EMPLOYMENT CONTRACT MAY ESTABLISH MOTIVE BEHIND EMPLOYEE DISMISSAL; EXEMPTION FROM 13TH MONTH PAY OF WORKERS ON TASK BASIS

Nate Casket Maker vs. Arango, et al.
G.R. No. 192282. October 5, 2016

Facts:

Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate Casket Maker. They employed respondents on various dates as carpenters, mascilladors and painters in their casket-making business from 1998 until their alleged termination in March 2007. Petitioners alleged in their Position Paper that respondents are pakyaw workers who are paid per job order.

The conflict arose when petitioners presented to respondents an employment contract. The said contract with a short term of five (5) months, renewable upon the terms set by petitioners, was presented to respondents on February 3, 2007. Respondents who had been continuously reporting to the petitioners since 1998 without any interruption would have second thoughts on signing the said contract. Feeling disgruntled, they filed a Complaint with the NLRC for money claims. Not being learned nor assisted by a lawyer, they also checked the box for “illegal dismissal. When the petitioners received the summons on March 15, 2007 in connection with the complaint, respondents were ordered by petitioners to go to the latter’s office. Because there was no dismissal yet, and thinking perhaps that it was for an amicable settlement of their claims, respondents went to the office of petitioners. However, respondents were presented with the same contract. According to respondents, their refusal to sign the contract irated petitioners who then told them to go home and not to report for work anymore. This prompted respondents to file an amended complaint for illegal dismissal and money claims.

LA Ruling:

Labor Arbiter (LA) Eduardo J. Carpio, issued a Decision dismissing 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 since respondents already initiated the case. 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 l31h month pay citing the case of field personnel and those paid on purely commission basis.

Respondents elevated the case to the NLRC.

NLRC Ruling:

The NLRC affirmed the Decision of the LA and held that no substantial evidence was presented to show that petitioners terminated 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. A motion for reconsideration was filed by respondents but the same was denied.

Aggrieved, respondents filed a petition for certiorari before the CA.

CA Ruling:

The CA reversed and set aside the decision of the NLRC. A motion for reconsideration was filed by petitioners but the same was denied by the Court of Appeals.

Issue/s:

1. Whether or not complainants were regular employees
2. Whether or not complainants were dismissed from service and if so, whether such dismissal was valid
3. Whether or not complainants, as pakyaw workers, were entitled to 13^th month pay

SC Ruling:

The SC held that complainants were regular employees. They were illegally dismissed from service. However, they are not entitled to 13^th month pay.

Elements of ER-EE relationship used to determine regular employment

A regular employment, whether it is one or not, is aptly gauged from the concurrence, or the non-concurrence, 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. The SC also considered the length of time that respondents worked for petitioners, commencing on various dates from 1998 to 2007.

In addition, the Court also found the power of control of petitioners over respondents is clearly present. Respondents follow the steps in making a casket, as instructed by the petitioners, like carpentry, mascilla, rubbing and painting. 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.

Circumstances that led the SC to conclude that there was dismissal

In the employment contract which the employer required the employees to sign, it stipulates 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. Hence, the key to understanding petitioners’ motive in severing respondents’ employment lies in the tenor of the contract itself which is the opposite to what is alleged by petitioners in their position paper.

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.

The validity of the charge must be established in a manner consistent with due process. These circumstances, taken together, lead the SC to conclude that petitioners indeed terminated respondents’ employment. The positive assertion of respondents that they were dismissed by petitioners is more convincing than the mere denial of petitioners.

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.

Pakyaw workers under control of employer are regular employees

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.

Exemption from coverage of 13^th month pay law of those paid on task basis, etc. is not qualified by the requirement that he should be a field personnel

The SC, citing, David vs. Macasio, held that Section 3 of the Rules and Regulations Implementing P.D. No. 851 enumerates the exemptions from the coverage of 13th month pay benefits. Under Section 3(e), “employers of those who are paid on xxx task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof’ are exempted.

Unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and Regulations Implementing PD No. 851 exempts employees “paid on task basis” without any reference to “field personnel.”

This could only mean that insofar as payment of the 13th month pay is concerned, the law did not intend to qualify the exemption from its coverage with the requirement that the task worker be a “field personnel” at the same time.