When work relationship commences

When work relationship commences | Daily Tribune

Here is an interesting and noteworthy labor case. The issue here is when the employer-employee relationship begins. Naturally and logically, we expect it to commence upon the rendition of service by the employee to the employer, correct? Well, apparently not.

In this case, the applicant employee signed the job offer of the employer in April 2016. The offer stated that he was to report in July and sign an employment contract when he reported. Preparatory to his transfer, he resigned from his present job.

In the meantime, the employer corporation underwent a reorganization where the position of the new employee was abolished due to redundancy. So prior to July, the employee was informed that there was no longer a position to fill.

The employee filed a case with the National Labor Relations Commission (NLRC). The labor arbiter sided with the employee, ruling that there already was an employer-employee relationship. Thus, this was an illegal dismissal.

However, the NLRC, on appeal, reversed the ruling. It found no employer-employee relationship had yet been established. So did the Court of Appeals when the issue was brought before it. Determined, the employee brought the matter before the Supreme Court.

The High Court ruled: “An employment contract, like any other contract, is perfected at the moment the parties come to agree upon its terms and conditions, and thereafter concur in the essential elements thereof. Based on these requirements, the Court finds that an employment contract between Aragones and Alltech was perfected on 18 April 2016.

“This conclusion is supported by the following undisputed facts: (a) Alltech made an offer that was certain through the job offer; (b) Aragones unequivocally accepted this offer by affixing his signature thereto on 18 April 2016; and (c) he informed Alltech of his acceptance by sending a copy of the signed job offer to respondent Octavio Eckhardt via e-mail on the same day.

“Thus, Alltech cannot claim that it validly withdrew its job offer in view of the general rule that an offer, once accepted, cannot be withdrawn. The question now is: What was the effect of the commencement date of 1 July 2016?

“It is true that in certain instances the perfection of the employment contract and the commencement of the employment relationship may not coincide. [...] In other words, while the employer-employee relationship was already established when the contract was entered into on 18 April 2016, the demandability of their respective obligations as employer and employee was deferred until 1 July 2016. That the demandability of obligations was at a later time (1 July 2016), while the contract was established earlier (18 April 2016), is a result of the fact that Aragones had yet to wrap up his employment with Cargill. It was a period when Aragones could voluntarily terminate his employment with Cargill and do a proper turnover.

“This is a recognition that most employees who shift from one employer to another would usually wait for an offer from a new employer before voluntarily terminating their current employment, which was the case here.

“Aragones, after having obtained an offer from Alltech, accepted the same, and was given a sufficient period between 18 April 2016 to 1 July 2016 to wrap up his employment with Cargill. Alltech, on the other hand, could use the period to prepare for the position of Aragones, such as making sure he had all the necessary equipment to do his work. This period benefits both Alltech and Aragones. Even the requirement that Aragones sign an employment contract on his first day of work did not prevent this. After all, no particular form of contract or document is required to prove the existence of an employer-employee relationship.

“The four-fold test could also not be used as Alltech does not deny that it offered an employment contract to Aragones, which Aragones accepted. The issue is whether Alltech can unilaterally cancel an employment contract on the basis of redundancy, when the contract is subject to a suspensive period. The four-fold test is used when the issue turns on the existence of an employer-employee relationship and the employer denies the existence of such. [...]

“Furthermore, even assuming arguendo that the commencement date on the signed job offer partakes of a condition, such condition would nevertheless be considered constructively fulfilled. This is because Alltech effectively prevented its fulfillment by unilaterally withdrawing the job offer due to the alleged abolition of the STMP position. Article 1186 of the Civil Code clearly provides that, ‘[t]he condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.’ Consequently, Aragones would still be considered an employee of Alltech.”

The facts and redacted portion of the decision are from Paolo Landa Yan Aragones v. Alltech Biotechnology Corporation, Octavio Eckhardt, and Matthew Smith (G.R. No. 251736, April 2, 2025).