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E. GANZON v. NLRC

FACTS:

This case involves 22 employees of E. Ganzon, Inc. who filed a complaint against the company for various labor violations. The complaints include illegal deductions, non-payment of various types of pay and benefits, and alleged illegal dismissal. On January 25, 1991, all the complainants were dismissed from their employment. Eight of the complainants signed a Release and Quitclaim and subsequently requested the dismissal of the complaint against them. However, the remaining 14 complainants, who did not sign the Release and Quitclaim, alleged that insurance premiums were deducted from their salaries without consent, and that they were not given various labor benefits. They also claimed that they were illegally dismissed when they reported for work on January 25, 1991.

E. Ganzon, Inc. argued that the complainants were contractual, project, temporary, or casual employees, and their employment contracts were renewed every three months. The Labor Arbiter ruled in favor of the remaining complainants, declaring them regular employees and finding E. Ganzon, Inc. guilty of illegal dismissal. The Labor Arbiter ordered the company to reinstate the complainants and pay them back wages and benefits.

On appeal, three complainants were further dismissed from the case due to a Release and Quitclaim they executed. The decision of the Labor Arbiter was affirmed subject to certain modifications. E. Ganzon, Inc. argued that the complainants were contractual or project employees and that their contracts simply expired on January 25, 1991. The company also disputed the computation of the money claims. The National Labor Relations Commission upheld the decision of the Labor Arbiter.

ISSUES:

  1. Whether the employees are regular or casual employees.

  2. Whether the fixed term contracts entered into by the employees are valid.

  3. Whether the private respondents are regular employees of the petitioner

  4. Whether the termination of employment of the private respondents was lawful

  5. Whether the money claims of the private respondents are barred by prescription

RULING:

  1. The employees are deemed regular employees. They have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, and they have been performing the same kind of work for more than one year. The repeated and continuing need for their performance is sufficient evidence of the necessity and indispensability of their activity to the business. As such, they are considered regular employees with respect to such activity while it exists.

  2. The fixed term contracts entered into by the employees are invalid. The contracts were renewed every three months, but the employees continued to perform the same kind of work throughout the entire period of their employment. The fixed periods of employment were imposed to preclude the acquisition of tenurial security by the employees. This arrangement is contrary to public policy and must be struck down.

  3. The private respondents are declared to be regular employees of the petitioner.

  4. The termination of employment of the private respondents was declared to be illegal.

  5. The money claims of the private respondents exceeding three years from the date of their amended complaint are barred by prescription.

PRINCIPLES:

  • The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee and the usual business or trade of the employer.

  • If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business, making the employment regular.

  • Fixed term contracts are valid provided they are knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure. However, when periods are imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy.

  • Regular employees are entitled to security of tenure and can only be terminated for just and authorized causes.

  • Termination of employment based on the expiration of a contract is not a legal cause unless there is proof of the actual duration of the contract.

  • Money claims arising from employer-employee relationships must be filed within three years from the time the cause of action accrues, otherwise, they will be forever barred.