AVELINO LAMBO and VICENTE BELOCURA, petitioners, vs.

NATIONAL LABOR RELATIONS

DECISION

MENDOZA, J.:

This is a petition for certiorari to set aside the decision[1] of the National Labor Relations Commission
(NLRC) which reversed the awards made by the Labor Arbiter in favor of petitioners, except one
for P4,992.00 to each, representing 13th month pay.

The facts are as follows.

Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C.
Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from
8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of
private respondents, petitioners were paid on a piece-work basis, according to the style of suits they
made. Regardless of the number of pieces they finished in a day, they were each given a daily pay of at
least P64.00.

On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and
sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave
pay, separation pay, 13th month pay, and attorneys fees.

After hearing, Labor Arbiter Jose G. Gutierrez found private respondents guilty of illegal dismissal and
accordingly ordered them to pay petitioners claims. The dispositive portion of the Labor Arbiters decision
reads:

WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring the complainants to
have been illegally dismissed and ordering the respondents to pay the complainants the following monetary
awards:

AVELINO LAMBO VICENTE BELOCURA

I. BACKWAGES P64,896.00 P64,896.00

II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30

IV. 13TH MONTH PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00

TOTAL P94,719.20 P96,383.20 = P191,102.40

Add: 10% Attorneys Fees 19,110.24

GRAND TOTAL P210,212.64

1
======

or a total aggregate amount of TWO HUNDRED TEN THOUSAND TWO HUNDRED TWELVE AND 64/100
(P210,212.64).

All other claims are dismissed for lack of merit.

SO ORDERED.[2]

On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. It found that
petitioners had not been dismissed from employment but merely threatened with a closure of the business
if they insisted on their demand for a straight payment of their minimum wage, after petitioners, on January
17, 1989, walked out of a meeting with private respondents and other employees. According to the NLRC,
during that meeting, the employees voted to maintain the company policy of paying them according to the
volume of work finished at the rate of P18.00 per dozen of tailored clothing materials. Only petitioners
allegedly insisted that they be paid the minimum wage and other benefits. The NLRC held petitioners guilty
of abandonment of work and accordingly dismissed their claims except that for 13th month pay. The
dispositive portion of its decision reads:

WHEREFORE, in view of the foregoing, the appealed decision is hereby vacated and a new one entered
ordering respondents to pay each of the complainants their 13th month pay in the amount of P4,992.00. All
other monetary awards are hereby deleted.

SO ORDERED.[3]

Petitioners allege that they were dismissed by private respondents as they were about to file a petition
with the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security
System (SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work.

The petition is meritorious.

First. There is no dispute that petitioners were employees of private respondents although they were
paid not on the basis of time spent on the job but according to the quantity and the quality of work produced
by them. There are two categories of employees paid by results: (1) those whose time and performance
are supervised by the employer. (Here, there is an element of control and supervision over the manner as
to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs
his work in the company premises.); and (2) those whose time and performance are unsupervised. (Here,
the employers control is over the result of the work. Workers on pakyao and takay basis belong to this
group.) Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced
in garment factories where work is done in the company premises, while payment
on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar plantations
where the work is performed in bulk or in volumes difficult to quantify. [4] Petitioners belong to the first
category, i.e., supervised employees.

In determining the existence of an employer-employee relationship, the following elements must be

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 In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners
worked in the companys premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The
mere fact that they were paid on a piece-rate basis does not negate their status as regular employees of
private respondents. The term wage is broadly defined in Art. 97 of the Labor Code as remuneration or
earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece
or commission basis.Payment by the piece is just a method of compensation and does not define the
essence of the relations.[7] Nor does the fact that petitioners are not covered by the SSS affect the employer-
employee relationship.

Indeed, the following factors show that petitioners, although piece-rate workers, were regular
employees of private respondents: (1) within the contemplation of Art. 280 of the Labor Code, their work as
tailors was necessary or desirable in the usual business of private respondents, which is engaged in the
tailoring business; (2) petitioners worked for private respondents throughout the year, their employment not
being dependent on a specific project or season; and, (3) petitioners worked for private respondents for
more than one year.[8]

Second. Private respondents contend, however, that petitioners refused to report for work after
learning that the J.C. Tailoring and Dress Shop Employees Union had demanded their (petitioners)
dismissal for conduct unbecoming of employees. In support of their claim, private respondents presented
the affidavits[9] of Emmanuel Y. Caballero, president of the union, and Amado Cabaero, member, that
petitioners had not been dismissed by private respondents but that practically all employees of the
company, including the members of the union had asked management to terminate the services of
petitioners. The employees allegedly said they were against petitioners request for change of the mode of
payment of their wages, and that when a meeting was called to discuss this issue, a petition for the dismissal
of petitioners was presented, prompting the latter to walk out of their jobs and instead file a complaint for
illegal dismissal against private respondents on January 17, 1989, even before all employees could sign
the petition and management could act upon the same.

To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified refusal
on the part of an employee to resume his employment. The burden of proof is on the employer to show an
unequivocal intent on the part of the employee to discontinue employment. [10] Mere absence is not
sufficient. It must be accompanied by manifest acts unerringly pointing to the fact that the employee simply
does not want to work anymore.[11]

Private respondents failed to discharge this burden. Other than the self-serving declarations in the
affidavits of their two employees, private respondents did not adduce proof of overt acts of petitioners
showing their intention to abandon their work. On the contrary, the evidence shows that petitioners lost no
time in filing the case for illegal dismissal against private respondent. This fact negates any intention on
their part to sever their employment relationship.[12] Abandonment is a matter of intention; it cannot be
inferred or presumed from equivocal acts.[13]

Third. Private respondents invoke the compromise agreement,[14] dated March 2, 1993, between them
and petitioner Avelino Lambo, whereby in consideration of the sum of P10,000.00, petitioner absolved
private respondents from liability for money claims or any other obligations.

To be sure, not all quitclaims are per se invalid or against public policy. But those (1) where there is
clear proof that the waiver was wangled from an unsuspecting or gullible person or (2) where the terms of
settlement are unconscionable on their face are invalid. In these cases, the law will step in to annul the
questionable transaction.[15] However, considering that the Labor Arbiter had given petitioner Lambo a total
award of P94,719.20, the amount of P10,000.00 to cover any and all monetary claims is clearly
unconscionable. As we have held in another case,[16] the subordinate position of the individual

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employee vis-a-vis management renders him especially vulnerable to its blandishments, importunings, and
even intimidations, and results in his improvidently waiving benefits to which he is clearly entitled. Thus,
quitclaims, waivers or releases are looked upon with disfavor for being contrary to public policy and are
ineffective to bar claims for the full measure of the workers legal rights. [17] An employee who is merely
constrained to accept the wages paid to him is not precluded from recovering the difference between the
amount he actually received and that amount which he should have received.

Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday pay, 13th month pay, separation
pay and attorneys fees, corresponding to 10% of the total monetary awards, in favor of petitioners.

As petitioners were illegally dismissed, they are entitled to reinstatement with backwages. Considering
that petitioners were dismissed from the service on January 17, 1989, i.e., prior to March 21, 1989,[18] the
Labor Arbiter correctly applied the rule in the Mercury Drug case,[19] according to which the recovery of
backwages should be limited to three years without qualifications or deductions. Any award in excess of
three years is null and void as to the excess.[20]

The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable time has
lapsed since petitioners dismissal, so that reinstatement would now be impractical and hardly in the best
interest of the parties. In lieu of reinstatement, separation pay should be awarded to petitioners at the rate
of one month salary for every year of service, with a fraction of at least six (6) months of service being
considered as one (1) year.[21]

The awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding that
petitioners are regular employees, although paid on a piece-rate basis.[22]These awards are based on the
following computation of the Labor Arbiter:

AVELINO LAMBO

I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.

P 64.00/day x 26 days =

1,664.00/mo. x 36 mos. = P 59,904.00

13th Mo. Pay:

P 1,664.00/yr. x 3 yrs. = 4, 992.00 P64,896.00

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

Jan. 17/86 - April 30/87 = 15 mos. & 12 days =

(15 mos. x 26 days + 12 days) = 402 days

*2 hours = 25%

402 days x 2 hrs./day = 804 hrs.

P 32.00/day 8 hrs. =

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4.00/hr. x 25% =

1.00/hr. + P4.00/hr. =

5.00/hr. x 804 hrs. = P 4,020.00

May 1/87-Sept. 30/87 = 4 mos. & 26 days =

(4 mos. x 26 days + 26 days) = 130 days

130 days x 2 hrs./day = 260 hrs.

P 41.00/day 8 hrs. =

5.12/hr. x 25% =

1.28/hr. + P5.12/hr. =

6.40/hr. x 260 hrs. = P 1,664.00

Oct. 1/87-Dec. 13/87 = 2 mos. & 11 days =

(2 mos. x 26 days + 11 days) = 63 days

63 days x 2 hrs./day = 126 hrs.

P 49.00/day 8 hrs. =

6.12/hr. x 25% =

1.53/hr. + P6.12/hr. =

7.65/hr. x 126 hrs. = P963.90

Dec. 14/87 - Jan. 17/89 = 13 mos. & 2 days =

(13 mos. x 26 days + 2 days) = 340 days

340 days x 2 hrs./day = 680 hrs.

P 64.00/day 8 hrs. =

8.00/hr. x 25% =

2.00/hr. + P8.00/hr. =

10.00/hr. x 680 hrs. = P6,800.00 P13,447.90

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III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89

Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs

P 32.00/day x 200% =

64.00/day x 12 days = P768.00

32.00/day x 12 days = (384.00) P384.00

32.00/day x 30% =

9.60/day x 8 days = 76.80 460.80

May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs

P 41.00/day x 200% =

82.00/day x 3 days = P246.00

41.00/day x 3 days = (123.00) P123.00

41.00/day x 30% =

12.30/day x 3 days = 36.90 159.90

Oct. 1/87 - Dec. 13/87 = 1 RH

P 49.00/day x 200% =

98.00/day x 1 day = P98.00

49.00/day x 1 day = (49.00) 49.00

Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs

P 64.00/day x 200% =

128.00/day x 9 days = P1,152.00

64.00/day x 9 days = (576.00) P 576.00

64.00/day x 30% =

19.20/day x 8 days = 153.60 729.60 1,399.30

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs.

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P 64.00/day x 26 days =

1,664.00/yr. x 3 yrs. = 4,992.00

V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6 yrs.

1,664.00/mo. x 6 yrs. = 9,984.00

TOTAL AWARD OF AVELINO LAMBO P94,719.20

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VICENTE BELOCURA

I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.

Same computation as A. Lambo P64,896.00

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

Same computation as A. Lambo 13,447.90

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89

Same computation as A. Lambo 1,399.30

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89

Same computation as A. Lambo 4,992.00

V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7 yrs.

P1,664.00/mo. x 7 yrs. = 11,648.00

TOTAL AWARD OF VICENTE BELOCURA P96,383.20

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SUMMARY

AVELINO LAMBO VICENTE BELOCURA

I. BACKWAGES P64,896.00 P64,896.00

II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30

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IV. 13TH MO. PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00

TOTAL P94,719.20 P96,383.20

= P191,102.40

ADD: 10% Attorneys Fees 19,110.24

GRAND TOTAL P 210,212.64

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Except for the award of attorneys fees in the amount of P19,110.24, the above computation is
affirmed. The award of attorneys fees should be disallowed, it appearing that petitioners were represented
by the Public Attorneys Office. With regard to petitioner Avelino Lambo, the amount of P10,000.00 paid to
him under the compromise agreement should be deducted from the total award
of P94,719.20. Consequently, the award to each petitioner should be as follows:

AVELINO LAMBO VICENTE BELOCURA

I. BACKWAGES P64,896.00 P 64,896.00

II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30

IV. 13TH MONTH PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00

P 94,719.20

Less 10,000.00

TOTAL P84,719.20 P96,383.20

GRAND TOTAL P181,102.40

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vvvvvvvvvv

WHEREFORE, the decision of the National Labor Relations Commission is SET ASIDE and another
one is RENDERED ordering private respondents to pay petitioners the total amount of One Hundred Eighty-
One Thousand One Hundred Two Pesos and 40/100 (P181,102.40), as computed above.SO ORDERED.