Piece-rate workers are entitled to overtime pay

FACTS: In Tan vs. Lagrama, the worker paints movie billboards and murals to be displayed at three theatres. He finishes the paintings in three to four days a week and receives as payment a fixed amount of P1,475.00 per week. As piece rater, he is not an employee, contends the employer.

HELD: Payment by result is not determinative of employer-employee relationship. There is employer-employee relationship in this case.

There are two types of workers who are paid by results: those who are not supervised and those who are supervised. Those in the second type are called "piece-rate workers" or "piece-raters."

Those in the first type are excluded by Article 82 of Book III of the Labor Code of the Philippines from benefits (e.g. overtime pay, holiday pay, etc.) under Title I of Book III. Those in the second type are NOT excluded.

Here, the painter is an employee, a regular employee. That he worked on a fixed piece-work basis is of no moment; that is, the employment relationship may exist even in a payment-by-result arrangement.

Payment by result is a method of compensation and does not define the essence of the relation. It is a method of computing compensation, not a basis for determining the existence or absence of employer-employee relationship. (Tan vs. Lagrama, G.R. No. 151228, August 15, 2002; see also Lambo vs. National Labor Relations Commission, G.R. No. 111042, October 26, 1999.)