FONTERRA BRANDS PHILS. INC. v.

LARGADO & ESTRELLADO

G.R. No. 205300 | March 18, 2015 | Third Division | Velasco, Jr., J.
Petitioner: FONTERRA BRANDS PHILIPPINES, INC.
Respondent: LEONARDO LARGADO and TEOTIMO ESTRELLADO

In this case, respondents Leonardo and Teotimo were trade merchandising representatives (TMRs)
provided by Zytron Marketing and Promotions Corp. to petitioner Fonterra Brands Phils., Inc. for the
marketing and promotion of its milk and dairy products. The engagement of their services began on
September 15, 2003 and May 27, 2002, respectively, and ended on June 6, 2006. Fearing for their jobs after
Fonterra terminated its promotions contract with Zytron, respondents did not renew their contract with
the latter and submitted their job applications with Fonterra’s new manpower supplier, A.C. Sicat
Marketing and Promotional Services. When respondents’ 5-month contracts with A.C. Sicat were about to
expire, they sought renewal thereof, but were refused, prompting them to file complaints for illegal
dismissal. The Labor Arbiter dismissed the complaint ruling that respondents were consecutively employed
by Zytron and A.C. Sicat, not by Fonterra, and that they were not illegally dismissed. NLRC affirmed the LA
decision. Reversing the NLRC decision, the Court of Appeals ruled that respondents were illegally dismissed.
Hence, this present petition for review on certiorari filed by petitioner Fonterra.

The main issue in this case is whether or not respondents Leonardo and Teotimo were illegally dismissed,
to which the Court ruled in the negative. Before determining whether the termination of respondents’
employment with the A.C. Sicat is valid, the Court first looked at A.C. Sicat’s status as job contractor. It
deferred to the CA’s finding that A.C. Sicat is engaged in legitimate job contracting as it was able to prove
that it carried out its merchandising and promotions business, independent of Fonterra’s business, and that
it has substantial capital, having assets totaling P5,926,155.76 as of December 31, 2006. Thus, having
settled that A.C. Sicat is a legitimate job contractor, the Court then discussed whether respondents were
illegally dismissed.

The Court sustained the findings of both the Labor Arbiter and the NLRC that the termination of
respondents’ employment was brought about by the expiration of Fonterra’s contracts with the Zytron and
respondents' acquiescence to their transfer to A.C. Sicat. Leonardo and Teotimo’s voluntary refusal to
renew their contracts with Zytron, effectively resigning therefrom, was brought about by their desire to
continue their assignment in Fonterra which could not happen if they remain with Zytron, whose
promotions contract was already terminated. Furthermore, it is clear that respondents were employed by
A.C. Sicat as project employees. As evidenced by their employment contract which clearly stated that “[A.C.
Sicat is] temporarily employing [respondents] as TMR[s] effective June 6[, 2006] under the following terms
and conditions: The need for your service being only for a specific project, your temporary employment will
be for the duration only of said project of our client, namely to promote FONTERRA BRANDS products xxx
which is expected to be finished on or before Nov. 06, 2006.” By accepting the conditions of the contract
with A.C. Sicat, respondents were well aware of and even acceded to the condition that their employment
thereat will end on said pre-determined date of termination. Hence, Leonardo and Teotimo cannot now
argue that they were illegally dismissed by the A.C. Sicat since the non-renewal of their contracts by A.C.
Sicat is a management prerogative, and failure of respondents to prove that such was done in bad faith
militates against their contention that they were illegally dismissed. All these premises considered, the
petition for review was granted reinstating the NLRC decision which ruled that respondents were not
illegally dismissed.