was estopped,
considering that it signed the CBA. It was the Union that committed ULP
when Umali hurled invectives at Diokno, and demanded that she be
excluded from the Banks negotiating team.

9.

OSG: Union failed to prove its ULP charges and that the SOLE did not
commit GAD.

The Bank filed a complaint for ULP and Damages before the Arbitration
Branch of the NLRC.

It contended that the Union demanded "sky high economic

demands," indicative of blue-sky bargaining.

Further, the Union violated its no strike-no lockout clause by filing a

notice of strike before the NCMB. Considering that the filing of
notice of strike was an illegal act, the Union officers should be
dismissed.

5.

8.

Nominal and actual damages and was forced to litigate and hire a
lawyer.

SOLE assumed jurisdiction over the dispute (LC 263(g)). The complaint for
ULP was consolidated with the complaint over which the SOLE assumed
jurisdiction. The SOLE ordered the parties to execute a CBA incorporating
her awards. ULP charges for both parties were dismissed, explaining that
both parties failed to substantiate their claims. She stated that ULP charges
would prosper only if shown to have directly prejudiced the public interest.

II. Issues
1.

Whether the Union was able to substantiate its claim of ULP. NO

2.

Whether the SOLE acted with GAD. NO

3.

Whether the Union is estopped from filing the instant action. NO

III. Holding
Resolutions of then SOLE are AFFIRMED. The Petition is hereby DISMISSED.
IV. Ratio
Topic under syllabus: "Interference" under LC 248 (a)
1.

Under ILO No. 87 FREEDOM OF ASSOCIATION AND PROTECTION OF

THE RIGHT TO ORGANIZE to which the Philippines is a signatory, "workers
and employers, without distinction whatsoever, shall have the right to
establish and, subject only to the rules of the organization concerned, to job
organizations of their own choosing without previous authorization."

2.

The Union filed this R65 alleging that the SOLE acted with GAD when it
found that the Bank did not commit ULP when it interfered with the Unions
choice of negotiator.

Workers and employers organizations shall have the right to draw up their
constitutions and rules, to elect their representatives in full freedom to
organize their administration and activities and to formulate their programs.
Article 2 of ILO Convention No. 98 pertaining to the Right to Organize and
Collective Bargaining, provides:

It argued that, Dioknos suggestion that the negotiation be limited

1. Workers and employers organizations shall enjoy adequate protection against any

Both parties filed an MR, both of which were denied. The Union filed a
second MR, also denied. The Bank and the Union signed the CBA.
Immediately thereafter, the wage increase was effected and the signing
bonuses based on the increased wage were distributed to the employees
covered by the CBA.

18

acts or interference by each other or each others agents or members in their

establishment, functioning or administration.
2. In particular, acts which are designed to promote the establishment of workers
organizations under the domination of employers or employers organizations or to
support workers organizations by financial or other means, with the object of placing
such organizations under the control of employers or employers organizations within
the meaning of this Article.
3.

The aforcited ILO Conventions are incorporated in LC243 6, 248, and 249
(ULP of employers and labor organizations)

4.

The said ILO Conventions were ratified on Dec. 29, 1953. However, even as
early as the 1935 Constitution, the State had already expressly bestowed
protection to labor as part of the general provisions. The 1973 Constitution,
on the other hand, declared it as a policy of the state to afford protection to
labor, specifying that the workers rights to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work would
be assured. The 1987 Constitution, aside from making it a policy to "protect
the rights of workers and promote their welfare," devotes an entire section,
emphasizing its mandate to afford protection to labor, and highlights "the
principle of shared responsibility" between workers and employers to
promote industrial peace.

5.

Article 248(a) of the Labor Code, considers it an unfair labor practice when
an employer interferes, restrains or coerces employees in the exercise of
their right to self-organization or the right to form association. The right to
self-organization necessarily includes the right to collective bargaining.

6.

Parenthetically, if an employer interferes in the selection of its negotiators or

coerces the Union to exclude from its panel of negotiators a representative
of the Union, and if it can be inferred that the employer adopted the said act
to yield adverse effects on the free exercise to right to self-organization or on
the right to collective bargaining of the employees, ULP under 248(a) in
connection with 243 of the Labor Code is committed.

7.

8.
6

(Substantial evidence is the degree of evidence required) The circumstances

that occurred do not show that the suggestion is an anti-union conduct,
especially considering that such was undertaken previous to the
commencement of the negotiation and simultaneously with Divinagracias
suggestion that the bank lawyers be excluded from its negotiating panel.

16, 1993 after a deadlock was declared by the Union on June 15, 1993.
9.

The Duty to Bargain Collectively

1.

If at all, the suggestion made by Diokno to Divinagracia should be construed

as part of the normal relations and innocent communications, which are all
part of the friendly relations between the Union and Bank.

2.

The Union alleges that the Bank violated its duty to bargain; hence,
committed ULP under Article 248(g) when it engaged in surface bargaining.
It alleged that the Bank just went through the motions of bargaining without
any intent of reaching an agreement, as evident in the Banks counterproposals. It explained that of the 34 economic provisions it made, the Bank
only made 6 economic counterproposals. Further, as borne by the minutes
of the meetings, the Bank, after indicating the economic provisions it had
rejected, accepted, retained or were open for discussion, refused to make a
list of items it agreed to include in the economic package.

3.

Surface bargaining is defined as "going through the motions of negotiating"

without any legal intent to reach an agreement. It involves the question of
whether an employers conduct demonstrates an unwillingness to bargain in
good faith or is merely hard bargaining.

4.

The Union has not been able to show that the Bank had done acts, both at
and away from the bargaining table, which tend to show that it did not want
to reach an agreement. Admittedly, the parties reached a deadlock.
However, it is herein emphasized that the duty to bargain "does not compel
either party to agree to a proposal or require the making of a concession."

5.

As can be gleaned from the Banks counterproposal, there were many

provisions which it proposed to be retained. Likewise, the Union failed to
substantiate its claim that the Bank refused to furnish the information it
needed.

6. In the case at bar, Umali requested the Bank to validate its guestimates on
the data of the rank and file. However, Umali failed to put his request in
writing (LC242(c)). Moreover, as alleged by the Union, the fact that the Bank
made use of the aforesaid guestimates, amounts to a validation of the data it
had used in its presentation.

The records show that after the initiation of the collective bargaining process,
the negotiations pushed through. The complaint was made only on August

ART. 243. Coverage And Employees Right To Self-Organization. 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.

It is clear that such ULP charge was merely an afterthought. The accusation
occurred after the arguments and differences over the economic provisions
became heated and the parties had become frustrated. It happened after the
parties started to involve personalities.

No Grave Abuse of Discretion On the Part of the Public Respondent

1.

While it is true that a showing of prejudice to public interest is not a requisite

for ULP charges to prosper, it cannot be said that the SOLE acted in
capricious and whimsical exercise of judgment, equivalent to lack of
jurisdiction or excess thereof.

2.

Neither was it shown that the she exercised its power in an arbitrary and
despotic manner by reason of passion or personal hostility.

Estoppel not Applicable In the Case at Bar

19

1.

The conclusion of the CBA was included in the order of the SOLE, while the
signing bonus was included in the CBA itself. Moreover, the Union twice filed
an MR respecting its ULP charges.

The Union Did Not Engage In Blue-Sky Bargaining

1.

The Bank failed to show that the economic demands made by the Union
were exaggerated or unreasonable. The Union based its economic
proposals on data of rank and file employees and the prevailing economic
benefits received by bank employees from other foreign banks doing
business in the Philippines and other branches of the Bank in the Asian
region.

20

LIBERTY COTTON MILLS WORKERS UNION v. LIBERTY COTTON MILLS, INC.

WON the dismissal of the complaining employees was justified. NO.

September 4, 1975 | J. Esguerra

By: Perry

RULING:

SUMMARY:

The Court found that PAFLU was acting for and in behalf of its affiliate, the Liberty
Cotton Mills Workers Union, thereby an agent of the latter. However, the Court opined
that the local union remained the basic unit of the association free to serve the
common interest of all its members including the freedom to disaffiliate when the
circumstances warrant.

The local union affiliated itself with PAFLU, a national union to act as its agent in the
CBA that was entered into with the respondent corporation. Later on, members of the
local union were alleged that the PAFLU was negligent in handling their ULP case
against the corporation and thus sought to disaffiliate themselves from PAFLU.
PAFLU wrote a letter to the corporation stating that the act of disaffiliation of the local
union constituted grounds for the termination of the employees pursuant to the Union
Security Clause provided for in the CBA. The corporation dismissed the petitioneremployees pursuant to the letter sent by PAFLU thus prompting them to file an unfair
labor practice case against the corporation. The SC held that the disaffiliation was
valid and that there was no cause for the termination of the petitioners. It ordered the
company to immediately reinstate the said employees and held PAFLU liable to pay
the backwages of the employees.

FACTS:
The Liberty Cotton Mills Workers Union (the Union) adopted its Constitution and Bylaws which among other things, affiliated itself with PAFLU. A CBA was then entered
into between the Company and the Union, represented by PAFLU. In the CBA, a
Union Security Clause was included which stated in part, that as a condition for
continued employment, those employees which are members of the union or those
who may join the union, must remain members while the CBA is in force; and any
member who resigns from the union shall be dismissed from employment by the
Company upon request in writing by the Union which shall hold the Company free
from any liability.

While the CBA was then in full force and effect, the petitioners wrote to the PAFLU
complaining about the legal counsel assigned by PAFLU to assist them in a ULP case
against the Company. They expressed their dissatisfaction and loss of confidence in
the PAFLU lawyers, and sought to disaffiliate themselves from PAFLU.

PAFLU then wrote a letter to the Company stating that the petitioners have no right to
disaffiliate themselves from PAFLU and requested that the Company terminate them.
The Company followed the request of PAFLU and terminated the petitioners thus
prompting them to file a complaint for unfair labor practice.

PAFLU contends that the dismissal was proper owing to the existence of a Union
Security Clause provided for in the CBA. However, the Court was quick to point out
that this was limited by a provision found in the Constitution and By-laws which
states, that the Liberty Cotton Mills Workers Union-PAFLU shall be affiliated with the
PAFLU, and shall remain an affiliate as long as ten (10) or more of its members
evidence their desire to continue the said local unions affiliation.

The Record shows that only 4 out of its members remained, 32 out of 36 members
signed the resolution for disaffiliation. Therefore, the disaffiliation was valid under the
local unions Constitution and By-laws, which taken together with the CBA, is
controlling.

As to the dismissal of the employees, the Court found that it was hastily and
summarily done. The PAFLU received the resolution to disaffiliate on 25 May 1964.
Then 2 days later, PAFLU wrote to the Company telling the latter to ignore the said
resolution submitted by the Petitioners. Then on 30 May 1964, the Company
terminated the employees.

However, as to the liability of the Company, the Court found it fair to limit its liability to
immediate reinstatement of the workers as the dispute revolved mainly around the
mother federation and its local union. The Court imposed upon the mother federation
(PAFLU) the obligation to pay the workers their backwages.

WHEREFORE, the decision appealed from is reversed and set aside and the
company is hereby ordered to immediately reinstate complainant workers, within thirty
(30) days from notice of this decision and failure to so reinstate the workers without
valid and just cause shall make respondent company liable to the workers for the
payment of their wages from and after the expiration of such thirty-day period. The
mother federation respondent PAFLU is sentenced to pay complainants-workers the
equivalent of three (3) years backwages without deduction or qualification.

ISSUE / HELD:
21

Antecedent facts:

Thirty-two (32) out of the thirty-six (36) members of the local union, Liberty Cotton
Mills Union, disaffiliated themselves from respondent PAFLU in accordance with
Article X, on Union Affiliation, of the local union's Constitution and By-Laws.

Respondent PAFLU received the resolution of disaffiliation and immediately informed

the respondent company that the disaffiliation was null and void and that it is taking
over the administration of the local union in dealing with the management.

Two days later, PAFLU advised the company that the petitioner workers, who were
among those who signed the disaffiliation resolution, were expelled from their union
membership in the mother federation because they were found guilty of acts
unbecoming of officers and members of the union and disloyalty to the mother
federation for instigating union disaffiliation, and at the same time requested for their
dismissal.

A day after, the company terminated the employment of the petitioner workers
pursuant to the Maintenance of Membership provision of the Collective Bargaining
Agreement.
LIBERTY COTTON MILLS WORKERS UNION v. LIBERTY COTTON MILLS, INC.
(1979)
May 31, 1979 | J.Makasiar
By: Ron
ISSUE / HELD:
WON the reliefs prayed for in the MR can be granted? Yes to 1 and 2, but not with
respect to 3.

FACTS:
In this MR of the 1975 case, petitioners pray that:

RULING:
1.
2.
3.

The respondent company be made jointly and severally, or at least jointly,

liable for the payment of backwages of the workers involved;
The workers involved be reinstated immediately, without loss of seniority
and/or fringe benefits and, upon their reinstatement, their wages should be
at the same rates as those of their contemporaries in 1964; and
The backwages of the workers involved be made for more than three (3)
years without any deduction or qualification or at least 50% backwages or
51/2 years, also without deduction or qualification, if not from the date of
dismissal up to the date of actual reinstatement

While respondent company, under the Maintenance of Membership provision of the

Collective Bargaining Agreement, is bound to dismiss any employee expelled by
PAFLU for disloyalty, upon its written request, this undertaking should not be done
hastily and summarily. The company acted in bad faith in dismissing petitioner
workers without giving them the benefit of a hearing. It did not even bother to inquire
from the workers concerned and from PAFLU itself about the cause of the expulsion
of the petitioner workers. Instead, the company immediately dismissed the workers
after its receipt of the request of PAFLU in a span of only one day thereby
disregarding the right of the workers to due process, self-organization and security of
22

tenure. Moreover, even after the workers had sought for reconsideration, respondent
company stood pat on its decision and immediately denied the request for
reconsideration without any valid reason.

The power to dismiss is a normal prerogative of the employer. However, this is not
without limitations. The employer is bound to exercise caution in terminating the
services of his employees especially so when it is made upon the request of a labor
union pursuant to the CBA, as in the instant case. Dismissals must not be arbitrary
and capricious. Due process must be observed in dismissing an employee because it
affects not only his position but also his means of livelihood. Employers should
therefore respect and protect the rights of their employees, which include the right to
labor.

The "scandalous haste" with which the company dismissed the workers, also
supports the conclusion that there was conspiracy or connivance between the
respondent company and respondent PAFLU in the dismissal of the petitioner
workers.

Likewise, the records show that the disaffiliation of the local union members from the
PAFLU was cause by the alleged negligence of PAFLU and its lack of concern over
the problems of the local union and its members. This apparent laxity or negligence
of PAFLU invites suspicion. The records also show that the local union members were
dissatisfied with the way PAFLU negotiated the CBA with the company because it did
not fight for their demands and instead accepted the proposals of the company.

Aid furthermore, PAFLU expelled only six (6) union members, because PAFLU
erroneously contends that their disaffiliation and their refusal to retract amounted to
disloyalty. It was not disloyalty; it was their dissatisfaction with PAFLU that compelled
them to disaffiliate. The constitutional guarantee of security of tenure of the worker
and his freedom of association to join or not to join a union are paramount and
should prevail over a contractual condition for continued union membership and over
whimsical or arbitrary termination of his employment.

Respondent PAFLU also overlooked the fact that only sixteen (16) out of the original
thirty-two (32) signatories retracted their disaffiliation. PAFLU should have also
expelled the remaining sixteen members who did not retract, instead of only the six
members, if indeed their unrestricted disaffiliation were an act of disloyalty instead of
dissatisfaction with the PAFLU's failure to promote and defend their interests.

Respondent company is therefore a party to the illegal dismissal of the petitioner

workers. Under such a situation, the respondent company should be jointly and

severally liable with the respondent PAFLU for the payment of backwages to the
petitioner workers.

The amount of backwages fixed by the Court in the main decision, consisting of three
(3) years backwages without deduction or qualification, following the formula of
computing backwages enunciated in the case of Mercury Drug Co., Inc., et al. vs. CIR
is just and reasonable under the facts and circumstances obtaining in the case.

BPI vs BPI Employees Union Davao Chapter

19 October 2011 | Leonardo-De Castro, J.
By: Sam
SUMMARY: BPI and FEBTC merged, BPI being the surviving corporation. BPI has an
existing Union Shop Clause agreement with the BPI Employees Union-Davao
Chapter-Federation of Unions in BPI Unibank (BPI Union) whereby it is a precondition that new employees must join the union before they can be regularized
otherwise they will not have a continued employment. By reason of the failure of the
FEB employees to join the union, BPI Union recommended to BPI their dismissal. BPI
refused.
DOCTRINE: The twin requirements of notice and hearing constitute the essential
elements of procedural due process. The law requires the employer to furnish the
employee sought to be dismissed with two written notices before termination of
employment can be legally effected: (1) a written notice apprising the employee of the
particular acts or omissions for which his dismissal is sought in order to afford him an
opportunity to be heard and to defend himself with the assistance of counsel, if he
desires, and (2) a subsequent notice informing the employee of the employer's
decision to dismiss him. This procedure is mandatory and its absence taints the
dismissal with illegality.
FACTS:
(This decision is on a Motion for Reconsideration, the antecedent facts of the case
are as follows: )
Bangko Sentral ng Pilipinas approved the Articles of Merger executed by and
between BPI and Far East Bank and Trust Company (FEBTC) and was approved by
the Securities and Exchange Commission. The Articles of Merger and Plan of Merger
did not contain any specific stipulation with respect to the employment contracts of
existing personnel of the non-surviving entity which is FEBTC. Pursuant to the said
Article and Plan of Merger, all the assets and liabilities of FEBTC were transferred to
and absorbed by BPI as the surviving corporation. FEBTC employees, including
those in its different branches across the country, were hired by BPI as its own
employees, with their status and tenure recognized and salaries and benefits
maintained.
Now BPI has an existing Union Shop Clause agreement with the BPI Employees
Union-Davao Chapter-Federation of Unions in BPI Unibank (BPI Union) whereby it is
a pre-condition that new employees must join the union before they can be
regularized otherwise they will not have a continued employment. By reason of the
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failure of the FEB employees to join the union, BPI Union recommended to BPI their
dismissal. BPI refused.
The issue went to voluntary arbitration where BPI won but the Court of Appeals
reversed the Voluntary Arbitrator.
BPI appealed to the Supreme Court; the SC affirmed the CA.
BPI filed a motion for reconsideration.
The provision on the Union Shop Clause in contention is as follows:
ARTICLE II
xxxx

reiterating here that these differences are too insubstantial to warrant the exclusion of
the absorbed employees from the application of the Union Shop Clause.
Although it is accepted that non-compliance with a union security clause is a valid
ground for an employees dismissal, jurisprudence dictates that such a dismissal must
still be done in accordance with due process.
The twin requirements of notice and hearing constitute the essential elements of
procedural due process. The law requires the employer to furnish the employee
sought to be dismissed with two written notices before termination of employment can
be legally effected: (1) a written notice apprising the employee of the particular acts or
omissions for which his dismissal is sought in order to afford him an opportunity to be
heard and to defend himself with the assistance of counsel, if he desires, and (2) a
subsequent notice informing the employee of the employer's decision to dismiss him.
This procedure is mandatory and its absence taints the dismissal with illegality.

Section 2. Union Shop - New employees falling within the bargaining unit as defined
in Article I of this Agreement, who may hereafter be regularly employed by the Bank
shall, within thirty (30) days after they become regular employees, join the Union as a
condition of their continued employment. It is understood that membership in good
standing in the Union is a condition of their continued employment with the Bank.
ISSUES/HELD:
W/N the absorbed FEBTC employees fell within the definition of new employees
under the Union Shop Clause, such that they may be required to join respondent
union and if they fail to do so, the Union may request BPI to terminate their
employment? YES covered by Union Shop Clause.
BPI must still accord said employees the twin requirements of notice and hearing on
the possibility that they may have other justifications for not joining the Union. (Apart
from the fresh thirty (30)-day period from notice of finality of the Decision given to the
affected FEBTC employees to join the Union before the latter can request petitioner
to terminate the formers employment)
RATIO:
By upholding the automatic assumption of the non-surviving corporations existing
employment contracts by the surviving corporation in a merger, the Court strengthens
judicial protection of the right to security of tenure of employees affected by a merger
and avoids confusion regarding the status of their various benefits which were among
the chief objections of our dissenting colleagues. However, nothing in this Resolution
shall impair the right of an employer to terminate the employment of the absorbed
employees for a lawful or authorized cause or the right of such an employee to resign,
retire or otherwise sever his employment, whether before or after the merger, subject
to existing contractual obligations.
From the plain, ordinary meaning of the terms of the Union Shop Clause, it covers
employees who (a) enter the employ of BPI during the term of the CBA; (b) are part of
the bargaining unit (defined in the CBA as comprised of BPIs rank and file
employees); and (c) become regular employees without distinguishing as to the
manner they acquire their regular status. Consequently, the number of such
employees may adversely affect the majority status of the Union and even its
existence itself.
Indeed, there are differences between (a) new employees who are hired as
probationary or temporary but later regularized, and (b) new employees who, by
virtue of a merger, are absorbed from another company as regular and permanent
from the beginning of their employment with the surviving corporation. It bears
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