ELEAZAR S. PADILLO+ vs. RURAL BANK OF NABUNTURAN, INC. and MARK S.

OROPEZA Facts: Petitioner, the late Eleazar Padillo, was employed by Rural Bank of Nabunturan, Inc. as its SA Bookkeeper. Due to liquidity problems, the Bank took out retirement/insurance plans for all its employees in anticipation of its possible closure and the concomitant severance of its personnel. In this regard, the Bank procured a Philam Life Plan in favor of Padillo for a benefit amount of P100,000.00 and which was set to mature on July 11, 2009. On October 14, 2004, respondent Mark S. Oropeza (Oropeza), the President of the Bank, bought majority shares of stock in the Bank and took over its management which brought about its gradual rehabilitation. The Bank's finances improved and eventually, its liquidity was regained. During the latter part of 2007, Padillo suffered a mild stroke due to hypertension which consequently impaired his ability to effectively pursue his work, the nature of which had been classified as a total disability. He wrote a letter addressed to Oropeza expressing his intention to avail of an early retirement package. Despite several follow-ups, his request remained unheeded. On October 3, 2007, Padillo was separated from employment due to his poor and failing health. Not having received his claimed retirement benefits, Padillo filed with the Labor Arbiter a complaint for the recovery of unpaid retirement benefits. He asserted that the Bank had adopted a policy of granting its aging employees early retirement packages, pointing out that one of his co-employees, Nenita Lusan, was accorded retirement benefits when she retired at the age of only fifty-three (53). The LA dismissed Padillo's complaint but directed the Bank to pay him the amount of P100,000.00 as financial assistance, treated as an advance from the amounts receivable under the Philam Life Plan. It found Padillo disqualified to receive any benefits under Article 300 of the Labor Code as he was only 55 years old when he resigned, while the law specifically provides for an optional retirement age of 60 and compulsory retirement age of 65. Dissatisfied, Padillo elevated the matter to the NLRC which reversed and set aside the LA's ruling. The NLRC applied the Labor Code provision on termination on the ground of disease particularly, Article 297 holding that while Padillo did resign, he did so only because of his poor health condition. The CA held that Padillo could not, absent any agreement with the Bank, receive any retirement benefits pursuant to Article 300 of the Labor Code considering that he was only 55 years old when he retired. It likewise found the evidence insufficient to prove that the Bank has an existing company policy of granting retirement benefits to its aging employees. Finally, citing the case of Villaruel v. Yeo Han Guan, it pronounced that separation pay on the ground of disease under Article 297 of the Labor Code should not be given to Padillo because he was the one who initiated the severance of his employment and that even before September 10, 2007, he already stopped working due to his poor and failing health. Issue: WON petitioner is entitled to (1) separation pay and (2) retirement benefits Ruling: At the outset, it must be maintained that the Labor Code provision on termination on the ground of disease does not apply in this case, considering that it was the petitioner and not the Bank who severed the employment relations. As borne from the records, the clear import of Padillo's letter and the fact that he stopped working before the foregoing date and never reported for work even thereafter show that it was Padillo who voluntarily retired and that he was not terminated by the Bank. As held in Villaruel v. Yeo Han Guan, Article 297 [now renumbered] of the Labor Code contemplates a situation where the employer, and not the employee, initiates the termination of employment on the ground of the latter's disease or sickness, viz.: A plain reading of the [Article 297 of the Labor Code] clearly presupposes that it is the employer who terminates the services of the employee found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his coemployees. It does not contemplate a situation where it is the employee who severs his or her employment ties. Thus, given the inapplicability of [Article 297 of the Labor Code] to the case at bar, it necessarily follows that petitioners' claim for separation pay anchored on such provision must be denied. What remains applicable, however, is the Labor Code provision on retirement [Article 300]. Simply stated, in the absence of any applicable agreement, an employee must (1) retire when he is at least sixty (60) years of age and (2) serve at least (5) years in the company to entitle him/her to a retirement benefit of at least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months being considered as one whole year. Notably, these age and tenure requirements are cumulative and non-compliance with one negates the employee's entitlement to the retirement benefits under the Labor Code.

In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or any other equivalent contract between the parties which set out the terms and condition for the retirement of employees, with the sole exception of the Philam Life Plan which premiums had already been paid by the Bank. Neither was it proven that there exists an established company policy of giving early retirement packages to the Bank's aging employees. It has been pronounced that to be considered a company practice, the giving of the benefits should have been done over a long period of time, and must be shown to have been consistent and deliberate. Neither can the grant of an early retirement package to Lusan show that Padillo was unfairly discriminated upon. Records show that the same was merely an isolated incident and petitioners have failed to show that any bad faith or motive attended such disparate treatment between Lusan and Padillo. Irrefragably also, there is no showing that other Bank employees were accorded the same benefits as that of Lusan which thereby dilutes the soundness of petitioners' imputation of discrimination and bad faith. All told, in the absence of any applicable contract or any evolved company policy, Padillo should have met the age and tenure requirements set forth under Article 300 of the Labor Code to be entitled to the retirement benefits provided therein. Unfortunately, while Padillo was able to comply with the five (5) year tenure requirement as he served for twenty-nine (29) years he, however, fell short with respect to the sixty (60) year age requirement given that he was only fifty-five (55) years old when he retired. Therefore, without prejudice to the proceeds due under the Philam Life Plan, petitioners' claim for retirement benefits must be denied. Nevertheless, the Court concurs with the CA that financial assistance should be awarded but at an increased amount. The Court, in light of the dictates of social justice, holds that the CA's financial assistance award should be increased from P50,000.00 to P75,000.00, still exclusive of the P100,000.00 benefit receivable by the petitioners under the Philam Life Plan which remains undisputed.

JAIME N. GAPAYAO vs. ROSARIO FULO, SOCIAL SECURITY SYSTEM and SOCIAL SECURITY COMMISSION
Facts: On 4 November 1997, Jaime Fulo died of "acute renal failure secondary to 1st degree burn 70% secondary electrocution" while doing repairs at the residence and business establishment of petitioner Gapayao. Allegedly moved by his Christian faith, Gapayao extended some financial assistance to private respondent Rosario, wife of Jaime Fulo. Rosario then executed an Affidavit of Desistance stating that she was not holding them liable for the death of her late husband, and was waiving her right and desisting from filing any criminal or civil action against petitioner. Both parties then executed a Compromise Agreement. Thereafter, Rosario filed a claim for social security benefits with the SSS. However, upon verification and evaluation, it was discovered that the deceased was not a registered member of the SSS. Upon the insistence of Rosario that her late husband had been employed by petitioner, the SSS conducted a field investigation to clarify his status of employment. In its field investigation report, it found that Jaime Fulo is an employee of Mr. & Mrs. Jaime Gapayao. Consequently, the SSS demanded that petitioner remit the social security contributions of the deceased. Gapayao denied that the deceased was his employee. In asserting the existence of an employer-employee relationship, Rosario alleges that her late husband had been in the employ of petitioner for 14 years, from 1983 to 1997. During that period, he was made to work as a laborer in the agricultural landholdings, a harvester in the abaca plantation, and a repairman/utility worker in several business establishments owned by petitioner. This view is bolstered by the admission of petitioner himself in the Compromise Agreement that he was the deceased's employer. This position was similarly espoused by the SSC, which insists that pakyaw workers are considered employees, as long as the employer exercises control over them. The SSC further asserts that the deceased rendered services essential for the petitioner's harvest. While these services were not rendered continuously (in the sense that they were not rendered every day throughout the year), still, the deceased had never stopped working for petitioner from year to year until the day the former died. Petitioner, on the other hand, insists that the deceased was not his employee. Supposedly, the latter, during the performance of his function, was not under petitioner's control. Granting without admitting that petitioner gave rules or guidelines to the deceased in the process of the latter's performing his work, the situation cannot be interpreted as control, because it was only intended to promote mutually desired results. Alternatively, petitioner insists that the deceased was hired by Adolfo Gamba, the contractor whom he had hired to construct their building; and by Amado Gacelo, the tenant whom petitioner instructed to manage the latter's farm. Anent the Compromise Agreement, petitioner clarifies that it was executed to buy peace, because "respondent kept on pestering them by asking for money." Petitioner allegedly received threats that if the matter was not settled, private respondent would refer the matter to the NPA. Likewise, petitioner maintains that he shouldered the hospitalization and burial expenses to express his "compassion and sympathy to a distressed person and his family," and not to admit liability. Lastly, petitioner alleges that the deceased is a freelance worker. Since he was engaged on a pakyaw basis and worked for a short period of time, in the nature of a farm worker every season, he was not precluded from working with other persons and in fact worked for them. Issue: WON there exists an employer-employee relationship between Jaime Fulo and petitioner that would merit an award of benefits in favor of private respondent under social security laws. Ruling: YES. Farm workers may be considered regular seasonal employees. Undet Article 280 of the Labor Code, jurisprudence has identified the three types of employees mentioned in the provision: (1) regular employees or those who have been engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer; (2) project employees or those whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of their engagement, or those whose work or service is seasonal in nature and is performed for the duration of the season; and (3) casual employees or those who are neither regular nor project employees. Farm workers generally fall under the definition of seasonal employees. The Court has consistently held that seasonal employees may be considered as regular employees. Regular seasonal employees are those called to work from time to time. The nature of their relationship with the employer is such that during the off season, they are temporarily laid off; but reemployed during the summer season or when their services may be needed. They are in regular employment because of the nature of their job, and not because of the length of time they have worked.

This rule, however, is not absolute. Seasonal workers who have worked for one season only may not be considered regular employees. Also when seasonal employees are free to contract their services with other farm owners, then the former are not regular employees. For regular employees to be considered as such, the primary standard used is the reasonable connection between the particular activity they perform and the usual trade or business of the employer. This test has been explained thoroughly in De Leon v. NLRC: The primary standard, therefore, of determining a regular 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. The records reveal that the deceased was indeed a farm worker who was in the regular employ of petitioner. From year to year, the deceased had been working on petitioner's land by harvesting abaca and coconut, processing copra, and clearing weeds. His employment was continuous in the sense that it was done for more than one harvesting season. Moreover, no amount of reasoning could detract from the fact that these tasks were necessary or desirable in the usual business of petitioner. The other tasks allegedly done by the deceased outside his usual farm work only bolster the existence of an employer-employee relationship. As found by the SSC, the deceased was a construction worker in the building and a helper in the bakery, grocery, hardware, and piggery all owned by petitioner. This fact only proves that even during the off season, the deceased was still in the employ of petitioner. The most telling indicia of this relationship is the Compromise Agreement executed by petitioner and private respondent. Petitioner entered into the agreement with full knowledge that he was described as the employer of the deceased. This knowledge cannot simply be denied by a statement that petitioner was merely forced or threatened into such an agreement. Pakyaw workers are considered employees, provided they are subject to the control of petitioner. In Legend Hotel Manila v. Realuyo, the Court held that "the power of the employer to control the work of the employee is considered the most significant determinant of the existence of an employer-employee relationship. This is the socalled control test and is premised on whether the person for whom the services are performed reserves the right to control both the end achieved and the manner and means used to achieve that end." It should be remembered that the control test merely calls for the existence of the right to control, and not necessarily the exercise thereof. It is not essential that the employer actually supervises the performance of duties by the employee. It is enough that the former has a right to wield the power. In this case, we agree with the CA that petitioner wielded control over the deceased in the discharge of his functions. Being the owner of the farm on which the latter worked, petitioner on his own or through his overseer necessarily had the right to review the quality of work produced by his laborers. It matters not whether the deceased conducted his work inside petitioner's farm or not because petitioner retained the right to control him in his work, and in fact exercised it through his farm manager Amado Gacelo. The latter himself testified that petitioner had hired the deceased as one of the pakyaw workers whose salaries were derived from the gross proceeds of the harvest. The right of an employee to be covered by the Social Security Act is premised on the existence of an employeremployee relationship. That having been established, the Court hereby rules in favor of private respondent.