G.R. No. 200712 - Abuda vs. L. Natividad Poultry Farms

The dispute involves a group of workers (petitioners) and L. Natividad Poultry Farms (respondent), along with its owner Juliana Natividad, manager Merlinda Natividad, and third-party contractors San Mateo General Services and Rodolfo Del Remedios.
The petitioners include maintenance personnel, poultry and livestock feed mixers, delivery helpers, checkers, and security guards who had been employed for periods ranging from one year to as long as 17 years.
Allegations raised by the workers include illegal dismissal, unfair labor practices, claims for overtime, holiday and premium pay, service incentive leave, 13th month pay, and moral and exemplary damages.

The petitioners were allegedly hired on a pakyaw (piece-rate or task basis) arrangement initially, intended for specific repair and maintenance works and other ancillary services in connection with the operations of L. Natividad Poultry Farms.
Hiring dates ranged from as early as 1989 up to May 1997 with termination dates spanning from the early 1990s to as recently as 2007, reflecting a long, albeit intermittent, engagement in repair and maintenance activities.
The employment relationship was complicated by the use of third-party contractors or intermediaries (San Mateo and Del Remedios) who were later identified as labor-only contractors functioning as mere agents of L. Natividad.

On May 13, 2009, Labor Arbiter Robert A. Jerez dismissed the complaint on the ground that there was no direct employer-employee relationship between L. Natividad and the workers, attributing the actual employment to San Mateo General Services and Del Remedios.
The National Labor Relations Commission (NLRC) modified the Labor Arbiter’s decision on August 31, 2010 by declaring that:

Certain workers – specifically BroAola, Jeremias Capellan, Arnel Capellan, Temmie Nawal, and Eduardo Capellan – were regular employees of L. Natividad.
Other claims and classifications, particularly regarding workers performing tasks as poultry and livestock feed mixers or maintenance personnel on a pakyaw basis, were not sustained due to the characterization of their work as not being regularly necessary or directly connected to the main business.

Subsequent orders included directions for reinstatement of the declared regular employees and payment of their 13th month pay and service incentive leave pay, albeit without backwages, and a declaration that some workers were engaged on a non-regular (pakyaw) basis.

The petitioners filed a Petition for Review on Certiorari challenging the Court of Appeals’ modifications and findings, contending that their continuous employment and the necessity of their repair and maintenance works rendered them regular employees of L. Natividad.
The petitioners argued that even if paid on a pakyaw basis, such mode of payment does not negate the establishment of an employer-employee relationship given that the duration and continuity of service should automatically classify them as regular employees under the second paragraph of Article 280 of the Labor Code.
The respondents maintained that the petitioners were hired by independent contractors or were employed for tasks not directly related to the core business of poultry and livestock production, thus justifying the absence of a regular employment relationship.
Both the NLRC and the Court of Appeals had previously determined that although some workers could be considered regular employees, the petitioners failed to sufficiently prove claims of illegal dismissal because no concrete evidence of a formal dismissal was provided.

The sworn affidavit of petitioner Del Remedios detailed his direct engagement in overseeing repair and maintenance works on the farm and related premises.
Statements of some petitioners admitted to being previously employed by Del Remedios or San Mateo, highlighting the blurred lines in the chain of employment.

The characterization of the pakyaw system as merely a mode of wage computation rather than a basis for classifying an employment as casual or irregular.
The role of supervisory control, the power of dismissal, and the continuous need for the workers’ services in determining regular employment status.

Whether the maintenance personnel and other workers, despite being hired on a pakyaw (piece-rate/task basis) arrangement, can be considered regular employees of L. Natividad Poultry Farms by virtue of the continuous and necessary nature of their work.
Whether the employment arrangement through independent contractors (San Mateo and Del Remedios) qualifies as “labor-only contracting” such that these contractors are mere agents of L. Natividad, thereby making L. Natividad the actual employer.
Whether the dismissal (or lack thereof) of the petitioners constitutes an illegal dismissal, particularly considering that no concrete or formal notification of termination was substantiated by the petitioners.
Whether the mode of payment (pakyaw system) affects the determination of the regularity of employment and the entitlement to benefits such as 13th month pay, service incentive leave, and backwages.