HACIENDA SAN ISIDRO / SILOS FARMS AND REY SILOS LLAMADO, PETITIONERS, VS. LUCITO VILLARUEL AND HELEN VILLARUEL, RESPONDENTS.

Hacienda San Isidro versus Villaruel

The Case

This is a labor case about the status of a farm worker. Hacienda San Isidro and Silos Farms, together with Rey Silos Llamado, are the petitioners, the employers. Lucito Villaruel and Helen Villaruel are the respondents, the workers. The employers ask the Supreme Court to reconsider its earlier ruling that Helen Villaruel was their regular seasonal employee. The case matters because it settles how a seasonal farm worker proves regular employment, and it clarifies that the control test requires proof of the right to control not only the end achieved but also the manner and means of reaching it.

Procedural History

The Labor Arbiter ruled that Helen Villaruel had attained the status of a regular employee by the nature of her work and the length of her service. On appeal, the National Labor Relations Commission initially held in its September 2011 Decision that she was not a regular employee, but reversed itself in its January 2012 Resolution and found her a regular employee. The case then went to the Court of Appeals. In its March 2013 Decision, the Court of Appeals initially held that she was not a regular employee, but in its January 2015 Amended Decision it reversed itself and found her a regular employee. The employers then filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court. In its November 2023 Decision, the Supreme Court denied the petition and affirmed that Helen Villaruel was a regular seasonal employee. The employers filed a Motion for Reconsideration. The Supreme Court granted that motion, set aside its earlier Decision, and rendered a new one granting the petition.

Facts

Helen Villaruel worked at the farm of the petitioners since 1978. She received wages for various services she rendered at the farm. The petitioners argued that she was not their employee at all, and in the alternative that she was not a regular employee because they did not control the manner by which she performed her work and because she was free to contract her services to other employers.

The lower tribunals differed on her status. The Labor Arbiter found her a regular employee. The National Labor Relations Commission first said she was not, then reversed itself and said she was. The Court of Appeals first said she was not, then reversed itself and said she was. The Supreme Court initially agreed that she was a regular seasonal employee.

On the employers' Motion for Reconsideration, the Supreme Court reviewed the records and found that nothing showed that Helen Villaruel had proven by substantial evidence that her employers had the power or right to control her work. No ruling of the Labor Arbiter, the National Labor Relations Commission, or the Court of Appeals found that the petitioners controlled or had the right to control the manner and means by which she performed her work.

Issues

• Whether or not the factual finding on the existence of the power or right to control may be reviewed by the Supreme Court in a Petition for Review on Certiorari under Rule 45.
• Whether or not Helen Villaruel was a regular seasonal employee of the petitioners.
• Whether or not the freedom of a seasonal worker to offer services to other employers negates regular employment.
• Whether or not compensation under a pakyaw scheme negates regular employment.

Applicable Provisions

Article 280, now Article 295, of the Labor Code provides:

Article 280. Regular and Casual Employment. Notwithstanding the provisions of written agreement to the contrary and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

The Court held that this provision should not be used as a criterion to determine the existence of an employer-employee relationship, since it merely distinguishes between regular and casual employees for purposes of benefits, union membership, and security of tenure, and does not apply where the existence of an employment relationship is in dispute.

Ruling

On the first issue, the Court held that while a factual issue is generally beyond the ambit of a Rule 45 petition, the rule admits of exceptions, including when the judgment is based on a misapprehension of facts. The Court found these exceptions present and reviewed the facts.

On the second issue, the Court held that Helen Villaruel failed to prove by substantial evidence that the petitioners had the power or right to control her work. The Court reiterated the control test:

Under said test, such relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end.

The Court explained that the control test merely calls for the existence of the right to control, not necessarily the exercise of such right, and does not require that the employer actually supervise the performance of duties by the employee. However, the employer must have the right to control both the end achieved and the manner and means used to achieve that end. Even if it could be presumed that the petitioners had the right to review the quality of her work, that is, the right to control the end achieved, it could not be presumed that they had the right to control the manner and means to achieve that end. Helen Villaruel had the burden of proving this by substantial evidence but failed.

On the third issue, the Court held that the freedom of a seasonal worker to offer services to other employers does not negate regular employment. The Court clarified that in Mercado, Sr. versus National Labor Relations Commission, the workers' freedom to offer their services elsewhere was merely an added observation of the Labor Arbiter, not the reason for the ruling. The ruling stemmed from the fact that the workers were hired only on an on-and-off basis.

On the fourth issue, the Court held that being compensated under a pakyaw scheme does not negate regular employment so long as the employer has the power or right to control. However, the Court modified its ruling on the factual finding of the existence of the power or right to control.

Doctrine

A seasonal employee is deemed a regular employee if they perform work or services that are seasonal in nature, and they are employed to perform such work or services for more than one season. The fact that an employee is free to make their services available to others does not negate regular employment status for as long as they are hired repeatedly for the same activities and not merely on and off for any single phase of agricultural work. Being compensated under a pakyaw scheme likewise does not negate regular employment so long as the employer has the right to exercise the power of control or supervision over the performance of an employee's duties, regardless of whether such control or supervision is exercised. Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end. The control test merely calls for the existence of the right to control, not necessarily the exercise of such right. Article 295 of the Labor Code should not be used as a criterion to determine the existence of an employer-employee relationship since it merely distinguishes between regular and casual employees for purposes of determining the right to certain benefits, to join or form a union, or to security of tenure. It does not apply where the existence of an employment relationship is in dispute.

Disposition

The Motion for Reconsideration was granted. The November 2023 Decision was set aside, and a new one was rendered granting the Petition for Review on Certiorari and reversing and setting aside the January 2015 Amended Decision and July 2015 Resolution of the Court of Appeals. The petitioners won.

Remember This

The single line worth memorizing is that the control test requires proof of the right to control both the end achieved and the manner and means of reaching it, and the burden is on the one claiming employment. Examiners like to use this case to test the requisites of regular seasonal employment and the proper application of the control test in disputes over the existence of an employer-employee relationship.