Labor Congress of the Philippines (LCP) for and in behalf of its 99 members named as

petitioners v. NLRC, Empire Food Products, its Proprietor/President & Manager, Mr. Gonzalo
Kehyeng and Mrs. Evelyn Kehyeng
21 May 1998 | 1st Division | J. Davide Jr.

Facts:
1. The 99 persons names as petitioners were rank and file employees of Empire Food
Products paid on a piece rate basis (pakiao basis). They filed a complaint against the
company for payment of money claims and for violation of labor standards law. They
also filed a petition for direct certification of LCP as their sole bargaining representative.
2. LCP and the company entered into a MOA wherein:
- the company recognized the LCP and its local chapter as the sole and exclusive
bargaining agent of the rank and file EEs of the company
- both parties agreed that the issues of the case filed shall be discussed and resolved by
the parties during the CBA negotiations
- the parties agreed that the NLRC case be provisionally withdrawn in consideration
of the agreements of the parties.
3. The MOA was approved by the mediator arbiter and the LCP was certified as the sole
and exclusive bargaining agent for the rank and file EEs.
4. LCP submitted to the company a proposal for collective bargaining.
5. LCP filed a complaint against the respondents for:
- ULP by way of illegal lockout and/or dismissal
- Union busting thru harassments, threats, and interfering with the rights of
employees to self-organization
- Violation of the MOA
- Underpayment of wages
- Actual, Moral, and Exemplary Damages.
6. LA: absolved the company from the claims of the petitioners but directed the
reinstatement of the individual complainants.
7. NLRC: Vacated the LAs decision and remanded the case to the LA for the reason that
the LA must have overlooked the testimonies of some of the individual complainants
which are on record.
8. LA: Dismissed the complaint for lack of merit.
- The complainants failed to present with definiteness and clarity the particular act/s
constitutive of ULP. The charge of illegal lockout is unfounded because it was the
complainant-petitioners who abandoned their work.
- They also failed to specify the type of threats or intimidation committed and who
committed the same
- There is no obligation on the part of the company to resolve the issues raised in the
first case as the NLRC has the exclusive jurisdiction thereof.
- There was no underpayment of wages as the complainants admitted that they are
piece workers or paid on a pakiao basis. The only limitation for piece workers is that
they should receive compensation no less than the minimum wage for at least 8
hours of work
9. NLRC: affirmed in toto LAs decision

Issues:
1. W/N complainants-petitioners were illegally dismissed. YES.
2. W/N complainants-petitioners are entitled to holiday pay, premium pay, 13th month pay, and
service incentive leave. YES
3. W/N complainants-petitioners are entitled to overtime pay. YES
Ratio:
1. The LA concluded in his Decision that the complainants-petitioners abandoned their work on
the basis of the sole testimony of Empires security guard. The LA in coming up with the
Decision, which was later on affirmed in toto by the NLRC, appeared to be motivated by, at
worst, spite, or at best, lackadaisically glossed over the petitioners evidence. Apparently, the
LA perceived that if not for petitioners, he would not have fallen victim to the stinging
rebuke by the NLRC.

The Court agreed with the OSG that the failure to work for one day, which resulted in the
spoilage of cheese curls does not amount to abandonment of work. In fact 2 days after, the
petitioners filed a complaint for, among others, ULP, illegal lockout and/or illegal dismissal.
In several cases the Court held that one could not possibly abandon his work and shortly
thereafter vigorously pursue his complaint for illegal dismissal.

The company also failed to overcome its burden of proving the existence of just cause for the
dismissing an EE. Likewise, the company violated the rights to security of tenure and to due
process in not even serving the EEs with a written notice of termination.

2. Definition: Piece rate workers - workers 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

Although petitioners are piece rate workers, they are regular employees of the company.
They are performing tasks (repacking snack foods) necessary or desirable in the usual
business of the company (manufacture and sale of food products); they worked throughout
the year, their employment not dependent on a specific project or season; and the length of
time that they worked for the company.

The Labor Code IRR excludes certain employees from receiving nighttime pay, holiday pay,
SIL, 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." Petitioners as piece rate
workers do not fall within this group. Not only did petitioners labor under the control of
their employer, likewise did petitioners toil throughout the year with the fulfillment of their
quota as supposed basis for compensation.

Further, in Section 8 (b), Rule IV, Book III of the Labor Code IRR specifically mentioned piece
workers as being entitled to holiday pay.

In addition, Revised IRR of the 13th Month Pay Law clearly exclude ER of piece rate workers
from those exempted from paying 13th month pay.

3. 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. Here, private respondents did not allege
adherence to the standards set forth in Sec. 8 nor with the rates prescribed by the
Secretary of Labor. As such, petitioners are therefore entitled to overtime pay.