Case Digest: Labayog v. M.Y. San Biscuits

BERNARDINO LABAYOG, CRESENCIO GRANZORE, JEANETTE GONZALES, NOEME DADIZ, GEMMA PANGANIBAN, DALISAY BUENVIAJE, VICTORIANA RUEDAS, MA. VICTORIA CABALONG, AMALIA SALVARRI, ROWENA FERNANDEZ, DELIA LOZARES, LUNINGNING ANGELES, ROSEMARIE SALES, VIVIAN VERZOSA, MARILYN JOSE, ROSANNA ROLDAN, HERMINIO CARANTO, ANITA SALVADOR, JORGE SALAMAT, ROBERTO ODIAMAR, EFREN LACAMPUINGAN, NOEL TAGALOG, MARCOS DE LA CRUZ, ELIAS BELO, DARIUS EROLES, HELEN BARAYUGA,1 CRISTOPHER HILARIO, JOEL ESGUERRA, BERNABE DUCUT, JOSEPH TANAUY, EDWIN CEA, NOEL VILLASCA, ERNESTO ALFONSO, FERNANDO CEBU and REYNALDO SESBRENO, petitioners,

vs.

M.Y. SAN BISCUITS, INC. and MEW WAH LIM, respondents

G.R. No. 148102, 11 July 2006.

Corona, J.:

On various dates in 1992, petitioners entered into contracts of employment with respondent company as mixers, packers and machine operators for a fixed term. On the expiration of their contracts, their services were terminated. Forthwith, they each executed a quitclaim.

Petitioners filed complaints for illegal dismissal, among others. The labor arbiter ruled their dismissal to be illegal on the ground that they had become regular employees who performed duties necessary and desirable in respondent company's business and ordered for their reinstatement.

The NLRC reversed the ruling, which the CA eventually affirmed.

ISSUE: W/N the fixed term contract of petitioners were valid.

RULING: YES.

Where the duties of the employee consist of activities which are necessary or desirable in the usual business of the employer, the parties are not prohibited from agreeing on the duration of employment. Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period provided it is not intended to circumvent the security of tenure.

Two criteria validate a contract of employment with a fixed period: (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. Against these criteria, petitioners' contracts of employment with a fixed period were valid.

In this case, there was no allegation of vitiated consent. Respondents did not exercise moral dominance over petitioners. The contracts were mutually advantageous to the parties.

While their employment as mixers, packers and machine operators was necessary and desirable in the usual business of respondents, they were employed temporarily only, during periods when there was heightened demand for production. Consequently, there could have been no illegal dismissal when their services were terminated on expiration of their contracts. There was even no need for notice of termination because they knew exactly when their contracts would end. Contracts of employment for a fixed period terminate on their own at the end of such period.