Dealco Farms, Inc. vs. NLRC (5th Division), Chiquito Bastida, and Albert Caban

An employee engaged to perform activities not necessarily central to the employer's main business may still attain regular employment status under Article 280 of the Labor Code if the employee renders at least one year of service, whether continuous or broken, with respect to the activity in which employed; and once regular status is acquired, the employee is entitled to security of tenure and may only be dismissed for just or authorized cause after due process.

Dealco Farms, Inc. was engaged in the importation, production, fattening, and distribution of live cattle for sale to meat dealers and traders in Mindanao and Metro Manila. As part of its operations, the company shipped fattened cattle from General Santos City to Manila. The company employed workers known as "comboys" or escorts to accompany the cattle during transit to ensure their safety, feeding, and proper care during the approximately 12-day journey.

• Dealco Farms, Inc. was a corporation engaged in the importation, production, fattening, and distribution of live cattle, importing cattle from Australia into ports in General Santos City, Subic, Batangas, or Manila.
• Respondent Albert Caban was hired on June 25, 1993, and respondent Chiquito Bastida was hired on October 29, 1994, as escorts or "comboys" for the transit of live cattle from General Santos City to Manila.
• Respondents' work entailed tending to the cattle during transportation, including feeding, frequently showering the cattle to prevent dehydration and develop heat resistance, and ensuring the cattle were safe from harm or death caused by cattle fights or similar incidents.
• For every round trip travel lasting an average of 12 days, respondents were each paid ₱1,500.00, usually making two trips per month.
• On August 19, 1999, respondents were informed by a hepe de viaje that they were being replaced immediately based on instructions from petitioner's manager, without any reason given for the termination.
• On October 15, 1999, respondents filed a Complaint for illegal dismissal with claims for separation pay, backwages, salary differentials, service incentive leave pay, 13th month pay, damages, and attorney's fees before the NLRC.
• Petitioner claimed that due to the devalued dollar, its import of cattle substantially decreased in 1998-1999, forcing it to downsize and reduce shipments to Manila, thereby eliminating the need for escort services.
• Petitioner maintained that respondents were engaged only on a "per-trip" or "per-contract" basis and that the shipment of cattle was undertaken by buyers and middlemen independently of petitioner's business of cattle fattening.

• Denied the existence of an employer-employee relationship, asserting that respondents were independent contractors who offered "comboy" services to various shippers and traders, not exclusively to petitioner.
• Contended that respondents were free from the control and supervision of petitioner during transit since the cattle owners (buyers/middlemen) were only interested in the result.
• Argued that even if an employment relationship existed, respondents could only be considered casual employees performing work not necessary and desirable to petitioner's usual business of cattle fattening and production.
• Asserted that respondents failed to complete the one-year service period required under Article 280 of the Labor Code because petitioner's shipments were substantially reduced in 1998-1999, limiting the escort activity.
• Claimed that the Court of Appeals gravely abused its discretion in dismissing the petition for certiorari based on technical procedural rules rather than substantial justice.

• Alleged they were illegally dismissed as they never violated any company rules and policies.
• Asserted that their dismissal was not due to any just or authorized cause and petitioner failed to observe due process by not giving written notice.
• Claimed they were regular employees performing activities necessary and desirable to petitioner's business.
• Contended that they had rendered service for more than one year (since 1993 and 1994) doing the same task repeatedly, thus attaining regular employment status under Article 280 of the Labor Code.

• Procedural Issues:
  • Whether the Court of Appeals gravely abused its discretion in dismissing the petition for certiorari for failure to comply with procedural requirements under Rules 46 and 65 of the Rules of Court.
  • Whether the principle of substantial justice should override strict compliance with procedural rules in this case.
• Substantive Issues:
  • Whether an employer-employee relationship existed between petitioner and respondents.
  • Whether respondents were casual employees or had attained regular employment status.
  • Whether respondents were illegally dismissed and entitled to separation pay and other monetary claims.

• Procedural:
  • The Supreme Court held that the Court of Appeals did not commit grave abuse of discretion in dismissing the petition for certiorari.
  • The Court affirmed that petitioner failed to comply with the mandatory requirement under Section 1, Rule 65 and Section 3, Rule 46 of the Rules of Court to attach copies of all pleadings and documents relevant and pertinent to the petition.
  • The Court rejected petitioner's invocation of substantial justice, noting that procedural rules are not to be belittled or ignored, and the failure to attach required documents was a fatal defect warranting dismissal.
• Substantive:
  • The Supreme Court affirmed the factual findings of the Labor Arbiter and NLRC that an employer-employee relationship existed, applying the four-fold test (hiring, wages, dismissal, control).
  • The Court emphasized that the "control test" (power to control the employee's conduct) is the most important element, and it merely requires the existence of the right to control, not necessarily the exercise thereof.
  • The Court found that petitioner exercised control over respondents through instructions regarding preparation of cattle for shipment, manning and feeding during transit, and reporting requirements upon return.
  • The Court held that even assuming respondents' task was not part of petitioner's regular course of business (fattening), respondents attained regular employment status under the second paragraph of Article 280 of the Labor Code by rendering at least one year of service (whether continuous or broken) since 1993 and 1994.
  • The Court sustained the finding of illegal dismissal, as petitioner failed to prove just or authorized cause and compliance with due process requirements.
  • The award of separation pay, COLA, and union service fees was affirmed.

• Four-fold Test for Employer-Employee Relationship — The test requires: (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to control the employee's conduct. The power of control is the most important element.
• Control Test — This test merely calls for the existence of the right to control, and not necessarily the exercise thereof. It is determined by whether the employer controls or has the right to control the employee both in the result and the means and methods by which the work is accomplished.
• Construction in Favor of Labor — In controversies between a laborer and his master, doubts reasonably arising from the evidence should be resolved in the former's favor, as reflected in Article 4 of the Labor Code and Article 1702 of the Civil Code.
• Casual Employment Becoming Regular — Under Article 280 of the Labor Code, 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.

• "The power of control is the most important element. More importantly, the control test merely calls for the existence of the right to control, and not necessarily the exercise thereof."
• "In controversies between a laborer and his master, doubts reasonably arising from the evidence should be resolved in the former's favor."
• "Even assuming that respondents' task is not part of petitioner's regular course of business, this does not preclude their attainment of regular employee status."
• "Undoubtedly, respondents were regular employees of petitioner with respect to the escort or 'comboy' activity for which they had been engaged since 1993 and 1994, respectively, without regard to continuity or brokenness of the service."

• NFL and Ricardo Garcia v. Bibiana Farms, Inc. — Cited by the Labor Arbiter to illustrate that escorting livestock is an activity necessary and desirable in the livestock business; distinguished by the NLRC because in that case, bills of lading showed shippers (not hog raisers) engaged and supervised the escorts.
• G & M (Phils.), Inc. v. Cruz — Cited for the principle that factual findings of administrative bodies are accorded respect and finality when supported by substantial evidence.
• PCL Shipping Philippines, Inc. v. NLRC — Cited for the doctrine that the Supreme Court is not a trier of facts and strictly adheres to this in labor cases.
• Caurdanetaan Piece Workers Union v. Laguesma — Cited regarding the four-fold test for employer-employee relationship.
• Coca-Cola Bottlers (Phils.), Inc. v. Climaco — Cited regarding the four-fold test for employer-employee relationship.
• Lopez v. Metropolitan Waterworks and Sewerage System — Cited for the principle that the control test merely requires the existence of the right to control, not necessarily the exercise thereof.
• L.T. Datu & Co., Inc. v. NLRC — Cited for the principle that doubts in labor cases should be resolved in favor of the laborer.

• Article 280 of the Labor Code — Defines regular and casual employment; provides that any 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 employed.
• Article 4 of the Labor Code — Mandates that all doubts in the implementation and interpretation of the Labor Code provisions shall be resolved in favor of labor.
• Article 1702 of the Civil Code — Provides that in case of doubt, all labor legislation and contracts shall be construed in favor of the safety and decent living of the laborer.
• Article XIII, Section 3 of the 1987 Constitution — Affords full protection to labor and guarantees workers' rights to security of tenure.
• Section 1, Rule 65 of the Rules of Court — Requirements for filing a petition for certiorari, including the attachment of relevant pleadings and documents.
• Section 3, Rule 46 of the Rules of Court — Contents and filing of petition; effect of non-compliance with requirements.
• Section 11, Rule 13 of the Rules of Court — Requirement for written explanation when service is not done personally.