ANGELINA FRANCISCO vs. NLRC, KASEI CORPORATION, et al.
G.R. No. 170087
August 31, 2006
FACTS:
In 1995, petitioner Angelina Francisco was hired by Kasei Corporation (Kasei) during its incorporation stage. She was designated as Accountant, Corporate Secretary and Liaison Officer of the company. In 1996, Francisco was designated Acting Manager to handle recruitment of all employees and perform management administration functions, represent the company in all dealings with government agencies, and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei.
For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation.
In January 2001, Francisco was replaced as Manager. She alleged that she was required to sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei. The Treasurer convened a meeting of all employees and announced that Francisco was still connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters.
Thereafter, Kasei reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001. She was not paid her mid-year bonus allegedly because the company was not earning well. In October 2001, she did not receive her salary from the company, made repeated follow-ups with the cashier but was advised that the company was not earning well. On October 15, 2001, she asked for her salary, but she was informed that she is no longer connected with the company.
Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter.
Kasei Corporation claimed that Francisco was not their employee, having been designated as technical consultant who performed work at her own discretion without the control and supervision of the Corporation, and that her consultancy may be terminated any time considering that her services were only temporary in nature and dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private respondents submitted a list of employees for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among the employees reported to the BIR, as well as a list of payees subject to expanded withholding tax which included petitioner. SSS records were also submitted showing that petitioner’s latest employer was Seiji Corporation.
ISSUES:
Whether or not there was an employer-employee relationship between Francisco and Kasei Corporation; and whether Francisco was illegally dismissed.
HELD:
Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship.
However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. There are instances when, aside from the employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished, economic realities of the employment relations help provide a comprehensive analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship.
This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on; and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latter’s employment.
Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employer’s business; (2) the extent of the worker’s investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the company and performing
functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security contributions from August 1, 1999 to December 18, 2000. When petitioner was designated General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioner’s membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship between petitioner and respondent corporation.
It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latter’s line of business.
The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from January to September 2001. This amounts to an illegal termination of employment, where the petitioner is entitled to full backwages. Since the position of petitioner as accountant is one of trust and confidence, and under the principle of strained relations, petitioner is further entitled to separation pay, in lieu of reinstatement.
A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee.
In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor Code to a greater number of employees. This would enable employees to avail of the benefits accorded to them by law, in line with the constitutional mandate giving maximum aid and protection to labor, promoting their welfare and reaffirming it as a primary social economic force in furtherance of social justice and national development.
Thursday, January 28, 2010
DEALCO FARMS vs. NLRC
DEALCO FARMS, INC. vs. NATIONAL LABOR RELATIONS COMMISSION (5th DIVISION), CHIQUITO BASTIDA, and ALBERT CABAN
GR No. 153192
January 30, 2009
FACTS:
Petitioner Dealco Farms is a corporation engaged in the business of importation, production, fattening and distribution of live cattle for sale to meat dealers, meat traders, meat processors, canned good manufacturers and other dealers in Mindanao and in Metro Manila. Petitioner imports cattle by the boatload from Australia into the ports of General Santos City, Subic, Batangas, or Manila. In turn, these imported cattle are transported to, and housed in, petitioner’s farms in Polomolok, South Cotabato, or in Magalang, Pampanga, for fattening until the cattle individually reach the market weight of 430 to 450 kilograms.
Respondents Albert Caban and Chiquito Bastida were hired by petitioner on June 25, 1993 and October 29, 1994, respectively, as escorts or "comboys" for the transit of live cattle from General Santos City to Manila. Respondents’ work entailed tending to the cattle during transportation. It included feeding and frequently showering the cattle to prevent dehydration and to develop heat resistance. On the whole, respondents ensured that the cattle would be safe from harm or death caused by a cattle fight or any such similar incident.
Upon arrival in Manila, the cattle are turned over to and received by the duly acknowledged buyers or customers of petitioner, at which point, respondents’ work ceases. For every round trip travel which lasted an average of 12 days, respondents were each paid P1,500.00. The 12-day period is occasionally extended when petitioner’s customers are delayed in receiving the cattle. In a month, respondents usually made two trips.
On August 19, 1999, respondents were told by Dealco’s hepe de viaje that their replacement had been effected immediately, but no reason was given for their replacement. Respondents attempted to meet with petitioner but failed.
Petitioner denies the existence of an employer-employee relationship with respondents, claiming that: (a) respondents are independent contractors who offer "comboy" services to various shippers and traders of cattle, not only to petitioner; (b) in the performance of work on board the ship, respondents are free from the control and supervision of the cattle owner since the latter is interested only in the result thereof; (c) in the alternative, respondents can only be considered as casual employees performing work not necessary and desirable to the usual business or trade of petitioner, i.e., cattle fattening to market weight and production; and (d) respondents likewise failed to complete the one-year service period, whether continuous or broken, set forth in Article 280 of the Labor Code, as petitioner’s shipments were substantially reduced in 1998-1999, thereby limiting the escort or "comboy" activity for which respondents were employed.
ISSUE:
Whether or not an employer-employee relationship existed between petitioner and respondents and therefore the latter’s termination was illegal.
HELD:
Complainant’s task of escorting the livestock shipped to Manila, taking care of the livestock in transit, is an activity which is necessary and desirable in the usual business or trade of respondent. It is of judicial notice that the bulk of the market for livestock of big livestock raisers such as respondent is in Manila. Hogs do not swim, they are shipped. The caretaker is a component of the business, a part of the scheme of the operation.
More, it also appears that respondents had rendered service for more than one year doing the same task repeatedly, thus, even assuming they were casual employees they may be considered regular employees with respect to the activity in which they were employed and their employment shall continue while such activity exists (last par. of Art. 280).
In the case at bench, both the Labor Arbiter and the NLRC were one in their conclusion that respondents were not independent contractors, but employees of petitioner. In determining the existence of an employer-employee relationship between the parties, both the Labor Arbiter and the NLRC examined and weighed the circumstances against the four-fold test which has the following elements: (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to control the employees’ conduct, or the so-called "control test." Of the four, the power of control is the most important element. More importantly, the control test merely calls for the existence of the right to control, and not necessarily the exercise thereof.
The presence of the four (4) elements in the determination of an employer-employee relationship has been clearly established by the facts and evidence on record, starting with the admissions of petitioner who acknowledged the engagement of respondents as escorts of their cattles shipped from General Santos to Manila, and the compensation of the latter at a fee of P1,500.00 per trip.
The element of control, jurisprudentially considered the most essential element of the four, has not been demolished by any evidence to the contrary. The branch has noticed that the preparation of the shipment of cattle, manning and feeding them while in transit, and making a report upon their return to General Santos that the cattle shipped and which reached Manila actually tallied were all indicators of instructions, supervision and control by [petitioner] on [respondents’] performance of work as escorts for which they were hired. This we agree on all fours. The livestock shipment would cost thousands of pesos and the certainty of it reaching its destination would be the only thing any operator would consider at all time and under all circumstances. It is illogical for [petitioner] to argue that the shipment was not necessary or desirable to their business, as their business was mainly livestock production, because they were undeniably the owners of the cattle escorted by respondents. Should losses of a shipment occur due to respondents’ neglect these would still be petitioners’ loss, and nobody else’s.
Considering that we have sustained the Labor Arbiter’s and the NLRC’s finding of an employer-employee relationship between the parties, we likewise sustain the administrative bodies’ finding of respondents’ illegal dismissal. Accordingly, we are not wont to disturb the award of separation pay, claims for COLA and union service fees fixed at 10% of the total monetary award, as these were based on the finding that respondents were dismissed without just or authorized cause.
GR No. 153192
January 30, 2009
FACTS:
Petitioner Dealco Farms is a corporation engaged in the business of importation, production, fattening and distribution of live cattle for sale to meat dealers, meat traders, meat processors, canned good manufacturers and other dealers in Mindanao and in Metro Manila. Petitioner imports cattle by the boatload from Australia into the ports of General Santos City, Subic, Batangas, or Manila. In turn, these imported cattle are transported to, and housed in, petitioner’s farms in Polomolok, South Cotabato, or in Magalang, Pampanga, for fattening until the cattle individually reach the market weight of 430 to 450 kilograms.
Respondents Albert Caban and Chiquito Bastida were hired by petitioner on June 25, 1993 and October 29, 1994, respectively, as escorts or "comboys" for the transit of live cattle from General Santos City to Manila. Respondents’ work entailed tending to the cattle during transportation. It included feeding and frequently showering the cattle to prevent dehydration and to develop heat resistance. On the whole, respondents ensured that the cattle would be safe from harm or death caused by a cattle fight or any such similar incident.
Upon arrival in Manila, the cattle are turned over to and received by the duly acknowledged buyers or customers of petitioner, at which point, respondents’ work ceases. For every round trip travel which lasted an average of 12 days, respondents were each paid P1,500.00. The 12-day period is occasionally extended when petitioner’s customers are delayed in receiving the cattle. In a month, respondents usually made two trips.
On August 19, 1999, respondents were told by Dealco’s hepe de viaje that their replacement had been effected immediately, but no reason was given for their replacement. Respondents attempted to meet with petitioner but failed.
Petitioner denies the existence of an employer-employee relationship with respondents, claiming that: (a) respondents are independent contractors who offer "comboy" services to various shippers and traders of cattle, not only to petitioner; (b) in the performance of work on board the ship, respondents are free from the control and supervision of the cattle owner since the latter is interested only in the result thereof; (c) in the alternative, respondents can only be considered as casual employees performing work not necessary and desirable to the usual business or trade of petitioner, i.e., cattle fattening to market weight and production; and (d) respondents likewise failed to complete the one-year service period, whether continuous or broken, set forth in Article 280 of the Labor Code, as petitioner’s shipments were substantially reduced in 1998-1999, thereby limiting the escort or "comboy" activity for which respondents were employed.
ISSUE:
Whether or not an employer-employee relationship existed between petitioner and respondents and therefore the latter’s termination was illegal.
HELD:
Complainant’s task of escorting the livestock shipped to Manila, taking care of the livestock in transit, is an activity which is necessary and desirable in the usual business or trade of respondent. It is of judicial notice that the bulk of the market for livestock of big livestock raisers such as respondent is in Manila. Hogs do not swim, they are shipped. The caretaker is a component of the business, a part of the scheme of the operation.
More, it also appears that respondents had rendered service for more than one year doing the same task repeatedly, thus, even assuming they were casual employees they may be considered regular employees with respect to the activity in which they were employed and their employment shall continue while such activity exists (last par. of Art. 280).
In the case at bench, both the Labor Arbiter and the NLRC were one in their conclusion that respondents were not independent contractors, but employees of petitioner. In determining the existence of an employer-employee relationship between the parties, both the Labor Arbiter and the NLRC examined and weighed the circumstances against the four-fold test which has the following elements: (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to control the employees’ conduct, or the so-called "control test." Of the four, the power of control is the most important element. More importantly, the control test merely calls for the existence of the right to control, and not necessarily the exercise thereof.
The presence of the four (4) elements in the determination of an employer-employee relationship has been clearly established by the facts and evidence on record, starting with the admissions of petitioner who acknowledged the engagement of respondents as escorts of their cattles shipped from General Santos to Manila, and the compensation of the latter at a fee of P1,500.00 per trip.
The element of control, jurisprudentially considered the most essential element of the four, has not been demolished by any evidence to the contrary. The branch has noticed that the preparation of the shipment of cattle, manning and feeding them while in transit, and making a report upon their return to General Santos that the cattle shipped and which reached Manila actually tallied were all indicators of instructions, supervision and control by [petitioner] on [respondents’] performance of work as escorts for which they were hired. This we agree on all fours. The livestock shipment would cost thousands of pesos and the certainty of it reaching its destination would be the only thing any operator would consider at all time and under all circumstances. It is illogical for [petitioner] to argue that the shipment was not necessary or desirable to their business, as their business was mainly livestock production, because they were undeniably the owners of the cattle escorted by respondents. Should losses of a shipment occur due to respondents’ neglect these would still be petitioners’ loss, and nobody else’s.
Considering that we have sustained the Labor Arbiter’s and the NLRC’s finding of an employer-employee relationship between the parties, we likewise sustain the administrative bodies’ finding of respondents’ illegal dismissal. Accordingly, we are not wont to disturb the award of separation pay, claims for COLA and union service fees fixed at 10% of the total monetary award, as these were based on the finding that respondents were dismissed without just or authorized cause.
BRENT SCHOOL vs. ZAMORA
BRENT SCHOOL, INC.DIMACHE vs. RONALDO ZAMORA and DOROTEO R. ALEGRE
G.R. No. L-48494 February 5, 1990 en banc
FACTS:
Private respondent Doroteo R. Alegre was engaged as athletic director by petitioner Brent School, Inc. at a yearly compensation of P20,000.00. The contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those contained in the original contract of July 18, 1971.
On April 20,1976, Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his services effective on July 16, 1976. The stated ground for the termination was "completion of contract, expiration of the definite period of employment." Although protesting the announced termination stating that his services were necessary and desirable in the usual business of his employer, and his employment lasted for 5 years - therefore he had acquired the status of regular employee - Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of contract."
The Regional Director considered Brent School's report as an application for clearance to terminate employment (not a report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent employee," to his former position without loss of seniority rights and with full back wages.
ISSUE:
Whether or not the provisions of the Labor Code, as amended, have anathematized "fixed period employment" or employment for a term.
RULING:
Respondent Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement.
The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. At that time, the validity of term employment was impliedly recognized by the Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto, it was the Code of Commerce (Article 302) which governed employment without a fixed period, and also implicitly acknowledged the propriety of employment with a fixed period. The Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on August 30,1950, itself deals with obligations with a period. No prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise deducible therefrom.
It is plain then that when the employment contract was signed between Brent School and Alegre, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof Stipulations for a term were explicitly recognized as valid by this Court.
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (PD 442), which went into effect on November 1, 1974. The Code contained explicit references to fixed period employment, or employment with a fixed or definite period. Nevertheless, obscuration of the principle of licitness of term employment began to take place at about this time.
Article 320 originally stated that the "termination of employment of probationary employees and those employed WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." Article 321 prescribed the just causes for which an employer could terminate "an employment without a definite period." And Article 319 undertook to define "employment without a fixed period" in the following manner: …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 service to be performed is seasonal in nature and the employment is for the duration of the season.
Subsequently, the foregoing articles regarding employment with "a definite period" and "regular" employment were amended by Presidential Decree No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the reference to persons "employed with a fixed period," and was renumbered (becoming Article 271).
As it is evident that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head.
Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period of employment as still good rule—a rule reaffirmed in the recent case of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served by her school a notice of termination following the expiration of the last of three successive fixed-term employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was probationary, contractual in nature, and one with a definitive period. At the expiration of the period stipulated in the contract, her appointment was deemed terminated and the letter informing her of the non-renewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes' contract of employment was due to expire and that the contract would no longer be renewed. It is not a letter of termination.
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the
expiration of his last contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to make the termination of his services effective. In any case, such clearance should properly have been given, not denied.
G.R. No. L-48494 February 5, 1990 en banc
FACTS:
Private respondent Doroteo R. Alegre was engaged as athletic director by petitioner Brent School, Inc. at a yearly compensation of P20,000.00. The contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those contained in the original contract of July 18, 1971.
On April 20,1976, Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his services effective on July 16, 1976. The stated ground for the termination was "completion of contract, expiration of the definite period of employment." Although protesting the announced termination stating that his services were necessary and desirable in the usual business of his employer, and his employment lasted for 5 years - therefore he had acquired the status of regular employee - Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of contract."
The Regional Director considered Brent School's report as an application for clearance to terminate employment (not a report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent employee," to his former position without loss of seniority rights and with full back wages.
ISSUE:
Whether or not the provisions of the Labor Code, as amended, have anathematized "fixed period employment" or employment for a term.
RULING:
Respondent Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement.
The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. At that time, the validity of term employment was impliedly recognized by the Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto, it was the Code of Commerce (Article 302) which governed employment without a fixed period, and also implicitly acknowledged the propriety of employment with a fixed period. The Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on August 30,1950, itself deals with obligations with a period. No prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise deducible therefrom.
It is plain then that when the employment contract was signed between Brent School and Alegre, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof Stipulations for a term were explicitly recognized as valid by this Court.
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (PD 442), which went into effect on November 1, 1974. The Code contained explicit references to fixed period employment, or employment with a fixed or definite period. Nevertheless, obscuration of the principle of licitness of term employment began to take place at about this time.
Article 320 originally stated that the "termination of employment of probationary employees and those employed WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." Article 321 prescribed the just causes for which an employer could terminate "an employment without a definite period." And Article 319 undertook to define "employment without a fixed period" in the following manner: …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 service to be performed is seasonal in nature and the employment is for the duration of the season.
Subsequently, the foregoing articles regarding employment with "a definite period" and "regular" employment were amended by Presidential Decree No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the reference to persons "employed with a fixed period," and was renumbered (becoming Article 271).
As it is evident that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head.
Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period of employment as still good rule—a rule reaffirmed in the recent case of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served by her school a notice of termination following the expiration of the last of three successive fixed-term employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was probationary, contractual in nature, and one with a definitive period. At the expiration of the period stipulated in the contract, her appointment was deemed terminated and the letter informing her of the non-renewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes' contract of employment was due to expire and that the contract would no longer be renewed. It is not a letter of termination.
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the
expiration of his last contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to make the termination of his services effective. In any case, such clearance should properly have been given, not denied.
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