BOOK SIX: Post-Employment

Title I: Termination of Employment

Part 1: Introduction: Employee’s Security of Tenure

ART. 293 Coverage

The provisions of this Title shall apply to ALL establishments or undertakings, whether for profit or not.

ART. 294 Security of Tenure

Security of tenure = the right not to be removed from one’s job without valid cause and valid procedure.

Constitutional Guaranty of Tenure

 Worker’s right of workers to “security of tenure” is an act of social justice.

 Security of tenure is a right which may not be denied on mere speculation of any unclear basis.

 This article construed the meaning of security of tenure as that “the employer shall not terminate the services
of an employee except for a just cause or when authorized by the Labor Code.”

 R.A. No. 1787 initiated the security-of-tenure right of employees.

Misleading

Security of tenure is so fundamental it extends to regular as well as nonregular employment.

- Probationary and contractual employees can enjoy security of tenure but only to a limited extent,
during the period of time their respective contracts of employment remained in effect.

Tenure of Managerial Personnel

Grounds for termination:

1. Rank-and-file employees: just and authorized cause
2. Managerial: loss of confidence

 Even managerial employees are entitled to 1security of tenure, 2fair standards of employment, and the
3
protection of labor laws.
- While dismissing a managerial employee is justified on ground of loss of confidence, it cannot be left
entirely to the employer.

 A dean of a college is a position at the managerial level.

 An in-house legal counsel may be an employee:

- May be an employee of a private corporation = pay them regular salaries, rank them in its table of
organization, and treat them as officers and employees
- May be an employee of the government =

Employment-At-Will (EAW)

Employment-At-Will = employees working with no assurance about their condition or term of employment
which can be altered or terminated by the employer at any time, for good reason, for no
reason, or even immoral reason.
= even if companies have grievance procedures, these employees have no rights to due
process or to appeal employment decisions, and the employer does not have any
obligation to give reasons for demotions, transfer, or dismissals.

 NOT recognized in the Philippines

XPN: Overseas Filipino worker entering into EAW contract in a foreign land where EAW is legal.

 Every employment termination has to accord due process which has 2 aspects:
1. Existence of lawful cause
2. Observance of proper procedure
Part 2: Kinds of Employment

ART. 295 Regular and Casual Employment

This article applies where the existence of employer-employee relationship is not the issue in dispute.

Examples of Non-employment

In the case of Singer Sewing Machine Co. vs. Drilon, et.al.:

- Not all collecting agents are employees and neither are all collecting agents independent contractors
(depending on the facts of each case).

- Any agreement may provide that one party shall render services for and in behalf of another for a
consideration [no matter how necessary for the latter’s business] even without being hired as an employee
 This is true in case of 1independent contractorship as well as in 2agency agreement

- Article 295 is not the yardstick for determining the existence of an employment relationship

- Article 295 merely distinguishes between two kinds of employees for purposes of determining the right of an
employee of certain benefits

A Non-employee Even after Eleven Years

In the case of Atok Big Wedge Co. vs. Gison:

- The long period of time does not make the non-employee an employee

- One who agreed to help, on retainer basis, without being controlled in the manner of accomplishing his
tasks, remained a non-employee even after 11 years

REGULAR EMPLOYMENT

Determining a regular employment:

 NOT the employment contract, but the nature of the job
 Whether the job is usually necessary or desirable to the main business of the employer
 Reasonable connection between the particular activity performed by the employee in relation to the
usual business or trade of the employer
 If the work is an integral part of the business and the worker does not furnish an independent business
or professional service

Two (2) kinds of regular employees:

1. Regular employees by nature of work
2. Regular employees by years of service (casual)

Examples of Regular Employment by Nature of Work

In the case of De Leon vs. NLRC:

- What determines whether a certain employment is regular or casual is not the will and word of the employer,
to which the employee often accedes

- It is the nature of the activities performed in relation to the particular business or trade considering all
circumstances, and in some cases the length of time of its performance and its continued existence

(1) Workers Supplied by Labor-only Contractor May be Declared Regular Employees of Contractee

In the case of Ecal, et.al. vs. NLRC:

- A finding that the petitioner is a labor-only contractor is equivalent to finding that an employer-employee
relationship exists

- Since petitioners perform tasks which are usually necessary or desirable in the main business of Hi-Line, they
should be deemed regular employees, and as such, are entitled to all the benefits and rights appurtenant to
regular employment
(2) “Contractual Project” Employee Becoming Regular

In the case of Magante vs. NLRC:

- Although petitioner had only rendered almost two years of service, still considered a regular employee
because the determining factor of the status of complainant-petitioner or any worker is the nature of the
work performed by the latter and the place where he performed his assignment

(3) “Day-to-Day Contractual” Employee Becoming Regular

In the case of Baguio Country Club Corporation vs. NLRC:

- Repeated rehiring and the continuing need for service are sufficient evidence of the necessity and
indispensability of service to the employer’s business or trade

(4) Temporary Employee Becoming Regular

In the case of Beta Electric Corporation vs. NLRC:

- An employment may only be said to be “temporary” where it has been fixed for a specific undertaking, the
completion and 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

(5) No Legal Room for Perpetual Employment

In the case of Sorreda vs. Cambridge Electronics Corporation:

- While the Constitution recognizes the primacy of labor, it also recognized the critical role of private
enterprise in nation-building and the prerogatives of management

- A contract of perpetual employment deprives management of its prerogative to decide whom to hire, fire and
promote

- An absolute and unqualified employment for life in the mold of employee’s concept of perpetual employment
is contrary to public policy and good customs, as it unjustly forbids the employer from terminating the
services of an employee despite the existence of a just or valid cause

CASUAL EMPLOYEE

Casual Employee:
1. Other type of regular employee, who becomes such after one (1) year of service
2. Regular only for that work activity for which he was hired
3. Employment may be on-and-off, but he is the one to be rehired every time the particular work activity occurs
4. He is a “regular casual” after one year of service
5. Performs a job, work or service which is merely incidental to the business of the employer

In the case of Philippine Geothermal, Inc. vs. NLRC:

- There are two kinds of regular employees:

1. Those who are engaged to perform activities which are usually necessary and desirable in the usual
business or trade of the employer;
2. Those who have rendered at least one year in service, whether continuous or broken with respect to
the activity in which they are employed

- An employee properly regarded as casual becomes entitled to be regarded as a regular employee of the
employer as soon as he completes one year of service

(1) Casual Employee with Less than One Year of Service does not become Regular

In the case of Capule, et.al. vs. NLRC:

- Petitioners are casual employees who cannot be considered regular employees because they were dismissed
before the expiration of the one-year period, thus, they cannot claim that their dismissal was illegal

(2) Salary of Casual Employee Controverted to Regular Should not be Reduced

 - Casual employees who have been controverted to regular should be entitled to be treated as such in every
respect

Contracting Out of Regular Jobs

In the case of Serrano vs. Isetam:

- Efficiency and economical operations are recognized as valid, lawful reasons for contracting out jobs, even
those being done by direct-hire regular employees, provided:
1. Contractor must be a legitimate one
2. The contracting out is not one of the arrangements prohibited under Section 6 of D.O. No. 18-02 nor
does it amount to ULP

In the case of San Miguel Employees Union-PTGWO vs. Bersamira:

- Contracting out is not unlimited; rather it is a prerogative that management enjoys subject to well-defined
legal limitations

PROJECT EMPLOYMENT

Project Employee = one whose employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of the engagement of
the employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season

Two Types of Project Activities:

1. Refers to a particular job or undertaking that is within the regular or usual business of the employer
company, but which is distinct and separate, and identifiable as such, from the other undertakings of the
company
2. Refers to a particular job or undertaking that is not within the regular business of the corporation

Principal Test

 In determining whether a particular employee is a project employee or a regular employee:

- Whether or not the “project employees” were assigned to carry out a specific project or undertaking,
the duration of which were specified at the time the employees were engaged for that project

Project Employees in the Construction Industry

In the case of Fernandez vs. NLRC and D.M. Consunji, Inc.:

- Petitioner in the numerous projects wherein he was assigned, the ineluctable conclusion is that petitioner has
not continuously worked with private respondent but only intermittently as he was hired solely for the
projects

- Generally, there are two types of employees in the construction industry:

1. Project employees
2. Non-project employees

Indicators of Project Employment

Section 2.2 of D.O. No. 19:

1) The duration of the specific undertaking is reasonably determinable

2) Such duration, as well as the work to be performed, is defined in an employment agreement
3) The work performed is in connection with the particular project for which he is engaged
4) The employee is free to offer his services to any other employer
5) The termination of his employment is reported to DOLE Regional Office within 30 days following the
date of his separation from work
6) An undertaking in the employment contract by the employer to pay completion bonus to the project
employee as practiced by most construction companies

Work Pool

 Members of a work pool from which a construction company draws its project employees, if considered
employee of the construction company while in the work pool, are non-project employees or employees for an
indefinite period
  In the case of Raycor Aircontrol Systems, Inc. vs NLRC, the Court clarified that project employees may or
may not be members of a work pool, and in turn, members of a work pool could be either project employees
or regular employees

 An employee in the work pool is not necessarily a regular employee; he may also be a project employee

Project Employees not Entitled to Separation Pay; Exception

In the case of De Ocampo, et.al. vs. NLRC:

- Petitioners were terminated from their services, which were still needed, because of the complaint that these
project workers had filed and their participation in the strike against the company; their services were
discontinued not because of the expiration of their contracts

NON-PROJECT EMPLOYEE

In the case of De Jesus vs. Philippine National Construction Corporation, et.al.:

- Generally, there are three types of non-project employees:

1. Probationary employees
2. Regular employees
3. Casual employees

- Petitioner’s engagement cannot be said to have been predetermined because the duration of work is
contingent upon the progress accomplishment and secondly, the company, under the contract is free to
determine the personnel and the number as the work progress

In the recent case of William Uy Construction vs. Trinidad:

- The test for distinguishing a project employee from a regular employee is whether or not he has been assigned
to carry out a “specific project or undertaking,” with the duration and scope of his assignment specified “at
the time his service is contracted”

- Complainant employee remained a project employee regardless of the number of years and the various
projects he worked for the company

SEASONAL EMPLOYMENT

Seasonal Employees:
1. Considered regular employees
2. Those called to work from time to time, season after season
3. During off season they are temporarily laid off but during summer season they are reemployed, or when their
services are needed
4. They are NOT separated from service, merely considered as on leave of absence without pay until they are
reemployed
5. Employment relationship only suspended

In the case of Industrial-Commercial-Agricultural Workers’ Union vs. CIR:

- Employer-employee relationship exists between milling company and its workers even during off season

- There is merely a temporary cessation of the manufacturing process due to passing shortage of raw material
that by itself alone is not sufficient, in the absence of other justified reasons, to sever employment or labor
relationship between the parties, since the shortage is not permanent

Seasonal “Pakiao” Employees

In the case of Zamudio vs. NLRC:

- Pakiao workers are considered employees as long as their employer exercises control over the means by
which such workers are to perform their work

- The seasonal nature of employee’s work does not detract from the conclusion that employer-employee
relationship exists

- Seasonal workers whose work is not merely for the duration of the season, but who are rehired every working
season are considered regular employees
The Mercado Ruling

In the case of Mercado, Sr., et.al. vs. NLRC:

- Project employees do not become regular employees although service exceeds one year

- Policy Instructions No. 12 of DOLE discloses that the concept of regular and casual employees was designed
to put employers to prevent so-called casuals from enjoying the benefits of regular employees or to prevent
casuals from joining a union. The proviso is only applicable to the employees who are deemed “casuals” but
not to the “project” employees nor the regular employees treated in paragraph one of Article 295

- Petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally
ends upon completion of the project or the season

“Regular Contractuals”

In the case of Cinderella Marketing Corp. vs. NLRC:

- Regular contractuals are entitled to benefits of regular employees

- It is undeniable that private respondents have rendered at least one year of service to petitioner as sales clerks,
an activity which is necessary or desirable in the usual business or trade of the employer. Therefore, they are
regular employees under the CBA

FIXED-PERIOD EMPLOYMENT, WHEN VALID

Employment for a fixed period arises for various reasons:

a. To substitute for a worker on a 1one-year study leave, or on 260-day special leave, or 3protracted temporary total
disability
b. To substitute for a woman employee who is on maternity leave

By definition, a project employment is also a fixed period employment. But not all fixed period employment is “project or
seasonal”

In the case of Brent School, Inc. vs. Zamora:

- Term employment cannot be said to be in circumvention of the law on security of tenure if:
1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties without
any force, duress, or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and the employee dealt with each other on more or less
equal terms with no moral dominance exercised by the former or the latter

- Such employment for a defined period is allowed even where the duties of the employee consist of activities
usually necessary or desirable in the usual business of the employer

Pretermination of Fixed-Period Employment

 A fixed-period employee is not regular because his job will exist only for a specified period of time. BUT, he is
deemed regular in two senses:
1. The nature of his work is necessary or desirable in the principal business of the employer
2. He enjoys security of tenure during the limited time of his employment

 Therefore, he cannot anymore be removed without just cause. Otherwise, employer commits illegal dismissal.

 A fixed-period employee is NOT an independent contractor because in fixed-term contracts, an employer-employee

relationship exists

Illegal “Fixed Period Employment”

In the case of Cielo vs. NLRC:

- The private respondent is engaged in the trucking business which requires drivers, and continuously because
the work is NOT seasonal, nor limited to a single undertaking. Thus, petitioner should be considered a regular
employee
 - In the Brent case, the Court affirmed the general principle that “where from the circumstances it is apparent
that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be
struck down or disregarded as contrary to public policy, morals, etc.”

In the case of Viernes vs. NLRC and BENECO:

- The fact that the petitioners were allowed to continue working after the expiration of their employment
contract is evidence of the necessity and desirability of their service to private respondent’s business

- In this case, the Brent ruling does not apply

- The job of a meter reader is necessary to the business of private respondent because unless a meter reader
records the electric consumption of the subscribing public, there could not be a valid basis for billing the
customers of private respondent

“ENDO” (End-of-Contract) Contractualization

In the case of Purefoods Corp. vs. NLRC:

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

- In this case, the casual workers are hired every month for the duration of five months, after which their
services are terminated and replaced by other casual employees. This scheme is apparently designed to
prevent the casual employees from attaining the status of a regular employee. Thus, being precisely imposed
to circumvent the guarantee on security of tenure, it should be struck down

Overseas Seafarers

In the case of Millares and Lagds vs. NLRC, et.al.:

- An overseas seafarer is not a regular employee and is not entitled to separation pay. His employment is
governed by the POEA Standard Employment Contract for Filipino Seamen. He is considered a contractual
employee

- Their employment is governed by the contracts they sign everytime they are rehired and their employment is
terminated when the contract expires

Domestic Seafarers

Seamen employed in domestic shipping are entitled to security of tenure, can become permanent employees and
can be terminated only for just or authorized causes

ART. 296 Probationary Employment

Probationary Employee :
 One who is under observation by an employer to determine whether he is qualified for permanent employment
 A probationary appointment gives the employer an opportunity to observe the fitness of a probationary employee
while at work, and to ascertain whether he will become a productive and efficient employee
 Probationary employment is a “trial period”

Conditions and Standards of Probation

In the case of Manila Hotel Corporation vs. NLRC and Cruz:

- Although on probationary basis, respondent still enjoys the constitutional protection on security of tenure

- If an employee hired allegedly on probationary basis was not informed of the standards that should qualify
her as a regular employee, the employee is deemed to have been hired from day one as a regular employee

In the case of A.M. Oreta & Co., Inc. vs. NLRC, et.al.:

- The employer shall make known to the employee, at the time he is hired, the standards by which he will
qualify as a regular employee

- Probation is the time and the opportunity the employer utilizes to size up not just the knowledge, skills, and
abilities but also the character traits of the prospective permanent employee
 In the case of Canadian Opportunities Unlimited vs. B. Dalangin, Jr.:

- Dalangin exhibited negative working habits, particularly with respect to the one hour lunch break policy of
the company and the observance of the company’s working hours

- Dalangin’s actuations, behavior and deportment during the four-week period to realize that Dalangin would
be a liability rather than an asset to its operations

Rights of Probationary Employee

A probationary employee may be terminated:

a. Just and authorized cause
b. Failure to qualify as a regular employee in accordance with reasonable standards

Limitations to Termination of Probation

The employer’s power to terminate a probationary employment contract is subject to the limitations that:
1) It must be exercised in accordance with the specific requirements of the contract
2) If a particular time is prescribed, the termination must be within such time and if formal notice is required, then
that form must be used
3) The employer’s dissatisfaction must be real and in good faith, not feigned so as to circumvent the contract or the
law
4) There must be no unlawful discrimination in the dismissal

In the absence of any evaluation or valid extension, we cannot conclude that respondent failed to meet the standards of
performance set by the employer

Non-observance of Employer’s Own Termination Procedure: Termination “Procedurally Infirm”

In the case of Abbott Laboratories vs. Alcaraz:

- Basic knowledge and common sense dictate that the adequate performance of one’s duties is an inherent and
implied standard for a probationary employee. Such standards need not be literally spelled out into technical
indicators

DURATION AND TERMINATION OF PROBATION

Period of Probation Not Necessarily Six Months

In the case of Buiser,et.al. vs. Hon. Vicente Leogarda, Jr. and General Telephone Directory Co.:

- An overseas seafarer is not a regular employee and is not entitled to separation pay. His employment is
governed by the POEA Standard Employment Contract for Filipino Seamen. He is considered a contractual
employee

- Their employment is governed by the contracts they sign everytime they are rehired and their employment is
terminated when the contract expires

No Successive Probations

 An employee who is allowed to work after a probationary period shall be considered a regular employee
 The fact of rehiring negates management’s claim that she failed to qualify as a regular employee
 These successive hirings and firings is a ploy to avoid the obligations imposed by law on employers for the
protection and benefit of probationary employees

Probation in Sister Company

 There is no basis for subjecting an employee to a new probationary or temporary employment where he had
already become a regular employee when absorbed by a sister company

Last Day of Probation

 The Supreme Court has so far used two different computation methods:
1) A probation of 6 months ends on the same date it started 6 months before
2) It ends 180 days from the starting date
Extension of Probation

In the case of Mariwasa Manufacturing, Inc. vs. Hon. Leogardo, Jr.:

- The extension of Dequila’s probation 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

- 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

Probation Not the Same as Fixed-Term Employment

 Probationary employment ends at a certain time, usually on the sixth month

 Terminating probationary employment has to be justified by a valid cause
 The termination has to be based on the employee’s failure to meet the standards or other valid cause

Probation of Teachers

Full-Time Teachers = 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

Part-Time Teachers = cannot acquire permanent employment

 Policy Instructions No. 11 by the DOLE provides that “the probationary employment of professors, instruuctors,
and teachers shall be subject to standards established by the DepEd.”
 Full time teachers who have rendered three consecutive years of satisfactory services shall be considered
permanent
 The legal requisites for acquisition by a teacher of permanent employment, or security of tenure, are as follows:
a. The teacher is full-time
b. The teacher must have rendered three consecutive years of service
c. Such service must have been satisfactory

Reversion from Full-Time to Part-Time to Avoid “Regularization”

In the case of Bongar vs. NLRC and AMA Computer College:

- For all that un unscrupulous school has to do to negate or render meaningless the rule on probationary
employment, is to inflexibly confine the recruitment or employment of its teachers to part-time basis, or to
revert as what happened to the complainant herein, an originally full-time status to mere part-time basis to
prevent in any way the incumbent teacher from becoming regular, a subtle way of circumventing the Labor
Code provisions on probationary employment

Reinstating a Probationary Employee

 The Court provided that reinstatement applies even to a probationary employee unjustly dismissed
 And as the dismissal is illegal, the employee is likewise entitled to backwages