ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD, BENJAMIN BRIZUELA, NORLITO LADIA, MARCELO AGUILAN, DAVID ORO, NELIA BRIZUELA, FLORA ESCOBIDO, JUSTILITA CABANIG, AND D…

A basic factor underlying the exercise of rights and the filing
of claims for benefits under the Labor Code and other presidential issuances or
labor legislations is the status and nature of one’s employment. Whether an employer-employee relationship
exists and whether such employment is managerial in character or that of a rank
and file employee are primordial considerations before extending labor
benefits. Thus, the petitioners in this
case seek a definitive ruling on the status and nature of their employment with
Broad Street Tailoring and pray for the nullification of the resolution dated
May 12, 1986 of the National Labor Relations Commission in NLRC Case No.
RB-IV-21558-78-T affirming the decision of Labor Arbiter Ernilo V. Peñalosa dated May 28, 1979, which held
eleven of them as independent contractors and the remaining one as an employee
but of managerial rank.

The facts of the case show that petitioner Elias Villuga was
employed as cutter in the tailoring shop owned by private respondent Rodolfo
Zapanta and known as Broad Street Tailoring located at Shaw Boulevard,
Mandaluyong, Metro Manila. As cutter,
he was paid a fixed monthly salary of P840.00 and a monthly
transportation allowance of P40.00. In addition to his work as cutter, Villuga was assigned the chore of
distributing work to the shop’s tailors or sewers when both the shop’s manager
and assistant manager would be absent. He saw to it that their work conformed with the pattern he had prepared
and if not, he had them redone, repaired or resewn.

The other petitioners were either ironers, repairmen and
sewers. They were paid a fixed amount
for every item ironed, repaired or sewn, regardless of the time consumed in
accomplishing the task. Petitioners did
not fill up any time record since they did not observe regular or fixed hours
of work. They were allowed to perform
their work at home especially when the volume of work, which depended on the
number of job orders, could no longer be coped up with.

From February 17 to 22, 1978, petitioner Villuga failed to report
for work allegedly due to illness. For
not properly notifying his employer, he was considered to have abandoned his
work.

In a complaint dated March 27, 1978, filed with the Regional
Office of the Department of Labor, Villuga claimed that he was refused
admittance when he reported for work after his absence, allegedly due to his
active participation in the union organized by private respondent’s
tailors. He further claimed that he was
not paid overtime pay, holiday pay, premium pay for work done on rest days and
holidays, service incentive leave pay and 13th month pay.

Petitioners Renato Abistado, Jill Mendoza, Benjamin Brizuela and
David Oro also claimed that they were dismissed from their employment because
they joined the Philippine Social Security Labor Union (PSSLU). Petitioners Andres Abad, Norlito Ladia,
Marcelo Aguilan, Nelia Brizuela, Flora Escobido, Justilita Cabaneg and Domingo
Saguit claimed that they stopped working because private respondents gave them
few pieces of work to do after learning of their membership with PSSLU. All the petitioners laid claims under the
different labor standard laws which private respondent allegedly violated.

On May 28, 1979, Labor Arbiter Ernilo V. Peñalosa rendered a
decision ordering the dismissal of the complaint for unfair labor practices,
illegal dismissal and other money claims except petitioner Villuga’s claim for
13th month pay for the years 1976, 1977 and 1980. The dispositive portion of the decision states as follows:

“WHEREFORE, premises considered, the respondent
Broad Street Tailoring and/or Rodolfo Zapanta are hereby ordered to pay
complainant Elias Villuga the sum of ONE THOUSAND TWO HUNDRED FORTY-EIGHT PESOS
AND SIXTY-SIX CENTAVOS (P1,248.66) representing his 13th month pay for
the years 1976, 1977 and 1978. His
other claims in this case are hereby denied for lack of merit.

“The complaint insofar as the other eleven (11)
complainants are concerned should be, as it is hereby dismissed for want of
jurisdiction.”^[1]

On appeal, the National Labor Relations Commission affirmed the
questioned decision in a resolution dated May 12, 1986, the dispositive portion
of which states as follows:

“WHEREFORE, premises considered, the decision appealed
from is, as it is hereby AFFIRMED, and the appeal dismissed.”^[2]

Presiding Commissioner Guillermo C. Medina merely concurred in the result while Commissioner
Gabriel M. Gatchalian rendered a dissenting opinion which states as follows:

“I am for upholding employer-employee relationship as argued by
the complainants before the Labor Arbiter and on appeal. The further fact that the proposed decision
recognizes complainants’ status as piece-rate worker all the more crystallizes
employer-employee relationship the benefits prayed for must therefore be
granted.”^[3]

Hence, petitioners filed this instant certiorari case on
the following grounds:

“1.
That the respondent National Labor Relations Commission abused its discretion
when it ruled that petitioner/complainant, Elias Villuga falls within the
category of a managerial employee;

“2. x x x when it ruled that the herein
petitioners were not dismissed by reason of their union activities;

“3. x x x when it ruled that petitioners Andres
Abad, Benjamin Brizuela, Norlito Ladia, Marcelo Aguilan, David Oro, Nelia
Brizuela, Flora Escobido, Justilita Cabaneg and Domingo Saguit were not employees
of private respondents but were contractors.

“4.  x x x when it ruled that petitioner Elias
Villuga is not entitled to overtime pay and services for Sundays and Legal
Holidays; and

“5.  x x x when it failed to grant petitioners
their respective claims under the provisions of P.D. Nos. 925, 1123 and
851.”^[4]

Under Rule I,
Section 2(c), Book III of the Implementing Rules of the Labor Code, to be a
member of a managerial staff, the following elements must concur or co-exist,
to wit: (1) that his primary duty
consists of the performance of work directly related to management policies;
(2) that he customarily and regularly exercises discretion and independent
judgment in the performance of his functions; (3) that he regularly and
directly assists in the management of the establishment; and (4) that he does
not devote twenty per cent of his time to work other than those described
above.

Applying the above criteria to petitioner Elias Villuga’s case,
it is undisputed that his primary work or duty is to cut or prepare patterns
for items to be sewn, not to lay down or implement any of the management
policies, as there is a manager and an assistant manager who perform said
functions. It is true that in the
absence of the manager and assistant manager, he distributes and assigns work
to employees but such duty,
though involving discretion, is occasional and not regular or customary. He had also the authority to order the
repair or resewing of defective items but such authority is part and parcel of
his function as cutter to see to it that the items cut are sewn correctly lest
the defective nature of the workmanship be attributed to his “poor
cutting.” Elias Villuga does not participate in policy-making. Rather, the functions of his position
involve execution of approved and established policies. In Franklin
Baker Company of the Philippines v. Trajano,^[5] it was held that employees who do
not participate in policy-making but are given ready policies to execute and
standard practices to observe are not managerial employees. The test of “supervisory or managerial
status” depends on whether a person possesses authority that is not merely
routinary or clerical in nature but one that requires use of independent
judgment. In other words, the functions
of the position are not managerial in nature if they only execute approved and
established policies leaving little or no discretion at all whether to
implement said policies or not.^[6]

Consequently, the exclusion of Villuga from the benefits claimed
under Article 87 (overtime pay and premium pay for holiday and rest day work),
Article 94, (holiday pay), and Article 95 (service incentive leave pay) of the
Labor Code, on the ground that he is a managerial employee is unwarranted. He is definitely a rank and file employee
hired to perform the work of a cutter
and not hired to perform supervisory or managerial functions. The fact that he is uniformly paid by the
month does not exclude him from
the benefits of holiday pay as held in the case of Insular Bank of America
Employees Union v. Inciong^[7]. He should therefore be paid in
addition to the 13th month pay, his overtime pay, holiday pay, premium pay for
holiday and rest day, and service incentive leave pay.

As to the dismissal of the charge for unfair labor practices of
private respondent consisting of termination of employment of petitioners and
acts of discrimination against members of the labor union, the respondent
Commission correctly held the absence of evidence that Mr. Zapanta was aware of
petitioners’ alleged union membership on February 22, 1978 as the notice of
union existence in the establishment with proposal for recognition and
collective bargaining negotiation was received by management only on March 3,
1978. Indeed, self-serving allegations
without concrete proof that the private respondent knew of their membership in
the union and accordingly reacted against their membership do not suffice.

Nor is private respondent’s claim that petitioner Villuga
abandoned his work acceptable. For
abandonment to constitute a valid cause for dismissal, there must be a
deliberate and unjustified refusal of the employee to resume his
employment. Mere absence is not
sufficient; it must be accompanied by overt acts unerringly pointing to the
fact that the employee simply does not want to work anymore.^[8]
At any rate, dismissal of an employee due to his prolonged absence without
leave by reason of illness duly established by the presentation of a medical
certificate is not justified.^[9] In
the case at bar, however, considering that petitioner Villuga absented himself
for four (4) days without leave and without submitting a medical certificate to
support his claim of illness, the imposition of a sanction is justified, but
surely, not dismissal, in the light of the fact that this is petitioner’s first
offense. In lieu of reinstatement,
petitioner Villuga should be paid separation pay where reinstatement can no
longer be effected in view of the long passage of time or because of the
realities of the situation.^[10] But
petitioner should not be granted backwages in addition to reinstatement as the
same is not just and equitable under the circumstances considering that he was
not entirely free from blame.^[11]

As to the other eleven petitioners, there is no clear showing
that they were dismissed because the circumstances surrounding their dismissal
were not even alleged. However, we
disagree with the finding of respondent Commission that the eleven petitioners
are independent contractors.

For an employer-employee relationship to exist, the following
elements are generally considered: “(1) the selection and engagement of the employee; (2) the payment
of wages; (3) the power of dismissal; and (4) the power to control the
employee’s conduct.”^[12]

Noting that the herein petitioners were oftentimes allowed to
perform their work at home and were paid wages on a piece-rate basis, the
respondent Commission apparently found the second and fourth elements lacking
and ruled that “there is no employer-employee relationship, for it is
clear that respondents are interested only in the result and not in the means
and manner and how the result is obtained.”

Respondent Commission is in error. The mere fact that petitioners were paid on a piece-rate basis is
no argument that herein petitioners were not employees. The term “wage” has been broadly
defined in Article 97 of the Labor Code as remuneration or earnings, capable of
being expressed in terms of money whether fixed or ascertained on a time, task,
piece or commission basis x x x.” The facts of this case indicate that payment
by the piece is just a method of compensation and does not define the essence
of the relations.^[13] That
petitioners were allowed to perform their work at home does not likewise imply
absence of control and supervision. The
control test calls merely for the existence of a right to control the manner of
doing the work, not the actual exercise of the right.^[14]

In determining whether the relationship is that of employer and
employee or one of an independent contractor, “each case must be
determined on its own facts and all the features of the relationship are to be
considered.”^[15]
Considering that petitioners who are either sewers, repairmen or ironer, have
been in the employ of private respondent as early as 1972 or at the latest in
1976, faithfully rendering services which are desirable or necessary for the
business of private respondent, and observing management’s approved standards
set for their respective lines of work as well as the customers’ specifications,
petitioners should be considered employees, not independent contractors.

Independent contractors are those who exercise independent
employment, contracting to do a piece of work according to their own methods
and without being subjected to control of their employer except as to the
result of their work. By the nature of
the different phases of work in a tailoring shop where the customers’
specifications must be followed to the letter, it is inconceivable that the
workers therein would not be subjected
to control.

In Rosario
Brothers, Inc. v. Ople,^[16] this Court
ruled that tailors and similar workers hired in the tailoring department,
although paid weekly wages on piece-work basis, are employees not independent
contractors. Accordingly, as regular
employees, paid on a piece-rate basis, petitioners are not entitled to overtime
pay, holiday pay, premium pay for
holiday/rest day and service incentive leave pay. Their claim for separation pay should also be denied for
lack of evidence that they were in fact dismissed by private respondent. They should be paid, however, their 13th
month pay under PD. 851, since they are employees not independent contractors.

WHEREFORE, in view of the foregoing reasons, the assailed
decision of respondent National Labor Relations Commission is hereby MODIFIED
by awarding –

(a)  in favor of petitioner Villuga, overtime pay,
holiday pay, premium pay for holiday and rest day, service incentive leave pay
and separation pay, in addition to his 13th month pay; and

(b)  in favor of the rest of the petitioners, their
respective 13th month pay.

The case is hereby REMANDED to the National Labor Relations
Commission for the computation of the claims herein-above mentioned.

SO ORDERED.

Narvasa, C.J., (Chairman), Padilla, Regalado, and Puno, JJ., concur.

^[1]
Rollo, pp. 12-13.

^[2]
Ibid., p. 17.

^[3]
Ibid.

^[4]
Rollo, pp. 5-9.

^[5]
G.R. No. 75039, 157 SCRA 416 (1988).

^[6]
Southern Philippines Federation of Labor (SPFL) v. Calleja, G.R. No.
80882, 172 SCRA 676 (1989).

^[7]
G.R. No. 52415, 132 SCRA 663 (1984).

^[8]
Flexo Manufacturing Corporation v. NLRC, et al. G.R. No. 55971, 135 SCRA
145 (1985); Nueva Ecija Electric Cooperative, Inc. v. Minister of Labor,
et al., G.R. No. 61965, 184 SCRA 25 (1990).

^[9]
Atlas Consolidated Mining and
Development Corporation v. NLRC, et al., G.R. No. 75751, 190 SCRA 505
(1990).

^[10]
Esmalin v. NLRC, G.R. No. 67880, 177 SCRA 537 (1989).

^[11]
See: San Miguel Corporation v.
NLRC, G.R. No. 60067, 115 SCRA 907 (1982)

^[12]
Singer Sewing Machine Co. v. Drilon, G.R. No. 91307, 193 SCRA 270
(1991); Deferia v. National Labor Relations Commission, G.R. No. 78713;
194 SCRA 525; Ecal v. National Labor Relations Commission, G.R. Nos.
92777-78, 195 SCRA 224 (1991); Hijos de F. Escaño, Inc. v. NLRC, G.R.
No. 59229, 201 SCRA 63 (1991).

^[13]
Dy Keh Beng v. International Labor and Marine Union of the Philippines,
et al., G.R. No. L-32245, 90 SCRA 161 (1979).

^[14]
Feati University v. Bautista, et al., G.R. No. L-21500, 18 SCRA 1191
(1966).

^[15]
56 CJS 45.

^[16]
G.R. No. 53590, 131 SCRA 72 (1984).