448 SUPREME COURT REPORTS ANNOTATED

Makati Haberdashery, Inc. vs. NLRC

*
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 (Labor Arbiter, Department of Labor and
Employment, National Capital Region), SANDIGAN NG
MANGGAGAWANG PILIPINO (SANDIGAN)—TUCP and
its members, JACINTO GARCIANO, ALFREDO C.
BASCO, VICTORIO Y. LAURETO, ESTER NARVAEZ,
EUGENIO L. ROBLES, BELEN N. VISTA, ALEJANDRO
A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA,
GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G.
DIMPAS, MERILYN A. VIRAY, LILY OPINA, JANET
SANGDANG, JOSEFINA ALCOCEBA and MARIA
ANGELES, respondents.

Labor Relations; Employer-Employee Relationship; Four-Fold

Test of Employer-Employee Relationship; Control Test, Defined.—
We have repeatedly held in countless decisions that the test of
employer-employee relationship is four-fold: (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. It is the so-called “control test” that is the most
important element. This simply means the determination of
whether the employer controls or has reserved

________________

* THIRD DIVISION.

449

VOL. 179, NOVEMBER 15, 1989 449

 Makati Haberdashery, Inc. vs. NLRC

the right to control the employee not only as to the result of the
work but also as to the means and method by which the same is to
be accomplished.
Labor Standards; Private respondents are not entitled to
service incentive leave pay and holiday pay because as piece-rate
workers they fall under the exceptions set forth in the
implementing rules.—On the other hand, while private
respondents are entitled to Minimum Wage, COLA and 13th
Month Pay, they are not entitled to service incentive leave pay
because as piece-rate workers being paid at a fixed amount for
performing work irrespective of time consumed in the
performance thereof, they fall under one of the exceptions stated
in Section 1(d), Rule V, Implementing Regulations, Book III,
Labor Code. For the same reason private respondents cannot also
claim holiday pay (Section 1(e), Rule IV, Implementing
Regulations, Book III, Labor Code).
Labor Law; Dismissal of Employees; An employer has the
right to dismiss an employee whose continuance in the service is
inimical to the employer’s interest.—Assuming that such acts do
not constitute abandonment of their jobs as insisted by private
respondents, their blatant disregard of their employer’s
memorandum is undoubtedly an open defiance to the lawful
orders of the latter, a justifiable ground for termination of
employment by the employer expressly provided for in Article
283(a) of the Labor Code as well as a clear indication of guilt for
the commission of acts inimical to the interests of the employer,
another justifiable ground for dismissal under the same Article of
the Labor Code, paragraph (c). Well established in our
jurisprudence is the right of an employer to dismiss an employee
whose continuance in the service is inimical to the employer’s
interest.
Same; Same; Right to dismiss for just and valid cause
pertains in the first place to the employer.—Finally, it has been
established that the right to dismiss or otherwise impose
disciplinary sanctions upon an employee for just and valid cause,
pertains in the first place to the employer, as well as the authority
to determine the existence of said cause in accordance with the
norms of due process. There is no evidence that the employer
violated said norms. On the contrary, private respondents who
vigorously insist on the existence of employer-employee
relationship, because of the supervision and control of their
employer over them, were the very ones who exhibited their lack
of respect and regard for their employer’s rules.
PETITION for certiorari to review the decision of the
National Labor Relations Commission.

450

450 SUPREME COURT REPORTS ANNOTATED

Makati Haberdashery, Inc. vs. NLRC

The facts are stated in the opinion of the Court.

     Ledesma, Saludo & Associates for petitioners.
     Pablo S. Bernardo for private respondents.

FERNAN, C.J.:

This petition for certiorari involving two separate cases

filed by private respondents against herein petitioners
assails the decision of respondent National Labor Relations
Commission in NLRC CASE No. 7-2603-84 entitled
“Sandigan Ng Manggagawang Pilipino (SANDIGAN)—
TUCP etc., et al. v. Makati Haberdashery and/or Toppers
Makati, et al.” and NLRC CASE No. 2-428-85 entitled
“Sandigan Ng Manggagawang Pilipino (SANDIGAN)—
TUCP etc., et al. v. Toppers Makati, et al.”, affirming the
decision of the Labor Arbiter who jointly heard and decided
aforesaid cases, finding: (a) petitioners guilty of illegal
dismissal and ordering them to reinstate the dismissed
workers and (b) the existence of employer-employee
relationship and granting respondent workers by reason
thereof their various monetary claims.
The undisputed facts are as follows:
Individual complainants, private respondents herein,
have been working for petitioner Makati Haberdashery,
Inc. as tailors, seamstress, sewers, basters (manlililip) and
“plantsadoras”. They are paid on a piece-rate basis except
Maria Angeles and Leonila Serafina who are paid on a
monthly basis. In addition to their piece-rate, they are
given a daily allowance of three (P3.00) pesos provided they
report for work before 9:30 a.m. everyday.
Private respondents are required to work from or before
9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday
and during peak periods even on Sundays and holidays.
On July 20, 1984, the Sandigan ng Manggagawang
Pilipino, a labor organization of the respondent workers,
filed a complaint docketed as NLRC NCR Case No. 7-2603-
84 for (a) underpayment of the basic wage; (b)
underpayment of living allowance; (c) non-payment of
overtime work; (d) non-payment of holiday pay; (e) non-
payment of service incentive pay; (f) 13th month pay; and
(g) benefits provided for under Wage Orders Nos. 1, 2,

451

VOL. 179, NOVEMBER 15, 1989 451

Makati Haberdashery, Inc. vs. NLRC

1
3, 4 and 5.
During the pendency of NLRC NCR Case No. 7-2603-84,
private respondent Dioscoro Pelobello left with Salvador
Rivera, a salesman of petitioner Haberdashery, an open
package which was discovered to contain a “jusi” barong
tagalog. When confronted, Pelobello replied that the same
was ordered by respondent Casimiro Zapata for his
customer. Zapata allegedly admitted that he copied the
design of petitioner Haberdashery. But in the afternoon,
when again questioned about said barong, Pelobello and
Zapata denied ownership of the same. Consequently a
memorandum was issued to each of them to explain on or
before February 4, 1985 why no action should be taken
against them for accepting a job order which is prejudicial
and in 2direct competition with the business of the
company. Both respondents allegedly did 3
not submit their
explanation and did not report for work. Hence, they were
dismissed by petitioners on February 4, 1985. They
countered by filing a complaint for illegal dismissal
docketed
4
as NLRC NCR Case No. 2-428-85 on February 5,
1985.
On June 10, 1986, Labor Arbiter Ceferina J. Diosana
rendered judgment, the dispositive portion of which reads:

“WHEREFORE, judgment is hereby rendered in NLRC NCR Case

No. 2-428-85 finding respondents guilty of illegal dismissal and
ordering them to reinstate Dioscoro Pelobello and Casimiro
Zapata to their respective or similar positions without loss of
seniority rights, with full backwages from July 4, 1985 up to
actual reinstatement. The charge of unfair labor practice is
dismissed for lack of merit.
“In NLRC NCR Case No. 7-26030-84, the complainants’ claims
for underpayment re violation of the minimum wage law is hereby
ordered dismissed for lack of merit.
“Respondents are hereby found to have violated the decrees on
the cost of living allowance, service incentive leave pay and the
13th Month Pay. In view thereof, the economic analyst of the
Commission is directed to compute the monetary awards due each
complainant based on the available records of the respondents
retroactive as of
________________

1 Rollo, p. 22.
2 Rollo, pp. 105-106.
3 Rollo, p. 27.
4 Rollo, p. 23.

452

452 SUPREME COURT REPORTS ANNOTATED

Makati Haberdashery, Inc. vs. NLRC

three years prior to the

5
filing of the instant case.
“SO ORDERED.”

From the foregoing decision, petitioners appealed to the

NLRC. The latter on March 30, 1988 affirmed said decision
but limited the backwages awarded the Dioscoro
6
Pelobello
and Casimiro Zapata to only one (1) year.
After their motion for reconsideration was denied,
petitioners filed the instant petition raising the following
issues:

THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED

THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS
BETWEEN PETITIONER HABERDASHERY AND
RESPONDENTS WORKERS.

II

THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED

THAT RESPONDENTS WORKERS ARE ENTITLED TO
MONETARY CLAIMS DESPITE THE FINDING THAT THEY
ARE NOT ENTITLED TO MINIMUM WAGE.

III

THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED

THAT RESPONDENTS PELOBELLO
7
AND ZAPATA WERE
ILLEGALLY DISMISSED.

The first issue which is the pivotal issue in this case is

resolved in favor of private respondents. We have
repeatedly held in countless decisions that the test of
employer-employee relationship is four-fold: (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. It is the8 socalled “control
test” that is the most important element. This

________________

5 Rollo, pp. 29-30.

6 Rollo, pp. 49-50.
7 Rollo, p. 8.
8 Bautista v. Inciong, G.R. No. 52824, March 16, 1988; Continen-

453

VOL. 179, NOVEMBER 15, 1989 453

Makati Haberdashery, Inc. vs. NLRC

simply means the determination of whether the employer

controls or has reserved the right to control the employee
not only as to the result of the work but also as to the
means and 9method by which the same is to be
accomplished.
The facts at bar indubitably reveal that the most
important requisite of control is present. As gleaned from
the operations of petitioner, when a customer enters into a
contract with the haberdashery or its proprietor, the latter
directs an employee who may be a tailor, pattern maker,
sewer or “plantsadora” to take the customer’s
measurements, and to saw the pants, coat or shirt as
specified by the customer. Supervision is actively
manifested in all these aspects—the manner and quality of
cutting, sewing and ironing.
Furthermore, the presence of control is immediately
evident in this memorandum issued by Assistant Manager
Cecilio B. Inocencio, Jr. dated May 30, 1981 addressed to
Topper’s Makati Tailors which reads in part:

“4. Effective immediately, new procedures shall be followed:

“A. To follow instruction and orders from the undersigned,

Roger Valderama, Ruben Delos Reyes and Ofel Bautista.
Other than this person (sic) must ask permission to the
above mentioned before giving orders or instructions to
the tailors.
“B. Before accepting the job orders tailors must check the
materials, job orders, due dates and other things to
maximize the efficiency of our production. The materials
should be check (sic) if it is match (sic) with the sample,
together with the number of the job order.
 “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. If you have

________________

tal Marble Corporation, et al. v. NLRC, G.R. No. 43825, May 9, 1988;
Asim, et al. v. Castro, G.R. No. 75063-64, June 30, 1988; Brotherhood
Labor Unity Mov’t. in the Philippines v. Zamora, 147 SCRA 49 [1987];
Investment Planning Corp. of the Phil. v. Social Security System, 21
SCRA 924 [1967]; Mafinco v. Ople, 70 SCRA 139 [1976]; Rosario Brothers
v. Ople, L-53590, 131 SCRA 72 [1984]; Shipside, Inc. v. NLRC, G.R. No.
50358, 118 SCRA 99 [1982]; American President Lines v. Clave, et al.,
G.R. No. 51641, 114 SCRA 826 [1982].
9 Social Security System v. Court of Appeals, 156 SCRA 383 [1987].

454

454 SUPREME COURT REPORTS ANNOTATED

Makati Haberdashery, Inc. vs. NLRC

many due dates for certain day, advise Ruben or Ofel at

once so that they can make necessary adjustment on due
dates.
“D. Alteration—Before accepting alteration person attending
on customs (sic) must ask first or must advise the tailors
regarding the due dates so that we can eliminate what we
call ‘Bitin’.
“E. If there is any problem regarding supervisors or co-tailor
inside our shop, consult with me at once settle the
problem. Fighting inside the shop is strictly prohibited.
Any tailor violating this memorandum will be subject to
disciplinary action.
10
“For strict compliance.”

From this memorandum alone, it is evident that petitioner

has reserved the right to control its employees not only as
to the result but also the means and methods by which the
same are to be accomplished. That private respondents are
regular employees is further proven by the fact that they
have to report for work regularly from 9:30 a.m. to 6:00 or
7:00 p.m. and are paid an additional allowance of P3.00
daily if they report for work before 9:30 a.m. 11and which is
forfeited when they arrive at or after 9:30 a.m.
Since private respondents are regular employees,
necessarily the argument that they are independent
contractors must fail. As established in the preceding
paragraphs, private respondents did not exercise
independence in their own methods, but on the contrary
were subject to the control of petitioners from the
beginning of their tasks to their completion. Unlike
independent contractors who generally rely on their own
resources, the equipment, tools, accessories, and
paraphernalia used by private respondents are supplied
and owned by petitioners. Private respondents are totally
dependent on petitioners in all these aspects.
Coming now to the second issue, there is no dispute that
private respondents are entitled to the Minimum Wage as
mandated by Section 2(g) of Letter of Instruction No. 829,
Rules Implementing Presidential Decree No. 1614 and
reiterated in Section 3(f), Rules Implementing Presidential
Decree 1713 which explicitly states that, “All employees
paid by the result shall

________________

10 Rollo, pp. 80-81.

11 Rollo, p. 44.

455

VOL. 179, NOVEMBER 15, 1989 455

Makati Haberdashery, Inc. vs. NLRC

receive not less than the applicable new minimum wage

rates for eight (8) hours work a day, except where a
payment by result rate has12 been established by the
Secretary of Labor x x x.” No such rate has been
established in this case.
But all these notwithstanding, the question as to
whether or not there is in fact an underpayment of
minimum wages to private respondents has already been
resolved in the decision of the Labor Arbiter where he
stated: “Hence, for lack of sufficient evidence to support the
claims of the complainants for alleged violation of the
minimum wage, their claims for underpayment re violation
of the Minimum Wage Law 13under Wage Orders Nos. 1, 2, 3,
4, and 5 must perforce fall.”
The records show that private respondents did not
appeal the above ruling of the Labor Arbiter to the NLRC;
neither did they file any petition raising that issue in the
Supreme Court. Accordingly, insofar as this case is
concerned, that issue has been laid to rest. As to private
respondents, the judgment may be said to have attained
finality. For it is a well-settled rule in this jurisdiction that
“an appellee who has not himself appealed cannot obtain
from the appellate court, any affirmative relief other 14
than
the ones granted in the decision of the court below.”
As a consequence of their status as regular employees of
the petitioners, they can claim cost of living allowance. This
is apparent from the provision defining the employees
entitled to said allowance, thus: “. . . All workers in the
private sector, regardless of their position, designation or
status, and15
irrespective of the method by which their wages
are paid.”
Private respondents are also entitled to claim their 13th
Month Pay under Section 3(e) of the Rules and Regulations
Implementing P.D. No. 851 which provides:

“Section 3. Employers covered.—The Decree shall apply to all

employers except to:

________________

12 Rules and Regulations Implementing P.D. 928.

13 Rollo, p. 29.
14 Alba v. Santander, G.R. No. L-28409, April 15, 1988.
15 Section 3, Rules Implementing Wage No. 1; Section 1 Chapter 3 of
the Rules Implementing Wage No. 2; Section 1 Chapter 3 of the Rules
Implementing Wage No. 5.

456

456 SUPREME COURT REPORTS ANNOTATED

Makati Haberdashery, Inc. vs. NLRC

xxx      xxx      xxx

“(e) Employers of those who are paid on purely commission,
boundary, or task basis, and those who are paid a fixed amount
for performing a 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 be covered by this
issuance insofar as such workers are concerned.” (Italics supplied.)

On the other hand, while private respondents are entitled

to Minimum Wage, COLA and 13th Month Pay, they are
not entitled to service incentive leave pay because as piece-
rate workers being paid at a fixed amount for performing
work irrespective of time consumed in the performance
thereof, they fall under one of the exceptions stated in
Section 1(d), Rule V, Implementing Regulations, Book III,
Labor Code. For the same reason private respondents
cannot also claim holiday pay (Section 1(e), Rule IV,
Implementing Regulations, Book III, Labor Code).
With respect to the last issue, it is apparent that public
respondents have misread the evidence, for it does show
that a violation of the employer’s rules has been committed
and the evidence of such transgression, the copied barong
tagalog, was in the possession of Pelobello who pointed to
Zapata as the owner. When required by their employer to
explain in a memorandum issued to each of them, they not
only failed to do so but instead went on AWOL (absence
without official leave), waited for the period to explain to
expire and for petitioner to dismiss them. They thereafter
filed an action for illegal dismissal on the far-fetched
ground that they were dismissed because of union
activities. Assuming that such acts do not constitute
abandonment of their jobs as insisted by private
respondents, their blatant disregard of their employer’s
memorandum is undoubtedly an open defiance to the
lawful orders of the latter, a justifiable ground for
termination of employment by the employer expressly
provided for in Article 283(a) of the Labor Code as well as a
clear indication of guilt for the commission of acts inimical
to the interests of the employer, another justifiable ground
for dismissal under the same Article of the Labor Code,
paragraph (c). Well established in our jurisprudence is the
right of an employer to dismiss an employee whose
continuance in
457

VOL. 179, NOVEMBER 15, 1989 457

Makati Haberdashery, Inc. vs. NLRC

16
the service is inimical to the employer’s interest.
In fact the Labor Arbiter himself to whom the
explanation of private respondents was submitted gave no
credence to their version and found their excuses that said
barong tagalog was the one they got from the embroiderer
for the Assistant Manager who was investigating them,
unbelievable.
Under the circumstances, it is evident that there is no
illegal dismissal of said employees. Thus, We have ruled
that:

“No employer may rationally be expected to continue in

employment a person whose lack of morals, respect and loyalty to
his employer, regard for his employer’s rules, and appreciation of
the dignity and responsibility of his office, has so plainly and
completely been bared.
“That there should be concern, sympathy, and solicitude for the
rights and welfare of the working class, is meet and proper. That
in controversies between a laborer and his master, doubts
reasonably arising from the evidence, or in the interpretation of
agreements and writings should be resolved in the former’s favor,
is not an unreasonable or unfair rule. But that disregard of the
employer’s own rights and interests can be justified by that
concern and solicitude is unjust and unacceptable.” (Stanford
Microsystems, Inc. v. NLRC, 157 SCRA 414-415 [1988]).

The law is protecting the rights of the laborer authorizes 17

neither oppression nor self-destruction of the employer.
More importantly, while the Constitution is committed to
the policy of social justice and the protection of the working
class, it should not be supposed that every labor18
dispute
will automatically be decided in favor of labor.
Finally, it has been established that the right to dismiss
or otherwise impose discriplinary sanctions upon an
employee for just and valid cause, pertains in the first
place to the employer, as well as the authority to determine
the existence of said cause

________________

16 San Miguel Corporation v. NLRC, 142 SCRA 377 [1986].

17 Manila Trading & Supply Co. v. Zulueta, 69 Phil. 485 [1939]; Allied
Banking Corp. v. Castro, 156 SCRA 789, 800 [1987].
18 Sosito v. Aguinaldo Development Corp., 156 SCRA 392, 396 [1987].

458

458 SUPREME COURT REPORTS ANNOTATED

Makati Haberdashery, Inc. vs. NLRC

19
in accordance with the norms of due process.
There is no evidence that the employer violated said
norms. On the contrary, private respondents who
vigorously insist on the existence of employer-employee
relationship, because of the supervision and control of their
employer over them, were the very ones who exhibited
their lack of respect and regard for their employer’s rules.
Under the foregoing facts, it is evident that petitioner
Haberdashery had valid grounds to terminate the services
of private respondents.
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.

          Gutierrez, Jr., Feliciano, Bidin and Cortés, JJ.,

concur.

Decision modified. Complaint dismissed.

Note.—The employer has the right to dismiss an

employee whose continuance in the service is inimical to
the employer’s interest. (San Miguel Corp. vs. National
Labor Relations Commission, 142 SCRA 376)

——o0o——

________________

19 Richardson v. Demetriou, 142 SCRA 505 [1986].

459

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