The Supreme Court held that employees repeatedly engaged in tasks necessary for a company’s operations, even during off-seasons, should be classified as regular employees, not seasonal ones. This ruling ensures that workers who consistently contribute to the business, regardless of fluctuating demands, are entitled to the full benefits and protections afforded to regular employees under Philippine labor laws. The decision emphasizes that actual work performed, rather than contractual labels, determines employment status.

Seasonal or Steady? Deciding the Fate of Sugar Mill Workers

Universal Robina Sugar Milling Corporation (URSUMCO) sought to overturn a Court of Appeals (CA) decision that affirmed a Voluntary Arbitrator’s (VA) ruling, which reclassified 78 of its employees from “regular seasonal” to “regular” status. The central question was whether these employees, who performed repair work during the off-milling season, should be considered regular employees, entitled to year-round benefits, or seasonal workers, whose employment is tied to the milling season.

URSUMCO argued that the Collective Bargaining Agreement (CBA) defined these employees as seasonal, and the labor union, Nagkahiusang Mamumuo sa URSUMCO-National Federation of Labor (NAMA-URSUMCO-NFL), was estopped from challenging this classification. They also maintained that assigning repair work during the off-season was an act of generosity, not an obligation. Further, URSUMCO argued that compelling them to convert all seasonal employees would infringe on their management prerogatives. The company also raised the issue of mootness, stating that many employees had already been regularized, resigned, retired, or passed away.

However, the Supreme Court disagreed. The Court emphasized that while CBAs are binding, employment status is determined by law, not contractual agreements. The Court noted that, according to Article 295 of the Labor Code, as amended, there are four types of employment status: regular employees, project employees, seasonal employees, and casual employees. The Court also added fixed-term employment as another valid type of employment, citing the landmark case of Brent School, Inc. v. Zamora^[16], 260 Phil. 747 (1990).

The Court then clarified the definitions of seasonal and regular employment. Seasonal employees are those whose work is seasonal in nature and whose employment lasts only for the duration of the season. Regular seasonal employment occurs when these employees are called to work from time to time. However, in both types of seasonal employment, the employee performs no work during the off-milling season.

The Supreme Court contrasted this with regular employees, defined as those engaged to perform activities that are usually necessary or desirable in the employer’s usual trade or business. Examining the circumstances, the Court found that the employees in question performed work for URSUMCO even during the off-milling season, as they were engaged to conduct repairs on the machineries and equipment.

The Supreme Court cited the case of Abasolo v. National Labor Relations Commission^[22], 400 Phil. 86, 103 (2000), to expound on the standard observed in determining regular employment status:

The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, 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. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists.

The Court reasoned that repairing machinery and equipment was reasonably necessary for URSUMCO’s sugar milling business. The Court rejected URSUMCO’s argument that these repairs constituted a “project” outside the company’s regular business. Unlike the expansion program in ALU-TUCP v. National Labor Relations Commission^[23], 304 Phil. 844 (1994)., the repairs were closely intertwined with the sugar milling business, ensuring the equipment’s upkeep and maintenance for the next milling season.

Moreover, the Court reiterated that employment status is determined by the nature of the employer’s business and the tasks performed by the employee, not the parties’ intent or motivations. The Supreme Court emphasized that in interpreting contracts, the words shall be given their natural and ordinary meaning unless a technical meaning was intended, citing Spouses Serrano v. Caguiat^[26], 545 Phil. 660, 667 (2007). In this case, the CBA defined a regular employee as someone connected with the regular operation of URSUMCO, while a regular seasonal employee works only during the milling season.

The Court determined that repairing machinery, repeatedly done during the off-milling season, was indeed part of URSUMCO’s regular operation. Therefore, the employees could not be categorized as regular seasonal employees. The Court emphasized that its ruling only applied to the 78 concerned employees, not all of URSUMCO’s seasonal employees.

Ultimately, the Supreme Court’s decision underscores the importance of aligning employment classifications with the actual nature of work performed. It reinforces that regular tasks, regardless of the employer’s perceived generosity or contractual labels, entitle employees to the rights and benefits of regular employment.

FAQs

What was the key issue in this case?	The central issue was whether certain employees of Universal Robina Sugar Milling Corporation (URSUMCO) should be classified as regular or seasonal employees based on the nature of their work. The court had to determine if their engagement in repair work during the off-milling season qualified them for regular employment status.
What did the Collective Bargaining Agreement (CBA) say about employment classification?	The CBA defined regular employees as those performing jobs connected with URSUMCO’s regular operations, while seasonal employees were defined as those working only during the milling season. The CBA was used as a basis for URSUMCO’s claim that the concerned employees were seasonal.
Why did the Court rule against URSUMCO’s claim that the employees were seasonal?	The Court found that the employees performed work for URSUMCO even during the off-milling season, conducting repairs on machinery and equipment. This continuous engagement, coupled with the necessity of the repairs for URSUMCO’s business, led the Court to conclude they were regular employees.
What is the legal basis for distinguishing between regular and seasonal employees?	Article 295 of the Labor Code, as amended, defines regular employees as those engaged to perform activities necessary or desirable in the employer’s usual trade or business. Seasonal employees, on the other hand, are those whose work is seasonal in nature and whose employment is only for the duration of the season.
How does the nature of the employer’s business affect employment classification?	The nature of the employer’s business is a key factor in determining employment status. If the tasks performed by the employee are reasonably necessary and desirable for the business, the employee is more likely to be classified as regular.
Can an employer avoid regularizing employees by outsourcing certain tasks?	While employers have the prerogative to outsource work, the Court’s decision suggests that continuous and necessary tasks related to the core business should be performed by regular employees. The fact that URSUMCO could have outsourced the repairs was deemed immaterial.
What does this case mean for other seasonal workers in the Philippines?	This case reinforces the principle that employment status is determined by the actual nature of the work performed, not just contractual labels. It provides a legal precedent for seasonal workers who perform continuous and necessary tasks to seek regularization.
Did the Court’s decision apply to all seasonal employees of URSUMCO?	No, the Court clarified that its ruling only applied to the 78 concerned employees involved in the case. It did not make a sweeping declaration that all of URSUMCO’s seasonal employees were now regular or permanent employees.

This ruling serves as a reminder that employment classifications must align with the actual work performed and the needs of the business. It protects workers from being misclassified and denied the rights and benefits they deserve.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: UNIVERSAL ROBINA SUGAR MILLING CORPORATION v. NAGKAHIUSANG MAMUMUO SA URSUMCO-NATIONAL FEDERATION OF LABOR (NAMA-URSUMCO-NFL), G.R. No. 224558, November 28, 2018