G.R. No. 122653 - Pure Foods Corp. vs. National Labor Relations Commission

Pure Foods Corporation, the petitioner, hired a large number of employees (906 private respondents) on five‑month fixed-term contracts to work at its tuna cannery plant in Tambler, General Santos City.
The employees were brought on board to perform functions integral to the company's regular operations, such as receiving, skinning, loining, packing, and casing-up of tuna fish destined for export.
Upon the expiration of their respective contracts in June and July 1991, the employees’ services were terminated.
At the time of dismissal, the employees executed a Release and Quitclaim, purportedly waiving any claims they might have against the petitioner.

On July 29, 1991, shortly after their dismissal, the private respondents filed a complaint for illegal dismissal before the NLRC Sub-Regional Arbitration Branch No. XI in General Santos City (Case No. RAB-11-08-50284-91).
Labor Arbiter Arturo P. Aponesto, on December 23, 1992, dismissed the complaint on the basis that the respondents were mere contractual or casual workers—not regular employees—and thus not entitled to security of tenure.
The Labor Arbiter’s ruling was partially based on previous decisions in related cases, including one where contractual workers in similar five‑month engagements were held not to be regular employees.

The private respondents appealed the Labor Arbiter’s decision, and the NLRC’s Fifth Division in Cagayan de Oro City initially affirmed the dismissal on October 28, 1994.
However, upon a motion for reconsideration, the NLRC reversed its earlier decision on January 30, 1995, declaring that the contractual employment arrangement was a “clandestine scheme” designed to circumvent the law on security of tenure.
The NLRC ruled that the fixed five‑month employment period was void for being contrary to law, public policy, and morals.
Consequently, the NLRC ordered the reinstatement of the private respondents without loss of seniority and with full back wages; alternatively, if reinstatement was no longer feasible (as the petitioner’s cannery had closed in November 1994), the respondents were to be awarded separation pay computed as one-month pay or one‑half‑month pay for every year of service—whichever was higher—along with back wages and additional attorney’s fees.

Pure Foods Corporation elevated the case to the Supreme Court through a petition for certiorari, contending that the NLRC committed grave abuse of discretion and lacked jurisdiction in reversing the Labor Arbiter’s ruling.
The petitioner argued that the private respondents were employed under fixed‑term contracts that were voluntarily agreed upon and, thus, should not be classified as regular employees eligible for security of tenure.
Additionally, Pure Foods invoked Article 280 of the Labor Code, asserting that employment fixed for a specific period—here, five months—falls within an exception that excludes such employees from becoming regular workers upon contract expiration.
The petitioner also relied on the Release and Quitclaim signed by the private respondents, contending that it barred the latter from now questioning their termination.

The OSG argued that, despite the fixed‑term contract, the tasks performed by the private respondents were fundamental to the petitioner’s regular business.
It was contended that the five‑month contracts were essentially a tool to evade the statutory protection of security of tenure, as evidenced by the company’s repeated practice of hiring workers for just five months and then replacing them with similarly contracted workers.
The private respondents further maintained that the contractual arrangement was designed to prevent their conversion into regular employees, intentionally circumventing the guarantees of labor law.

Whether the employees hired for a definite period, while performing acts necessary and desirable in the petitioner’s usual business, should be classified as regular employees, thereby enjoying the right to security of tenure.
Whether the five‑month fixed‑term contracts were valid or if they were employed as a stratagem to circumvent the statutory protections afforded to regular employees.
Whether the execution of a Release and Quitclaim by the private respondents precludes them from challenging the termination of their employment and claiming their legal rights.
Whether the termination of employment upon expiration of the fixed‑term contracts is justified when the employment activities render the workers as integral to the regular operations of the company.
Whether the NLRC properly exercised its jurisdiction in vacating the initial Labor Arbiter decision and in ordering the reinstatement or awarding separation pay and back wages, considering the alleged circumvention of security of tenure.