A. NATE CASKET MAKER AND/OR ARMANDO and ANELY NATE, petitioners, v s .

ELIAS V. ARANGO, EDWIN M. MAPUSAO, JORGE C. CARIÑO, JERMIE MAPUSAO,

[G.R. No. 192282. October 5, 2016.]

FACTS: Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate Casket Maker. They
employed respondents on various dates as carpenters, mascilladors and painters in their casket-making
business from 1998 until their alleged termination in March 2007. Petitioners alleged that respondents
are pakyaw workers who are paid per job order. Respondents are "stay-in" workers with free board and
lodging, but they would "always" drink, quarrel with each other on petty things such that they could not
accomplish the job orders on time. Hence, petitioners would then be compelled to "contract out" to
other workers for the job to be finished.

In February 2007, they met with respondents in order to present a proposed employment
agreement which would change the existing pakyaw system to "contractual basis" and would provide
for vacation leave and sick leave pay and other benefits given to regular employees. Petitioners alleged
that the proposed employment agreement would be more beneficial to respondents. Respondents
alleged that they worked from Monday to Saturday, from 7:00a.m. to 10:00 p.m., with no overtime pay
and any monetary benefits despite having claimed for such. On March 15, 2007, they were called by
petitioners and were made to sign a Contract of Employment with the following terms and conditions:
they shall be working on contractual basis for a period of five months, renewal of employment contract
after such period shall be on a case-to-case basis or subject to respondents' efficiency and performance,
petitioners shall reserve the right to terminate their employment should their performance fall below
expectations or if the conditions under which they were employed no longer exist, their wages shall be
on a piece-rate basis, in the performance of their tasks, they shall be obliged to strictly follow their work
schedules, they shall not be eligible to avail of sick leave or vacation leave, nor receive 13th month pay
and/or bonuses, or any other benefits given to a regular employee.

Respondents then alleged that when they were adamant and eventually refused to sign the
contract, petitioners told them to go home because their employment has been terminated.
Respondents filed a Complaint for illegal dismissal and non-payment of separation pay against
petitioners. They amended the complaint to include claims for underpayment of wages, non-payment of
overtime pay, holiday pay, 5-day service incentive leave pay and 13th month pay.
Labor Arbiter: Dismissed complaint for lack of merit.
NLRC: Affirmed the decision of the CA.

ISSUE: Whether or not respondents who are pakyaw workers and are considered regular employees are
entitled to overtime pay, holiday pay, SIL and 13th month pay.

HELD: Yes. There is no dispute that the tasks performed by respondents as carpenters, painters, and
mascilladors were necessary and desirable in the usual business of petitioners who are engaged in the
manufacture and selling of caskets. Respondents have also worked for petitioners for quite a long period
of time, commencing on various dates from 1998 to 2007. In addition, the power of control of
petitioners over respondents is clearly present in this case. Respondents follow the steps in making a
casket as instructed by the petitioners. They had their own notebooks where they listed the work
completed with their signature and the date finished. The same would be checked by petitioners as
basis for the compensation for the day. Thus, petitioners wielded control over the respondents in the
discharge of their work.

It should be remembered that the control test merely calls for the existence of the right to
control, and not necessarily the exercise thereof. It is not essential that the employer actually supervises
the performance of duties by the employee. It is enough that the former has a right to wield the power.
Hence, pakyaw workers are considered regular employees for as long as their employers exercise
control over them. Thus, while respondents’ mode of compensation was on a per-piece basis, the status
and nature of their employment was that of regular employees.

Workers engaged on pakyaw or task basis are entitled to holiday and service incentive leave pay
provided that they are not field personnel. In short, in determining whether workers engaged on
“pakyaw” or task basis” is entitled to holiday and SIL pay, the presence (or absence) of employer
supervision as regards the worker’s time and performance is the key: if the worker is simply engaged on
“pakyaw” or task basis, then the general rule is that he is entitled to a holiday pay and SIL pay unless
exempted from the exceptions specifically provided under the Labor Code. However, if the worker
engaged on pakyaw or task basis also falls within the meaning of “field personnel” under the law, then
he is not entitled to these monetary benefits.

Respondents do not fall under the definition of “field personnel”. First, respondents regularly
performed their duties at petitioners’ place of business; second, their actual hours of work could be
determined with reasonable certainty; and third, petitioners supervised their time and performance of
their duties. Since respondents cannot be considered as “field personnel,” then they are not exempted
from the grant of holiday and SIL pay even as they were engaged on pakyaw or task basis.

Contrary to petitioner’s claims, it is specifically stated in the employment agreement that during
the period of employment, respondents would not be eligible to earn or receive any sick leave pay,
vacation leave pay, or any other benefits given to regular employees such as 13th month pay and
bonuses.

Employers cannot seek refuge under whatever terms of the agreement they had entered into
with their employees. The law, in defining their contractual relationship, does so, not necessarily or
exclusively upon the terms of their written or oral contract, but also on the basis of the nature of the
work of employees who had been called upon to perform. The law affords protection to an employee,
and it will not countenance any attempt to subvert its spirit and intent. A stipulation in an agreement
can be ignored as and when it is utilized to deprive the employee of his security of tenure.