AVELINO LAMBO AND VICENTE BELOCURA, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION AND J.C. TAILOR SHOP AND/OR JOHNNY CO, RESPONDENTS.

Lambo versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by Avelino Lambo and Vicente Belocura against the National Labor Relations Commission and J.C. Tailor Shop and Johnny Co. The petitioners were tailors who had been declared illegally dismissed by a Labor Arbiter, only to have that victory reversed on appeal by the Commission. The case matters because it gathers in one decision the whole architecture of the labor relationship: how a piece-rate worker is classified, how abandonment of work must be proved, when a quitclaim is void, and how backwages and separation pay are computed. For a Bar candidate, it is a compact review of the employer-employee test and the protection of labor rights.

Procedural History

The petitioners filed a complaint for illegal dismissal and money claims before the Labor Arbiter. Labor Arbiter Jose G. Gutierrez found the private respondents guilty of illegal dismissal and awarded backwages, overtime pay, holiday pay, thirteenth month pay, separation pay, and attorney's fees. On appeal, the National Labor Relations Commission reversed the Labor Arbiter, holding that the petitioners had abandoned their work, and deleted all awards except the thirteenth month pay of four thousand nine hundred ninety-two pesos for each petitioner. The petitioners then came to the Supreme Court by petition for certiorari to set aside the Commission's decision.

Facts

Avelino Lambo and Vicente Belocura were employed as tailors by J.C. Tailor Shop and Johnny Co, on September 10, 1985 and March 3, 1985, respectively. They worked from eight in the morning to seven in the evening daily, including Sundays and holidays. Like the other one hundred employees, they were paid on a piece-work basis according to the style of suits they made, but regardless of the number of pieces finished in a day, each was given a daily pay of at least sixty-four pesos.

On January 17, 1989, the petitioners filed a complaint for illegal dismissal and sought overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, thirteenth month pay, and attorney's fees. The Labor Arbiter found illegal dismissal and awarded the claims.

On appeal, the Commission found that the petitioners had not been dismissed but had merely been threatened with closure of the business if they insisted on their demand for straight payment of minimum wage, after they walked out of a meeting on January 17, 1989. The Commission held them guilty of abandonment and deleted all awards except thirteenth month pay. The petitioners alleged they were dismissed as they were about to file a petition with the Department of Labor and Employment for benefits such as Social Security System coverage, sick leave, and vacation leave, and denied abandoning their work.

Issues

• Whether or not the petitioners were regular employees of the private respondents despite being paid on a piece-rate basis.
• Whether or not the petitioners abandoned their work, thereby justifying the dismissal of their claims.
• Whether or not the compromise agreement and quitclaim signed by petitioner Avelino Lambo barred his money claims.
• Whether or not the Labor Arbiter correctly awarded backwages, overtime pay, holiday pay, thirteenth month pay, separation pay, and attorney's fees.

Applicable Provisions

Article 97 of the Labor Code defines wage, and the Court quotes it to show that payment by the piece is merely a method of compensation:

Wage is the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered.

This definition matters because it establishes that a piece-rate worker is still an employee receiving wages, not an independent contractor.

Article 280 of the Labor Code governs regular employment, and the Court cites it to show that the petitioners' work was necessary or desirable in the usual business of the employer:

Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding 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 service to be performed is seasonal in nature and the employment is for the duration of the season.

This provision bears on the case because the petitioners worked throughout the year, not on a specific project or season, and for more than one year.

Ruling

On the first issue, the Court held that the petitioners were regular employees. There are two categories of employees paid by results: those whose time and performance are supervised by the employer, and those whose time and performance are unsupervised. Piece-rate workers who perform their work in the company premises belong to the first category. The Court applied the four elements of the employer-employee relationship: the selection and engagement of the employee, the payment of wages, the power of dismissal, and the power to control the employee's conduct. The most important criterion is control over the means and methods by which the result is accomplished. The private respondents exercised control, as the petitioners worked in the company premises from eight in the morning to seven in the evening daily, including Sundays and holidays. The mere fact of piece-rate payment does not negate regular employment, and the absence of Social Security System coverage does not affect the relationship.

On the second issue, the Court held that abandonment was not proved. To justify a finding of abandonment, there must be proof of a deliberate and unjustified refusal to resume employment, and the burden is on the employer. Mere absence is not sufficient; it must be accompanied by manifest acts unerringly pointing to the fact that the employee does not want to work anymore. The private respondents offered only self-serving affidavits, and the petitioners lost no time in filing the case for illegal dismissal, which negates any intention to sever the relationship. Abandonment is a matter of intention and cannot be inferred from equivocal acts.

On the third issue, the Court held that the quitclaim was invalid. Not all quitclaims are per se invalid, but those wangled from an unsuspecting person or whose terms are unconscionable on their face are void. Considering that the Labor Arbiter had awarded petitioner Lambo ninety-four thousand seven hundred nineteen pesos and twenty centavos, the ten thousand pesos paid to cover any and all monetary claims was clearly unconscionable. Quitclaims are looked upon with disfavor as contrary to public policy and are ineffective to bar claims for the full measure of the workers' legal rights.

On the fourth issue, the Court held that the awards were proper. As the petitioners were illegally dismissed, they are entitled to reinstatement with backwages. Because the dismissal occurred on January 17, 1989, prior to March 21, 1989, the recovery of backwages is limited to three years without qualifications or deductions. The Labor Arbiter correctly ordered separation pay, since considerable time had lapsed and reinstatement would be impractical, at the rate of one month salary for every year of service, with a fraction of at least six months considered as one year. The awards for overtime pay, holiday pay, and thirteenth month pay are in accordance with the finding that the petitioners are regular employees, although paid on a piece-rate basis.

Doctrine

A piece-rate worker who performs work in the employer's premises under the employer's supervision is a regular employee. Payment by the piece is merely a method of compensation and does not define the essence of the employment relationship. The most important element of the employer-employee relationship is the employer's power to control the employee not only as to the result of the work but also as to the means and methods by which the result is accomplished. Abandonment of work requires proof of a deliberate and unjustified refusal to resume employment, and the burden of proof is on the employer; mere absence is not sufficient. Quitclaims are invalid where the waiver was wangled from an unsuspecting person or where the terms of settlement are unconscionable on their face. Backwages for dismissals occurring before March 21, 1989 are limited to three years without qualifications or deductions.

Disposition

The petition was granted; the decision of the National Labor Relations Commission was set aside and the decision of the Labor Arbiter was reinstated, with the awards of backwages, overtime pay, holiday pay, thirteenth month pay, separation pay, and attorney's fees in favor of the petitioners.

Remember This

Memorize this line: payment by the piece is just a method of compensation and does not define the essence of the employment relationship. Examiners like to use this case to test the employer-employee relationship test, the requisites of abandonment, and the invalidity of unconscionable quitclaims.