Makati Haberdashery vs NLRC

G.R. No. 83380-81 15 November 1989 Penned by Justice Fernan Nature: Petition for certiorari to review the decision of the NLRC which affirmed the decision of the Labor Arbiter who jointly heard and decided two cases filed by the Union in behalf of the private respondents MAIN FACTS: Individual complainants are working for Makati Haberdashery Inc as tailors, seamstress, sewers, basters, and plantsadoras and are paid on a piece-rate basis (except two petitioners who are paid on a monthly basis) In addition, they are given a daily allowance of P 3.00 provided they report before 9:30 a.m. everyday. Work schedule: 9:30-6 or 7 p.m., Mondays to Saturdays and even on Sundays and holidays during peak periods. The Sandigan ng Manggagawang Pilipino filed a complaint for underpayment of the basic wages, underpayment of living allowance, nonpayment of overtime work, nonpayment of holiday pay, and other money claims. The Labor Arbiter rendered judgment in favor of complainants which the NLRC affirmed but limited back wages to one year. Petitioner urged that the NLRC erred in concluding that an employer-employee relationship existed between the petitioner and the workers. Issue: 1. WON employees paid on piece-rate basis are entitled to service incentive pay? 2. WON there is an Employer-Employee Relationship? Held: 1. NO, fall under exceptions set forth in the implementing rules (this will be reexamined under Article 101). 2. Yes, evident in a Memorandum issued by the Assistant Manager. Ratio: 1. As to the service incentive leave pay: as piece-rate workers being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof, they fall under the exceptions stated in Sec1(d), Rule V, IRR, Book III, Labor Code. Service Incentive Leave SECTION 1. Coverage. This rule shall apply to all employees except: (d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof; 2. Employer-Employee Relationship There is such relationship because in the application of the four-fold test, it was found that petitioners had control over the respondents not only as to the result but also as to the means and method by which the same is to be accomplished. Such control is proven by a memorandum

which enumerates procedures and instructions regarding job orders, alterations, and their behavior inside the shop issued by the Assistant Manager which reads in part: "Effective immediately, new procedures shall be followed: a. To follow instruction and orders from the undersigned b. Before accepting the job orders, tailors must check the materials, job orders, due dates, and other things to maximize efficiency c. Effective immediately all job orders, must be finished one day before the due date. This can be done by proper scheduling of job order and if you will cooperate with your supervisors. xxxx d. If there is any problem regarding supervisors or co-tailor inside our shop, consult with me at once to settle the problem. Fighting inside the shop is strictly prohibited. Any tailor violating this memorandum will be subject to disciplinary action.
WHEREFORE, the decision of the National Labor Relations Commission dated March 30, 1988 and that of the Labor Arbiter dated June 10, 1986 are hereby modified. The complaint filed by Pelobello and Zapata for illegal dismissal docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack of factual and legal bases. Award of service incentive leave pay to private respondents is deleted. SO ORDERED.

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OTHER FACTS: (there are only two main issues, just in case this is going to be asked) While the first case was pending decision, Pelobello left an open package containing a jusi barong tagalong with salesman Rivera. He was caught and confronted about this and he explained that this was ordered by Zapata, also a worker, for his (personal) customer. Zapata allegedly admitted that he copied the design of the company but later denied ownership of the same. They were made to explain why no action should be taken against them for accepting a job order which is prejudicial and in direct competition with the business. However they did not submit and went on AWOL until the period given for them to explain expired hence the dismissal. Illegal dismissal complaint on the second case filed before the Labor Arbiter Diosana (THIS IS THE 3rd ISSUE IN THE FULL CASE). LA declared petitioners guilty of illegal dismissal and ordered to reinstate Pelobello and Zapata and found petitioners violating decrees of Cost-Of-Living Allowance (COLA), service incentive and 13th month pay. Commission analyst was directed to compute the monetary awards which retroacts to three years prior to filing of case.

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Other issues discussed: Minimum Wage Held: No dispute that entitled to minimum wage but court dismissed case for lack of sufficient evidence to support claim that there was in fact underpayment which was ruled by the LAand which the private respondents did not appeal to in the NLRC nor in the SC. Well-settled is the rule that an appellee who has not himself appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the decision of the court below. COLA (Cost-Of-Living Allowance) Held: Entitled. They are regular employees. IRR of Wage No. 1, 2, and 5 provide that all workers in the private sector, regardless of their position, designation of status, and irrespective of the method by which their wages are paid are entitled to such allowance. 13th Month pay Held: Entitled under Sec. 3(e) of the IRR of PD 851 which is an exception to the exception of such provision which states that employers whose workers are paid on piece-rate basis in which are covered by such issuance in so far as such workers are concerned. Illegal dismissal Held: Dismissed for justifiable ground based on Article 283 (a)and (c). Inimical to the interest of the employer. Not dismissed just because of union activities.

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