FONTERRA BRANDS PHILS., INC., Petitioner, v. LEONARDO1 LARGADO AND TEOTIMO ESTRELLADO, Respondents. G.R. No. !"#!!, M$r%& 1', !1" Facts: Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted the services of Zytron Marketing and Promotions Cor. (Zytron) for the marketing and romotion of its milk and dairy rod!cts. P!rs!ant to the contract, Zytron rovided Fonterra "ith trade merchandising reresentatives (#M$s), incl!ding resondents %eonardo %argado (%argado) and #eotimo &strellado (&strellado). #he engagement of their services 'egan on etem'er *, +- and May +, ++, resectively, and ended on /!ne 0, +0. 1n May -, +0, Fonterra sent Zytron a letter terminating its romotions contract, e2ective /!ne *, +0. Fonterra then entered into an agreement for mano"er s!ly "ith 3.C. icat Marketing and Promotional ervices (3.C. icat). 4esiro!s of contin!ing their "ork as #M$s, resondents s!'mitted their 5o' alications "ith 3.C. icat, "hich hired them for a term of 6ve (*) months, 'eginning /!ne , +0 ! to 7ovem'er 0, +0. 8hen resondents9 *month contracts "ith 3.C. icat "ere a'o!t to e;ire, they allegedly so!ght rene"al thereof, '!t "ere allegedly ref!sed. #his romted resondents resondents to 6le comlaints for illegal dismissal, reg!lari
and (+) they "ere consec!tively emloyed 'y Zytron and 3.C. icat, not 'y Fonterra. #he disositive ortion of the #he 7%$C 7%$C a?rmed the the %a'or 3r'iter, 3r'iter, 6nding that resondents9 resondents9 searation searation from Zytron "as 'ro!ght a'o!t 'y the e;ec!tion of the contract 'et"een Fonterra and 3.C. icat "here the arties agreed to a'sor' Zytron9s ersonnel, incl!ding resondents. #oo, resondents failed to resent any evidence that they rotested this set!. F!rthermore, resondents failed to ref!te the allegation that they vol!ntarily ref!sed to rene" their contract "ith 3.C. icat. 3lso, resondents did not assert any claim against Zytron and 3.C. icat. #he 7%$C9s 7%$C9s decision "as assailed assailed in a etition !nder $!le $!le 0* 'efore 'efore the C3. $!ling $!ling on the etition, the C3, in the =!estioned 4ecision,@ fo!nd that 3.C. icat satis6es the re=!irements of legitimate 5o' contracting, '!t Zytron does not. 3ccording to the C3: () Zytron9s aidin caital of P+*, cannot 'e considered as s!'stantial caital> (+) its Certi6cate of $egistration $egistration "as iss!ed 'y the 41%& months after resondents9 resondents9 s!osed emloyment ended> and (-) its claim that it has the necessary tools and e=!iment for its '!siness is !ns!'stantiated. #herefore, #herefore, according according to the C3, resondents resondents "ere "ere Fonterra9s Fonterra9s emloyees. 3dditionally, the C3 held that resondents "ere illegally dismissed since Fonterra itself failed to rove that their dismissal is la"f!l. Ao"ever, the illegal dismissal sho!ld 'e reckoned from the termination of their s!osed emloyment "ith Zytron on /!ne 0, +0. F!rthermore, resondents9 transfer to 3.C. icat is tantamo!nt to a comletely ne" engagement 'y another emloyer. %astly, the termination of their contract "ith 3.C. icat arose from the e;iration of their resective contracts "ith the latter. #he C3, th!s, r!led that Fonterra is lia'le to resondents and ordered the reinstatement of resondents "itho!t loss of seniority rights, "ith f!ll 'ack"ages, and other 'ene6ts from the time of their illegal dismissal ! to the time of their act!al reinstatement.
Iss!es: () 8hether or not resondents "ere illegally dismissed. (+) 8hether or not Zytron and 3.C. icat are la'oronly contractors, making Fonterra the emloyer of herein resondents. Aeld: () 7o. $esondents vol!ntarily terminated their emloyment "ith Zytron, contrary to their allegation that their emloyment "ith Zytron "as illegally terminated. 3s correctly held 'y the %a'or 3r'iter and the 7%$C, the termination of resondents9 emloyment "ith Zytron "as 'ro!ght a'o!t 'y the cessation of their contracts "ith the latter. 3s regards to the %a'or 3r'iter9s concl!sion that resondents "ere the ones "ho ref!sed to rene" their contracts "ith Zytron, and the 7%$C9s 6nding that they themselves ac=!iesced to their transfer to 3.C. icat. By ref!sing to rene" their contracts "ith Zytron, resondents e2ectively resigned from the latter. $esignation is the vol!ntary act of emloyees "ho are comelled 'y ersonal reasons to dissociate themselves from their emloyment, done "ith the intention of relin=!ishing an o?ce, accomanied 'y the act of a'andonment. 3ccording to the C, it is o'vio!s that resondents "ere no longer interested in contin!ing their emloyment "ith Zytron. #heir vol!ntary ref!sal to rene" their contracts "as 'ro!ght a'o!t 'y their desire to contin!e their assignment in Fonterra "hich co!ld not haen in vie" of the concl!sion of Zytron9s contract "ith Fonterra. Aence, to 'e a'le to contin!e "ith their assignment, they alied for "ork "ith 3.C. icat "ith the hoe that they "ill 'e a'le to contin!e rendering services as #M$s at Fonterra since 3.C. icat is Fonterra9s ne" mano"er s!lier. #his fact is even ackno"ledged 'y the C3 in the assailed 4ecision "here it recogni they also incl!de those to "hich the arties 'y free choice have assigned a seci6c date of termination. #he determining factor of s!ch contracts is not the d!ty of the emloyee '!t the day certain agreed !on 'y the arties for the commencement and termination of the emloyment relationshi.
In the case at 'ar, it is clear that resondents "ere emloyed 'y 3.C. icat as ro5ect emloyees. In their emloyment contract "ith the latter, it is clearly stated that D3.C. icat isE temorarily emloying DresondentsE as #M$DsE e2ective /!ne 0D, +0E !nder the follo"ing terms and conditions: #he need for yo!r service 'eing only for a seci6c ro5ect, yo!r temorary emloyment "ill 'e for the d!ration only of said ro5ect of o!r client, namely to romote F17#&$$3 B$374 rod!cts ;;; "hich is e;ected to 'e 6nished on or 'efore 7ov. 0, +0. $esondents, 'y acceting the conditions of the contract "ith 3.C. icat, "ere "ell a"are of and even acceded to the condition that their emloyment thereat "ill end on said redetermined date of termination. #hey cannot no" arg!e that they "ere illegally dismissed 'y the latter "hen it ref!sed to rene" their contracts after its e;iration. #his is so since the nonrene"al of their contracts 'y 3.C. icat is a management rerogative, and fail!re of resondents to rove that s!ch "as done in 'ad faith militates against their contention that they "ere illegally dismissed. #he e;iration of their contract "ith 3.C. icat simly ca!sed the nat!ral cessation of their 6;edterm emloyment there at.
