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A. NATE CASKET MAKER AND/OR ARMANDO & ANELY NATE v. ELIAS V. ARANGO

FACTS:

The owners of A. Nate Casket Maker, the petitioners, employed the respondents as pakyaw workers, paid per job order and provided with free board and lodging. The petitioners proposed an employment agreement to change the pakyaw system to a contractual basis and offer additional benefits. The respondents claimed that they worked long hours without overtime pay or other monetary benefits. They were later made to sign a contract that limited their rights and benefits, and when they refused to sign, their employment was terminated. The respondents filed a complaint for illegal dismissal and non-payment of separation pay, underpayment of wages, non-payment of overtime pay, holiday pay, service incentive leave pay, and 13th month pay. The labor arbiter dismissed the complaint, ruling that the respondents were not terminated and as pakyaw workers, they were not entitled to certain benefits. The NLRC affirmed the labor arbiter's decision, but the Court of Appeals reversed it, finding that the respondents were illegally dismissed and ordering the petitioners to pay backwages, separation pay, and other monetary benefits. The petitioners filed a petition for review on certiorari before the Supreme Court, questioning the illegal dismissal of the respondents.

The main issues were whether the respondents' employment was terminated and whether the respondents, as pakyaw workers, were entitled to certain benefits. The respondents had been reporting to the petitioners since 1998 but filed a complaint with the NLRC in 2016, seeking money claims and protection of their employment status. The petitioners ordered the respondents to their office upon receiving the summons, and instead of settlement, presented the same contract that the respondents had previously refused to sign. The respondents declined to sign again, and were told to go home and not report for work anymore. The petitioners denied both the meeting and dismissal but claimed in their position paper that the employment contract was offered due to the respondents' alleged refusal to report for work because of drinking and quarrels.

ISSUES:

  1. Whether the respondents were illegally dismissed from their employment.

  2. Whether the employment contract entered into by the parties is valid and enforceable.

  3. Whether the respondents are regular employees of the petitioners.

  4. Whether the petitioners violated the respondents' right to security of tenure and constitutional right to due process.

  5. Whether the respondents are entitled to reinstatement and backwages.

  6. Whether the respondents are entitled to reinstatement or separation pay;

  7. Whether the respondents are entitled to backwages and other benefits.

  8. Whether or not the petition for certiorari and prohibition should be dismissed for being filed beyond the reglementary period.

  9. Whether or not the respondent judge gravely abused his discretion in refusing to dismiss the case based on the affidavit of desistance filed by the private complainant.

RULING:

  1. The respondents were illegally dismissed from their employment. The allegations of the respondents and the absence of proof to show that the petitioners conducted an investigation or provided the respondents an opportunity to explain their side with respect to the charges against them lead to the conclusion that the petitioners terminated the respondents' employment. The burden of proving just and valid cause for dismissing an employee rests upon the employer, and the petitioners failed to discharge this burden.

  2. The employment contract entered into by the parties is not valid and enforceable. The terms and conditions in the contract, which stated that the respondents would not be eligible for sick leave pay, vacation leave pay, 13th month pay, and bonuses, contradicted the allegations of the petitioners in their position paper that they offered the contract to the respondents because of their alleged refusal to do their work and that the contract was beneficial to the employees. Employers cannot seek refuge under the terms of an agreement if it is used to deprive the employee of their security of tenure. The law affords protection to the employee and will not allow any attempt to subvert its spirit and intent.

  3. The respondents are considered regular employees of the petitioners. The control test is used to determine whether an employment relationship exists, and in this case, the petitioners exercised control over the respondents in the performance of their work as carpenters, painters, and mascilladors. This control is evident in the instructions given by the petitioners for the steps in making caskets, the requirement for the respondents to list their completed work, and the checking of this work by the petitioners. Thus, despite being compensated on a per-piece basis, the respondents have the status and nature of regular employees.

  4. The petitioners violated the respondents' right to security of tenure and due process. The respondents were terminated without being given a written notice of termination stating the valid or just cause for their dismissal, in violation of Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code. This constitutes an illegal dismissal.

  5. The respondents are entitled to reinstatement and backwages. As regular employees who were unjustly dismissed, they are entitled to reinstatement without loss of seniority rights and other privileges, and to their full backwages, inclusive of allowances and other benefits. Reinstatement and backwages are the appropriate remedies to give meaning and substance to the constitutional right of labor to security of tenure. However, the Court of Appeals correctly awarded separation pay in lieu of reinstatement as it may be granted if reinstatement is no longer practical or in the best interest of the parties.

  6. The respondents are entitled to separation pay in lieu of reinstatement. The Court of Appeals (CA) correctly ruled that the respondents were entitled to reinstatement by reason of their illegal dismissal, but if reinstatement is no longer practicable, separation pay is the appropriate remedy.

  7. The amount of backwages to which each respondent is entitled cannot be fully determined at this time. As the respondents are piece-rate workers, there is a need to determine the varying degrees of production and days worked by each worker. Thus, the issue of backwages should be remanded to the National Labor Relations Commission (NLRC) for proper determination. However, nothing in the decision should impede the award of separation pay to the respondents as previously rendered by the CA.

  8. The respondents are also entitled to holiday pay, 13th month pay, service incentive leave pay, and overtime pay. The Court held that piece-rate workers engaged on a task basis are entitled to these benefits unless they fall under the exemption for "field personnel". In this case, the respondents do not fall under the definition of field personnel, as they regularly performed their duties at the petitioner's place of business, their hours of work could be determined with reasonable certainty, and the petitioners supervised their time and performance. However, the respondents are not entitled to 13th month pay as they are paid on a task basis and the exemption for 13th month pay does not require the worker to be a field personnel.

  9. No, the petition for certiorari and prohibition should not be dismissed for being filed beyond the reglementary period. The Supreme Court held that the petitioner substantially complied with the requisites for the filing of the petition and that the delay in filing was reasonable and justifiable based on the circumstances presented.

  10. Yes, the respondent judge gravely abused his discretion in refusing to dismiss the case based on the affidavit of desistance filed by the private complainant. The Supreme Court held that the private complainant's affidavit of desistance is a ground for the immediate dismissal of the case, and the respondent judge's refusal to do so constitutes grave abuse of discretion.

PRINCIPLES:

  • The burden of proving just and valid cause for dismissing an employee rests upon the employer.

  • Employers cannot use the terms of an agreement to deprive an employee of their security of tenure.

  • The classification of employees as regular, project, seasonal, or casual is determined by the nature of the work performed and the duration of the employment.

  • The control test is used to determine the existence of an employment relationship, where an employer exercises control and supervision over the work performed by the employee.

  • Regular employees are entitled to security of tenure and can only be dismissed for just or authorized causes and after due process.

  • Employees must be served with a written notice of dismissal stating the particular acts or omissions constituting the grounds for dismissal.

  • Unjustly dismissed employees are entitled to reinstatement and backwages, which restore the employee to their position prior to dismissal and compensate them for lost wages.

  • Separation pay in lieu of reinstatement may be granted if reinstatement is no longer practical or in the best interest of the parties.

  • Employees engaged on a task basis or piece-rate workers are entitled to holiday pay, service incentive leave pay, and overtime pay unless they are classified as field personnel.

  • The determination of the amount of backwages to which piece-rate workers are entitled should be left to the NLRC to determine the varying degrees of production and days worked by each worker.

  • Piece-rate workers engaged on a task basis may be awarded separation pay in lieu of reinstatement if reinstatement is no longer practicable.

  • Substantial compliance with the requisites for the filing of a petition may be allowed if the delay is reasonable and justifiable.

  • An affidavit of desistance by the private complainant is a ground for the immediate dismissal of a criminal case.