Additional Cases for September 10

Test of Regularity of Employment vs. Fixed Term

CASE 1

ATLANTA INDUSTRIES, INC. AND/OR ROBERT CHAN, PETITIONERS, VS. APRILITO R.

SEBOLINO, KHIM V. COSTALES, ALVIN V. ALMOITE, AND JOSEPH S. SAGUN,
RESPONDENTS.

FACTS:

Sebolino et al. filed several complaints for illegal dismissal, regularization, underpayment,
nonpayment of wages and other money claims, and damages. They alleged that they had attained regular
status as they were allowed to work with Atlanta for more than six (6) months from the start of a
purported apprenticeship agreement between them and the company. They claimed that they were
illegally dismissed when the apprenticeship agreement expired.

In defense, Atlanta and Chan argued that the workers were not entitled to regularization and to
their money claims because they were engaged as apprentices under a government-approved
apprenticeship program. The company offered to hire them as regular employees in the event vacancies
for regular positions occurred in the section of the plant where they had trained. They also claimed that
their names did not appear in the list of employees (Master List) prior to their engagement as apprentices.

ISSUE:
Whether or not the respondents are indeed illegally dismissed.

RULING:

 LA
The Labor Arbiter found the dismissal to be illegal with respect to nine out of the twelve
complainants.

 NLRC
Atlanta appealed the decision to the NLRC. The NLRC rendered a decision, on appeal, modifying
the ruling of the labor arbiter, as follows: (1) withdrawing the illegal dismissal finding with
respect to Sagun, Mabanag, Sebolino and Pedregoza; (2) affirming the dismissal of the
complaints of dela Cruz, Zaño, Magalang and Chiong; (3) approving the compromise
agreement entered into by Costales, Ramos, Villagomez, Almoite and Alegria, and (4) denying all
other claims. Sebolino, Costales, Almoite and Sagun moved for the reconsideration of the
decision, but the NLRC denied the motion

 CA
They then brought the case up to the Court of Appeals, which held that Sebolino and the three
others were illegally dismissed. The CA ruled that Sebolino and the three others were already
employees of the company before they entered into the first and second apprenticeship
agreements. For example, Sebolino was employed by Atlanta on March 3, 2004, then he entered
into his first apprenticeship agreement with the company from March 20, 2004, to August 19,
 2004. The second apprenticeship agreement was from May 28, 2004, to October 8, 2004.
However, the CA found the apprenticeship agreements to be void because they were executed in
violation of the law and the rules. Therefore, in the first place, there were no apprenticeship
agreements. Furthermore, The positions occupied by the respondents - machine operator, extruder
operator, and scaleman - are usually necessary and desirable in the manufacture of plastic
building materials, the company's main business. Moreover, the compromise agreement entered
by Costales and Almoite, together with Ramos, Villagomez, and Alegria, was not binding on
Costales and Almoite because they did not sign the agreement. Atlanta and Chan moved for
reconsideration, but the CA denied the motion in a resolution rendered on March 25, 2009.
Hence, the present petition.

 SC

(Petitioner’s Contentions)
Atlanta seeks a reversal of the CA decision. It submits the following arguments: First.
The CA's conclusion that the respondent workers were company employees before they were
engaged as apprentices was primarily based on the Monthly Report and the Production and Work
Schedule in total disregard of the Master List prepared by the company accountant. The names of
Costales, Almoite, Sebolino, and Sagun do not appear as employees in the Master List. Second,
in declaring invalid the apprenticeship agreements it entered into with the respondent workers,
the CA failed to recognize the rationale behind the law on apprenticeship. The respondents
initially executed a five-month apprenticeship program with Atlanta, at the end of which, they
"voluntarily and willingly entered into another apprenticeship agreement with the petitioner for
the training of a second skill" for five months; thus, the petitioners committed no violation of the
apprenticeship period laid down by the law. Third. There was no illegal dismissal as the
respondent workers' tenure ended with the expiration of the apprenticeship agreement they
entered into. There was, therefore, no regular employer-employee relationship between Atlanta
and the respondent workers.

(Respondents’ Contentions)
Costales, Almoite, Sebolino and Sagun pray for a denial of the petition for being
procedurally defective and for lack of merit. The respondent workers contend that the petition
failed to comply with Section 4, Rule 45 of the Rules of Court which requires that the petition be
accompanied by supporting material portions of the records. The petitioners failed to attach to the
petition a copy of the Production and Work Schedule, and a copy of the compromise agreement.
For this reason, the respondent workers submit that the petition should be dismissed.

The respondents posit that the CA committed no error in holding that they were already
Atlanta's employees before they were engaged as apprentices, as confirmed by the company's
Production and Work Schedule. The respondent workers reiterate their mistrust of the Master
List[25] as evidence that they were not employees of the company at the time they became
apprentices.

Supreme Court ruling:

The petition is hereby denied for lack of merit. The assailed decision and resolution of the
Court of Appeals are AFFIRMED.
The following considerations support the CA ruling.

First. Based on company operations at the time material to the case, Costales, Almoite,
Sebolino and Sagun were already rendering service to the company as employees before they
were made to undergo apprenticeship. The company itself recognized the respondents' status
through relevant operational records - in the case of Costales and Almoite, the CPS monthly
report for December 2003 which the NLRC relied upon and, for Sebolino and Sagun, the
production and work schedule for March 7 to 12, 2005 cited by the CA. Second. The Master List
of employees that the petitioners heavily rely upon as proof of their position that the respondents
were not Atlanta's employees, at the time they were engaged as apprentices, is unreliable and does
not inspire belief. Third. The fact that Costales, Almoite, Sebolino and Sagun were already
rendering service to the company when they were made to undergo apprenticeship (as established
by the evidence) renders the apprenticeship agreements irrelevant as far as the four are concerned.
This reality is highlighted by the CA finding that the respondents occupied positions such as that
are usually necessary and desirable in Atlanta's usual business or trade as a manufacturer of
plastic building materials. Fourth. The compromise agreement allegedly entered into by Costales
and Almoite, together with Ramos, Villagomez and Alegria, purportedly in settlement of the case
before the NLRC, is not binding on Costales and Almoite because they did not sign it.
CASE 2

MARIO A. ABUDA, et al., PETITIONERS, V. L. NATIVIDAD POULTRY FARMS, JULIANA

NATIVIDAD, AND MERLINDA NATIVIDAD, RESPONDENTS.

FACTS:

This resolves the Petition for Review filed by Mario A. Abuda, et al. (collectively, workers),
assailing the October 11, 2011, Decision and February 8, 2012, Resolution of the. The workers of L.
Natividad Poultry Farms (L. Natividad) filed complaints for "illegal dismissal, unfair labor practice,
overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay, thirteenth-
month pay, and moral and exemplary damages" against it and its owner, Juliana Natividad (Juliana), and
manager, Merlinda Natividad (Merlinda). The workers claimed that L. Natividad had employed and
terminated their employment after several years of employment.

ISSUE:
Whether or not the maintenance personnel in L. Natividad Poultry Farms can be considered as its
regular employees.

RULING:

 LA
LA Robert A. Jerez dismissed the complaint due to a lack of employer-employee relationship
between the workers and L. Natividad. He ruled that San Mateo General Services (San Mateo),
Wilfredo Broñola (Broñola), and Rodolfo Del Remedios (Del Remedios) were the real employers
as they were the ones who employed the workers, not L. Natividad.

 NLRC
The NLRC modified the Decision of LA. It found that the workers were hired as maintenance
personnel by San Mateo and Del Remedios on pakyaw basis to perform specific services for L.
Natividad. Furthermore, it ruled that Jose Gonzales (Gonzales) and Roger Martinez (Martinez)
could not be considered as regular employees because their jobs as poultry livestock mixers were
not necessary in L. Natividad's line of business. However, it found Broñola, Jeremias, Arnel,
Nawal, and Eduardo to be regular employees and ordered L. Natividad to reinstate them and pay
their thirteenth-month pay and service incentive leave pay.

 CA
The workers filed a Petition for Review on Certiorari before the Court of Appeals. The petition is
PARTLY GRANTED and the Decision dated August 31, 2010, MODIFIED. Petitioners Jose
Gonzales and Roger Martinez are DECLARED regular employees of respondent L. Natividad
Poultry Farms; and the latter, DIRECTED to reinstate Jose Gonzales and Roger Martinez without
back wages and to pay their 13th month and service incentive leave pay.

The CA modified the NLRC's assailed Decision and ruled that San Mateo and Del Remedios
were labor-only contractors, and as such, they must be considered as L. Natividad's agents. The
 CA also reversed the NLRC's ruling on Gonzales' and Martinez's employment status since as
poultry and livestock feed mixers, they performed tasks that were necessary and desirable to L.
Natividad's business and were not mere helpers. It deemed them to be L. Natividad's regular
employees. However, the CA upheld the NLRC's finding that the maintenance personnel were
only hired on a pakyaw basis to perform necessary repairs or construction within the farm as the
need arose. As for the issue of illegal dismissal, the CA also affirmed the NLRC's finding that the
workers failed to substantiate their bare allegation that L. Natividad verbally notified them of
their dismissal.

 SC

(Petitioners’ contentions)
Petitioners claim that as maintenance personnel assigned to respondent L. Natividad's farms and
sales outlets, they performed functions that were necessary and desirable to L. Natividad's usual
business. They assert that they have been continuously employed by L. Natividad for a period
ranging from more than one (1) year to 17 years. Petitioners stress that L. Natividad provided all
the tools, equipment, and materials they used as maintenance personnel. Respondents Juliana and
Merlinda then gave them specific tasks and supervised their work. Petitioners argue that even if
they were mere project employees as respondents claim, respondents failed to present any service
contract executed between them. Petitioners point out that respondents used the supposed
contracting arrangement with petitioner Del Remedios to prevent them from becoming L.
Natividad's regular employees.

(Respondent’s contentions)
Respondents claim to be engaged in the business of livestock and poultry production. They also
aver to have engaged San Mateo's services to clean up the poultry farm and to repair and maintain
their chicken pens. Respondents likewise state that they engaged petitioner Del Remedios to
provide carpentry services. They assert that petitioners who claim to be maintenance personnel
were carpenters or masons deployed by petitioner Del Remedios for his own account.

Respondents further assert that carpentry and masonry cannot be considered necessary or
desirable in their business of livestock and poultry production. They point out that petitioners
were only occasionally deployed as needed to repair and maintain their farm and sales outlets as
needed. They assert that petitioners Gonzales and Martinez were Broiola's employees, whom he
hired specifically to help him mix feeds on a pakyaw system. Respondents deny that petitioners
were illegally dismissed and contend that their contracts were merely not renewed.

Supreme Court’s ruling

This Court resolves to PARTIALLY GRANT the petition. The assailed October 11, 2011,
Decision and February 8, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 117681 are
AFFIRMED with MODIFICATION. The following petitioners are DECLARED to be regular
employees of L. Natividad Poultry Farms and are ORDERED to be REINSTATED to their
former positions and to be PAID their back wages, allowances, and other benefits from the time
of their illegal dismissal up to the time of their actual reinstatement.

Both the NLRC and the CA found respondent L. Natividad to be petitioners' real
employer, in light of the labor-only contracting arrangement between respondents, San Mateo,
and petitioner Del Remedios. This Court sees no reason to disturb their findings since their
findings are supported by substantial evidence. Furthermore, a resort to the four (4)-fold test of
"(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee's conduct"49 also strengthens the finding
that respondent L. Natividad is petitioners' employer.

Respondents hired petitioners directly or through petitioner Del Remedios, a supervisor at

respondents' farm. They likewise paid petitioners' wages, as seen by the vouchers issued to Del
Remedios and San Mateo. They also had the power of dismissal inherent in their power to select
and engage their employees. Most importantly though, they controlled petitioners and their work
output by maintaining an attendance sheet and by giving them specific tasks and assignments.
With an employer-employee relationship between respondent L. Natividad and petitioners duly
established, the next question for resolution is whether petitioners can be considered to be regular
employees.

A regular employee is an employee who is: 1) engaged to perform tasks usually necessary
or desirable in the usual business or trade of the employer, unless the employment is one for a
specific project or undertaking or where the work is seasonal and for the duration of a season; or
2) has rendered at least 1 year of service, whether such service is continuous or broken, with
respect to the activity for which he is employed and his employment continues as long as such
activity exists. This finds basis in Article 280 of the Labor Code.

Respondents did not refute petitioners' claims that they continuously worked for
respondents for a period ranging from three (3) years to 17 years. Thus, even if the Court of
Appeals is of the opinion that carpentry and masonry are not necessary or desirable to the
business of livestock and poultry production, the nature of their employment could have been
characterized as being under the second paragraph of Article 280. Thus, petitioners' service of
more than one (1) year to respondents has made them regular employees for so long as the
activities they were required to do subsist.

As for petitioners Bro�ola, Gonzales, Martinez, Jeremias, Arnel, Nawal, and Eduardo,
although the Court of Appeals reversed the labor tribunals' decisions and held them to be regular
employees, it nonetheless upheld the findings of both Labor Arbiter Jerez and the National Labor
Relations Commission that they failed to support their allegation that they were illegally
dismissed, thus: “In illegal dismissal cases, it is incumbent upon the employees to first establish
the fact of their dismissal before the burden is shifted to the employer to prove that the dismissal
was legal. Here, [the NLRC] found no dismissal, much less, an illegal one as petitioners failed to
substantiate their bare allegation that [L. Natividad] verbally notified them of their dismissal. It is
settled that in the absence of proof of dismissal, the remedy is reinstatement without back wages.
CASE 3

ATTY. MARCOS D. RISONAR, JR., Petitioner, v. COR JESU COLLEGE AND/OR EDGARDO S.
ESCURIL, Respondents.

FACTS:
Atty. Marcos D. Risonar, Jr. (petitioner) was initially appointed as Dean of the Law School of Cor
Jesu College (CJC) effective August 1, 2003 until May 31, 2004. On June 7, 2004, his appointment as
school dean was renewed for a term of three years effective June 1, 2004. After his three-year term ended
on May 31, 2007, the petitioner had not received any notice of termination from CJC. Thus, despite the
lapse of the term of his appointment as Law School Dean, the petitioner continued to perform his duties
and proceeded to prepare for the forthcoming first semester of school year 2007-2008. July 12, 2007, the
petitioner received a letter from Escuril informing him that his services as Law school dean was already
terminate and that the new Dean would report on July 13, 2007, for a formal turn-over of office and
responsibilities. On July 20, 2007, the petitioner filed a complaint for illegal dismissal and damages with
the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) in Davao City
against the respondents. He claimed that the respondents violated the express provision in his
appointment letter as regards the written notice of termination sent within 30 days prior to the expiration
of the term of his appointment in case the respondents did not desire to renew or extend his services. He
likewise claimed that no just or authorized cause exists to warrant his dismissal. The respondents claimed
that the petitioner's appointment is a term of employment that presupposes that a day certain has been
agreed upon by the parties for the commencement and termination of the employment contract. They
claimed that the petitioner's appointment as Law School Dean expired on May 31, 2007, and, thus, he was
not illegally dismissed.

ISSUE:
Whether or not the petitioner’s employment is a fixed-term employment.

RULING:

 LA
The LA rendered a Decision declaring the petitioner's dismissal as valid but directed the
respondents to pay the petitioner nominal damages, moral and exemplary damages, and attorney’s
fees. The LA opined that notwithstanding that the petitioner's employment was a fixed-term
employment, the parties were nevertheless bound by the contract of employment which indicated
that CJC should send the petitioner a written notice of termination 30 days prior to the expiration
of the term of appointment. The LA held that when CJC failed to send the petitioner the required
written notice of termination, it violated the petitioner's right to due process, thus, making it liable
to pay nominal, moral and exemplary damages.

 NLRC
The NLRC issued a Resolution reversing the LA's disposition. The NLRC declared the
petitioner's dismissal as illegal and, thus, directed the respondents to reinstate the petitioner to his
former position as Law School Dean and to pay him full back wages. However, if reinstatement is
 no longer possible, the NLRC directed the respondents to instead pay the petitioner's wages
equivalent to three years. The NLRC affirmed the awards for moral and exemplary damages but
deleted the award of nominal damages. The NLRC likewise reduced the award of attorney's fees.
The NLRC held that in view of the respondent's failure to comply with the written notice of
termination requirement stipulated in the letter of appointment and considering that the petitioner
was allowed to continue serving as Law School Dean more than a month after the stipulated end
of his appointment, his appointment was deemed renewed and extended until such terms and
conditions set forth in his original appointment. Accordingly, the NLRC ruled that the petitioner
has the right to tenurial security at least within the same period of three years and his employment
cannot be terminated except for a just or an authorized cause provided by law or in his
appointment letter.

 CA
The respondents filed a petition for review on certiorari with the CA alleging that the NLRC
committed grave abuse of discretion when it ruled that the petitioner's appointment was deemed
renewed and extended on account of their failure to send him the required written notice of
termination. They also claimed that the NLRC's award of nominal and exemplary damages and
attorney's fees is without factual and legal basis.

The CA reversed the NLRC’s resolution and pointed out that the petitioner's employment with
CJC is a fixed-term employment and, thus, the petitioner cannot be considered a regular
employee. The CA further held that the respondent's failure to send the petitioner the required
written notice of termination, contrary to the NLRC's ruling, does not result in the automatic
renewal or extension of the petitioner's appointment as Law School Dean. The CA stressed that
the petitioner's appointment is clearly and categorically fixed for a period of three years.
Nevertheless, the CA opined that the respondents' failure to afford the 30-day notice amounts to a
violation of the due process requirement making them liable to pay the petitioner nominal
damages.

 SC

The petition is GRANTED. The Decision dated December 9, 2010, and the Resolution dated July
28, 2011, issued by the Court of Appeals in CA-G.R. SP No. 02957-MIN are hereby REVERSED
and SET ASIDE. Respondent Cor Jesu College is hereby declared guilty of illegal dismissal.

The petitioner's appointment as Law School Dean is a fixed-term employment. It is indisputable

that the petitioner and CJC knowingly and voluntarily agreed upon the petitioner's fixed period of
employment as the Law School Dean and, in doing so, they dealt with each other on equal terms.

The fixed-term employment of the petitioner was impliedly renewed after its expiration. Should
CJC fail to send the petitioner the required written notice of termination 30 days prior to the
expiration of the term of the original appointment, it can be logically pad necessarily inferred that
CJC intended to renew the petitioner's appointment as Law School Dean under such terms and
conditions set forth in his original appointment. Notwithstanding the lapse of the term of the
petitioner's original appointment, the respondents allowed the petitioner to still assume his office
as the Law School Dean. If indeed the respondents no longer intended to renew the petitioner's
 appointment, they should not have allowed the petitioner to serve as the Law School Dean after
the lapse of the term of his original appointment.

The petitioner was illegally dismissed and is entitled to payment of back wages and separation
pay. Fixed-term employees are akin to project employees. The period of employment of fixed-
term employees has been fixed prior to engagement while the project employees' employment has
been fixed for a specific project or undertaking, the completion or termination of which has been
determined likewise at the time of the engagement.

*Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period. There is nothing
essentially contradictory between a definite period of employment and the nature of the employee's duty. A contract of
employment with a fixed period necessitates that: (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 on the employee and without any
circumstances vitiating consent; or (2) it satisfactorily appears that the employer and employee dealt with each other on more or
less equal terms with no moral dominance whatever being exercised by the former on the latter.