Labor Congress vs Nlrc and Empire Food Products

G.R. No. 123938 May 21, 1998 Labor Congress of the Philippines vs. NLRC Ponente: J. Davide, Jr. Doctrine: Application of LC Article 286(n) in determination of status of piece workers as regular workers versus LC Article 86 definition Facts: The 99 persons (Ana Marie Ocampo, Mary Intal, et al) as private petitioners in the proceeding (represented by the Labor Congress of the Phils.) were rank-and-file employees of private respondent Empire Food Products (a food and fruit processing company), hired on various dates. Ocampo et al filed against Empire an NLRC complaint for payment of money claims and for violation of labor standards laws. Alongside this they also filed a petition for direct certification for the Labor Congress to be their bargaining representative. On Oct. 23, 1990, petitioners represented by LCP, and private respondents Gonzalo and Evelyn Kehyeng (Kehyeng spouses) entered into a Memorandum of Agreement, recognizing the following:   

Status of LCP as sole and exclusive Bargaining Agent and Representative for all rank and file employees of the Empire Food Products regarding "wages, hours of work, and other terms and conditions of employment"; With regard to the NLRC complaint, all parties agree to resolve the issues during the Collective Bargaining Agreement; Proper adjustment of wages, withdrawal of case from the Calendar of NLRC, non-interference or any ULP act, etc.

On Oct. 24, 1990, the Mediator Arbiter approved the memorandum and certified LCP as the sole and exclusive bargaining agent for the rank-and-file employees of Empire. On November 1990, LCP President Navarro submitted to Empire a proposal for collective bargaining. However, on January 1991, the private petitioners Ana Marie et al filed a complaint for:  Unfair Labor Practices via Illegal Lockout and Dismissal;  Union-Busting through harassment, threats and interference to the right for self-organization;  Violation of the Oct. 23, 1990 memorandum  Underpayment of wages  Actual, moral and exemplary damages Labor Arbiter (Part 1):  Absolved Empire for ULP, union busting, violation of the memorandum of agreement, underpayment of wages and denied petitioners' prayer for actual, moral and exemplary damages.  Denied prayer for actual, moral and exemplary damages  Directed reinstatement of complainants, due to the fact that Empire did not keep its payroll records as per requirement of the DOLE. Admonition to Empire given as well re: further harassment and intimidation.

NLRC (Part 1):  Remanded case to Labor Arbiter for further proceedings due to overlooking “…the testimonies of some of the individual complainants which are now on record”. Labor Arbiter (Part 2):  Complainants failed to present with definiteness and clarity the particular act or acts constitutive of unfair labor practice.  Declaration of ULP connotes a finding of prima facie evidence of probability that a criminal offense may have been committed so as to warrant the filing of a criminal information before the regular court.  As regards the issue of harassment, threats and interference with the rights of employees to self-organization which is actually an ingredient of unfair labor practice, complainants failed to specify what type of threats or intimidation was committed and who committed the same. NLRC (Part 2):  Affirmed LA decision Part 2. Petitioners:  The fact that they are piece workers does not imply that they are not regular employees entitled for reinstatement.  LA and NLRC decisions were not supported by substantial evidence;  Abandonment of work was not proved by substantial evidence;  Much credit given to the Kehyeng spouses’ self-serving arguments. Respondents:  Ana Marie, et al were piece workers hence they are exempt from labor standards benefits Issues: 1. [RELEVANT] WON the petitioners are entitled to labor standard benefits, considering their status as piece rate workers. 2. WON the actions of Ana Marie, et al constituted abandonment of work. Held: 1. YES, petitioners are entitled to labor standards benefits, namely, holiday pay, premium pay, 13th month pay and service incentive leave. 2. NO, failure to appear to work did not constitute abandonment, Ratio: Supreme Court decision cites that Ana Marie, et al, despite being “pakyao” or piece workers does not imply that they are not regular employees entitled to reinstatement. Applying the two-fold test from LC Article 286(n) [Art. 280 (old)], the SC found that the supposedly piece workers had three factors in their favor: a) The nature of the tasks of Ana Marie, et al of repacking snack food items was NECESSARY and DESIRABLE in the usual business of Empire Foods, which is a food and fruit processing company. According to Tabas vs California Manufacturing, merchandisers of processed food who coordinates for sales of processed food was a necessity and was desirable for the day-to-day

operations of a food processing company. With more reason would the job of food packers be necessary for the day-to-day operations of a food processing plant. b) Ana Marie et al worked throughout the year, with their employment being independent from a specific project or season. c) The length of time that petitioners fulfilled the requirement of Article 286(n). Therefore, the SC considered the employees as regular employees despite their status as piece workers, according them benefits such as holiday pay, premium pay, 13th month pay and service incentive leave. The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, holiday pay, service incentive leave and 13th month pay, inter alia, "field personnel and other employees whose time and 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." However, petitioners as piece-rate workers do not fall within this group. Not only did the employees labor under the control of Empire, the employees also worked throughout the year to fulfil their quota as “basis for compensation”. Further, in Section 8 (b), Rule IV, Book III, piece workers are specifically mentioned as being entitled to holiday pay. Sec. 8. Holiday pay of certain employees. (b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday: Provided, however, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate. In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the modifications to P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those exempted from paying 13th month pay, to wit: 2.

EXEMPTED EMPLOYERS - The following employers are still not covered by P.D. No. 851: d. Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers.

However, the Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate category as those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same. They should also be paid for overtime pay, even though Sec. 2(e), Rule I, Book III of the Implementing Rules states that: “…workers who are paid by results including those who are paid on piece-work, takay, pakiao, or task basis, if their output rates are in accordance with the standards prescribed under Sec. 8,

Rule VII, Book III, of these regulations, or where such rates have been fixed by the Secretary of Labor in accordance with the aforesaid section, are not entitled to receive overtime pay.” In this case, Empire Foods did not allege that they adhered
to
the
standards
set forth
in
 Sec. 8, Rule VII, Book III, nor
with
the
rates
prescribed
by
the
Secretary
of
Labor. Therefore, even though they are piece workers, they are entitled to overtime pay With regard to the issue of abandonment of work, the SC cited the Office of Solicitor General’s observations: In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied on the testimony of Security Guard Rolando Cairo that on January 21, 1991, petitioners refused to work. As a result of their failure to work, the cheese curls ready for repacking on said date were spoiled… … The failure to work for one day, which resulted in the spoilage of cheese curls does not amount to abandonment of work. In fact two (2) days after the reported abandonment of work or on January 23, 1991, petitioners filed a complaint for, among others, unfair labor practice, illegal lockout and/or illegal dismissal. Furthermore, the SC stressed that the burden of proving the existence of just cause for dismissing an employee, such as abandonment, rests on the employer. According to the SC, Empire Foods failed to discharge this burden as basis for dismissing the employees. Also, the SC considered that, in terminating the employees for abandonment of work, Empire failed to serve to the employees a written notice of termination (as required by the Two-Notice rule and Section 2, Rule XIV, Book V of the Omnibus Rules), violating the employees’ right to security of tenure and the constitutional right to due process. Made by: John Michael Vida