FACTS: Philippine Veterans Bank was liquidated under the auspecies of the Monetary Board. As a result, petitioners were terminated but immediately rehired. However, their new employment contracts stipulated that their employment was strictly temporary, for the duration of the undertaking for which the employee was hired. The liquidator also had the right to terminate the employee any time, if the latter was found to be incompetent, unqualified, etc. Subsequently, the petitioners were dismissed. The reason given for the dismissal was to reduce costs inherent to the liquidation process. The petitioners then filed an illegal dismissal case.
ISSUE: Was there an illegal dismissal?
HELD: Yes. True, the employees were employed under the new contract for a fixed period, as seen in the various stipulations of the agreement. A fixed term contract is valid, provided; (1) The fixed period was knowingly and voluntarily agreed upon by the parties, with no vitiation of consent, particularly in relation to the employee, and (2) The employer and employee dealt with each other on more or less equal bargaining terms, with no moral compulsion exercised by the former on the latter.
Both were present in this case. However, the reason given by the Liquidator for termination was inadequate. It was a mere allegation of the need to cut costs, with no concrete proof of actual losses to substantiate the same. Since the employer in this case did not meet the burden of proving that the dismissal was in fact valid, the conclusion is that it was an illegal dismissal.
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