PHILIPS SEMICONDUCTORS INC.

vs FADRIQUELA Case Digest

[G.R. No. 141717. April 14, 2004]
PHILIPS SEMICONDUCTORS (PHILS.), INC., petitioner, vs. ELOISA FADRIQUELA,
respondent.

FACTS: The petitioner Philips Semiconductors is a domestic corporation engaged in the production
and assembly of semiconductors such as power devices, RF modules, CATV modules, RF and
metal transistors and glass diods. It caters to domestic and foreign corporations that manufacture
computers, telecommunications equipment and cars. Aside from contractual employees, the
petitioner employed 1,029 regular workers. The employees were subjected to periodic performance
appraisal based on output, quality, attendance and work attitude.[2] One was required to obtain a
performance rating of at least 3.0 for the period covered by the performance appraisal to maintain
good standing as an employee.

Respondent, during her 5 consecutive contracts, got the following ratings: 3.15, 3.8, 3.4, and 2.8.
The reason for her failed mark on the last contract was her absences. She was then asked to
explain such absences but she failed to do the same. Subsequently, respondent’s supervisor
recommended that her employment be terminated due to habitual absenteeism. Thus, her contract
of employment was no longer renewed. Respondent then filed a complaint for illegal dismissal. On
the other hand, petitioner contends that respondent was not dismissed; her contract merely expired.

The Labor Arbiter and the NLRC based their decision on the CBA between the petitioner and the
labor union which provides that a contractual employee would only be considered a regular
employee if he has completed 17 months of service and a performance rating of at least 3.0. The
respondent filed a motion for reconsideration but the NLRC denied the same. On appeal, the CA
reversed the decision of the NLRC. Hence, this petition.

ISSUE: Whether or not respondent was still a contractual employee of the company.

HELD: The SC agreed with the appellate court. Article 280 of the Labor Code of the Philippines was
emplaced in our statute books to prevent the circumvention by unscrupulous employers of the
employee’s right to be secure in his tenure by indiscriminately and completely ruling out all written
and oral agreements inconsistent with the concept of regular employment defined therein. The
language of the law manifests the intent to protect the tenurial interest of the worker who may be
denied the rights and benefits due a regular employee because of lopsided agreements with the
economically powerful employer who can maneuver to keep an employee on a casual or temporary
status for as long as it is convenient to it. In tandem with Article 281 of the Labor Code, Article 280
was designed to put an end to the pernicious practice of making permanent casuals of our lowly
employees by the simple expedient of extending to them temporary or probationary appointments,
ad infinitum.

The two kinds of regular employees under the law are (1) those 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 activities in which they are employed. The primary standard to determine a regular
employment is the reasonable connection between the particular activity performed by the employee
in relation to the business or trade of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. If the employee has been
performing the job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance as sufficient
evidence of the necessity, if not indispensability of that activity to the business of the employer.
Hence, the employment is also considered regular, but only with respect to such activity and while
such activity exists. The law does not provide the qualification that the employee must first be issued
a regular appointment or must be declared as such before he can acquire a regular employee
status.

In this case, the original contract of employment had been extended or renewed four times, to the
same position, with the same chores. Such a continuing need for the services of the respondent is
sufficient evidence of the necessity and indispensability of her services to the petitioner’s business.
By operation of law, then, the respondent had attained the regular status of her employment with the
petitioner, and is thus entitled to security of tenure as provided for in Article 279 of the Labor Code.

The limited period specified in petitioner’s employment contract 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 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 employee’s security of tenure in their jobs.

Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of
security of tenure and free them from the bondage of uncertainty of tenure woven by some
employers into their contracts of employment. The guarantee is an act of social justice. When a
person has no property, his job may possibly be his only possession or means of livelihood and
those of his dependents. When a person loses his job, his dependents suffer as well. The worker
should therefor be protected and insulated against any arbitrary deprivation of his job.

The ruling in Brent School, Inc. v. Zamora is also not applicable in this case because it could not be
supposed that private respondents and all other so-called “casual” workers of the petitioner
KNOWINGLY and VOLUNTARILY agreed to the employment contract. 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’s reliance on the CBA is also misplaced. It is the express mandate of the CBA not to
include contractual employees within its coverage. Such being the case, we see no reason why an
agreement between the representative union and private respondent, delaying the regularization of
contractual employees, should bind petitioner as well as other contractual employees. Indeed,
nothing could be more unjust than to exclude contractual employees from the benefits of the CBA on
the premise that the same contains an exclusionary clause while at the same time invoke a collateral
agreement entered into between the parties to the CBA to prevent a contractual employee from
attaining the status of a regular employee.

The CBA, during its lifetime, constitutes the law between the parties. Such being the rule, the
aforementioned CBA should be binding only upon private respondent and its regular employees who
were duly represented by the bargaining union. The agreement embodied in the “Minutes of
Meeting” between the representative union and private respondent, providing that contractual
employees shall become regular employees only after seventeen months of employment, cannot
bind petitioner. Such a provision runs contrary to law not only because contractual employees do not
form part of the collective bargaining unit which entered into the CBA with private respondent but
also because of the Labor Code provision on regularization. The law explicitly states that an
employee who had rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee. The period set by law is one year. The seventeen
months provided by the “Minutes of Meeting” is obviously much longer. The principle is well settled
that the law forms part of and is read into every contract without the need for the parties expressly
making reference to it.

Petition is denied.

G.R. No. 165381 : February 9, 2011

NELSON A. CULILI, Petitioner, v. EASTERN TELECOMMUNICATIONS

PHILIPPINES, INC., SALVADOR HIZON (President and Chief Executive Officer),
EMILIANO JURADO (Chairman of the Board), VIRGILIO GARCIA (Vice
President) and STELLA GARCIA (Assistant Vice President), Respondents.

LEONARDO-DE CASTRO, J.:

FACTS:

Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a

telecommunications company engaged mainly in the business of establishing
commercial telecommunications systems and leasing of international datalines or
circuits that pass through the international gateway facility (IGF). The other
respondents are ETPIs officers.

Petitioner Nelson A. Culili was employed by ETPI as a Technician in its Field

Operations Department in 1981. In 1996, Culili was promoted to Senior Technician
in the Customer Premises Equipment Management Unit of the Service Quality
Department.

As a telecommunications company and an authorized IGF operator, ETPI was

required, under RA No. 7925 and EO No. 109, to establish landlines in Metro Manila
and certain provinces. However, due to interconnection problems with the PLDT,
poor subscription and cancellation of subscriptions, and other business difficulties,
ETPI was forced to halt its roll out of 129,000 landlines already allocated to a
number of its employees.

In 1998, due to business troubles and losses, ETPI was compelled to implement a
Right-Sizing Program which consisted of two phases: the first phase involved the
reduction of ETPIs workforce to only those employees that were necessary and
which ETPI could sustain; the second phase entailed a company-wide
reorganization which would result in the transfer, merger, absorption or abolition of
certain departments of ETPI.

As part of the first phase, ETPI offered to its employees who had rendered at least
fifteen years of service, the Special Retirement Program, which consisted of the
option to voluntarily retire at an earlier age and a retirement package equivalent to
two and a half (2) months salary for every year of service. This offer was initially
rejected by the Eastern Telecommunications Employees Union (ETEU), ETPIs duly
recognized bargaining agent, which threatened to stage a strike. ETPI explained to
ETEU the exact details of the Right-Sizing Program and the Special Retirement
Program and after consultations with ETEUs members, ETEU agreed to the
implementation of both programs. Thus, ETPI re-offered the Special Retirement
Program and the corresponding retirement package to the one hundred two (102)
employees who qualified for the program. Of all the employees who qualified to avail
of the program, only Culili rejected the offer.

Among the departments abolished was the Service Quality Department. The
functions of the Customer Premises Equipment Management Unit, Culilis unit, were
absorbed by the Business and Consumer Accounts Department. As a result, Culilis
position was abolished due to redundancy and his functions were absorbed by the
Business and Consumer Accounts Department.

ETPI, through its Assistant Vice President Stella Garcia, informed Culili of his
termination from employment effective April 8, 1999.

Culili alleged that neither he nor the DOLE were formally notified of his termination.
Culili believed that ETPI had already decided to dismiss him even prior to the March
8, 1999 letter. Moreover, Culili asserted that ETPI had contracted out the services
he used to perform to a labor-only contractor which not only proved that his
functions had not become unnecessary, but which also violated their Collective
Bargaining Agreement (CBA) and the Labor Code. Aside from these, Culili also
alleged that he was discriminated against when ETPI offered some of his co-
employees an additional benefit in the form of motorcycles to induce them to avail of
the Special Retirement Program, while he was not.

ETPI denied singling Culili out for termination. ETPI claimed that because there was
no more work for Culili, it was constrained to serve a final notice of termination to
Culili, which Culili ignored. Thus, on March 26, 1999, ETPI tendered to Culili his final
pay check of P859,033.99 consisting of his basic salary, leaves, 13th month pay and
separation pay. ETPI claimed that Culili refused to accept his termination and
continued to report for work.

Culili filed a complaint against ETPI and its officers for illegal dismissal, unfair labor
practice, and money claims before the Labor Arbiter.

The Labor Arbiter found ETPI guilty of illegal dismissal and unfair labor practice.

On appeal, the NLRC affirmed the Labor Arbiters decision but modified the amount
of moral and exemplary damages awarded.

The Court of Appeals found that Culilis position was validly abolished due to
redundancy. It further held that ETPI cannot be held guilty of unfair labor practice as
mere contracting out of services being performed by union members does not per se
amount to unfair labor practice unless it interferes with the employees right to self-
organization. Hence, this petition.

ISSUE: Whether or not Culili is illegally dismissed.

HELD: The decision of the Court of Appeals is sustained.

LABOR LAW

There is redundancy when the service capability of the workforce is greater than
what is reasonably required to meet the demands of the business enterprise. A
position becomes redundant when it is rendered superfluous by any number of
factors such as over-hiring of workers, decrease in volume of business, or dropping
a particular product line or service activity previously manufactured or undertaken by
the enterprise. Soriano, Jr. v. NLRC, G.R. No. 165594, April 23, 2007

This Court also held that the following evidence may be proffered to substantiate
redundancy: the new staffing pattern, feasibility studies/ proposal on the viability of
the newly created positions, job description and the approval by the management of
the restructuring.

In the case at bar, ETPI was upfront with its employees about its plan to implement
a Right-Sizing Program. Even in the face of initial opposition from and rejection of
the said program by ETEU, ETPI patiently negotiated with ETEUs officers to make
them understand ETPIs business dilemma and its need to reduce its workforce and
streamline its organization. This evidently rules out bad faith on the part of ETPI.

The records show that ETPI had sufficiently established not only its need to reduce
its workforce and streamline its organization, but also the existence of redundancy in
the position of a Senior Technician. ETPI explained how it failed to meet its business
targets and the factors that caused this, and how this necessitated it to reduce its
workforce and streamline its organization. ETPI also submitted its old and new
tables of organization and sufficiently described how limited the functions of the
abolished position of a Senior Technician were and how it decided on whom to
absorb these functions.

LABOR LAW

Although the Court finds Culilis dismissal was for a lawful cause and not an act of
unfair labor practice, ETPI, however, was remiss in its duty to observe procedural
due process in effecting the termination of Culili.

For termination of employment as defined in Article 283 of the Labor Code, the
requirement of due process shall be deemed complied with upon service of a written
notice to the employee and the appropriate Regional Office of the Department of
Labor and Employment at least thirty days before effectivity of the termination,
specifying the ground or grounds for termination.

ETPI does not deny its failure to provide DOLE with a written notice regarding Culilis
termination. It, however, insists that it has complied with the requirement to serve a
written notice to Culili as evidenced by his admission of having received it and
forwarding it to his union president.

The Court of Appeals, in finding that Culili was not afforded procedural due process,
held that Culilis dismissal was ineffectual, and required ETPI to pay Culili full
backwages in accordance with our decision in Serrano v. NLRC, 387 Phil. 345
(2000).

Hence, since it has been established that Culilis termination was due to an
authorized cause and cannot be considered unfair labor practice on the part of ETPI,
his dismissal is valid. However, in view of ETPIs failure to comply with the notice
requirements under the Labor Code, Culili is entitled to nominal damages in addition
to his separation pay.

DENIED.

Philippine Long Distance

Telephone Company vs National
Labor Relations Commission
(1988)
August 21, 2014

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164 SCRA 671 – Labor Law – Termination – Just and Authorized Causes – Separation Pay;
When not available – Equity
Marilyn Abucay has been an employee of the Philippine Long Distance Telephone
Company (PLDT) for ten years when it was discovered that she accepted “bribes” from
certain customers in order to facilitate the phone connections of said customers. PLDT
terminated her employment. A labor case was filed by Abucay. The National Labor
Relations Commission (NLRC) found the dismissal to be valid but nevertheless, the NLRC
ordered PLDT to pay Abucay separation pay equivalent to one month pay for every year of
service.
PLDT assailed the said decision. PLDT averred that separation pay is only available in
cases where the employee has been illegally dismissed and reinstatement is no longer
possible. PLDT further argued that to award Abucay separation pay is tantamount to
rewarding her misdeeds.
The Solicitor General, arguing for the NLRC, cited numerous previous cases where
separation pay has been awarded by the Supreme Court even if the employee’s dismissal
were due to just and authorized causes.
ISSUE: Whether or not Abucay is entitled to separation pay.
HELD: No. In this case, the Supreme Court finally set the rules as to when separation pay
is proper in cases where the employee is dismissed for valid reasons.
As a rule, and under the Labor Code, a person dismissed for just and authorized causes is
not entitled to separation pay. However, based on equity, an exception can be made if the
employee is dismissed for causes other than serious misconduct or those reflecting on his
moral character. Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a
fellow worker, the employer may not be required to give the dismissed employee separation
pay, or financial assistance, or whatever other name it is called, on the ground of social
justice.
In the case at bar, the reason for Abucay’s dismissal is due to her acceptance of a “bribe”
which is dishonesty and is immoral. The fact that she has worked with the PLDT for more
than a decade, if it is to be considered at all, should be taken against her as it reflects a
regrettable lack of loyalty that she should have strengthened instead of betraying during all
of her 10 years of service with the company. The court also made a pronouncement:
Compassion for the poor is an imperative of every humane society but only when the
recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted
to be refuge of scoundrels any more than can equity be an impediment to the punishment of
the guilty. Those who invoke social justice may do so only if their hands are clean and their
motives blameless and not simply because they happen to be poor.