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G.R. No.

L-48645 January 7, 1987


"BROTHERHOOD" LABOR UNITY MOVEMENT OF THE PHILIPPINES, ANTONIO
CASBADILLO, PROSPERO TABLADA, ERNESTO BENGSON, PATRICIO SERRANO, ANTONIO
B. BOBIAS, VIRGILIO ECHAS, DOMINGO PARINAS, NORBERTO GALANG, JUANITO
NAVARRO, NESTORIO MARCELLANA, TEOFILO B. CACATIAN, RUFO L. EGUIA, CARLOS
SUMOYAN, LAMBERTO RONQUILLO, ANGELITO AMANCIO, DANILO B. MATIAR, ET AL.,
petitioners,
vs.
HON. RONALDO B. ZAMORA, PRESIDENTIAL ASSISTANT FOR LEGAL AFFAIRS, OFFICE OF
THE PRESIDENT, HON. AMADO G. INCIONG, UNDERSECRETARY OF LABOR, SAN MIGUEL
CORPORATION, GENARO OLIVES, ENRIQUE CAMAHORT, FEDERICO OATE, ERNESTO
VILLANUEVA, ANTONIO BOCALING and GODOFREDO CUETO, respondents
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 January 1969, the 140 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.
Labor Arbiter Nestor Lim rendered a decision in favor of the complainants which was affirmed by the
NLRC. On appeal, the Secretary set aside the NLRC ruling stressing the absence of an employeremployee relationship
Issue: Whether an employer-employee relationship exists between petitioners and respondent San
Miguel Corporation
Held: YES, there is an employer-employee relationship between petitioners and respondent San
Miguel Corporation.
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 called "control test" that
is the most important element

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 (Documentary evidence presented by the petitioners establish
respondent SMC's right to impose disciplinary measures for violations or infractions of its rules and
regulations as well as its right to recommend transfers and dismissals of the piece workers)
submitted in evidence prove the companys control over the workers. That San Miguel has the power
to recommend penalties or dismissal is the strongest indication of the companys right of control over
the workers as direct employer.
The contract of employment executed between SMC and the said labor contractor Guaranteed and
Reliable Labor have neither substantial capital nor investment to qualify as an independent
contractor under the law. The premises, tools and equipment used by the petitioners in their jobs are
all supplied by the respondent SMC. 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
SC also held that in a truly independent contractor-contractee relationship, the fees are paid directly
to the manpower agency in lump sum without indicating or implying that the basis of such lump sum
is the salary per worker multiplied by the number of workers assigned to the company. In the case a
bar, the alleged independent contractors were paid a lump sum representing only the salaries the
workers were entitled to, arrived at by adding the salaries of each worker which depend on the
volume of work they had accomplished individually. Therefore, there is no independent contractorcontractee relationship.
Respondent San Miguel Corporation was ordered to REINSTATE petitioners, with three (3) years
backwages but if 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.