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OKS DESIGNTECH v. MARY JAYNE L. CACCAM

FACTS:

The respondent, Mary Jayne L. Caccam, was initially employed by the petitioner, OKS DesignTech, Inc., under a fixed-term contract of employment. This contract was later extended for another year. However, before the expiration of the contract, the petitioner notified the respondent that her contract would expire and offered her the option to use her unused leave credits. Dissatisfied with her dismissal and the non-payment of her earned salary, the respondent filed a complaint for illegal dismissal and non-payment of salaries.

During the mandatory conference, the respondent was fully paid her money claims. The labor arbiter subsequently ruled in favor of the respondent, declaring her dismissal as illegal and ordering her reinstatement, as well as the payment of backwages.

The petitioner filed an appeal with the National Labor Relations Commission (NLRC), which overturned the labor arbiter's decision and dismissed the complaint. The NLRC maintained that there was no factual basis to consider the initial contract as one for probationary employment.

In response, the respondent filed a motion for reconsideration, which was denied. She then brought the matter to the Court of Appeals (CA) through a petition for certiorari. The CA reversed the NLRC's decision and reinstated the labor arbiter's ruling, stating that the respondent was indeed a regular employee entitled to backwages. However, the CA removed the award of damages.

The petitioner filed a motion for reconsideration with the CA, but it was denied. Consequently, the petitioner appealed the case to the Supreme Court. The primary issue for the Court to resolve is whether the CA erred in its ruling that the NLRC gravely abused its discretion in determining that the respondent was not a regular employee and, thus, lawfully dismissed due to the termination of her fixed-term contract.

ISSUES:

  1. Whether the Court of Appeals erred in finding grave abuse of discretion on the part of the NLRC in ruling that the respondent was not illegally dismissed.

  2. Whether the respondent was hired for a fixed period or as a regular employee.

  3. Whether the respondent was a regular employee despite signing a fixed-term employment contract.

  4. Whether the respondent was employed on a probationary or fixed-term basis.

  5. Whether the termination of the respondent's employment upon the expiration of her contract was valid.

RULING:

  1. The Court finds that the Court of Appeals committed reversible error in granting the respondent's certiorari petition since the NLRC did not gravely abuse its discretion in ruling that the respondent was legally dismissed.

  2. The validity of the respondent's dismissal depends on whether she was hired for a fixed period or as a regular employee. An examination of the contracts entered into by the respondent reveals that her employment was clearly limited to a fixed period and did not go beyond such period.

  3. The respondent is not a regular employee. The Court held that an employee can still be engaged under a fixed-term employment contract even if their duties are necessary or desirable in the usual trade or business of the employer. The decisive factor in fixed-term employment is the agreed-upon period for the employment relationship, not the nature of the employee's duties. In this case, the respondent executed two fixed-term employment contracts with clear start and end dates, and there was no evidence that her consent to these contracts was vitiated or that force, duress, or improper pressure was exerted upon her. The Court also emphasized that fixed-term employment contracts are not inherently unlawful and that employers have the right to choose their workers. There was no showing that the contracts used in this case were a subterfuge to deny the respondent security of tenure. Therefore, the respondent was not a regular employee.

  4. The respondent was employed on a fixed-term basis and not on a probationary basis. The records support the finding that the respondent's employment was hinged on a stipulated term. The Court explained that fixed-term employment refers to a period agreed upon between the employer and the employee, and employment exists only for the duration of the term and ends on its own when the term expires. On the other hand, probationary status refers to a period of testing and observing the ability of a person who is new to a role or job. The Court emphasized that the probationary period can only last for the specific maximum period and must conform to reasonable and well-laid standards.

  5. The termination of the respondent's employment upon the expiration of her contract was valid. As the respondent was hired under a valid fixed-period employment contract, her employment was lawfully terminated upon its expiration without the need for further notice. The Court disagreed with the Court of Appeals' finding of grave abuse of discretion on the part of the National Labor Relations Commission (NLRC) and held that the NLRC correctly found that the respondent was not illegally dismissed.

PRINCIPLES:

  • Only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court.

  • Grave abuse of discretion connotes a capricious and whimsical exercise of judgment, done in a despotic manner by reason of passion or personal hostility.

  • The Court may open and scrutinize the records when there is a divergence in the findings of fact by the lower courts.

  • Regular employment exists when the employee is engaged to perform activities that are necessary or desirable in the usual trade or business of the employer, or when a casual employee has rendered at least one year of service with respect to the activity in which he is employed.

  • Fixed-term employment is valid and not a circumvention of security of tenure when 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, or when the employer and employee dealt with each other on more or less equal terms with no moral dominance exercised by either party.

  • Fixed-term employment contracts can be valid as long as they are entered into voluntarily and without vitiating circumstances.

  • The nature of an employee's duties does not preclude the use of a fixed-term employment contract.

  • The decisive factor in fixed-term employment is the agreed-upon period for the employment relationship.

  • Employers have the right and prerogative to choose their workers, as long as it does not result in injustice to the employee.

  • Self-serving and unsubstantiated declarations are not sufficient evidence. The natural presumption is that a person takes ordinary care of their concerns, and private transactions are presumed to be fair and regular.

  • Notarized employment contracts carry the presumption of regularity and can only be contradicted by clear, convincing, and more than merely preponderant evidence.

  • Including a provision for termination based on failure to meet reasonable standards does not automatically create an implied probationary employment status.

  • The difference between probationary and fixed-term employment contracts.

  • The protective character of probationary status and the need for reasonable and well-laid standards.

  • Contracts of employment for a fixed period are not per se unlawful, but the practice of circumventing the law to terminate employment capriciously is objectionable.