A. NATE CASKET MAKER and/or
ARMANDO and ANELY NATE, petitioners, vs. ELIAS V. ARANGO, EDWIN M. MAPUSAO,
JORGE C. CARINO, JERMIE, MAPUSAO, WILSON A. NATE, EDGAR A. NATE, MICHAEL A.
MONTALES, CELSO A. NATE, BENJES A. LLONA and ALLAN A. MONTALES, respondents
TOPIC:
Holidays, SIL, and Service Charge
FACTS:
Petitioners Armando and Anely Nate employed
respondents as carpenters, mascilladors and painters in their casket-making
business from 1998 until their alleged termination in March 2007. Petitioners
alleged that respondents are pakyaw workers who are paid per job order. They further alleged that respondents are
“always” drinking and quarrelling with each other on petty things such that
they could not accomplish the job orders on time. As a result, petitioners
would then be compelled to “contract out” to other workers for the job to be
finished. On February 3, 2007, they proposed an employment agreement to the
respondents which would change the existing pakyaw system to “contractual
basis” and would provide for vacation leave and sick leave pay and other
benefits given to regular employees.
On the other hand, respondents alleged that
they worked from Monday to Saturday from 7 AM – 10 PM, with no overtime pay and
any monetary benefits despite having claimed for such. On March 15, 2007, the
petitioners made them sign a Contract of Employment with the following terms:
(1)
they shall be working on
contractual basis for a period of five months;
(2)
renewal of employment contract
after such period shall be on a case-to-case basis or subject respondents’
efficiency and performance;
(3)
petitioners shall reserve the
right to terminate their employment should their performance fall below
expectations or if the conditions under which they were employed no longer
exist;
(4)
their wages shall be on a
piece-rate basis;
(5)
in the performance of their
tasks, they shall be obliged to strictly follow their work schedules;
(6)
they shall not be eligible to avail of sick leave or vacation leave,
nor receive 13th month pay and/or bonuses, or any other benefits given to a
regular employee.
Respondents alleged that when they were
adamant and refused to sign the contract, petitioners told them to go home
because their employment has been terminated.
Respondents filed a Complaint for illegal
dismissal and nonpayment of separation pay against petitioners and later
amended such complaint to include claims for underpayment of wages, nonpayment
of overtime pay, holiday pay, 5-day service incentive leave pay and 13th
month pay.
The LA dismissed the complaint for lack of
merit. While the LA acknowledged that respondents being pakyaw workers are
considered regular employees, he ruled that petitioners did not terminate the
services of respondents and believed in the denial of petitioners that
respondents were called to their office on March 15, 2007 since respondents
already initiated the present case on February 8, 2007. On the issue of
underpayment, the LA held that respondents were earning more than the minimum
wage per day; and as pakyaw workers, though they are deemed regular workers,
they are not entitled to overtime pay, holiday pay, service incentive leave pay
and 13th month pay citing the case of field personnel and those paid on purely
commission basis.
The NLRC affirmed the decision of the LA
and held that no substantial evidence was presented to show that petitioners
terminate the employment of respondents. It stated that pakyaw workers are not
entitled to money claims because their work depends on the availability of job
orders from petitioners’ clients. Also, there was no proof that overtime work
was rendered by respondents.
On appeal, the CA reversed and set aside
the decision of the NLRC.
ISSUE:
Whether or not respondents who are pakyaw
workers and are considered regular employees are entitled to overtime pay,
holiday pay, SIL and 13th month pay
RULING:
Article 280
of the Labor Code classifies employees into regular, project, seasonal and
casual. It further classifies regular employees into two kinds: (1) those
“engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer”; and (2) casual employees who have
“rendered at least one year of service, whether such service is continuous or
broken.”
A regular
employment is gauged from the concurrence or nonconcurrence of the following
factors: (a) the manner of selection and engagement of the putative employee;
(b) the mode of payment of wages; (c) the presence or absence of the power of
dismissal; and (d) the presence or absence of the power to control the conduct
of the putative employee or the power to control the employee with respect to
the means or methods by which his work is to be accomplished. The “control
test” assumes primacy in the overall consideration. Under this test, an
employment relation obtains where work is performed or services are rendered
under the control and supervision of the party contracting for the service, not
only as to the result of the work but also as to the manner and details of the
performance desired.
There is no dispute that the tasks
performed by respondents as carpenters, painters, and mascilladors were necessary
and desirable in the usual business of petitioners who are engaged in the
manufacture and selling of caskets. Respondents have also worked for
petitioners for quite a long period of time, commencing on various dates from
1998 to 2007. In addition, the power of control of petitioners over respondents
is clearly present in this case. Respondents follow the steps in making a
casket as instructed by the petitioners. They had their own notebooks where
they listed the work completed with their signature and the date finished. The
same would be checked by petitioners as basis for the compensation for the day.
Thus, petitioners wielded control over the respondents in the discharge of
their work.
It should be remembered that the control
test merely calls for the existence of the right to control, and not
necessarily the exercise thereof. It is not essential that the employer
actually supervises the performance of duties by the employee. It is enough
that the former has a right to wield the power. Hence, pakyaw workers are
considered regular employees for as long as their employers exercise control
over them. Thus, while respondents’ mode of compensation was on a per-piece
basis, the status and nature of their employment was that of regular employees.
As regular employees, respondents were
entitled to security of tenure and could be dismissed only for just or
authorized causes and after the observance of due process.
Petitioners violated respondents’ rights to
security of tenure and constitutional right to due process in not even serving
them with a written notice of termination which would recite any valid or just
cause for their dismissal. Respondents were merely told that their services are
terminated.
Moreover, there was the absence of proof to
show that petitioners conducted an investigation on the alleged drinking and
petty quarrelling of respondents nor did the petitioners provide respondents
with an opportunity to explain their side with respect to charges against them.
In termination cases, the burden of proving
just and valid cause for dismissing an employee from his employment rests upon
the employer, and the latter’s failure to do so would result in a finding that
the dismissal is unjustified. Petitioners failed to discharge this burden.
Workers engaged on pakyaw or task basis are
entitled to holiday and service incentive leave pay provided that they are not
field personnel. In short, in determining whether workers engaged on “pakyaw”
or task basis” is entitled to holiday and SIL pay, the presence (or absence) of
employer supervision as regards the worker’s time and performance is the key:
if the worker is simply engaged on “pakyaw” or task basis, then the general
rule is that he is entitled to a holiday pay and SIL pay unless exempted from
the exceptions specifically provided under the Labor Code. However, if the
worker engaged on pakyaw or task basis also falls within the meaning of “field
personnel” under the law, then he is not entitled to these monetary benefits.
Respondents do not fall under the definition
of “field personnel”. First, respondents regularly performed their duties at
petitioners’ place of business; second, their actual hours of work could be
determined with reasonable certainty; and third, petitioners supervised their
time and performance of their duties. Since respondents cannot be considered as
“field personnel,” then they are not exempted from the grant of holiday and SIL
pay even as they were engaged on pakyaw or task basis.
Contrary to petitioner’s claims, it is
specifically stated in the employment agreement that during the period of
employment, respondents would not be eligible to earn or receive any sick leave
pay, vacation leave pay, or any other benefits given to regular employees such
as 13th month pay and bonuses.
Employers cannot seek refuge under whatever
terms of the agreement they had entered into with their employees. The law, in
defining their contractual relationship, does so, not necessarily or
exclusively upon the terms of their written or oral contract, but also on the basis
of the nature of the work of employees who had been called upon to perform. The
law affords protection to an employee, and it will not countenance any attempt
to subvert its spirit and intent. A stipulation in an agreement can be ignored
as and when it is utilized to deprive the employee of his security of tenure.
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