Kinds of Employment

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G.R. No. 70705 August 21, 1989

MOISES DE LEON, petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION and LA TONDE;A INC., respondents.

Amorito V. Canete for petitioner.

Pablo R. Cruz for private respondent.

FERNAN, C.J.:

This petition forcertiorariseeks to annul and set aside: (1) the majority decision datedJanuary 28, 1985 of the National Labor Relations Commission First Division in Case No.NCR- 83566-83, which reversed the Order dated April 6,1984 of Labor Arbiter BienvenidoS. Hernandez directing the reinstatement of petitioner Moises de Leon by privaterespondent La Tonde;a Inc. with payment of backwages and other benefits due a regularemployee; and, (2) the Resolution dated March 21, 1985 denying petitioner's motion forreconsideration.

It appears that petitioner was employed by private respondent La Tonde;a Inc. on

December 11, 1981, at the Maintenance Section of its Engineering Department in Tondo,Manila. 1 His work consisted mainly of painting company building and equipment, and otherodd jobs relating to maintenance. He was paid on a daily basis through petty cashvouchers.

In the early part of January, 1983, after a service of more than one (1) year, petitionerrequested from respondent company that lie be included in the payroll of regular workers,instead of being paid through petty cash vouchers. Private respondent's response to thisrequest was to dismiss petitioner from his employment on January 16, 1983. Having beenrefused reinstatement despite repeated demands, petitioner filed a complaint for illegaldismissal, reinstatement and payment of backwages before the Office of the Labor Arbiterof the then Ministry now Department of Labor and Employment.

Petitioner alleged that he was dismissed following his request to be treated as a regularemployee; that his work consisted of painting company buildings and maintenance choreslike cleaning and operating company equipment, assisting Emiliano Tanque Jr., a regularmaintenance man; and that weeks after his dismissal, he was re-hired by the respondentcompany indirectly through the Vitas-Magsaysay Village Livelihood Council, a labor agencyof respondent company, and was made to perform the tasks which he used to do. EmilianoTanque Jr. corroborated these averments of petitioner in his affidavit. 2

On the other hand, private respondent claimed that petitioner was not a regular employeebut only a casual worker hired allegedly only to paint a certain building in the companypremises, and that his work as a painter terminated upon the completion of the paintingjob.

On April 6, 1984, Labor Arbiter Bienvenido S. Hernandez rendered a decision 3 finding thecomplaint meritorious and the dismissal illegal; and ordering the respondent company toreinstate petitioner with full backwages and other benefits. Labor Arbiter Hernandez ruledthat petitioner was not a mere casual employee as asserted by private respondent but a

regular employee. He concluded that the dismissal of petitioner from the service wasprompted by his request to be included in the list of regular employees and to be paidthrough the payroll and is, therefore, an attempt to circumvent the legal obligations of anemployer towards a regular employee.

Labor Arbiter Hernandez found as follows:

After a thorough examination of the records of the case and evaluation ofthe evidence and versions of the parties, this Office finds and so holds thatthe dismissal of complainant is illegal. Despite the impressive attempt ofrespondents to show that the complainant was hired as casual and for the

work on particular project, that is the repainting of Mama Rosa Building,which particular work of painting and repainting is not pursuant to theregular business of the company, according to its theory, we finddifferently. Complainant's being hired on casual basis did not dissuadefrom the cold fact that such painting of the building and the painting andrepainting of the equipment and tools and other things belonging to thecompany and the odd jobs assigned to him to be performed when he hadno painting and repainting works related to maintenance as a maintenanceman are necessary and desirable to the better operation of the businesscompany. Respondent did not even attempt to deny and refute thecorroborating statements of Emiliano Tanque Jr., who was regularlyemployed by it as a maintenance man doing same jobs not only of paintingand repainting of building, equipment and tools and machineries ormachines if the company but also other odd jobs in the Engineering andMaintenance Department that complainant Moises de Leon did perform thesame odd jobs and assignments as were assigned to him during the periodde Leon was employed for more than one year continuously by Idrespondent company. We find no reason not to give credit and weight tothe affidavit and statement made therein by Emiliano Tanque Jr. Thisstrongly confirms that complainant did the work pertaining to the regularbusiness in which the company had been organized. Respondent cannotbe permitted to circumvent the law on security of tenure by consideringcomplainant as a casual worker on daily rate basis and after working for aperiod that has entitled him to be regularized that he would beautomatically terminated. ... . 4

On appeal, however, the above decision of the Labor Arbiter was reversed by the FirstDivision of the National Labor Relations Commission by virtue of the votes of two members 5which constituted a majority. Commissioner Geronimo Q. Quadra dissented, voting "for theaffirmation of the well-reasoned decision of the Labor Arbiter below." 6 The motion forreconsideration was denied. Hence, this recourse.

Petitioner asserts that the respondent Commission erred and gravely abuse its discretion inreversing the Order of the Labor Arbiter in view of the uncontroverted fact that the tasks heperformed included not only painting but also other maintenance work which are usuallynecessary or desirable in the usual business of private respondent: hence, the reversalviolates the Constitutional and statutory provisions for the protection of labor.

The private respondent, as expected, maintains the opposite view and argues that petitioner

was hired only as a painter to repaint specifically the Mama Rosa building at its Tondocompound, which painting work is not part of their main business; that at the time of hisengagement, it was made clear to him that he would be so engaged on a casual basis, somuch so that he was not required to accomplish an application form or to comply with the


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usual requisites for employment; and that, in fact, petitioner was never paid his salarythrough the regular payroll but always through petty cash vouchers. 7

The Solicitor General, in his Comment, recommends that the petition be given due coursein view of the evidence on record supporting petitioner's contention that his work wasregular in nature. In his view, the dismissal of petitioner after he demanded to beregularized was a subterfuge to circumvent the law on regular employment. He furtherrecommends that the questioned decision and resolution of respondent Commission beannulled and the Order of the Labor Arbiter directing the reinstatement of petitioner withpayment of backwages and other benefits be upheld. 8

After a careful review of the records of this case, the Court finds merit in the petition as Wesustain the position of the Solicitor General that the reversal of the decision of the LaborArbiter by the respondent Commission was erroneous.

The law on the matter is Article 281 of the Labor Code which defines regular and casualemployment as follows:

Art. 281. Regular and casual employment. The provisions of a writtenagreement to the contrary notwithstanding and regardless of the oralagreements of the parties, an employment shall be deemed to be regularwhere the employee has been engaged to perform activities which areusually necessary or desirable in the usual business or trade of theemployer, except where the employment has been fixed for a specific

project or undertaking the completion or termination of which has beendetermined at the time of the engagement of the employee or where thework or services to be performed is seasonal in nature and theemployment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by thepreceding paragraph: Provided, That any employee who has rendered atleast one year of service, whether such service is continuous or broken,shall be considered a regular employee with respect to the activity inwhich he is employed and his employment shall continue while suchactually exists.

This provision reinforces the Constitutional mandate to protect the interest of labor. Itslanguage evidently manifests the intent to safeguard the tenurial interest of the worker whomay be denied the rights and benefits due a regular employee by virtue of lopsidedagreements with the economically powerful employer who can maneuver to keep anemployee on a casual status for as long as convenient. Thus, contrary agreementsnotwithstanding, an employment is deemed regular when the activities performed by theemployee are usually necessary or desirable in the usual business or trade of theemployer. Not considered regular are the so-called "project employment" the completion ortermination of which is more or less determinable at the time of employment, such as thoseemployed in connection with a particular construction project 9and seasonal employmentwhich by its nature is only desirable for a limited period of time. However, any employeewho has rendered at least one year of service, whether continuous or intermittent, isdeemed regular with respect to the activity he performed and while such activity actuallyexists.

The primary standard, therefore, of determining a regular employment is the reasonableconnection between the particular activity performed by the employee in relation to theusual 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. The connection canbe determined by considering the nature of the work performed and its relation to thescheme of the particular business or trade in its entirety. Also, if the employee has beenperforming the job for at least one year, even if the performance is not continuous or merelyintermittent, the law deems the repeated and continuing need for its performance assufficient evidence of the necessity if not indispensability of that activity to the business.Hence, the employment is also considered regular, but only with respect to such activity andwhile such activity exists.

In the case at bar, the respondent company, which is engaged in the business ofmanufacture and distillery of wines and liquors, claims that petitioner was contracted on a

casual basis specifically to paint a certain company building and that its completion renderedpetitioner's employment terminated. This may have been true at the beginning, and had itbeen shown that petitioner's activity was exclusively limited to painting that certain building,respondent company's theory of casual employment would have been worthy ofconsideration.

However, during petitioner's period of employment, the records reveal that the tasksassigned to him included not only painting of company buildings, equipment and tools butalso cleaning and oiling machines, even operating a drilling machine, and other odd jobsassigned to him when he had no painting job. A regular employee of respondent company,Emiliano Tanque Jr., attested in his affidavit that petitioner worked with him as amaintenance man when there was no painting job.

It is noteworthy that, as wisely observed by the Labor Arbiter, the respondent company didnot even attempt to negate the above averments of petitioner and his co- employee. Indeed,the respondent company did not only fail to dispute this vital point, it even went further andconfirmed its veracity when it expressly admitted in its comment that, "The main bulk of workand/or activities assigned to petitioner was painting and other related activities. Occasionally,he was instructed to do other odd things in connection with maintenance while he waswaiting for materials he would need in his job or when he had finished early one assigned tohim. 10

The respondent Commission, in reversing the findings of the Labor Arbiter reasoned thatpetitioner's job cannot be considered as necessary or desirable in the usual business ortrade of the employer because, "Painting the business or factory building is not a part of therespondent's manufacturing or distilling process of wines and liquors. 11

The fallacy of the reasoning is readily apparent in view of the admitted fact that petitioner'sactivities included not only painting but other maintenance work as well, a fact which eventhe respondent Commission, like the private respondent, also expressly recognized when itstated in its decision that, 'Although complainant's (petitioner) work was mainly painting, hewas occasionally asked to do other odd jobs in connection with maintenance work. 12Itmisleadingly assumed that all the petitioner did during his more than one year of employmentwas to paint a certain building of the respondent company, whereas it is admitted that hewas given other assignments relating to maintenance work besides painting companybuilding and equipment.

It is self-serving, to say the least, to isolate petitioner's painting job to justify the proposition ofcasual employment and conveniently disregard the other maintenance activities of petitioner

which were assigned by the respondent company when he was not painting. The lawdemands that the nature and entirety of the activities performed by the employee beconsidered. In the case of petitioner, the painting and maintenance work given him manifesta treatment consistent with a maintenance man and not just a painter, for if his job was truly


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only to paint a building there would have been no basis for giving him other workassignments In between painting activities.

It is not tenable to argue that the painting and maintenance work of petitioner are notnecessary in respondent's business of manufacturing liquors and wines, just as it cannotbe said that only those who are directly involved in the process of producing wines andliquors may be considered as necessary employees. Otherwise, there would have been noneed for the regular Maintenance Section of respondent company's EngineeringDepartment, manned by regular employees like Emiliano Tanque Jr., whom petitioner oftenworked with.

Furthermore, the petitioner performed his work of painting and maintenance activitiesduring his employment in respondent's business which lasted for more than one year, untilearly January, 1983 when he demanded to be regularized and was subsequentlydismissed. Certainly, by this fact alone he is entitled by law to be considered a regularemployee. And considering further that weeks after his dismissal, petitioner was rehired bythe company through a labor agency and was returned to his post in the MaintenanceSection and made to perform the same activities that he used to do, it cannot be deniedthat as activities as a regular painter and maintenance man still exist.

It is of no moment that petitioner was told when he was hired that his employment wouldonly be casual, that he was paid through cash vouchers, and that he did not comply withregular employment procedure. Precisely, the law overrides such conditions which areprejudicial to the interest of the worker whose weak bargaining position needs the support

of the State. That determines whether a certain employment is regular or casual is not thewill and word of the employer, to which the desperate worker often accedes, much less theprocedure of hiring the employee or the manner of paying his salary. It is the nature of theactivities performed in relation to the particular business or trade considering allcircumstances, and in some cases the length of time of its performance and its continuedexistence.

Finally, considering its task to give life and spirit to the Constitutional mandate for theprotection of labor, to enforce and uphold our labor laws which must be interpreted liberallyin favor of the worker in case of doubt, the Court cannot understand the failure of therespondent Commission to perceive the obvious attempt on the part of the respondentcompany to evade its obligations to petitioner by dismissing the latter days after he askedto be treated as a regular worker on the flimsy pretext that his painting work was suddenly

finished only to rehire him indirectly weeks after his dismissal and assign him to performthe same tasks he used to perform. The devious dismissal is too obvious to escape notice.The inexplicable disregard of established and decisive facts which the Commission itselfadmitted to be so, in justifying a conclusion adverse to the aggrieved laborer clearly spellsa grave abuse of discretion amounting to lack of jurisdiction.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of theNational Labor Relations Commission are hereby annulled and set aside. The Order ofLabor arbiter Bienvenido S. Hernandez dated April 6, 1984 is reinstated. Privaterespondent is ordered to reinstate petitioner as a regular maintenance man and to paypetitioner 1) backwages equivalent to three years from January 16,1983, in accordancewith the Aluminum Wage Orders in effect for the period covered, 2) ECOLA 3) 13th MonthPay, 4) and other benefits under pertinent Collective Bargaining Agreements, if any.

SO ORDERED.

G.R. No. 148492 May 9, 2003

BUENAVENTURA C. MAGSALIN & COCA-COLA BOTTLERS PHILS., INC., petitioners,vs.NATIONAL ORGANIZATION OF WORKING MEN (N.O.W.M.), RODOLFO MELGAR,ARNEL DELOS SANTOS, SILVERIO MINDAJAO, RUBEN NAVALES, BOBBYAUSTERO, RAYMUNDO GAUDICOS, CHRISTOPHER PERALTA, GIOVANI DELA CRUZ,JOSELITO OCCIDENTAL, AMADO BODASAN, FREDERIK MAGALINO, CHITOOCCIDENTAL, ALEXANDER DELOS SANTOS, DEONIL MESA, OLIVER VILLAFLOR,ROBERTO TUMONBA, RODRIGO ANGELES, ROMMEL ABAD, FELIX AVENIDO,ARMANDO AMOR, FREDERICK DE GUZMAN, CEA CARMELO, MARIANO CAETE,ALBERTO ANTONES, ROMEO BASQUINAS, ROGELIO MALINIS, EDMUNDO BAYOS,RAMIL REVADO, JOEL PIATA, OSCAR MALINAY, ROBERT REYES, JIMMY REYES,RETCHEL HAUTEA, VICTORINO TORRALBA, NOEL RUBAI, RENATO DE OCAMPO,

JESUS NOZON, JOEL MALINIS, REYNALDO GREGORY, MICHAEL RUBIA, JOSELITOVILLANUEVA, LEONARDO MONDINA, EDUARDO BELLA, WILFREDO BELLA,ALBERTO MAGTIBAY, MIGUEL CUESTA, JOSE MARCOS RODRIGUEZ III, HERMINIOROFLO, ERNIE CHAVEZ, NELSON LOGRONIO, LEONILO GALAPIN, REY PANGILINAN,LARRY JAVIER, MATIAS ARBUES, RONILO AUSTERO, ADEMAR ESTUITA, EDWIN DELEON, RANDY DE CHAVEZ, respondents.

VITUG, J.:

Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondentworkers as "sales route helpers" for a limited period of five months. After five months,respondent workers were employed by petitioner company on a day-to-day basis. Accordingto petitioner company, respondent workers were hired to substitute for regular sales routehelpers whenever the latter would be unavailable or when there would be an unexpectedshortage of manpower in any of its work places or an unusually high volume of work. Thepractice was for the workers to wait every morning outside the gates of the sales office ofpetitioner company. If thus hired, the workers would then be paid their wages at the end ofthe day.

Ultimately, respondent workers asked petitioner company to extend to them regularappointments. Petitioner company refused. On 07 November 1997, twenty-three (23) of the"temporary" workers (herein respondents) filed with the National Labor RelationsCommission (NLRC) a complaint for the regularization of their employment with petitionercompany. The complaint was amended a number of times to include other complainants thatultimately totaled fifty-eight (58) workers. Claiming that petitioner company meanwhileterminated their services, respondent workers filed a notice of strike and a complaint forillegal dismissal and unfair labor practice with the NLRC.

On 01 April 1998, the parties agreed to submit the controversy, including the issue raised inthe complaint for regularization of employment, for voluntary arbitration. On 18 May 1998,the voluntary arbitrator rendered a decision dismissing the complaint on the thesis thatrespondents (then complainants) were not regular employees of petitioner company.

Respondent workers filed with the Court of Appeals a petition for review under Rule 43 of theRules of Civil Procedure assailing the decision of the voluntary arbitrator, therein contendingthat -

"1. The Voluntary Arbitrator committed errors in finding that petitioners voluntarily

and knowingly agreed to be employed on a day-to-day basis; and

"2. The Voluntary Arbitrator committed errors in finding that petitioners' dismissalwas valid."1


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In its decision of 11 August 2000, the Court of Appeals reversed and set aside the ruling ofthe voluntary arbitrator, it concluded -

"WHEREFORE, the assailed decision of the Voluntary Arbitrator is herebyREVERSED and SET ASIDE and anew one is entered:

"1. Declaring petitioners as regular employees of Coca-Cola BottlersPhils., Inc. and their dismissal from employment as illegal;

"2. Ordering respondent Coca-Cola Bottlers Phils., Inc. to reinstatepetitioners to their former positions with full backwages, inclusive of

allowances that petitioners had been receiving during their employmentand 13th month pay, computed from the date of their termination up to thetime of their actual reinstatement (Paramount Vinyl Product Corp. vs.NLRC, 190 SCRA 526)."2

Petitioner company's motion for reconsideration was denied in a resolution, dated 21 May2001, of the appellate court.

The focal issues revolve around the matter of whether or not the nature of work ofrespondents in the company is of such nature as to be deemed necessary and desirable inthe usual business or trade of petitioner that could qualify them to be regular employees.

The basic law on the case is Article 280 of the Labor Code. Its pertinent provisions read:

"Art. 280. Regular and Casual Employment. The provisions of written agreementto the contrary notwithstanding and regardless of the oral agreement of theparties, an employment shall be deemed to be regular where the employee hasbeen engaged to perform activities which are usually necessary or desirable in theusual business or trade of the employer, except where the employment has beenfixed for a specific project or undertaking the completion or termination of whichhas been determined at the time of the engagement of the employee or where thework or services to be performed is seasonal in nature and the employment is forthe duration of the season.

"An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year ofservice, whether such service is continuous or broken, shall be considered aregular employee with respect to the activity in which he is employed and hisemployment shall continue while such activity exists."

Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinksin the country. Respondent workers have long been in the service of petitioner company.Respondent workers, when hired, would go with route salesmen on board delivery trucksand undertake the laborious task of loading and unloading softdrink products of petitionercompany to its various delivery points.

Even while the language of law might have been more definitive, the clarity of its spirit andintent, i.e., to ensure a "regular" worker's security of tenure, however, can hardly bedoubted. In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable connection between the particular activityperformed by the employee in relation to the usual business or trade of the employer. Thestandard, supplied by the law itself, is whether the work undertaken is necessary or

desirable in the usual business or trade of the employer, a fact that can be assessed bylooking into the nature of the services rendered and its relation to the general scheme underwhich the business or trade is pursued in the usual course. It is distinguished from a specificundertaking that is divorced from the normal activities required in carrying on the particularbusiness or trade. But, although the work to be performed is only for a specific project orseasonal, where a person thus engaged has been performing the job for at least one year,even if the performance is not continuous or is merely intermittent, the law deems therepeated and continuing need for its performance as being sufficient to indicate the necessityor desirability of that activity to the business or trade of the employer. The employment ofsuch person is also then deemed to be regular with respect to such activity and while suchactivity exists.3

The argument of petitioner that its usual business or trade is softdrink manufacturing and thatthe work assigned to respondent workers as sales route helpers so involves merely"postproduction activities," one which is not indispensable in the manufacture of its products,scarcely can be persuasive. If, as so argued by petitioner company, only those whose workare directly involved in the production of softdrinks may be held performing functionsnecessary and desirable in its usual business or trade, there would have then been no needfor it to even maintain regular truck sales route helpers. The nature of the work performedmust be viewed from a perspective of the business or trade in its entirety4 and not on aconfined scope.

The repeated rehiring of respondent workers and the continuing need for their servicesclearly attest to the necessity or desirability of their services in the regular conduct of thebusiness or trade of petitioner company. The Court of Appeals has found each ofrespondents to have worked for at least one year with petitioner company. While this Court,in Brent School, Inc. vs. Zamora,5 has upheld the legality of a fixed-term employment, it hasdone so, however, with a stern admonition that where from the circumstances it is apparentthat the period has been imposed to preclude the acquisition of tenurial security by theemployee, then it should be struck down as being contrary to law, morals, good customs,public order and public policy. The pernicious practice of having employees, workers andlaborers, engaged for a fixed period of few months, short of the normal six-monthprobationary period of employment, and, thereafter, to be hired on a day-to-day basis, mocksthe law. Any obvious circumvention of the law cannot be countenanced. The fact thatrespondent workers have agreed to be employed on such basis and to forego the protectiongiven to them on their security of tenure, demonstrate nothing more than the serious problemof impoverishment of so many of our people and the resulting unevenness between laborand capital. A contract of employment is impressed with public interest. The provisions of

applicable statutes are deemed written into the contract, and "the parties are not at liberty toinsulate themselves and their relationships from the impact of labor laws and regulations bysimply contracting with each other."6

With respect to the "Release, Waiver and Quitclaim" executed by thirty-six (36) of the originalcomplainants, namely, Rommel Abad, Armando Amor, Bobby Austero, Felix Avenido,Amado Badasan, Edmundo Bayos, Eduardo Bella, Jr., Mariano Caete, Carmelo Cea, ErnieChavez, Randy Dechaves, Frederick De Guzman, Renato De Ocampo, Ademar Estuita,Leonilo Galapin, Raymund Gaudicos, Retchel Hautea, Larry Javier, Nelson Logrinio, AlbertoMagtibay, Frederick Magallano, Rogelio Malinis, Rodolfo Melgar, Silverio Mindajao,Leonardo Mondina, Ruben Navales, Rey Pangilinan, Christopher Peralta, Jimmy Reyes,Herminio Roflo, Michael Rubia, Noel Rubia, Roberto Tumomba, Oliver Villaflor, and JoselitoVillanueva, this Court finds the execution of the same to be in order. During the pendency of

the appeal with the Court of Appeals, these thirty-six (36) complainants individually executedvoluntarily a release, waiver and quitclaim and received from petitioner company the amountof fifteen thousand (P15,000.00) pesos each. The amount accords with the disposition of thecase by the voluntary arbitrator thusly:


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"WHEREFORE, above premises considered, the herein complaint is herebyDISMISSED for lack of merit.

"However, we cannot completely negate the fact that complainants did and doactually render services to the Company. It is with this in mind and considering thedifficulty the complainants may face in looking for another job in case they are nolonger re-engaged that we direct the company to pay complainants FifteenThousand Pesos each (P15,000.00) as financial assistance. It is howeverunderstood that the financial assistance previously extended by the Company tosome of the complainants shall be deducted from the financial assistance hereinawarded."7

The receipt of the amount awarded by the voluntary arbitrator, as well as the execution of arelease, waiver and quitclaim, is, in effect, an acceptance of said decision. There is nothingon record which could indicate that the execution thereof by thirty-six (36) of therespondent workers has been attended by fraud or deceit. While quitclaims executed byemployees are commonly frowned upon as being contrary to public policy and areineffective to bar claims for the full measure of their legal rights, there are, however,legitimate waivers that represent a voluntary and reasonable settlement of laborers' claimswhich should be so respected by the Court as the law between the parties.8 Where theperson making the waiver has done so voluntarily, with a full understanding thereof, andthe consideration for the quitclaim is credible and reasonable, the transaction must berecognized as being a valid and binding undertaking. "Dire necessity" is not an acceptableground for annulling the release, when it is not shown that the employee has been forcedto execute it.9

WHEREFORE, the questioned decision of the Court of Appeals, in CA-G.R. SP No. 47872is hereby AFFIRMED with MODIFICATION in that the "Release, Waiver and Quitclaim"executed by the thirty-six (36) individual respondents are hereby declared VALID andLEGAL.

SO ORDERED.

G.R. No. 148492 May 9, 2003

BUENAVENTURA C. MAGSALIN & COCA-COLA BOTTLERS PHILS., INC., petitioners,vs.

NATIONAL ORGANIZATION OF WORKING MEN (N.O.W.M.), RODOLFO MELGAR,ARNEL DELOS SANTOS, SILVERIO MINDAJAO, RUBEN NAVALES, BOBBYAUSTERO, RAYMUNDO GAUDICOS, CHRISTOPHER PERALTA, GIOVANI DELACRUZ, JOSELITO OCCIDENTAL, AMADO BODASAN, FREDERIK MAGALINO, CHITOOCCIDENTAL, ALEXANDER DELOS SANTOS, DEONIL MESA, OLIVER VILLAFLOR,ROBERTO TUMONBA, RODRIGO ANGELES, ROMMEL ABAD, FELIX AVENIDO,ARMANDO AMOR, FREDERICK DE GUZMAN, CEA CARMELO, MARIANO CAETE,ALBERTO ANTONES, ROMEO BASQUINAS, ROGELIO MALINIS, EDMUNDO BAYOS,RAMIL REVADO, JOEL PIATA, OSCAR MALINAY, ROBERT REYES, JIMMY REYES,RETCHEL HAUTEA, VICTORINO TORRALBA, NOEL RUBAI, RENATO DE OCAMPO,JESUS NOZON, JOEL MALINIS, REYNALDO GREGORY, MICHAEL RUBIA, JOSELITOVILLANUEVA, LEONARDO MONDINA, EDUARDO BELLA, WILFREDO BELLA,ALBERTO MAGTIBAY, MIGUEL CUESTA, JOSE MARCOS RODRIGUEZ III, HERMINIO

ROFLO, ERNIE CHAVEZ, NELSON LOGRONIO, LEONILO GALAPIN, REYPANGILINAN, LARRY JAVIER, MATIAS ARBUES, RONILO AUSTERO, ADEMARESTUITA, EDWIN DE LEON, RANDY DE CHAVEZ, respondents.

VITUG, J.:

Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondentworkers as "sales route helpers" for a limited period of five months. After five months,respondent workers were employed by petitioner company on a day-to-day basis. Accordingto petitioner company, respondent workers were hired to substitute for regular sales routehelpers whenever the latter would be unavailable or when there would be an unexpectedshortage of manpower in any of its work places or an unusually high volume of work. Thepractice was for the workers to wait every morning outside the gates of the sales office ofpetitioner company. If thus hired, the workers would then be paid their wages at the end ofthe day.

Ultimately, respondent workers asked petitioner company to extend to them regularappointments. Petitioner company refused. On 07 November 1997, twenty-three (23) of the"temporary" workers (herein respondents) filed with the National Labor RelationsCommission (NLRC) a complaint for the regularization of their employment with petitionercompany. The complaint was amended a number of times to include other complainants thatultimately totaled fifty-eight (58) workers. Claiming that petitioner company meanwhileterminated their services, respondent workers filed a notice of strike and a complaint forillegal dismissal and unfair labor practice with the NLRC.

On 01 April 1998, the parties agreed to submit the controversy, including the issue raised inthe complaint for regularization of employment, for voluntary arbitration. On 18 May 1998,the voluntary arbitrator rendered a decision dismissing the complaint on the thesis that

respondents (then complainants) were not regular employees of petitioner company.

Respondent workers filed with the Court of Appeals a petition for review under Rule 43 of theRules of Civil Procedure assailing the decision of the voluntary arbitrator, therein contendingthat -

"1. The Voluntary Arbitrator committed errors in finding that petitioners voluntarilyand knowingly agreed to be employed on a day-to-day basis; and

"2. The Voluntary Arbitrator committed errors in finding that petitioners' dismissalwas valid."1

In its decision of 11 August 2000, the Court of Appeals reversed and set aside the ruling ofthe voluntary arbitrator, it concluded -

"WHEREFORE, the assailed decision of the Voluntary Arbitrator is herebyREVERSED and SET ASIDE and anew one is entered:

"1. Declaring petitioners as regular employees of Coca-Cola BottlersPhils., Inc. and their dismissal from employment as illegal;

"2. Ordering respondent Coca-Cola Bottlers Phils., Inc. to reinstatepetitioners to their former positions with full backwages, inclusive ofallowances that petitioners had been receiving during their employmentand 13th month pay, computed from the date of their termination up to thetime of their actual reinstatement (Paramount Vinyl Product Corp. vs.NLRC, 190 SCRA 526)."2


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Petitioner company's motion for reconsideration was denied in a resolution, dated 21 May2001, of the appellate court.

The focal issues revolve around the matter of whether or not the nature of work ofrespondents in the company is of such nature as to be deemed necessary and desirable inthe usual business or trade of petitioner that could qualify them to be regular employees.

The basic law on the case is Article 280 of the Labor Code. Its pertinent provisions read:

"Art. 280. Regular and Casual Employment. The provisions of written agreementto the contrary notwithstanding and regardless of the oral agreement of the

parties, an employment shall be deemed to be regular where the employee hasbeen engaged to perform activities which are usually necessary or desirable in theusual business or trade of the employer, except where the employment has beenfixed for a specific project or undertaking the completion or termination of whichhas been determined at the time of the engagement of the employee or where thework or services to be performed is seasonal in nature and the employment is forthe duration of the season.

"An employment shall be deemed to be casual if it is not covered by the precedingparagraph: Provided, That, any employee who has rendered at least one year ofservice, whether such service is continuous or broken, shall be considered aregular employee with respect to the activity in which he is employed and hisemployment shall continue while such activity exists."

Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinksin the country. Respondent workers have long been in the service of petitioner company.Respondent workers, when hired, would go with route salesmen on board delivery trucksand undertake the laborious task of loading and unloading softdrink products of petitionercompany to its various delivery points.

Even while the language of law might have been more definitive, the clarity of its spirit andintent, i.e., to ensure a "regular" worker's security of tenure, however, can hardly bedoubted. In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable connection between the particular activityperformed by the employee in relation to the usual business or trade of the employer. Thestandard, supplied by the law itself, is whether the work undertaken is necessary ordesirable in the usual business or trade of the employer, a fact that can be assessed bylooking into the nature of the services rendered and its relation to the general schemeunder which the business or trade is pursued in the usual course. It is distinguished from aspecific undertaking that is divorced from the normal activities required in carrying on theparticular business or trade. But, although the work to be performed is only for a specificproject or seasonal, where a person thus engaged has been performing the job for at leastone year, even if the performance is not continuous or is merely intermittent, the lawdeems the repeated and continuing need for its performance as being sufficient to indicatethe necessity or desirability of that activity to the business or trade of the employer. Theemployment of such person is also then deemed to be regular with respect to such activityand while such activity exists.3

The argument of petitioner that its usual business or trade is softdrink manufacturing and

that the work assigned to respondent workers as sales route helpers so involves merely"postproduction activities," one which is not indispensable in the manufacture of itsproducts, scarcely can be persuasive. If, as so argued by petitioner company, only thosewhose work are directly involved in the production of softdrinks may be held performing

functions necessary and desirable in its usual business or trade, there would have then beenno need for it to even maintain regular truck sales route helpers. The nature of the workperformed must be viewed from a perspective of the business or trade in its entirety4 and noton a confined scope.

The repeated rehiring of respondent workers and the continuing need for their servicesclearly attest to the necessity or desirability of their services in the regular conduct of thebusiness or trade of petitioner company. The Court of Appeals has found each ofrespondents to have worked for at least one year with petitioner company. While this Court,in Brent School, Inc. vs. Zamora,5 has upheld the legality of a fixed-term employment, it hasdone so, however, with a stern admonition that where from the circumstances it is apparentthat the period has been imposed to preclude the acquisition of tenurial security by theemployee, then it should be struck down as being contrary to law, morals, good customs,public order and public policy. The pernicious practice of having employees, workers andlaborers, engaged for a fixed period of few months, short of the normal six-monthprobationary period of employment, and, thereafter, to be hired on a day-to-day basis, mocksthe law. Any obvious circumvention of the law cannot be countenanced. The fact thatrespondent workers have agreed to be employed on such basis and to forego the protectiongiven to them on their security of tenure, demonstrate nothing more than the serious problemof impoverishment of so many of our people and the resulting unevenness between laborand capital. A contract of employment is impressed with public interest. The provisions ofapplicable statutes are deemed written into the contract, and "the parties are not at liberty toinsulate themselves and their relationships from the impact of labor laws and regulations bysimply contracting with each other."6

With respect to the "Release, Waiver and Quitclaim" executed by thirty-six (36) of the originalcomplainants, namely, Rommel Abad, Armando Amor, Bobby Austero, Felix Avenido,Amado Badasan, Edmundo Bayos, Eduardo Bella, Jr., Mariano Caete, Carmelo Cea, ErnieChavez, Randy Dechaves, Frederick De Guzman, Renato De Ocampo, Ademar Estuita,Leonilo Galapin, Raymund Gaudicos, Retchel Hautea, Larry Javier, Nelson Logrinio, AlbertoMagtibay, Frederick Magallano, Rogelio Malinis, Rodolfo Melgar, Silverio Mindajao,Leonardo Mondina, Ruben Navales, Rey Pangilinan, Christopher Peralta, Jimmy Reyes,Herminio Roflo, Michael Rubia, Noel Rubia, Roberto Tumomba, Oliver Villaflor, and JoselitoVillanueva, this Court finds the execution of the same to be in order. During the pendency ofthe appeal with the Court of Appeals, these thirty-six (36) complainants individually executedvoluntarily a release, waiver and quitclaim and received from petitioner company the amountof fifteen thousand (P15,000.00) pesos each. The amount accords with the disposition of thecase by the voluntary arbitrator thusly:

"WHEREFORE, above premises considered, the herein complaint is herebyDISMISSED for lack of merit.

"However, we cannot completely negate the fact that complainants did and doactually render services to the Company. It is with this in mind and considering thedifficulty the complainants may face in looking for another job in case they are nolonger re-engaged that we direct the company to pay complainants FifteenThousand Pesos each (P15,000.00) as financial assistance. It is howeverunderstood that the financial assistance previously extended by the Company tosome of the complainants shall be deducted from the financial assistance hereinawarded."7

The receipt of the amount awarded by the voluntary arbitrator, as well as the execution of arelease, waiver and quitclaim, is, in effect, an acceptance of said decision. There is nothingon record which could indicate that the execution thereof by thirty-six (36) of the respondentworkers has been attended by fraud or deceit. While quitclaims executed by employees are


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commonly frowned upon as being contrary to public policy and are ineffective to bar claimsfor the full measure of their legal rights, there are, however, legitimate waivers thatrepresent a voluntary and reasonable settlement of laborers' claims which should be sorespected by the Court as the law between the parties.8 Where the person making thewaiver has done so voluntarily, with a full understanding thereof, and the consideration forthe quitclaim is credible and reasonable, the transaction must be recognized as being avalid and binding undertaking. "Dire necessity" is not an acceptable ground for annullingthe release, when it is not shown that the employee has been forced to execute it.9

WHEREFORE, the questioned decision of the Court of Appeals, in CA-G.R. SP No. 47872is hereby AFFIRMED with MODIFICATION in that the "Release, Waiver and Quitclaim"executed by the thirty-six (36) individual respondents are hereby declared VALID andLEGAL.

SO ORDERED.

G.R. No. L-48494 February 5, 1990

BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners,vs.RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of thePresident, and DOROTEO R. ALEGRE, respondents.

Quasha, Asperilla, Ancheta, Pea & Nolasco for petitioners.

Mauricio G. Domogon for respondent Alegre.

NARVASA, J.:

The question presented by the proceedings at bar1 is whether or not the provisions of theLabor Code, 2 as amended, 3 have anathematized "fixed period employment" oremployment for a term.

The root of the controversy at bar is an employment contract in virtue of which Doroteo R.Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation ofP20,000.00. 4 The contract fixed a specific term for its existence, five (5) years, i.e., fromJuly 18, 1971, the date of execution of the agreement, to July 17, 1976. Subsequentsubsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974reiterated the same terms and conditions, including the expiry date, as those contained inthe original contract of July 18, 1971. 5

Some three months before the expiration of the stipulated period, or more precisely onApril 20,1976, Alegre was given a copy of the report filed by Brent School with theDepartment 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 definiteperiod of employment." And a month or so later, on May 26, 1976, Alegre accepted the

amount of P3,177.71, and signed a receipt therefor containing the phrase, "in full paymentof services for the period May 16, to July 17, 1976 as full payment of contract."

However, at the investigation conducted by a Labor Conciliator of said report of terminationof his services, Alegre protested the announced termination of his employment. He arguedthat although his contract did stipulate that the same would terminate on July 17, 1976, sincehis services were necessary and desirable in the usual business of his employer, and hisemployment had lasted for five years, he had acquired the status of a regular employee andcould not be removed except for valid cause. 6 The Regional Director considered BrentSchool's report as an application for clearance to terminate employment (not a report oftermination), and accepting the recommendation of the Labor Conciliator, refused to givesuch clearance and instead required the reinstatement of Alegre, as a "permanentemployee," to his former position without loss of seniority rights and with full back wages.The Director pronounced "the ground relied upon by the respondent (Brent) in terminatingthe services of the complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite

oddly, as prohibited by Circular No. 8, series of 1969, of the Bureau of Private Schools. 7

Brent School filed a motion for reconsideration. The Regional Director denied the motion andforwarded the case to the Secretary of Labor for review. 8 The latter sustained the RegionalDirector. 9 Brent appealed to the Office of the President. Again it was rebuffed. That Officedismissed its appeal for lack of merit and affirmed the Labor Secretary's decision, ruling thatAlegre was a permanent employee who could not be dismissed except for just cause, andexpiration of the employment contract was not one of the just causes provided in the LaborCode for termination of services. 10

The School is now before this Court in a last attempt at vindication. That it will get here.

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.Indeed, the Code did not come into effect until November 1, 1974, some three years after theperfection of the employment contract, and rights and obligations thereunder had arisen andbeen mutually observed and enforced.

At that time, i.e., before the advent of the Labor Code, there was no doubt whatever aboutthe validity of term employment. It was impliedly but nonetheless clearly recognized by theTermination Pay Law, R.A. 1052, 11 as amended by R.A. 1787. 12 Basically, this statuteprovided that

In cases of employment, without a definite period, in a commercial,industrial, or agricultural establishment or enterprise, the employer or the

employee may terminate at any time the employment with just cause; orwithout just cause in the case of an employee by serving written notice onthe employer at least one month in advance, or in the case of an employer,by serving such notice to the employee at least one month in advance orone-half month for every year of service of the employee, whichever islonger, a fraction of at least six months being considered as one wholeyear.

The employer, upon whom no such notice was served in case oftermination of employment without just cause, may hold the employeeliable for damages.

The employee, upon whom no such notice was served in case of

termination of employment without just cause, shall be entitled tocompensation from the date of termination of his employment in an amountequivalent to his salaries or wages corresponding to the required period ofnotice.


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There was, to repeat, clear albeit implied recognition of the licitness of term employment.RA 1787 also enumerated what it considered to be just causes for terminating anemployment without a definite period, either by the employer or by the employee withoutincurring any liability therefor.

Prior, thereto, it was the Code of Commerce which governed employment without a fixedperiod, and also implicitly acknowledged the propriety of employment with a fixed period.Its Article 302 provided that

In cases in which the contract of employment does not have a fixedperiod, any of the parties may terminate it, notifying the other thereof one

month in advance.

The factor or shop clerk shall have a right, in this case, to the salarycorresponding to said month.

The salary for the month directed to be given by the said Article 302 of the Codeof Commerce to the factor or shop clerk, was known as the mesada (from mes,Spanish for "month"). When Article 302 (together with many other provisions ofthe Code of Commerce) was repealed by the Civil Code of the Philippines,Republic Act No. 1052 was enacted avowedly for the precise purpose ofreinstating the mesada.

Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and becameeffective on August 30,1950, itself deals with obligations with a period in section 2, Chapter3, Title I, Book IV; and with contracts of labor and for a piece of work, in Sections 2 and 3,Chapter 3, Title VIII, respectively, of Book IV. No prohibition against term-or fixed-periodemployment 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 andAlegre on July 18, 1971, it was perfectly legitimate for them to include in it a stipulationfixing the duration thereof Stipulations for a term were explicitly recognized as valid by thisCourt, for instance, in Biboso v. Victorias Milling Co., Inc., promulgated on March 31, 1977,13 and J. WalterThompson Co. (Phil.) v. NLRC, promulgated on December 29, 1983. 14TheThompson case involved an executive who had been engaged for a fixed period of three(3) years. Biboso involved teachers in a private school as regards whom, the followingpronouncement was made:

What is decisive is that petitioners (teachers) were well aware an thetime that their tenure was for a limited duration. Upon its termination,both parties to the employment relationship were free to renew it or to letit lapse. (p. 254)

Under American law 15 the principle is the same. "Where a contract specifies the period ofits duration, it terminates on the expiration of such period." 16"A contract of employment fora definite period terminates by its own terms at the end of such period." 17

The status of legitimacy continued to be enjoyed by fixed-period employment contractsunder the Labor Code (Presidential Decree No. 442), which went into effect on November

1, 1974. The Code contained explicit references to fixed period employment, oremployment with a fixedordefinite period. Nevertheless, obscuration of the principle oflicitness of term employment began to take place at about this time

Article 320, entitled "Probationary and fixed period employment," originally stated that the"termination of employment of probationary employees and those employed WITH A FIXEDPERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." Theasserted objective to was "prevent the circumvention of the right of the employee to besecured in their employmentas provided . . . (in the Code)."

Article 321 prescribed the just causes for which an employer could terminate "anemployment without a definite period."

And Article 319 undertook to define "employment without a fixed period" in the followingmanner: 18

An employment shall be deemed to be without a definite periodforpurposes of this Chapter where the employee has been engaged toperform activities which are usually necessary or desirable in the usualbusiness or trade of the employer, except where the employment has beenfixed for a specific project or undertaking the completion or termination ofwhich has been determined at the time of the engagement of theemployee or where the work or service to be performed is seasonal innature and the employment is for the duration of the season.

The question immediately provoked by a reading of Article 319 is whether or not a voluntaryagreement on a fixed term or period would be valid where the employee "has been engagedto perform activities which are usually necessary or desirable in the usual business or trade

of the employer." The definition seems a non sequitur. From the premise that the duties ofan employee entail "activities which are usually necessary or desirable in the usual businessor trade of the employer the" conclusion does not necessarily follow that the employer andemployee should be forbidden to stipulate any period of time for the performance of thoseactivities. There is nothing essentially contradictory between a definite period of anemployment contract and the nature of the employee's duties set down in that contract asbeing "usually necessary or desirable in the usual business or t rade of the employer." Theconcept of the employee's duties as being "usually necessary or desirable in the usualbusiness or trade of the employer" is not synonymous with or identical to employment with afixed term. Logically, the decisive determinant in term employment should not be theactivities that the employee is called upon to perform, but the day certain agreed upon by theparties for the commencement and termination of their employment relationship, a daycertain being understood to be "that which must necessarily come, although it may not be

known when."19

Seasonalemployment, and employment for a particular projectare merelyinstances employment in which a period, where not expressly set down, necessarily implied.

Of course, the term periodhas a definite and settled signification. It means, "Length ofexistence; duration. A point of time marking a termination as of a cause or an activity; anend, a limit, a bound; conclusion; termination. A series of years, months or days in whichsomething is completed. A time of definite length. . . . the period from one fixed date toanother fixed date . . ." 20 It connotes a "space of time which has an influence on anobligation as a result of a juridical act, and either suspends its demandableness or producesits extinguishment." 21 It should be apparent that this settled and familiar notion of a period, inthe context of a contract of employment, takes no account at all of the nature of the duties ofthe employee; it has absolutely no relevance to the character of his duties as being "usuallynecessary or desirable to the usual business of the employer," or not.

Subsequently, the foregoing articles regarding employment with "a definite period" and"regular" employment were amended by Presidential Decree No. 850, effective December16, 1975.


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Article 320, dealing with "Probationary and fixed period employment," was altered byeliminating the reference to persons "employed with a fixed period," and was renumbered(becoming Article 271). The article 22 now reads:

. . . Probationary employment.Probationary employment shall notexceed six months from the date the employee started working, unless itis covered by an apprenticeship agreement stipulating a longer period.The services of an employee who has been engaged in a probationarybasis may be terminated for a just cause or when he fails to qualify as aregular employee in accordance with reasonable standards made knownby the employer to the employee at the time of his engagement. Anemployee who is allowed to work after a probationary period shall beconsidered a regular employee.

Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period,"supra) by (a) deletingmention of employment with a fixed or definite period, (b) adding ageneral exclusion clause declaring irrelevant written or oral agreements "to the contrary,"and (c) making the provision treat exclusively of "regular" and "casual" employment. Asrevised, said article, renumbered 270, 23 now reads:

. . . Regular and Casual Employment.The provisions of writtenagreement to the contrary notwithstanding and regardless of the oralagreement of the parties, an employment shall be deemed to be regularwhere the employee has been engaged to perform activities which are

usually necessary or desirable in the usual business or trade of theemployer except where the employment has been fixed for a specificproject or undertaking the completion or termination of which has beendetermined at the time of the engagement of the employee or where thework or service to be employed is seasonal in nature and theemployment is for the duration of the season.

An employment shall be deemed to he casual if it is not covered by thepreceding paragraph: provided, that, any employee who has rendered atleast one year of service, whether such service is continuous or broken,shall be considered a regular employee with respect to the activity inwhich he is employed and his employment shall continue while suchactually exists.

The first paragraph is identical to Article 319 except that, as just mentioned, aclause has been added, to wit: "The provisions of written agreement to thecontrary notwithstanding and regardless of the oral agreements of the parties . . ."The clause would appear to be addressed inter alia to agreements fixing a definiteperiod for employment. There is withal no clear indication of the intent to denyvalidity to employment for a definite period. Indeed, not only is the concept ofregular employment not essentially inconsistent with employment for a fixed term,as above pointed out,Article 272of the Labor Code, as amended by said PD 850,still impliedly acknowledged the propriety of term employment: it listed the "justcauses" for which "an employer may terminate employment without a definiteperiod," thus giving rise to the inference that if the employment be with a definiteperiod, there need be no just cause for termination thereof if the ground be

precisely the expiration of the term agreed upon by the parties for the duration ofsuch employment.

Still later, however, saidArticle 272(formerly Article 321) was further amended by BatasPambansa Bilang130, 24 to eliminate altogether reference to employment without a definiteperiod. As lastly amended, the opening lines of the article (renumbered 283), now pertinentlyread: "An employer may terminate an employment for any of the following just causes: . . . "BP 130 thus completed the elimination of every reference in the Labor Code, express orimplied, to employment with a fixed or definite period or term.

It is in the light of the foregoing description of the development of the provisions of the LaborCode bearing on term or fixed-period employment that the question posed in the openingparagraph of this opinion should now be addressed. Is it then the legislative intention tooutlaw stipulations in employment contracts laying down a definite period therefor? Are suchstipulations in essence contrary to public policy and should not on this account be accordedlegitimacy?

On the one hand, there is the gradual and progressive elimination of references to term orfixed-period employment in the Labor Code, and the specific statement of the rule 25 that

. . . Regular and Casual Employment. The provisions of writtenagreement to thecontrary notwithstanding and regardless of the oralagreement of the parties, an employment shall be deemed to be regularwhere the employee has been engaged to perform activities which areusually necessary or desirable in the usual business or trade of theemployer except where the employment has been fixed for a specificproject or undertaking the completion or termination of which has been

determined at the time of the engagement of the employee or where thework or service to be employed is seasonal in nature and the employmentis for the duration of the season.

An employment shall be deemed to be casual if it is not covered by thepreceding paragraph: provided, that, any employee who has rendered atleast one year of service, whether such service is continuous or broken,shall be considered a regular employee with respect to the activity in whichhe is employed and his employment shall continue while such actuallyexists.

There is, on the other hand, the Civil Code, which has always recognized, and continues torecognize, the validity and propriety of contracts and obligations with a fixed or definite

period, and imposes no restraints on the freedom of the parties to fix the duration of acontract, whatever its object, be it specie, goods or services, except the general admonitionagainst stipulations contrary to law, morals, good customs, public order or public policy. 26Under the Civil Code, therefore, and as a general proposition, fixed-term employmentcontracts are not limited, as they are under the present Labor Code, to those by natureseasonal or for specific projects with pre-determined dates of completion; they also includethose to which the parties by free choice have assigned a specific date of termination.

Some familiar examples may be cited of employment contracts which may be neither forseasonal work nor for specific projects, but to which a f ixed term is an essential and naturalappurtenance: overseas employment contracts, for one, to which, whatever the nature of theengagement, the concept of regular employment will all that it implies does not appear everto have been applied, Article 280 of the Labor Code not withstanding; also appointments to

the positions of dean, assistant dean, college secretary, principal, and other administrativeoffices in educational institutions, which are by practice or tradition rotated among the facultymembers, and where fixed terms are a necessity, without which no reasonable rotationwould be possible. Similarly, despite the provisions of Article 280, Policy, Instructions No. 8


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of the Minister of Labor27 implicitly recognize that certain company officials may be electedfor what would amount to fixed periods, at the expiration of which they would have to standdown, in providing that these officials," . . . may lose their jobs as president, executive vice-president or vice-president, etc. because the stockholders or the board of directors for onereason or another did not re-elect them."

There can of course be no quarrel with the proposition that where from the circumstances itis apparent that periods have been imposed to preclude acquisition of tenurial security bythe employee, they should be struck down or disregarded as contrary to public policy,morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise,where the reason for the law does not exist, e.g., where it is indeed the employee himselfwho insists upon a period or where the nature of the engagement is such that, withoutbeing seasonal or for a specific project, a definite date of termination is a sine qua non,would an agreement fixing a period be essentially evil or illicit, therefore anathema? Wouldsuch an agreement come within the scope of Article 280 which admittedly was enacted "toprevent the circumvention of the right of the employee to be secured in . . . (his)employment?"

As it is evident from even only the three examples already given that Article 280 of theLabor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut ofemployment contracts to which the lack of a fixed period would be an anomaly, but wouldalso appear to restrict, without reasonable distinctions, the right of an employee to freelystipulate with his employer the duration of his engagement, it logically follows that such aliteral interpretation should be eschewed or avoided. The law must be given a reasonableinterpretation, to preclude absurdity in its application. Outlawing the whole concept of termemployment and subverting to boot the principle of freedom of contract to remedy the evilof employer's using it as a means to prevent their employees from obtaining security oftenure is like cutting off the nose to spite the face or, more relevantly, curing a headache bylopping off the head.

It is a salutary principle in statutory construction that there exists a validpresumption that undesirable consequences were never intended by alegislative measure, and that a construction of which the statute is fairlysusceptible is favored, which will avoid all objecionable mischievous,undefensible, wrongful, evil and injurious consequences. 28

Nothing is better settled than that courts are not to give words a meaning

which would lead to absurd or unreasonable consequences. That s aprinciple that does back to In re Allen decided oil October 27, 1903,where it was held that a literal interpretation is to be rejected if it wouldbe unjust or lead to absurd results. That is a strong argument against itsadoption. The words of Justice Laurel are particularly apt. Thus: "Thefact that the construction placed upon the statute by the appellants wouldlead to an absurdity is another argument for rejecting it. . . ." 29

. . . We have, here, then a case where the true intent of the law is clearthat calls for the application of the cardinal rule of statutory constructionthat such intent of spirit must prevail over the letter thereof, for whateveris within the spirit of a statute is within the statute, since adherence to theletter would result in absurdity, injustice and contradictions and would

defeat the plain and vital purpose of the statute.

30

Accordingly, and since the entire purpose behind the development of legislationculminating in the present Article 280 of the Labor Code clearly appears to have been, as

already observed, to prevent circumvention of the employee's right to be secure in histenure, the clause in said article indiscriminately and completely ruling out all written or oralagreements conflicting with the concept of regular employment as defined therein should beconstrued to refer to the substantive evil that the Code itself has singled out: agreementsentered into precisely to circumvent security of tenure. It should have no application toinstances where a fixed period of employment was agreed upon knowingly and voluntarily bythe parties, without any force, duress or improper pressure being brought to bear upon theemployee and absent any other circumstances vitiating his consent, or where it satisfactorilyappears that the employer and employee dealt with each other on more or less equal termswith no moral dominance whatever being exercised by the former over the latter. Unless thuslimited in its purview, the law would be made to apply to purposes other than those explicitlystated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to

lead to absurd and unintended consequences.

Such interpretation puts the seal on Bibiso31 upon the effect of the expiry of an agreedperiod of employment as still good rulea rule reaffirmed in the recent case ofEscudero vs.Office of the President(G.R. No. 57822, April 26, 1989) where, in the fairly analogous caseof a teacher being served by her school a notice of termination following the expiration of thelast of three successive fixed-term employment contracts, the Court held:

Reyes (the teacher's) argument is not persuasive. It loses sight of the factthat her employment was probationary, contractual in nature, and one witha definitive period. At the expiration of the period stipulated in the contract,her appointment was deemed terminated and the letter informing her ofthe non-renewal of her contract is not a condition sine qua non beforeReyes may be deemed to have ceased in the employ of petitioner UST.The notice is a mere reminder that Reyes' contract of employment wasdue to expire and that the contract would no longer be renewed. It is not aletter of termination. The interpretation that the notice is only a reminder isconsistent with the court's finding in Labajo supra. ... 32

Paraphrasing Escudero, respondent Alegre's employment was terminated upon theexpiration of his last contract with Brent School on July 16, 1976 without the necessity of anynotice. The advance written advice given the Department of Labor with copy to saidpetitioner was a mere reminder of the impending expiration of his contract, not a letter oftermination, nor an application for clearance to terminate which needed the approval of theDepartment of Labor to make the termination of his services effective. In any case, suchclearance should properly have been given, not denied.

WHEREFORE, the public respondent's Decision complained of is REVERSED and SETASIDE. Respondent Alegre's contract of employment with Brent School having lawfullyterminated with and by reason of the expiration of the agreed term of period thereof, he isdeclared not entitled to reinstatement and the other relief awarded and confirmed on appealin the proceedings below. No pronouncement as to costs.

SO ORDERED.

G.R. No. 61594 September 28, 1990

PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner,vsHON. BLAS F. OPLE, in his capacity as Minister of Labor; HON. VICENTE LEOGARDO,JR., in his capacity as Deputy Minister; ETHELYNNE B. FARRALES and MARIAMOONYEEN MAMASIG, respondents.


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Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.

Ledesma, Saludo & Associates for private respondents.

FELICIANO, J.:

On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), aforeign corporation licensed to do business in the Philippines, executed in Manila two (2)separate contracts of employment, one with private respondent Ethelynne B. Farrales andthe other with private respondent Ma. M.C. Mamasig. 1 The contracts, which becameeffective on 9 January 1979, provided in pertinent portion as follows:

5. DURATION OF EMPLOYMENT AND PENALTY

This agreement is for a period of three (3) years, but can be extended bythe mutual consent of the parties.

xxx xxx xxx

6. TERMINATION

xxx xxx xxx

Notwithstanding anything to contrary as herein provided, PIA reservesthe right to terminate this agreement at any time by giving theEMPLOYEE notice in writing in advance one month before the intendedtermination or in lieu thereof, by paying the EMPLOYEE wagesequivalent to one month's salary.

xxx xxx xxx

10. APPLICABLE LAW:

This agreement shall be construed and governed under and by the lawsof Pakistan, and only the Courts of Karachi, Pakistan shall have thejurisdiction to consider any matter arising out of or under this agreement.

Respondents then commenced training in Pakistan. After their training period, they begandischarging their job functions as flight attendants, with base station in Manila and flyingassignments to different parts of the Middle East and Europe.

On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of thecontracts of employment, PIA through Mr. Oscar Benares, counsel for and official of thelocal branch of PIA, sent separate letters both dated 1 August 1980 to private respondentsFarrales and Mamasig advising both that their services as flight stewardesses would be

terminated "effective 1 September 1980, conformably to clause 6 (b) of the employmentagreement [they had) executed with [PIA]." 2

On 9 September 1980, private respondents Farrales and Mamasig jointly instituted acomplaint, docketed as NCR-STF-95151-80, for illegal dismissal and non-payment ofcompany benefits and bonuses, against PIA with the then Ministry of Labor and Employment("MOLE"). After several unfruitful attempts at conciliation, the MOLE hearing officer Atty.Jose M. Pascual ordered the parties to submit their position papers and evidence supportingtheir respective positions. The PIA submitted its position paper, 3but no evidence, and thereclaimed that both private respondents were habitual absentees; that both were in the habit ofbringing in from abroad sizeable quantities of "personal effects"; and that PIA personnel atthe Manila International Airport had been discreetly warned by customs officials to adviseprivate respondents to discontinue that practice. PIA further claimed that the services of bothprivate respondents were terminated pursuant to the provisions of the employment contract.

In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered thereinstatement of private respondents with full backwages or, in the alternative, the paymentto them of the amounts equivalent to their salaries for the remainder of the fixed three-yearperiod of their employment contracts; the payment to private respondent Mamasig of anamount equivalent to the value of a round trip ticket Manila-USA Manila; and payment of abonus to each of the private respondents equivalent to their one-month salary. 4 The Orderstated that private respondents had attained the status of regular employees after they hadrendered more than a year of continued service; that the stipulation limiting the period of theemployment contract to three (3) years was null and void as violative of the provisions of theLabor Code and its implementing rules and regulations on regular and casual employment;and that the dismissal, having been carried out without the requisite clearance from theMOLE, was illegal and entitled private respondents to reinstatement with full backwages.

On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy Minister,MOLE, adopted the findings of fact and conclusions of the Regional Director and affirmed thelatter's award save for the portion thereof giving PIA the option, in lieu of reinstatement, "topay each of the complainants [private respondents] their salaries corresponding to theunexpired portion of the contract[s] [of employment] . . .". 5

In the instant Petition forCertiorari, petitioner PIA assails the award of the Regional Directorand the Order of the Deputy Minister as having been rendered without jurisdiction; for havingbeen rendered without support in the evidence of record since, allegedly, no hearing wasconducted by the hearing officer, Atty. Jose M. Pascual; and for having been issued indisregard and in violation of petitioner's rights under the employment contracts with privaterespondents.

1. Petitioner's first contention is that the Regional Director, MOLE, had no jurisdiction overthe subject matter of the complaint initiated by private respondents for illegal dismissal,jurisdiction over the same being lodged in the Arbitration Branch of the National LaborRelations Commission ("NLRC") It appears to us beyond dispute, however, that both at thetime the complaint was initiated in September 1980 and at the time the Orders assailed wererendered on January 1981 (by Regional Director Francisco L. Estrella) and August 1982 (byDeputy Minister Vicente Leogardo, Jr.), the Regional Director had jurisdiction overtermination cases.

Art. 278 of the Labor Code, as it then existed, forbade the termination of the services ofemployees with at least one (1) year of service without prior clearance from the Departmentof Labor and Employment:

Art. 278. Miscellaneous Provisions . . .


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(b) With or without a collective agreement, no employer may shut downhis establishment or dismiss or terminate the employment of employeeswith at least one year of service during the last two (2) years, whethersuch service is continuous or broken, without prior written authorityissued in accordance with such rules and regulations as the Secretarymay promulgate . . . (emphasis supplied)

Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code,made clear that in case of a termination without the necessary clearance, theRegional Director was authorized to order the reinstatement of the employeeconcerned and the payment of backwages; necessarily, therefore, the RegionalDirector must have been given jurisdiction over such termination cases:

Sec. 2. Shutdown or dismissal without clearance. Any shutdown ordismissal without prior clearance shall be conclusively presumed to betermination of employment without a just cause. The Regional Directorshall, in such case order the immediate reinstatement of the employeeand the payment of his wages from the time of the shutdown or dismissaluntil the time of reinstatement. (emphasis supplied)

Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April 1976,was similarly very explicit about the jurisdiction of the Regional Director overtermination of employment cases:

Under PD 850, termination cases with or without CBA are nowplaced under the original jurisdiction of the Regional Director. Preventivesuspension cases, now made cognizable for the first time, are alsoplaced under the Regional Director. Before PD 850, termination caseswhere there was a CBA were under the jurisdiction of the grievancemachinery and voluntary arbitration, while termination cases where therewas no CBA were under the jurisdiction of the Conciliation Section.

In more details, the major innovations introduced by PD 850 and itsimplementing rules and regulations with respect to termination andpreventive suspension cases are:

1. The Regional Director is now required to rule on every application for

clearance, whether there is opposition or not, within ten days fromreceipt thereof.

xxx xxx xxx

(Emphasis supplied)

2. The second contention of petitioner PIA is that, even if the Regional Director hadjurisdiction, still his order was null and void because it had been issued in violation ofpetitioner's right to procedural due process . 6 This claim, however, cannot be given seriousconsideration. Petitioner was ordered by the Regional Director to submit not only itsposition paper but also such evidence in its favor as it might have. Petitioner opted to rely

solely upon its position paper; we must assume it had no evidence to sustain its assertions.Thus, even if no formal or oral hearing was conducted, petitioner had ample opportunity toexplain its side. Moreover, petitioner PIA was able to appeal his case to the Ministry ofLabor and Employment. 7

There is another reason why petitioner's claim of denial of due process must be rejected. Atthe time the complaint was filed by private respondents on 21 September 1980 and at thetime the Regional Director issued his questioned order on 22 January 1981, applicableregulation, as noted above, specified that a "dismissal without prior clearance shall beconclusively presumed to be termination of employment without a cause", and the RegionalDirector was required in such case to" order the immediate reinstatement of the employeeand the payment of his wages from the time of the shutdown or dismiss until . . .reinstatement." In other words, under the then applicable rule, the Regional Director did noteven have to require submission of position papers by the parties in view of the conclusive(juris et de jure) character of the presumption created by such applicable law and regulation.In Cebu Institute of Technology v. Minister of Labor and Employment, 8 the Court pointed outthat "under Rule 14, Section 2, of the Implementing Rules and Regulations, the termination

of [an employee] which was without previous clearance from the Ministry of Labor isconclusively presumed to be without [just] cause . . . [a presumption which] cannot beoverturned by any contrary proof however strong."

3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract ofemployment with private respondents Farrales and Mamasig, arguing that its relationshipwith them was governed by the provisions of its contract rather than by the generalprovisions of the Labor Code. 9

Paragraph 5 of that contract set a term of three (3) years for that relationship, extendible byagreement between the parties; while paragraph 6 provided that, notwithstanding any otherprovision in the Contract, PIA had the right to terminate the employment agreement at anytime by giving one-month's notice to the employee or, in lieu of such notice, one-monthssalary.

A contract freely entered into should, of course, be respected, as PIA argues, since acontract is the law between the parties. 10 The principle of party autonomy in contracts is not,however, an absolute principle. The rule in Article 1306, of our Civil Code is that thecontracting parties may establish such stipulations as they may deem convenient, "providedthey are not contrary to law, morals, good customs, public order or public policy." Thus,counter-balancing the principle of autonomy of contracting parties is the equally general rulethat provisions of applicable law, especially provisions relating to matters affected with publicpolicy, are deemed written into the contract. 11Put a little differently, the governing principle isthat parties may not contract away applicable provisions of law especially peremptoryprovisions dealing with matters heavily impressed with public interest. The law relating tolabor 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 simplycontracting with each other. It is thus necessary to appraise the contractual provisionsinvoked by petitioner PIA in terms of their consistency with applicable Philippine law andregulations.

As noted earlier, both the Labor Arbiter and the Deputy Minister, MOLE, in effect held thatparagraph 5 of that employment contract was inconsistent with Articles 280 and 281 of theLabor Code as they existed at the time the contract of employment was entered into, andhence refused to give effect to said paragraph 5. These Articles read as follows:

Art. 280. Security of Tenure. In cases of regular employment, theemployer shall not terminate the services of an employee except for a justcause or when authorized by this Title An employee who is unjustlydismissed from work shall be entitled to reinstatement without loss ofseniority rights and to his backwages computed from the time hiscompensation was withheld from him up to the time his reinstatement.


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Art. 281. Regular and Casual Employment. The provisions of writtenagreement to the contrary notwithstanding and regardless of the oralagreements of the parties, an employment shall be deemed to be regularwhere the employee has been engaged to perform activities which areusually necessary or desirable in the usual business or trade of theemployer, except where the employment has been fixed for a specificproject or undertaking the completion or termination of which has beendetermined at the time of the engagement of the employee or where thework or services to be performed is seasonal in nature and theemployment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by thepreceding paragraph: provided, that, any employee who has rendered atleast one year of service, whether such service is continuous or broken,shall be considered as regular employeewith respect to the activity inwhich he is employed and his employment shall continue while suchactually exists. (Emphasis supplied)

In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al.,12 the Court had occasion toexamine in detail the question of whether employment for a fixed term has been outlawedunder the above quoted provisions of the Labor Code. After an extensive examination ofthe history and development of Articles 280 and 281, the Court reached the conclusion thata contract providing for employment with a fixed period was not necessarily unlawful:

There can of course be no quarrel with the proposition that where fromthe circumstances it is apparent that periods have been imposed topreclude acquisition of tenurial security by the employee, they should bestruck down or disregarded as contrary to public policy, morals, etc. Butwhere no such intent to circumvent the law is shown, or stated otherwise,where the reason for the law does not exist e.g. where it is indeed theemployee himself who insists upon a period or where the nature of theengagement is such that, without being seasonal or for a specific project,a definite date of termination is a sine qua non would an agreementfixing a period be essentially evil or illicit, therefore anathema Wouldsuch an agreement come within the scope of Article 280 whichadmittedly was enacted "to prevent the circumvention of the right of theemployee to be secured in . . . (his) employment?"

As it is evident from even only the three examples already given thatArticle 280 of the Labor Code, under a narrow and literal interpretation,not only fails to exhaust the gamut of employment contracts to which thelack of a fixed period would be an anomaly, but would also appear torestrict, without reasonable distinctions, the right of an employee tofreely stipulate with his employer the duration of his engagement, itlogically follows that such a literal interpretation should be eschewed oravoided. The law must be given reasonable interpretation, to precludeabsurdity in its application. Outlawing the whole concept of termemployment and subverting to boot the principle of freedom of contractto remedy the evil of employers" using it as a means to prevent theiremployees from obtaining security of tenure is like cutting off the nose tospite the face or, more relevantly, curing a headache by lopping off the

head.

xxx xxx xxx

Accordingly, and since the entire purpose behind the development oflegislation culminating in the present Article 280 of the Labor Code clearlyappears to have been, as already observed, to prevent circumvention ofthe employee's right to be secure in his tenure, the clause in said articleindiscriminately and completely ruling out all written or oral agreementsconflicting with the concept of regular employment as defined thereinshould be construed to refer to the substantive evil that the Code itself hassingled out: agreements entered into precisely to circumvent security oftenure. It should have no application to instances where a fixed period ofemployment was agreed upon knowingly and voluntarily by the parties,without any force, duress or improper pressure being brought to bear uponthe employee and absent any other circumstances vitiating his consent, or

where it satisfactorily appears that the employer and employee dealt witheach other on more or less equal terms with no moral dominance whateverbeing exercised by the former over the latter. Unless thus limited in itspurview, the law would be made to apply to purposes other than thoseexplicitly stated by its framers; it thus becomes pointless and arbitrary,unjust in its effects and apt to lead to absurd and unintendedconsequences . (emphasis supplied)

It is apparent from Brent Schoolthat the critical consideration is the presence orabsence of a substantial indication that the period specified in an employmentagreement was designed to circumvent the security of tenure of regular employeeswhich is provided for in Articles 280 and 281 of the Labor Code. This indicationmust ordinarily rest upon some aspect of the agreement other than the mere

specification of a fixed term of the ernployment agreement, or upon evidencealiunde of the intent

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