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ATLANTA INDUSTRIES v. APRILITO R. SEBOLINO

FACTS:

In the months of February and March 2005, complainants Aprilito R. Sebolino, Khim V. Costales, Alvin V. Almoite, Joseph S. Sagun, Agosto D. Zaño, Domingo S. Alegria, Jr., Ronie Ramos, Edgar Villagomez, Melvin Pedregoza, Teofanes B. Chiong, Jr., Leonardo L. dela Cruz, Arnold A. Magalang, and Saturnino M. Mabanag filed several complaints for illegal dismissal, regularization, underpayment, nonpayment of wages, and other money claims, as well as claims for moral and exemplary damages and attorney's fees against the petitioners Atlanta Industries, Inc. (Atlanta) and its President and Chief Operating Officer Robert Chan. Atlanta is a domestic corporation engaged in the manufacture of steel pipes. The complaints were consolidated and raffled to Labor Arbiter Daniel Cajilig but were later transferred to Labor Arbiter Dominador B. Medroso, Jr. The complainants alleged that they had attained regular status as they were allowed to work with Atlanta for more than six months from the start of a purported apprenticeship agreement between them and the company. They claimed that they were illegally dismissed when the apprenticeship agreement expired.

In defense, Atlanta and Chan argued that the workers were not entitled to regularization and to their money claims because they were engaged as apprentices under a government-approved apprenticeship program. The company offered to hire them as regular employees in the event vacancies for regular positions occur in the section of the plant where they had trained. They also claimed that their names did not appear in the list of employees (Master List) prior to their engagement as apprentices. On May 24, 2005, dela Cruz, Magalang, Zaño, and Chiong executed a Pagtalikod at Pagwawalang Saysay before Labor Arbiter Cajilig. On April 24, 2006, Labor Arbiter Medroso dismissed the complaint with respect to dela Cruz, Magalang, Zaño, and Chiong, but found the termination of service of the remaining nine to be illegal. Consequently, the arbiter awarded the dismissed workers back wages, wage differentials, holiday pay, and service incentive leave pay amounting to P1,389,044.57 in the aggregate.

Atlanta appealed to the National Labor Relations Commission (NLRC). In the meantime, Ramos, Alegria, Villagomez, Costales, and Almoite allegedly entered into a compromise agreement with Atlanta. The agreement provided that except for Ramos, Atlanta agreed to pay the workers a specified amount as settlement, and to acknowledge them at the same time as regular employees. On December 29, 2006, the NLRC rendered a decision, on appeal, modifying the ruling of the labor arbiter, as follows: (1) withdrawing the illegal dismissal finding with respect to Sagun, Mabanag, Sebolino, and Pedregoza; (2) affirming the dismissal of the complaints of dela Cruz, Zaño, Magalang, and Chiong; (3) approving the compromise agreement entered into by Costales, Ramos, Villagomez, Almoite, and Alegria, and (4) denying all other claims. Sebolino, Costales, Almoite, and Sagun moved for the reconsideration of the decision, but the NLRC denied the motion in its March 30, 2007 resolution. The four then sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court. They charged that the NLRC committed grave abuse of discretion in: (1) failing to recognize their prior employment with Atlanta; (2) declaring the second apprenticeship agreement valid; (3) holding that the dismissal of Sagun, Mabanag, Sebolino, and Melvin Pedregoza is legal; and (4) upholding the compromise agreement involving Costales, Ramos, Villagomez, Almoite, and Alegria.

ISSUES:

  1. Whether the respondents (Costales, Almoite, Sebolino, and Sagun) were employees of Atlanta before they entered into apprenticeship agreements.

  2. Whether the second apprenticeship agreement between Atlanta and the respondents is valid.

  3. Whether the dismissal of the respondents was illegal.

  4. Whether the compromise agreement involving Costales and Almoite is binding.

RULING:

  1. Yes. The Court found that the respondents were already rendering services to Atlanta as employees before they were engaged as apprentices.

  2. No. The second apprenticeship agreement is invalid as it violated the law and rules, and the respondents continued to work beyond the allowed apprenticeship period.

  3. Yes. The dismissal of the respondents was illegal due to lack of a just or authorized cause and notice.

  4. No. The compromise agreement is not binding on Costales and Almoite as they did not sign it.

PRINCIPLES:

  1. Employee Status Before Apprenticeship Workers who are already rendering services to a company are considered employees, and their subsequent involvement in an apprenticeship agreement does not change this status.

  2. Validity of Apprenticeship Agreements Apprenticeship agreements must comply with the Labor Code and its implementing rules, and any subsequent agreement must be for a period and purpose that align with legal stipulations.

  3. Illegal Dismissal Dismissal without a just or authorized cause and proper notice constitutes illegal dismissal under the Labor Code.

  4. Binding Nature of Compromise Agreements Compromise agreements in labor disputes must be signed by the concerned parties to be binding.