G.R. No.

L-75038 August 23, 1993

ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD, BENJAMIN BRIZUELA, NORLITO LADIA,
MARCELO AGUILAN, DAVID ORO, NELIA BRIZUELA, FLORA ESCOBIDO, JUSTILITA CABANIG, and DOMINGO
SAGUIT, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and BROAD STREET TAILORING and/or
RODOLFO ZAPANTA, respondents.
Facts: Elias Villuga was employed in Broad Street Tailoring as a cutter. He receives monthly salary and transportation
allowance. In addition to his work as a cutter, during the absence of the shops manager and assistant manager, he
would be the one distributing the work to the shops tailors. He is to make sure that their work conformed with the
pattern he prepared. On the other hand, other petitioners were ironers, repairmen and sewers. Their salaries are
based on every item ironed, repaired or sewn regardless of the time consumed. There are also allowed to perform
their work at home especially when they could no longer cope with the volume of work.
Petitioner Villuga, for four days, failed to report to work allegedly due to illness. He was not able to notify his employer
and the latter considered he abandoned his work. He filed with Regional Office of the Department of Labor for illegal
dismissal and the refusal of his admittance for work is due to his active participation in the union organized by private
respondents tailors. He also claimed that he was not paid overtime pay, holiday pay, premium pay for work done on
rest days and holidays, service incentive leave pay and 13th month. Other petitioners also claimed that they were
dismissed from their work because they joined the Philippine Social Security Labor Union (PSSLU). They stopped
working because private respondents gave them few pieces of work to do after learning their membership with
PSSLU.
Labor Arbiter dismissed the complaint except petitioner Villugas claim for 13th month pay for the years 1976, 1977
and 1980. The complaints regarding the other eleven petitioners were likewise dismissed for want of jurisdiction. On
appeal, NLRC affirmed the assailed decision. Thus, this is the present petition.
Issue: Whether there is an employee-employer relationship between other eleven petitioners and Broad Street
Tailoring that warrants them a claim for benefits under Labor Code; and when it comes to Villuga, whether his
employment is managerial in character?
Held: The court held that Villugas employment is not managerial in character though he distributes and assigns work
to employees during the absence of the manager and assistant manager but such is occasional and not regular. In
Franklin Baker Company of the Philippines v. Trajano, the court held that employees who do not participate in policymaking but are given ready policies to execute the standard practices to observe are not managerial employees.
Another test was of managerial status depends on whether a person possess authority that requires the use of
independent judgment. In this light, it is obvious that Villuga was hired to be a cutter and not hired to perform
managerial functions. He is therefore not entitled with benefits claimed under Articles 87 (overtime pay and premium
pay for holiday and rest day work), Article 94, (holiday pay), and Article 95 (service incentive leave pay) of the Labor
Code. But since he is uniformly paid, he is entitled from the benefits of holiday pay as held in the case of Insular
Bank of America Employees Union v. Inciong. It was also held that there was no illegal dismissal on the ground of
membership on union. But there was no abandonment that warrants the dismissal. The court held that a sanction
was justified and not dismissal. Instead of reinstatement, Villuga was entitled with separation pay since reinstatement
was no longer possible.
In regards with the other eleven petitioners, the court held that they are not independent contractors. There was an
employee-employer relationship since the four elements were satisfied namely: (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 employees
conduct. The mere fact that petitioners were paid based on piece- rate basis does not mean that they were not

employees. Such was just a method of compensation and does not define the essence of the relation. And though
they were allowed to perform their work in their home does not imply absence of control and supervision. The control
test calls merely for the existence of a right to control the manner of doing the work, not the actual exercise of the
right. And in the case of Rosario Brothers, Inc. v. Ople, the court already pronounced that tailors and similar workers
hired in the tailoring department, although paid weekly wages on piece of work basis, are employees not indepent
contractors. As regular employees paid on a piece-rate basis, petitioners are not entitled to overtime pay, holiday pay,
premium pay for holiday/rest day and service incentive leave pay. They were also not entitled for separation pay
since they were dismissed by the private respondent.