Labor Congress of the Philippines v NLRC

As to the other benefits, namely, holiday pay, premium pay, 13th month pay and service incentive leave which the
Labor Arbiter failed to rule on but which petitioners prayed for in their complaint, we hold that petitioners are so
entitled to these benefits. Three (3) factors lead us to conclude that petitioners, although piece-rate workers, were
regular employees of private respondents. First, as to the nature of petitioners' tasks, their job of repacking snack
food was necessary or desirable in the usual business of private respondents, who were engaged in the
manufacture and selling of such food products; second, petitioners worked for private respondents throughout the
year, their employment not having been dependent on a specific project or season; and third, the length of time
that petitioners worked for private respondents. Thus, while petitioners' mode of compensation was on a "per piece
basis," the status and nature of their employment was that of regular employees.

FACTS:
Petitioners were rank-and-file employees of respondent Empire Food Products, which hired them on various dates.
Petitioners filed against private respondents a complaint for payment of money claim[s] and for violation of labor
standard[s] laws. They also filed a petition for direct certification of petitioner Labor Congress of the Philippines as
their bargaining representative.

On October 23, 1990, petitioners represented by LCP President Benigno B. Navarro, Sr. and private respondents
Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food Products, Inc. entered into a Memorandum of
Agreement. Mediator Arbiter Antonio Cortez approved the memorandum of agreement and certified LCP "as the
sole and exclusive bargaining agent among the rank-and-file employee of Empire Food Products for purposes of
collective bargaining with respect to wages, hours of work and other terms and conditions of employment".

On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-1964-91 against private
respondents for Unfair Labor Practice, Union busting, violation of the Memorandum of Agreement, Underpayment
of Wages, and actual, moral and exemplary damages.

Labor Arbiter absolved private respondents of the charges, but ordered the reinstatement of the individual
complainants. On appeal, the National Labor Relations Commission vacated the Decision and remanded the case
to the Labor Arbiter for further proceedings.

In a Decision dated July 27, 1994, Labor Arbiter Santos made the following determination:
“Complainants failed to present with definiteness and clarity the particular act or acts constitutive of unfair labor
practice. As regards the issue of harassments [sic], threats and interference with the rights of employees to self-
organization which is actually an ingredient of unfair labor practice, complainants failed to specify what type of
threats or intimidation was committed and who committed the same.

Anent the charge that there was underpayment of wages, the evidence points to the contrary.

Finally, the claim for moral and exemplary damages has no leg to stand on when no malice, bad faith or fraud was
ever proven to have been perpetuated by respondents.”
On appeal, the NLRC, in its Resolution dated 29 March 1995, affirmed in toto the decision of Labor Arbiter Santos.

ISSUE:
Whether or not petitioners should be reinstated from the date of their dismissal up to the time of their
reinstatement, with backwages, statutory benefits, damages and attorney's fees.

RULING:
Invocation of the general rule that factual findings of the NLRC bind this Court is unavailing under the
circumstances. Initially, we are unable to discern any compelling reason justifying the Labor Arbiter's volte face
from his 14 April 1992 decision reinstating petitioners to his diametrically opposed 27 July 1994 decision, when in
both instances, he had before him substantially the same evidence. Neither do we find the 29 March 1995 NLRC
resolution to have sufficiently discussed the facts so as to comply with the standard of substantial evidence.

Apparently, the Labor Arbiter perceived that if not for petitioners, he would not have fallen victim to this stinging
rebuke at the hands of the NLRC. Thus does it appear to us that the Labor Arbiter, in concluding in his 27 July 1994
Decision that petitioners abandoned their work, was moved by, at worst, spite, or at best, lackadaisically glossed
over petitioner's evidence. On this score, we find the following observations of the OSG most persuasive:
“In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied on the
testimony of Security Guard Rolando Cairo that on January 21, 1991, petitioners refused to work. As a result of
their failure to work, the cheese curls ready for repacking on said date were spoiled.

The failure to work for one day, which resulted in the spoilage of cheese curls does not amount to abandonment of
work. In fact two (2) days after the reported abandonment of work or on January 23, 1991, petitioners filed a
complaint for, among others, unfair labor practice, illegal lockout and/or illegal dismissal.”

It may likewise be stressed that the burden of proving the existence of just cause for dismissing an employee, such
as abandonment, rests on the employer, a burden private respondents failed to discharge. Private respondents,
moreover, in considering petitioners' employment to have been terminated by abandonment, violated their rights
to security of tenure and constitutional right to due process in not even serving them with a written notice of such
termination.

Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of the Labor Code,
as amended by R.A. No. 6715. Nevertheless, the records disclose that taking into account the number of
employees involved, the length of time that has lapsed since their dismissal, and the perceptible resentment and
enmity between petitioners and private respondents which necessarily strained their relationship, reinstatement
would be impractical and hardly promotive of the best interests of the parties. In lieu of reinstatement then,
separation pay at the rate of one month for every year of service, with a fraction of at least six (6) months of
service considered as one (1) year, is in order.

That being said, the amount of back wages to which each petitioner is entitled, however, cannot be fully settled at
this time. Petitioners, as piece-rate workers having been paid by the piece, there is need to determine the varying
degrees of production and days worked by each worker. Clearly, this issue is best left to the National Labor
Relations Commission.

As to the other benefits, namely, holiday pay, premium pay, 13th month pay and service incentive leave which the
Labor Arbiter failed to rule on but which petitioners prayed for in their complaint, we hold that petitioners are so
entitled to these benefits. Three (3) factors lead us to conclude that petitioners, although piece-rate workers, were
regular employees of private respondents. First, as to the nature of petitioners' tasks, their job of repacking snack
food was necessary or desirable in the usual business of private respondents, who were engaged in the
manufacture and selling of such food products; second, petitioners worked for private respondents throughout the
year, their employment not having been dependent on a specific project or season; and third, the length of time
that petitioners worked for private respondents. Thus, while petitioners' mode of compensation was on a "per
piece basis," the status and nature of their employment was that of regular employees.

The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay,
holiday pay, service incentive leave and 13th month pay, inter alia, "field personnel and other employees whose
time and performance is unsupervised by the employer, including those who are engaged on task or contract basis,
purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time
consumed in the performance thereof." Plainly, petitioners as piece-rate workers do not fall within this group. As
mentioned earlier, not only did petitioners labor under the control of private respondents as their employer,
likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for
compensation. Further, in Section 8 (b), Rule IV, Book III which we quote hereunder, piece workers are specifically
mentioned as being entitled to holiday pay.
Sec. 8. Holiday pay of certain employees. –
(b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay shall
not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday:
Provided, however, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate.
In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the modifications
to P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those
exempted from paying 13th month pay

The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate
category as those who are paid a standard amount for every piece or unit of work produced that is more or less
regularly replicated, without regard to the time spent in producing the same.

As to overtime pay, the rules, however, are different. According to Sec. 2(e), Rule I, Book III of the Implementing
Rules, workers who are paid by results including those who are paid on piece- work, takay, pakiao, or task basis, if
their output rates are in accordance with the standards prescribed under Sec. 8, Rule VII, Book III, of these
regulations, or where such rates have been fixed by the Secretary of Labor in accordance with the aforesaid
section, are not entitled to receive overtime pay. Here, private respondents did not allege adherence to the
standards set forth in Sec. 8 nor with the rates prescribed by the Secretary of Labor. As such, petitioners are
beyond the ambit of exempted persons and are therefore entitled to overtime pay. Once more, the National Labor
Relations Commission would be in a better position to determine the exact amounts owed petitioners, if any.
DAVID v MACASIO

FACTS:
 Macasio filed before the LA a complaint against petitioner for non-payment of overtime pay, holiday pay
and 13thmonth pay. He also claimed payment for moral and exemplary damages and attorney’s fees, and
payment for service incentive leave (SIL).

 Macasio alleged that he had been working as a butcher for David since January 6, 1995.That David
exercised effective control and supervision over his work, pointing out that David:

(1) set the work day, reporting time and hogs to be chopped, as well as the
manner by which he was to perform his work;
(2) daily paid his salary of P700.00, which was increased from P600.00 in 2007,
P500.00 in 2006 and P400.00 in 2005; and
(3) approved and disapproved his leaves.

 Macasio added that David owned the hogs delivered for chopping, as well as the work tools and
implements; the latter also rented the workplace.

 David’s defense:
He claimed that he hired Macasio as a butcher or chopper on "pakyaw" or task basis who is,
therefore, not entitled to overtime pay, holiday pay and 13th month pay pursuant to the
provisions of the IRR of the Labor Code.

LABOR ARBITER:
The LA dismissed respondent’s claims for lack of merit and gave credence to David’s claim that he engaged
Macasio on "pakyaw" or task basis. The LA noted the following facts to support this finding:

(1) Macasio received the fixed amount of P700.00 for every work done, regardless of the number ofhours that he
spent in completing the task and of the volume or number of hogs that he had to chop per engagement;

(2) Macasio usually worked for only four hours, beginning from 10:00 p.m. up to 2:00 a.m. of the following day;
and

(3) the P700.00 fixed wage far exceeds the then prevailing daily minimum wage of P382.00. The LA added that the
nature of David’s business as hog dealer supports this "pakyaw" or task basis arrangement concluded that as
Macasio was engaged on "pakyaw" or task basis, he is not entitled to overtime, holiday, SIL and 13th month pay.

The LA concluded that as Macasio was engaged on "pakyaw" or task basis, he is not entitled to overtime,
holiday, SIL and 13th month pay.

NLRC
Affirmed the LA ruling.

CA
The CA reversed the NLRC’s ruling for having been rendered with grave abuse of discretion and awarded
Macasio’s claim for holiday, SIL and 13th month pay for three years, with 10% attorney’s fees on the total
monetary award. The CA, however, denied Macasio’s claim for moral and exemplary damages for lack of basis.
 
ISSUE:
 Whether the CA correctly found the NLRC in grave abuse of discretion in ruling that Macasio is entitled
to these labor standards benefits.

(The issue revolves around the proper application and interpretation of the labor law provisions on holiday, SIL and
13th month pay to a worker engaged on "pakyaw" or task basis. In the context of the Rule 65 petition before the
CA, the issue is whether the CA correctly found the NLRC in grave abuse of discretion in ruling that Macasio is
entitled to these labor standards benefits.)

RULING:
We partially grant the petition.

 ON THE ISSUE IF THERE IS ER-EE RELATIONSHIP: YES

Engagement on "pakyaw" or task basis does not characterize the relationship that may exist between the
parties, i.e., whether one of employment or independent contractorship.

A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to straight-hour wage

In Macasio’s case, the established facts show that he would usually start his work at 10:00 p.m. Thereafter,
regardless of the total hours that he spent at the workplace or of the total number of the hogs assigned to him for
chopping, Macasio would receive the fixed amount of ₱700.00 once he had completed his task. Clearly, these
circumstances show a "pakyaw" or task basis engagement that all three tribunals uniformly found.
In sum, the existence of employment relationship between the parties is determined by applying the "four-fold"
test; engagement on "pakyaw" or task basis does not determine the parties’ relationship as it is simply a
method of pay computation. Accordingly, Macasio is David’s employee, albeit engaged on "pakyaw" or task
basis.

 ON THE ISSUE OF MACASIO’S ENTITLEMENT TO HOLIDAY, SIL AND 13TH MONTH PAY:
a.) Whether respondent Macasia is a Field personnel: NO

Based on the definition of field personnel under Article 82, we agree with the CA that Macasio does not
fall under the definition of "field personnel." The CA’s finding in this regard is supported by the established facts of
this case: first, Macasio regularly performed his duties at David’s principal place of business; second, his actual
hours of work could be determined with reasonable certainty; and, third, David supervised his time and
performance of duties.
Since Macasio cannot be considered a "field personnel," then he is not exempted from the grant of
holiday, SIL pay even as he wasengaged on "pakyaw" or task basis.

b.) Whether respondent Macasio is entitled to 13th month pay: NO

That the CA erred in finding that the NLRC gravely abused its discretion in denying this benefit to
Macasio.The governing law on 13th month pay is PD No. 851.5313th month pay benefits generally cover
all employees; an employee must be one of those expressly enumerated to beexempted.

Section 3 of the IRR of 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 forperforming a specific work, irrespective of the time
consumed in the performance thereof" are exempted.

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the IRR ofPD
No. 851 exempts employees"paid on task basis" without any reference to "field personnel." This could
only mean that insofar as payment of the 13thmonth pay is concerned, the law did not intend to qualify
the exemption from its coverage with the requirement that thetask worker be a "field personnel" at the
same time.

c.) Whether respondent Macasia is entitled to SIL, Holiday pay: YES

The payment of an employee on task or pakyaw basis alone is insufficient to exclude one from
the coverage of SIL andholiday pay. They are exempted from the coverage of Title I (including the holiday
and SIL pay) only if they qualify as "field personnel."

The IRR therefore validly qualifies and limits the general exclusion of "workers paid by results"
found in Article82 from the coverage of holiday and SIL pay. This is the only reasonable interpretation
since the determination ofexcluded workers who are paid by results from the coverage of Title I is
"determined by the Secretary of Labor inappropriate regulations."

The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport
Systems, Inc., v. Bautista:

A careful perusal of said provisions of law will result in the conclusion that the grant of service
incentive leave has beendelimited by the IRR of the Labor Code to apply only to those employees not
explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave
shall not apply to employees classified as "field personnel."The phrase "other employees whose
performance is unsupervised by the employer" must not be understood as a separateclassification of
employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of
theinterpretation of the definition of field personnel under the Labor Code as those "whose actual hours of
work in the fieldcannot be determined with reasonable certainty."

The same is true with respect to the phrase "those who are engaged on task or contract basis,
purely commission basis."Said phrase should be related with "field personnel," applying the rule on
ejusdem generis that general and unlimited termsare restrained and limited by the particular terms
that they follow.

The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in
support of granting Macasio’s petition. In Serrano, the Court, applying the rule on ejusdem generis
declared that "employees engaged on task or contract basisxxx are not automatically exempted from the
grant of service incentive leave, unless, they fall under the classification of field personnel."

The Court explained that the phrase "including those who are engaged on task or contract basis,
purelycommission basis" found in Section 1(d), Rule V of Book III of the IRR should not be understood as
a separate classificationof employees to which SIL shall not be granted. Rather, as with its preceding
phrase - "other employees whose performanceis unsupervised by the employer" - the phrase "including
those who are engaged on task or contract basis" serves toamplify the interpretation of the Labor Code
definition of "field personnel" as those "whose actual hours of work in thefield cannot be determined with
reasonable certainty."
 
Under these provisions, the general rule is that holiday and SIL pay provisions cover all employees. To
be excluded from their coverage, an employee must be one of those that these provisions
expressly exempt, strictly in accordance with theexemption.

Under the IRR, exemption from the coverage of holiday and SIL pay refer to "field personnel”
and other employees whose time and performance is unsupervised by the employer including those who
are engaged on task orcontract basis[.]" Note that unlike Article 82 of the Labor Code, the IRR on holiday
and SIL pay do not exclude employees"engaged on task basis" as a separate and distinct category from
employees classified as "field personnel." Rather, theseemployees are altogether merged into one
classification of exempted employees.