Purefoods Corp. V NLRC, 283 Scra 133 (1997)

PUREFOODS CORP.
V NLRC, 283 SCRA 133 (1997)
FACTS:
The 906 private respondents were hired by Pure Foods Corporation to work for a fixed
period of five months at its tuna cannery plant. After the expiration of their respective
contracts of employment, their services were terminated and the respondents were made to
execute a “Release and Quitclaim” stating that they had no claim whatsoever against the
petitioner.
The private respondents filed before the National Labor Relations Commission a complaint
for illegal dismissal against the petitioner and its plant manager, Marciano Aganon. The
Labor Arbiter dismissed the complaint on the ground that the respondents were mere
contractual workers and not regular employees; hence, they could not avail of the law on
security of tenure. The termination of their services by reason of the expiration of their
contracts of employment was, therefore, justified. The Labor Arbiter also observed that an
order for private respondents’ reinstatement would result in the reemployment of more than
10,000 former contractual employees of the petitioner. Besides, by executing a “Release and
Quitclaim,” the private respondents had waived and relinquished whatever right they might
have against the petitioner.
The NLRC affirmed the Labor Arbiter’s decision. However, on private respondents’ motion
for reconsideration, the NLRC rendered another decision vacating and setting aside its
decision of 28 October 1994 and holding that the private respondents and their co-
complainants were regular employees. It declared that the contract of employment for five
months was a “clandestine scheme employed by Pure Foods to stifle respondents’ right to
security of tenure” and should therefore be struck down and disregarded for being contrary
to law, public policy, and morals. Hence, their dismissal on account of the expiration of their
respective contracts was illegal.
ISSUE:
Whether or not employees hired for a definite period and whose services are necessary and
desirable in the usual business or trade of the employer are regular employees.
RULING:
We find the petition devoid of merit.
The two kinds of regular employees are: (1) those who are engaged to perform activities
which are necessary or desirable in the usual business or trade of the employer; and (2)
those casual employees who have rendered at least one year of service, whether continuous
or broken, with respect to the activity in which they are employed.
In the instant case, the private respondents’ activities consisted in the receiving, skinning,
loining, packing, and casing-up of tuna fish which were then exported by the petitioner.
Indisputably, they were performing activities which were necessary and desirable in
petitioner’s business or trade. The private respondents could not be regarded as having
been hired for a specific project or undertaking. The term “specific project or undertaking”
under Article 280 of the Labor Code contemplates an activity which is not commonly or
habitually performed or such type of work which is not done on a daily basis but only for a
specific duration of time or until completion; the services employed are then necessary and
desirable in the employer’s usual business only for the period of time it takes to complete the
project.
The fact that the petitioner repeatedly and continuously hired workers to do the same kind of
work as that performed by those whose contracts had expired negates petitioner’s
contention that those workers were hired for a specific project or undertaking only.
The Brent Case laid down the criteria under which term employment cannot be said to be in
circumvention of the law on security of tenure: 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 upon the employee and absent any other circumstances
vitiating his consent; or 2) It satisfactorily appears that the employer and the employee dealt
with each other on more or less equal terms with no moral dominance exercised by the
former or the latter. None of these criteria had been met in the present case.
Pure Foods Corp. does not deny or rebut private respondents’ averments (1) that the main
bulk of its workforce consisted of its so-called “casual” employees; (2) that as of July 1991,
“casual” workers numbered 1,835; and regular employees, 263; (3) that the company hired
“casual” every month for the duration of five months, after which their services were
terminated and they were replaced by other “casual” employees on the same five-month
duration; and (4) that these “casual” employees were actually doing work that were
necessary and desirable in petitioner’s usual business.
This scheme of the petitioner was apparently designed to prevent the private respondents
and the other “casual” employees from attaining the status of a regular employee. It was a
clear circumvention of the employees’ right to security of tenure and to other benefits like
minimum wage, cost-of-living allowance, sick leave, holiday pay, and 13th month pay.
Indeed, the petitioner succeeded in evading the application of labor laws. Also, it saved itself
from the trouble or burden of establishing a just cause for terminating employees by the
simple expedient of refusing to renew the employment contracts.
The five-month period specified in private respondents’ employment contracts having been
imposed precisely to circumvent the constitutional guarantee on security of tenure should,
therefore, be struck down or disregarded as contrary to public policy or morals. To uphold
the contractual arrangement between the petitioner and the private respondents would, in
effect, permit the former to avoid hiring permanent or regular employees by simply hiring
them on a temporary or casual basis, thereby violating the employees’ security of tenure in
their jobs. The execution by the private respondents of a “Release and Quitclaim” did not
preclude them from questioning the termination of their services. Generally, quitclaims by
laborers are frowned upon as contrary to public policy and are held to be ineffective to bar
recovery for the full measure of the workers’ rights. The reason for the rule is that the
employer and the employee do not stand on the same footing.
The NLRC was, thus, correct in finding that the private respondents were regular employees
and that they were illegally dismissed from their jobs. Under Article 279 of the Labor Code
and the recent jurisprudence, the legal consequence of illegal dismissal is reinstatement
without loss of seniority rights and other privileges, with full back wages computed from the
time of dismissal up to the time of actual reinstatement, without deducting the earnings
derived elsewhere pending the resolution of the case. However, since reinstatement is no
longer possible because the petitioner’s tuna cannery plant had, admittedly, been closed in
November 1994, the proper award is separation pay equivalent to one month pay or one-half
month pay for every year of service, whichever is higher, to be computed from the
commencement of their employment up to the closure of the tuna cannery plant. The amount
of back wages must be computed from the time the private respondents were dismissed until
the time petitioner’s cannery plant ceased operation.

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PUREFOODS CORP.

V NLRC, 283 SCRA 133 (1997)

We find the petition devoid of merit.

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