G.R. Nos. 83380-81 November 15, 1989
MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G. INOCENCIO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA, SANDIGAN NG MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP and its members, et al., respondents.

FACTS

The private respondents were workers for petitioner Makati Haberdashery, Inc., performing tasks as tailors, seamstresses, and sewers, primarily paid on a piece-rate basis. They were required to work specific hours and were subject to company rules, including a memorandum dictating work procedures. The labor union filed a case (NLRC NCR Case No. 7-2603-84) for various monetary claims, including underpayment and non-payment of statutory benefits. During its pendency, two workers, Dioscoro Pelobello and Casimiro Zapata, were implicated in a incident involving a barong tagalog allegedly made for an outside customer in competition with the company. After being asked to explain, they were dismissed, leading to a separate complaint for illegal dismissal (NLRC NCR Case No. 2-428-85).

ISSUE

The primary issues were: (1) whether an employer-employee relationship existed between the petitioners and the piece-rate workers; (2) whether the workers were entitled to monetary claims like service incentive leave pay; and (3) whether the dismissal of Pelobello and Zapata was legal.

RULING

The Supreme Court affirmed the existence of an employer-employee relationship. Applying the four-fold test, particularly the “control test,” the Court found that petitioners exercised supervision over the workers’ performance, dictating the manner, quality, and methods of their work, as evidenced by company memoranda. This control established the relationship, making the workers regular employees entitled to statutory benefits.
However, the Court modified the NLRC decision on two points. First, it deleted the award of service incentive leave pay. The Court reasoned that since the workers were paid purely on a piece-rate basis and their claims for minimum wage underpayment were dismissed for lack of merit, they did not fall under the category of workers entitled to such leave pay under the implementing rules, which required entitlement to the minimum wage.
Second, the Court reversed the finding of illegal dismissal regarding Pelobello and Zapata. It held that the act of copying a company design for an outside customer constituted willful breach of trust and a prejudicial act against the employer’s business, constituting just cause for termination under Article 282 of the Labor Code. The employer’s right to dismiss for a valid cause was upheld, as the Constitution’s policy of social justice does not preclude the enforcement of disciplinary action for acts inimical to the employer’s interests. Thus, the complaint for illegal dismissal was dismissed.