G.R. No.

74246 January 26, 1989

MARIWASA MANUFACTURING, INC., and ANGEL T. DAZO, petitioners,

vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of Ministry of Labor and Employment judgment, and JOAQUIN
A. DEQUILA, respondents.

FACTS:

Joaquin A. Dequila (or Dequilla) was hired on probation by Mariwasa Manufacturing, Inc. as a general utility worker on January 10,
1979. After 6 months, he was informed that his work was unsatisfactory and had failed to meet the required standards. To give him
another chance, and with Dequilas written consent, Mariwasa extended Dequilas probationary period for another three months:
from July 10 to October 9, 1979. Dequilas performance, however, did not improve and Mariwasa terminated his employment at the
end of the extended period.

Dequila filed a complaint for illegal dismissal against Mariwasa and its VP for Administration, Angel T. Dazo, and violation of
Presidential Decrees Nos. 928 and 1389.

DIRECTOR OF MINISTRY OF LABOR: Complaint is dismissed. Termination is justified. Thus, Dequila appeals to the Minister of Labor.
MINISTER OF LABOR: Deputy Minister Vicente Leogardo, Jr. held that Dequila was already a regular employee at the time of his
dismissal, thus, he was illegally dismissed. (Initial order: Reinstatement with full backwages. Later amended to direct payment of
Dequilas backwages from the date of his dismissal to December 20, 1982 only.)

ISSUE: WON employer and employee may, by agreement, extend the probationary period of employment beyond the six months
prescribed in Art. 282 of the Labor Code?

RULING: YES, agreements stipulating longer probationary periods may constitute lawful exceptions to the statutory prescription
limiting such periods to six months.

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

Petition granted. Order of Deputy Minister Leogardo reversed.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 85519 February 15, 1990

UNIVERSITY OF STO. TOMAS, FR. MAXIMO MARINA O.P. AND GILBERTO L. GAMEZ, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE LABOR ARBITER BIENVENIDO S.
HERNANDEZ AND BASILIO E. BORJA, respondents.

Abad, Leao & Associates for petitioners.

Antonio B. Fidelino for private respondent.

GANCAYCO, J.:

The herein private respondent Dr. Basilio E. Borja was first appointed as "affiliate faculty" in the Faculty of
Medicine and Surgery at the University of Sto. Tomas (UST for short) on September 29, 1976. In the second
semester of the school year 1976-77 he was appointed instructor with a load of twelve (12) hours a week. He
was reappointed instructor for the school year 1977-78 with a load of nine (9) hours a week in the first semester
and two (2) hours a week in the second. On June 10, 1978 he was appointed as Instructor III for the school
year 1978-79. His load for the first semester was eight (8) hours a week, and for the second semester, seven
(7) hours a week.

On March 19, 1979 Dean Gilberto Gamez observed that Dr. Borja should not be reappointed based on the
evaluation sheet that shows his sub-standard and inefficient performance. 1 Nevertheless in view of the
critical shortage of staff members in the Department of Neurology and Psychiatry Dr. Gamez
recommended the reappointment of Dr. Borja, after informing the latter of the negative feedbacks
regarding his teaching and his promise to improve his performance. Thus on July 27, 1979 he was
extended a reappointment as Instructor III in the school year 1979-80. He was given a load of six (6)
hours a week. In all these appointments he was a part time instructor.

At the end of the academic year, it appearing that Dr. Borja had not improved his performance in spite of his
assurances of improvement, his reappointment was not recommended.

In July, 1982 he filed a complaint in the National Labor Relations Commission (NLRC for short) for illegal
dismissal against the UST. After the submission of the pleadings and due proceedings the labor arbiter
rendered a decision on July 19, 1984, the dispositive part of which reads as follows:
 WHEREFORE this Office finds in favor of the complainant. The respondents (sic) university
are hereby ordered to effect the immediate reinstatement of complainant to his former position
with full backwages, rights and benefits appertaining thereto. Respondent university is
likewise ordered to pay the complainant the sum of FIVE HUNDRED THOUSAND PESOS
(P500,000.00) as and by way of moral damages and another 1 0% of the gross amount due
him, and as and by way of attorney's fees.

Respondents are hereby ordered to effect this decision immediately. 2

The UST appealed therefrom to the NLRC which in due course rendered a decision on September 30, 1988,
modifying the appealed decision as follows:

WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED with a

modification limiting the backwages to three (3) years without qualification or deduction,
computed at P660.00 per month, ordering respondents to pay complainant P100,000.00 as
and for actual or compensatory damages, ordering respondents to pay complainant
P300,000.00 as and for moral damages, and further ordering them to pay complainant
P100,000.00 as and for exemplary damages.

Finally, respondents are ordered to pay to complainant the sum of ten (10%) percent of the
total sum due as and for attorney's fees. 3

Hence the instant petition for certiorari and prohibition with a prayer for the issuance of a writ of preliminary
injunction and restraining order that was filed by the UST and its officers wherein it is alleged that the public
respondent NLRC committed the following errors:

THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED SERIOUS

REVERSIBLE ERRORS OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF
DISCRETION AND/OR LACK OR EXCESS OF JURISDICTION IN FINDING THAT BASILIO
E. BORJA ACQUIRED TENURE, THE SAID FINDING BEING CLEARLY CONTRARY TO
THE EVIDENCE AT HAND AND DEVOID OF BASIS IN LAW.

II

THE HONORABLE NLRC COMMITTED A SERIOUS AND REVERSIBLE ERROR AND

GRAVELY ABUSED ITS DISCRETION IN HOLDING THAT THE SERVICES OF BASILIO E.
BORJA HAD BEEN CONSTRUCTIVELY TERMINATED, HIS APPOINTMENT HAVING
MERELY LAPSED IN ACCORDANCE WITH ITS TERMS AS ACCEPTED BY THE
COMPLAINANT-APPELLEE BORJA.

III

THE HONORABLE NLRC COMMITTED A SERIOUS AND GRAVE ERROR IN AFFIRMING,

ALBEIT REDUCING THE AWARD OF THE HONORABLE LABOR ARBITER A QUO OF
CLEARLY EXCESSIVE, UNJUST, UNCONSCIONABLE AND SHOCKING MORAL
DAMAGES OF P300,000.00 AND IN AWARDING MOTU PROPIO EXEMPLARY DAMAGES
IN THE AMOUNT OF P100,000.00 IN GRAVE ABUSE OF ITS DISCRETION AMOUNTING
TO EXCESS OF JURISDICTION. 4

The petition is impressed with merit.

In the questioned decision of the public respondent NLRC it found that private respondent had earned to his
credit eight (8) semesters or four (4) academic years of professional duties with the UST and that he has met
the requirements to become a regular employee under the three (3) years requirement in the Manual of
Regulations for Private Schools.

The appealed decision is correct insofar as it declares that it is the Manual of Regulations for Private Schools,
not the Labor Code, that determines the acquisition of regular or permanent status of faculty members in an
educational institution, but the Court disagrees with the observation that it is only the completion of three (3)
years of service that is required to acquire such status.

According to Policy Instructions No. 11 issued by the Department of Labor and Employment, "the probationary
employment of professors, instructors and teachers shall be subject to standards established by the
Department of Education and Culture." Said standards are embodied in paragraph 75 of the Manual of
Regulations for Private Schools, to wit:

75. Full time teachers who have rendered three consecutive years of satisfactory service shall
be considered permanent." (Emphasis supplied)

The legal requisites, therefore, for acquisition by a teacher of permanent employment, or security of tenure, are
as follows:

1) the teacher is a full time teacher;

2) the teacher must have rendered three (3) consecutive years of service; and

3) such service must have been satisfactory.

Now, the Manual of Regulations also states that "a full-time teacher" is "one whose total working day is devoted
to the school, has no other regular remunerative employment and is paid on a regular monthly basis regardless
of the number of teaching hours" (Par. 77); and that in college, "the nominal teaching load of a full-time
instructor shall be eighteen hours a week" (par. 78).

It follows that a part-time member of the faculty cannot acquire permanence in employment under the Manual
of Regulations in relation to the Labor Code.

Hence, the crucial question is whether or not the private respondent was a full-time or part-time member of the
faculty during the three (3) years that he served in the petitioner-university's College of Medicine. Stated
otherwise, the question is (1) whether or not the said respondent's "total working day ..... (was) devoted to the
school" and he had "no other regular remunerative employment" and was "paid on a regular monthly basis
regardless of the number of teaching hours;" and/or (2) whether or not his normal teaching load was eighteen
(18) hours a week.

It cannot be said that respondent's total working day was devoted to the school alone. It is clear from the record
that he was practising his profession as a doctor and maintaining a clinic in the hospital for this purpose during
the time that he was given a teaching load. In other words, he had another regular remunerative work aside
from teaching. His total working day was not, therefore, devoted to the school. Indeed, his salaries from
teaching were computed by the respondent Commission itself at only an average of P660.00 per month; he,
therefore, had to have other sources of income, and this of course was his self-employment as a practising
psychiatrist. That the compensation for teaching had to be averaged also shows that he was not paid on a
regular monthly basis. Moreover, there is absolutely no evidence that he performed other functions for the
school when not teaching. All things considered, it would appear that teaching was only a secondary
occupation or "sideline," his professional practice as a psychiatrist being his main vocation.

The record also discloses that he never had a normal teaching load of eighteen (18) hours a week during the
time that he was connected with the university. The only evidence on this equally vital issue was presented by
the petitioner through the affidavit of Dr. Gilberts Gamez who was the dean of the medical school during the
time material to the proceedings at bar. His sworn declaration is to the effect that as "affiliate faculty" member
of the Department of Neurology and Psychiatry from September 29,1976, private respondent had no teaching
functions: that in fact, when he was appointed in September, 1976, classes for the first semester were already
nearing their end; that as "affiliate faculty" he was merely an observer acquainting himself with the functions of
an instructor while awaiting issuance of a formal appointment as such; that in the school year 1977-78 he had a
teaching load of nine (9) hours a week in the first semester and two (2) hours a week in the second semester;
that in the school year 1978-1979 he had a load of eight (8) hours a week in the first semester and seven (7)
hours a week in the second semester; that in the school year 1979-1980 he had a load of six (6) hours a
week in each semester. This evidence does not appear to have been refuted at all by the private respondent,
and has inexplicably been ignored by public respondent. No discussion of this particular point is found in the
decisions of the Labor Arbiter or the NLRC.

The private respondent, therefore, could not be regarded as a full- time teacher in any aspect. He could not be
regarded as such because his total working day was not devoted to the school and he had other regular
remunerative employment. Moreover, his average teaching load was only 6.33 hours a week.

In view of the explicit provisions of the Manual of Regulations above-quoted, and the fact that private
respondent was not a full- time teacher, he could not have and did not become a permanent employee even
after the completion of three (3) years of service.

Having found that private respondent did not become a permanent employee of petitioner UST, it
correspondingly follows that there was no duty on the part of petitioner UST to reappoint private respondent as
Instructor, the temporary appointment having lapsed. Such appointment is a matter addressed to the discretion
of said petitioner.

The findings, therefore, of the public respondent NLRC that private respondent was constructively terminated is
without lawful basis. By the same token, the order for reinstatement of private respondent with backwages plus
an award of actual or compensatory, moral and exemplary damages must be struck down.

WHEREFORE, the petition is hereby GRANTED. The questioned orders of public respondent NLRC dated
September 13, 1988 and public respondent labor arbiter Bienvenido S. Hernandez dated July 19,1988 are
hereby SET ASIDE and another judgment is hereby rendered DISMISSING the complaint of private
respondent, without pronouncement as to costs.

SO ORDERED.

Hacienda Fatima v. National Federation Digest

Hacienda Fatima v. National Federation

Facts:
The petitioner disfavored the fact that the private respondent employees have formed a union. When the
union became the collective bargaining representative in the certification election, the petitioner refused
to sit down to negotiate a CBA. Moreover, the respondents were not given work for a month amounting
to unjustified dismissal. As a result, the complainants staged a strike to protest but was settled through a
memorandum of agreement which contained a list of those considered as regular employees for the
payroll.

The NLRC held that there was illegal dismissal and this was affirmed by the Court of Appeals.

Issue: W/N the employees are regular workers

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

FACTS

In a small town in Negros Oriental, employees formed a labor union. Their employer (Hacienda) owned a
sugarcane plantation and did not favor employees associated to unions and refused to negotiate with the labor
union to discuss the collective bargaining agreement between the hacienda and the laborers. The hacienda did
not give work to 36 employees for more than a month, which led to the employees staging a strike. Issues were
temporarily settled when the hacienda and union entered into a Memorandum of Agreement (MOA).
Unfortunately, the MOA was not followed and the hacienda even employed armed guards to ensure that the
employees could not enter the premises.
With the assistance of Department of Labor and Employment, another MOA was reached. The employees
were supposed to be reinstated upon availability of work but the hacienda reneged on its commitment once
again. Hence, a case for illegal dismissal was filed with the National Labor Relations Commission (NLRC). In
the haciendas defense, it argued that the employees were merely seasonal employees and not regular
employees who could file a case of illegal dismissal.
The NLRC ruled that the hacienda illegally dismissed its employees who were deemed regular employees
since they performed the same task for several years. The Court of Appeals (CA) affirmed the NLRCs decision

[W]hile the work of (employees) was seasonal in nature, they were considered to be merely on leave during the
off-season and were therefore still employed by (hacienda). Moreover, the workers enjoyed security of tenure.
Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal.
The Supreme Court agreed with the CA, holding that the refusal of the hacienda to make use of the services of
their employees, even when they were ready, able, and willing to perform their usual duties whenever these
were available, and hiring of other workers to perform the tasks originally assigned to (them) amounted to
illegal dismissal of the latter. Article 280 of the Labor Code provides for the distinction between regular and
seasonal employees
[a]n employment shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or services to be performed
is seasonal in nature and the employment is for the duration of the season.
The Court clarified that in order to be classified as a seasonal worker, and excluded from the classification of
regular employees, one must perform work or services that are seasonal in nature and be employed only for
the duration of one season.
On the other hand, regular employees include seasonal employees who continuously and repeatedly perform a
particular nature of work as it is sufficient evidence of the necessity if not indispensability of that activity to the
business. The employment is considered regular only with respect to the activity and while such activity exists.
Citing De Leon v. NLRC, this Court has already settled that seasonal workers who are called to work from time
to time and are temporarily laid off during off-season are not separated from service in said period, but merely
considered on leave until re-employed(Hacienda Fatima v. National Federation of Sugarcane Workers-
Food and General Trade, G.R. No. 149440, 28 January 2003, J. Panganiban).

Brent School, Inc. v. Zamora

G.R. No. 48494, 05 February 1990 (En Banc)

Complainant Doroteo R. Alegre filed an illegal dismissal case against defendant Brent School, Inc., after the latter
terminated his employment. Previously, defendant engaged complainant as the schools athletic director for a specific
term consisting of five years. Months prior to the end of the period, defendant furnished DOLE and complainant a
notice of termination due to completion of contract, expiration of the definite period of employment. Complainant
signed a receipt sating therein that he has received full payment for his service under the contract. Notwithstanding,
complainant protested his termination claiming that he was a regular employee since his services were necessary
and desirable in the usual trade or business of his employer adding to the fact that he was employed for five years.
Meanwhile, the DOLE Regional Director refused to give clearance to defendant and instead directed complainants
reinstatement as a permanent employee stating that the Labor Code did not recognize the ground cited by
defendant. Relevant to this case is that the parties entered into the employment contract prior to the effectivity of the
Labor Code.

HELD: Defendant was not liable for terminating the employment as complainant was a fixed-period or term
employee. Hence, his employment ended after the period. He was not illegally dismissed. While the parties executed
the contract prior to the Labor Code, the laws in force then allowed for fixed-period employment as expressed in the
Civil Code which recognize contracts with fixed or definite periods.

The definition of a regular employee does not exclude a fixed-period or term employee. From the premise that the
duties of an employee entail activities which are usually necessary or desirable in the usual business or trade of the
employer the conclusion does not necessarily follow that the employer and employee should be forbidden to
stipulate any period of time for the performance of those activities. There is nothing essentially contradictory
between a definite period of an employment contract and the nature of the employees duties set down in
that contract as being usually necessary or desirable in the usual business or trade of the employer. The
concept of the employees duties as being usually necessary or desirable in the usual business or trade of the
employer is not synonymous with or identical to employment with a fixed term. Logically, the decisive determinant
in term employment should not be the activities that the employee is called upon to perform, but the day
certainagreed upon by the parties for the commencement and termination of their employment relationship,
a day certain being understood to be that which must necessarily come, although it may not be known
when. x x x (Emphasis supplied.)

Fixed-period or term employment is a recognized practice in certain industries. Some familiar examples may be cited
of employment contracts which may be neither for seasonal work nor for specific projects, but to which a fixed term is
an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the
engagement, the concept of regular employment will all that it implies does not appear ever to have been applied,
Article 280 of the Labor Code not withstanding; also appointments to the positions of dean, assistant dean, college
secretary, principal, and other administrative offices in educational institutions, which are by practice or tradition
rotated among the faculty members, and where fixed terms are a necessity, without which no reasonable rotation
would be possible. Similarly, despite the provisions of Article 280, Policy, Instructions No. 8 of the Minister of Labor
27 implicitly recognize that certain company officials may be elected for what would amount to fixed periods, at the
expiration of which they would have to stand down, in providing that these officials 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.

To avoid situations wherein fixed-period employment is used to circumvent the employees right to security of tenure,
the Supreme Court laid down these limitations. Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already
observed, to prevent circumvention of the employees right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular
employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled
out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances
where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any
force, duress or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt
with each other on more or less equal terms with no moral dominance whatever being exercised by the
former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than
those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to
absurd and unintended consequences.

Best Legal Practices:

Clearly stipulate the terms and conditions of fixed-period or term employment As fixed-period or term employment
is often struck down for violating the rule on security of tenure, the fixed-period or term employment contract should
clearly stipulate therein the terms and conditions thereof. Afterwards, these should be diligently observed.
Unlike other employment arrangements which are specifically recognized by the Labor Code, fixed-period or term
employment is one recognized through jurisprudence starting with the Brent case. While there is a caselaw affirming
the validity of fixed-period or term employment, there are numerous cases wherein such an arrangement has been
struck down for violating the employees security of tenure.

As a result, fixed-period or term employment is the riskiest of the various employment arrangements. As a matter of
practice, it should be avoided whenever practicable.