CASE: Caurdanetaan vs. Laguesma

[G.R. No. 113542. February 24, 1998]

CAURDANETAAN PIECE WORKERS UNION, represented by JUANITO P. COSTALES, JR. in his capacity as union president, petitioner, vs.UNDERSECRETARY BIENVENIDO E. LAGUESMA and CORFARM GRAINS, INC., respondents.

[G.R. No. 114911. February 24, 1998]

CAURDANETAAN PIECE WORKERS ASSOCIATION as represented by JUANITO P. COSTALES, JR., president, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, CORFARM GRAINS, INC. and/or TEODY C. RAPISORA and HERMINIO RABANG, respondents.

FACTS:

-Caurdanetaan Piece Workers Union (CPWU) has 92 members who worked as ‘cargador’ for CoFarm Grains, Inc. (Cofarm).

- As cargadores, they loaded, unloaded and piled sacks of palay from the warehouse to the cargo trucks and those brought by cargo trucks for delivery to different places. They were paid by Cofarm on a piece rate basis. When CGI denied some benefits to these cargadores, the latter organized (CPWU). Upon learning of its formation, CGI barred its members from working with them and replaced [them] with non-members of the union sometime in the middle of 1992.

-In 1992, CPWU filed a petition for certification election before the DOLE. While this was pending, they also filed a complaint for illegal dismissal and unlabor practice (among others).

- In 1993, petition for certification was granted. However, the petition for certification election was later dismissed (on motion for recon filed by Cofarm) by Laguesma for lack of employer- employee relationship.

-On September 14, 1993, Labor Arbiter Rolando D. Gambito issued his decision finding the dismissal of petitioner’s members illegal. On appeal by both parties. On appeal, NLRC set aside the appealed decision and remanded the case to the labor arbiter for further proceedings.

Cofarm’s contention: Corfarm insists that no E-E relationship exists and it denies that it had the power of control, rationalizing that CPWU members" were 'street-hired' workers engaged from time to time to do loading and unloading work .There was no superintendent-in-charge to give orders and there were no gate passes issued, nor tools, equipment and paraphernalia issued by Corfarm for loading/unloading. Furthermore they contended that employer-employee relationship is negated by the fact that they offer and actually perform loading and unloading work for various rice mills in Pangasinan. Cofarm asserts that a literal application of such article will result in “absurdity,” where CPWU’s members will be regular employees not only of COfarm but also of several other rice mills, where they were allegedly also under service. Finally, Corfarm submits that the OSG’s position is negated by the fact that “CPWU’s members contracted for loading and unloading services with respondent company when such work was available and when they felt like it.

ISSUES:

Whether or not an employer-employee relationship between the CPWU members and Respondent Cofarm exist? YES.

RULING:

The Four-Fold Test to determine the existence of an E-E relationship

To determine the existence of an employer-employee relation, this Court has consistently applied the “four-fold” test which has the following elements: (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to control -- the last being the most important element.

The examination of the case records indubitably shows the presence of an employer-employee relationship. Relying on the evidence adduced by theCPWU, Laguesma himself affirmed the presence of such connection in its First Order finding:

“Anent the first issue, we find the annexes submitted by the respondent company not enough to prove that herein petitioner is indeed an independent contractor. The existence of an independent contractor relationship is generally established by the following criteria. The contractor is carrying on an independent business; [the] nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and

supervision over the workers; payment of the contractor’s workers; the control and the supervision over the workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and laborers, and the mode, manner and terms of payment. [Brotherhood Labor Unity Movement of the Philippines vs. Zamora, 147 SCRA 49 (198) [sic] ].

None of the above criteria exists in the case at bar. The absence of a written contract which specifies the performance of a specified piece of work, the nature and extent of the work and the term and duration of the relationship between herein petitioner and respondent company belies the latters [sic] allegation that the former is indeed and [sic] independent contractor.

Also, respondent failed to show by clear and convincing proof that herein respondent has the substantial capital or investment to qualify as an independent contractor under the law. The premises, tools, equipments [sic] and paraphernalia are all supplied by respondent company. It is only the manpower or labor force which the alleged contractor supplies, suggesting the existence of a ‘labor only’ contracting scheme which is prohibited by law. Further, if herein petitioner is indeed an independent contractor, it should have offered its services to other companies and not to work [sic] exclusively for the respondent company. It is therefore, clear that the alleged J.P. Costales, Jr. Cargador Services cannot be considered as an independent contractor as defined by law.”

Cofarm is not an independent contractor (with respect to Laguesma’s subsequent Order reversing his First Order above, finding no EE relationship existed) (which was absurd according to the SC)

The standard to determine whether a worker is an independent contractor:

“The applicable law is not Article 280 of the Labor Code but Art. 106, which provides:

‘Art. 106. Contractor or subcontractor. -- Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code. xxx There is ‘labor-only’ contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.’ (emphasis supplied)

It is undeniable that petitioner’s members worked as cargadores for Cofarm. They loaded, unloaded and piled sacks of palay from the warehouses to the cargo trucks and from the cargo trucks to the buyers. This work is directly related, necessary and vital to the operations of Corfarm. Moreover, Corfarm did not even allege, much less prove, that CPWU’s members have “substantial capital or investment in the form of tools, equipment, machineries, [and] work premises, among others.” Furthermore, Cofarm did not contradict CPWU’s allegation that it paid wages directly to these workers without the intervention of any third-party independent contractor. It also wielded the power of dismissal over petitioners.

Applying Article 280 of the Labor Code, we hold that the CPWU members were regular employees of private respondent. Their tasks were essential in the usual business of private respondent.

CASE: San Miguel vs. Ople

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

FACTS

-On April 17, 1978, a collective bargaining agreement was entered into by San Miguel Corporation Sales Force Union (PTGWO), and the private respondent, San Miguel Corporation(SMC) allowing employees with the appropriate bargaining unit to be entitled to a basic monthly compensation plus commission based on sales.

-On September 1979, SMC introduced a marketing scheme called “Complemetary Distribution System" (CDS) whereby its beer products were offered for sale directly to wholesalers through San Miguel's sales offices.

-PTGWO then filed a complaint for unfair labor practice on the ground that it violates the collective bargaining agreement as it would reduce the take home pay of the salesmen and their truck helpers for the company would be unfairly competing with them.

Minister of Labor: dismissed the petition upheld that CDS was a valid exercise of management prerogative.

ISSUE: Whether or not the CDS violates the collective bargaining agreement? NO.

RULING:

CDS was 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.

Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise means designed towards that goal.

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.

CDS was not an indirect way of busting the union

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.

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.

CASE: Union vs. Vivar

G.R. No. 79255 January 20, 1992

UNION OF FILIPRO EMPLOYEES (UFE), petitioner, vs.BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTLÉ PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.

Union of Filipro Employees v. Vivar

Facts:

-Filipro Inc. (now Nestle Philippines, Inc.) had excluded sales personnel from the holiday pay award and changed the divisor in the computation of benefits from 251 to 261 days.

-In the case for voluntary arbitration, Vivar directed Filipro to “pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in the Code.”

-Filipro filed a motion for clarification seeking (1) the limitation of the award to 3 years, (2) exclusion of its sales personnel (consisted by salesmen, sales representatives, truck drivers, merchandisers and medical representatives) 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.

-Vivar issued an order declaring that the effectivity of the holiday pay award shall retroact to November1, 1974, the date of effectivity of the labor Code. However, he adjudged the sales personnel are field personnel and, as such, are not entitled to holiday pay. He likewise ruled that the divisor should be changed from 251 to 261 due to the grant of 10 days’ holiday pay and ordered the reimbursement of overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251 days as divisor. Treating the motions for partial reconsideration of the parties.

-Vivar forwarded the case to the NLRC, which remanded the case to Vivar for lack of jurisdiction.

Union’s contention: - They contended that the award should be made effective from the date of effectivity of the Labor Code, their sales personnel are not field personnel and are therefore entitled to holiday pay, and the use of 251 as divisor is an established employee benefit which cannot be diminished.

ISSUE #1. Whether or not Nestle’s sales personnel are entitled to holiday pay?

Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as “non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.”

It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based. However, the Union maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel’s working hours which can be determined with reasonable certainty. However, the court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The company has no way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the hours in between in actual field work. Moreover, the Court fails to see how the company can monitor the number of actual hours spend infield work by an employee through imposition of sanctions on absenteeism.

The requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides:

Rule IV Holidays with Pay

Sec. 1. Coverage — This rule shall apply to all employees except:

xxx xxx xxx

(e) Field personnel and other employees whose time and performance is unsupervised by the employer . . . (Emphasis supplied)

Rule IV (above) did not add another element to the Labor definition of field personnel

Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to the Labor Code definition of field personnel. The clause "whose time and performance is unsupervised by the employer" did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such employee's time and performance is constantly supervised by the employer.

ISSUE #2. Whether or not, related to the award of holiday pay, the divisor should be changed from 251 to261 days and whether or not the previous use of 251 as divisor resulted in overpayment for overtime?

The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of his daily rate.

The use of 251 days’ divisor by Filipro indicates that holiday pay is not yet included in the employee’s salary, otherwise the divisor should have been 261.It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constantfigure for the purpose of computing overtime and night differential pay and commutation of sick and vacation leave credits. Necessarily, the daily rate should also be the same for computing the 10 unpaid holidays.

The respondent Arbitrator’s order to change the divisor from 251 to 261 days would result in a lower daily rate which is violative of the prohibition or non-diminution of benefits found in Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the dividend, which represents the employee’s annual salary, should correspondingly be increased too incorporate the holiday pay.

Moreover,the divisor to be used in computing holiday pay shall be 251 days and the reckoning period for the application of the holiday award is October 23, 1984 and not November 1, 1974.