Case Digest

G.R. 178505 Innodata V. Inting

FACTS:

The Petitioners prayed for a review of the decision promulgated by the Court of Appeals on June 15, 2007
which affirmed the decision of the NLRC on December 14, 2001 in favour of the Respondent, which
reversed the decision of the Labor Arbiter on October 17, 2000.The Respondent is a domestic corporation
engaged in data encoding and data conversion, therefore employing encoders, indexers, formatters,
programmers, quality/quantity staff, and others to perform its operations and assignments from clients.
The Petitioners and Respondent engaged in an employment contract for a fixed duration of one year,
beginning on February 16, 1999 until February 16, 2000. The Petitioners were hired as Formatters. The
aforesaid Employment Contract indicated the following terms for termination: Innodata or the Petitioners
may pre-terminate the contract with or without cause, with due notice of 15 days Innodata or the
Petitioners may pre-terminate the contract by reason of breach or violation of the terms and conditions
of the contract through 15 days written notice, without need of judicial action or approval Respondent
through its HRAD Manager sent notice to Petitioners re their last day of work on February 16, 2000, the
end data stipulated in the contract Petitioners filed a complaint for illegal dismissal and damages against
respondents on May 22, 2000 for the reason that they should be considered as regular employees given
that (1) their positions as formatters were necessary and desirable to the usual business of Innodata and
(2) they are not project employees as there was no specific indication of the project upon which their
contract duration was co-terminous with Respondents explained that (1) they were compelled to engage
additional employees for fixed durations to accommodate the wide range of services requested by their
clients (2) the contract was for a fixed term only, from September 6, 1999 to February 16, 2000 (3) the
Petitioners knowingly, voluntarily, and wilfully entered into the contract Respondents have ceased
operations in June 2002 The Labor Arbiter ruled in favour of the Petitioners, which was reversed by the
NLRC and the Court of Appeals upon finding merit in the execution of the contract which indicates the
duration of the employment over the nature of the services rendered.

ISSUE:

Were the Petitioners regular employees of Innodata?

Were the Petitioners illegally dismissed, therefore, subject to reinstatement and payment of backwages?

HELD:
Yes. While the Court renders fixed-term contracts as valid, these should not be construed as a means for
employers to circumvent the law on security of tenure. The employment status of a person is provided
for by the law and not by what the Parties declare it to be, and as such, they should not absolve themselves
from the coverage of the law. Applicable references are Art. 280 and Art. 270 of the Labor Code.
Undoubtedly, the Petitioners are regular employees by the nature of the work they render, such that they
are desirable and necessary in the usual operation of business of Innodata. Fixed-term employment is
valid only for certain cases, such that these are essential and natural undertakings, such as in (a) overseas
employment (b) positions in educational institutions where these are undertaken in rotation among
faculty members like deans and principals (c) elective positions in companies of which durations are fixed
The Employment Contract is highly suspicious as the document was clearly tampered with: the beginning
data, supposedly indicated to be on February 16, 1999, was crossed out to indicate September 6, 2000.
This was due to the completion of the project before the end of the one year term, and as such, the
Petitioners were re-hired in September. This would mean that they engaged the Petitioners for a period
of less than a year, which is an attempt to circumvent security of tenure. Petitioners could not be
considered as Project Employees, defined as (1) engaged for a specific project or undertaking (2)
completion or termination of the project has been predetermined at the time of engagement of the
employee. The contract did not indicate a specific project upon which the Petitioners shall render services
accordingly, and in fact the Petitioners have rendered services for a number of clients of Innodata. The
contract has barred the Petitioners from claiming illegal dismissal upon termination of the contract as it
has indicated that they can be pre-terminated with or without cause provided they be given 15 days
notice. Since reinstatement is no longer possible, the Respondents shall pay backwages from the start of
illegal termination until its closure plus attorney’s fees.

Expedition Construction Corp V. Africa

Facts:

Petitioner Expedition Construction Corporation (Expedition), with petitioners Simon Lee Paz and Jordan
Jimenez as its Chief Executive Officer and Operations Manager, respectively, is a domestic corporation
engaged in garbage collection/hauling. It engaged the services of respondents as garbage truck drivers to
collect garbage from different cities and transport the same to the designated dumping site. In their
Position Paper,[ respondents alleged that in August 2013, they were illegally terminated from
employment when they were prevented from entering the premises of Expedition without cause or due
process. They claimed that they were regular employees of Expedition. They also averred that the costs
of repair and maintenance of the garbage trucks were illegally deducted from their salaries.

Expedition, in its Position Paper, countered that respondents were not illegally dismissed. It averred that
it entered into separate contracts with the cities of Quezon, Mandaluyong, Caloocan, and Muntinlupa for
the collection and transport of their garbage to the dump site; that it engaged the services of respondents,
as dump truck drivers, who were oftentimes dispatched in Quezon City and Caloocan City; that the need
for respondents' services significantly decreased sometime in 2013 after its contracts with Quezon City
and Caloocan City were not renewed; and, that it nonetheless tried to accommodate respondents by
giving them intermittent trips whenever the need arose.

Expedition denied that respondents were its employees. It claimed that respondents were not part of the
company's payroll but were being paid on a per trip basis. Respondents were not under Expedition's direct
control and supervision as they worked on their own, were not subjected to company rules nor were
required to observe regular/fixed working hours, and that respondents hired/paid their respective
garbage collectors. As such, respondents' money claims had no legal basis.

ISSUE:

1. IS there employee-employer relationship?

2. THERE IS NO FINDING OF ILLEGAL DISMISSAL. IS AWARD OF SEPARATION PAY/FINANCIAL ASSISTANCE

STILL PROPER?

Held:

1. In ruling that respondents were employees of Expedition, the CA found all the elements of
employer-employee relationship to be present. As shown in the records, Expedition hired
respondents as dump truck drivers and paid them the amount of P620.00 per trip. The CA held
that Expedition wielded the power to dismiss respondents based on Expedition's admission that
when the dispatch of drivers became irregular, it tried to accommodate them by giving trips when
the need arose. The control test was likewise established because Expedition determined how,
where, and when respondents would perform their tasks. Expedition, however, proffers that the
actual findings of the CA on this matter had no legal basis. It claims that respondents were never
hired but were merely engaged as drivers; that they worked on their own and were not subjected
to its control and supervision; that they were compensated based on output or number of trips
made in a day; that they selected their own garbage collectors, chose their own route and
determined the manner by which they would collect the garbage; and, that they performed their
work at their own pleasure without fear of being sanctioned if they chose not to report for work
2. YES AS A MEASURE OF SOCIAL JUSTICE UNDER EXCEPTIONAL CIRCUMSTANCES. “As a measure of
social justice, the award of separation pay/financial assistance has been upheld in some cases 40
even if there is no finding of illegal dismissal. The Court, in Eastern Shipping Lines, Inc. v. Sedan,41
had this to say: x x x We are not unmindful of the rule that financial assistance is allowed only in
instances where the employee is validly dismisse<l for causes other than serious misconduct or
those reflecting on his moral character. Neither are we unmindful of this Court’s pronouncements
in Arc~Men Food Industries Corporation v. NLRC, and Lemery Savings and Loan Bank v. NLRC,
where the Court ruled that when there is no dismissal to spe~1k of, an award of financial
assistance is not in order. But we must stress that this Court did allow, in several instances, the
grant of financial assistance. In the words of Justice Sabino de Leon, Jr., now deceased, financial
assistance may be allowed as a measure of social justice [under] exceptional circumstances, and
as an equitable concession. The instant case equally calls for balancing the interests of the
 employer with those of the worker, if only to approximate what Justice Laurel calls justice in its
secular sense.

Maria Carmela V. Hobbywing

Facts: Petitioner Umali alleged that she started working for Hobbywing Solutions, Inc. an online casino
gaming establishment as a pitboss supervisor. Her main duties and responsibilities involve, among other
supervising casino dealers as well as the operation of the entire gaming area or studio of hobbywing
company. She, however, never signed any employment contract before the commenecement of her
service but regularly received her salary every month. Sometime, Umali was asked to signe 2 employment
contracts. She signed both contracts. However, Umali later was informed by respondents that her
employment has already ended and was told to just wait for advice whether she will be rehired ore
regularized. She was also required tosign an exit clearance from the company apparently to clear her from
accountabilities. She was no longer allowed to work thereafter. Thus the filing of complaing of illegal
dismissal. Hobbywing admitted that it hired umali as pitboss uperviser on probationary status. With the
conformity of Umali the probationary period was extended for 3 months. Hobbywing claimed the
engagement of Umali’s service as a probationary employee and the extension of the period of probation
were both covered by separate employment contracts duly signed by the parties.

Issues:

1. Whether Or not the extension of probationary status beyond the period agreed upon by the party
is valid?
2. Whether or not the burden to prove the validiy extension of such status lies with the employer?
3. Whether or not extension of probationary status is valid despite the fact the employee earned
commendable performance in evaluation?

Ruling:

The SC found the petition meritorious. It is beyond disupute that umali started working for hobbywing as
a probationary employee. The parties, however, held conflicting claims with respect to the time when the
contracts were signed. Umali is claiming that there was no conrtact beore the commencement of her
employment and she was later on asked sign 2 employment contracts.

The Sc held that while the first contract was undated, the probation extention was dated, which was way
beyond the end of the supposes probationary period eof employment. Therefore validating Umali;s claim
that she had already worked for more than six months when she was asked to sign an employment
contract and its purported extension. Surprisingly, Hobbywing never explained the disparity in the dates
on the actual copies of the contracts which were submitted as annexes and that alleged in its position
paper as the time they were signed by Umali. Umali consistently reiterates that she was made to sign 2
probationary contracts. This brings to conlusion that the contracts were only made up to create a
semblance of legality in the employment and severance of Umali. The significant details left unexplained
only validated Umali’s claim that she had served way beyond the allowable period for probationary
employment and therefore has attained the status of regular employment. The court stated that
generally, the probationary period of employment is limited to 6 months. The exception to this general
rule is when the parties to an employment contract may agree otherwise. Such as when the same is
established by company policy or when the same is required by the nature of work to be performed by
the employee. Since extension is the excetion, the employer has burden of proof to show that the
extension is warranted and not simply a stratagem to preclude the worker’s attainment of regular status.

Son et al, V. University of Sto. Tomas

Facts: Raymond Son et al, are full time professors of UST colleges of Fine arts and Design and Philosphy
and are members of UST faculty union, with which UST at the time had a CBA. Under their respective
appointment papers, they were designated as faculty members on probationary period whose accession
to tenure status is conditioned by meeting all the requirements provided under existing university rules
and regulations and other applicable laws. Son, et al. did not possess the required Master’s degree, but
were nonetheless hired by UST on the condition that they fulfill the requirement within the prescribed
period. They enrolled in the Master’s program, but were unable to finish the same. In spite of their failure
to obtain the title, they continued to teach even beyond the period given for completion thereof. Later,
CHED chairman issued a memorandum addressed, directing the strict implementation of the minimum
requirement for faculty members of undergraduate programs, particularly the Master’s degree and
licensure requirements, as mandated by Memo Order no. 40-08 to ensure the highest qualification of
their faculty. Acting on such memo, UST wrote Son, et al and others informing them to cease
reappointment of those who failed to complete master’s degree, but allow a written appeal from the
concerned faculty members who are due for thesis defense/completion. Petitioners didn’t appeal under
the belief that they have been vested tenure under the CBA. Later they received termination/thank you
letters. Hence they filed for Unfair labor practice and illegal dismissal.

Issue: Whether or not the faculty member can be validly dismissed for failure to comply with the master’s
degree requirement despite the fact the CBA already granted tenure even to those who have no degree?

Ruling:

The SC denied the petition. The requirement of masteral degree for tertiary education was held to be not
unreasonable but rather in accord with the public interest. Thus, when the CBA was exevuted between
parties in 2006, they had no right to include therein the provision relative to the acquisition of tenure by
default, because it is contrary to and thus violative of the 1992 Revise manual of reglations for Private
schools that was in effect at the time. AS such, said CBA is null and void, and can have no effect as between
the parties. When CHED memo no 40-08 came out, it merely carried over the requirement of masteral
degree for faculty members, of undergraduate programs in the 1992 revised manual regulations for
private schools. It cannot thefeore be said that the requirement of a master’s degree was retroactively
applied to petitioners, because it was already the prevailing rule. From a strict legal viewpoint, the paries
are both in violation of law. UST for mainting professors without the mandated degrees. Son, et al cannot
therefore insist to employed UST since they still do not possess the required master’s degree; the fact UST
continues to hire and maintain professors without the necessary master’s degree is not a ground for
claiming illegal dismissal, or even reinstatement.