332 Phil. 804
PANGANIBAN, J.:
"1. Legal Holiday Pay -- Complainants are not entitled. (a) the casual dispatchers have no fix (sic) day of work, they merely act as substituted (sic); and (b) the drivers-complainants, who are purely on commission basis are not entitled to legal holiday pay (Rule IV, Holiday Pay, Sec. 1 (e), Implementing Rules of the Labor Code).The arbiter ruled that insofar as the claims for holiday pay, 13th month pay and service incentive pay were concerned, under the Rules Implementing PD 851, the complainants were not entitled to such benefits, being workers on a purely commission basis. With respect to the alleged underpayment of minimum wage, the arbiter held that "since the complainants-drivers control(led) their own collections and time, xxx there could be no basis to determine minimum wage in relation to their commissions xxx. Moreover, a perusal of the Complaint xxx shows a clear admission of payment of the latter on commission basis at the rate of 14.4% of their collections. xxx (T)he failure of the complainants-drivers to state in their Complaint and pleadings the amount of their alleged underpayment only reflects that complainants themselves were unsure if they were underpaid or not. Hence this Arbiter finds no basis to grant the same." (The foregoing findings by the arbiter were subsequently cited with approval by the respondent NLRC.)
2. 13th month pay: Not applicable to complainants who are purely on commission basis (Sec. 3 (e), Rules and Regulations Implementing P.D. 851) Complainants casual-dispatchers are not allowed 13th month pay because they are not (paid on) monthly basis.
3. Underpayment of Minimum Wage: Complainants-drivers are not wage earners. They are not paid on the basis of their work-hours rendered but on the percentages of their collections representing fares from their passengers. They control their own collections. There is no basis of minimum wage in relation to their commissions taken by them.
The complainants-casual dispatchers are well over their minimum wage.
4. Overtime pay. -- Complainants cannot claim overtime pay. They control their own time. The amount of their percentages depend on how industrious they are in looking for paying passengers. Hence, complainants control their pay, not the respondents. So, why give overtime pay to one who is really working on such a (sic) time?
5. Separation pay. -- All the complainants stopped working when(ever) they pleased. At least respondent Mamerto Galace has given all the complainants notice on July 17, 1988 (should be 1987) that his contract will terminate on February 3, 1988 and after this date, complainants went on strike. How could they be entitled to separation pay when they wilfully stopped working without the fault of the respondents(?)
6. Service Incentive pay: -- This is not applicable to the complainants who are purely on commission basis (Rule V, Sec. 1 (d), Implementing Rules and Regulations of the Labor Code)."
"(Insofar) as the cases of Edna Farin and Brainly Aglibot and Abner Martinez are concerned, we rule that they are entitled to the difference of the underpayment of their wages as their jobs are different from that of complainants-drivers, but regular employees of respondents, in accordance with Article(s) 280 and 281 of the Labor Code as amended. These three (3) employees having been found to have been dismissed without due process of law are entitled to separation pay equivalent to one-half (1/2) month for every year of service." (underscoring supplied)He likewise held that the non-renewal of the contract with the US Naval Base is a closure or cessation of operations NOT due to serious business losses under Art. 283 of the Labor Code, and that being the case, the drivers became entitled to one-half (1/2) month pay for every year of service. All other claims, such as for overtime pay and the like, were dismissed for lack of both legal basis and evidence to support the same. However, the arbiter ordered payment of P1,000.00 to each of the complainants-drivers by way of financial assistance, considering their length of service. The dispositive portion of the arbiter’s decision reads:[5]
"WHEREFORE, premises considered, judgment is hereby rendered ordering respondents to pay complainants Edna Farin, Brainly Aglibot and Abner Martinez the differentials for underpayment of wages, as well as, their severance pay, equivalent to one-half (1/2) month for every year of service.On appeal, the respondent Commission modified the arbiter’s ruling, holding that "all the complainants are regular employees in the contemplation of Article 281 (now Art. 280) of the Labor Code, which provides that employment ‘shall be deemed regular when the employee performs activities which are usually necessary and desirable in the usual business or trade "’"; respondent Commission thus ruled that the complainants are entitled to separation pay of one-half month for every year of service, by virtue of the non-renewal of the transportation contract with the naval base. However, finding that the complainants did not ask for financial assistance, the NLRC deleted the award of P1,000.00 for the each of the complainants. The fallo of the Commission’s Resolution states:[6]
Respondents are further ordered to extend by way of financial assistance in the amount of P1,000.00 each or a total of P19,000.00."
"WHEREFORE, in the light of the preceding disquisition, the judgment appealed from is hereby modified, in that the award of P1,000.00 each to the complainants for financial assistance is deleted. The respondent is ordered to pay all the complainants their separation pay equivalent to one-half (1/2) month for every year of service."Dissatisfied, petitioners brought this petition for certiorari under Rule 65 of the Rules of Court on April 19, 1990.
Petitioners concede that the NLRC may have been correct after all in holding that complainants/private respondents were regular employees, for they acknowledged albeit grudgingly that "the above ruling seems to be tinged with reason and authority". Nevertheless, they contend that they cannot be held liable for separation pay for "petitioner SMJS had been experiencing financial reverses since 1986".[8] Petitioners cited the figures provided by petitioner Galace showing "sliding incomes":[9]"I
The respondent NLRC acted in grave abuse of its discretion in awarding separation pay in favor of respondents, such award not being warranted by the facts and the law.II
Assuming arguendo that such award of separation pay is warranted by law, the respondent NLRC nevertheless gravely abused its discretion in making said award in the absence of the requisite factual basis therefor."
"Our gross receipt in 1985 amounted to .. P846,459.25Petitioners also fault the NLRC for acknowledging in its findings of fact (p. 2 of the Resolution) that SMJS had experienced financial reverses while at the same time holding that the closure of SMJS was simply due to non-renewal of its transportation contract, and thereby implying unfairly that SMJS did not cease operations due to financial reverses. Finally, petitioners argue that in order to award separation pay, there must be some numerical and factual basis (e.g. latest salary rate) for the computation thereof, which they claim is absent in this case, as complainants were earning commissions, which of course varied from period to period.
Our gross receipt in 1986 amounted to ... 676,748.75
So, our income decreased in 1986 by ..... P169,710.50
Our gross income in 1986 was ............ P 676,748.75
Our gross income in 1987 was ............ 534,204.71
Our income decreased in 1987 by ......... P142,544.04"
"The primary standard, x x x, of determining a regular (as against casual) employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, 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. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists."[16] (underscoring supplied)On the other hand, we should hasten to add that while in this particular case, these "commission-basis" employees involved were regular employees (by operation of law, plus of course, the fact that their status as employees had never been challenged at any stage of the present case), it does not follow that every employee paid (whether wholly or partly) on commission basis can be considered a regular employee, or an employee at all, for that matter. While this caveat may seem rather elementary, it is still needful to stress that there are many lines of business legally and legitimately engaging the services of workers, who are paid on commission basis to perform activities desirable and necessary for such businesses, without creating any kind of employer-employee relationship at any time. A case in point is Singer Sewing Machine Company vs. Drilon,[17] where certain individuals were hired to work as collectors or "collecting agents" of the company but per written agreement were to be considered at all times as independent contractors and not employees of the company. The key issue in Singer was whether these so-called independent contractors were in reality employees. After applying the control test, this Court held:[18]
"The nature of the relationship between a company and its collecting agents depends on the circumstances of each particular relationship. Not all collecting agents are employees and neither are all collecting agents independent contractors. The collectors could fall under either category depending on the facts of each case.Having said that, we return to the instant case and, at the risk of being repetitive, reiterate that in this case there was no question about the existence of employer-employee relationship between petitioners and private respondents. Art. 280 therefore can be properly applied to the present case, to confirm the regular-employee status of the private respondents.
The (Collection Agency) Agreement confirms the status of the collecting agent in this case as an independent contractor not only because he is explicitly described as such but also because the provisions permit him to perform collection services for the company without being subject to the control of the latter except only as to the result of his work. xxx
xxx xxx xxx
xxx xxx xxx
The Court finds the contention of the respondents that the union members are employees under Article 280 of the Labor Code to have no basis. The definition that regular employees are those who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. Any agreement may provide that one party shall render services for and in behalf of another for a consideration (no matter how necessary for the latter’s business) even without being hired as an employee. This is precisely true in the case of an independent contractorship as well as in an agency agreement. The Court agrees with the petitioner’s argument that Article 280 is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute." (underscoring ours)