Paulino Ungos III

Lawyer | Law Professor | Author

Tag: independent contractor

  • The Law Prescribes the Parties’ Employment Relationship

    Rico and six other people alleged that they were engaged on different dates as fitness trainers by Fitness First Phil., Inc., a fitness company.

    Rico and his co-workers narrated that as fitness trainers, they sold and marketed the company’s physical health training programs and packages. With the company’s equipment, they also conducted actual training sessions for their clients and were paid fixed monthly salaries, 13th month pay, and commissions.

    However, the company later reclassified them as freelance trainers. Although it still paid their salaries, the company discontinued paying their other labor benefits, i.e., 13th month pay, overtime pay, holiday pay, and rest day pay.

    Furthermore, the company allowed them to work on their own time as long as they trained clients for at least 90 hours per month and Php80,000.00 worth of physical training packages. If Rico and his co-workers fail to meet the quota, the same translates to salary deduction, or worse, disciplinary action such that repeated failure to meet the quota may subject them to warning, suspension, and even termination of their engagement.

    Soon after, the company required Rico and his co-workers to register their alleged freelance business to comply with tax regulations. Should Rico and his co-workers refuse to comply, they were penalized with a 20% deduction in their commission and termination or non-renewal of their freelance agreement. Despite such penalties, Rico and his co-workers did not comply with the company’s requirements since they believed they were its employees.

    As a result, the company revoked its offer of higher commission. It also offered Rico and his co-workers the chance to revert to being instructors. Moreover, the company ignored Rico and his co-workers’ request to enjoy the benefits of being both an instructor and a freelance trainer.

    Believing this was an instance of constructive dismissal, Rico and his co-workers filed a complaint against the company for illegal dismissal, regularization, and other monetary claims.

    The company countered that Rico and his co-workers were independent contractors who were not required to observe fixed work hours. According to the company, Rico and his co-workers were required to observe relevant house rules in dealing with their clients, conduct 90 hours of training, and guarantee a minimum fixed monthly sale.

    The company added that its employment arrangement with Rico and his co-workers is distinguished from that of its fitness instructors, who were required to work nine hours a day, six days a week.

    The company explained that all trainers start as full-time fitness instructors. According to the company, a progressive commission scheme allows instructors who have obtained a certain skill and training to be promoted as freelance personal trainers to take advantage of the higher commissions and flexible working hours. It also mentioned that a freelance personal trainer though may revert to being an instructor by manifesting his or her decision to the human resource department.

    The company acknowledged that it required Rico and his co-workers to register their freelance business with an offer of higher commission in compliance with tax regulations and that only 62 of its freelance trainers complied with the requirement.

    Although the company revoked its offer of higher commission, it offered Rico and his co-workers the chance to revert to being instructors. However, the latter insisted on enjoying the benefits of both an instructor and a freelance trainer.

    In its Decision, the Office of the Labor Arbiter declared Rico and his co-workers as independent contractors and denied their claims.

    It held that the selection of Rico and his co-workers based on their expertise indicated their nature as independent contractors.

    It added that Rico and his co-workers voluntarily signed the freelance agreement, successively renewed it for years, and were paid on a commission basis. It also noted that Rico and his co-workers were responsible for paying and remitting their respective monthly contributions to the Social Security System without fail and timely filing the required income tax returns. Finally, it found that both parties may terminate the agreement with or without cause.

    It continued that even if the parties’ relationship were gauged under the power of control test, Rico and his co-workers would still be considered independent contractors. This was because, as freelance trainers, they were not required to report for work on a fixed schedule, and they controlled the time and manner they conducted physical training with their respective clients.

    The National Labor Relations Commission and the Court of Appeals agreed with the finding that Rico and his co-workers were not employees of the company.

    Rico and his co-workers elevated their case to the Supreme Court, insisting that they were regular employees of the company.

    Were Rico and his co-workers independent contractors?

    The Supreme Court ruled in the negative and declared Rico and his co-workers as employees of the company.

    The Supreme Court began by stating that there is no inflexible rule to determine if one is an employee or an independent contractor. According to the Court, the relationship must be characterized based on the circumstances of each case.

    The Court then discussed that a person’s employment status is not defined by what the parties say it should be. Rather, the employment relationship of parties is prescribed by law. When the employment status is in dispute, the employer bears the burden of proving that the person whose service it pays for is an independent contractor rather than a regular employee with or without fixed terms. The rule is that where a person who works for another performs his or her job more or less at his or her own pleasure, in the manner he or she sees fit, is not subject to definite hours or conditions of work, and is compensated according to the result of his or her efforts and not the amount thereof, no employer-employee relationship exists.

    An independent contractor, the Court expounded, carries on a distinct and independent business and undertakes to perform the job, work, or service on one’s own account and under one’s own responsibility according to one’s own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. Independent contractors consist of individuals with unique skills and talents that set them apart from ordinary employees and whose means and work methods are free from the employer’s control. Under this arrangement, there is no trilateral relationship but a bilateral relationship because a principal directly engages independent contractors. An independent contractor enjoys independence and freedom from the control and supervision of his or her principal as opposed to an employee who is subject to the employer’s power to control the means and methods by which the employee’s work is to be performed and accomplished.

    The Court went on to employ a two-tiered test to resolve the issue: the four-fold test and the economic dependence test.

    Under the four-fold test, to establish an employer-employee relationship, four factors must be proven:

    • employer’s selection and engagement of the employee;
    • payment of wages;
    • power to dismiss; and
    • power to control the employee’s conduct.

    Regarding the power of hiring, the Court found that the company initially engaged Rico and his co-workers as fitness consultants, and on different dates, they transitioned to become freelance personal trainers. However, the Court clarified that an engagement based on talents and skills does not necessarily prevent a person from achieving regular employment status, especially when he or she is repeatedly engaged as an independent contractor on a fixed term in an effort to circumvent security of tenure.

    On the payment of wages, the Court found that based on the Freelance Personal Trainer Agreement, Rico and his co-workers were paid on a commission basis. Again, the Court clarified that the Labor Code of the Philippines explicitly mentions commissions as one of the forms of paying wages, or anything paid as remuneration of earnings to employees.

    On the power to dismiss, the Court found that although the Freelance Personal Trainer Agreement mentioned that the parties may voluntarily terminate the same with or without cause, the power to dismiss actually rests with the company. For instance, the company held the power to dismiss the freelance personal trainer if it became manifest that the latter was unqualified or unfit to discharge his or her duties.

    The Court then remarked that the company’s power to terminate Rico and his co-workers is better understood concurrently with the company’s power of control.
    The Court stated that under the four-fold test, the right to control is the dominant factor in determining whether one is an employee or an independent contractor. The so-called control test is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control the end to be achieved and the manner and means to reach that end.

    In this regard, the Court held that Rico and his co-workers did not perform their tasks at their own pleasure and in the manner they saw fit. This was based on the following findings:

    First, as personal trainers, Rico and his co-workers performed tasks necessary and desirable to the company’s principal business of providing health programs/packages — to conduct physical training to its clients.

    Second, to ensure the quality of services, Rico and his co-workers were required to attend all educational training sessions and other such events pertaining to the company. In fact, the company kept track of the performance of Rico and his co-workers, and some of them were even lauded for their exemplary performance.

    Third, even if It assessed the company’s power of control vis-à-vis the Freelance Personal Trainer Agreement, it would reach the same conclusion because although the Agreement guaranteed that Rico and his co-workers shall be free of control in the marketing and conduct of the physical health training packages, the following portions of such Agreement negate the alleged absence of control on the part of the company.

    One, upon engagement, Rico and his co-workers were bound to
    -diligently perform and assume their duties;
    -be assigned to any health club managed by the company;
    -observe company rules and regulations; and
    -attend company educational training sessions.

    Two, Rico and his co-workers were required to guarantee a set number of monthly sales and conduct a set block of time for physical training programs/packages.

    And three, the company reserved the right to unilaterally revise the Minimum Performance Standards even without notice.

    In addition, the Court further discussed that even if It applied the economic dependence test, the conclusion would be the same. The Court reiterated the following circumstances of the whole economic activity laid down in Francisco v. National Labor Relations Commission1G.R. No. 170087, 31 August 2006 in considering the determination of the relationship between employer and employee:

    • extent to which the services performed are an integral part of the employer’s business;
    • extent of the worker’s investment in equipment and facilities;
    • nature and degree of control exercised by the employer;
    • worker’s opportunity for profit and loss;
    • amount of initiative, skill, judgment[,] or foresight required for the success of the claimed independent enterprise;
    • permanency and duration of the relationship between the worker and the employer; and
    • degree of dependency of the worker upon the employer for his continued employment in that line of business.

    Here, the Court found that Rico and his co-workers acted as personal trainers, marketed physical health packages and were paid commissions for the sale of such packages. The Court also found that Rico and his co-workers were wholly dependent upon the company for their continued employment as they were prohibited from providing training outside the company. The exclusivity clause, said the Court, only strengthened the finding that Rico and his co-workers were regular employees of the company.

    Further reading:

    • Escauriaga v. Fitness First, Phil., Inc., G.R. No. 266552, 22 January 2024.

  • But They Agreed to be Engaged as Independent Contractors

    Chrisden and several other persons alleged that in February 2016, Lazada E-Services, Philippines, Inc. (Lazada), a business which claims to facilitate the sale of goods between its sellers and buyers, hired them to work as riders. As riders, Chrisden and his group were primarily tasked to pick up items from sellers and deliver them to Lazada’s warehouse. Each of them signed an Independent Contractor Agreement which states that they will be engaged for one year and paid a service fee. They were to use their privately-owned motorcycles in their trips.

    Chrisden and his group narrated that sometime in January 2017, a Lazada dispatcher told them that they have been removed from their usual routes and will no longer be given any schedules. Despite this development, they still went to the office and waited for three days to be given new tasks, but no work schedules came. They soon learned that their routes were already given to other riders.

    Aggrieved by the events, Chrisden and his group filed a complaint before the National Labor Relations Commission against Lazada for illegal dismissal, illegal deduction, money claims, with claims for moral and exemplary damages and attorney’s fees.

    Lazada denied that Chrisden and his group were its employees. It maintained that Chrisden and his group were independent contractors. Lazada concluded that Chrisden and his group cannot claim backwages, separation pay, and other benefits considering that they are not regular employees.

    The Office of the Labor Arbiter ruled that no employer-employee relationship existed between Lazada and Chrisden and the co-riders.

    The Office of the Labor Arbiter found that the respective Independent Contractor Agreements of Chrisden and his group clearly stated that no employer-employee relationship existed between them and Lazada. The said Office also determined that Chrisden and his group had control over the means and methods of their work since they provided their own vehicles and were free to choose the means of transport, delivery routes and working hours.

    The Office of the Labor Arbiter added that Lazada only required goods to be delivered promptly and in good condition. While the said Office acknowledged that Lazada gave out rules and regulations on the delivery of goods, it ruled that this did not amount to control over the means and methods by which Chrisden and his group accomplished their work.

    Thus, the Office of the Labor Arbiter dismissed the complaint for lack of jurisdiction.

    On appeal, the National Labor Relations Commission affirmed the Office of the Labor Arbiter’s ruling.

    Chrisden and his group filed a petition with the Court of Appeals, but their petition was dismissed outright.

    Chrisden and his group then elevated their case to the Supreme Court.

    Were Chrisden and his group regular employees of Lazada?

    The Supreme Court ruled in the affirmative.

    The Court reiterated the following established principles:

    Consistent with the constitutional recognition that labor is a primary social economic force, full protection to labor is a social policy enshrined in Article XIII, Section 3 of the Constitution. The provision guarantees the right of workers to security of tenure, among others. One’s employment is a property right which cannot be revoked without due process.

    Under Philippine laws, the nature of employment of a worker is prescribed by law, regardless of what the contract and the parties present it to be. Furthermore, employment contracts are not ordinary contracts because they are imbued with public interest.

    The applicable provisions of the law are deemed incorporated into the contract and the parties cannot exempt themselves from the coverage of labor laws simply by entering into contracts. Thus, regardless of the nomenclature and stipulations of the contract, the employment contract must be read consistent with the social policy of providing protection to labor.

    To determine the existence of an employer-employee relationship, the Court employs a two-tiered test:

    Under the four-fold test, to establish an employer-employee relationship, four factors must be proven:

    • the employer’s selection and engagement of the employee;
    • the payment of wages;
    • the power to dismiss; and
    • the power to control the employee’s conduct.

    The Court identifies the power of control is the most significant factor in the four-fold test.

    The right to control extends not only over the work done but over the means and methods by which the employee must accomplish the work. The power of control does not have to be actually exercised by the employer. It is sufficient that the employer has a right to wield the power.

    However, not all rules imposed upon the worker is an indication of control. When rules are intended to serve as general guidelines to accomplish the work, it is not an indicator of control.

    When the control test is insufficient, the economic realities of the employment are considered to get a comprehensive assessment of the true classification of the worker.

    The determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as:

    • the extent to which the services performed are an integral part of the employer’s business;
    • the extent of the worker’s investment in equipment and facilities;
    • the nature and degree of control exercised by the employer;
    • the worker’s opportunity for profit and loss;
    • the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise;
    • the permanency and duration of the relationship between the worker and the employer; and
    • the degree of dependency of the worker upon the employer for his continued employment in that line of business.

    Regarding classifications of employment, the Court referred to Article 295 of the Labor Code of the Philippines which provides four classifications, namely:

    • regular;
    • project;
    • seasonal; and
    • casual.

    Employees who perform activities which are necessary or desirable in the usual business of the employer may be regular, project, or seasonal employees. Of the three, project and seasonal employees are generally engaged to perform tasks which only lasts for a specific period and duration. Meanwhile, casual employees are those who perform work which are not usually necessary or desirable for the employer’s business.

    The Court explained that activities which are considered usually necessary or desirable in the employer’s business generally depends on the industry. There must be a reasonable connection between the work performed by the employee and the usual trade or business of the employer.

    The Court mentioned Brent School, Inc. v. Zamora as a case which recognized another employment classification referred to as fixed-term.

    Said the Court, fixed-term employment is an arrangement wherein an employee is hired for a specific period. In fixed-term employment, the work performed may also be necessary or desirable to the usual business of the employer. Fixed-term employments are recognized by law for projects with pre-determined completion or generally in a work where a fixed term is essential and natural appurtenance.

    The Court then discussed that in order for fixed-term employment to be valid, either of these circumstances must be proven:

    • 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.

    These criteria presume that an employee, on account of special skills or market forces, is in a position to make demands upon the prospective employer. The parity of standing between the employer and employee indicates that the employee needs less protection than that of the ordinary worker. In determining whether the fixed-term employment is valid, the burden of proof lies with the employer to show that it deals with the employee in more or less equal terms. The recognition of fixed-term employment in Brent remains an exception rather than the general rule.

    In the present case, the Court declared that Chrisden and his group were regular employees of Lazada.

    According to the Court, Chrisden and his group satisfied the four-fold test.

    • First, Chrisden and his group were directly employed by Lazada as evidenced by the Independent Contractor Agreements they signed;
    • Second, as indicated in the said Agreement, Chrisden and his group received their salaries from Lazada. Chrisden and his group were paid by Lazada the amount of P1,200.00 for each day of service;
    • Third, Lazada had the power to dismiss Chrisden and his group. In their contract, Lazada can immediately terminate the Agreement for breach of its material provisions.; and
    • Fourth, Lazada had control over the means and methods of the performance of the work of Chrisden and his group, as explicitly mentioned in their Agreement and as reflected in the way the work of Chrisden and his group was carried out. Lazada required the accomplishment of a route sheet which kept track of the arrival, departure, and unloading time of the items. Chrisden and his group shouldered a penalty of P500.00 on top of an item’s actual value should it get lost. Chrisden and his group were also required to submit trip tickets and incident reports to Lazada.

    The Court added that even if it considered the foregoing factors as mere guidelines, the circumstances of the whole economic activity between Lazada and Chrisden and his group, nonetheless, confirmed the existence of an employer-employee relationship. Stated otherwise, the Court found that Chrisden and his group satisfied the economic dependence test.

    Although Lazada insisted that the delivery of items was only incidental to its business as it was mainly an online platform where sellers and buyers transact, the Court found that the delivery of items by Chrisden and his group was clearly integrated in the services it offered. The Court even noticed Lazada’s admission that it had different route managers to supervise the delivery of the products from the sellers to the buyers. But this only confirmed that Lazada had taken steps to facilitate not only the transaction of the seller and buyer in the online platform but also the delivery of the items.

    The Court also looked into the contention of Lazada that it could have left the delivery of the goods to the sellers and buyers. However, the Court disregarded said contention as this was not the business model it actually implemented.

    The Court further found that Chrisden and his group were required by Lazada to use their own motor vehicles and other equipment and supplies in the delivery of the items. Moreover, Chrisden and his group were found to have no control over their own profit or loss because they were paid a set daily wage. There were also found to have no control over their own time and they could not offer their service to other companies as Lazada could demand their presence from time to time.

    For the Court, Chrisden and his group were economically dependent on Lazada for their livelihood and their continued engagement in its line of business.

    At this point, the Court rejected Lazada’s assertion that the Independent Contractor Agreements of Chrisden and his group explicitly stipulated that the absence of an employer-employee relationship between them. According to the Court, the protection of the law afforded to labor precedes over the nomenclature and stipulations of the Contract. The Independent Contractor Agreements of Chrisden and his group signed was not as ordinary as Lazada purported it to be. Thus, it was patently erroneous for the labor tribunals to reject an employer-employee relationship simply because the Independent Contractor Agreements stipulated the non-existence of the employment relation.

    The Court then rebuffed Lazada’s contention that Chrisden and his group were independent contractors.

    The Court set forth the following relevant principles:

    An independent contractor is defined as one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under one’s own responsibility according to one’s own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof.

    Laws and jurisprudence recognize two types of contractors:

    • legitimate job contractors under Article 106 of the Labor Code of the Philippines; and
    • independent contractors who possess unique skills and talent and whose contracts are governed by the Civil Code of the Philippines.

    The Court stressed that when the status of the employment is in dispute, the employer bears the burden to prove that the workers are independent contractors rather than regular employees.

    In the present case, the Court ruled that Lazada failed to establish that Chrisden and his group fell under any of the categories of independent contractors, based on the following findings:

    • First, Chrisden and his group were not hired by a contractor or subcontractor as both parties’ submitted that they were directly engaged by Lazada; and
    • Second, the work performed by Chrisden and his group did not require a special skill or talent. Picking up and delivering goods from warehouse to buyers did not call for a specific expertise. There was also no showing that Chrisden and his group were hired due to their unique ability or competency.

    Finally, the Court could not consider Chrisden and his group as regular employees with a fixed-term employment. The Court stated that fixed-term employment as enunciated in Brent presupposes an employee who is more or less on equal footing with an employer. It applies only in exceptional cases where the employee has bargaining power on account of a special skill or the market force.

    In the present case, the Court found that Lazada neither demonstrated nor argued this and had even failed to allege as to how the terms and conditions of their contracts were agreed upon.

    Having been declared regular employees of Lazada, the Court accordingly ordered the reinstatement of Chrisden and his group, as well as the payment of their backwages.

    Further reading:

    • Ditiangkin, et al. v. Lazada, et al., G.R. No. 246892, September 21, 2022.

  • Unique Skills and Talents

    The complainants here were engaged on various dates as camera operators and were later dismissed in May 2013.

    Because of the termination of their employment, the said camera operators filed a complaint for illegal dismissal and regularization against GMA Network, Inc. (GMA).

    The camera operators asserted that they were assigned to several television programs of GMA and had performed functions that were necessary and desirable to GMA’s business as both a television and broadcasting company. They further contended that their repeated and continuous employment with GMA after each television program they covered showed the necessity and desirability of their functions. The camera operators concluded they have already attained the status of regular employees.

    On the other hand, GMA asserted that the camera operators were never hired as employees, as they were merely pinch-hitters or freelancers engaged on a per-shoot basis whenever the need for additional workforce arose. Further, GMA asserted that the “service fees” given to the camera operators were “not compensation paid to an employee, but rather remuneration for the services rendered” as pinch-hitters/freelancers. GMA also belied the contention that it exercised control over the camera operators. It claimed that it only monitored the performance of their work to ensure that the “end result” is compliant with company standards.

    GMA added that, even assuming that an employer-employee relationship did exist between them, the camera operators could not have attained regular status considering their failure to render “at least one year of service” as required by law.

    Specifically, with respect to one of the camera operators, named Adonis, GMA added that he was engaged as a fixed-term employee under a valid “Talent Agreement.” Accordingly, Adonis’ employment was automatically terminated upon the happening of the day certain stipulated in the contract. GMA further maintained that it may not be obliged to re-engage Adonis.

    Did an employer-employee relationship exist between GMA and the camera operators?

    The Supreme Court did not agree with GMA’s assertion as it found that the four-fold test in determining the existence of an employer-employee relationship was met.

    Jurisprudence1Begino v. ABS-CBN Corp., G.R. No. 199166, April 20, 2015. dictates that to determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee on the means and methods by which the work is accomplished. Of these criteria, the so-called “control test” is generally regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under this test, an employer-employee relationship is said to exist where the person for whom the services are performed reserves the right to control not only the end result but also the manner and means utilized to achieve the same.

    On the power of hiring, the Court found that the camera operators were engaged by GMA and had rendered services directly to it. GMA was found to have engaged the camera operators to perform functions necessary and desirable to its usual business as both a television and broadcasting company.

    On the payment of wages, there was no question that GMA directly compensated the camera operators for their services. Although GMA paid the camera operators “service fees” or “talent fees,” the Court ruled that this was merely a matter of nomenclature. The Court further ruled that although the camera operators were paid on a per-shoot basis, this was only a mode of computing compensation and did not, in any way, preclude GMA’s control over the distribution of their wages and the manner by which they carried out their work. According to the Court, what matters is that the employee received compensation from the employer for the services that he or she rendered.2Chavez v. National Labor Relations Commission, G.R. No. 146530, January 17, 2005, 489 PHIL 444-462

    On the power to dismiss, the Court found that GMA’s act of disengaging the camera operators from service amounted to a dismissal from employment.

    Finally, on the element of control, the Court noted GMA’s implicit assertion that it engaged the camera operators as independent contractors in view its denial of an employer-employee relationship, coupled with the claim that it merely exercised control over the output required of the camera operators. The Court thus inquired whether the camera operators fell within the concept of an independent contractor.

    Jurisprudence3Fuji Television Network, Inc. v. Espiritu, G.R. Nos. 204944-45, December 3, 2014, 749 PHIL 388-450 has recognized a certain kind of independent contractor: individuals with unique skills and talents that set them apart from ordinary employees. In such a situation there is no trilateral relationship (as in legitimate contracting provided under Article 106 of the Labor Code of the Philippines) because the independent contractor himself or herself performs the work for the principal. In other words, the relationship is bilateral.

    In the present case, the Court found that the relationship between GMA and the camera operators was bilateral since the camera operators themselves performed work for GMA. Therefore, in order to be considered independent contractors GMA should establish that the camera operators were hired because of their “unique skills and talents” and that they were not controlled over the means and methods of their work.

    However, the Court found no proof that they were hired because of their unique skills, talent and celebrity status not possessed by ordinary employees.

    Significantly, there was a showing that the camera operators were subject to GMA’s control in that:

    • Their recordings and shoots were never left to their own discretion and craft;
    • They were required to follow the work schedules which GMA provided to them;
    • They were not allowed to leave the work site during tapings, which often lasted for days;
    • They were also required to follow company rules like any other employee.

    The Court also found that GMA provided the equipment they used during tapings and assigned supervisors to monitor their performance and guarantee their compliance with company protocols and standards.

    Should the camera operators be considered regular employees of GMA?

    The Supreme Court ruled in the affirmative.

    It found that GMA is primarily engaged in the business of broadcasting, which encompasses the production of television programs. Following the nature of its business, GMA was naturally and logically expected to engage the service of camera operators, such as the camera operators. The Court said that there was no denying that a reasonable connection exists between camera operators’ work and GMA’s business as both a television and broadcasting company. The repeated engagement of camera operators over the years only reinforces the indispensability of their services to GMA’s business. For the Court, the camera operators were GMA’s regular employees.

    The Court did not accept GMA’s assertion that the camera operators were mere casual employees.

    The Court stated that it is clear from the law that the requirement of rendering “at least one (1) year of service[,]” before an employee is deemed to have attained regular status, only applies to casual employees. An employee is regarded a casual employee if he or she was engaged to perform functions which are NOT necessary and desirable to the usual business and trade of the employer. Thus, when one is engaged to perform functions which are necessary and desirable to the usual business and trade of the employer, engagement for a year-long duration is not a controlling consideration.

    The Court stressed that GMA’s claim that the camera operators were required to render at least one (1) year of service before they may be considered regular employees had no basis in law. This was because the camera operators were never casual employees as they performed functions that were necessary and desirable to the usual business of GMA. For the Court, the camera operators need not render a year’s worth of service to be considered regular employees.

    Although the Court noted that the camera operators’ functions could mean that they were project employees whose engagements were fundamentally time-bound, the Court ruled that they were not. The Court found that GMA repeatedly engaged them as camera operators for its television programs. As camera operators, they performed activities which were within the regular and usual business of GMA and NOT identifiably distinct or separate from the other undertakings of GMA. According to the Court, it would be absurd to consider the nature of their work of operating cameras as distinct or separate from the business of GMA, a broadcasting company that produces, records, and airs television programs. From this alone, the camera operators could not be considered project employees for there was no distinctive “project” to even speak of.

    On GMA’s assertion that the camera operators were merely pinch-hitters or substitutes, the Court did not lend credence to the same. According to the Court, every industry has to deal with securing substitutes for employees who are absent or on leave. Such tasks, whether performed by the usual employee or by a substitute, cannot be considered separate and distinct from the other undertakings of the company. While it is management’s prerogative to device a method to deal with this issue, such prerogative is not absolute and is limited to systems wherein employees are not ingeniously and methodically deprived of their constitutionally protected right to security of tenure. It is unlikely that a big corporation could not device a system wherein a sufficient number of technicians can be hired with a regular status who can take over when their colleagues are absent or on leave, especially when it appears from the records that petitioner hires so-called pinch-hitters regularly every month.

    Finally, on GMA’s assertion of Adonis’ fixed-term employment, the Court did not accept the same. The Court said that it would be improper to classify Adonis as a fixed-term employee considering that GMA did not even allege the manner as to how the terms of the contract with him were agreed upon. The Court stressed that it is “the employer which must satisfactorily show that it was not in a dominant position of advantage in dealing with its prospective employee.” Thus, GMA as the employer had the burden to prove that it dealt with Adonis in more or less equal terms in the execution of the talent agreements with him. Sweeping guarantees that the contract was knowingly and voluntarily agreed upon by the parties and that the employer and the employee stood on equal footing will not suffice. The Court added that although Adonis never contested the execution of his talent agreements, such could not preclude him from attaining regular employment status. In the words of the Court, it is not blind to the unfortunate tendency for many employees to cede their right to security of tenure rather than face total unemployment.

    Were the camera operators validly dismissed from employment?

    The Supreme Court ruled that the camera operators were illegally dismissed from employment since GMA failed to allege and that the camera operators’ dismissals were impelled by any of the just or authorized causes recognized in the Labor Code of the Philippines. The camera operators were thus awarded the reliefs of reinstatement and backwages.

    Further reading:

    • Paragele v. GMA Network, Inc., G.R. No. 235315, July 13, 2020.