Hacienda Leddy/Ricardo Gamboa, Jr. vs. Paquita Villegas

An employee who has rendered more than twenty years of service — even in odd jobs repeatedly re-hired over a long period — is a regular employee by operation of law under Article 280 of the Labor Code, and payment on a piece-rate basis does not negate regular employment. The employer bears the burden of proving a just and valid cause for termination, and failure to discharge that burden renders the dismissal illegal.

Hacienda Leddy was a sugar farm originally named Hacienda Teresa, owned by Ricardo Gamboa Sr. and later succeeded by his son, Ricardo Gamboa Jr. Villegas had been employed at the hacienda since 1960 and, by act of generosity and compassion, was allowed to erect his house on a small portion of the hacienda's land during his employment. This long-standing farm employment, coupled with the residential privilege granted to the worker, frames the dispute over whether Villegas was a regular employee entitled to security of tenure.

Villegas had been employed at Hacienda Leddy since 1960, when the sugar farm was still known as Hacienda Teresa. The hacienda was owned by Ricardo Gamboa Sr., and upon his death it was succeeded by his son, Ricardo Gamboa Jr. Throughout his employment, Villegas performed sugar farming work eight hours a day, six days a week, continuously for not less than 302 days a year, for which he was paid ₱45.00 per day. He likewise worked in Gamboa's coconut lumber business, where he received ₱34.00 a day for eight hours of work. By act of generosity and compassion, Gamboa allowed Villegas to erect his house on a small portion of the hacienda's land during his employment.

On June 9, 1993, Gamboa went to Villegas's house and told him that his services were no longer needed, without prior notice or valid reason. Villegas thereupon filed a complaint for illegal dismissal.

Gamboa denied having dismissed Villegas but admitted in his earlier position paper that Villegas had indeed worked on the farm owned by his father, doing casual and odd jobs, until the latter's death in 1993. He maintained, however, that Villegas had ceased working at the farm as early as 1992. Gamboa later appeared to retract this account and instead insisted that the farm records showed Villegas had rendered service for the hacienda only in 1993, specifically on February 9 and February 11, 1993, when he was contracted to cut coconut lumber that was given to regular workers for the repair of their houses. Gamboa added that they had informed Villegas that they needed the property and requested that he vacate it, but he refused; Gamboa surmised that Villegas filed the complaint to gain leverage so that he would not be evicted from the land he occupied. He further argued that Villegas had been paid in accordance with the rate mandated by law and that the claim for illegal dismissal was a fabrication because Villegas himself had opted not to work.

The Labor Arbiter found that there was illegal dismissal and ordered Gamboa to pay Villegas ₱140,308.84 representing wage differential, backwages and separation pay. On appeal, the NLRC set aside and vacated the Labor Arbiter's decision, and denied reconsideration. The Court of Appeals, however, granted Villegas's petition for certiorari and reinstated the Labor Arbiter's Decision. In so ruling, the appellate court observed that Villegas appeared to be without educational attainment and could not have known that he had rights as a regular employee protected by law.

• Absence of Employer-Employee Relationship: Petitioner disputed that an employer-employee relationship existed between him and Villegas, claiming that respondent was paid on a piece-rate basis without supervision.
• Non-Regular Employment: Petitioner argued that since Villegas's job was not necessary or desirable in the usual business or trade of the hacienda, he could not be considered a regular employee.
• Abandonment, Not Dismissal: Petitioner insisted that it was Villegas who had stopped working in the hacienda and that he was not dismissed.
• Improper Computation: Petitioner contended that, assuming Villegas was a regular worker, the Court of Appeals erred in directing a straight computation of wage differentials, backwages and separation pay, the findings not being in accord with law.

• Regular Employment: Whether the Court of Appeals committed reversible error in reversing the NLRC and affirming the Labor Arbiter's declaration that respondent is a regular worker, the findings not being in accord with law.
• Motive and Credibility: Whether the Court of Appeals committed reversible error in reversing the NLRC and affirming the Labor Arbiter, and in failing to consider the motive of respondent in filing the case and the credibility of his witness.
• Computation of Awards: Whether, assuming respondent is a regular worker, the Court of Appeals committed reversible error in directing a straight computation for wage differentials, backwages and separation pay, the findings not being in accord with law.

• Regular Employment: Yes. With more than twenty years of service, Villegas became a regular employee by operation of law under Article 280 of the Labor Code, and payment on a piece-rate basis does not negate regular employment.
• Motive and Credibility: No reversible error. The employer failed to discharge its burden of proving a just and valid cause for termination, and abandonment was not established by the evidence.
• Computation of Awards: The awards stand, but the case must be remanded to the Labor Arbiter for recomputation of separation pay and backwages with legal interest, reckoned from the finality of the decision.

• Regular Employment: The existence of an employer-employee relationship was essentially a question of fact, but because the factual findings of the Labor Arbiter, the NLRC and the Court of Appeals conflicted, the Court reviewed and re-evaluated the records. Villegas's employment at the hacienda while it was still managed by petitioner's father until the latter's death in 1993 was undisputed, having been admitted by Gamboa in his earlier pleadings; while Gamboa refuted that Villegas was a regular employee, he failed to categorically deny that Villegas was employed at the hacienda, insisting only that Villegas was a casual employee doing odd jobs. Under Article 280 of the Labor Code, a regular employee is one who is either (1) engaged to perform activities necessary or desirable in the usual business or trade of the employer, or (2) a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed. Following Integrated Contractor and Plumbing Works, Inc. vs. National Labor Relations Commission, the test is the reasonable connection between the particular activity performed and the usual business or trade of the employer; if the employee has performed the job for at least one year, even if not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability, of that activity to the business. With more than twenty years of service, Villegas passed this test. The grant of a place to build his house, and petitioner's admission that Villegas worked until his father's demise, further showed that his job was necessary and indispensable; even assuming employment was only for a specific duration, the fact that he was repeatedly re-hired over a long period confirmed this. Payment on a piece-rate basis did not negate regular employment, since Article 97 of the Labor Code broadly defines "wage" as remuneration capable of being expressed in money, whether fixed or ascertained on a time, task, piece or commission basis; payment by the piece is merely a method of compensation and does not define the essence of the relationship.
• Motive and Credibility: The Court was unconvinced that Villegas suddenly stopped working. Given more than twenty years of employment and the privilege of a place to call home, it made no sense that he would stop working for no apparent reason. To justify a finding of abandonment, there must be proof of a deliberate and unjustified refusal to resume employment, and the burden is on the employer to show an unequivocal intent to discontinue employment; mere absence is insufficient and must be accompanied by manifest acts unerringly pointing to the fact that the employee does not want to work anymore. Petitioner failed to discharge this burden, adducing nothing beyond self-serving declarations in an affidavit of his employee and no proof of overt acts showing an intention to abandon work. Abandonment is a matter of intention and cannot be inferred or presumed from equivocal acts; on the contrary, the filing of the illegal dismissal complaint negated any intention to sever the employment relationship. The delay of more than one year in filing the complaint was a non-issue, since it was filed within a reasonable period during the three-year period provided under Article 291 of the Labor Code.
• Computation of Awards: As a regular worker, Villegas was entitled to security of tenure under Article 279 of the Labor Code and could only be removed for cause. No valid cause attended his dismissal, and the dismissal was also without due process, petitioner having failed to comply with the procedural guidelines under Article 277(b) of the Labor Code requiring a written notice stating the causes for termination and an opportunity to be heard. An illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, plus backwages in either instance. Because reinstatement was no longer feasible owing to strained relations, separation pay was granted; the basis for computing separation pay is usually the length of past service, while backwages cover the actual period when the employee was unlawfully prevented from working. The finality of the illegal dismissal decision becomes the reckoning point, and in allowing separation pay the final decision effectively declares that the employment relationship ended, so that separation pay and backwages are computed up to that point; the decision also becomes a judgment for money from which the payment of interest in case of delay flows.

• Regular Employment under Article 280 of the Labor Code — A regular employee is one who is either (1) engaged to perform activities which are necessary or desirable in the usual business or trade of the employer, or (2) a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed. The test is the reasonable connection between the particular activity performed by the employee and the usual business or trade of the employer; if the employee has performed the job for at least one year, even if not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability, of that activity to the business. In this case, Villegas's more than twenty years of service, coupled with petitioner's admission that he worked until the father's demise and the grant of a place to build his house, established that his job was necessary and indispensable, making him a regular employee by operation of law.
• Piece-Rate Compensation Does Not Negate Regular Employment — Payment on a piece-rate basis is merely a method of compensation and does not define the essence of the employment relationship. Article 97 of the Labor Code broadly defines "wage" as remuneration or earnings capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis. The Court applied this to reject petitioner's contention that Villegas's piece-rate pay made him a non-regular worker.
• Burden of Proof in Illegal Dismissal Cases — In illegal dismissal cases, the burden of proof is on the employer to show that the employee's termination from service is for a just and valid cause. The employer's case succeeds or fails on the strength of its own evidence and not on the weakness of the evidence adduced by the employee, in keeping with the principle that the scales of justice should be tilted in favor of the latter in case of doubt. The quantum of proof required is substantial evidence — such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other equally reasonable minds might conceivably opine otherwise.
• Abandonment of Work — To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified refusal on the part of the employee to resume his employment. The burden of proof is on the employer to show an unequivocal intent on the part of the employee to discontinue employment. Mere absence is not sufficient; it must be accompanied by manifest acts unerringly pointing to the fact that the employee simply does not want to work anymore. Abandonment is a matter of intention and cannot be inferred or presumed from equivocal acts. The filing of an illegal dismissal complaint negates any intention to sever the employment relationship.
• Security of Tenure and Procedural Due Process — A regular worker is entitled to security of tenure under Article 279 of the Labor Code and can only be removed for cause. Article 277(b) requires the employer to furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and to afford him ample opportunity to be heard and to defend himself. Failure to comply with these procedural guidelines renders the dismissal illegal.
• Separation Pay in Lieu of Reinstatement and Reckoning of Awards — An illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, plus backwages in either instance. Where reinstatement is no longer feasible because of strained relations, separation pay should be granted; the basis for computing separation pay is usually the length of the employee's past service, while that for backwages is the actual period when the employee was unlawfully prevented from working. The finality of the illegal dismissal decision becomes the reckoning point, and the decision also becomes a judgment for money from which the payment of interest in case of delay flows.

• "The rule is long and well settled that, in illegal dismissal cases like the one at bench, the burden of proof is upon the employer to show that the employee's termination from service is for a just and valid cause. The employer's case succeeds or fails on the strength of its evidence and not the weakness of that adduced by the employee, in keeping with the principle that the scales of justice should be tilted in favor of the latter in case of doubt in the evidence presented by them." — This passage states the controlling evidentiary rule in illegal dismissal litigation and explains why petitioner's failure to prove a just cause, rather than any weakness in Villegas's evidence, was fatal to the dismissal.
• "If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business." — This is the canonical formulation of the regularity test under Article 280 of the Labor Code, drawn from Integrated Contractor and Plumbing Works, Inc. vs. National Labor Relations Commission, and applied to Villegas's more than twenty years of service.
• "Payment by the piece is just a method of compensation and does not define the essence of the relations." — This passage, quoting Lambo vs. NLRC, disposes of petitioner's argument that Villegas's piece-rate pay precluded regular employment.
• "To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified refusal on the part of an employee to resume his employment. The burden of proof is on the employer to show an unequivocal intent on the part of the employee to discontinue employment. Mere absence is not sufficient. It must be accompanied by manifest acts unerringly pointing to the fact that the employee simply does not want to work anymore." — This excerpt defines the requisites of abandonment and explains why petitioner's self-serving evidence failed to establish it.

• Integrated Contractor and Plumbing Works, Inc. vs. National Labor Relations Commission, 503 Phil. 875 (2005) — Controlling precedent for the test of regular employment; cited for the rule that performance of the job for at least one year, even if intermittent, is sufficient evidence of the necessity or indispensability of the activity to the employer's business.
• Lambo vs. National Labor Relations Commission, 375 Phil. 855 (1999) — Cited for the rule that piece-rate payment is merely a method of compensation that does not negate regular employment, and for the requisites of abandonment of work.
• Baguio Country Club Corporation vs. National Labor Relations Commission, G.R. No. 71664, February 28, 1992, 206 SCRA 643 — Cited for the policy that the Labor Code safeguards the tenurial interest of workers who may be denied the rights and benefits due a regular employee through lopsided agreements with economically powerful employers.
• De Leon vs. National Labor Relations Commission, 257 Phil. 626 (1989) — Cited for the principle that what determines whether employment is regular or casual is not the will or word of the employer, the procedure of hiring, or the manner of paying salary, but the nature of the activities performed in relation to the employer's business, considering all circumstances including the length of time of performance and its continued existence.
• Javier vs. Fly Ace Corporation, G.R. No. 192558, February 15, 2012, 666 SCRA 382 — Cited for the rule that when factual findings of the Labor Arbiter, the NLRC and the Court of Appeals conflict, the Court may review and re-evaluate the factual issues and re-examine the records.
• Functional, Inc. vs. Granfil, G.R. No. 176377, November 16, 2011, 660 SCRA 279 — Cited for the definition of substantial evidence as the quantum of proof in labor cases.
• Padilla vs. Javilgas, 569 Phil. 673 (2008) — Cited in connection with the prescriptive period for filing an illegal dismissal complaint under Article 291 of the Labor Code.
• Wenphil Corporation vs. Elmer R. Abing, G.R. No. 207983, April 7, 2014 — Cited for the rule that an illegally dismissed employee is entitled to reinstatement or separation pay, plus backwages, and for the bases of computing separation pay and backwages.
• Nacar vs. Gallery Frames and/or Felipe Bordey, Jr., G.R. No. 189871, August 13, 2013, 703 SCRA 439 — Cited for the rule on the payment of legal interest on monetary awards in case of delay.

• Article 280, Labor Code — Defines a regular employee as one who is either (1) engaged to perform activities necessary or desirable in the usual business or trade of the employer, or (2) a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed. Applied to hold Villegas a regular employee by operation of law given his more than twenty years of service.
• Article 279, Labor Code — Guarantees security of tenure, providing that a regular employee may only be removed for cause. Applied to hold that Villegas could not be dismissed without a valid cause.
• Article 277(b), Labor Code — Requires the employer to furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and to afford him ample opportunity to be heard and to defend himself. Petitioner's failure to comply rendered the dismissal illegal.
• Article 283, Labor Code — Referenced in Article 277(b) as the source of the notice requirement in cases of authorized causes of termination.
• Article 291, Labor Code — Provides the three-year prescriptive period for money claims arising from employer-employee relations. Applied to hold that Villegas's complaint, filed more than one year after dismissal, was filed within a reasonable period and was not barred.
• Article 97, Labor Code — Broadly defines "wage" as remuneration or earnings capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis. Applied to hold that piece-rate payment does not negate regular employment.

• Presbitero J. Velasco, Jr. (Chairperson)
• Martin S. Villarama, Jr.
• Bienvenido L. Reyes
• Francis H. Jardeleza