Brotherhood Labor Unity Movement of the Phil. v.

Zamora

Facts:
The petitioners are workers who have been employed at the San Miguel Parola Glass Factory as
“pahinantes” or “kargadors” for almost seven years. They worked exclusively at the SMC plant,
never having been assigned to other companies or departments of San Miguel Corp, even when
the volume of work was at its minimum. Their work was neither regular nor continuous,
depending on the volume of bottles to be loaded and unloaded, as well as the business activity of
the company. However, work exceeded the eight-hour day and sometimes, necessitated work on
Sundays and holidays. -for this, they were neither paid overtime nor compensation.
Sometime in 1969, the workers organized and affiliated themselves with Brotherhood Labor
Unity Movement (BLUM). They wanted to be paid to overtime and holiday pay. They pressed
the SMC management to hear their grievances. BLUM filed a notice of strike with the Bureau of
Labor Relations in connection with the dismissal of some of its members. San Miguel refused to
bargain with the union alleging that the workers are not their employees but the employees of an
independent labor contracting firm, Guaranteed Labor Contractor.
The workers were then dismissed from their jobs and denied entrance to the glass factory despite
their regularly reporting for work. A complaint was filed for illegal dismissal and unfair labor
practices.

Issue:
Whether or not there was employer-employee (ER-EE)relationship between the workers and San
Miguel Corp.

Held:
YES. In determining if there is an existence of the (ER-EE) relationship, the four-fold test was
used by the Supreme Court. These are:
· The selection and engagement of the employee
· Payment of wages
· Power of dismissal
· Control Test- the employer’s power to control the employee with respect to the means and
methods by which work is to be accomplished
In the case, the records fail to show that San Miguel entered into mere oral agreements of
employment with the workers. Considering the length of time that the petitioners have worked

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with the company, there is justification to conclude that they were engaged to perform activities
necessary in the usual business or trade. Despite past shutdowns of the glass plant, the workers
promptly returned to their jobs. The term of the petitioner’s employment appears indefinite and
the continuity and habituality of the petitioner’s work bolsters the claim of an employee status.
As for the payment of the workers’ wages, the contention that the independent contractors were
paid a lump sum representing only the salaries the workers where entitled to have no merit. The
amount paid by San Miguel to the contracting firm is no business expense or capital outlay of the
latter. What the contractor receives is a percentage from the total earnings of all the workers plus
an additional amount from the earnings of each individual worker.
The power of dismissal by the employer was evident when the petitioners had already been
refused entry to the premises. It is apparent that the closure of the warehouse was a ploy to get
rid of the petitioners, who were then agitating the company for reforms and benefits.
The inter-office memoranda submitted in evidence prove the company’s control over the
workers. That San Miguel has the power to recommend penalties or dismissal is the strongest
indication of the company’s right of control over the workers as direct employer.

*SC ordered San Miguel to reinstate the petitioners with 3 years backwages.

Domasig v NLRC (96)

It has long been established that in administrative and quasi-judicial proceedings, substantial
evidence is sufficient as a basis for judgment on the existence of employer-employee
relationship. No particular form of evidence is required to prove the existence of such.

EDDIE DOMASIG, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION

(SECOND DIVISION), CATA GARMENTS CORPORATION and/or OTTO ONG and
CATALINA CO, respondents.
DECISION
PADILLA, J.:

This petition for certiorari under Rule 65 of the Rules of Court seeks to nullify and set aside the
Resolution[1] of respondent National Labor Relations Commission (NLRC) rendered on 20
September 1994 remanding the records of the case to the arbitration branch of origin for further
proceedings.

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The antecedent facts as narrated by public respondent in the assailed resolution are as follows:

The complaint was instituted by Eddie Domasig against respondents Cata Garments Corporation,
a company engaged in garments business and its owner/manager Otto Ong and Catalina Co for
illegal dismissal, unpaid commission and other monetary claim[s]. Complainant alleged that he
started working with the respondent on July 6, 1986 as Salesman when the company was still
named Cato Garments Corporation; that three (3) years ago, because of a complaint against
respondent by its workers, it changed its name to Cata Garments Corporation; and that on August
29, 1992, he was dismissed when respondent learned that he was being pirated by a rival
corporation which offer he refused. Prior to his dismissal, complainant alleged that he was
receiving a salary of P1,500.00 a month plus commission. On September 3, 1992 he filed the
instant complaint.

Respondent denied complainants claim that he is a regular employee contending that he is a mere
commission agent who receives a commission of P5.00 per piece of article sold at regular price
and P2.50 per piece sold in [sic] bargain price; that in addition to commission, complainant
received a fixed allowance of P1,500.00 a month; that he had no regular time schedule; and that
the company come [sic] into existence only on September 17, 1991. In support of its claim that
complainant is a commission agent, respondent submitted as Annexes B and B-1 the List of
Sales Collections, Computation of Commission due, expenses incurred, cash advances received
for the month of January and March 1992 (Rollo pp. 22-27). Respondent further contends that
complainant failed to turn over to the respondent his collection from two (2) buyers as per
affidavit executed by these buyers (Rollo pp. 28-29) and for which, according to respondent it
initiated criminal proceedings against the complainant.

The Labor Arbiter held that complainant was illegally dismissed and entitled to reinstatement
and backwages as well as underpayment of salary; 13th month pay; service incentive leave and
legal holiday. The Arbiter also awarded complainant his claim for unpaid commission in the
amount of P143,955.00.[2]

Private respondents appealed the decision of the labor arbiter to public respondent. As aforesaid,
the NLRC resolved to remand the case to the labor arbiter for further proceeding. It declared as
follows:

We find the decision of the Labor Arbiter not supported by evidence on record. The issue of
whether or not complainant was a commission agent was not fully resolved in the assailed

3|Page
decision. It appears that the Labor Arbiter failed to appreciate the evidences submitted by
respondent as Annexes B and B-1 (Rollo pp. 22-27) in support of its allegation as regard[s] the
nature of complainants employment. Neither is there a showing that the parties were required to
adduce further evidence to support their respective claim. The resolution of the nature of
complainants employment is vital to the case at bar considering that it would be determinative to
his entitlement of monetary benefits. The same is similarly true as regard the claim [sic] for
unpaid commission. The amount being claim [sic] for unpaid commission as big as it is requires
substantial proof to establish the entitlement of the complainant to the same. We take note of the
respondents claim that while they admit that complainant has an unpaid commission due him, the
same is only for his additional sale of 4,027 pieces at regular price and 1,047 pieces at bargain
price for a total sum of (P20,135.00 + 2,655.00) or P22,820.00 as appearing in the list of Sales
and unpaid commission (Annex C and C-1' Appeal, Rollo pp. 100-102). Said amount according
to respondent is being withheld by them pending the accounting of money collected by
complainant from his two (2) buyers which was not remitted to them. Considering the conflicting
version of the parties regarding the issues on hand, it was incumbent on the Labor Arbiter to
conduct further proceedings thereon. The ends of justice would better be served if both parties
are given the opportunity to ventilate further their positions.[3]

In their comment on the petition at bar, private respondents agree with the finding of the NLRC
that the nature of petitioners employment with private respondents is vital to the case as it will
determine the monetary benefits to which he is entitled. They further aver that the evidence
presented upon which the labor arbiter based her decision is insufficient, so that the NLRC did
not commit grave abuse of discretion in remanding the case to the arbitration branch of origin for
further proceedings.

The comment of the Solicitor General is substantially the same as that of private respondents,
i.e., there is no sufficient evidence to prove employer-employee relationship between the parties.
Furthermore, he avers that the order of the NLRC to the labor arbiter for further proceedings
does not automatically translate to a protracted trial on the merits for such can be faithfully
complied with through the submission of additional documents or pleadings only.

The only issue to be resolved in this petition is whether or not the NLRC gravely abused its
discretion in vacating and setting aside the decision of the labor arbiter and remanding the case to
the arbitration branch of origin for further proceedings.

In essence, respondent NLRC was not convinced that the evidence presented by the petitioner,
consisting of the identification card issued to him by private respondent corporation and the cash
vouchers reflecting his monthly salaries covering the months stated therein, settled the issue of
employer-employee relationship between private respondents and petitioner.

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It has long been established that in administrative and quasi-judicial proceedings, substantial
evidence is sufficient as a basis for judgment on the existence of employer-employee
relationship. No particular form of evidence is required to prove the existence of such employer-
employee relationship. Any competent and relevant evidence to prove the relationship may be
admitted.[4]

Substantial evidence has been defined to be such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion, and its absence is not shown by stressing that there is
contrary evidence on record, direct or circumstantial, for the appellate court cannot substitute its
own judgment or criterion for that of the trial court in determining wherein lies the weight of
evidence or what evidence is entitled to belief.[5]

In a business establishment, an identification card is usually provided not only as a security

measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues
it. Together with the cash vouchers covering petitioners salaries for the months stated therein, we
agree with the labor arbiter that these matters constitute substantial evidence adequate to support
a conclusion that petitioner was indeed an employee of private respondent.

Section 4, Rule V of the Rules of Procedure of the National Labor Relations Commission
provides thus:

Section 4. Determination of Necessity of Hearing. Immediately after the submission of the

parties of their position papers/memoranda, the Labor Arbiter shall motu propio determine
whether there is need for a formal trial or hearing. At this stage, he may, at his discretion and for
the purpose of making such determination, ask clarificatory questions to further elicit facts or
information, including but not limited to the subpoena of relevant documentary evidence, if any,
from any party or witness.

It is clear from the law that it is the arbiters who are authorized to determine whether or not there
is a necessity for conducting formal hearings in cases brought before them for adjudication. Such
determination is entitled to great respect in the absence of arbitrariness.[6]

In the case at bar, we do not believe that the labor arbiter acted arbitrarily. Contrary to the
finding of the NLRC, her decision at least on the existence of an employer-employee relationship
between private respondents and petitioner, is supported by substantial evidence on record.

5|Page
The list of sales collection including computation of commissions due, expenses incurred and
cash advances received (Exhibits B and B-1) which, according to public respondent, the labor
arbiter failed to appreciate in support of private respondents allegation as regards the nature of
petitioners employment as a commission agent, cannot overcome the evidence of the ID card and
salary vouchers presented by petitioner which private respondents have not denied. The list
presented by private respondents would even support petitioners allegation that, aside from a
monthly salary of P1,500.00, he also received commissions for his work as a salesman of private
respondents.

Having been in the employ of private respondents continuously for more than one year, under the
law, petitioner is considered a regular employee. Proof beyond reasonable doubt is not required
as a basis for judgment on the legality of an employers dismissal of an employee, nor even
preponderance of evidence for that matter, substantial evidence being sufficient.[7] Petitioners
contention that private respondents terminated his employment due to their suspicion that he was
being enticed by another firm to work for it was not refuted by private respondents. The labor
arbiters conclusion that petitioners dismissal is therefore illegal, is not necessarily arbitrary or
erroneous. It is entitled to great weight and respect.

It was error and grave abuse of discretion for the NLRC to remand the case for further
proceedings to determine whether or not petitioner was private respondents employee. This
would only prolong the final disposition of the complaint. It is stressed that, in labor cases,
simplification of procedures, without regard to technicalities and without sacrificing the
fundamental requisites of due process, is mandated to ensure the speedy administration of
justice.[8]

After all, Article 218 of the Labor Code grants the Commission and the labor arbiter broad
powers, including issuance of subpoena, requiring the attendance and testimony of witnesses or
the production of such documentary evidence as may be material to a just determination of the
matter under investigation.

Additionally, the National Labor Relations Commission and the labor arbiter have authority
under the Labor Code to decide a case based on the position papers and documents submitted
without resorting to the technical rules of evidence.[9]

However, in view of the need for further and correct computation of the petitioners commissions
in the light of the exhibits presented and the dismissal of the criminal cases filed against

6|Page
petitioner, the labor arbiter is required to undertake a new computation of the commissions to
which petitioner may be entitled, within thirty (30) days from submission by the parties of all
necessary documents.

WHEREFORE, the resolutions of the public respondent dated 20 September 1994 and 9
November 1994 are SET ASIDE. The decision of the labor arbiter dated 19 May 1993 is
REINSTATED and AFFIRMED subject to the modification above-stated as regards a re-
computation by the labor arbiter of the commissions to which petitioner maybe actually entitled.

SO ORDERED.

Bellosillo, Vitug, Kapunan, and Hermosisima, Jr., JJ., concur.

GREAT PACIFIC LIFE ASSURANCE CORPORATION vs.

HONORATO JUDICO and NLRC
[G.R. No. 73887 December 21, 1989]

Q. Are insurance agents considered as regular employees?

Facts:

1. On June 09, 1976, Great Pacific Life Assurance Corporation (Grepalife, for brevity) entered
into an agreement of agency with Honorato Judico to become a debit agent to the industrial life
agency.

Debit agent-an insurance agent selling/servicing industrial life plans and policy holders.

Industrial life plans-are those whose premiums are payable either daily, weekly or
monthly and which are collectible b the debit agents at the home or any place designated by the
policy holder.

7|Page
2. As a debit agent, Judico had definite work assignments including but not limited to collections
of premiums from policy holders and selling insurance to prospective clients.

3. Judico was initially paid P200.00 as allowance for thirteen (13) weeks regardless of
production and later a certain percentage denominated as “sales reserve” of his total collections
but not lesser than P200.00.

3. In September 1981, he was promoted to the position of Zone Supervisor and paid additional
(supervisor’s) allowance fixed at P110,00 per week. However, two months thereafter, he was
reverted to his former position as debit agent, but, for unknown reasons, not paid so-called
weekly sales reserve of at least P200.00. Finally, on June 28, 1982, he was dismissed by way of
termination of his agency contract.

4. Contentions of the petitioner.

a. Judico’s compensation was not based on any fixed number of hours but was based on actual
production.

b. Judico’s compensation, in the form of commissions and bonuses, cannot be construed as

salary, but as a subsidy or way of assistance for transportation and meal expenses of a new debit
agent during the initial period of his training which was fixed for thirteen (13) weeks.

4. Contentions of the respondent.

a. adopted by SC in its ruling.

6. Ruling of the Labor Arbiter (LA) – In favor of Grepalife

a. The LA dismissed the complaint on the ground that no employer-employee

relationship exist.

8|Page
7. Ruling of the NLRC - In favor of Honorato Judico

a. It ruled that Judico is a regular employee as defined under Article 281 of the Labor
Code.

¬¬¬¬¬¬¬Art. 281. Probationary employment. Probationary employment shall not exceed six (6)
months from the date the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.

9. Not convinced, the matter was elevated to the Supreme Court.

Issue: Whether or not: (1) the debit agent is considered as regular employee; and (2) the
dismissal was valid.

Ruling of the Supreme Court:

Salaried employees vs. Registered representatives

1. In Investment Planning Corp. vs. SSS, 21 SCRA 294, an insurance agent may have two
classes of agents who sell its insurance policies.

a. Salaried employees – who keep definite hours and work under the control and
supervision of the company.

b. Registered representatives – who works on a commission basis.

9|Page
• These agents are not required to report for work anytime;
• They do not have to devote their time exclusively to or work exclusively for the company
since the time and effort they spend in their work depend entirely upon their own will and
initiative;
• They are not required to account for their time nor submit a report of their activities;
• They shoulder their own selling and transportation expenses; and
• They are paid their commission based on a certain percentage of their sales.

Element of control

2. The test is whether the “employer” controls or has reserved the right to control the “employee”
not only as to the result of the work to be done but also as to the means and methods by which
the same is to be accomplished.

3. In this case, the element of control is evident.

• The element of control by the petitioner on Judico was very much present.
• The record shows that petitioner Judico received a definite minimum amount per week as
his wage known as "sales reserve" wherein the failure to maintain the same would bring him
back to a beginner's employment with a fixed weekly wage of P 200.00 for thirteen weeks
regardless of production.
• He was assigned a definite place in the office to work on when he is not in the field; and
in addition to his canvassing work he was burdened with the job of collection.
• In both cases he was required to make regular report to the company regarding these
duties, and for which an anemic performance would mean a dismissal.
• Conversely faithful and productive service earned him a promotion to Zone Supervisor
with additional supervisor's allowance, a definite amount of P110.00 aside from the regular P
200.00 weekly "allowance".
• Furthermore, his contract of services with petitioner is not for a piece of work nor for a
definite period.

Ordinary commission insurance agent in brief.

10 | P a g e
4. An ordinary commission agent works at his own volition or at his own leisure without fear of
dismissal from the company and short of committing acts detrimental to the business interest of
the company or against the latter, whether he produces or not is of no moment as his salary is
based on his production, his anemic performance or even dead result does not become a ground
for dismissal.

DISPOSITIVE PORTION

1. The appealed decision of AFFIRMED in toto

Citizen’s League of Free Workers et.al. vs Abbas et.al.

GR No. 21212, September 23, 1966
Doctrine:
There is an employer-employee relationship between theoperator of an auto- alesa !is-"-!is the
#ri!ers thereof.

FACTS:

11 | P a g e
Respondents-spouses, owners and operators of auto-calesas filed acomplaint with the CFI of
Davao to restrain the Union and its members, who were drivers of the spouses in said business,
from interfering with its operationand to recover damages. They alleged that the defendants
(petitioners herein)
used to lease theauto-calesas of the spouses on a daily rental basis; that, unable to get thespouses
to recognize said defendants as employees instead of lessees and to bargain with it on that basis,
the Union declared a strike and since then hadparalyzed plaintiffs' business operations through
threats, intimidation and violence. The complaint also prayed for the issuance of a writ of
preliminaryinjunction
ex-parte
which was granted by the respondent judge.

Meanwhile, petitioners filed a complaint for unfair labor practice againstthe respondents-spouses
with the CIR for failure of the latter's refusal to bargain with them. They also filed a motion to
declare the writ of preliminaryinjunction void, however, the respondent judge denied said motion
on theground that there was no employer-employee relationship betweenrespondents-spouses
and the individual petitioners herein and that,consequently, the Rules of Court and not Republic
Act No. 875 applied to thematter of injunction.
ISSUE:
Whether there exists an employer-employee relationship between theoperator of the auto-calesa
vis-à-vis the drivers thereof; hence, the respondent judge in the civil case has no jurisdiction to
issue the writ of preliminaryinjunction.
HELD:
The Supreme court ruled in the AFFIRMATIVE.

In one case
1
the Court held that a driver of a jeep who operates the sameunder the boundary system is
considered an employee within the meaning ofthe law and as such the case comes under the
jurisdiction of the CIR. It washeld that:
"The only features that would make the relationship of lessor andlessee between the respondent,
owner of the jeeps, and the drivers,members of the petitioner union, are the fact that he does not
pay themany fixed wage but their compensation is the excess of the total amount of fares earned
or collected by them over and above the amount of P7.50which they agreed to pay to the
respondent, and the fact that the gasolineburned by the jeeps is for the account of the drivers.

12 | P a g e
These two featuresare not, however, sufficient to withdraw the relationship, between them from
that of employer-employee, because the estimated earnings for faresmust be over and above the
amount they agreed to pay to the respondent for a ten-hour shift or ten-hour a day operation of
the jeeps. Not having anyinterest in the business because they did not invest anything in
theacquisition of the jeeps and did not participate in the management thereof,their service as
drivers of the jeeps being their only contribution to thebusiness, the relationship of lessor and
lessee cannot be sustained."
There was a labor dispute between the parties from the beginning.Moreover, upon the filing of
the unfair labor practice case, the Court ofIndustrial Relations acquired complete jurisdiction
over the labor dispute andthe least that could be done in Civil Case is either to dismiss it or
suspendproceedings therein until the final resolution of the former. Judgment is rendered setting
aside the writ of preliminary injunction.

256 Phil. 1182

GANCAYCO, J.:

Is there an employer-employee relationship between a security agency and its security guards?
Is the so-called "floating status" of a security guard lawful and could such prolonged status
amount to illegal dismissal? These are the issues raised in this petition for certiorari and
prohibition with preliminary injunction questioning the prohibition resolution dated January 29,
1988 of public respondent National Labor Relations Commission (NLRC) affirming the decision
of public respondent labor arbiter Bienvenido V. Hermogenes dated March 19, 1987 finding
private respondents to have been illegally dismissed and ordering petitioner to pay them
separation pay of one-half (1/2) month salary for every year of service, 13th month pay for the
year 1986 and the money value of their respective service incentive leave amounting to fifteen
(15) days salary each with allowances. The petition also assails the resolution of the respondent
NLRC dated April 18, 1988 denying the motion for reconsideration filed by petitioner.

Private respondents, numbering forty-six (46) in all, worked as security guards and/or janitors
under individual contracts with petitioner. They were assigned to firms and offices where
petitioner had contracts providing security and janitorial services. Their service period and last
rates of salary are stated in the decision of the labor arbiter.[1] Their individual contracts of
employment provide, among others, as follows:

13 | P a g e
"3.d. That the security guard, agrees to temporary suspension of his employment completely to
include such changes in his employment status with the Agency, in case of termination of
contract between the Agency and its Client, or reduction in force of same;"
In the early part of 1986, petitioner's service contracts with various corporations and government
agencies to which private respondents were previously assigned had been terminated generally
due to the sequestration of the said offices by the Presidential Commission on Good
Government. Accordingly, many of the private respondents were placed on "floating status" on
September 16, 1986. A number of them had been put on that status even earlier. "Floating
status" means an indefinite period of time when private respondents do not receive any salary or
financial benefit provided by law. A number of them later obtained employment in other
security agencies.

On account of the uncertainty of their employment with the petitioner, on July 25, 1986, private
respondents filed a complaint for illegal dismissal in the Arbitration Branch of the Department of
Labor and Employment against petitioner. They sought the payment of their respective
separation pay, 13th month pay for 1986 and service incentive leave pay. After due proceedings
where the parties were required to submit their position papers and stipulation of facts, the
respondent labor arbiter ruled in favor of the private respondents whose decision as above-
related was affirmed by the NLRC.

Hence, the herein petition alleging that the petitioner was denied due process of law by the
NLRC and it committed a grave abuse of discretion in considering private respondents as
employees of petitioner, in ruling that the "floating status" of private respondents amounted to an
illegal dismissal, and in causing the execution of the judgment pending a complete and full
adjudication of the issues.

Forthwith, the allegation of denial of due process is without basis. Petitioner was afforded the
opportunity to file its position paper. It even entered into a stipulation of facts with private
respondent.

As to the issue of employer-employee relationship, an examination of the records shows that

private respondents are regular employees of petitioner. Their individual length of service
ranges from four (4) to more than ten (10) years. In accordance with the stipulation of facts, it
appears that private respondents worked with petitioner as security guards/janitors. Their
employment contracts provide, among others:

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"1. That the AGENCY hereby undertakes to look for, procure, and/or furnish the services of the
SECURITY GUARD, with any individual, business establishment, residential houses or any
entity whatsoever, and the SECURITY GUARD agrees to supply his services, assignments,
position and undertaking, subject to the following conditions:
a) That the SECURITY GUARD upon acceptance of his position or undertaking for
employment, shall observe, follow and obey all rules, regulations, code of conduct required by
the AGENCY and any of its contracted client, in accordance with the provisions of RA 5487 and
its implementing Rules and Regulations;

b) That the AGENCY shall pay the monthly SECURITY GUARD a monthly salary of P/day
payable on the 5th and 20th of the month;

c) That the AGENCY shall have the exclusive right to withdraw or re-assign the SECURITY
GUARD;

d) That the SECURITY GUARD, agrees to temporary suspension of his employment

completely to include such changes in his employment status with the AGENCY, in case of
termination of contract between the AGENCY and its client, or reduction in force same;

e) That the AGENCY may terminate or dismiss the SECURITY GUARD, if, after proper and
due investigation it is shown that the SECURITY GUARD has violated any rule, regulation,
code of conduct and discipline, imposed by the AGENCY;

f) That the terms and conditions pertinent to service and discipline embodied in the Agreement
executed between the AGENCY and any person, establishment, or entity with whom the
SECURITY GUARD is going to serve or is assigned shall be considered part of this Agreement
and therefore binding on SECURITY GUARD."[2]

It was petitioner who determined how much private respondents received as their monthly salary,
overtime/night differential pay, mid-year and Christmas bonus and 13th month pay, uniforms
and meal allowances and other benefits mandated by law. Private respondents were reported by
the petitioner as its employees for purposes of social security coverage. Petitioner remitted their
withholding taxes to the Bureau of Internal Revenue and made monthly contributions to the Pag-
Ibig fund for their benefit. It was petitioner who determined and decided on the assignments,
promotions and salary increases of private respondents, their working hours, the firearms to be
issued to them and janitorial devices and tools to be used. Likewise, it was petitioner who

15 | P a g e
imposed the appropriate disciplinary measures on private respondents by way of reprimand,
suspension and dismissal.

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

generally considered:

1) the selection and engagement of the employees;

2) payment of wages;
3) the power of dismissal; and
4) the power to control the employees' conduct.[3]
It is clear, therefore, that private respondents are petitioner's regular employees who enjoy
security of tenure and who cannot be dismissed except for cause.[4]

As to the alleged illegal dismissal of private respondents, the records show that they filed their
complaint against petitioner on July 25, 1986. At the time they filed their complaint, most of
them were still on the job or on assignments and it was only in September 1986 when most of
them were placed on "floating status."

Obviously, the filing of the complaint was premature. Apparently, this issue was not raised at all
and so it is deemed waived. Thus, when the labor arbiter rendered his decision, he considered
those who have been out of work or "floating status" for a period exceeding six (6) months to
have been terminated from the service without just cause thus entitling them to the corresponding
benefits for such separation. We agree.

Under Article 286 of the Labor Code it is provided as follows:

"ART. 286. When employment not deemed terminated. - The bonafide suspension of the
operation of a business or undertaking for a period not exceeding six months, or the fulfillment
by the employee of a military or civic duty shall not terminate employment. In all such cases,
the employer shall reinstate the employee to his former position without loss of seniority rights if
he indicates his desire to resume his work not later than one month from the resumption of
operations of his employer or from his relief from the military or civic duty."
From the foregoing it is clear that when the bonafide suspension of the operation of a business or
undertaking exceeds six (6) months then the employment of the employee shall be deemed

16 | P a g e
terminated. By the same token and applying the said rule by analogy to security guards, if they
remained without work or assignment, that is in "floating status" for a period exceeding six (6)
months, then they are in effect constructively dismissed.

The labor arbiter disagreed with the representations of petitioner that the private respondents
who accepted assignments in other security agencies without previously resigning should be
considered to have been dismissed with just cause. In the stipulation of facts, the parties
admitted that the disciplinary rules promulgated by petitioner for its employees provide that
acceptance by an employee of other employment without first resigning from the agency is a
cause for dismissal.

In this case, it appears that twenty-seven (27) of the private respondents violated this rule by
accepting employment in other security agencies without previously resigning from employment
with petitioner. No doubt, this is a just cause for termination of their services and as such they
are not entitled to any separation pay.[5]

As regards the other seventeen (17) private respondents, they admittedly remained in "floating
status" for more then six (6) months. Such a "floating status" is not unusual for security guards
employed in security agencies as their assignments primarily depend on the contracts entered
into by the agency with third parties. Such a stipulated status is, therefore, lawful.

The "floating status" of such an employee should last only for a reasonable time. In this case,
respondent labor arbiter correctly held that when the "floating status" of said employees lasts for
more than six (6) months, they may be considered to have been illegally dismissed from the
service. Thus, they are entitled to the corresponding benefits for their separation.

WHEREFORE, the petition is GRANTED insofar as the twenty-seven (27) private respondents
are concerned who have accepted employment elsewhere. The questioned resolutions of the
NLRC dated January 29, 1988 and April 18, 1988 are hereby modified as to said twenty-seven
(27) private respondents in that their complaint is hereby dismissed for lack of merit. The
questioned resolutions are hereby affirmed in all other respects as to the other private
respondents. No pronouncement as to costs.

SO ORDERED.

Reynaldo Bautista vs. Hon. Amado Inciong G.R. No. L-52824, March 16, 1988
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FACTS:

Petitioner was employed by Associated Labor Unions(ALU) as organizer. Bautista went on leave
and when he went back to work, he was informed that he was already terminated. The Director
ruled in favor of Bautista. The Deputy Minister of Labor, however, set aside the order of the
Director finding that his membership coverage with the SSS which shows that respondent ALU
is the one paying the employer’s share in the premiums is not conclusive proof that respondent is
the petitioner’s employer because such payments were performed by the respondent as a favor
for all those who were performing full time union activities with it to entitle them to SSS
benefits. He then ruled that there was no emplore-employee relationship between ALU and
Bautista by the fact that ALU is not an entity for profit but a duly registered labor union whose
sole purpose is the representation of its bonafide organization units.

ISSUE:

Whether or not there can be employer-employee relationship between a labor union and its
member.

HELD:

Yes, the mere fact that the respondent is a labor union does not mean that it cannot be considered
an employer of the persons who work for it.

Moreover, the four elements in determining the existence of an employer-employee relationship

was present in the case at bar. The Regional Director correctly found that the petitioner was an
employee of the respondent union as reflected in the latter’s individual payroll sheets and shown
by the petitioner’s membership with the Social Security System (SSS) and the respondent
union’s share of remittances in the petitioner’s favor. Bautista was selected and hired by the
union. ALU had the power to dismiss him as indeed it dismissed him. And definitely, the Union
tightly controlled the work of Bautista as one of its organizers.

G.R. No. L-53515 February 8, 1989

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SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO), petitioner,
vs.
HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL CORPORATION, respondents.

Lorenzo F. Miravite for petitioner.

Isidro D. Amoroso for New San Miguel Corp. Sales Force Union.

Siguion Reyna, Montecillo & Ongsiako for private respondent.

GRIÑO-AQUINO, J.:

This is a petition for review of the Order dated February 28, 1980 of the Minister of Labor in
Labor Case No. AJML-069-79, approving the private respondent's marketing scheme, known as
the "Complementary Distribution System" (CDS) and dismissing the petitioner labor union's
complaint for unfair labor practice.

On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until January 31,
1981) was entered into by petitioner San Miguel Corporation Sales Force Union (PTGWO), and
the private respondent, San Miguel Corporation, Section 1, of Article IV of which provided as
follows:

Art. IV, Section 1. Employees within the appropriate bargaining unit shall be entitled to a basic
monthly compensation plus commission based on their respective sales. (p. 6, Annex A; p. 113,
Rollo.)

In September 1979, the company introduced a marketing scheme known as the "Complementary
Distribution System" (CDS) whereby its beer products were offered for sale directly to
wholesalers through San Miguel's sales offices.

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The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of
Labor, with a notice of strike on the ground that the CDS was contrary to the existing marketing
scheme whereby the Route Salesmen were assigned specific territories within which to sell their
stocks of beer, and wholesalers had to buy beer products from them, not from the company. It
was alleged that the new marketing scheme violates Section 1, Article IV of the collective
bargaining agreement because the introduction of the CDS would reduce the take-home pay of
the salesmen and their truck helpers for the company would be unfairly competing with them.

The complaint filed by the petitioner against the respondent company raised two issues: (1)
whether the CDS violates the collective bargaining agreement, and (2) whether it is an indirect
way of busting the union.

In its order of February 28, 1980, the Minister of Labor found:

... We see nothing in the record as to suggest that the unilateral action of the employer in
inaugurating the new sales scheme was designed to discourage union organization or diminish its
influence, but rather it is undisputable that the establishment of such scheme was part of its
overall plan to improve efficiency and economy and at the same time gain profit to the highest.
While it may be admitted that the introduction of new sales plan somewhat disturbed the present
set-up, the change however was too insignificant as to convince this Office to interpret that the
innovation interferred with the worker's right to self-organization.

Petitioner's conjecture that the new plan will sow dissatisfaction from its ranks is already a
prejudgment of the plan's viability and effectiveness. It is like saying that the plan will not work
out to the workers' [benefit] and therefore management must adopt a new system of marketing.
But what the petitioner failed to consider is the fact that corollary to the adoption of the assailed
marketing technique is the effort of the company to compensate whatever loss the workers may
suffer because of the new plan over and above than what has been provided in the collective
bargaining agreement. To us, this is one indication that the action of the management is devoid
of any anti-union hues. (pp. 24-25, Rollo.)

The dispositive part of the Minister's Order reads:

WHEREFORE, premises considered, the notice of strike filed by the petitioner, San Miguel
Brewery Sales Force Union-PTGWO is hereby dismissed. Management however is hereby
ordered to pay an additional three (3) months back adjustment commissions over and above the
adjusted commission under the complementary distribution system. (p. 26, Rollo.)

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The petition has no merit.

Public respondent was correct in holding that the CDS is a valid exercise of management
prerogatives:

Except as limited by special laws, an employer is free to regulate, according to his own
discretion and judgment, all aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, tools to be used, processes to be followed,
supervision of workers, working regulations, transfer of employees, work supervision, lay-off of
workers and the discipline, dismissal and recall of work. ... (NLU vs. Insular La Yebana Co., 2
SCRA 924; Republic Savings Bank vs. CIR 21 SCRA 226, 235.) (Perfecto V. Hernandez, Labor
Relations Law, 1985 Ed., p. 44.) (Emphasis ours.)

Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise
means designed towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled:

... Even as the law is solicitous of the welfare of the employees, it must also protect the right of
an employer to exercise what are clearly management prerogatives. The free will of management
to conduct its own business affairs to achieve its purpose cannot be denied.

So long as a company's management prerogatives are exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating or circumventing the
rights of the employees under special laws or under valid agreements, this Court will uphold
them (LVN Pictures Workers vs. LVN, 35 SCRA 147; Phil. American Embroideries vs.
Embroidery and Garment Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia, 18 SCRA 110).
San Miguel Corporation's offer to compensate the members of its sales force who will be
adversely affected by the implementation of the CDS by paying them a so-called "back
adjustment commission" to make up for the commissions they might lose as a result of the CDS
proves the company's good faith and lack of intention to bust their union.

WHEREFORE, the petition for certiorari is dismissed for lack of merit.

SO ORDERED.

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National Sugar Refineries Corp v. NLRC
Chester Cabalza recommends his visitors to please read the original & full text of the case cited.
Xie xie!

G.R. No. 101761 March 24, 1993

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP,
respondents.

Facts:

Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully

owned and controlled by the Government, operates three (3) sugar refineries located at
Bukidnon, Iloilo and Batangas. Private respondent union represents the former supervisors of the
NASUREFCO Batangas Sugar Refinery.

In 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from
rank-and-file to department heads. We glean from the records that for about ten years prior to the
JE Program, the members of respondent union were treated in the same manner as rank-and file
employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the
provisions of Articles 87, 93 and 94 of the Labor Code as amended.

With the implementation of the JE Program, members of respondent union were re-classified
under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and
benefits.

In May 1990, petitioner NASUREFCO recognized herein respondent union, which was
organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own
unions, as the bargaining representative of all the supervisory employees at the NASUREFCO
Batangas Sugar Refinery.

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In June 1990, the members of herein respondent union filed a complainant with the executive
labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of
Article 100 of the Labor Code.

In 1991, Executive Labor Arbiter Pido directed NASUREFCO to pay for the wages complained
of.

On appeal, in a decision promulgated on July 1991, respondent National Labor Relations

Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the members
of respondent union are not managerial employees, and, therefore, they are entitled to overtime,
rest day and holiday pay. Respondent NLRC declared that these supervisory employees are
merely exercising recommendatory powers subject to the evaluation, review and final action by
their department heads.

Issue:

W/N the Supervisors are considered Managerial Employees and should no longer receive
overtime, rest day and holiday pay.

Ruling:

Yes

Ratio:

"Art. 82 Coverage. — The provisions of this title shall apply to employees in all establishments
and undertakings whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on him
for support, domestic helpers, persons in the personal service of another, and workers who are
paid by results as determined by the Secretary of Labor in Appropriate regulations.

23 | P a g e
"As used herein, 'managerial employees' refer to those whose primary duty consists of the
management of the establishment in which they are employed or of a department or subdivision
thereof, and to other officers or members of the managerial staff." (Emphasis supplied.)

It is the submission of petitioner that while the members of respondent union, as supervisors,
may not be occupying managerial positions, they are clearly officers or members of the
managerial staff because they meet all the conditions prescribed by law and, hence, they are not
entitled to overtime, rest day.

Quintessentially, with the promotion of the union members, they are no longer entitled to the
benefits which attach and pertain exclusively to their positions. Entitlement to the benefits
provided for by law requires prior compliance with the conditions set forth therein. With the
promotion of the members of respondent union, they occupied positions which no longer met the
requirements imposed by law. Their assumption of these positions removed them from the
coverage of the law, ergo, their exemption therefrom.

As correctly pointed out by petitioner, if the union members really wanted to continue receiving
the benefits which attach to their former positions, there was nothing to prevent them from
refusing to accept their promotions and their corresponding benefits. As the saying goes by, they
could not, as a simple matter of law and fairness, get the best of both worlds at the expense of
NASUREFCO.

Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of

management, provided it is done in good faith. In the case at bar, private respondent union has
miserably failed to convince this Court that the petitioner acted implementing the JE Program.
There is no showing that the JE Program was intended to circumvent the law and deprive the
members of respondent union of the benefits they used to receive.

24 | P a g e
Union of Filipino Employees v. Vivar
Chester Cabalza recommends his visitors to please read the original & full text of the case cited.
Xie xie!

Union of Filipino Employees vs Vivar

G..R. No. 79255
January 20, 1992

Excluded Employees: Field Personnel

Facts:

This labor dispute stems from the exclusion of sales personnel from the holiday pay award and
the change of the divisor in the computation of benefits from 251 to 261 days.

On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the
National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling
on its rights and obligations respecting claims of its monthly paid employees for holiday pay in
the light of the Court's decision in Chartered Bank Employees Association v. Ople (138 SCRA
273 [1985]).

Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary
arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator.

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2)
the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical
representatives (hereinafter referred to as sales personnel) from the award of the holiday pay, and
(3) deduction from the holiday pay award of overpayment for overtime, night differential,
vacation and sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145)

25 | P a g e
Petitioner UFE answered that the award should be made effective from the date of effectivity of
the Labor Code, that their sales personnel are not field personnel and are therefore entitled to
holiday pay, and that the use of 251 as divisor is an established employee benefit which cannot
be diminished.

Issue:

W/N the respondent's sales personnel are not field personnel under Article 82 of the Labor Code?

Held:

The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on
sales target; (2) good collection performance; (3) proper compliance with good market hygiene;
(4) good merchandising work; (5) minimal market returns; and (6) proper truck maintenance.
(Rollo, p. 190).

The Court thereby resolves that the grant of holiday pay be effective, not from the date of
promulgation of the Chartered Bank case nor from the date of effectivity of the Labor Code, but
from October 23, 1984, the date of promulgation of the IBAA case.

WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be
used in computing holiday pay shall be 251 days. The holiday pay as above directed shall be
computed from October 23, 1984. In all other respects, the order of the respondent arbitrator is
hereby AFFIRMED.

26 | P a g e
San Miguel Brewer, Inc. vs. Democratic Labor Organization, et al.GR No. L-18353July 31.
1963EN BANC | Bautista,
J.
Prologue (Principle)
: The Eight-Hour Labor Law only applies to employees who are paid on a monthly or daily
basis.Employees who are
paid on a piece-work
basis are EXCLUDED.
FACTS:-
Respondent Democratic Labor Assoc. filed a manifestation claiming for the following against
petitioner SMB: overtime pay,night-shift differential pay, attorney’s fees. Separation pay, and
sick and vacation leave compensation.- Judge Bautista ruled that those working outside the
company’s premises are entitled to overtime compensation, hence, theEight-Hour Labor Law
applies to them.- Petitioner filed for an M.R. before the CIR. It was deniedHENCE THE
PETITIONIssue: Whether the Eight-Hour Labor Law applies to respondent workers.
Held: NoRatio Decidendi:
The Eight-Hour Labor Law only applies to an employee who is paid on a monthly or daily basis.
This lawhas no application to employees paid on a piece-work basis. CIR is wrong to apply the
law to the piece-work employees.According to a ruling by DOLE on Dec. 9, 1957, field sales
personnel receiving monthly salaries (such as the respondents inthis case) are not subject to the
Eight-Hour Labor Law (although they are paid on a monthly basis, their commission shall
beconsidered as payment for extra time he renders in excess of 8 hours).Additional Issue: Are the
claimants who are watchmen and security guards entitled to extra pay for work done on
Sundaysand Holidays?COURT: They are entitled to such pay as per Comm. Act No. 444. They
shall be entitled to + 25% of their regular salary.PETITION: GRANTED: Decision of the CIR,
SET ASIDE.

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