III.

Test of Employment Relationship

1. David v. Macasio, G.R. No. 195466, [July 2, 2014]

In January 2009, Macasio filed before the Labor Arbiter a complaint against petitioner Ariel L. David,
doing business under the name and style "Yiels Hog Dealer," for non-payment of overtime pay, holiday
pay and 13th month pay. He also claimed payment for moral and exemplary damages and attorneys
fees. Macasio also claimed payment for service incentive leave (SIL).

Macasio alleged before the Labor Arbiter that he had been working as a butcher for David since January
6, 1995. Macasio claimed 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 700.00, which was increased from
600.00 in 2007, 500.00 in 2006 and 400.00 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. Macasio further claimed that David employs about
twenty-five (25) butchers and delivery drivers.

In his defense, David claimed that he started his hog dealer business in 2005 and that he only has ten
employees. He alleged 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 Implementing Rules and Regulations (IRR) of the Labor Code. David pointed out that Macasio: (1)
usually starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day or earlier, depending on
the volume of the delivered hogs; (2) received the fixed amount of 700.00 per engagement, regardless
of the actual number of hours that he spent chopping the delivered hogs; and (3) was not engaged to
report for work and, accordingly, did not receive any fee when no hogs were delivered.

Macasio disputed Davids allegations. He argued that, first, David did not start his business only in 2005.
He pointed to the Certificate of Employment that David issued in his favor which placed the date of his
employment, albeit erroneously, in January 2000. Second, he reported for work every day which the
payroll or time record could have easily proved had David submitted them in evidence.

Refuting Macasios submissions, David claims that Macasio was not his employee as he hired the latter
on "pakyaw" or task basis. He also claimed that he issued the Certificate of Employment, upon Macasios
request, only for overseas employment purposes. He pointed to the "Pinagsamang Sinumpaang
Salaysay," executed by Presbitero Solano and Christopher (Antonio Macasios co-butchers), to
corroborate his claims.
In the April 30, 2009 decision, the LA dismissed Macasios complaint for lack of merit. The LA gave
credence to Davids 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 700.00 for every work
done, regardless of the number of hours 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 700.00 fixed wage far
exceeds the then prevailing daily minimum wage of 382.00. The LA added that the nature of Davids
business as hog dealer supports this "pakyaw" or task basis arrangement.

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.

The NLRCs Ruling

In its May 26, 2010 decision, the NLRC affirmed the LA ruling. The NLRC observed that David did not
require Macasio to observe an eight hour work schedule to earn the fixed 700.00 wage; and that
Macasio had been performing a non-time work, pointing out that Macasio was paid a fixed amount for
the completion of the assigned task, irrespective of the time consumed in its performance. Since
Macasio was paid by result and not in terms of the time that he spent in the workplace, Macasio is not
covered by the Labor Standards laws on overtime, SIL and holiday pay, and 13th month pay under the
Rules and Regulations Implementing the 13th month pay law.

Macasio moved for reconsideration but the NLRC denied his motion in its August 11, 2010 resolution,
prompting Macasio to elevate his case to the CA via a petition for certiorari.

The CAs Ruling

In its November 22, 2010 decision, the CA partly granted Macasios certiorari petition and reversed the
NLRCs ruling for having been rendered with grave abuse of discretion.
While the CA agreed with the LA and the NLRC that Macasio was a task basis employee, it nevertheless
found Macasio entitled to his monetary claims following the doctrine laid down in Serrano v. Severino
Santos Transit. The CA explained that as a task basis employee, Macasio is excluded from the coverage
of holiday, SIL and 13th month pay only if he is likewise a "field personnel." As defined by the Labor
Code, a "field personnel" is one who performs the work away from the office or place of work and
whose regular work hours cannot be determined with reasonable certainty. In Macasios case, the
elements that characterize a "field personnel" are evidently lacking as he had been working as a butcher
at Davids "Yiels Hog Dealer" business in Sta. Mesa, Manila under Davids supervision and control, and
for a fixed working schedule that starts at 10:00 p.m.

Accordingly, the CA awarded Macasios claim for holiday, SIL and 13th month pay for three years, with
10% attorneys fees on the total monetary award. The CA, however, denied Macasios claim for moral
and exemplary damages for lack of basis.

David filed the present petition after the CA denied his motion for reconsideration in the CAs January
31, 2011 resolution.

The Petition

In this petition, David maintains that Macasios engagement was on a "pakyaw" or task basis. Hence, the
latter is excluded from the coverage of holiday, SIL and 13th month pay. David reiterates his submissions
before the lower tribunals and adds that he never had any control over the manner by which Macasio
performed his work and he simply looked on to the "end-result." He also contends that he never
compelled Macasio to report for work and that under their arrangement, Macasio was at liberty to
choose whether to report for work or not as other butchers could carry out his tasks. He points out that
Solano and Antonio had, in fact, attested to their (David and Macasios) established "pakyawan"
arrangement that rendered a written contract unnecessary. In as much as Macasio is a task basis
employee who is paid the fixed amount of 700.00 per engagement regardless of the time consumed
in the performance David argues that Macasio is not entitled to the benefits he claims. Also, he posits
that because he engaged Macasio on "pakyaw" or task basis then no employer-employee relationship
exists between them.

Finally, David argues that factual findings of the LA, when affirmed by the NLRC, attain finality especially
when, as in this case, they are supported by substantial evidence. Hence, David posits that the CA erred
in reversing the labor tribunals findings and granting the prayed monetary claims.
The Case for the Respondent

Macasio counters that he was not a task basis employee or a "field personnel" as David would have this
Court believe. He reiterates his arguments before the lower tribunals and adds that, contrary to Davids
position, the 700.00 fee that he was paid for each day that he reported for work does not indicate a
"pakyaw" or task basis employment as this amount was paid daily, regardless of the number or pieces of
hogs that he had to chop. Rather, it indicates a daily-wage method of payment and affirms his regular
employment status. He points out that David did not allege or present any evidence as regards the
quota or number of hogs that he had to chop as basis for the "pakyaw" or task basis payment; neither
did David present the time record or payroll to prove that he worked for less than eight hours each day.
Moreover, David did not present any contract to prove that his employment was on task basis. As David
failed to prove the alleged task basis or "pakyawan" agreement, Macasio concludes that he was Davids
employee. Procedurally, Macasio points out that Davids submissions in the present petition raise purely
factual issues that are not proper for a petition for review on certiorari. These issues whether he
(Macasio) was paid by result or on "pakyaw" basis; whether he was a "field personnel"; whether an
employer-employee relationship existed between him and David; and whether David exercised control
and supervision over his work are all factual in nature and are, therefore, proscribed in a Rule 45
petition. He argues that the CAs factual findings bind this Court, absent a showing that such findings are
not supported by the evidence or the CAs judgment was based on a misapprehension of facts. He adds
that the issue of whether an employer-employee relationship existed between him and David had
already been settled by the LA29 and the NLRC30 (as well as by the CA per Macasios manifestation
before this Court dated November 15, 2012), in his favor, in the separate illegal case that he filed against
David.

The Issue

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.

The Courts Ruling

We partially grant the petition.

Preliminary considerations: the Montoya ruling and the factual-issue-bar rule

In this Rule 45 petition for review on certiorari of the CAs decision rendered under a Rule 65
proceeding, this Courts power of review is limited to resolving matters pertaining to any perceived legal
errors that the CA may have committed in issuing the assailed decision. This is in contrast with the
review for jurisdictional errors, which we undertake in an original certiorari action. In reviewing the legal
correctness of the CA decision, we examine the CA decision based on how it determined the presence or
absence of grave abuse of discretion in the NLRC decision before it and not on the basis of whether the
NLRC decision on the merits of the case was correct.32 In other words, we have to be keenly aware that
the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it.33

Moreover, the Courts power in a Rule 45 petition limits us to a review of questions of law raised against
the assailed CA decision.34

In this petition, David essentially asks the question whether Macasio is entitled to holiday, SIL and 13th
month pay. This one is a question of law. The determination of this question of law however is
intertwined with the largely factual issue of whether Macasio falls within the rule on entitlement to
these claims or within the exception. In either case, the resolution of this factual issue presupposes
another factual matter, that is, the presence of an employer-employee relationship between David and
Macasio.

In insisting before this Court that Macasio was not his employee, David argues that he engaged the
latter on "pakyaw" or task basis. Very noticeably, David confuses engagement on "pakyaw" or task basis
with the lack of employment relationship. Impliedly, David asserts that their "pakyawan" or task basis
arrangement negates the existence of employment relationship.

At the outset, we reject this assertion of the petitioner. 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. Article 97(6) of the Labor Code defines wages as "xxx the remuneration or
earnings, however designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which
is payable by an employer to an employee under a written or unwritten contract of employment for
work done or to be done, or for services rendered or to be rendered[.]"35 In relation to Article 97(6),
Article 10136 of the Labor Code speaks of workers paid by results or those whose pay is calculated in
terms of the quantity or quality of their work output which includes "pakyaw" work and other non-time
work.

More importantly, by implicitly arguing that his engagement of Macasio on "pakyaw" or task basis
negates employer-employee relationship, David would want the Court to engage on a factual appellate
review of the entire case to determine the presence or existence of that relationship. This approach
however is not authorized under a Rule 45 petition for review of the CA decision rendered under a Rule
65 proceeding.

First, the LA and the NLRC denied Macasios claim not because of the absence of an employer-employee
but because of its finding that since Macasio is paid on pakyaw or task basis, then he is not entitled to
SIL, holiday and 13th month pay. Second, we consider it crucial, that in the separate illegal dismissal case
Macasio filed with the LA, the LA, the NLRC and the CA uniformly found the existence of an employer-
employee relationship.37

In other words, aside from being factual in nature, the existence of an employer-employee relationship
is in fact a non-issue in this case. To reiterate, in deciding a Rule 45 petition for review of a labor decision
rendered by the CA under 65, the narrow scope of inquiry is whether the CA correctly determined the
presence or absence of grave abuse of discretion on the part of the NLRC. In concrete question form,
"did the NLRC gravely abuse its discretion in denying Macasios claims simply because he is paid on a
non-time basis?"

At any rate, even if we indulge the petitioner, we find his claim that no employer-employee relationship
exists baseless. Employing the control test,38 we find that such a relationship exist in the present case.

Even a factual review shows that Macasio is Davids employee

To determine the existence of an employer-employee relationship, four elements generally need to be

considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3)
the power of dismissal; and (4) the power to control the employees conduct. These elements or
indicators comprise the so-called "four-fold" test of employment relationship. Macasios relationship
with David satisfies this test.
First, David engaged the services of Macasio, thus satisfying the element of "selection and engagement
of the employee." David categorically confirmed this fact when, in his "Sinumpaang Salaysay," he stated
that "nag apply po siya sa akin at kinuha ko siya na chopper[.]"39 Also, Solano and Antonio stated in
their "Pinagsamang Sinumpaang Salaysay"40 that "[k]ami po ay nagtratrabaho sa Yiels xxx na pag-aari ni
Ariel David bilang butcher" and "kilalanamin si xxx Macasio na isa ring butcher xxx ni xxx David at
kasama namin siya sa aming trabaho."

Second, David paid Macasios wages.Both David and Macasio categorically stated in their respective
pleadings before the lower tribunals and even before this Court that the former had been paying the
latter 700.00 each day after the latter had finished the days task. Solano and Antonio also confirmed
this fact of wage payment in their "Pinagsamang Sinumpaang Salaysay."41 This satisfies the element of
"payment of wages."

Third, David had been setting the day and time when Macasio should report for work. This power to
determine the work schedule obviously implies power of control. By having the power to control
Macasios work schedule, David could regulate Macasios work and could even refuse to give him any
assignment, thereby effectively dismissing him.

And fourth, David had the right and power to control and supervise Macasios work as to the means and
methods of performing it. In addition to setting the day and time when Macasio should report for work,
the established facts show that David rents the place where Macasio had been performing his tasks.
Moreover, Macasio would leave the workplace only after he had finished chopping all of the hog meats
given to him for the days task. Also, David would still engage Macasios services and have him report for
work even during the days when only few hogs were delivered for butchering.

Under this overall setup, all those working for David, including Macasio, could naturally be expected to
observe certain rules and requirements and David would necessarily exercise some degree of control as
the chopping of the hog meats would be subject to his specifications. Also, since Macasio performed his
tasks at Davids workplace, David could easily exercise control and supervision over the former.
Accordingly, whether or not David actually exercised this right or power to control is beside the point as
the law simply requires the existence of this power to control 4243 or, as in this case, the existence of
the right and opportunity to control and supervise Macasio.44
In sum, the totality of the surrounding circumstances of the present case sufficiently points to an
employer-employee relationship existing between David and Macasio.

Macasio is engaged on "pakyaw" or task basis

At this point, we note that all three tribunals the LA, the NLRC and the CA found that Macasio was
engaged or paid on "pakyaw" or task basis. This factual finding binds the Court under the rule that
factual findings of labor tribunals when supported by the established facts and in accord with the laws,
especially when affirmed by the CA, is binding on this Court.

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

payment, is the non-consideration of the time spent in working. In a task-basis work, the emphasis is on
the task itself, in the sense that payment is reckoned in terms of completion of the work, not in terms of
the number of time spent in the completion of work.45 Once the work or task is completed, the worker
receives a fixed amount as wage, without regard to the standard measurements of time generally used
in pay computation.

In Macasios 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 Davids employee, albeit engaged on
"pakyaw" or task basis.

As an employee of David paid on pakyaw or task basis, we now go to the core issue of whether Macasio
is entitled to holiday, 13th month, and SIL pay.

On the issue of Macasios entitlement to holiday, SIL and 13th month pay
The LA dismissed Macasios claims pursuant to Article 94 of the Labor Code in relation to Section 1, Rule
IV of the IRR of the Labor Code, and Article 95 of the Labor Code, as well as Presidential Decree (PD) No.
851. The NLRC, on the other hand, relied on Article 82 of the Labor Code and the Rules and Regulations
Implementing PD No. 851. Uniformly, these provisions exempt workers paid on "pakyaw" or task basis
from the coverage of holiday, SIL and 13th month pay.

In reversing the labor tribunals rulings, the CA similarly relied on these provisions, as well as on Section
1, Rule V of the IRR of the Labor Code and the Courts ruling in Serrano v. Severino Santos Transit.46
These labor law provisions, when read together with the Serrano ruling, exempt those engaged on
"pakyaw" or task basis only if they qualify as "field personnel."

In other words, what we have before us is largely a question of law regarding the correct interpretation
of these labor code provisions and the implementing rules; although, to conclude that the worker is
exempted or covered depends on the facts and in this sense, is a question of fact: first, whether Macasio
is a "field personnel"; and second, whether those engaged on "pakyaw" or task basis, but who are not
"field personnel," are exempted from the coverage of holiday, SIL and 13th month pay.

To put our discussion within the perspective of a Rule 45 petition for review of a CA decision rendered
under Rule 65 and framed in question form, the legal question is whether the CA correctly ruled that it
was grave abuse of discretion on the part of the NLRC to deny Macasios monetary claims simply
because he is paid on a non-time basis without determining whether he is a field personnel or not.

To resolve these issues, we need tore-visit the provisions involved.

Provisions governing SIL and holiday pay

Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of the Labor
Code - provisions governing working conditions and rest periods.

Art. 82. Coverage. The provisions of [Title I] shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers who are paid by results as determined
by the Secretary of Labor in appropriate regulations.

xxxx

"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away
from the principal place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty. [emphases and underscores ours]

Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor Code) and
SIL pay (under Article 95 of the Labor Code). Under Article 82,"field personnel" on one hand and
"workers who are paid by results" on the other hand, are not covered by the Title I provisions. The
wordings of Article82 of the Labor Code additionally categorize workers "paid by results" and "field
personnel" as separate and distinct types of employees who are exempted from the Title I provisions of
the Labor Code.

The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the IRR47 reads:

Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than (10) workers[.]
[emphasis ours]

xxxx

SECTION 1. Coverage. This Rule shall apply to all employees except:

xxxx
(e)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.
[emphases ours]

On the other hand, Article 95 of the Labor Code and its corresponding provision in the IRR48 pertinently
provides:

Art. 95. Right to service incentive. (a) Every employee who has rendered at least one year of service shall
be entitled to a yearly service incentive leave of five days with pay.

(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days and those employed in establishments regularly
employing less than ten employees or in establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the viability or financial condition of such
establishment. [emphases ours]

xxxx

Section 1. Coverage. This rule shall apply to all employees except:

xxxx

(e) Field personnel and other employees whose 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. [emphasis
ours]

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 the exemption. 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 or contract 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,
these employees are altogether merged into one classification of exempted employees.

Because of this difference, it may be argued that the Labor Code may be interpreted to mean that those
who are engaged on task basis, per se, are excluded from the SIL and holiday payment since this is what
the Labor Code provisions, in contrast with the IRR, strongly suggest. The arguable interpretation of this
rule may be conceded to be within the discretion granted to the LA and NLRC as the quasi-judicial bodies
with expertise on labor matters.

However, as early as 1987 in the case of Cebu Institute of Technology v. Ople49 the phrase "those who
are engaged on task or contract basis" in the rule has already been interpreted to mean as follows:

[the phrase] should however, be related with "field personnel" applying the rule on ejusdem generis
that general and unlimited terms are restrained and limited by the particular terms that they follow xxx
Clearly, petitioner's teaching personnel cannot be deemed field personnel which refers "to non-
agricultural employees who regularly perform their duties away from the principal place of business or
branch office of the employer and whose actual hours of work in the field cannot be determined with
reasonable certainty. [Par. 3, Article 82, Labor Code of the Philippines]. Petitioner's claim that private
respondents are not entitled to the service incentive leave benefit cannot therefore be sustained.

In short, the payment of an employee on task or pakyaw basis alone is insufficient to exclude one from
the coverage of SIL and holiday 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 Article 82 from the coverage of holiday and
SIL pay. This is the only reasonable interpretation since the determination of excluded workers who are
paid by results from the coverage of Title I is "determined by the Secretary of Labor in appropriate
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 been delimited by the Implementing Rules and Regulations 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 separate
classification of employees to which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under the Labor Code as those
"whose actual hours of work in the field cannot 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 terms are 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 Macasios petition.

In Serrano, the Court, applying the rule on ejusdem generis50 declared that "employees engaged on
task or contract basis xxx are not automatically exempted from the grant of service incentive leave,
unless, they fall under the classification of field personnel."51 The Court explained that the phrase
"including those who are engaged on task or contract basis, purely commission basis" found in Section
1(d), Rule V of Book III of the IRR should not be understood as a separate classification of employees to
which SIL shall not be granted. Rather, as with its preceding phrase - "other employees whose
performance is unsupervised by the employer" - the phrase "including those who are engaged on task or
contract basis" serves to amplify the interpretation of the Labor Code definition of "field personnel" as
those "whose actual hours of work in the field cannot be determined with reasonable certainty."

In contrast and in clear departure from settled case law, the LA and the NLRC still interpreted the Labor
Code provisions and the IRR as exempting an employee from the coverage of Title I of the Labor Code
based simply and solely on the mode of payment of an employee. The NLRCs utter disregard of this
consistent jurisprudential ruling is a clear act of grave abuse of discretion.52 In other words, by
dismissing Macasios complaint without considering whether Macasio was a "field personnel" or not, the
NLRC proceeded based on a significantly incomplete consideration of the case. This action clearly
smacks of grave abuse of discretion.
Entitlement to holiday pay

Evidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the NLRC had only taken
counsel from Serrano and earlier cases, they would have correctly reached a similar conclusion
regarding the payment of holiday pay since the rule exempting "field personnel" from the grant of
holiday pay is identically worded with the rule exempting "field personnel" from the grant of SIL pay. To
be clear, the phrase "employees engaged on task or contract basis "found in the IRR on both SIL pay and
holiday pay should be read together with the exemption of "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 workers 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 Article 94 (holiday pay) and Article95 (SIL pay) of 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.

Macasio does not fall under the classification of "field personnel"

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 CAs finding in this regard is supported by the
established facts of this case: first, Macasio regularly performed his duties at Davids 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 was engaged on
"pakyaw" or task basis.

Not being a "field personnel," we find the CA to be legally correct when it reversed the NLRCs ruling
dismissing Macasios complaint for holiday and SIL pay for having been rendered with grave abuse of
discretion.

Entitlement to 13th month pay

With respect to the payment of 13th month pay however, we find that the CA legally erred in finding
that the NLRC gravely abused its discretion in denying this benefit to Macasio.1wphi1

The governing law on 13th month pay is PD No. 851.53

As with holiday and SIL pay, 13th month pay benefits generally cover all employees; an employee must
be one of those expressly enumerated to be exempted. Section 3 of the Rules and Regulations
Implementing P.D. No. 85154 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"55 are exempted.

Note that 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.

WHEREFORE, in light of these considerations, we hereby PARTIALLY GRANT the petition insofar as the
payment of 13th month pay to respondent is concerned. In all other aspects, we AFFIRM the decision
dated November 22, 2010 and the resolution dated January 31, 2011 of the Court of Appeals in CA-G.R.
SP No. 116003.

SO ORDERED.

8. Paguio v. National Labor Relations Commission, G.R. No. 147816, [May 9, 2003]

On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an
agreement with petitioner Efren P. Paguio, appointing the latter to be an account executive of the
firm.[1] Again, petitioner was to solicit advertisements for "The Manila Times," a newspaper of general
circulation, published by respondent company. Petitioner, for his efforts, was to receive compensation
consisting of a 15% commission on direct advertisements less withholding tax and a 10% commission on
agency advertisements based on gross revenues less agency commission and the corresponding
withholding tax. The commissions, released every fifteen days of each month, were to be given to
petitioner only after the clients would have paid for the advertisements. Apart from commissions,
petitioner was also entitled to a monthly allowance of P2,000.00 as long as he met the P30,000.00-
monthly quota. Basically, the contentious points raised by the parties had something to do with the
following stipulations of the agreement; viz:

12. You are not an employee of the Metromedia Times Corporation nor does the company have any
obligations towards anyone you may employ, nor any responsibility for your operating expenses or for
any liability you may incur. The only rights and obligations between us are those set forth in this
agreement. This agreement cannot be amended or modified in any way except with the duly authorized
consent in writing of both parties.

13. Either party may terminate this agreement at any time by giving written notice to the other, thirty
(30) days prior to effectivity of termination.[2]

On 15 August 1992, barely two months after the renewal of his contract, petitioner received the
following notice from respondent firm -

Dear Mr. Paguio,

Please be advised of our decision to terminate your services as Account Executive of Manila Times
effective September 30, 1992.

This is in accordance with our contract signed last July 1, 1992.[3]

Apart from vague allegations of misconduct on which he was not given the opportunity to defend
himself, i.e., pirating clients from his co-executives and failing to produce results, no definite cause for
petitioners termination was given. Aggrieved, petitioner filed a case before the labor arbiter, asking that
his dismissal be declared unlawful and that his reinstatement, with entitlement to backwages without
loss of seniority rights, be ordered. Petitioner also prayed that respondent company officials be held
accountable for acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00
exemplary damages.
In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any
agreement with petitioner outside of the contract of services under Articles 1642 and 1644 of the Civil
Code of the Philippines.[4] Asserting their right to terminate the contract with petitioner, respondents
pointed to the last provision thereof stating that both parties could opt to end the contract provided
that either party would serve, thirty days prior to the intended date of termination, the corresponding
notice to the other.

The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered respondent
Metromedia Times Corporation and its officers to reinstate petitioner to his former position, without
loss of seniority rights, and to pay him his commissions and other remuneration accruing from the date
of dismissal on 15 August 1992 up until his reinstatement. He likewise adjudged that Liberato I. Gomez,
general manager of respondent corporation, be held liable to petitioner for moral damages in the
amount of P20,000.00.

On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the labor arbiter and
declared the contractual relationship between the parties as being for a fixed-term employment. The
NLRC declared a fixed-term employment to be lawful as long as it was agreed upon knowingly and
voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon
the worker and absent any other circumstances vitiating his consent."[5] The finding of the NLRC was
primarily hinged on the assumption that petitioner, on account of his educated stature, having indeed
personally prepared his pleadings without the aid of counsel, was an unlikely victim of a lopsided
contract. Rejecting the assertion of petitioner that he was a regular employee, the NLRC held: "The
decisive determinant would not be the activities that the employee (was) called upon to perform but
rather, the day certain agreed upon by the parties for the commencement and termination of their
employment relationship, a day certain being understood to be that which (would) necessarily come,
although it (might) not be known when."[6]

Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in toto the findings
of the commission. In his petition for review on certiorari, petitioner raised the following issues for
resolution:

WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENTS COMPANY IS FOR A FIXED
PERIOD.

WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL.

WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND MORAL DAMAGES.[7]

The crux of the matter would entail the determination of the nature of contractual relationship between
petitioner and respondent company - was it or was it not one of 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.[8] 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.[9]

An indicum of regular employment, rightly taken into account by the labor arbiter, was the reservation
by respondent Metromedia Times Corporation not only of the right to control the results to be achieved
but likewise the manner and the means used in reaching that end.[10] Metromedia Times Corporation
exercised such control by requiring petitioner, among other things, to submit a daily sales activity report
and also a monthly sales report as well. Various solicitation letters would indeed show that Robina
Gokongwei, company president, Alda Iglesia, the advertising manager, and Frederick Go, the advertising
director, directed and monitored the sales activities of petitioner.

The Labor Code, in Article 280 thereof, provides:

ART. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed
for a specific project or undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the proceeding paragraph: Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity exists.

Thus defined, a regular employee is one who is engaged to perform activities which are necessary and
desirable in the usual business or trade of the employer as against those which are undertaken for a
specific project or are seasonal. Even in these latter cases, where such person has rendered at least one
year of service, regardless of the nature of the activity performed or of whether it is continuous or
intermittent, the employment is considered regular as long as the activity exists, it not being
indispensable that he be first issued a regular appointment or be formally declared as such before
acquiring a regular status.[11]

That petitioner performed activities which were necessary and desirable to the business of the
employer, and that the same went on for more than a year, could hardly be denied. Petitioner was an
account executive in soliciting advertisements, clearly necessary and desirable, for the survival and
continued operation of the business of respondent corporation. Robina Gokongwei, its President,
herself admitted that the income generated from paid advertisements was the lifeblood of the
newspaper's existence. Implicitly, respondent corporation recognized petitioners invaluable
contribution to the business when it renewed, not just once but five times, its contract with petitioner.

Respondent company cannot seek refuge under the terms of the agreement it has entered into with
petitioner. 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
petitioner has been called upon to perform.[12] 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.[13] The sheer
inequality that characterizes employer-employee relations, where the scales generally tip against the
employee, often scarcely provides him real and better options.

The real question that should thus be posed is whether or not petitioner has been justly dismissed from
service. A lawful dismissal must meet both substantive and procedural requirements; in fine, the
dismissal must be for a just or authorized cause and must comply with the rudimentary due process of
notice and hearing. It is not shown that respondent company has fully bothered itself with either of
these requirements in terminating the services of petitioner. The notice of termination recites no valid
or just cause for the dismissal of petitioner nor does it appear that he has been given an opportunity to
be heard in his defense.

The evidence, however, found by the appellate court is wanting that would indicate bad faith or malice
on the part of respondents, particularly by respondent Liberato I. Gomez, and the award of moral
damages must thus be deleted.

WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in C.A. G.R. SP No.
527773 and that of the National Labor Relations Commission are hereby SET ASIDE and that of the Labor
Arbiter is REINSTATED except with respect to the P20,000.00 moral damages adjudged against
respondent Liberato I. Gomez which award is deleted.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

VII. Overtime pay

2. (Ultra Villa Food Haus v. Geniston, G.R. No. 120473, [June 23, 1999]

This special civil action for certiorari stems from a complaint for illegal dismissal filed by Renato
Geniston, private respondent herein, against the Ultra Villa Food Haus restaurant and/or its alleged
owner Rosie Tio. Private respondent alleged that he was employed as a do it all guy, acting as waiter,
driver, and maintenance man, in said restaurant. His employment therein spanned from March 1, 1989
until he was dismissed on May 13, 1992. For his services, private respondent was paid P60.00 in 1989,
P70.00 in 1990, P80.00 in 1991 and P90.00 when he was dismissed in 1992.

During the elections of May 11, 1992, private respondent acted as a Poll Watcher for the National Union
of Christian Democrats. The counting of votes lasted until 3:00 p.m. the next day, May 12. Private
respondent did not report for work on both days on account of his poll-watching.

Upon arriving home on May 12, private respondent discovered that Tio had phoned his mother that
morning. Tio allegedly gave his mother an inscrutable verbal lashing, and informed the latter that
private respondent was dismissed from work. On May 13, 1992, private respondent went to Tios
residence to plead his case only to be subjected to a brow beating by Tio who even attempted to force
him to sign a resignation letter.

Private respondent prayed that the Labor Arbiter order petitioner Tio to pay him overtime pay, premium
pay, holiday pay, service incentive leave pay, salary differential and 13th month pay. He likewise prayed
for reinstatement plus backwages or, in the alternative, separation pay, as well as moral damages,
exemplary damages and attorneys fees.

Petitioner Rosie Tio, on the other hand, maintained that private respondent was her personal driver, not
an employee of the Ultra Villa Food Haus. As petitioners personal driver, private respondent was
required to report for work at 7:00 a.m. to drive petitioner to Mandaue City where petitioner worked as
the Manager of the CFC Corporation. Accordingly, private respondent was paid P65.00 a day in 1989
which was gradually increased to P70.00 then to P90.00. Private respondent was likewise given free
meals as well as 13th month pay at the end of the year. Petitioner denied dismissing private respondent
whom she claimed abandoned his job.

Though well aware that May 12, 1992 was a holiday, petitioner called up private respondent that day to
ask him to report for work as she had some important matters to attend to. Private respondents wife,
however, coldly told petitioner that private respondent was helping in the counting of ballots. Petitioner
was thus forced to hire another driver to replace private respondent. Private respondent came back a
week after but only to collect his salary.

The Labor Arbiter found that private respondent was indeed petitioners personal driver. Private
respondents claim that he was an employee of the Ultra Villa Food Haus was deemed by the Labor
Arbiter to be a mere afterthought, considering that:

x x x. In his verified complaint, complainant states that the nature of his work position was a driver. If it
[were] true that he was made to perform these functions as a waiter, it would be incongruous with the
position of a driver. The nature of the position of a waiter is one that requires him to be at the place of
work at all times while that of a driver, complainant had to be away from the restaurant at all times. At
any rate, an admission is made that he was only a personal driver of the individual respondent.[1]

The admission referred to above is contained in the mandatory conference order issued by the Labor
Arbiter on January 10, 1994, to wit:
Also on this date, the following matters were threshed out:

That complainant started his employment with the individual respondent as the latters personal driver
on March 1, 1989 and the last day of his service was on May 13, 1992;[2]

The Labor Arbiter concluded that private respondent, being a personal driver, was not entitled to
overtime pay, premium pay, service incentive leave pay and 13th month pay. Private respondents claim
for salary differential was likewise denied since he received a daily salary of P90.00 which is more than
that set by law.[3]

Neither was private respondent awarded separation pay. While the hiring of a substitute driver
amounted to a constructive dismissal, the Labor Arbiter ruled that the same was justified in view of
petitioners dire need for the services of a driver.

The Labor Arbiter, however, noted that petitioner failed to comply with procedural due process in
dismissing private respondent and thus ordered the former to indemnify the latter the amount of
P1,000.00. The dispositive portion of the Labor Arbiter's decision states:

WHEREFORE, in the light of the foregoing premises, judgment is rendered finding complainant's
dismissal for a valid cause. Complaint is hereby ordered dismissed. However, respondent is directed to
indemnify complainant the amount of P1,000.00 for failure to observe the due process requirement
before dismissing the complainant.

SO ORDERED.[4]

Both parties appealed the decision of the Labor Arbiter to the National Labor Relations Commission
(NLRC).

Petitioner questioned the Labor Arbiters decision insofar as it required her to pay private respondent
the amount of P1,000.00. Petitioner maintained that private respondent abandoned his job, and was
not constructively dismissed as found by the Labor Arbiter. Petitioner concluded that she could not be
held liable for failing to observe procedural due process in dismissing private respondent, there being no
dismissal to speak of.

On the other hand, private respondent denied admitting that he was employed as petitioners personal
driver. He alleged that what was admitted during the mandatory conference was that he was made to
drive for the manager and his wife (petitioner) on top of his other duties which were necessary and
desirable to petitioners business. Private respondent likewise maintained his claim that he was unjustly
dismissed, contending that his absence on May 11 and 12, 1992 did not warrant dismissal since those
days were official holidays.

The NLRC found private respondents arguments meritorious, and ordered petitioner to reinstate private
respondent and to pay him the sum of P45,311.55 in backwages, overtime pay, premium pay for holiday
and rest days, 13th month pay, and service incentive pay. Thus:

WHEREFORE, the respondents are hereby ordered to reinstate the complainant with backwages fixed
for 6 months as he delayed in filing this case.

The respondents are likewise ordered to pay the complainant his overtime pay, holiday pay, premium
pay for holiday and rest day, 13th month pay, and service incentive leave covering the period from
October 28, 1990 to May 10, 1992.

Complainant's backwages up to the time of this Decision and his other monetary claims as computed by
Nazarina C. Cabahug, Fiscal Examiner II of the Commission are the following:

x x x.

SUMMARY

1) Backwages P 14, 130.00

2) Overtime Pay P 22, 060.00

3) Holiday Pay; Premium Pay for Holiday P 1,554.00

4) Premium Pay for Rest Day P 1,683.00

5) 13th Month Pay P 5,484.55

6) Service Incentive Leave P 400.00

TOTAL P 45,311.55

SO ORDERED.[5]

Acting on the parties respective motions for reconsideration, the NLRC granted private respondent
separation pay in lieu of reinstatement on account of the establishments closure but denied his prayer
for moral, actual and exemplary damages, and attorneys fees. The NLRC also denied petitioners motion,
reiterating its earlier ruling that private respondent was an employee of the Ultra Villa Food Haus.

Two issues are thus presented before this Court:

(1) Whether private respondent was an employee of the Ultra Villa Food Haus or the personal driver of
petitioner; and

(2) Whether private respondent was illegally dismissed from employment.

I
The Solicitor General, in his Manifestation and Motion In Lieu of Comment, agrees with petitioners
submission that private respondent was her personal driver.[6]

We find that private respondent was indeed the personal driver of petitioner, and not an employee of
the Ultra Villa Food Haus. There is substantial evidence to support such conclusion, namely:

(1) Private respondents admission during the mandatory conference that he was petitioners personal
driver.[7]

(2) Copies of the Ultra Villa Food Haus payroll which do not contain private respondents name.[8]

(3) Affidavits of Ultra Villa Food Haus employees attesting that private respondent was never an
employee of said establishment.[9]

(4) Petitioner Tios undisputed allegation that she works as the branch manager of the CFC Corporation
whose office is located in Mandaue City. This would support the Labor Arbiters observation that private
respondents position as driver would be incongruous with his functions as a waiter of Ultra Villa Food
Haus.[10]

(5) The Joint Affidavit of the warehouseman and warehouse checker of the CFC Corporation stating that:

Renato Geniston usually drive[s] Mrs. Tio from her residence to the office. Thereafter, Mr. Geniston will
wait for Mrs. Tio in her car. Most of the time, Renato Geniston slept in the car of Mrs. Tio and will be
awakened only when the latter will leave the office for lunch.

Mr. Geniston will again drive Mrs. Tio to the office at around 2:00 o'clock in the afternoon and
thereafter the former will again wait for Mrs. Tio at the latter's car until Mrs. Tio will again leave the
office to make her rounds at our branch office at the downtown area.[11]
In contrast, private respondent has not presented any evidence other than his self-serving allegation to
show that he was employed in the Ultra Villa Food Haus. On this issue, therefore, the evidence weighs
heavily in petitioners favor. The Labor Arbiter thus correctly ruled that private respondent was
petitioners personal driver and not an employee of the subject establishment.

Accordingly, the terms and conditions of private respondents employment are governed by Chapter III,
Title III, Book III of the Labor Code[12] as well as by the pertinent provisions of the Civil Code.[13] Thus,
Article 141 of the Labor Code provides:

Art. 141. Coverage. - This Chapter shall apply to all persons rendering services in households for
compensation.

Domestic or household service shall mean services in the employers home which is usually necessary or
desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort
and convenience of the members of the employers household, including services of family drivers.
(Underscoring supplied.)

Chapter III, Title III, Book III, however, is silent on the grant of overtime pay, holiday pay, premium pay
and service incentive leave to those engaged in the domestic or household service.

Moreover, the specific provisions mandating these benefits are found in Book III, Title I of the Labor
Code,[14] and Article 82, which defines the scope of the application of these provisions, expressly
excludes domestic helpers from its coverage:

Art. 82. Coverage. - The provision of this title shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers who are paid by results as determined
by the Secretary of Labor in appropriate regulations. (Underscoring supplied.)

The limitations set out in the above article are echoed in Book III of the Omnibus Rules Implementing
the Labor Code.[15]
Clearly then, petitioner is not obliged by law to grant private respondent any of these benefits.

Employing the same line of analysis, it would seem that private respondent is not entitled to13 month
pay. The Revised Guidelines on the Implementation of the 13th Month Pay Law also excludes employers
of household helpers from the coverage of Presidential Decree No. 851, thus:

2. Exempted Employers

The following employers are still not covered by P.D. No. 851:

a. x x x;

b. Employers of household helpers x x x;

c. x x x,

d. x x x.

Nevertheless, we deem it just to award private respondent 13th month pay in view of petitioners
practice of according private respondent such benefit. Indeed, petitioner admitted that she gave private
respondent 13th month pay every December.[16]

II

We come now to the issue of private respondents dismissal. Petitioner submits that private respondent
abandoned his job, preferring to work as an election watcher instead.
We do not agree. To constitute abandonment, two requisites must concur: (1) the failure to report to
work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-
employee relationship as manifested by some overt acts, with the second requisite as the more
determinative factor.[17] The burden of proving abandonment as a just cause for dismissal is on the
employer.[18] Petitioner failed to discharge this burden. The only evidence adduced by petitioner to
prove abandonment is her affidavit, the pertinent portion of which states:

On May 12, 1992, a day after the election, complainant was again absent. Since it was a holiday and I
have no work on that day, I just did not bother to call up complainant. Although the following day was
still a holiday, I called up complainant to inform him that he has to report for work as I will report to the
office to do some important things there. Unfortunately, complainants wife instead coldly told me that
complainant was fetched by the latters uncle to help in the counting of ballots. I then told his wife to let
complainant choose between his job with me or that of election watcher. The following day, I was
informed again by complainants wife that he is no longer interested to work with me as he is earning
more as election watcher. I was really disenchanted to know his respon[se] as all of a sudden, I have no
driver to drive me to my place of work. Nevertheless, I have no other choice to accept it as I can not also
forced him to continue working with me. Hence, I was really inconvenience for about a week due to the
absence of a driver.

Complainant then collected his salary after one weeks absence.[19]

It is quite unbelievable that private respondent would leave a stable and relatively well paying job as
petitioners family driver to work as an election watcher. Though the latter may pay more in a day,
elections in this country are so far in between that it is unlikely that any person would abandon his job
to embark on a career as an election watcher, the functions of which are seasonal and temporary in
nature. Consequently, we do not find private respondent to have abandoned his job. His dismissal from
petitioners employ being unjust, petitioner is entitled to an indemnity under Article 149 of the Labor
Code:[20]

Art. 149. Indemnity for unjust termination of services. If the period of household service is fixed, neither
the employer nor the househelper may terminate the contract before the expiration of the term, except
for a just cause. If the househelper is unjustly dismissed, he or she shall be paid the compensation
already earned plus that for fifteen (15) days by way of indemnity.
If the househelper leaves without justifiable reason he or she shall forfeit any unpaid salary due him or
her not exceeding fifteen (15) days. (Underscoring supplied.)

Petitioner likewise concedes that she failed to comply with due process in dismissing private respondent
since private respondent had already abandoned his job.[21] As we have shown earlier however,
petitioners theory of abandonment has no leg to stand on, and with it, her attempts to justify her failure
to accord due process must also fall. Accordingly, private respondent is ordered to pay private
respondent the sum of P1,000.00.[22]

WHEREFORE, the decision of the National Labor Relations Commission is hereby REVERSED and a new
one entered declaring:

(1) Private respondent Renato Geniston, the personal driver of petitioner Rosie Tio, and not an
employee of the Ultra Villa Food Haus;

(2) The dismissal of private respondent to be without a valid cause and without due process.
Accordingly, petitioner Rosie Tio is ordered to pay private respondent:

(a) Thirteenth Month Pay to be computed in accordance with the Rules and Regulations, and the
Revised Guidelines, Implementing Presidential Decree No. 851;

(b) Indemnity equal to 15 days of his salary as personal driver at the time of his unjust dismissal; and

(c) Indemnity in the sum of P1,000.00.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Melo, Pardo, and Ynares-Santiago, JJ., concur.
XII. Wages

Our Haus Realty Development Corp. v. Parian, G.R. No. 204651, [August 6, 2014])

We resolve in this petition for review on certiorari1 the challenge to the May 7, 2012 decision2 and the
November 27, 2012 resolution3 (assailed CA rulings) of the Court of Appeals (CA) in CA-G.R. SP No.
123273. These assailed CA rulings affirmed the July 20, 2011 decision4 and the December 2, 2011
resolution5 (NLRC rulings) of the National Labor Relations Commission (NLRC) in NLRC LAC No.
02-000489-11 (NLRC NCR Case No. 06-08544-10). The NLRC rulings in turn reversed and set
aside the December 10, 2010 decision6 of the labor arbiter (LA).

Factual Antecedents

Respondents Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and Bernardo
Tenederowere all laborers working for petitioner Our Haus Realty Development Corporation (Our
Haus), a company engaged in the construction business.The respondents respective employment
records and daily wage rates from 2007 to 2010 are summarized in the table7 below:

Years of Daily
Name Date Hired Year and Place of Assignment
Service Rate
Alexander M. October
10 years 2007-2010- Quezon City 353.50
Parian 1999
January 2008- Quezon City 2009- Antipolo
Jay C. Erinco 10 years 342.00
2000 2010- Quezon City
Alexander R.
2005 5 years 2007-2010- Quezon City 312.00
Canlas
August 2008- Quezon City 2009- Antipolo
Jerry Q. Sabulao 10 years 342.00
1999 2010- Quezon City
Bernardo N.
1994 16 years 2007-2010- Quezon City 383.50
Tenedero

Sometime in May 2010, Our Haus experienced financial distress. To alleviate its condition, Our Haus
suspended some of its construction projects and asked the affected workers, including the
respondents, to take vacation leaves.8

Eventually, the respondents were asked to report back to work but instead of doing so, they filed
with the LA a complaint for underpayment of their daily wages. They claimed that except for
respondent Bernardo N. Tenedero, their wages were below the minimum rates prescribed in the
following wage orders from 2007 to 2010:

1. Wage Order No. NCR-13, which provides for a daily minimum wage rate of 362.00for the
non-agriculture sector (effective from August 28, 2007 until June 13, 2008); and

2. Wage Order No. NCR-14, which provides for a daily minimum wage rate of 382.00for the
non-agriculture sector (effective from June 14, 2008 until June 30, 2010).

The respondents also alleged thatOur Haus failed to pay them their holiday, service incentive leave
(SIL), 13th month and overtime pays.9
The Labor Arbitration Rulings

Before the LA, Our Haus primarily argued that the respondents wages complied with the laws
minimum requirement. Aside from paying the monetary amount of the respondents wages, Our
Haus also subsidized their meals (3 times a day), and gave them free lodging near the construction
project they were assigned to.10 In determining the total amount of the respondents daily wages, the
value of these benefits should be considered, in line with Article 97(f)11 of the Labor Code.

Our Haus also rejected the respondents other monetary claims for lack of proof that they were
entitled to it.12

On the other hand, the respondents argued that the value of their meals should not be considered in
determining their wages total amount since the requirements set under Section 413 of
DOLE14 Memorandum Circular No. 215were not complied with.

The respondents pointed out that Our Haus never presented any proof that they agreed in writing to
the inclusion of their meals value in their wages.16 Also, Our Haus failed to prove that the value of
the facilities it furnished was fair and reasonable.17 Finally, instead of deducting the maximum
amount of 70% of the value of the meals, Our Haus actually withheld its full value (which was
Php290.00 per week for each employee).18

The LA ruled in favor of Our Haus. He held that if the reasonable values of the board and lodging
would be taken into account, the respondents daily wages would meet the minimum wage rate. 19 As
to the other benefits, the LA found that the respondents were not able to substantiate their claims for
it.20

The respondents appealed the LAs decision to the NLRC, which in turn, reversed it. Citing the case
of Mayon Hotel & Restaurant v. Adana,21 the NLRC noted that the respondents did not authorize Our
Haus in writing to charge the values of their board and lodging to their wages. Thus, the samecannot
be credited.

The NLRC also ruled that the respondents are entitled to their respective proportionate 13th month
payments for the year 2010 and SIL payments for at least three years,immediately preceding May
31, 2010, the date when the respondents leftOur Haus. However, the NLRC sustained the LAs
ruling that the respondents were not entitled to overtime pay since the exact dates and times when
they rendered overtime work had not been proven.22

Our Haus moved for the reconsideration23 of the NLRCs decision and submitted new evidence (the
five kasunduans) to show that the respondents authorized Our Haus in writing to charge the values
of their meals and lodging to their wages.

The NLRC denied Our Haus motion, thus it filed a Rule 65 petition 24 with the CA. In its petition, Our
Haus propounded a new theory. It made a distinction between deduction and charging. A written
authorization is only necessary if the facilitys value will be deducted and will not be needed if it will
merely be charged or included in the computation of wages.25 Our Haus claimed that it did not
actually deduct the values of the meals and housing benefits. It only considered these in computing
the total amount of wages paid to the respondents for purposes of compliance with the minimum
wage law. Hence, the written authorization requirement should not apply.

Our Haus also asserted that the respondents claim for SIL pay should be denied as this was not
included in their pro formacomplaint. Lastly, it questioned the respondentsentitlement to attorneys
fees because they were not represented by a private lawyer but by the Public Attorneys Office
(PAO).

The CAs Ruling

The CA dismissed Our Haus certiorari petition and affirmed the NLRC rulings in toto. It found no real
distinction between deduction and charging,26 and ruled that the legal requirements before any
deduction or charging can be made, apply to both. Our Haus, however, failed to prove that it
complied with any of the requirements laid down in Mabeza v. National Labor Relations
Commission.27 Accordingly, it cannot consider the values of its meal and housing facilities in the
computation of the respondents total wages.

Also, the CA ruled that since the respondents were able to allege non-payment of SIL in their
position paper, and Our Haus, in fact, opposed it in its various pleadings,28 then the NLRC properly
considered it as part of the respondents causes of action. Lastly, the CA affirmed the respondents
entitlement to attorneys fees.29

Our Haus filed a motion for reconsideration but the CA denied its motion, prompting it to file the
present petition for review on certiorari under Rule 45.

The Petition

Our Haus submits that the CA erred in ruling that the legal requirements apply without distinction
whether the facilitys value will be deducted or merely included in the computation of the wages. At
any rate, it complied with the requirements for deductibility of the value of the facilities. First, the five
kasunduans executed by the respondents constitute the written authorization for the inclusion of the
board and lodgings values to their wages. Second, Our Haus only withheld the amount of 290.00
which represents the foods raw value; the weekly cooking cost (cooks wage, LPG, water) at
239.40 per person is a separate expense that Our Haus did not withhold from the respondents
wages.30 This disproves the respondentsclaim that it deducted the full amount of the meals value.

Lastly, the CA erred in ruling that the claim for SIL pay may still be granted though not raised in the
complaint; and that the respondents are entitled to an award of attorneys fees.31

The Case for the Respondents

The respondents prayed for the denial of the petition.32 They maintained that the CA did not err
inruling that the values of the board and lodging cannot be deducted from their wages for failure to
comply with the requirements set by law.33 And though the claim for SIL pay was not included in their
pro forma complaint, they raised their claims in their position paper and Our Haus had the
opportunity to contradict it in its pleadings.34

Finally, under the PAO law, the availment of the PAOs legal services does not exempt its clients
from an award of attorneys fees.35