Kimberly v Drilon

Facts: Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed a three-year collective
bargaining agreement (CBA) with United Kimberly-Clark Employees Union-Philippine Transport and
General Workers' Organization (UKCEU-PTGWO) which expired on June 30, 1986.

Within the 60-day freedom period prior to the expiration of and during the negotiations for the
renewal of the aforementioned CBA, some members of the bargaining unit formed another union
called "Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor
Association in Line Industries and Agriculture (KILUSAN-OLALIA)."

On April 21, 1986, KILUSAN-OLALIA filed a petition for certification election in Regional Office No.
IV, Ministry of Labor and Employment (MOLE). KIMBERLY and (UKCEU-PTGWO) did not object to
the holding of a certification election but objected to the inclusion of the so-called contractual
workers whose employment with KIMBERLY was coursed through an independent contractor, Rank
Manpower Company (RANK for short), as among the qualified voters

Med-Arbiter Bonifacio 1. Marasigan, who was handling the certification election case (RO4-OD-M-4-
1586), issued an order   declaring the following as eligible to vote in the certification election, thus:
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1. The regular rank-and-file laborers/employees of the respondent company 

2. Those casuals who have worked at least six (6) months

3. Those contractual employees who are allegedly in the employ of an independent contractor

and who have also worked for at least six (6) months

During the pre-election conference, 64 casual workers were challenged by KIMBERLY and
(UKCEU-PTGWO) on the ground that they are not employees, of KIMBERLY but of RANK. It was
agreed by all the parties that the 64 voters shall be allowed to cast their votes but that their ballots
shall be segregated and subject to challenge proceedings

On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a "Protest and Motion to Open and
Count Challenged Votes"   on the ground that the 64 workers are employees of KIMBERLY within
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the meaning of Article 212(e) of the Labor Code. On July 7, 1986, KIMBERLY filed an opposition to
the protest and motion, asserting that there is no employer-employee relationship between the
casual workers and the company, and that the med-arbiter has no jurisdiction to rule on the issue of
the status of the challenged workers which is one of the issues covered by the assumption
order. The med-arbiter opted not to rule on the protest until the issue of regularization has been
resolved by
MOLE

On, November 13, 1986, Minister Sanchez rendered a decision in BLR Case No. NS-5-164-86,   the 14

disposition wherein is summarized as follows:

1. The service contract for janitorial and yard maintenance service between KIMBERLY and
RANK was declared legal;
 2. The other casual employees not performing janitorial and yard maintenance services were
deemed labor-only contractual and since labor-only contracting is prohibited, such employees
were held to have attained the status of regular employees,

Issue: when said workers, not performing janitorial or yard maintenance service, became regular
employees of KIMBERLY.

Held: We find and so hold that the former labor minister gravely abused his discretion in holding that
those workers not engaged in janitorial or yard maintenance service attained the status of regular
employees only on November 13, 1986, which thus deprived them of their constitutionally protected
right to vote in the certification election and choose their rightful bargaining representative.

Art 280 of the labor code thus provides for two. kinds of regular employees, namely: (1) those who
are engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer; and (2) those who have rendered at least one year of service, whether
continuous or broken, with respect to the activity in which they are employed. The individual
petitioners herein who have been adjudged to be regular employees fall under the second category.
These are the mechanics, electricians, machinists machine shop helpers, warehouse helpers,
painters, carpenters, pipefitters and masons It is not disputed that these workers have been in the
employ of KIMBERLY for more than one year at the time of the filing of the Petition for certification
election by KILUSAN-OLALIA.

Owing to their length of service with the company, these workers became regular employees,
by operation of law, one year after they were employed by KIMBERLY through RANK. To rule
otherwise, and to instead make their regularization dependent on the happening of some
contingency or the fulfillment of certain requirements (appointment papers), is to impose a burden on
the employee which is not sanctioned by law.

That the first stated position is the situation contemplated and sanctioned by law is further enhanced
by the absence of a statutory limitation before regular status can be acquired by a casual
employee. The law is explicit. As long as the employee has rendered at least one year of service, he
becomes a regular employee with respect to the activity in which he is employed. The law does not
provide the qualification that the employee must first be issued a regular appointment or must first be
formally declared as such before he can acquire a regular status. Obviously, where the law does not
distinguish, no distinction should be drawn.

We likewise do not subscribe to the claim of respondents that KILUSAN-OLALIA has impliedly
accepted the questioned decision by demanding compliance therewith.  The filing of said motion for
reconsideration of the questioned decision by KILUSAN-OLALIA, which was later denied, sustains
our position on this issue and denies the theory of estoppel postulated by respondents.

On the basis of the foregoing circumstances, and as a consequence of their status as regular
employees, those workers not perforce janitorial and yard maintenance service were performance
entitled to the payment of salary differential, cost of living allowance, 13th month pay, and such other
benefits extended to regular employees under the CBA, from the day immediately following their first
year of service in the company. These regular employees are likewise entitled to vote in the
certification election held in July 1, 1986. Consequently, the votes cast by those employees not
performing janitorial and yard maintenance service, which form part of the 64 challenged votes,
should be opened, counted and considered for the purpose of determining the certified bargaining
representative.
Philippine Geothermal v NLRC

Facts: Petitioner Philippine Geothermal, Inc. is a U.S. corporation engaged in the exploration and
development of geothermal energy resources as an alternative source of energy. It is duly
authorized to engage in business in the Philippines and at present is the prime contractor of the
National Power Corporation at the latter's operation of the Tiwi, Albay and the Makiling-Banahaw
Geothermal Projects.  1

Private respondents, on the other hand, are employees of herein petitioner occupying various
positions ranging from carpenter to Clerk II who had worked with petitioner company under individual
contracts, categorized as contractual employment, for a period ranging from fifteen (15) days to
three (3) months. These contracts were regularly renewed to the extent that individual private
respondents had rendered service from three (3) to five (5) years until 1983 and 1984 when
petitioner started terminating their employment by not renewing their individual contracts.
Subsequently petitioner entered into job contracting agreement with Dra. Generosa Gonzales who
supplies it with skilled manpower. 

Sometime in July 1983, herein private respondents organized a separate labor union in view of their
exclusion in the bargaining unit of the regular rank and file employees represented by the Federation
of Free Workers. In August 1983, they filed a petition for certification election with the Ministry of
Labor and Employment

Because of this, herein petitioner allegedly started harassing them and replaced them with so called
"contract workers". Thus, complainant union and herein respondent employees filed a case for illegal
lock-out and unfair labor practice.

 Labor Arbiter Voltaire A. Balitaan rendered a decision in favor of the respondents – judgment is
hereby rendered in favor of the petitioners and they are hereby declared regular and permanent
employees of the respondent and finding their dismissal from the service illegal

 National Labor Relations Commission on November 9, 1987 rendered a decision dismissing the
appeal and affirming the decision of the Labor Arbiter.

Petitioner alleges that it engaged the services of private respondents on a monthly basis to ensure
that manpower would be available when and where needed. Private respondents were fully aware of
the nature of their employment as this was clearly spelled out in the employment contracts. What
happened to them was not a case of unwarranted dismissal but simply one of expiration of the
tenure of employment contracts and the completion of the phase of the project for which their
services were hired

Issue: whether or not private respondents may be considered regular and permanent employees
due to their length of service in the company despite the fact that their employment is on contractual
basis.

Held: YES.

This Court classified the two kinds of regular employees, as: 1) those who are engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer;
and 2) those who have rendered at least one (1) year of service, whether continuous or broken with
respect to the activity in which they are employed. While the actual regularization of these
employees entails the mechanical act of issuing regular appointment papers and compliance with
such other operating procedures, as may be adopted by the employer, it is more in keeping with the
intent and spirit of the law to rule that the status of regular employment attaches to the casual
employee on the day immediately after the end of his first year of service.

Assuming therefore, that an employee could properly be regarded as a casual (as distinguished from
a regular employee) he becomes entitled to be regarded as a regular employee of the employer as
soon as he has completed one year of service. Under the circumstances, employers may not
terminate the service of a regular employee except for a just cause or when authorized under the
Labor Code. It is not difficult to see that to uphold the contractual arrangement between the
employer and the employee would in effect be to permit employers to avoid the necessity of hiring
regular or permanent employees indefinitely on a temporary or casual status, thus to deny them
security of tenure in their jobs. Article 106 of the Labor Code is precisely designed to prevent such
result.

BRENT SCHOOL, vs. ZAMORA

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

FACTS: 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 of P20,000.00. The contract fixed
a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the
agreement, to July 17, 1976.

Some three months before the expiration of the stipulated period, or more precisely on April 20,1976, Alegre
was given a copy of the report filed by Brent School with the Department of Labor advising of the termination
of his services effective on July 16, 1976. The stated ground for the termination was "completion of contract,
expiration of the definite period of employment.

However, at the investigation conducted by a Labor Conciliator of said report of termination of his services,
Alegre protested the announced termination of his employment. He argued that although his contract did
stipulate that the same would terminate on July 17, 1976, since his services were necessary and desirable in
the usual business of his employer, and his employment had lasted for five years, he had acquired the status
of a regular employee and could not be removed except for valid cause. The Regional Director considered
Brent School's report as an application for clearance to terminate employment (not a report of termination),
and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead
required the reinstatement of Alegre, as a "permanent employee," to his former position without loss of
seniority rights and with full back wages.

Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded the
case to the Secretary of Labor for review. The latter sustained the Regional Director. Brent appealed to the
Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack of merit and affirmed
the Labor Secretary's decision, ruling that Alegre was a permanent employee who could not be dismissed
except for just cause, and expiration of the employment contract was not one of the just causes provided in
the Labor Code for termination of services.
Issue: whether or not the provisions of the Labor Code,  as amended, have anathematized "fixed period
employment" or employment for a term.

Ruling: No

There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, 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 a contract, whatever its object, be it specie, goods or
services, except the general admonition against stipulations contrary to law, morals, good customs, public
order or public policy.

There can of course be no quarrel with the proposition that where from the circumstances it is apparent that
periods have been imposed to preclude acquisition of tenurial security by the employee, they should be
struck down or disregarded as contrary to public policy, morals, etc. But where no such intent to circumvent
the law is shown, or stated otherwise, where the reason for the law does not exist,.

Accordingly, and since the entire purpose behind the development of legislation culminating 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 his tenure, the clause in said article indiscriminately and completely
ruling out all written or oral agreements conflicting with the concept of regular employment as defined
therein should be construed to refer to the substantive evil that the Code itself has singled out:  agreements
entered into precisely to circumvent security of tenure. It should have no application to instances where a
fixed period of employment was agreed upon knowingly and voluntarily 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 where it satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no moral dominance whatever being exercised by
the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes
other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects
and apt to lead to absurd and unintended consequences.

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

WHEREFORE, the public respondent's Decision complained of is REVERSED and SET ASIDE. Respondent
Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the
expiration of the agreed term of period thereof, he is declared not entitled to reinstatement and the other
relief awarded and confirmed on appeal in the proceedings below. 

NOTES: 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 the perfection of the employment contract,
and rights and obligations thereunder had arisen and been mutually observed and enforced.

At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity of
term employment. It was impliedly but nonetheless clearly recognized by the Termination Pay Law, R.A.
1052, 11 as amended by R.A. 1787, Prior, thereto, it was the Code of Commerce which governed employment
without a fixed period, and also implicitly acknowledged the propriety of employment with a fixed period. 

Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on August
30,1950.

It is plain then that when the employment contract was signed between Brent School and Alegre on July 18,
1971, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof Stipulations
for a term were explicitly recognized as valid by this Court

The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor
Code (Presidential Decree No. 442), which went into effect on November 1, 1974. The Code contained explicit
references to fixed period employment, or employment with a fixed or definite period.

Subsequently, the foregoing articles regarding employment with "a definite period" and "regular"
employment were amended by Presidential Decree No. 850, effective December 16, 1975.

Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the
reference to persons "employed with a fixed period," and was renumbered (becoming Article 281).

Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra) by
(a) deleting mention of employment with a fixed or definite period, (b) adding a general exclusion clause
declaring irrelevant written or oral agreements "to the contrary," and (c) making the provision treat
exclusively of "regular" and "casual" employment, renumbered as Article 280.

Still later, however, said Article 272 (formerly Article 321) was further amended by Batas Pambansa
Bilang 130,  to eliminate altogether reference to employment without a definite period. As lastly amended,
the opening lines of the article (renumbered 283), now pertinently read: "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 or implied, 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 Labor Code bearing
on term or fixed-period employment that the question posed in the opening paragraph of this opinion should
now be addressed. Is it then the legislative intention to outlaw stipulations in employment contracts laying
down a definite period therefor? Are such stipulations in essence contrary to public policy and should not on
this account be accorded legitimacy?- Refer to the Ruling for the answer.