Julian, Larry, and a group of co-workers were engaged as janitors, messengers, and utility persons by LBP Service Corporation, which had a manpower service agreement with Land Bank of the Philippines.
In 2014, the manpower service agreement between LBP Service Corporation and Land Bank of the Philippines expired and resulted in the recall of Julian, Larry and the group.
Believing that they were illegally dismissed from employment, Julian and the group filed a complaint against LBP Service Corporation before the Office of the Labor Arbiter. In such complaint, they also claimed to be regular employees of LBP Service Corporation since they performed services necessary and desirable to its business.
LBP Service Corporation countered that Julian, Larry, and the group were supposed to be reassigned to a different client, but they opted to resign.
On December 10, 2014, the Labor Arbiter dismissed the complaint.
The Office of the Labor Arbiter declared Julian, Larry, and the group as fixed-term contractual employees of LBP Service Corporation.
However, the Office of the Labor Arbiter found no evidence that LBP Service Corporation terminated their employment contracts, since the notice of recall did not amount to a termination of their services.
The Office of the Labor Arbiter ordered Larry and a number of his co-complainants to report for work because their engagement merely lapsed when the manpower services agreement between LBP Service Corporation and Land Bank of the Philippines expired.
For the Office of the Labor Arbiter, Larry and the group were still in LBP Service Corporation’s workforce and may be deployed to its other clients.
However, the Office of the Labor Arbiter did not order Julian and another group of co-complainants to return to work because they were found to have voluntarily resigned from their employment.
Julian, Larry, and the group appealed to the National Labor Relations Commission, but the Commission dismissed their appeal and affirmed the Office of the Labor Arbiter’s Decision.
Julian, Larry, and the group filed a petition for certiorari before the Court of Appeals, which, however, affirmed the ruling of the Commission.
Julian, Larry and the group elevated their case to the Supreme Court, and insisted on their claim that they were regular employees of LBP Service Corporation.
Were Julian, Larry and the group regular employees of LBP Service Corporation?
The Supreme Court ruled in the negative. It agreed with the ruling of the Court of Appeals and labor tribunals that Julian, Larry and the group were fixed-term contractual employees of LBP Service Corporation.
The Court discussed that contracts of employment for a fixed term are not unlawful unless it is apparent from the circumstances that the periods have been imposed to circumvent the laws on security of tenure.
The Court reiterated the following criteria of a valid fixed-term employment, to wit:
- The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or
- It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter.
In the present case, the Court found that Julian, Larry and the group were employed on a contract basis to meet LBP Service Corporation’s commitment to its client, the Land Bank of the Philippines.
The Court also found that at the time of their hiring, they were informed through their respective employment contracts that their engagement was for a specific period.
The Court further remarked that such employment contracts expressly stipulated the duration of their services, to wit:
- Employee’s voluntary resignation;
- Non-renewal or termination of the contract with the client company where the employee is assigned; or
- When the company of assignment no longer needs the employee’s services, but with future referral and employment with another client.
In addition, the Court found no evidence indicating that Julian, Larry and the group were pressured into signing their fixed-term contracts or that LBP Service Corporation exhibited dominance over them. The Court remarked that Julian, Larry and the group had the chance to refuse but they consciously accepted their contracts. Significantly, it was found that the periods and conditions stipulated in their employment contracts were likewise not intended to deny them from acquiring security of tenure.
The Court noted Julian, Larry and the group’s claim that they were regular employees. However, the Court declared such claim to be untenable. The Court stated that the fact that an employee is engaged to perform activities that are necessary and desirable in the usual business of the employer does not prohibit the fixing of employment for a definite period. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employee’s duties.
For the Court, Julian, Larry and the group were fixed-term employees.
Further reading:
- Tuppil, Jr. v. LBP Service Corp., G.R. No. 228407, 10 June 2020.
