FACTS:

Petitioners are workers who have been employed at the San Miguel Parola Glass Factory since 1961, averaging about seven (7) years of service at the time of their termination. 

They worked as “cargadores” or “pahinante” at the SMC Plant loading, unloading, piling or palleting empty bottles and wooden shells to and from company trucks and warehouses. 

When any of the glass furnaces suffered a breakdown, making a shutdown necessary, the petitioners work was temporarily suspended. Thereafter, the petitioners would return to work at the glass plant.

Sometime in January 1969, Petitioner workers — numbering one hundred and forty (140) organized and affiliated themselves with the petitioner union and engaged in union activities, believing themselves entitled to overtime and holiday pay. However, their gripes and grievances were not heeded by the respondents.

On February 20, 1969, all the petitioners were dismissed from their jobs and, thereafter, denied entrance to respondent company’s glass factory despite their regularly reporting for work. 

A complaint for illegal dismissal and unfair labor practice was filed by the petitioners.

Respondents moved to dismiss the complaint on the grounds that the complainants are not and have never been employees of respondent company but employees of the independent contractor.

The Labor Arbiter found for complainants which was concurred in by the NLRC.

On appeal, the Secretary set aside the NLRC ruling, stressing the absence of an employer-employee relationship.

ISSUE:

Whether or not an employer-employee relationship exists between petitioners-members of the “Brotherhood Labor Unit Movement of the Philippines” (BLUM) and respondent San Miguel Corporation.

RULING:

The petition is GRANTED.

In determining the existence of an employer-employee relationship, the elements that are generally considered are the following: 

(a) the selection and engagement of the employee; 

(b) the payment of wages; 

(c) the power of dismissal; and 

(d) the employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished. 

It is the so-called “control test” that is the most important element.

Respondent asserts that the petitioners are employees of the Guaranteed Labor Contractor, an independent labor contracting firm.

The facts and evidence on record negate respondent SMC’s claim.

Uncontroverted is the fact that for an average of seven (7) years, each of the petitioners had worked continuously and exclusively for the respondent company’s shipping and warehousing department. 

Considering the length of time that the petitioners have worked with the respondent company, there is justification to conclude that they were engaged to perform activities necessary or desirable in the usual business or trade of the respondent, and the petitioners are, therefore regular employees.

The term of the petitioners’ employment appears indefinite. The continuity and habituality of petitioners’ work bolsters their claim of employee status vis-a-vis respondent company.

Section 8, Rule VIII, Book III of the Implementing Rules of the Labor Code provides:

Job contracting. — There is job contracting permissible under the Code if the following conditions are met:

(1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and

(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business.

We find that Guaranteed and Reliable Labor contractors have neither substantial capital nor investment to qualify as an independent contractor under the law. The premises, tools, equipment and paraphernalia used by the petitioners in their jobs are admittedly all supplied by respondent company. It is only the manpower or labor force which the alleged contractors supply, suggesting the existence of a “labor only” contracting scheme prohibited by law.

SMC is hereby ordered to REINSTATE petitioners, with three (3) years backwages. However, where reinstatement is no longer possible, the respondent SMC is ordered to pay the petitioners separation pay equivalent to one (1) month pay for every year of service.