Ramiro Lim & Sons Agricultural Co., Inc. vs. Armando Guilaran

The presumption of regularity of payroll entries is merely disputable and may be overthrown by clear and convincing evidence; once overthrown, a backwage computation based on those payrolls cannot stand, and the Labor Arbiter may instead use applicable minimum wage rates for the presumed six-to-eight-month sugar cane season. For regular seasonal pakyaw workers whose illegal dismissal is final, backwages may be computed using mandated wage rates for a six-month work year where the employer fails to prove a shorter season and its payrolls are unreliable.

Petitioners Ramiro Lim & Sons Agricultural Co., Inc., Sima Real Estate Development, Inc., and Ramiro Lim owned an 84-hectare hacienda. Respondents were agricultural workers engaged in the agricultural stages of work on that hacienda; except Romeo Frias, who was paid purely on a daily basis, they were engaged on a pakyaw basis. Prior proceedings had already settled that respondents were regular seasonal workers illegally dismissed, with the Supreme Court denying petitioners’ earlier petition on 22 June 2009 and that denial attaining finality on 17 November 2009. What remained was the computation of backwages.

Petitioners Ramiro Lim & Sons Agricultural Co., Inc., Sima Real Estate Development, Inc., and Ramiro Lim owned an 84-hectare hacienda. Respondents were agricultural workers employed to work in all the agricultural stages of work on that hacienda. They alleged that they were paid on a mixed pakyaw and daily basis. Petitioners, for their part, claimed that respondents — except Romeo Frias, who was paid purely on a daily basis — were employed as laborers on a pakyaw basis.

Respondents alleged that they were illegally dismissed on 22 July 2000, when they asked to be paid based on the rates prescribed by the prevailing Wage Order. Petitioners countered that when their attention was called to the plan to conduct stricter measures to prevent wastage and production losses due to respondents’ half-hearted performance, respondents refused to return to work, paralyzing operations for about three weeks. Because of their unjustified absence even after show-cause notices, petitioners considered them to have abandoned their respective jobs.

The Labor Arbiter and the NLRC initially dismissed the complaints, ruling that respondents had abandoned their work. The Court of Appeals later found that petitioners failed to prove abandonment. It held that because respondents had been performing services necessary and desirable to the business — badges of regular employment — even though they did not work throughout the year and their employment depended on a specific season, they were regular seasonal workers entitled to reinstatement and full backwages based on the latest Wage Order, plus attorney’s fees. The case was remanded to the Labor Arbiter for computation of backwages from 19 July 2000 up to the date of reinstatement.

After the illegal dismissal ruling attained finality, the Labor Arbiter adopted the Fiscal Examiner’s computation and awarded respondents ₱5,058,264.64, or ₱143,700.70 each. The award was based on the mandated rates provided by law for the period from 2000 until December 2009 and was limited to six months of work per year, considering that sugarcane farming is not continuous the whole year round. Petitioners appealed, arguing that the computation had no basis because respondents barely and sparingly worked and were not entitled to six months’ pay per year. The NLRC annulled the Labor Arbiter’s Order, upheld petitioners’ Work Summary and payrolls, and found that not all respondents worked for at least six months in the last six years prior to dismissal.

Respondents questioned the authenticity and completeness of the payrolls, alleging that the payrolls were incomplete, irregular, and forged and that they were never given copies. They also alleged that their signatures were forged or signed by unauthorized persons. The Court of Appeals found the inconsistencies in the signatures so questionable to the naked eye that their genuineness was doubtful, and it found the payrolls self-serving, unreliable, and unsubstantial. It also found the argument that respondents worked for only one hour a day hardly believable and contrary to human experience. The Court of Appeals sustained the factual findings of the Labor Arbiter.

• Payrolls as Basis for Backwages: Petitioners argued that the Court of Appeals committed grave error in disregarding the payrolls they submitted as the basis for computing respondents’ backwages.
• Social Justice Policy: Petitioners argued that the Court of Appeals committed grave error in applying the policy of social justice in labor laws in favor of respondents; they claimed that not one of the respondents rendered service for more than six months a year, and that 21 out of the 30 respondents did not even render service for one month in a year.
• Grave Abuse of Discretion Finding: Petitioners argued that the Court of Appeals committed grave error in reversing and setting aside the NLRC Decision without any finding and discussion that the NLRC committed grave abuse of discretion amounting to lack of jurisdiction.

• Payrolls Invalid: Respondents denied and refuted the payrolls submitted as being incomplete, irregular, and forged, and alleged that they were never given copies of these payrolls.
• Forged Signatures: Respondents alleged that their signatures were forged or signed by unauthorized persons.

• Payrolls as Basis for Backwages: Whether the Court of Appeals erred in disregarding the payrolls submitted by petitioners as the basis for computing respondents’ backwages.
• Social Justice and Six-Month Computation: Whether the Court of Appeals erred in applying the policy of social justice in labor laws in favor of respondents and in upholding a six-month-per-year computation despite petitioners’ claim that respondents rendered less service.
• Grave Abuse of Discretion: Whether the Court of Appeals erred in reversing and setting aside the NLRC Decision without a finding and discussion that the NLRC committed grave abuse of discretion amounting to lack of jurisdiction.
• Legal Interest: Whether the monetary awards should earn legal interest, and at what rates, from the finality of the illegal dismissal ruling until full satisfaction.

• Payrolls as Basis for Backwages: No. The Court of Appeals did not disregard the payrolls; it scrutinized them and found the signatures questionable, the payrolls self-serving, unreliable, and unsubstantial, thereby overthrowing the disputable presumption of regularity under Section 43, Rule 130 of the Rules of Court.
• Social Justice and Six-Month Computation: No. Respondents were already finally adjudged regular seasonal workers; the sugar cane season is presumed to last six to eight months, and petitioners failed to prove a shorter period. Article 124 of the Labor Code and Pulp and Paper, Inc. vs. NLRC support using ordinary minimum wage rates for pakyaw workers.
• Grave Abuse of Discretion: No. By finding merit in respondents’ petition, the Court of Appeals necessarily found grave abuse of discretion; it found that the NLRC based its computation on payrolls that were extremely doubtful. An explicit recital of the phrase is not required where the ratio and discussion show such a finding.
• Legal Interest: Yes. The monetary awards earn 12% per annum from 17 November 2009 to 30 June 2013 and 6% per annum from 1 July 2013 until full satisfaction, pursuant to Nacar vs. Gallery Frames.

• Payrolls as Basis for Backwages: The Court of Appeals did not disregard the payrolls; rather, its careful scrutiny led it to conclude that the inconsistencies in respondents’ signatures were so questionable to the naked eye that their genuineness was doubtful. While entries in payrolls enjoy the presumption of regularity under Section 43, Rule 130 of the Rules of Court, this is merely a disputable presumption that may be overthrown by clear and convincing evidence. A presumption shifts the burden of proof to the party disadvantaged by the presumed fact, and prima facie evidence is not conclusive or absolute. Respondents denied the payrolls as incomplete, irregular, and forged, alleged they were never given copies, and claimed their signatures were forged or signed by unauthorized persons. The Court of Appeals found signatures of unknown or unauthorized persons and declared the payrolls self-serving, unreliable, and unsubstantial. Thus, the presumption of regularity was effectively overthrown.
• Social Justice and Six-Month Computation: The status of respondents as regular seasonal workers had already been settled with finality; the only remaining issue was the amount of backwages. A distinguishing characteristic of pakyaw or task-basis engagement, as opposed to straight-hour wage payment, is the non-consideration of time spent in working; payment is reckoned by completion of the work, not by hours spent. To determine backwages for piece-rate or pakyaw workers, there is a need to determine the varying degrees of production and days worked by each worker. The NLRC relied on petitioners’ payrolls, but the Court of Appeals reversed this and agreed with the Labor Arbiter that respondents worked for at least six months. Jurisprudence recognizes that the season of sugar cane industries lasts for six to eight months. The payrolls showed most respondents rendered service for less than one month per year, but the payrolls lacked credibility and their genuineness was doubtful. Because the season is presumed to last six to eight months, the burden was on petitioners to prove otherwise, and their evidence failed to discharge that burden. The Labor Arbiter’s computation based on mandated rates from 2000 to December 2009 and limited to six months per year was therefore not baseless or arbitrary. Article 124 of the Labor Code provides that all workers paid by result, including those paid on piecework, takay, pakyaw, or task basis, shall receive not less than the prescribed wage rates per eight hours of work a day, or a proportion thereof for working less than eight hours. Pulp and Paper, Inc. vs. NLRC holds that in the absence of wage rates based on time and motion studies approved by the Secretary of Labor, ordinary minimum wage rates prescribed by the Regional Tripartite Wages and Productivity Boards apply to piece-rate workers.
• Grave Abuse of Discretion: Grave abuse of discretion is such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse must be patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility. By finding merit in respondents’ petition, the Court of Appeals obviously found that the NLRC committed grave abuse of discretion. The Court of Appeals found that the NLRC based its computation on payrolls that were self-serving, unreliable, and unsubstantial, and that the inconsistent signatures were so questionable that their genuineness was doubtful. Thus, the NLRC based its computation on extremely doubtful evidence. While the Court of Appeals did not explicitly use the phrase “grave abuse of discretion,” a reading of the ratio and discussion in the body of its decision shows that it found such abuse.
• Legal Interest: The Resolution of the Supreme Court affirming the finding of illegal dismissal attained finality on 17 November 2009. In accordance with Nacar vs. Gallery Frames, the monetary awards shall earn legal interest of 12% per annum computed from 17 November 2009 until 30 June 2013, and legal interest of 6% per annum from 1 July 2013 until full satisfaction thereof.

• Presumption of Regularity of Entries in the Course of Business — Under Section 43, Rule 130 of the Rules of Court, entries made at or near the time of the transactions to which they refer, by a person deceased or unable to testify, who was in a position to know the facts therein stated, may be received as prima facie evidence if made in the person’s professional capacity or in the performance of duty and in the ordinary or regular course of business or duty. The presumption is disputable and may be overthrown by clear and convincing evidence. In this case, the payrolls enjoyed the presumption, but the Court of Appeals found forged or unauthorized signatures and declared the payrolls self-serving, unreliable, and unsubstantial; the presumption was therefore effectively overthrown.
• Regular Seasonal Employment — Seasonal workers who are called from time to time and temporarily laid off during the off-season are not separated from service but are merely considered on leave until re-employed. The fact that they do not work continuously for one whole year but only for the duration of a season does not detract from considering them regular employees. The Court relied on the final ruling that respondents were regular seasonal workers, leaving only the computation of backwages.
• Backwages for Pakyaw or Piece-Rate Workers — In a pakyaw or task-basis engagement, the emphasis is on the task itself; payment is reckoned in terms of completion of the work, not the number of hours spent. To determine backwages for piece-rate or pakyaw workers, there is a need to determine the varying degrees of production and days worked by each worker. However, where the employer’s payrolls are unreliable and the sugar cane season is presumed to last six to eight months, the Labor Arbiter may compute backwages using applicable minimum wage rates for a six-month work year. Article 124 of the Labor Code requires workers paid by result, including pakyaw workers, to receive not less than the prescribed wage rates per eight hours of work a day, or a proportion thereof for working less than eight hours. Absent approved wage rates based on time and motion studies, ordinary minimum wage rates prescribed by the Regional Tripartite Wages and Productivity Boards apply.
• Grave Abuse of Discretion — Grave abuse of discretion is a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction. The abuse must be patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility. The Court of Appeals need not explicitly use the phrase if its ratio and discussion show that it found such abuse. Here, the Court of Appeals found that the NLRC based its computation on extremely doubtful payrolls.
• Legal Interest on Monetary Awards — Under Nacar vs. Gallery Frames, monetary awards earn legal interest of 12% per annum from finality of the judgment until 30 June 2013, and 6% per annum from 1 July 2013 until full satisfaction. The Court applied this to the backwage awards, computing interest from 17 November 2009, when the illegal dismissal ruling attained finality.

• "While it is true that entries in the payrolls enjoy the presumption of regularity, it is merely a disputable presumption that may be overthrown by clear and convincing evidence to the contrary." — This states the evidentiary rule governing payroll entries and frames the central issue on whether petitioners’ payrolls could sustain the NLRC’s computation.
• "Thus, while the payrolls in question enjoyed the presumption of regularity as entries made in the course of business, this presumption of regularity was effectively overthrown by evidence to the contrary." — This is the Court’s application of the rule to the facts, holding that the payrolls could not be relied upon because of questionable signatures and unauthorized persons.
• "It has been recognized by jurisprudence that the season of sugar cane industries lasts for periods of six to eight months." — This supports the six-month-per-year computation and places the burden on petitioners to prove a shorter season.
• "In the absence of such prescribed wage rates for piece-rate workers, the ordinary minimum wage rates prescribed by the Regional Tripartite Wages and Productivity Boards should apply." — This states the controlling wage-rate rule for pakyaw or piece-rate workers and justifies the Labor Arbiter’s use of mandated minimum wage rates.

• Philippine Tobacco Flue-Curing & Redrying Corporation vs. NLRC, 360 Phil. 218 (1998) — Cited by the NLRC for the proposition that the straight computation based on six months per year or 13 days per month requires service rendered for at least six months in a given year; the Supreme Court did not rely on it to overturn the Court of Appeals’ reinstatement of the Labor Arbiter’s computation.
• Velasco vs. NLRC, 525 Phil. 749 (2006) — Held that for piece-rate workers, the NLRC must determine the varying degrees of production and the number of days worked by each worker; cited to frame the backwage computation problem.
• Labor Congress of the Philippines vs. NLRC, 352 Phil. 1118 (1998) — Cited in Velasco for the rule that in piece-rate backwage cases, there is a need to determine the varying degrees of production and days worked, an issue best left to the NLRC.
• Pulp and Paper, Inc. vs. NLRC, 344 Phil. 821 (1997) — Relied on for the rule that absent wage rates based on time and motion studies approved by the Secretary of Labor, ordinary minimum wage rates prescribed by the Regional Tripartite Wages and Productivity Boards apply to piece-rate workers.
• Custodio vs. The Workmen’s Compensation Commission, 176 Phil. 450 (1978) — Relied on for the recognition that the season of sugar cane industries lasts for six to eight months.
• Nacar vs. Gallery Frames, 716 Phil. 267 (2013) — Applied for legal interest: 12% per annum from 17 November 2009 to 30 June 2013 and 6% per annum from 1 July 2013 until full satisfaction.
• United Coconut Planters Bank vs. Looyuko, 560 Phil. 581 (2007) — Cited for the definition of grave abuse of discretion as a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction.
• Mabunga vs. People, 473 Phil. 555 (2004) — Cited for the definition of presumption and its effect of shifting the burden of proof to the party disadvantaged by the presumed fact.
• Wa-acon vs. People, 539 Phil. 485 (2006) — Cited for the definition of prima facie evidence as evidence sufficient to sustain a judgment if unexplained or uncontradicted, but which may be contradicted by other evidence.
• David vs. Macasio, 738 Phil. 293 (2014) — Cited for distinguishing pakyaw or task-basis engagement from straight-hour wage payment; the emphasis is on the task, not the time spent.

• Section 43, Rule 130, Rules of Court — Entries made at or near the time of the transactions to which they refer, by a person deceased or unable to testify, who was in a position to know the facts stated, may be received as prima facie evidence if made in the person’s professional capacity or in the performance of duty and in the ordinary or regular course of business or duty. Applied to the payrolls: they enjoyed the presumption of regularity, but the presumption was disputable and was overthrown by evidence of forged or unauthorized signatures.
• Article 124, Labor Code of the Philippines — Provides standards and criteria for minimum wage fixing and states that all workers paid by result, including those paid on piecework, takay, pakyaw, or task basis, shall receive not less than the prescribed wage rates per eight hours of work a day, or a proportion thereof for working less than eight hours. Applied to justify the Labor Arbiter’s computation using mandated minimum wage rates for pakyaw workers.
• Article 101, Labor Code of the Philippines — Provides that the Secretary of Labor shall regulate the payment of wages by results, including pakyaw, piecework, and other non-time work, and that wage rates should be based preferably on time and motion studies or arrived at in consultation with representatives of workers’ and employers’ organizations. Cited in Pulp and Paper, Inc. vs. NLRC and relied on in the reasoning on piece-rate wage rates.
• Rule 45, Rules of Court — Governs petitions for review on certiorari; the vehicle by which petitioners brought the present petition to the Supreme Court.
• Rule 65, Rules of Court — Governs petitions for certiorari; the vehicle by which respondents challenged the NLRC Decision before the Court of Appeals.

Perlas-Bernabe, Caguioa, and Hernando concurred. J. Reyes, Jr. was on official leave.