GMA NETWORK, INC.

, Petitioner,
vs.
CARLOS P. PABRIGA, GEOFFREY F. ARIAS, KIRBY N. CAMPO, ARNOLD L. LAGAHIT, and ARMANDO A.
CATUBIG, Respondent
G.R. No. 176419 | November 27, 2013| LEONARDO-DE CASTRO, J.:

Topic: Post-employment/Employee-Employer relationship/Kinds of employment

DOCTRINE – “Thus, in order to safeguard the rights of workers against the arbitrary use of the
word "project" to prevent employees from attaining the status of regular employees, employers
claiming that their workers are project employees should not only prove that the duration and scope of
the employment was specified at the time they were engaged, but also that there was indeed a project.
As discussed above, the project could either be (1) a particular job or undertaking that is within the
regular or usual business of the employer company, but which is distinct and separate, and identifiable
as such, from the other undertakings of the company; or (2) a particular job or undertaking that is not
within the regular business of the corporation. As it was with regard to the distinction between a regular
and casual employee, the purpose of this requirement is to delineate whether or not the employer is in
constant need of the services of the specified employee. If the particular job or undertaking is within the
regular or usual business of the employer company and it is not identifiably distinct or separate from the
other undertakings of the company, there is clearly a constant necessity for the performance of the task
in question, and therefore said job or undertaking should not be considered a project.”

FACTS:
Private respondents were engaged as Television technicians by Petitioner GMA. Their duties
include manning of the technical operation center, acting as transmitter, acting as maintenance staff,
and acting as cameramen.
On July 19, 1999, private respondents filed a complaint before the NLRC against GMA for
miserable working conditions. After GMA received the notice for hearing, the engineering manager of
GMA, Villacastin, confronted the private respondents.
Sometime later, private respondents were summoned to the office GMA’s area manager, Susan
Alino. They were made to explain why they filed the complaint. The day after, private respondents were
barred from going to work.
Through counsel, private respondents wrote to Alinorequesting they be allowed to return to
work. It was the head of Personnel and Labor relations, Bienvenido Bustria who replied admitting the
non-payment of benefits but no mention of the request to return to work.
Private respondents then filed an amended complaint raising the issues of Unfair labor practice,
illegal dismissal, and damages and Atty’s fees.
A mandatory conference was set but no amicable settlement was had. The parties were ordered
to file their position papers. The LA dismissed the case for illegal dismissal and unfair labor practice but
upheld the private respondents’ entitlement to 13 th month pay.
The NLRC reversed the LA decision.
GMA brought the case to the CA but the CA denied the case for lack of merit.
ISSUE:

1. Whether private respondents are regular employees.

RULING:
1. Yes

At the outset, we should note that the nature of the employment is determined by law, regardless
of any contract expressing otherwise. The supremacy of the law over the nomenclature of the contract
and the stipulations contained therein is to bring to life the policy enshrined in the Constitution to afford
full protection to labor. Labor contracts, being imbued with public interest, are placed on a higher plane
than ordinary contracts and are subject to the police power of the State.
The terms regular employment and project employment are taken from Article 280 of the Labor
Code, which also speaks of casual and seasonal employment:

ARTICLE 280. 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 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:

A fifth classification, that of a fixed term employment, is not expressly mentioned in the Labor
Code. Nevertheless, this Court ruled in Brent School, Inc. v. Zamora, that such a contract, which specifies
that employment will last only for a definite period, is not per se illegal or against public policy.

Pursuant to the above-quoted Article 280 of the Labor Code, employees performing activities
which are usually necessary or desirable in the employer’s usual business or trade can either be regular,
project or seasonal employees, while, as a general rule, those performing activities not usually necessary
or desirable in the employer’s usual business or trade are casual employees. The reason for this
distinction may not be readily comprehensible to those who have not carefully studied these provisions:
only employers who constantly need the specified tasks to be performed can be justifiably charged to
uphold the constitutionally protected security of tenure of the corresponding workers. The consequence
of the distinction is found in Article 279 of the Labor Code, which provides:

ARTICLE 279. Security of tenure. – In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this Title.
An employee who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.
 On the other hand, the activities of project employees may or may not be usually necessary or
desirable in the usual business or trade of the employer, as we have discussed in ALU-TUCP v. National
Labor Relations Commission, and recently reiterated in Leyte Geothermal Power Progressive Employees
Union-ALU-TUCP v. Philippine National Oil Company-Energy Development Corporation. In said cases, we
clarified the term "project" in the test for determining whether an employee is a regular or project
employee:

It is evidently important to become clear about the meaning and scope of the term "project" in the
present context. The "project" for the carrying out of which "project employees" are hired would
ordinarily have some relationship to the usual business of the employer. Exceptionally, the "project"
undertaking might not have an ordinary or normal relationship to the usual business of the employer. In
this latter case, the determination of the scope and parameters of the "project" becomes fairly easy. It is
unusual (but still conceivable) for a company to undertake a project which has absolutely no relationship
to the usual business of the company; thus, for instance, it would be an unusual steel-making company
which would undertake the breeding and production of fish or the cultivation of vegetables. From the
viewpoint, however, of the legal characterization problem here presented to the Court, there should be
no difficulty in designating the employees who are retained or hired for the purpose of undertaking fish
culture or the production of vegetables as "project employees," as distinguished from ordinary or
"regular employees," so long as the duration and scope of the project were determined or specified at
the time of engagement of the "project employees." For, as is evident from the provisions of Article 280
of the Labor Code, quoted earlier, the principal test for determining whether particular employees are
properly characterized as "project employees" as distinguished from "regular employees," is whether or
not the "project employees" were assigned to carry out a "specific project or undertaking," the duration
(and scope) of which were specified at the time the employees were engaged for that project.

In the realm of business and industry, we note that "project" could refer to one or the other of
at least two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or
undertaking that is within the regular or usual business of the employer company, but which is distinct
and separate, and identifiable as such, from the other undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times. The typical example of this first type
of project is a particular construction job or project of a construction company. A construction company
ordinarily carries out two or more [distinct] identifiable construction projects: e.g., a twenty-five-storey
hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo
City. Employees who are hired for the carrying out of one of these separate projects, the scope and
duration of which has been determined and made known to the employees at the time of employment,
are properly treated as "project employees," and their services may be lawfully terminated at
completion of the project.

The term "project" could also refer to, secondly, a particular job or undertaking that is not
within the regular business of the corporation. Such a job or undertaking must also be identifiably
separate and distinct from the ordinary or regular business operations of the employer. The job or
undertaking also begins and ends at determined or determinable times.

Thus, in order to safeguard the rights of workers against the arbitrary use of the word "project"
to prevent employees from attaining the status of regular employees, employers claiming that their
workers are project employees should not only prove that the duration and scope of the employment
was specified at the time they were engaged, but also that there was indeed a project. As discussed
above, the project could either be (1) a particular job or undertaking that is within the regular or usual
business of the employer company, but which is distinct and separate, and identifiable as such, from the
other undertakings of the company; or (2) a particular job or undertaking that is not within the regular
business of the corporation. As it was with regard to the distinction between a regular and casual
employee, the purpose of this requirement is to delineate whether or not the employer is in constant
need of the services of the specified employee. If the particular job or undertaking is within the regular
or usual business of the employer company and it is not identifiably distinct or separate from the other
undertakings of the company, there is clearly a constant necessity for the performance of the task in
question, and therefore said job or undertaking should not be considered a project
Petitioner’s allegation that respondents were merely substitutes or what they call pinch-hitters
(which means that they were employed to take the place of regular employees of petitioner who were
absent or on leave) does not change the fact that their jobs cannot be considered projects within the
purview of the law. Every industry, even public offices, 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. We are not convinced that a big corporation
such as petitioner cannot 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.
There is another reason why we should rule in favor of private respondents. Nowhere in the
records is there any showing that petitioner reported the completion of its projects and the dismissal
of private respondents in its finished projects to the nearest Public Employment Office as per Policy
Instruction No. 2015 of the Department of Labor and Employment [DOLE]. Jurisprudence abounds with
the consistent rule that the failure of an employer to report to the nearest Public Employment Office
the termination of its workers’ services everytime a project or a phase thereof is completed indicates
that said workers are not project employees.
In the extant case, petitioner should have filed as many reports of termination as there were
projects actually finished if private respondents were indeed project employees, considering that the
latter were hired and again rehired from 1996 up to 1999. Its failure to submit reports of termination
cannot but sufficiently convince us further that private respondents are truly regular employees.
Important to note is the fact that private respondents had rendered more than one (1) year of service at
the time of their dismissal which overturns petitioner’s allegations that private respondents were hired
for a specific or fixed undertaking for a limited period of time the employee is engaged for the project.
The Court of Appeals also ruled that even if it is assumed that respondents are project
employees, they would nevertheless have attained regular employment status because of their
continuous rehiring:
Be that as it may, a project employee may also attain the status of a regular employee if there
is a continuous rehiring of project employees after the stoppage of a project; and the activities
performed are usual [and] customary to the business or trade of the employer. The Supreme Court
ruled that a project employee or a member of a work pool may acquire the status of a regular
employee when the following concur:
1) There is a continuous rehiring of project employees even after cessation of a project; and
2) The tasks performed by the alleged project employee are vital, necessary and indispensable
to the usual business or trade of the employer.
 The circumstances set forth by law and the jurisprudence is present in this case. In fine, even if
private respondents are to be considered as project employees, they attained regular employment
status, just the same
petitioner interchangeably characterizes respondents’ service as project and fixed term
employment. These types of employment, however, are not the same. While the former requires a
project as restrictively defined above, the duration of a fixed-term employment agreed upon by the
parties may be any day certain, which is understood to be "that which must necessarily come although it
may not be known when." The decisive determinant in fixed-term employment is not the activity that
the employee is called upon to perform but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship.
Cognizant of the possibility of abuse in the utilization of fixed-term employment contracts, we
emphasized in Brent that where from the circumstances it is apparent that the periods have been
imposed to preclude acquisition of tenurial security by the employee, they should be struck down as
contrary to public policy or morals. We thus laid down indications or criteria under which "term
employment" cannot be said to be in circumvention of the law on security of tenure, namely:
1) 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
2) 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. (Citation omitted.)
These indications, which must be read together, make the Brent doctrine applicable only in a
few special cases wherein the employer and employee are on more or less in equal footing in entering
into the contract. The reason for this is evident: when a prospective employee, on account of special
skills or market forces, is in a position to make demands upon the prospective employer, such
prospective employee needs less protection than the ordinary worker. Lesser limitations on the parties’
freedom of contract are thus required for the protection of the employee. These indications were
applied in Pure Foods Corporation v. National Labor Relations Commission, where we discussed the
patent inequality between the employer and employees therein:
[I]t could not be supposed that private respondents and all other so-called "casual" workers of
[the petitioner] KNOWINGLY and VOLUNTARILY agreed to the 5-month employment contract. Cannery
workers are never on equal terms with their employers. Almost always, they agree to any terms of an
employment contract just to get employed considering that it is difficult to find work given their
ordinary qualifications. Their freedom to contract is empty and hollow because theirs is the freedom to
starve if they refuse to work as casual or contractual workers. Indeed, to the unemployed, security of
tenure has no value. It could not then be said that petitioner and private respondents "dealt with each
other on more or less equal terms with no moral dominance whatever being exercised by the former
over the latter.
To recall, it is doctrinally entrenched that in illegal dismissal cases, the employer has the burden
of proving with clear, accurate, consistent, and convincing evidence that the dismissal was valid. It is
therefore the employer which must satisfactorily show that it was not in a dominant position of
advantage in dealing with its prospective employee. Thus, in Philips Semiconductors (Phils.), Inc. v.
Fadriquela, this Court rejected the employer’s insistence on the application of the Brent doctrine when
the sole justification of the fixed terms is to respond to temporary albeit frequent need of such workers:
We reject the petitioner’s submission that it resorted to hiring employees for fixed terms to
augment or supplement its regular employment "for the duration of peak loads" during short-term
surges to respond to cyclical demands; hence, it may hire and retire workers on fixed terms, ad
infinitum, depending upon the needs of its customers, domestic and international. Under the
petitioner's submission, any worker hired by it for fixed terms of months or years can never attain
regular employment status. x x x.
Similarly, in the case at bar, we find it unjustifiable to allow petitioner to hire and rehire workers
on fixed terms, ad infinitum, depending upon its needs, never attaining regular employment status. To
recall, respondents were repeatedly rehired in several fixed term contracts from 1996 to 1999. To prove
the alleged contracts, petitioner presented cash disbursement vouchers signed by respondents, stating
that they were merely hired as pinch-hitters. It is apparent that respondents were in no position to
refuse to sign these vouchers, as such refusal would entail not getting paid for their services. Plainly,
respondents as "pinch-hitters" cannot be considered to be in equal footing as petitioner corporation in
the negotiation of their employment contract.
In sum, we affirm the findings of the NLRC and the Court of Appeals that respondents are
regular employees of petitioner. As regular employees, they are entitled to security of tenure and
therefore their services may be terminated only for just or authorized causes. Since petitioner failed to
prove any just or authorized cause for their termination, we are constrained to affirm the findings of the
NLRC and the Court of Appeals that they were illegally dismissed.
2. Yes.
In lieu of reinstatement, the grant of separation pay equivalent to one (1) month pay for every year
of service is proper which public respondent actually did. Where the relationship between private
respondents and petitioner has been severely strained by reason of their respective imputations of
accusations against each other, to order reinstatement would no longer serve any purpose. In such
situation, payment of separation pay instead of reinstatement is in order.
As regards night shift differential, the Labor Code provides that every employee shall be paid not
less than ten percent (10%) of his regular wage for each hour of work performed between ten o’clock in
the evening and six o’clock in the morning. As employees of petitioner, respondents are entitled to the
payment of this benefit in accordance with the number of hours they worked from 10:00 p.m. to 6:00
a.m., if any. In the Decision of the NLRC affirmed by the Court of Appeals, the records were remanded to
the Regional Arbitration Branch of origin for the computation of the night shift differential and the
separation pay. The Regional Arbitration Branch of origin was likewise directed to require herein
petitioner to produce additional documents where necessary. Therefore, while we are affirming that
respondents are entitled to night shift differential in accordance with the number of hours they worked
from 10:00 p.m. to 6:00 a.m., it is the Regional Arbitration Branch of origin which should determine the
computation thereof for each of the respondents, and award no night shift differential to those of them
who never worked from 10:00 p.m. to 6:00 a.m.
It is also worthwhile to note that in the NLRC Decision, it was herein petitioner GMA Network, Inc.
(respondent therein) which was tasked to produce additional documents necessary for the computation
of the night shift differential. This is in accordance with our ruling in Dansart Security Force & Allied
Services Company v. Bagoy, where we held that it is entirely within the employer's power to present
such employment records that should necessarily be in their possession, and that failure to present such
evidence must be taken against them.
Petitioner, however, is correct that the award of attorney's fees is contrary to jurisprudence.

NOTES during the discussion: