Labor Law Review 2023

Answers to Bar Questions On

CLASSIFICATION OF EMPLOYEES

Atty. Paciano F. Fallar Jr.

SSCR-CoL

Q1. FALCON Factory, an auto parts assembler, which 50 persons for its building
renovation: Should they be compulsorily covered under the SSS?

Answer

Yes, I agree in part with the employees' contention. While the nature of their functions
is "casual" in relation to the busines of producing automotive parts, , their engagement
for more than one (1) year would eventually convert their status to regular employees
for the duration of their construction work engagement . But until an individual
employee has completed the minimum one-year service, the employer could defer his
enrolment with the SSS since the latest SS law (2018) grants to the SSS the authority
to exclude from mandatory coverage those employees rendering casual or temporary
work

If they are classified as project employees, they would compulsorily covered by the
SSS as project employees are not excluded by law from the scope of the SSS.

Comments:

The Question is not realistic. A company would normally outsource building renovation works to an
independent contractor rendering building or engineering works. But since the Q imposes the
employment mode ( not merely that they were "hired" but the "employees contended"), the
answerer must work on the basis of this given fact.

The jobs related to the building renovation are classified as “casual”, since they are merely
incidental to the business of the employer, and such job, work or service is for a determinable
period made known to the employee at the time of engagement (Conti v. NLRC, G.R. 119253, April 10,
1997) which in this case is that of assembly of auto components. But since the engineers, architects,
and construction personnel are expected to work for three (3) years, or more then the one-year
rule on casual employees, they will ultimately be classified as regular employees (Art. 295, LC).

The workers could also be deemed as “project employees”, since the building renovation could be
treated as a “project” or an activity with a definite completion and such completion is already
determined at the start of the employees’ engagement. It is also valid to hire the workers on a fixed
term; that the jobs are merely incidental to the company’s business and would not be for an
indefinite period are legitimate reasons for the fixed term employment.

The facts of the Q nonetheless do not specify under what employment category the 50 persons
were engaged. Nor does it tell us what is the employer's possible defense.

Notes:

Note 1: The employees are compulsorily covered by the SSS, whether they are classified as
regular-turned- casual with limited tenure ( only while the building renovation activity subsists) ,
project- based, or with fixed term tenure. None of these employee categories are excluded from the
compulsory coverage of the SSS.

The more difficult question is whether they should be covered immediately upon hiring (since it is
indubitable that they would working beyond one [1] year) or only upon completing a year in service.
Considering that this is a social legislation and the work is hazardous, I would have initially argued
for immediate coverage by citing Art. 1702 of the Civil Code that "in case of doubt, all labor

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legislation and all labor contracts shall be construed in favor of the safety and decent living for the
laborer".

But it is equally valid to argue that, until a casual employee renders service for at least one (1) year,
his status is not converted yet to regular.

Note 2: For purposes of SSS coverage, an employee could be:

• A worker in the private sector, regardless of status of employment, whether

permanent, temporary, or provisional, who is not over 60 years of age (up to 60th
birthday, if initial coverage);

The Social Security Commission is given authority to exclude from coverage " such other
services performed by temporary and other employees" (Sec. 8 [j][4]. RA No. 11199)

• A house helper who is not over 60 years of age (up to 60th birthday, on initial
coverage);

• A Filipino seafarer, upon signing of the standard employment contract and actual
deployment by the manning agency and the foreign principal, who are considered as the employers;
or

• A worker of a foreign government or international organization, or its wholly-owned

instrumentalities, with an approved Administrative Agreement with the SSS.
Note 3: All employees, regardless of tenure, would qualify for compulsory membership in the SSS,
except those classes of employees contemplated in the relevant section of the statute. Thus, project
employees are covered (Chua vs Court of Appeals, GR No. 125837, 06 October 2004). This would
include alien employees (see Philippine Blooming Mills Co., Inc. vs. SSS, G.R. No. L-21223, 31 August
1966). OFW are also covered. Land-based OFWs will be covered in the same manner as self-
employed individuals for now, meaning, they will have to shoulder both employer’s and employee’s
share. They may have the option to contribute only at the minimum salary credit of P2,000. For
sea-based OFWs , the employer’s share is shouldered by their manning agencies.(Joint Ship
Manning Group, Inc. v. Social Security System, G.R. No. 247471 , 07 July 2020).

Q2 The services of an employee were terminated upon the completion of the

probationary period of employment for failure to qualify for the position. The employee
filed a complaint for Illegal Dismissal on the ground that the employer failed to
inform him in writing the reasonable standards for regular employment. Will the
complaint for Illegal Dismissal prosper?

Answer

The complaint for illegal dismissal will prosper. The employee has already completed
the probationary period, and he has become by operation of law a regular employee.
He could no longer be dismissed for failure to qualify as a regular employee, but only
for just and authorized causes and after compliance with the 2-notice rule or the 30-
day prior written notice rule with separation benefits, respectively.

Comments:

The key phrase is “upon the completion of the probationary period”. Since the employee has already
completed the probationary period, he has become by operation of law a regular employee without
need of formal appointment or confirmation. Hence, he could no longer be dismissed for failure to
qualify as a regular employee (he has obviously already qualified). He could only be dismissed for
just and authorized causes (Arts.297-299, LC).

My interpretation of the phrase " upon completion of the probationary period" means the probation
had lapsed. Something which is completed means it has been finished or done. It is a better
interpretation than the one which argues that the probationary period had expired ( last day) but
had not yet lapsed. My interpretation would mean that , while I do not subscribe to the employee's
theory of his cause of action ( which is erroneous) , I can use another theory or ground to argue
that his dismissal is illegal.

Notes:

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Note 1: The law requires "reasonable notice" prior to end of the probation period. Termination on the
expiry of the probationary period, or so near it like a few days before, may be viewed as indicator
that the termination is done in bad faith (see Manila Hotel Co vs NLRC, GR No. L-53453, 22 January
1986; Holiday Inn vs NLRC, G.R. No. 109114, 14 September 1993).

Note 2: There is no legal requirement that the probationary period should be completed before
termination is effected. If the purpose sought by the employer is neither attained nor attainable within
the probationary period, the employer may decide to end the employment ( International Catholic
Migration Commission vs NLRC, GR No.72222, 30 January 1989).

Note 3: If the employee is allowed to continue working beyond the probationary period, he
automatically gains regular status notwithstanding the employer's failure to formalize the status
through a written memo (Servidad vs NLRC, GR No. 128682, 08 March 1999). An extension of a lapsed
probation would also have no legal effect; the employee is already regular by operation of law
( Umali vs Hobbywing Solution,s GR No. 221356, 14 March 2018).The possible exception is when
company policy or the employment contact expressly requires some other condition, like a master’s
degree, for a teacher (see Herrera-Manaois vs St. Scholastica’s College, GR No. 188914, 11 December
2013).

Note 4: Although a prudent employer would not wait for the last day of probation to terminate the
probationary employee, terminating on the last day does not necessarily mean that the same is
made in bad faith. In once case, an engineering support services supervisor was hired on a
probationary basis for six (6) months. The company exercised its option not to renew the contract
when it informed petitioner on the last day of his probationary employment that it did not intend to
grant him a regular status( see Alcira vs NLRC G.R. No. 149859 , 09 June 2004). The company was able
to substantiate that the engineer : (1) incurred ten absences; (2) was tardy several times ;(3) failed to
wear the proper uniform many times; and, (4) showed inferior supervisory skills.

Note 5: While a probationary employment need not be in writing ( hence the standards need not
also be in writing), the extension to be valid requires the employee's consent and a written
agreement would be the best evidence of such consent (Mariwasa vs Leogardo, GR No. 74246,26
January 1989;see Dusit Hotel Nikko vs. Gatbonton,G.R. No. 161654, 05 May 2006).

Note 6: It has been ruled that the rule on reasonable standards should not be used to exculpate
a probationary employee who acts in a manner contrary to basic knowledge and common
sense, in regard to which there is no need to spell out a policy or standard to be met (Aberdeen vs
Agustin , GR No. 149371, 13 April 2005 ). "The communication of performance standards should be
perceived within the context of the nature of the probationary employee’s duties and responsibilities”
(Abott Laboratories vs. Alcaraz, G.R. No. 192571, 22 April 2014, Resolution of the Motion for
Reconsideration)
Note 6: The provision in the employment contact which states that the company "will determine
your suitability for the job including your work habits, personal characteristics and your fitness prior
to regularization" and must strictly abide by [the] Code of Discipline and its policies and be issued
by the organization" was held sufficient standards (Pasamba vs NLRC, G.R. No. 168421, 08 June 2007).
Note 7: The peculiar feature of probationary employment is that that the services of the
probationary employee ( besides just and authorized causes) may be terminated when he fails to
qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. The grounds are not exclusive but may
overlap. A ground may constitute both a 'just cause '(e.g. gross and habitual neglect) and a failure to
qualify. Thus, tardiness and absenteeism have been used to justify termination of a probationary
employee either as just cause ( gross and habitual neglect of duty, or violation of company rules and
regulations) or failure to qualify with reasonable standards on punctuality ( Carvajal vs Luzon
Development Bank, GR No. 186169, 01 August 2012).

Note 8: Section 2, Rule 1, Book VI of the Rules to Implement the Labor Code provides that if the
termination is brought about by .... by failure of an employee to meet the standards of the employer
in the case of probationary employment, it shall be sufficient that a written notice is served the
employee within a reasonable time from the effective date of termination. (Philemploy Services
vs Rodriguez (GR No.152616, 31 March 2006), see also Philippine Daily Inquirer vs. Leon M. Magtibay, Jr., G.R.
No. 164532, 24 July 2007; Aliling vs. Feliciano, G.R. No. 185829, April 25, 2012).

Note 9: A probationary employee could always file a labor case, and in the litigation proceedings
could demand that the company justify its finding and conclusion that he failed the standards ( AMA
College vs Mercado, GR No. 183572, 13 April 2010).

Q3. Inday , who performed laundry service at staff house of company X: Is she regular
employee or a kasambahay? Decide.

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Answer

Inday is a regular employee of the mining company, as she renders services necessary
and desirable for the maintenance of company's staff house. While the company is
engaged in mining, its operation of the staff house with free laundry services renders
Inday;s functions necessary and desirable. She does not render domestic household
chores for any specific individual and not for the domestic chores exclusively for any
specific individual. Thus, she correctly impleaded the company as the party respondent.

Comment:

Note that the Question seems to ask only the employee classification of Inday, not the validity of the
dismissal.

Notes:

Note 1: A house helper or domestic servant working within the premises of the business of the
employer and in relation to or in connection with its business, as in its staff houses for its guest or
even for its officers and employees renders such house helper or domestic servant a as a regular
employee of the business enterprise, and not mere family househelper or domestic servant of a
household (Remington Industrial Sales Corp. vs Castaneda, GR NO.s. 169295-96, 20 November 2006).

The distinction is important because kasambahays, while now entitled to five (5) day SIL after one
(1) year of service as well as mandatory SSS coverage, have very limited security of tenure.

Note 2: The law provides that the employer may terminate the contract before the expiration of the
term except for just causes ( basically the same as those under Art. 297 of the Labor Code) but the
remedy is only “compensation already earned plus the equivalent of 15 days work by way of
indemnity”. This makes kasambahay employment virtually at will . They could be terminated
anytime, subject only to 15 days pay. There is no remedy of reinstatement, back wages, or salaries
for the unexpired portion of the contract.

Note 3: The only possible exemption is when the contract of the kasambahay is for a fixed period.
In one case of fixed period house help agreement the dismissal effected without just cause resulted
in the award of salary for the unexpired portion of the contract plus the indemnity of 15-day salary
(Philippine Integrated Labor Assistance Corporation vs NLRC, GR No. 123354, 19 November 1996). This
is similar to the relief granted to OFWs, who are on fixed term contracts.

Note 4: Section 4 of the Batas Kasambahay defines domestic work as “work performed in or for a
household or households” and domestic worker or "kasambahay"as any person engaged in
domestic work within an employment relationship such as, but not limited to, the following: general
househelp, nursemaid or "yaya", cook, gardener, or laundry person, but shall exclude any person
who performs domestic work only occasionally or sporadically and not on an occupational basis. The
enumeration is not exhaustive but merely illustrative.

The term household is defined as “immediate members of the family or the occupants of the house
that are directly provided services by the domestic worker . "

The Supreme Court , upholding the DOLE's interpretation (Atienza vs Saluta , GR No. 233413, 17 June
2019) has ruled that " family drivers" are not covered by the Kasambahay Law. Since this law has
repealed Art. 139 of the Labor Code, "family drivers" revert to being covered by the Civil Code
provisions ( Arts. 1689-1694). The DOLE exclusion has no effect on the aspect of security of tenure,
only on employee benefits like minimum wage rates and SIL .

Note 5: The mining company could also resort to outsourcing the laundry functions, in which case
individuals like Inday would not even be employees. The IRR of the Kasambahay law expressly
excludes "service providers" (defined as independent contractors) from its coverage. This is really
surplusage , a "for emphasis" or "for avoidance of doubt" purpose, since independent contractors are
evidently not employees. This is like the SSS provision which excludes from its mandatory coverage
instances where no Er EE relationship exists.

Note 6: Outsourcing the laundry functions would be valid, subject to the 30-day prior notice and
payment of separation benefits to Inday.

Note 7: The Q does not state in proper form the defense raised. It is lack of jurisdiction, there being
no ER EE relationship. This is a weak defense, intended only to bring out the examinee's knowledge

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of the distinction between laundry services as a regular work in a company and laundry work as
domestic work. Obviously, the employer of Inday is the mining company, not any of the mining
company's officers or staff. Her laundry services is for the benefit of the company’s staff in their
capacity as employees, not as employers. Inday cannot be a kasambahay of a corporation, because
the concept is only possible when the employer is a natural person ( household refers to members
of the family or residents of a home).

Note 8. A more tenable defense is that Inday's services are not necessary and desirable for the
operation of the mining company. The facts do not indicate the company's reason for not allowing
Inday to return. It is conceivable, in the real world, that the company has decided to shut down the
staff house and simply lodge its employees in hotels. While Inday may have become a regular
employee for rendering services beyond one (1) year, the law states that she "shall be considered a
regular employee with respect to the activity in which she is employed and her employment shall
[ only] continue while such activity exists" (Art. 295, last sentence of last par., Labor Code ). At best,
the closure of the staff house would mean a valid redundancy.

Note 9: There could be valid reasons why Inday "was not allowed to return to work". One possible
relevant reason, in the light of the pandemic, is that the mining operations are closed or at least the
staff house has been temporarily shut down. If the temporary closure has not lasted beyond six (6)
months., then the temporary suspension of employment is valid and does not give rise to a cause of
action for constructive dismissal (Art. 301, Labor Code). And if the closure has exceeded six (6)
months by legal fiat (IATF resolution) , may Inday claim the right to separation benefits? The
employer could theoretically argue that this is Act of State, and therefore it should have no legal
liability.

Note 10: The company may also raise the "no dismissal" defense. It could argue that she has not
been dismissed, only not recalled pending submission of "fit to work" medical clearance or covid-19
negative test result. The complaint is premature for failure to state a cause of action. there being no
actual dismissal. [Note: DOLE guidelines prohibit suspension, termination, or discrimination on
employees who refuse to be vaccinated apparently even if the employer shoulders the cost. Is this
DOLE rule reasonable or is it an excessive intrusion on management prerogatives. Why is mandatory
wearing of face masks reasonable, but not vaccination, when both are health measures?]

Q4. Albert, a 40-year old employer, who asked his domestic helper, Inday, to give him
a private massage. May Inday validly refuse?

Answer

Albert is wrong. Inday’s refusal is justified. Giving private massage ether does not fall
into the category of domestic work or else it is not contemplated as part of the agreed
services

Notes:

Note 1: Art. 139 of the Labor Code , which defines "domestic or household service " as services in
the employer's home including " ministering to the personal comfort and convenience of the
members of the employer's household", has been superseded by the Kasambahay Law, which
defines “domestic work”” as work “ in and for the household”. The law further enumerates
domestic work services (cook, yaya, laundry , gardener, general house help).

Note 2: Giving private massage does not seem to fall into the category of domestic work. But the
list is merely illustrative, not exhaustive, and does not also exclude massage in the same way that
foster family arrangement is excluded from the definition. Indeed, the IRR does not also exclude
giving massage unlike the exclusion of family drivers. If the kasambahay's work is primarily as yaya
or caregiver, giving massage would seem a necessary part of the job.

Nonetheless, the facts of the Q do not indicate that massage was intended by the parties to be part
of Inday's job.

Note 3: But there are also other tasks which are given to kasambahays, like taking care of pets
feeding , bathing , and walking them outdoors to poo at the front of your neighbor's gate). We seem
not to have any problem accepting these tasks as domestic work.

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Note 4: Would such request by Albert be construed as a demand for sexual favor that results in an
intimidating , hostile, or offensive environment for Inday (Section 3, RA 7877)?

Q5: Engineer "A", a Project Engineer since 1987 and assigned to five (5) successive
separate projects, for 10 years. : Is he a regular employee?

Answer

No. Each project employment contract is distinct and separate from any other project
employment contract. The end of each project employment contract terminates the
employment relationship, and there is no obligation on the employer to give the
employee a new contract. The commencement of a new project employment is not
considered a continuity, and does not confer regular employment status even if the
function is necessary and desirable.

Notes:

Note 1: A project may have a fixed date of expiry ( e.g., a project to provide transportation services
to delegates to the APEC summit hosted by the Philippines). Or, instead of an expiry date, a project
may have an estimated completion date of the task (e.g., construction of a power plant set for
completion in 10-12 months).

Note 2: Project employees whose services end because of completion of the project or a phase
thereof are not entitled to separation benefits ( Salazar vs NLRC, GR No. 1099210, 17 April 1996). Nor
is the employer obliged to hire the for the next projects.

Note 3: The employee must be informed at the outset that he is hired for a particular project. Thus,
the Supreme Court has held that the summary of project assignments cannot be considered as the
needed notice because it only listed down the projects from where the employees were previously
assigned but nowhere did it indicate that they were informed or were aware that they were hired for
a project or undertaking only (Inocentes vs R. Syjuco Construction, GR No. 237020, 29 July 2019).

Note 4: All project completion , and the consequent termination of employment, must be reported
to the DOLE. Albeit the DOLE regulations is quite specific to the construction industry, the rule has
also been applied to other industries when the project employment category is disputed (GMA
Network vs Pabriga, GR No. 176419, 27 November 2013).Absent such periodic termination reports, the
employment of the workers may be viewed by the courts as indicating regular employment
(Freyssinet Filipinas Corp. vs. Lapuz, G.R. No. 226722, 18 March 2019).

Q6 Julius Lagat, a truck driver, hired by Merdeka Trucking Company which is engaged
in the business of hauling farm produce, on a 6-month contract. Is the fixed term
contract valid?

Answer:

The fixed term contract in this case is invalid, and imposed by the employer on the
employee in order to circumvent regular employment. The services of a truck driver is
necessary and desirable in the company's business of hauling farm produce, and no
legitimate reason (e.g., Julius was hired as temporary substitute to a regular driver who
is in quarantine) was offered to justify the fixed term employment. The dismissal, which
was not predicated on a just or authorized cause, is illegal..

Notes:

Fixed term contracts, while not prohibited, is the exception to the default mode of regular, open-
ended employment; hence they must be strictly construed. Fixed term contracts ideally should be
limited to high-ranking positions in which the applicant-employee has sufficient parity in bargaining

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power with the employer. They should not apply to low-ranking employees who have little or no
choice at all but to sign company-prepared employment contracts on a "take it or leave it" basis.

Note 1: Other possible justifiable reason for the fixed term in this case could be that the company
is experimenting on adding a new route, client, or products and that it may yet decide to
discontinue the expansion within a certain period and upon certain business parameters. An
employee's medial leave ( quarantine) would be a another good justification.

Note 2: Brent School vs Zamora, GR No. 48494, 05 February 1990 laid down two (2) general
parameters to determine the validity of fixed term employment:

(i). 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,

(ii) 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.

Q7: A was hired in a sugar plantation performing such tasks as weeding, cutting and
loading canes, and A also worked as a houseboy at the house of the plantation owner.
For the next planting season, the owner decided not to hire A as a plantation worker
but as a houseboy instead. Furious, A filed a case for illegal dismissal against the
plantation owner. Decide with reason.

Answer

A was hired only for the duration of one season only , and there is no indication that he
was hired on the understanding that his services would be required for the succeeding
planting season. In the absence of such commitment on the part of the employer, A's
employment was seasonal in nature and it validly terminated upon end of the planting
season. His non-recall for the next planting season does not constitute illegal dismissal.

Comments

While jurisprudence has recognized the concept of "regular seasonal employees", the case involved
repeat hiring during several seasons. The successive hiring is crucial in determining the regularity of
the employment status. This is not the case in this Question; hence, the jurisprudence may not
apply.

Regular seasonal employees may demand work at the onset of the new season,. However, the
employer may still have valid reasons to refuse work ( e.g., there is no work because of covid; the
worker fails to submit a medical clearance; the worker may have reached retirement age).

Q8: Design Consultants, Inc. , engaged by the PNCC to supervise the construction of
the South Expressway Extension, hired Omar as a driver for two (2) years which was
extended for another 9 months. After his two-year contract expired, he was extended
another contract for nine (9) months. Did Omar become a regular employee?

Answer

Yes, Omar is correct. The position of driver is necessary and desirable in a construction
company. The hiring in two successive fixed term contracts indicate the position is
necessary and desirable. No reason was advanced to justify the fixed term hiring. The
resort to fixed term contracts is an illegitimate scheme to evade regular employment.

Comments

While the company here is involved in construction work in which project employment is common,
the Question itself does not state that Omar was hired on project basis. Instead, the Question states
that Omar was hired on fixed term basis ( "driver for 2 years", "two-year contract expired",
"extended for 9 months"). In the absence of reference to a specific project, the contract must be
presumed to be for fixed term.

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Notes:

Note 1 : In Caparoso vs CA ( GR No. 155505, 15 Fe bruary 2007), the Supreme Court upheld the fixed
term employment of two (2) delivery men hired by a company engaged in the distribution and
supply of confectioneries, initially on 3- month contracts and then renewed for another two (2)
months. The Supreme Court said that the contracts were voluntarily entered into. I dislike this
ruling, because it casually treats the employment contracts as ordinary civil contract despite the Civil
Code mandate itself that they are imbued with public interest. Moreover, the drivers are lowly
workers and hardly have bargaining power vis-a-vis the employer.

Note 2: The better ruling is Viernes vs NLRc ( GR No,. 108405, 04 April 2003), in which the repeat
hiring of meter readers by an electric cooperative after the initial fixed term contract had lapsed
was deemed indicator of regular employment.

Instead of fixed term employment, Omar could have been validly engaged on project basis.

Q9. Tomas and Cruz , employed for the last 22 years in various capacities on board the
ships of BARKO Shipping Company. : Are they regular employees.?

Answer

The NLRC is correct . Overseas seafarers are considered fixed term employees . Their
employment is governed by the POEA-approved contracts that they sign every time
they are rehired and their employment is terminated when the contract expires. Their
employment is contractually fixed for a certain period of time (Millares v. NLRC, GR No.
110524, 29 July 2002). Non-renewal of the contract does not constitute dismissal

Comments:

Since the Question states that "their employment was made through a local manning company", the
employees here can be presumed to be overseas seafarers. All OFW hiring, except for the very few
instances of direct hiring, must go through local recruitment and placement agency. And all OFW
contracts, which must be approved by the POEA, are for fixed term.

Q10: Mr. X, hired on probation for six months as general utility worker, and whose
probation was extended in writing for three (3) months. Is the extension valid?

Answer:

Case law has settled that a probationary period may be legally extended with the
consent of the employee. The probationary employee may still be validly dismissed,
during the period of extension, for failure to qualify as a regular employee. The
complaint must therefore be dismissed for lack of merit.

Notes:

The extension must be done prior to the end of probation; an extension done when the employee
had already become a regular employee would not revert the status to probationary ( Umali vs
Hobbywing Solution, GR No. 221356, 14 March 2018).PFFALLARJROCT2023