MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P. PASCUAL, RAQUEL ESTILLER, ALBERT HALLARE, EDMUND M. CORTEZ, JOSELITO O. AGDON GEORGE P. LIGUTAN JR., CELSO M. YA…

Marites Bernardo versus Far East Bank and Trust Company

The Case

This is a labor case brought by forty-three deaf-mute employees against Far East Bank and Trust Company. The employees, hired as money sorters and counters under six-month contracts labeled "Employment Contract for Handicapped Workers," claim they were illegally dismissed after the bank refused to renew their contracts. The case matters because it settles how the Magna Carta for Disabled Persons interacts with the Labor Code's rules on regular employment, and whether an employer can use fixed-term contracts to deny security of tenure to disabled workers who perform tasks necessary to its business.

Procedural History

The employees filed a complaint for illegal dismissal before the Labor Arbiter, who dismissed the case for lack of merit. On appeal, the National Labor Relations Commission affirmed the Labor Arbiter's ruling, holding that the workers were not regular employees and that the terms of their contracts governed their employment. The employees then filed a Petition for Certiorari with the Supreme Court, alleging that the Commission committed grave abuse of discretion in applying the law to the established facts.

Facts

The employees were deaf-mutes hired by the bank from 1988 to 1993 under a uniformly worded agreement. The contract stated that the bank, cognizant of its social responsibility, sought to provide disabled persons gainful employment. Each contract ran for six months and could be renewed in writing. The employees sorted and counted bills, wrapped and labeled them, and submitted bundled bills to bank tellers for verification. Their contracts were renewed every six months, and by the time the case arose, fifty-six deaf-mutes were employed under this arrangement.

The bank claimed the workers were hired as an accommodation to civic-minded personalities and government officials, that there were no plantilla positions for money sorters, and that the task used to be performed by tellers. The bank argued the workers were "special" employees under Article 80 of the Labor Code, which governs employment of handicapped workers. When the bank decided not to renew their contracts, the employees filed this case. The bank later explained that Bangko Sentral regulations required cash to be turned over during business hours, forcing nighttime sorting, which it claimed was risky for deaf-mutes traveling at night.

Issues

• Whether or not the money sorters and counters working in the bank were regular employees.
• Whether or not the six-month employment contracts signed and renewed by the petitioners were valid.
• Whether or not the National Labor Relations Commission gravely abused its discretion in not applying the Magna Carta for Disabled Persons.

Applicable Provisions

Article 80 of the Labor Code, on employment agreements with handicapped workers, provides:

ART. 80. Employment agreement. - Any employer who employs handicapped workers shall enter into an employment agreement with them, which agreement shall include: (a) The names and addresses of the handicapped workers to be employed; (b) The rate to be paid the handicapped workers which shall be not less than seventy five (75%) per cent of the applicable legal minimum wage; (c) The duration of employment period; and (d) The work to be performed by handicapped workers. The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized representatives.

This provision allowed the bank to hire the petitioners under special contracts, but its application depends on whether the workers were qualified disabled persons or merely unqualified ones needing accommodation.

Section 5 of the Magna Carta for Disabled Persons, on equal opportunity for employment, provides:

Section 5. Equal Opportunity for Employment.--No disabled person shall be denied access to opportunities for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person.

This provision is the heart of the case, because it mandates that qualified disabled employees be treated exactly like qualified able-bodied employees.

Article 280 of the Labor Code, on regular and casual employment, provides:

ART. 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 the 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: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered as regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

This provision defines regular employment by the nature of the work performed, regardless of what the written contract says.

Ruling

The Court ruled that the petition was meritorious, but only for the twenty-seven employees who worked for more than six months and whose contracts were renewed. The sixteen who worked only six months were not deemed regular employees.

On the first issue, the Court held that the task of counting and sorting bills was undoubtedly necessary and desirable to the business of the bank. The renewal of contracts and the hiring of additional workers showed that their tasks were beneficial and necessary, and that their disability did not render them unqualified. Because they were qualified disabled persons, the Magna Carta removed their contracts from the ambit of Article 80 and placed them under Article 280 of the Labor Code. The Court quoted the test for regular employment from an earlier case:

The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business 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 and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business.

On the second issue, the Court rejected the bank's reliance on the doctrine allowing fixed-term contracts. The term limit in the contract was premised on the fact that the petitioners were disabled, and the bank had to determine their fitness for the position. But once the employees proved themselves qualified, Article 80 no longer applied. The Court held that validating a contract limit imposed by reason of disability was a glaring instance of the very mischief the Magna Carta sought to address. Provisions of applicable statutes are deemed written into the contract, and parties cannot insulate themselves from labor laws by simply contracting with each other.

On the third issue, the Court held that the Magna Carta for Disabled Persons clearly applied. The bank's argument that nighttime travel was risky for deaf-mutes found no basis, since such risks affect able-bodied persons equally. The Court also rejected the arguments that the employees were merely accommodated, that the bank did not recruit them, and that their positions were not in the plantilla. Regular employment depends on the nature of the work and the length of service, not on the mode or reason for hiring.

Doctrine

A qualified disabled employee must be given the same terms and conditions of employment as a qualified able-bodied employee. Once a disabled worker performs activities usually necessary or desirable in the employer's business for more than six months, that worker becomes a regular employee under Article 280 of the Labor Code, and the special provisions of Article 80 no longer apply. An employer cannot use fixed-term contracts to deny security of tenure to qualified disabled workers, because the Magna Carta for Disabled Persons mandates equal treatment, and statutes are deemed written into every employment contract.

Disposition

The Court set aside the rulings of the National Labor Relations Commission and the Labor Arbiter, declared the twenty-seven employees who worked beyond six months to be regular employees illegally dismissed, and awarded them separation pay in lieu of reinstatement, plus back wages.

Remember This

The single line worth memorizing is that the Magna Carta for Disabled Persons mandates that qualified disabled employees be granted the same terms and conditions of employment as qualified able-bodied employees, rooted not on charity but on justice. Examiners like to use this case to test whether a student can apply the regular employment test under Article 280 to special classes of workers, and to check whether they know that statutory protections cannot be waived by contract.