Paulino Ungos III

Lawyer | Law Professor | Author

Tag: regular employment

  • 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.

  • The Subcontractor Assigned Him to Work on Our Projects

    Freddie alleged that in April 2012, he was hired by Helenar Construction as painter and made to work in its various products.

    Freddie narrated that on October 24, 2014, Helenar Construction’s foreman required him to sign a labor contract for a period of 3 months with a clause stating that his employment would be renewable depending on the evaluation of such company’s site engineer and foreman. Believing that the contract would violate his security of tenure, Freddie refused to sign the contract. On November 7, 2014, Helenar Construction’s project-in-charge, barred him from entering the construction site.

    On November 9, 2014, Freddie filed a complaint claiming that he was Helenar Construction’s regular employee who was illegally dismissed from employment.

    Helenar Construction countered that Freddie is not its regular employee. It explained that Freddie was hired by its subcontractor as a painter for projects. Helenar Construction pointed out that in the construction industry, subcontractors are hired for the flooring, ceiling, painting, electrical and other related services. It likewise claimed that Freddie unjustifiably stopped reporting for work after refusing to sign the labor contract it prepared.

    The Office of the Labor Arbiter declared Freddie as a regular employee of Helenar Construction and ruled that he was illegally dismissed from service.

    Helenar Construction appealed to the National Labor Relations Commission, which reversed the Office of the Labor Arbiter’s findings. According to the Commission, no employment relationship existed between Freddie and Helenar Construction. Applying the four-fold tests, the Commission ruled that the subcontractor was Freddie’s true employer, based on the following findings: First, the unsigned contract bore the name of the subcontractor and identified him as the employer. Second, through cash vouchers, it was revealed that the subcontractor paid Freddie’s weekly wages. Third, the contract showed that the subcontractor reserved the right to dismiss his painters if they have violated the terms of the labor contract. Finally, Helenar Construction hired subcontractors for specific works such as painting.

    Freddie elevated the case to the Court of Appeals, which, however, affirmed the judgment of the Commission.

    Freddie thus filed his petition before the Supreme Court and maintained that he was a regular employee of Helenar Construction and that he was illegally dismissed from employment.

    Was Freddie a regular employee of Helenar Construction?

    The Supreme Court ruled that Freddie was a regular employee of Helenar Construction.

    The Court discussed that what determines regular employment is not the employment contract, written or otherwise, but the nature of the job. The applicable test is the reasonable connection between the particular activity performed by the employee, in relation to the usual business of the employer. The standard supplied by Article 295 of the Labor Code of the Philippines is whether the work undertaken is necessary or desirable in the usual business or trade of the employer. This can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business is pursued in the usual course.

    In the present case, the Court found that Helenar Construction was principally engaged in the construction business and that Freddie, as a painter, was tasked with preparing, sanding and painting various construction works. The Court mentioned that the nature of Freddie’s job inarguably required him to perform activities which were deemed necessary in Helenar Construction’s usual business and that Freddie’s continuous rehiring to different construction projects from April 2012 until his dismissal in November 2014 attested to the desirability of his services.

    The Court added that at any rate, Helenar Construction, as well as the supposed subcontractor, did not comply with the requirements of the law with respect to the hiring of project employees. The Court reiterated that the principal test in determining project-based employment is whether a person is assigned to carry out a specific project or undertaking, the duration and scope of which was specified at, and made known to him, at the time of his engagement. It is crucial that the worker was informed of his status as a project employee at the time of hiring and that the period of his employment must be knowingly and voluntarily agreed upon by the parties, without any force, duress, or improper pressure vitiating consent.

    In the present case, the Court found no substantial evidence proving that Freddie was adequately informed of his status as a project employee at least at the time of his engagement. There was also no showing that Freddie was fully apprised of the duration and scope of the projects.

    While the Court noted the reliance on the provisions of the unsigned labor contract to characterize Freddie as a project employee, the Court viewed the labor contract as an afterthought designed to deny Freddie the benefits of a regular employee, particularly, his security of tenure. The Court stressed that a worker shall be presumed a regular employee absent clear agreement showing that he was properly informed of the nature of his employment. For the Court, the Office of the Labor Arbiter correctly held that Freddie was a regular employee of Helenar Construction.

    As a regular employee, said the Court, Freddie may be dismissed subject to both substantive and procedural limitations.

    Was the termination of Freddie’s employment valid?

    The Court expounded that the dismissal must be for a just or authorized cause provided in the Labor Code of the Philippines, and the employee must be accorded procedural due process, basic of which is the opportunity to be heard and to defend himself. The Court reiterated that in termination disputes, the burden of proof is always on the employer to prove that the dismissal was for a valid cause, failure to do so would necessarily mean that the dismissal is not justified. Likewise, evidence must be clear, convincing and free from any inference that the prerogative to dismiss an employee was abused and unjustly used by the employer to further any vindictive end.

    In the present case, the Court found that Helenar Construction failed to establish a valid cause for dismissing Freddie since there was no proof that Freddie unjustifiably stopped reporting for work. The Court gathered that Freddie refused to sign the belated labor contract that Helenar Construction prepared. This irked the foreman and engineer of Helenar Construction and resulted in Freddie being barred from the construction site. The Court similarly found that Freddie’s dismissal from employment was attended with procedural infirmity as there was no administrative investigation conducted. Neither were there prior notices served upon Freddie.

    The Court thus affirmed the Office of the Labor Arbiter’s ruling of Freddie’s illegal dismissal.

    Further reading:

    • Laurente v. Helenar Construction, G.R. No. 243812, 07 July 2021.

  • But Their Services were Coterminous with Their Assigned Projects

    The employees in this case were hired on various dates by Sigma Construction and Supply (Sigma Construction), an independent contractor owned by Eduardo. As cement cutters, the said employees were assigned to work at the drilling site of Philippine Geothermal, Inc. (Philippine Geothermal), beginning in April 1990.

    However, Philippine Geothermal preterminated one of its contracts with Sigma Construction on April 1, 1993. Due to such termination, the project manager of Sigma Construction issued a notice to all cement cutters, informing them that the contract with Philippine Geothermal will be effective only until April 30, 1993.

    The employees filed a complaint for illegal dismissal against Sigma Construction and Philippine Geothermal. They argued that they were regular employees of Sigma Construction because they were continuously hired and assigned to different Philippine Geothermal projects from the beginning of their employment in 1990 until their recent termination in 1993. The employees added that they were even transferred to other projects prior to the completion of a previously assigned project and they also cleaned canals and pipes, fixed tools, and other related work at Philippine Geothermal.

    Eduardo alleged that Sigma Construction was an independent contractor that hired project employees to work on its projects with Philippine Geothermal. In support of this stand, Eduardo presented Sigma Construction’s Service contracts with Philippine Geothermal. According to Eduardo, when Philippine Geothermal preterminated its latest contract with Sigma Construction, the latter was forced to dismiss its employees from employment their services were coterminous with Sigma Construction’s projects with Philippine Geothermal. Eduardo posited that it would be unjust to require Sigma Construction to retain employees in the absence of projects with Philippine Geothermal.

    Are the employees here project employees of Sigma Construction?

    The Supreme Court held that said employees were not project employees, but were regular employees of Sigma Construction.

    The Court stated that the principal test in determining whether an employee is a project employee is whether he/she is assigned to carry out a “specific project or undertaking,” the duration and scope of which are specified at the time the employee is engaged in the project, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. A true project employee should be assigned to a project which begins and ends at determined or determinable times, and be informed thereof at the time of hiring.

    In the present case, the Court found no proof that the employees’ engagement as project employees had been predetermined, as required by law. There was no showing that the employees were informed that they were to be assigned to a “specific project or undertaking” upon their hiring. No employment contracts for the specific project signed by the employees were presented.

    The Court pointed out that Eduardo only presented Sigma Construction’s Service Contracts with Philippine Geothermal. According to the Court, nowhere in the contracts did it show that employees were parties to such contract. More importantly, the said documents did not prove that employees were hired for the projects with Philippine Geothermal.

    For the Court, the presentation of service contracts between Sigma Construction and Philippine Geothermal (even if it showed the duration of the project), in lieu of the employees’ individual employment contracts, did not establish that the latter were project employees.

    Further reading:

    • Jovero v. Cerio, G.R. No. 202466, June 23, 2021.

  • Specified at the Time of Engagement

    Respondent RSCI is a construction company engaged in short-term projects such as renovation or construction of bank branches, stores in malls and similar projects with short duration. For its projects, RSCI hired construction workers like masons, carpenters, whose contracts of engagement were indicated to be co-terminous with the projects to which they were assigned.

    Sometime in 2005, RSCI hired several employees and were assigned to its various projects.

    Sometime in February and May 2016, the RSCI’s foreman twice directed said employees to report for work for another short-term project, but the latter failed to do so. Said employees, nonetheless, filed a complaint for illegal dismissal against RSCI.

    RSCI denied that it illegally dismissed the employees. It asserts that they were project employees whose employment was validly terminated after end of each construction project.

    Could the employees be considered project employees?

    Jurisprudence1Dacuital v. L.M. Camus Engineering Corp., G.R. No. 176748, September 1, 2010, 644 PHIL 158-175 dictates that a project employee is assigned to a project that starts and ends at a determined or determinable time. The principal test to determine if an employee is a project employee is — whether he or she is assigned to carry out a particular project or undertaking, which duration or scope was specified at the time of engagement.

    In the present case, the Court found that at the time of hiring, the employees were not given a notice informing them of their engagement for a specific project. The Court also found that the employees were all continuously engaged by RSCI to render construction services for its short-term projects. Finally, the Court found that RSCI was unable to file any termination report to the DOLE due to alleged project completion or pay the workers any completion bonus supposedly due to project employees following completion of each project.

    The Supreme Court thus ruled that the employees were regular employees of RSCI, as they rendered services necessary and desirable to its construction business. As such, the Court stated that they may not be dismissed upon the mere expiration or completion of each project for which they were engaged.

    Further reading:

    • Inocentes, Jr. v. R. Syjuco Construction, Inc., G.R. No. 240549, August 27, 2020.

  • 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.

  • Unsigned Probationary Employment Contracts

    The Supreme Court declared the employees as regular employees of Concentrix Daksh Services Philippines Corp. because their probationary employment contracts were unsigned and since the employer failed to explain to them the standards for regularization. The Court said:

    As correctly ruled by the CA, Concentrix failed to sufficiently prove that respondents were apprised of the reasonable standards set for their regularization at the time of their engagement; and more importantly, show how these standards were applied in respondents’ case. Notably, while Concentrix presented copies of respondents’ employment contracts which state, albeit generally, the expected areas for evaluation (e.g., communication skills, knowledge, skills application, attendance and tardiness, etc.), the same appear to be unsigned. At any rate, no proof was presented to convincingly show that the regularization standards, supposedly contained in the employment contracts, were adequately explained to them. As such, respondents were regular employees whose dismissal, absent a valid cause, was illegal.

    Further Reading:

    • Concentrix Daksh Services Philippines Corp. v. Palacio, G.R. No. 242673, January 7, 2019.

  • On Equal Footing

    In a case for illegal dismissal filed by members of a Health Service Team against La Salle Greenhills, Inc., the Supreme Court set aside the finding of said members’ fixed-term employment.

    The parties to the fixed-term employment contract were not on equal footing.

    The Court emphasized that the ruling in Brent School, Inc. v. Zamora1G.R. No. L-48494, February 5, 1990, 260 PHIL 747-765 should be strictly construed, in that it should apply to cases where it appears that the employer and employee are on equal footing. In the present case, the Court found that this was not so for the members of the Health Services Team.

    • The uniform one-page Contracts of Retainer signed by the Health Service Team members were prepared by La Salle Greenhills, Inc.
    • While the Health Service Team members were medical professionals, this fact had not placed them on equal footing with La Salle Greenhills, Inc. According to the Court, the Health Service Team members obviously did not want to lose their jobs that they had stayed in for fifteen years.
    • The contracts had no specificity regarding terms and conditions of employment that would indicate that the Health Service Team members and La Salle Greenhills, Inc. were on equal footing in negotiating it. The Court stated that without specifying what the tasks assigned to each Health Service Team member were, La Salle Greenhills, Inc. “may upon prior written notice to the retainer, terminate [the] contract should the retainer fail in any way to perform his assigned job/task to the satisfaction of La Salle Greenhills, Inc. or for any other just cause.”

    Power of control was exercised over the Health Service Team members.

    The power of control refers to the existence of the power and not necessarily to the actual exercise thereof, nor is it essential for the employer to actually supervise the performance of duties of the employee. It is enough that the employer has the right to wield that power.

    In ruling that La Salle Greenhills, Inc. exercised control over the Health Services Team members, the Court took into account:

    • The repeated renewal of each Health Service Team member’s contract for fifteen years, interrupted only by the close of the school year;
    • The necessity of the work performed by the Health Service Team members as school physicians and dentists; and
    • The control exercised by La Salle Greenhills, Inc. over the means and method pursued by the Health Service Team members in the performance of their job.

    The repeated renewals of each Health Service Team member’s fixed-term employment contract made for a regular employment.

    Finally, the Court noted the repeated renewals of the Contracts of Retainer of the Health Service Team members spanning a decade and a half. Said the Court: “The repeated engagement under contract of hire is indicative of the necessity and desirability of the [employee’s] work in respondent’s business and where employee’s contract has been continuously extended or renewed to the same position, with the same duties and remained in the employ without any interruption, then such employee is a regular employee.”

    The Court thus declared the Health Service Team members’ regular employment status. They were entitled to security of tenure and could only be dismissed for just and authorized causes.

    Further reading:

    • Samonte v. La Salle Greenhills, Inc., G.R. No. 199683, February 10, 2016.

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  • Continuing Need and Desirability of Services

    The Supreme Court did not give credence to the claim that Mr. L was not OH, Inc.’s regular employee.

    The Labor Code of the Philippines1Under Article 295 (formerly Article 280) provides:

    Art. 295. Regular and casual employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the 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 of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

    In this case, the Court found that Mr. L was under the continuous employ of OH, Inc. since 3 March 1995 until the latter placed him on floating status in February 2000.

    OH, Inc. was engaged in the business of managing residential and commercial condominium units at the OE Residences, a condominium hotel building in Makati City. Its business required that it maintained a pool of housekeeping staff to ensure that the premises remain an uncluttered place of comfort for the occupants.

    OH, Inc. continuously employed Mr. L precisely because of the indispensability of his services to its business.

    According to the Court, his uninterrupted employment by OH, Inc., that spanned more than a year, manifested the continuing need and desirability of his services, which characterize regular employment.

    Further reading:

    • Olympia Housing, Inc. v. Lapastora, G.R. No. 187691, January 13, 2016.