LVN Pictures, Inc. vs.
Philippine Musicians Guild "And even in the recording sessions and during the actual shooting of a scene, the
Facts:
In its petition in the lower court, the Philippine Musicians Guild (FFW), hereafter referred to
as the Guild, averred that it is a duly registered legitimate labor organization; that LVN
Pictures, Inc., Sampaguita Pictures, Inc., and Premiere Productions, Inc. are corporations,
duly organized under the Philippine laws, engaged in the making of motion pictures and in
the processing and distribution thereof; that said companies employ musicians for the
purpose of making music recordings for title music, background music, musical numbers,
finale music and other incidental music, without which a motion picture is incomplete; that
ninety-five (95%) percent of all the musicians playing for the musical recordings of said
companies are members of the Guild; and that the same has no knowledge of the existence
of any other legitimate labor organization representing musicians in said companies.
Premised upon these allegations, the Guild prayed that it be certified as the sole and
exclusive bargaining agency for all musicians working in the aforementioned companies.
In their respective answers, the latter denied that they have any musicians as employees,
and alleged that the musical numbers in the films of the companies are furnished by
independent contractors. The lower court, however, rejected this pretense and sustained the
theory of the Guild, with the result already adverted to. A reconsideration of the order
complained of having been denied by the Court en banc, LVN Pictures, Inc. and Sampaguita
Pictures, Inc. filed these petitions for review by certiorari.
ISSUE: WON the musicians in question are employees of the film companies.
Yes.
"As a normal and usual course of procedure employed by the companies when a picture is to
be made, the producer invariably chooses, from the musical directors, one who will furnish
the musical background for a film. A price is agreed upon verbally between the producer and
musical director for the cost of furnishing such musical background. Thus, the musical
director may compose his own music specially written for or adapted to the picture. He
engages his own men and pays the corresponding compensation of the musicians under him.
"When the music is ready for recording, the musicians are summoned through 'call slips' in
the name of the film company, which show the name of the musician, his musical instrument,
and the date, time and place where he will be picked up by the truck of the film company.
The film company provides the studio for the use of the musicians for that particular
recording. The musicians are also provided transportation to and from the studio by the
company. Similarly, the company furnishes them meals at dinner time.
"During the recording sessions, the motion picture director, who is an employee of the
company, supervises the recording of the musicians and tells what to do in every detail. He
solely directs the performance of the musicians before the camera. As director, he supervises
the performance of all the actors including the musicians who appear in the scenes so that in
the actual performance to be shown on the screen, the musical director's intervention has
stopped.
technicians, soundmen and other employees of the company assist in the operation. Hence,
the work of the musicians is an integral part of the entire motion picture since they not only
furnish the music but are also called upon to appear in the finished picture.
'Notwithstanding that the employees are called independent contractors', the Board will hold
them to be employees under the Act where the extent of the employer's control over them
indicates that the relationship is in reality one of employment.
"The right of control of the film company over the musicians is shown (1) by calling the
musicians through 'call slips' in the name of the company; (2) by arranging schedules in its
studio for recording sessions; (3) by furnishing transportation and meals to musicians; and (4)
by supervising and directing in detail, through the motion picture director, the performance
of the musicians before the camera, in order to suit the music they are playing to the picture
which is being flashed on the screen.
"In view of the fact that the three (3) film companies did not question the union's majority,
the Philippine Musicians Guild is hereby declared as the sole collective bargaining
representative for all the musicians employed by the film companies."
The musical directors above referred to have no such control over the musicians involved in
the present case. Said musical directors control neither the music to be played, nor the
musicians playing it. The film companies summon the musicians to work, through the musical
directors. The film companies, through the musical directors, fix the date, the time and the
place of work. The film companies, not the musical directors, provide the transportation to
and from the studio. The film companies furnish meal at dinner time.
What is morein the language of the order appealed from"during the recording sessions,
the motion picture director who is an employee of the company"not the musical director
"supervises the recording of the musicians and tells them, what to do in every detail". The
motion picture directornot the musical director"solely directs the performance of the
musicians before the camera". The motion picture director "supervises the performance of
all the actors, including the musicians who appear in the scenes, so that in the actual
performance to be shown on the screen, the musical director's intervention has stopped." Or,
as testified to in the lower court, "the movie director tells the musical director what to do;
tells the music to be cut or tells additional music in this part or he eliminates the entire music
he does not (want) or he may want more drums or more violin or piano, as the. case may be".
The movie director "directly controls the activities of the musicians". He "says he wants more
drums. and the drummer plays more" or "if he wants more violin or 'he does not like that".
It is well settled that "an employer-employee relationship exists x x x where the person for
whom the services are performed reserves a right to control not only the end to be achieved
but also the means to be used in reaching such end x x x." (Alabama Highway Express Co. v.
Local 612, 108 S. 2d. 350.) The decisive nature of said control over the "means to be used", is
illustrated in the case of Gilchrist Timber Co., et al., Local No. 2530 (73 NLRB No. 210, pp.
1197, 1199-1201), in which, by reason of said control, the employer-employee relationship
was held to exist between the management and the workers, notwithstanding the
intervention of an alleged independent contractor, who had, and exercise, the power to hire
and fire said workers. The aforementioned control over the means to be used" in reaching
the desired end is possessed and exercised by the film companies over the musicians in the
cases before us.
WHEREFORE, the order appealed from is, hereby affirmed, with costs against petitioners
herein. It is so ordered.
DY KEH BENG, petitioner, vs. INTERNATIONAL LABOR and MARINE UNION OF THE
PHILIPPINES, ET AL., respondents. G.R. No. L-32245 May 25, 1979
FACTS: Petitioner, Dy Keh Beng, proprietor of basket factory, was charged with ULP for
discriminatory acts defined under Sec 4(a), subparagraph (1 & 4), R.A. No. 875 by dismissing
on September 28-29, 1960, respectively, Carlos N. Solano and Ricardo Tudla for their union
activities.
After PI was conducted, a case was filed in the CIR for in behalf of the ILMUP and two of its
members, Solano and Tudla. Dy Keh Beng contended that he did not know Tudla and that
Solano was not his employee because the latter came to the establishment only when there
was work which he did on pakiaw basis. According to Dy Keh Beng, Solano was not his
employee for the following reasons:
(1) Solano never stayed long enough at Dys establishment;
(2) Solano had to leave as soon as he was through with the order given him by Dy;
(3) When there were no orders needing his services there was nothing for him to
do;
(4) When orders came to the shop that his regular workers could not fill it was
then that Dy went to his address in Caloocan and fetched him for these
orders; and
(5) Solano's work with Dy's establishment was not continuous.
According to petitioner, these facts show that respondents Solano and Tudla are only piece
workers, not employees under Republic Act 875, where an employee is referred to as
shall include any employee and shag not be limited to the employee of a particular
employer unless the act explicitly states otherwise and shall include any individual whose
work has ceased as a consequence of, or in connection with any current labor dispute or
because of any ulp and who has not obtained any other substantially equivalent and regular
employment.
while an employer
includes any person acting in the interest of an employer, directly or indirectly but
shall not include any labor organization (otherwise than when acting as an
employer) or anyone acting in the capacity of officer or agent of such labor
organization.
Petitioner also contends that the private respondents "did not meet the control test in the
fight of the ... definition of the terms employer and employee, because there was no
evidence to show that petitioner had the right to direct the manner and method of
respondent's work. He points to the case of Madrigal Shipping Co., Inc. v. Nieves Baens del
Rosario, et al., L-13130, October 31, 1959, where the Court ruled that:
The test ... of the existence of employee and employer relationship is whether
there is an understanding between the parties that one is to render personal
services to or for the benefit of the other and recognition by them of the right of
one to order and control the other in the performance of the work and to direct
the manner and method of its performance.
The CIR found that there existed an employee-employer relationship between Dy Keh Beng
and complainants Tudla and Solano, although Solano was admitted to have worked on piece
basis.
Hence, this petition for certiorari.
ISSUE: Whether or not an employee employer relation existed between petitioner Dy Keh
Beng and the respondents Solano and Tudla.
HELD:
The SC also noted the decision of Justice Paras in the case of Sunrise Coconut Products Co.
Vs. CIR (83 Phil 518, 523) that judicial notice of the fact that the so-called "pakyaw" system
mentioned in this case as generally practiced in our country, is, in fact, a labor contract -
between employers and employees, between capitalists and laborers.
With regard to the control test the SC said that It should be borne in mind that the control
test calls merely for the existence of the right to control the manner of doing the work, not
the actual exercise of the right. Considering the finding by the Hearing Examiner that the
establishment of Dy Keh Beng is "engaged in the manufacture of baskets known as kaing, it is
natural to expect that those working under Dy would have to observe, among others, Dy's
requirements of size and quality of the kaing. Some control would necessarily be exercised
by Dy as the making of the kaing would be subject to Dy's specifications. Parenthetically,
since the work on the baskets is done at Dy's establishments, it can be inferred that the
proprietor Dy could easily exercise control on the men he employed.
The petition was dismissed. The Court affirmed the decision of the CIR.
CORPORAL SR. VS. NLRC
341 SCRA 658
[G.R. No. 129315. October 2, 2000]
Facts: 5 male barbers and 2 female manicurists (Petitioners) worked at New Look
Barbershop, a sole proprietorship owned and managed by Vicente Lao which in 1982 was
taken over by Lao Enteng Co., Inc., (respondent corporation) a corporation formed by
Vicente Laos children. The petitioners were allowed to work there until April 1985 when
they were told that the barbershop building was sold and their services are no longer
needed.
Petitioners filed with the Arbitration branch of NLRC a complaint for illegal dismissal, illegal
deduction, separation pay, non-payment of 13th month pay and salary differential. Also they
seek for refund of P1.00 collected from each of them daily as salary of the barbershops
sweeper.
Respondent Corporation alleged that petitioners were Joint Venture (JV) partners receiving
50% commission (Petitioners admitted in receiving 50-60%), therefore no employer-
employee relationship existed. And assuming arguendo that employer-employee relationship
existed, petitioners were not entitled to separation pay since cessation of the business was
due to serious business losses. Also, they allege that the barbershop had always been a JV
partnership with the operation and management left entirely to petitioners and that the
former had no control over the latter who could freely come and go as they wish. Lastly, they
allege that some of the petitioners were allowed to register in SSS only as an act of
accommodation.
The Labor Arbiter dismissed the complaint and found that there was a JV and no employer-
employee relationship. Also that the business was closed due to serious business losses or
financial reverses and the law does not compel the establishment to pay separation pay to
whoever were its employees. On appeal, NLRC affirmed the decision but held that petitioners
were considered independent contractors and not employees. The MR was also denied by
NLRC, hence, this petition on certiorari.
Issue: WON there was an employer-employee relationship.
Held:YES.Petitioners are employees of Respondent Corporation and shall be accorded the
benefits given in Art. 283 of the Labor Code granting separation pay equivalent to 1 month
pay for every year of service and also to 13th month pay. The other claims of petitioners are
found to be without basis.
No documentary evidence of the existence of JV other than the self-serving
affidavit of the company president.
The power of control in the 4-fold test (employer-employee relationship) refers to
the EXISTENCE and NOT THE EXERCISE of such power the following elements must
be present for an employer-employee relationship to exist: (1) the selection and
engagement of the workers; (2) power of dismissal; (3) the payment of wages by
whatever means; and (4) the power to control the worker's conduct, with the latter
assuming primacy in the overall consideration.
The records show that Vicente Lao engaged the petitioners to work for the
barbershop and retained them after it was taken over by the respondent
corporation who continuously paid their wages. Also, the fact that the petitioners
worked in the barbershop owned and operated by respondents, and that they
were required to report daily, observing definite hours of work, they were not free
to accept employment elsewhere and devoted their full time working in the
barbershop proves the existence of the power of control.
The petitioners are not independent contractors. An independent contractor is
one who undertakes "job contracting", i.e., a person who (a) carries on an
independent business and undertakes the contract work on his own account under
his own responsibility according to his own manner and method, free from the
control and direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof, and (b) has substantial
capital or investment in the form of tools, equipment, machineries, work premises,
and other materials which are necessary in the conduct of the business.Petitioners
have neither of the above since the tools used such as scissors, razors, nail cutters,
polishes, etc. cannot be considered substantial capital or investment.
While it is no longer true that membership to SSS is predicated on the existence of
an employee-employer relationship since the policy is now to encourage even the
self-employed dressmakers, manicurists and jeepney drivers to become SSS
members, we could not agree with private respondents that petitioners were
registered with the Social Security System as their employees only as an
accommodation. As we have earlier mentioned private respondent showed no
proof to their claim that petitioners were the ones who solely paid all SSS
contributions. It is unlikely that respondents would report certain persons as their
workers, pay their SSS premium as well as their wages if it were not true that they
were indeed their employee.
ALEJANDRO MARAGUINOT, JR. AND PAUILINO ENERO v. NLRC, VIC DEL ROSARIO, VIVA
FILMS
GR No. 120969
Facts:
Maraguinot and Enero were separately hired by Vic Del Rosario under Viva Films as part of
the filming crew. Sometime in May 1992, sought the assistance of their supervisor to
facilitate their request that their salary be adjusted in accordance with the minimum wage
law.
On June 1992, Mrs. Cesario, their supervisor, told them that Mr. Vic Del Rosario would agree
to their request only if they sign a blank employment contract. Petitioners refused to sign
such document. After which, the Mr. Enero was forced to go on leave on the same month
and refused to take him back when he reported for work. Mr. Maraguinot on the other hand
was dropped from the payroll but was returned days after. He was again asked to sign a
blank employment contract but when he refused, he was terminated.
Consequently, the petitioners sued for illegal dismissal before the Labor Arbiter. The private
respondents claim the following: (a) that VIVA FILMS is the trade name of VIVA
PRODUCTIONS, INC. and that it was primarily engaged in the distribution & exhibition of
movies- but not then making of movies; (b) That they hire contractors called producers
who act as independent contractors as that of Vic Del Rosario; and (c) As such, there is no
employee-employer relation between petitioners and private respondents.
The Labor Arbiter held that the complainants are employees of the private respondents. That
the producers are not independent contractor but should be considered as labor-only
contractors and as such act as mere agent of the real employer. Thus, the said employees are
illegally dismissed.
The private respondents appealed to the NLRC which reversed the decision of the Labor
Arbiter declaring that the complainants were project employees due to the ff. reasons: (a)
Complainants were hired for specific movie projects and their employment was co-terminus
with each movie project; (b)The work is dependent on the availability of projects. As a result,
the total working hours logged extremely varied; (c) The extremely irregular working days
and hours of complainants work explains the lump sum payment for their service; and (d)
The respondents alleged that the complainants are not prohibited from working with other
movie companies whenever they are not working for the independent movie producers
engaged by the respondents.
A motion for reconsideration was filed by the complainants but was denied by NLRC. In effect,
they filed an instant petition claiming that NLRC committed a grave abuse of discretion in: (a)
Finding that petitioners were project employees; (b) Ruling that petitioners were not illegally
dismissed; and (c) Reversing the decision of the Labor Arbiter.
In the instant case, the petitioners allege that the NLRC acted in total disregard of evidence
material or decisive of the controversy.
Issues:
(a) W/N there exist an employee- employer relationship between the petitioners and the
private respondents.
(b) W/N the private respondents are engaged in the business of making movies.
(c) W/N the producer is a job contractor.
Held:
There exist an employee- employer relationship between the petitioners and the private
respondents because of the ff. reasons that nowhere in the appointment slip does it appear
that it was the producer who hired the crew members. Moreover, it was VIVAs corporate
name appearing on heading of the slip. It can likewise be said that it was VIVA who paid for
the petitioners salaries.
Respondents also admit that the petitioners were part of a work pool wherein they attained
the status of regular employees because of the ff. requisites: (a) There is a continuous
rehiring of project employees even after cessation of a project; (b) The tasks performed by
the alleged project employees are vital, necessary and indispensable to the usual business
or trade of the employer; and (c) However, the length of time which the employees are
continually re-hired is not controlling but merely serves as a badge of regular employment.
Since the producer and the crew members are employees of VIVA and that these employees
works deal with the making of movies. It can be said that VIVA is engaged of making movies
and not on the mere distribution of such.
The producer is not a job contractor because of the ff. reasons: (Sec. Rule VII, Book III of the
Omnibus Rules Implementing the Labor Code.)
a. A contractor carries on an independent business and undertakes the contract work on his
own account under his own responsibility according to his own manner and method, free
from the control and direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof. The said producer has a fix time
frame and budget to make the movies.
b. The contractor should have substantial capital and materials necessary to conduct his
business. The said producer, Del Rosario, does not have his own tools, equipment, machinery,
work premises and other materials to make motion pictures. Such materials were provided
by VIVA.
It can be said that the producers are labor-only contractors. Under Article 106 of the Labor
Code (reworded) where the contractor does not have the requisites as that of the job
contractors.
WPP Marketing Communications Inc., et al., vs. Galera,
G.R. No. 169207, March 25, 2010
Facts:
Petitioner is Jocelyn Galera, an American citizen who was recruited from the US by private
respondent John Steedman, Chairman-WPP Worldwide and Chief Executive Officer of
Mindshare, Co., a corporation based in Hong Kong, China, to work in the Philippines for
private respondent WPP Marketing Communications, Inc. (WPP). On December 14, 2000,
GALERA alleged she was verbally notified by private
STEEDMAN that her services had been terminated from private respondent WPP.
Atermination letter followed the next day. On 3 January 2001, Galera filed a complaint for
illegal dismissal, holiday pay, service incentive leave pay, 13th month pay, incentive plan,
actual and moral damages, and attorney's fees against WPP and/or John Steedman
(Steedman), Mark Webster (Webster) and Nominada Lansang (Lansang). The Labor Arbiter's
Ruling for illegal dismissal and damages in favor of GALERA. The First Division of the NLRC
reversed the ruling of Arbiter Madriaga. Yet it was reversed again by CA.
Issue:
Whether Galera is an Employee or a Corporate Officer.
Whether WPP illegally dismissed Galera.
Ruling:
Employee. Galera, on the belief that she is an employee, filed her complaint before the Labor
Arbiter. On the other hand, WPP, Steedman, Webster and Lansang contend that Galera is a
corporate officer; hence, any controversy regarding her dismissal is under the jurisdiction of
the Regional Trial Court. We agree with Galera. Corporate officers are given such character
either by the Corporation Code or by the corporation's by-laws. Galera's appointment as a
corporate officer (Vice-President with the operational title of Managing Director of
Mindshare) during a special meeting of WPP's Board of Directors is an appointment to a non-
existent corporate office. At the time of Galera's appointment, WPPalready had one Vice-
President in the person of Webster and all five directorship positions provided in the by-laws
are already occupied. Another
indicator that she was a regular employee and not a corporate officer is Section 14 of the
contract, which clearly states that she is a permanent employee not a Vice-President or a
member of the Board of Directors. Another convincing indication that she was only a regular
employee and not a corporate officer is the disciplinary procedure, which states that her
right of redress is through Mindshare's Chief Executive Officer for the Asia-Pacific. This
implies that she was not under the disciplinary control of private respondent WPP's Board of
Directors (BOD), which should have been the case if in fact she was a corporate officer
because only the Board of Directors could appoint and terminate such a corporate officer.
WPP's dismissal of Galera lacked both substantive and procedural due process. Apart from
Steedman's letter dated 15 December 2000 to Galera, WPP failed to prove any just or
authorized cause for Galera's dismissal. Steedman's letter to Galera reads: The operations
are currently in a shamble. There is lack of leadership and confidence in your abilities from
within, our agency partners and some clients. Most of the staff I spoke with felt they got
more guidance and direction from Minda than yourself. In your role as Managing Director,
that is just not acceptable. I believe your priorities are mismanaged. The recent situation
where you felt an internal strategy meeting was more important than a new businesspitch is
a good example. You failed to lead and advise on the two new business pitches. In both cases,
those involved sort (sic) Minda's input.
As I discussed with you back in July, my directive was for you to lead and review all business
pitches. It is obvious [that] confusion existed internally right up until the day of the pitch. The
quality output is still not to an acceptable standard, which was also part of my directive that
you needed to focus on back in July. I do not believe you understand the basic skills and
industry knowledge required to run a media special operation.
WPP, Steedman, Webster, and Lansang, however, failed to substantiate the allegations in
Steedman's letter. Galera, on the other hand, presented documentary evidence 22 in the
form of congratulatory letters, including one from Steedman, which contents are
diametrically opposed to the 15 December 2000 letter. The law further requires that the
employer must furnish the worker sought to be dismissed with two written notices before
termination of employment can be legally effected: (1) notice which apprises the employee
of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent
notice which informs the employee of the employer's decision to dismiss him. Failure to
comply with the requirements taints the dismissal with illegality. 23 WPP's acts clearly show
that Galera's dismissal did not comply with the two-notice rule.
Phil Bank v NLRC
FACTS:
Petitioner and CESI entered into a letter agreement wherein CESI will provide Temporary
Services topetitioner. Attached to the letter was a list of messengers, assigned to work with
the petitioner, includingrespondent Orpiada. Orpiada rendered services within the premises
of the bank. On October 1976, petitionerrequested CESI to withdraw Orpiadas assignment
because Orpiadas services were no longer needed. Thus,Orpiada filed a complaint against
petitioner for illegal dismissal and failure top ay the 13
th
month pay.
ISSUE:
W/N an ER-EE relationship existed between the bank and respondent
HELD:
Yes.In the case at bar, Orpiada is not previously selected by the bank but was assigned to
work by CESI. Theselection of Orpiada by CESI, was however subject to the acceptance of the
bank.With respect to the payment of Orpiadas wages, the bank remitted to CESI the daily
rate or Orpiada andCESI pays the latter his wages. He was also listed in the payroll of CESI
with SSS deduction.In respect of the power of dismissal, the bank requested CESI to
withdraw Orpiadas assignment, whichresulted to the latters termination.With regards to
power of control, Orpiada performed his functions within the banks premises and not
inCESA/Payment of wages and power of dismissal exist between CESI and Orpiada. However,
selection and controlexist between Orpiada and the bank. Thus, it is necessary to determine
the relationship between the bank andCESI, whether the latter is a job (independent)
contactor or a labor-only contracting.In the present case, the undertaking of CESI in favor of
the bank was not the performance of a specific job,but to produce its client the bank with
a certain number of persons to work as messengers. Thus, Orpiadautilized the premises and
office equipment of the bank and not of CESI.Orpiada worked in the bank for a period of 16
months. Under the Labor Code, any employee who hasrendered at least 1 year, whether
continuous or not, shall be considered as a regular employee. Therefore, CESI was only
engaged in a labor-only contracting with petitioner and Orpiada. As a result,petitioner is
liable to Opiada as if Opiada had been directly employer by the bank.Wherefore, petition of
certiorari is denied.
Apex- alang digest
BRENT SCHOOL, INC.DIMACHE vs. RONALDO ZAMORA and DOROTEO R. ALEGRE
G.R. No. L-48494 February 5, 1990 en banc
FACTS:
Private respondent Doroteo R. Alegre was engaged as athletic director by petitioner Brent
School, Inc. at a yearly compensation of P20,000.00. The contract fixed a specific term for its
existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to
July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973,
and September 14, 1974 reiterated the same terms and conditions, including the expiry date,
as those contained in the original contract of July 18, 1971.
On April 20,1976, Alegre was given a copy of the report filed by Brent School with the
Department of Labor advising of the termination of his services effective on July 16, 1976.
The stated ground for the termination was "completion of contract, expiration of the definite
period of employment." Although protesting the announced termination stating that his
services were necessary and desirable in the usual business of his employer, and his
employment lasted for 5 years - therefore he had acquired the status of regular employee -
Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the
phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of
contract."
The Regional Director considered Brent School's 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.
ISSUE:
Whether or not the provisions of the Labor Code, as amended, have anathematized "fixed
period employment" or employment for a term.
RULING:
Respondent Alegre's contract of employment with Brent School having lawfully terminated
with and by reason of the expiration of the agreed term of period thereof, he is declared not
entitled to reinstatement.
The employment contract between Brent School and Alegre was executed on July 18, 1971,
at a time when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated.
At that time, the validity of term employment was impliedly recognized by the Termination
Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto, it was the Code of Commerce
(Article 302) which governed employment without a fixed period, and also implicitly
acknowledged the propriety of employment with a fixed period. The Civil Code of the
Philippines, which was approved on June 18, 1949 and became effective on August 30,1950,
itself deals with obligations with a period. No prohibition against term-or fixed-period
employment is contained in any of its articles or is otherwise deducible therefrom.
It is plain then that when the employment contract was signed between Brent School and
Alegre, it was perfectly legitimate for them to include in it a stipulation fixing the duration
thereof Stipulations for a term were explicitly recognized as valid by this Court.
The status of legitimacy continued to be enjoyed by fixed-period employment contracts
under the Labor Code (PD 442), which went into effect on November 1, 1974. The Code
contained explicit references to fixed period employment, or employment with a fixed or
definite period. Nevertheless, obscuration of the principle of licitness of term employment
began to take place at about this time.
Article 320 originally stated that the "termination of employment of probationary employees
and those employed WITH A FIXED PERIOD shall be subject to such regulations as the
Secretary of Labor may prescribe." Article 321 prescribed the just causes for which an
employer could terminate "an employment without a definite period." And Article 319
undertook to define "employment without a fixed period" in the following manner: where
the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of the
season.
Subsequently, the foregoing articles regarding employment with "a definite period" and
"regular" employment were amended by Presidential Decree No. 850, effective December 16,
1975.
Article 320, dealing with "Probationary and fixed period employment," was altered by
eliminating the reference to persons "employed with a fixed period," and was renumbered
(becoming Article 271).
As it is evident 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 employer's 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.
Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period
of employment as still good rulea rule reaffirmed in the recent case of Escudero vs. Office
of the President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a
teacher being served by her school a notice of termination following the expiration of the last
of three successive fixed-term employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her
employment was probationary, contractual in nature, and one with a definitive period. At the
expiration of the period stipulated in the contract, her appointment was deemed terminated
and the letter informing her of the non-renewal of her contract is not a condition sine qua
non before Reyes may be deemed to have ceased in the employ of petitioner UST. The notice
is a mere reminder that Reyes' contract of employment was due to expire and that the
contract would no longer be renewed. It is not a letter of termination.
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the
expiration of his last contract with Brent School on July 16, 1976 without the necessity of any
notice. The advance written advice given the Department of Labor with copy to said
petitioner was a mere reminder of the impending expiration of his contract, not a letter of
termination, nor an application for clearance to terminate which needed the approval of the
Department of Labor to make the termination of his services effective. In any case, such
clearance should properly have been given, not denied.
Cielo- wala din.
[G.R. No. 122653 December 12, 1997]
PURE FOODS CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
RODOLFO CORDOVA, VIOLETA CRUSIS, ET AL., * respondents.
FACTS: The private respondents were hired by petitioner Pure Foods to work for a fixed
period of five months at its tuna cannery plant in General Santos City. After the expiration of
their respective contracts of employment, their services were terminated. They forthwith
executed a "Release and Quitclaim" stating that they had no claim whatsoever against the
petitioner. Private respondents then filed before the NLRC-Sub-RAB a complaint for illegal
dismissal against the petitioner.
The Labor Arbiter dismissed the complaint on the ground that the private respondents were
mere contractual workers, and not regular employees; hence, they could not avail of the law
on security of tenure. The termination of their services by reason of the expiration of their
contracts of employment was, therefore, justified.
The private respondents appealed the decision to the NLRC which affirmed the LAs decision.
However, on private respondents' motion for reconsideration, the NLRC rendered another
decision holding that the private respondent and their co-complainants were regular
employees. It declared that the contract of employment for five months was a "clandestine
scheme employed by the petitioner to stifle private respondents' right to security of tenure"
and should therefore be struck down and disregarded for being contrary to law, public policy,
and morals. Hence, their dismissal on account of the expiration of their respective contracts
was illegal. Its motion for reconsideration having been denied, the petitioner came to this
Court contending that respondent NLRC committed grave abuse of discretion amounting to
lack of jurisdiction in reversing the decision of the Labor Arbiter.
ISSUE: Whether or not private respondents are regular employees of petitioner company or
mere contractual employees.
HELD: The SC held that the petition devoid of merit. Under Art. 280, there are two kinds of
regular employees are (1) those who are engaged to perform activities which are necessary
or desirable in the usual business or trade of the employer; and (2) those casual employees
who have rendered at least one year of service, whether continuous or broken, with respect
to the activity in which they are employed.
In the instant case, the private respondents' activities consisted in the receiving, skinning,
loining, packing, and casing-up of tuna fish which were then exported by the petitioner.
Indisputably, they were performing activities which were necessary and desirable in
petitioner's business or trade. Contrary to petitioner's submission, the private respondents
could not be regarded as having been hired for a specific project or undertaking. The term
"specific project or undertaking" under Article 280 of the Labor Code contemplates an
activity which is not commonly or habitually performed or such type of work which is not
done on a daily basis but only for a specific duration of time or until completion; the services
employed are then necessary and desirable in the employer's usual business only for the
period of time it takes to complete the project. The fact that the petitioner repeatedly and
continuously hired workers to do the same kind of work as that performed by those whose
contracts had expired negates petitioner's contention that those workers were hired for a
specific project or undertaking only.
Although, this Court has upheld the legality of fixed-term employment, none of the criteria
had been met in the present case. It could not be supposed that private respondents and all
other so-called "casual" workers of the petitioner KNOWINGLY and VOLUNTARILY agreed to
the 5-month employment contract. Cannery workers are never on equal terms with their
employers. Almost always, they agree to any terms of an employment contract just to get
employed considering that it is difficult to find work given their ordinary qualifications. Their
freedom to contract is empty and hollow because theirs is the freedom to starve if they
refuse to work as casual or contractual workers. Indeed, to the unemployed, security of
tenure has no value. It could not then be said that petitioner and private respondents "dealt
with each other on more or less equal terms with no moral dominance whatever being
exercised by the former over the latter.
The petitioner does not deny or rebut private respondents' averments (1) that the main bulk
of its workforce consisted of its so-called "casual" employees; (2) that as of July 1991,
"casual" workers numbered 1,835; and regular employee, 263; (3) that the company hired
"casual" every month for the duration of five months, after which their services were
terminated and they were replaced by other "casual" employees on the same five-month
duration; and (4) that these "casual" employees were actually doing work that were
necessary and desirable in petitioner's usual business. This scheme of the petitioner was
apparently designed to prevent the private respondents and the other "casual" employees
from attaining the status of a regular employee. It was a clear circumvention of the
employees' right to security of tenure and to other benefits like minimum wage, cost-of-
living allowance, sick leave, holiday pay, and 13th month pay. Indeed, the petitioner
succeeded in evading the application of labor laws. Also, it saved itself from the trouble or
burden of establishing a just cause for terminating employees by the simple expedient of
refusing to renew the employment contracts.
The five-month period specified in private respondents' employment contracts having been
imposed precisely to circumvent the constitutional guarantee on security of tenure should,
therefore, be struck down or disregarded as contrary to public policy or morals. To uphold
the contractual arrangement between the petitioner and the private respondents would, in
effect, permit the former to avoid hiring permanent or regular employees by simply hiring
them on a temporary or casual basis, thereby violating the employees' security of tenure in
their jobs.
JOAQUIN T. SERVIDAD, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, INNODATA PHILIPPINES, INC./ INNODATA
CORPORATION, TODD SOLOMON, respondents.
PURISIMA, J.:
FACTS:
Petitioner Joaquin T. Servidad was employed on May 9, 1994 by respondent INNODATA as a
"Data Control Clerk", under a contract of employment Section 2 of which, reads:
Sec. 2. This Contract shall be effective for a period of 1 years commencing on May 10,
1994, until May 10, 1995 unless sooner terminated pursuant to the provisions hereof.
From May 10, 1994 to November 10, 1994, or for a period of six (6) months, the EMPLOYEE
shall be contractual during which the EMPLOYER can terminate the EMPLOYEE's services by
serving written notice to that effect. Such termination shall be immediate, or at whatever
date within the six-month period, as the EMPLOYER may determine. Should the EMPLOYEE
continue his employment beyond November 10, 1994, he shall become a regular employee
upon demonstration of sufficient skill in the terms of his ability to meet the standards set by
the EMPLOYER. If the EMPLOYEE fails to demonstrate the ability to master his task during the
first six months he can be placed on probation for another six (6) months after which he will
be evaluated for promotion as a regular employee.
On November 9, 1995, or after working for six (6) months, he was made to sign a three-
month probationary employment and later, an extended three-month probationary
employment good until May 9, 1995.
On July 7, 1994, the petitioner was given an overall rating of 100% and 98% in the work
evaluations conducted by the company. In another evaluation, petitioner received a rating of
98.5% given by the private respondent.
On May 9, 1995, petitioner was dismissed from the service on the ground of alleged
termination of contract of employment.
ISSUE:
Whether or not Servidad is a probationary employee?
RULING:
The private respondent sought to alternatively avail of probationary employment and
employment for a fixed term so as to preclude the regularization of the status of petitioner.
The utter disregard of public policy by the contract in question negates the ruling of NLRC
that said contract is the law between the parties. The private agreement of the parties
cannot prevail over Article 1700 of the Civil Code, which provides:
Art. 1700. The relation between capital and labor are not merely contractual. They
are so impressed with public interest that labor contracts must yield to the common good.
Therefore, such contracts are subject to special laws on labor unions, collective bargaining,
strikes and lockouts, closed shops, wages, working conditions, hours of labor and similar
subjects.
Similarly telling is the case of Pakistan Airlines Corporation vs. Pole, et al. 20 There, it was
said:
. . . provisions of applicable law, especially provisions relating to matters affected with public
policy, are deemed written into the contract. Put a little differently, the governing principle is
that the parties may not contract away applicable provisions of law especially peremptory
provisions dealing with matters heavily impressed with public interest. The law relating to
labor and employment is clearly such an area and parties are not at liberty to insulate
themselves and their relationships from the impact of labor laws and regulations by simply
contracting with each other. . . .
On the averment that NLRC gravely abused its discretion in finding that petitioner failed to
meet the standards of the company, we find for petitioner. The decision at NLRC on the
matter simply stated that the petitioner fell short of the expectations of the company
without specifying factual basis therefor. The public respondent overlooked the undisputed
satisfactory ratings of the performance of petitioner in the two job evaluations conducted by
the respondent company. Even granting, therefore, that the contract litigated upon is valid;
still, the petitioner, who was permitted to work beyond six months could not be dismissed on
the ground of failure to meet the standards of Innodata. By the provisions of the very
contract itself, petitioner has become a regular employee of private respondent. Therein, it is
stipulated that: ". . . Should the EMPLOYEE continue employment beyond November 10,
1994, he shall become a regular employee upon demonstration of sufficient skill in the terms
of his ability to meet the standards set by the EMPLOYER. . . ."
Aliviado v. Procter and Gamble
GR. No. 160505 March 9, 2010
FACTS:Respondent Procter & Gamble (P & G) entered into contracts with Promm-Gem and
SAPS forthe promotion and merchandising of its products .Petitioners all
individually signedemployment contracts with either Promm-Gem or SAPS for
periods of more or less fivemonths at a time. They were assigned at different outlets,
supermarkets and stores wherethey handled all the products of P&G. They received their
wages from Promm-Gem or SAPS.SAPS and Promm-Gem also imposed disciplinary
measures on erring merchandisers forreasons such as habitual absenteeism, dishonesty
or changing day-off without prior notice. InDecember 1991, petitioners filed a complaint
against P&G for regularization, service incentiveleave pay and other benefits with damages.
The Labor Arbiter dismissed the complaint forlack of merit and ruled that there was
no employer-employee relationship betweenpetitioners and P&G. On appeal, the
decision was affirmed by the NLRC and subsequently bythe CA. Hence, thispetition.
ISSUE: Whether or not Promm-Gem and SAPS are legitimate job contractors
RULING: Labor laws expressly prohibit labor-only contracting. To prevent its
circumvention, the LaborCode establishes an employer-employee relationship between
the employer and theemployees of the labor-only contractor. In this case, the petitioners
have been charged withthe merchandising and promotion of the products of P&G, an activity
that has already beenconsidered by the Court as doubtlessly directly related to the
manufacturing business, whichis the principal business of P&G. Considering that
SAPS has no substantial capital orinvestment and the workers it recruited are
performing activities which are directly related tothe principal business of P&G, the Court
finds that the former is engaged in "labor-onlycontracting". Therefore, the employees of
SAPS are the employees of P&G, SAPS being themerely the agent of P&G.

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.
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners, vs.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.
G.R. No. 162994, September 17, 2004, SECOND DIVISION
TINGA, J.:
Facts:
Petitioner Pedro A. Tecson was hired by respondent Glaxo Wellcome Philippines, Inc. as
medical representative after Tecson had undergone training and orientation.
Thereafter, Tecson signed a contract of employment which stipulates, among others, that he
agrees to study and abide by existing company rules; to disclose to management any existing
or future relationship by consanguinity or affinity with co-employees or employees of
competing drug companies and should management find that such relationship poses a
possible conflict of interest, to resign from the company.
The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to
inform management of any existing or future relationship by consanguinity or affinity with
co-employees or employees of competing drug companies. If management perceives a
conflict of interest or a potential conflict between such relationship and the employees
employment with the company, the management and the employee will explore the
possibility of a "transfer to another department in a non-counterchecking position" or
preparation for employment outside the company after six months.
Tecson was initially assigned to market Glaxos products in the Camarines Sur-Camarines
Norte sales area.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra
Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy was Astras Branch Coordinator in
Albay. She supervised the district managers and medical representatives of her company and
prepared marketing strategies for Astra in that area.
Even before they got married, Tecson received several reminders from his District Manager
regarding the conflict of interest which his relationship with Bettsy might engender. Still, love
prevailed, and Tecson married Bettsy in September 1998.
In January 1999, Tecsons superiors informed him that his marriage to Bettsy gave rise to a
conflict of interest. Tecsons superiors reminded him that he and Bettsy should decide which
one of them would resign from their jobs, although they told him that they wanted to retain
him as much as possible because he was performing his job well.
Tecson requested for time to comply with the company policy against entering into a
relationship with an employee of a competitor company. He explained that Astra, Bettsys
employer, was planning to merge with Zeneca, another drug company; and Bettsy was
planning to avail of the redundancy package to be offered by Astra. With Bettsys separation
from her company, the potential conflict of interest would be eliminated. At the same time,
they would be able to avail of the attractive redundancy package from Astra.
In August 1999, Tecson again requested for more time resolve the problem. In September
1999, Tecson applied for a transfer in Glaxos milk division, thinking that since Astra did not
have a milk division, the potential conflict of interest would be eliminated. His application
was denied in view of Glaxos "least-movement-possible" policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur
sales area. Tecson asked Glaxo to reconsider its decision, but his request was denied.
Tecson sought Glaxos reconsideration regarding his transfer and brought the matter to
Glaxos Grievance Committee. Glaxo, however, remained firm in its decision and gave Tescon
until February 7, 2000 to comply with the transfer order. Tecson defied the transfer order
and continued acting as medical representative in the Camarines Sur-Camarines Norte sales
area.
During the pendency of the grievance proceedings, Tecson was paid his salary, but was not
issued samples of products which were competing with similar products manufactured by
Astra. He was also not included in product conferences regarding such products.
Because the parties failed to resolve the issue at the grievance machinery level, they
submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation pay of
one-half () month pay for every year of service, or a total of P50,000.00 but he declined the
offer. On November 15, 2000, the National Conciliation and Mediation Board (NCMB)
rendered its Decision declaring as valid Glaxos policy on relationships between its employees
and persons employed with competitor companies, and affirming Glaxos right to transfer
Tecson to another sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the NCMB
Decision.
The Court of Appeals denied the Petition for Review on the ground that the NCMB did not err
in rendering its Decision. The appellate court held that Glaxos policy prohibiting its
employees from having personal relationships with employees of competitor companies is a
valid exercise of its management prerogatives.
Tecson filed a Motion for Reconsideration of the appellate courts Decision, but the motion
was denied by the appellate court.
Hence this petition.
Issue:
Whether the Glaxos policy against its employees marrying employees from competitor
companies is valid;
Held:
YES. No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxos
policy prohibiting an employee from having a relationship with an employee of a competitor
company is a valid exercise of management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and
other confidential programs and information from competitors, especially so that it and Astra
are rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxos employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying down
the assailed company policy, Glaxo only aims to protect its interests against the possibility
that a competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less
than the Constitution recognizes the right of enterprises to adopt and enforce such a policy
to protect its right to reasonable returns on investments and to expansion and growth.20
Indeed, while our laws endeavor to give life to the constitutional policy on social justice and
the protection of labor, it does not mean that every labor dispute will be decided in favor of
the workers. The law also recognizes that management has rights which are also entitled to
respect and enforcement in the interest of fair play.
STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN CHUA, Petitioners, -
versus- RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E. ESTRELLA, Respondents.
G.R. No. 164774 , April 12, 2006, SECOND DIVISION
PUNO, J.:
Facts:
Petitioner Star Paper Corporation is a corporation engaged in trading principally of paper
products. Josephine Ongsitco is its Manager of the Personnel and Administration Department
while Sebastian Chua is its Managing Director.
Respondents Ronaldo D. Simbol , Wilfreda N. Comia and Lorna E. Estrella were all regular
employees of the company.
Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also an
employee of the company, whom he married on June 27, 1998. Prior to the marriage,
Ongsitco advised the couple that should they decide to get married, one of them should
resign pursuant to a company policy.
Simbol resigned on June 20, 1998 pursuant to the company policy.
Comia was hired by the company on February 5, 1997. She met Howard Comia, a co-
employee, whom she married on June 1, 2000. Ongsitco likewise reminded them that
pursuant to company policy, one must resign should they decide to get married. Comia
resigned on June 30, 2000.
Estrella was hired on July 29, 1994. She met Luisito Zuiga , also a co-worker. Petitioners
stated that Zuiga, a married man, got Estrella pregnant. The company allegedly could have
terminated her services due to immorality but she opted to resign on December 21, 1999.
The respondents each signed a Release and Confirmation Agreement. They stated therein
that they have no money and property accountabilities in the company and that they release
the latter of any claim or demand of whatever nature.
Respondents offer a different version of their dismissal. Simbol and Comia allege that they
did not resign voluntarily; they were compelled to resign in view of an illegal company policy.
As to respondent Estrella, she alleges that she had a relationship with co-worker Zuiga who
misrepresented himself as a married but separated man. After he got her pregnant, she
discovered that he was not separated. Thus, she severed her relationship with him to avoid
dismissal due to the company policy. On November 30, 1999, she met an accident and was
advised by the doctor at the Orthopedic Hospital to recuperate for twenty-one (21) days. She
returned to work on December 21, 1999 but she found out that her name was on-hold at the
gate. She was denied entry. She was directed to proceed to the personnel office where one
of the staff handed her a memorandum. The memorandum stated that she was being
dismissed for immoral conduct. She refused to sign the memorandum because she was on
leave for twenty-one (21) days and has not been given a chance to explain. The management
asked her to write an explanation. However, after submission of the explanation, she was
nonetheless dismissed by the company. Due to her urgent need for money, she later
submitted a letter of resignation in exchange for her thirteenth month pay.
Respondents later filed a complaint for unfair labor practice, constructive dismissal,
separation pay and attorneys fees. They averred that the aforementioned company policy is
illegal and contravenes Article 136 of the Labor Code.
The Labor Arbiter dismissed the complaint for lack of merit. On appeal to the NLRC, the
Commission affirmed the decision of the Labor Arbiter.
Respondents filed a Motion for Reconsideration but was denied by the NLRC. They appealed
to the Court of Appeals which reversed the NLRC decision declaring illegal, the petitioners
dismissal from employment and ordering private respondents to reinstate petitioners to
their former positions without loss of seniority rights with full backwages from the time of
their dismissal until actual reinstatement;
Issue:
Whether the policy of the employer banning spouses from working in the same company is a
valid exercise of management prerogative.
Held:
NO. The Labor Code is the most comprehensive piece of legislation protecting labor. The case
at bar involves Article 136 of the Labor Code which provides:
Art. 136. It shall be unlawful for an employer to require as a condition of employment or
continuation of employment that a woman employee shall not get married, or to stipulate
expressly or tacitly that upon getting married a woman employee shall be deemed resigned
or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.
It is true that the policy of petitioners prohibiting close relatives from working in the same
company takes the nature of an anti-nepotism employment policy. Companies adopt these
policies to prevent the hiring of unqualified persons based on their status as a relative, rather
than upon their ability.
These policies focus upon the potential employment problems arising from the perception of
favoritism exhibited towards relatives.
With more women entering the workforce, employers are also enacting employment policies
specifically prohibiting spouses from working for the same company. We note that two types
of employment policies involve spouses: policies banning only spouses from working in the
same company (no-spouse employment policies), and those banning all immediate family
members, including spouses, from working in the same company (anti-nepotism
employment policies).
A requirement that a woman employee must remain unmarried could be justified as a bona
fide occupational qualification, or BFOQ, where the particular requirements of the job
would justify the same, but not on the ground of a general principle, such as the desirability
of spreading work in the workplace. A requirement of that nature would be valid provided it
reflects an inherent quality reasonably necessary for satisfactory job performance.
We do not find a reasonable business necessity in the case at bar. It is significant to note that
in the case at bar, respondents were hired after they were found fit for the job, but were
asked to resign when they married a co-employee. Petitioners failed to show how the
marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of
the Repacking Section, could be detrimental to its business operations. Neither did
petitioners explain how this detriment will happen in the case of Wilfreda Comia, then a
Production Helper in the Selecting Department, who married Howard Comia, then a helper in
the cutter-machine. The policy is premised on the mere fear that employees married to each
other will be less efficient. If we uphold the questioned rule without valid justification, the
employer can create policies based on an unproven presumption of a perceived danger at
the expense of an employees right to security of tenure.
Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction
cannot benefit the petitioners. The protection given to labor in our jurisdiction is vast and
extensive that we cannot prudently draw inferences from the legislatures silence that
married persons are not protected under our Constitution and declare valid a policy based on
a prejudice or stereotype. Thus, for failure of petitioners to present undisputed proof of a
reasonable business necessity, we rule that the questioned policy is an invalid exercise of
management prerogative.