Pure Foods Corporation v. National Labor Relations Commission, et al.

Article 280 of the Labor Code defines regular and casual employment as follows:

Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral argument 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 a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists.

Brent ruling also 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 over the latter.

Facts:

The private respondents (numbering 906) were hired by petitioner Pure Foods Corporation to work for a
fixed period of five months at its tuna cannery plant.

After the expiration of their respective contracts, their services were terminated. They forthwith executed a
"Release and Quitclaim" stating that they had no claim whatsoever against the petitioner.

Private respondents then filed before the NLRC a complaint for illegal dismissal against the petitioner.

The Labor Arbiter dismissed the complaint on the basis that private respondents were mere contractual
workers, and not regular employees; hence, they could not avail of the law on security of tenure.
Termination of their services by reason of the expiration of their contracts was justified. Further, by
executing a "Release and Quitclaim," the private respondents had waived and relinquished
whatever right they might have against the petitioner.

Private respondents appealed the decision to the NLRC. LA’s decision was affirmed.

On motion for reconsideration, NLRC reversed their decision and held that private respondents were
regular employees. It declared that the contract of employment for five months was a "clandestine
scheme employed by [the petitioner] to stifle [private 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.

The NLRC ordered the petitioner to reinstate the private respondents to their former position without loss
of seniority rights and other privileges, with full back wages; and in case their reinstatement would no
longer be feasible, the petitioner should pay them separation pay equivalent to one-month pay or one-
half-month pay for every year of service, whichever is higher, with back wages and 10% of the monetary
award as attorney's fees.

Pure Foods Corp filed a motion for reconsideration but it was denied. Thus, this petition for certiorari
imputing that NLRC committed grave abuse of discretion in reversing the decision of the LA

Pure Food Corps position: Private respondents are estopped from questioning their separation in view
of their express conformity with the five-month duration of their employment contracts. Besides, they fall
within the exception provided in Article 280 of the Labor Code which reads: "[E]xcept 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." Moreover, the first
paragraph of the said article must be read and interpreted in conjunction with the proviso in the second
paragraph, which reads: "Provided that any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed . . ." In the instant case, the private respondents were
employed for a period of five months only. In any event, private respondents' prayer for reinstatement
is well within the purview of the "Release and Quitclaim" they had executed wherein they unconditionally
released the petitioner from any and all other claims which might have arisen from their past employment
with the petitioner.

OSG’s contention: Private respondents were regular employees, since they performed activities
necessary and desirable in the business or trade of the petitioner. The period of employment
stipulated in the contracts of employment was null and void for being contrary to law and public policy, as
its purpose was to circumvent the law on security of tenure. The expiration of the contract did not,
therefore, justify the termination of their employment.

Issue/s: Whether or not the employees should be treated as regular employees. [YES]

Held:

Private employees are regular employees.

Thus, 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.

Private respondents' activities (receiving, skinning, loining, packing, and casing-up of tuna fish) were
necessary and desirable in petitioner's business or trade.

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 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.
On the legality of the 5 month contract

In Brent School, Inc. v. Zamora, this Court has upheld the legality of fixed-term employment. It ruled that
the decisive determinant in term employment should not be the activities that the employee is called
upon to perform but the day certain agreed upon by the parties for the commencement and
termination of their employment relationship. However, where from the circumstances it is apparent
that the periods have been imposed to preclude acquisition of tenurial security by the employee,
they should be struck down or disregarded as contrary to public policy and morals.

None of these criteria had been met in the present case. As pointed out by the private respondents:

[I]t could not be supposed that private respondents and all other so-called "casual" workers of
[the petitioner] KNOWINGLY and VOLUNTARILY agreed to the 5-month employment contract.
Cannery workers are never on equal terms with their employers. Almost always, they agree to
any terms of an employment contract just to get employed considering that it is difficult to find
work given their ordinary qualifications. Their freedom to contract is empty and hollow because
theirs is the freedom to starve if they refuse to work as casual or contractual workers. Indeed, to
the unemployed, security of tenure has no value. It could not then be said that petitioner and
private respondents "dealt with each other on more or less equal terms with no moral dominance
whatever being exercised by the former over the latter.

The petitioner 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 employee, 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.

It was really the practice of the company to hire workers on a uniformly fixed contract basis and
replace them upon the expiration of their contracts.

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.

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.

Effect of Release and Quitclaim

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.

DP: WHEREFORE, for lack of merit, the instant petition is DISMISSED and the challenged decision of 30
January 1995 of the National Labor Relations Commission in NLRC CA No. N-001323-93 is hereby
AFFIRMED subject to the above modification on the computation of the separation pay and back wages.
Buenaventura C. Magsalin & Coca Cola Bottlers, Phils. Inc. v. National Organization of Working
Men

Facts:

 Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondent workers as
"sales route helpers" for a limited period of five months.
 After five months, respondent workers were employed by petitioner company on a day-to-day
basis. According to petitioner company, respondent workers were hired to substitute for regular
sales route helpers whenever the latter would be unavailable or when there would be an
unexpected shortage of manpower in any of its work places or an unusually high volume of work.
 Ultimately, respondent workers asked petitioner company to extend to them regular
appointments. Petitioner company refused.

 Hence, twenty-three (23) of the "temporary" workers (herein respondents) filed with the National
Labor Relations Commission (NLRC) a complaint for the regularization of their employment with
petitioner company. Claiming that petitioner company meanwhile terminated their services,
respondent workers filed a notice of strike and a complaint for illegal dismissal and unfair labor
practice with the NLRC.

 On 18 May 1998, the voluntary arbitrator rendered a decision dismissing the complaint on the
thesis that respondents (then complainants) were not regular employees of petitioner company.
 In its decision of 11 August 2000, the Court of Appeals reversed and set aside the ruling of the
voluntary arbitrator, it concluded -

"1. Declaring petitioners as regular employees of Coca-Cola Bottlers Phils., Inc. and their
dismissal from employment as illegal;

"2. Ordering respondent Coca-Cola Bottlers Phils., Inc. to reinstate petitioners to their former
positions with full backwages, inclusive of allowances that petitioners had been receiving during
their employment and 13th month pay, computed from the date of their termination up to the time
of their actual reinstatement (Paramount Vinyl Product Corp. vs. NLRC, 190 SCRA 526)."2

 Petitioner company's motion for reconsideration was denied in a resolution, dated 21 May 2001,
of the appellate court.
Issue/s: Whether or not the employees should be treated as regular employees. [YES]

Held:

Yes.

Respondent workers have long been in the service of petitioner company. Respondent workers,
when hired, would go with route salesmen on board delivery trucks and undertake the laborious
task of loading and unloading softdrink products of petitioner company to its various delivery
points.

Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to
ensure a "regular" worker's security of tenure, however, can hardly be doubted. In determining whether an
employment should be considered regular or non-regular, the applicable test is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or trade of the
employer.
The standard, supplied by the law itself, is whether the work undertaken is necessary or desirable in
the usual business or trade of the employer, a fact that can be assessed by looking into the nature of
the services rendered and its relation to the general scheme under which the business or trade is pursued
in the usual course. It is distinguished from a specific undertaking that is divorced from the normal
activities required in carrying on the particular business or trade. But, although the work to be performed
is only for a specific project or seasonal, where a person thus engaged has been performing the job for at
least one year, even if the performance is not continuous or is merely intermittent, the law deems the
repeated and continuing need for its performance as being sufficient to indicate the necessity or
desirability of that activity to the business or trade of the employer. The employment of such person is
also then deemed to be regular with respect to such activity and while such activity exists.

The argument of petitioner that its usual business or trade is softdrink manufacturing and that the
work assigned to respondent workers as sales route helpers so involves merely "postproduction
activities," one which is not indispensable in the manufacture of its products, scarcely can be
persuasive. If, as so argued by petitioner company, only those whose work are directly involved in
the production of softdrinks may be held performing functions necessary and desirable in its
usual business or trade, there would have then been no need for it to even maintain regular truck
sales route helpers. The nature of the work performed must be viewed from a perspective of the
business or trade in its entirety and not on a confined scope.

The repeated rehiring of respondent workers and the continuing need for their services clearly
attest to the necessity or desirability of their services in the regular conduct of the business or
trade of petitioner company.

The Court of Appeals has found each of respondents to have worked for at least one year with petitioner
company.

The pernicious practice of having employees, workers and laborers, engaged for a fixed period of few
months, short of the normal six-month probationary period of employment, and, thereafter, to be hired on
a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be countenanced. The
fact that respondent workers have agreed to be employed on such basis and to forego the protection
given to them on their security of tenure, demonstrate nothing more than the serious problem of
impoverishment of so many of our people and the resulting unevenness between labor and capital. A
contract of employment is impressed with public interest. The provisions of applicable statutes are
deemed written into the contract, and "the parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting with each other."

DP: WHEREFORE, the questioned decision of the Court of Appeals, in CA-G.R. SP No. 47872 is hereby
AFFIRMED with MODIFICATION in that the "Release, Waiver and Quitclaim" executed by the thirty-six
(36) individual respondents are hereby declared VALID and LEGAL.
Romares v. NLRC

Facts:

 Petitioner, Romares, has been hired and employed by respondent PILMICO, in a broken tenure
(contractual) but all in all totaled to fifteen (15) months more or less.
 He was assigned at respondent's Maintenance/Projects/Engineering Department performing
maintenance work.
 Without any legal cause or justification and in the absence of any opportunity to be heard,
respondent terminated him.
 The Executive Labor Arbiter said that the fact that complainant was hired, terminated and
rehired again for three times in a span of than three (3) years and performing the same
functions, only bolstered findings that complainant is already considered a regular employee and
therefore covered by security of tenure and cannot be removed except for lawful and valid cause
as provided by law and after due process.
 However, the NLRC set aside the decision of the Executive Labor Arbiter and ruled, the
employee cannot be considered a regular employee if his employment is for a specific project or
undertaking and for a fixed period hence, the applicable provision is paragraph 1 and not
paragraph 2 of Article 280 of the Labor Code.

Issue/s: Whether or not petitioner is to be considered as a regular employee. [YES]

Held:

Construing the aforesaid provision, the phrase "usually necessary or desirable in the usual business
or trade of the employer" should be emphasized as the criterion in the instant case. Facts show that
petitioner's work with PILMICO as a mason was definitely necessary and desirable to its business.

It is noteworthy that during each rehiring, the summation of which exceeded one (1) year, petitioner was
assigned to PILMICO's Maintenance/Projects/Engineering Department performing the same kind of
maintenance work. Such a continuing need for the services of petitioner is sufficient evidence of the
necessity and indispensability of his services to PILMICO's business or trade.

NLRC erred in finding that the contract of employment of petitioner was for a fixed or specified period.

At this juncture, the leading case of Brent School, Inc. vs. Zamora proves instructive. It ruled that the
decisive determinant in "term employment" should not be the activities that the employee is
called upon to perform but the day certain agreed upon by the parties for the commencement and
termination of their employment relationship. But this Court went on to say that where from the
circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial
security by the employee, they should be struck down or disregarded as contrary to public policy and
morals.

The Brent ruling also laid down the criteria under which "term employment" cannot be said to be in
circumvention of the law on security of tenure. None of those requisites were complied with.

DP: WHEREFORE, in the light of the above-discussion, it is hereby declared and ordered that
complainant ARTEMIO J. ROMARES is a regular employee of respondent PILMICO FOODS
CORPORATION since January 16, 1993 and his termination on the same date is illegal as contrary to law
and public policy and therefore, he would be reinstated to his former position as if he was not terminated
and to be entitled to all benefits, allowances accruing thereto and without loss of seniority rights.
Association of Trade Unions v. Abella

Facts:

Respondent company is a domestic corporation engaged in road construction projects of the government.
From 1968 to 1989, it engaged the services of the workers to work on various projects on different date s.
Their contracts indicate the particular project they are assigned, the duration of their employment and
their daily wage.

In February 1989, the above-named workers joined petitioner union as members. Accordingly, petitioner
union filed a petition for certification election with the regional office of the labor department. Respondent
company opposed the petition on the ground that the workers were project employees and therefore not
qualified to form part of the rank and file collective bargaining unit. Not for long, the Med-Arbiter dismissed
the petition for certification election. On appeal, the Secretary of Labor and Employment reversed the
Med-Arbiter's decision and ordered the immediate holding of a certification election.

Meanwhile, the national president of petitioner union sent a demand letter to respondent company
seeking the payment of wage differentials to some affected union members. As said demand was
unheeded, petitioner union and the concerned workers filed a complaint for payment of wage differentials
and other benefits before the Regional Office of the Department of Labor and Employment.

Shortly thereafter, respondent company terminated the employment of aforementioned workers owing to
the completion of its projects or the expiration of workers' contracts. Respondent company explained the
circumstances surrounding the separation of the workers from the service.

However, the affected workers claim that they were dismissed because of their union activities. In view of
the alleged illegal dismissals and harassment by their employer, the workers staged a strike on May 17,
1989. Upon complaint of respondent company, Labor Arbiter Newton Sancho declared said strike illegal
and decreed further that Victorio Lunzaga, Alfred Jalet, Julito Macabodbod, Ramon Tabada and Remsy
Asensi, who had participated in the strike, were deemed to have lost their employment status.

On appeal, the National Labor Relations Commission affirmed said decision.

Issue/s: Whether or not the workers are project employees. [YES]

Held:

Regular employees are those who have been engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer even if the parties enter into an agreement
stating otherwise.18 In contrast, project employees are those whose 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.19

Furthermore, Policy Instruction No. 20,20 which was in force during the period of petitioners' employment,
stated:

Project employees are those employed in connection with a particular construction project. Non-project
(regular) employees are those employed by a construction company without reference to any particular
project.

Project employees are not entitled to termination pay if they are terminated as a result of the completion
of the project or any phase thereof in which they are employed, regardless of the number of projects in
which they have been employed by a particular construction company. Moreover, the company is not
required to obtain clearance from the Secretary of Labor in connection with such termination. What is
required of the company is report to the nearest Public Employment Office for statistical purposes.

In the case at bar, the contracts of employment of the petitioners attest to the fact that they had been
hired for specific projects, and their employment was coterminous with the completion of the project for
which they had been hired. Said contracts expressly provide that the workers' tenure of employment
would depend on the duration of any phase of the project or the completion of the awarded government
construction projects in any of their planned phases. Further, petitioners were informed in advance that
said project or undertaking for which they were hired would end on a stated or determinable date.
Besides, public respondent noted that respondent company regularly submitted reports of termination of
services of project workers to the regional office of the labor department as required under Policy
Instruction No. 20. This compliance with the reportorial requirement confirms that petitioners were project
employees.

Considering that petitioners were project employees, whose nature of employment they were fully
informed about, at the time of their engagement, related to a specific project, work or undertaking, their
employment legally ended upon completion of said project. The termination of their employment
could not be regarded as illegal dismissal.

DP: WHEREFORE, the instant petition is DISMISSED, and the assailed RESOLUTION of respondent
NLRC dated May 17, 1991, is AFFIRMED.
Bustamante v. NLRC

Facts:

 EVERGREEN FARMS, INC. company is engaged in the business of producing high grade
bananas in its plantation in Davao del Norte.
 Petitioners Paulino Bantayan, Fernando Bustamante, Mario Sumonod and Osmalik Bustamante
were employed as laborers and harvesters while petitioner Sabu Lamaran was employed as a
laborer and sprayer in respondent company's plantation.
 Petitioners are non-continuous employees of respondent company (i.e., serving for more than
one (1) year of broken or non-continuous service as probationary employees.)
 Petitioners filed a complaint for illegal dismissal before the Regional Arbitration Branch, Branch XI
of the NLRC
 The labor arbiter rendered judgment in favor of petitioners---- with backwages.
 Action on motion NLRC delete the award of back wages on the ground that the termination of
petitioners' employments "was the result of the latter's (private respondent) mistaken
interpretation of the law and that the same was therefore not necessarily attended by bad faith,
nor arbitrariness..

Issue/s: Whether or not the petitioners are regular employees. [YES]

Held:

The court ruled in the affirmative.

It is undisputed that petitioners were illegally dismissed from employment.

In the case at bar, petitioners were employed at various periods from 1985 to 1989 for the same kind of
work they were hired to perform in September 1989. Both the labor arbiter and the respondent NLRC
agree that petitioners were employees engaged to perform activities necessary in the usual business of
the employer.

Petitioners have, therefore, become regular employees after performing activities which are necessary in
the usual business of their employer.

We do not sustain public respondent's theory that private respondent should not be made to compensate
petitioners for backwages because its termination of their employment was not made in bad faith. The act
of hiring and re-hiring the petitioners over a period of time without considering them as regular
employees evidences bad faith on the part of private respondent.

The employees (petitioners) have not performed any act to warrant termination of their employment.
Consequently, petitioners are entitled to their full backwages and other benefits from the time their
compensation was withheld from them up to the time of their actual reinstatement.

DP: WHEREFORE, the Resolution of the National Labor Relations Commission dated 3 May 1993 is
modified in that its deletion of the award for backwages in favor of petitioners, is SET ASIDE. The
decision of the Labor Arbiter dated 26 April 1991 is AFFIRMED with the modification that backwages shall
be paid to petitioners from the time of their illegal dismissal on 25 June 1990 up to the date of their
reinstatement. If reinstatement is no longer feasible, a one-month salary shall be paid the petitioners as
ordered in the labor arbiter's decision; in addition to the adjudged backwages.
Maranaw Hotels & Resort Corp. V. Court of Appeals

Facts:

 Sheryl Oabel l was initially hired by MARANAW HOTELS AND RESORT CORP as an extra
beverage attendant on April 24, 1995. This lasted until February 7, 1997. Respondent worked in
Century Park Hotel, an establishment owned by MARANAW HOTELS AND RESORT CORP.
 On September 16, 1996, petitioner contracted with Manila Resource Development Corporation.
Subsequently, private respondent Oabel was transferred to MANRED, with the latter deporting
itself as her employer.
 On July 20, 1998, private respondent filed before the Labor Arbiter a petition for regularization of
employment against MARANAW HOTELS AND RESORT CORP.
 On August 1, 1998, however, private respondent Oabel was dismissed from employment.
 Respondent converted her petition for regularization into a complaint for illegal dismissal.
 Labor Arbiter dismissed the petition  Reason: complainant could not even be considered as
casual employee or provisional employee.

 Private respondent appealed before the National Labor Relations Commission (NLRC).
 NLRC reversed the decision on the ffg. reasons:
o (1) MANRED is a labor-only contractor
 MANRED had insufficient capitalization and was not sufficiently equipped
to provide specific jobs.
o (2) Private respondent was illegally dismissed.
 Termination of private respondent’s was not effected for a valid or just
cause and was therefore illegal.
 MARANAW HOTELS AND RESORT CORP appealed before the Court of Appeals.  CA
denied.

Issue/s:
Whether or not Sheryl Oabel was a casual employee. [YES]
Whether or not she should be considered as a regular employee. [YES]
Whether or not she was illegally dismissed. [YES]
Held:
A. When is an employment casual? It is casual (1) when the work to be performed by an employee is
merely incidental to the principal business of the employer; and (2) when such work or job is for a definite
period made known to the employee at the time of engagement.

B. Can a casual employee become a regular employee? An employee is deemed casual only for a period
of one (1) year. After one (1) year, he becomes, ipso facto (i.e., by that very fact or act), a regular
employee. The one (1) year period is reckoned from the date of hiring.

Notably, private respondent’s purported employment with MANRED commenced only in 1996, way after
she was hired by the petitioner as extra beverage attendant on April 24, 1995. There is thus much
credence in the private respondent’s claim that the service agreement executed between the
petitioner and MANRED is a mere ploy to circumvent the law on employment, in particular that
which pertains on regularization.

In this regard, it has not escaped the notice of the Court that the operations of the hotel itself do not cease
with the end of each event or function and that there is an ever present need for individuals to perform
certain tasks necessary in the petitioner’s business. Thus, although the tasks themselves may vary,
the need for sufficient manpower to carry them out does not. In any event, as borne out by the
findings of the NLRC, the petitioner determines the nature of the tasks to be performed by the private
respondent, in the process exercising control.
This being so, the Court finds no difficulty in sustaining the finding of the NLRC that MANRED is a labor-
only contractor.20 Concordantly, the real employer of private respondent Oabel is the petitioner.

It appears further that private respondent has already rendered more than one year of service to the
petitioner, for the period 1995-1998, for which she must already be considered a regular employee,
pursuant to Article 280 of the Labor Code:

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
service 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 a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists.

DP: IN VIEW WHEREOF, the present petition is DENIED. The resolution of the Court of Appeals dated
June 15, 2001 is affirmed.
Mercado v. NLRC (1991)

Facts:

The case originated from a complaint of petitioner (Fortunato Mercado) for illegal dismissal,
underpayment of wages; non-payment of OT pay, holiday pay, service incentive leave benefits,
emergency cost of living allowances and 13th month pay against private respondents Aurora L. Cruz,
Francisco Borja, Leticia C. Borja and Sto. Niño Realty Incorporated, with Regional Arbitration Branch No.
III, National Labor Relations Commission in San Fernando, Pampanga.

Fortunato Mercado, Sr. and Leon Santillan - worked in the farm since 1949
Fortunato Mercado, Jr. and Antonio Mercado - worked since 1972
Rest of the petitioners - since 1960 up to April 1979 (when they were illegally dismissed)

Petitioners were agricultural workers utilized by private respondents in all the agricultural phases of work
on the 7 ½ hectares of rice land and 10 hectares of sugar land owned by the latter; averred that they were
regular employees.

Respondent Aurora Cruz - denied the complaint and instead averred that she engaged their services,
thru Sps. Mercado, their “mandarols”, that is persons who take charge in supplying the number of workers
needed by owners of various farms, but only to do a particular phase of agricultural work necessary in the
rice production and/or sugar cane production; that after which they are free to render services to other
farm owners.

Labor Arbiter
Ruling: In favor of private respondents; petitioners not regular employees; award petitioners P10,000.00
as financial assistance.
Reason: Petitioners were not regular and permanent employees, for the nature of the terms and
conditions of their hiring reveal that they were required to perform phases of agricultural work for a
definite period of time; that petitioners were only hired as casuals, on an “on and off” basis.

On appeal of the both parties to NLRC.

Petitioners questioned the findings of LA that they were not regular employees.
Private respondents question the award of financial assistance granted by LA.

NLRC
Ruling: Ruled in favor of private respondents. Affirmed the LA, with modification of deletion of the award
of financial assistance.

Petitioner: (in present petition at SC): LA and NLRC erred based on the terms and conditions of their
hiring, for said findings are contrary to the provisions of Art. 280 of the Labor Code; submit that their
employment, even assuming that it were seasonal, continued for so many years, such that by express
provision of Art. 280 of LC, petitioners have become regular and permanent employees.

Another basis for contention: Policy Instruction No. 12 of the DOLE, when it states:

“PD 830 has defined the concept of regular and casual employment. What determines regularity
or casualness is not the employment contract, written or otherwise, but the nature of the job. If
the job is usually necessary or desirable to the main business of the employer, then employment
 is regular. If not, then the employment is casual. Employment for a definite period which exceeds
one (1) year shall be considered regular for the duration of the definite period.

This concept of regular and casual employment is designed to put an end to casual employment
in regular jobs which has been abused by many employers to prevent so-called casuals from
enjoying the benefits of regular employees or to prevent casuals from joining unions.”

Respondent: Petitioners were hired as casuals based on solid evidence presented by them and also by
the Special Task Force of NLRC Regional Office.

Public respondent NLRC: (separate comment): It argues that they cannot be deemed to be permanent
and regular employees since they fall under the exception stated in Art. 280 of the Civil Code:
“The provisions of written agreements to the contrary notwithstanding and regardless of the oral
agreements 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."

Issue/s:

Whether or not the petitioners are regular and permanent farm workers. [NO]

Held:

No. Petitioners are not regular employees. They are seasonal employees.

Rationale:
Art. 280 of the Labor Code:
1st paragraph: answers the question of who are the regular employees
*Regular employees - states that, regardless of any written or oral agreement to the contrary, an
employee is deemed regular when he is engaged in necessary or desirable activities in the usual
business or trade of the employer except for project and seasonal employees.

*Project employees - defined to be one of whose 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.

Seasonal employees - Where the work or service to be performed by the employee is seasonal in nature
and the employment is for the duration of the season.

2nd paragraph: demarcates as “casual” employees

all other employees who do not fall under the definition of the preceding paragraph; The proviso,
in said second paragraph, deems as regular employees those “casual” employees who have
rendered at least one year of service regardless of the fact that such service may be continuous
or broken.
Hence, the proviso is applicable only to employees who are deemed “casuals” but not to the “project”
employees treated in paragraph one of Art. 280.

Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees,
their employment legally ends upon completion of the project or the season. The termination of their
employment cannot and should not constitute an illegal dismissal.

WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations Commission
affirming that of the Labor Arbiter, under review, is AFFIRMED. No pronouncement as to costs.
Philippine Jai-Alai & Amusement Corporation v. Clave

Facts:

Petitioner is a corporation operating a jai-alai fronton for sport and amusement. It has its own
maintenance group for the upkeep of its premises. For the renovation of its main building, which work is
not included in maintenance, it hired private respondents, Cadatal, Jr , a plumber, and Delgra, a mason,
together with 30 other workers on February 2, 1976 for a period of one month, to continue even after that
period should their services be needed further in the renovation work.
This renovation was completed by the end of October 1976.

However, management decided to construct an Annex to the Building, and private respondents were
assigned to work on a fire escape. On November 27, 1976, private respondents received notice of
termination effective November 29, 1976, but since minor repairs were still needed, they worked up to
December 11, 1976 and were fully paid for their labor up to that date.

A letter-complaint, dated December 13, 1976, was filed by private respondents with Regional Office No. 4
of the then Department of Labor, alleging termination without cause. A summary Order was issued by
respondent Leogardo, Jr., dated December 24, 1976, for reinstatement with full backwages, stating that
the nature of the jobs (i.e., employment as maintenance helpers) performed by private respondents was
necessary and desirable in the usual business or trade of petitioner; that they are regular employees
pursuant to Article 170 (now Article 281) of the Labor Code; and that their termination was without just
cause.

Issue/s: Whether or not private respondents are regular employees entitled to security of tenure. [NO]

Held:

Private respondents were hired for a specific project—to renovate the main building, where major repairs
such as painting the main building, repair of the roof, cleaning of clogged water pipes and drains, and
other necessary repairs were required. It was made known, and so understood at the start of the hiring,
that their services would last until the completion of the renovation. They rendered service from February
2 to December 11, 1976, almost 11 months, but less than a year. In its Report to the Department of
Labor, petitioner gave the reason for termination as "due to termination of project." It was only private
respondents Cadatal, Jr. and Delgra, out of the 32 hired for the renovation, who questioned their
termination, the 30 other workers having acquiesced to their termination.

Private respondents merely alleged in their letter-complaint that "kami'y inalis sa trabaho ng walang
dahilan. There could be no other reason, however, than that the termination of private respondents was
because their services were no longer needed and they had nothing more to do since the project for
which they were hired had been completed. The fact was not that private respondents were hired as
maintenance helpers, because petitioner corporation had a regular maintenance force. Private
respondents, as well as the other 30 workers, were needed as additional hands for the renovation work
and not for ordinary upkeep and maintenance. The erection of the fire escape and other small jobs after
the renovation cannot be deemed maintenance but more of casual work.

Not being regular employees, it cannot be justifiably said that petitioner had dismissed them without just
cause. They are not entitled to reinstatement with full backwages.

DP: WHEREFORE, the Order of public respondent Vicente Leogardo, Jr., dated December 24, 1976, and
the Orders of the other public respondents dated July 13, 1977, January 25, 1979, March 19, 1979, and
June 5, 1980, are hereby reversed and set aside. The Complaint for illegal dismissal against petitioner in
Case No. RO4-12-11832-76 LS (Regional Office No. IV, Department of Labor) is dismissed, and the
Temporary Restraining Order heretofore issued is hereby made permanent.
University of Santo Tomas v. Samahang Mangagawa ng UST

Facts:

The case stemmed from a complaint for regularization and illegal dismissal filed by Samahang
Manggagawa ng UST and Pontesor, et al against UST before the NLRC. Respondents alleged that on
various periods spanning from 1990-1999, petitioner repeatedly hired them to perform various
maintenance duties within its campus as laborer, mason, tinsmith, painter, electrician, welder, carpenter.

Respondents:
Respondents insisted that they should be deemed regular employees. They argued that for as long as
petitioner continues to operate exist as an educational institution, with rooms, buildings, and facilities to
maintain, the latter could not dispense with their services which are necessary and desirable to the
business of petitioner.

Petitioner:
It admitted that it repeatedly hired Pontesor, et al. in different capacities throughout the aforesaid years, it
nevertheless maintained that they were merely hired on a per-project basis, as evidenced by numerous
Contractual Employee Appointments (CEAs).

LA Ruling
The LA ruled in favour of the respondents and, accordingly, ordered petitioner to reinstate them to their
former jobs with full backwages and without loss of seniority rights. It found that they should be deemed
as petitioner's regular employees. It found that they should be deemed as petitioner's regular employees,
considering that: a) they have rendered at least one (1) year of service to petitioner as its employees;
(b) the activities for which they were hired for are vital or inherently indispensable to the maintenance of
the buildings or classrooms.

NLRC Ruling
The NLRC vacated the LA ruling and, consequently, entered a new one dismissing respondents'
complaint for lack of merit. Contrary to the LA's findings, the NLRC found that they cannot be considered
regular employees as they knowingly and voluntarily entered into fixed term contracts of employment with
petitioner.

The CA Ruling
The CA reversed and set aside the NLRC ruling and reinstated the decision of the LA.

Issue/s: Whether or not the Pontesor, et al. should be treated as regular employees. [YES]

Held:

The petition is without merit.

The Court finds that the CA correctly ascribed grave abuse of discretion on the part of the NLRC, as its
finding that Pontesor, et al. are not regular employees of petitioner patently deviates from the evidence on
record as well as settled legal principles of labor law.

Article 295 [280] of the Labor Code, as amended, distinguishes project employment from regular
employment as follows:

Art. 295 [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 a regular employee with respect to the activity in
which he is employed and his employment shall continue while such activity exists.

The law provides for two (2) types of regular employees: (a) those who are engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer (first category);
and (b) those who have rendered at least one year of service, whether continuous or broken, with respect
to the activity in which they are employed (second category).

Pontesor, et al nature of work are not necessary and desirable to petitioner's usual business as an
educational institution; hence, removing them from the ambit of the first category of regular employees
under Article 295. Nonetheless, it is clear that their respective cumulative periods of employment
as per their respective CEAs each exceed one (1) year. Thus, they fall under the second category
of regular employees under Article 295 of the Labor Code.

They were not project employees of petitioner. A project employee is assigned to a project which begins
and ends at determined time. Unlike regular employees who may only be dismissed for just and/or
authorized causes under the Labor Code, the services of employees who are hired as "project[-based]
employees" may be lawfully terminated at the completion of the project. The principal test for determining
whether particular employees are "project[based] employees" as distinguished from "regular employees,"
is whether or not the employees were assigned to carry out a "specific project or
undertaking”. The project could either be (1) a particular job or undertaking that is within the
regular or usual business of the employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company; or (2) a particular job or
undertaking that is not within the regular business of the corporation. In order to safeguard the
rights of workers against the arbitrary use of the word "project" to prevent employees from attaining a
regular status, employers claiming that their workers are project[-based] employees should not
only prove that the duration and scope of the employment was specified at the time they were
engaged, but also, that there was indeed a project.

They could not be considered as project employees because the specific undertakings or projects for
which they were employed were not clearly defined. This is evidenced by the vagueness of the project
descriptions set forth in their respective CEAs, which states that they were tasked "to assist" in various
carpentry, electrical, and masonry work. In fact, they were engaged to perform all-around maintenance
services throughout the various facilities in the campus. Thus, the petitioner, through the CEAs, merely
attempted to classify their various tasks into purported "projects" so as to make it appear that they were
hired on a per-project basis. Verily, the Court cannot countenance this practice as to do so would
effectively permit petitioners to avoid hiring permanent or regular employees by simply hiring them on a
temporary or casual basis, thereby violating the employees' security of tenure relative to their jobs.

DP: The petition is DENIED and the decision of the CA is affirmed.