Bustamante vs. NLRC

Employees who have rendered at least one year of service, whether continuous or broken, performing activities necessary or desirable to the employer's business acquire regular employment status under Article 280 of the Labor Code; consequently, they are entitled to backwages from the time of their illegal dismissal until actual reinstatement when terminated without just or authorized cause, regardless of the employer's lack of subjective bad faith in the termination.

• Respondent Evergreen Farms, Inc. 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.
• All petitioners signed six-month contracts of employment from 2 January 1990 to 2 July 1990, but had actually started working sometime in September 1989.
• Previously, petitioners were hired to do the same work for periods lasting a month or more from 1985 to 1989, rendering non-continuous or broken service over spans of two to four years.
• Before the contracts expired on 2 July 1990, petitioners' employment was terminated on 25 June 1990 on the ground of poor performance on account of age, as none of them was allegedly below forty years old.
• Petitioners performed activities which were necessary and desirable in the usual business of the employer, specifically tasks indispensable to the year-round operations of the banana plantation.
• Both the Labor Arbiter and the NLRC found that petitioners were engaged to perform activities necessary in the usual business of the employer and had rendered more than one year of service, whether continuous or broken, thereby acquiring regular employment status.

• The NLRC gravely abused its discretion in rendering the second resolution dated 3 May 1993 which removed the award of backwages in their favor despite its own finding that they had become regular employees.
• The deletion of backwages was improper because they were illegally dismissed without valid cause, and the employer's act of hiring and re-hiring them over several years evidenced bad faith and constituted a subterfuge to prevent regularization.
• They are entitled to backwages from the time of their illegal dismissal on 25 June 1990 until their actual reinstatement, not merely six months as awarded by the Labor Arbiter.

• The termination of petitioners' employment was the result of the employer's mistaken interpretation of the law regarding probationary employment and was therefore not necessarily attended by bad faith nor arbitrariness.
• Citing Manila Electric Company vs. NLRC, respondent argued that backwages should not be awarded where the employer acted under a mistaken interpretation of the law and without bad faith.
• The employment contracts were for a probationary period of six months and the termination was due to poor performance on account of age, which allegedly justified the dismissal before the contract expiration.

• Procedural:
  • Whether the NLRC gravely abused its discretion in deleting the award of backwages in its 3 May 1993 resolution despite having affirmed the finding of illegal dismissal.
• Substantive Issues:
  • Whether petitioners acquired regular employment status under Article 280 of the Labor Code despite their non-continuous service and probationary contracts.
  • Whether petitioners are entitled to backwages after a finding that they had become regular employees and were illegally dismissed.

• Procedural:
  • The NLRC gravely abused its discretion in deleting the award of backwages. While the NLRC had authority to modify decisions, the deletion was contrary to law and established jurisprudence regarding the mandatory entitlement to backwages in illegal dismissal cases where no valid cause exists.
• Substantive:
  • Petitioners acquired regular employment status under Article 280 of the Labor Code. They were engaged to perform activities necessary or desirable in the usual business of the employer, and alternatively, they had rendered at least one year of service whether continuous or broken.
  • The repeated hiring and re-hiring of petitioners over a period of years without considering them as regular employees evidenced bad faith on the part of the employer, constituting a convenient subterfuge to prevent petitioners from becoming regular employees and evading statutory benefits.
  • The dismissal was illegal because there was no valid cause for termination. The ground of poor performance due to age was not a valid just cause under the Labor Code, and the probationary contract was utilized as a chicanery to deny regular status.
  • Reliance on Manila Electric Company vs. NLRC was misplaced because in that case there was a valid cause for dismissal where the penalty was too severe, whereas in the instant case there was no valid cause for dismissal whatsoever.
  • Petitioners are entitled to full backwages and other benefits from the time their compensation was withheld (25 June 1990) up to the time of their actual reinstatement. If reinstatement is no longer feasible, they are entitled to separation pay of one-month salary in addition to the adjudged backwages.

• Article 280 of the Labor Code (Regular and Casual Employment) — Defines regular employment as either (1) engagement to perform activities usually necessary or desirable in the usual business or trade of the employer, or (2) rendering at least one year of service whether such service is continuous or broken. The provision was applied to classify petitioners as regular employees despite their broken service and probationary contracts, protecting them from arbitrary dismissal.
• Regularization by Operation of Law — An employee who has rendered at least one year of service, whether continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed, regardless of any written agreement to the contrary. This doctrine was applied to find that petitioners became regular employees by operation of law due to their cumulative service from 1985 to 1990.
• Backwages in Illegal Dismissal — An illegally dismissed employee is entitled to backwages from the time of dismissal until actual reinstatement when there is no valid cause for dismissal, regardless of the employer's lack of subjective bad faith. This doctrine was invoked to overturn the NLRC's deletion of backwages and to award full backwages instead of the limited six-month period granted by the Labor Arbiter.

• "Its language evidently manifests the intent to safeguard the tenurial interest of the worker who may be denied the rights and benefits due a regular employee by virtue of lopsided agreements with the economically powerful employer who can maneuver to keep an employee on a casual status for as long as convenient..." — The Court's interpretation of Article 280's protective purpose for labor against contractual schemes that circumvent security of tenure.
• "clearly appears to be a convenient subterfuge on the part of management to prevent complainants (petitioners) from becoming regular employees." — The Court's characterization of the employer's repeated hiring and re-hiring scheme to avoid regularization.
• "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." — The Court's ruling on the entitlement to backwages in cases of illegal dismissal without valid cause.

• Baguio Country Club Corporation vs. NLRC — Cited as controlling precedent for the interpretation of Article 280 of the Labor Code, emphasizing the legislative intent to safeguard workers' tenurial interests against lopsided agreements with economically powerful employers who maneuver to keep employees on casual status.
• Manila Electric Company vs. NLRC — Distinguished by the Court; while cited by respondent to argue against backwages, the Court noted that this case involved a valid cause for dismissal where the penalty was too severe, unlike the instant case where there was no valid cause for dismissal at all.
• De Leon vs. NLRC — Cited within Baguio Country Club Corporation vs. NLRC as part of the doctrinal lineage on Article 280 interpretation regarding the protection of labor.

• Article 280 of the Labor Code (Regular and Casual Employment) — The central statutory provision interpreted by the Court to determine the employment status of petitioners, providing that any employee who has rendered at least one year of service, whether continuous or broken, shall be considered a regular employee.

• Bellosillo, Vitug, Kapunan, and Hermosisima, Jr. — Joined in the opinion penned by Justice Padilla without writing separate concurring opinions.