Labor Digest- Makati Haberdashery and Sentinel Cases

Makati Haberdashery vs NLRC, 179 SCRA 449 (89)

Other issues discussed:

Penned by Justice Fernan Nature: Petition for certiorari to review the decision of the NLRC which affirmed the decision of the Labor Arbiter who jointly heard and decided two cases filed by the Union in behalf of the private respondents

• ER-EE relationship Held: There is such relationship because in the application of the four-fold test, it was found that petitioners had control over the respondents not only as to the result but also as to the means and method by which the same is to be accomplished. Such control is proven by a memorandum which enumerates procedures and instructions regarding job orders, alterations, and their behavior inside the shop.

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Private complainants are working for Makati Haberdashery Inc as tailors, seamstress, sewers, basters, and plantsadoras and are paid on a piece-rate basis (except two petitioners who are paid on a monthly basis) and in addition, they are given a daily allowance of P 3.00 provided they report before 9:30 a.m. Work sked: 9:30-6 or 7 p.m., Mondays to Saturdays and even on Sundays and holidays during peak periods. Union’s first case was on:  underpayment of • basic wage • living allowance  non-payment of • holiday pay • service incentive pay

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13th month pay • benefits provided for under Wage Orders 1-5 While the first case was pending decision, Pelobello left an open package containing a jusi barong tagalong with salesman Rivera. He was caught and confronted about this and he explained that this was ordered by Zapata, also a worker, for his (personal) customer. Zapata allegedly admitted that he copied the design of the company but later denied ownership of the same. They were made to explain why no action should be taken against them for accepting a job order which is prejudicial and in direct competition with the business. However they did not submit and went on AWOL until the period given for them to explain expired hence the dismissal. Illegal dismissal complaint on the second case filed before the LA Diosana. LA declared petitioners guilty of illegal dismissal and ordered to reinstate Pelobello and Zapata and found petitioners violating decrees of COLA, service incentive and 13th month pay. Commission analyst was directed to compute the monetary awards which retroacts to three years prior to filing of case. NLRC affirmed but limited backwages to one year.

Issue: WON employees paid on piece-rate basis are entitled to service incentive pay (relevant to title) Held: NO, fall under exceptions set forth in the implementing rules Ratio: 

As to the service incentive leave pay: as piece-rate workers being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof, they fall under the exceptions stated in Sec 1(d), Rule V, IRR, Book III, Labor Code.

Service Incentive Leave SECTION 1. Coverage. — This rule shall apply to all employees except: (d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof;

• Minimum Wage Held: No dispute that entitled to minimum wage but court dismissed case for lack of sufficient evidence to support claim that there was in fact underpayment which was ruled by the LA and which the private resp did not appeal to in the NLRC nor in the SC. Well-settled is the rule that “an appellee who has not himself appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the decision of the court below”. • COLA Held: Entitled. They are regular employees. IRR of Wage No. 1, 2, and 5 provide that “all workers in the private sector, regardless of their position, designation of status, and irrespective of the method by which their wages are paid” are entitled to such allowance.

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13th Month pay Held: Entitled under Sec. 3(e) of the IRR of PD 851 which is an exception to the exception of such provision which states that employers whose workers are paid on piece-rate basis in which are covered by such issuance in so far as such workers are concerned. • Illegal dismissal Held: Dismissed for justifiable ground based on Article 283 (a) and (c). Inimical to the interest of the employer. Not dismissed just because of union activities.

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• Sentinel Security Agency, Inc. v. NLRC, 295 SCRA 123 1998) Penned by Justice Panganiban Nature: Certiorari seeking the reversal of the two petitions to the NLRC Facts: •

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Five employees of Sentinel Security Agency filed for illegal dismissal against the Agency and its Client Philamlife Cebu and prayed for payment of salary differential, service incentive pay, and separation pay. The complainants were assigned to Philamlife Cebu but after nearly 20 years for some employees and more than 20 years for some, Philam requested on Dec 16, 1993 that security guards be replaced in the Client’s offices in Cebu, Bacolod, CDO, Dipolog and Iligan. Agency issued a Relief and Transfer Order replacing the guards and for them to be reassigned to other clients effective on Jan 16 1994. On Jan 18 and Feb 4 1994, the employees filed an illegal dismissal complaint because of a threat from the personnel manager who told them that they were replaced because they were old. Hence the complaint against the Agency and the Client. Client and Agency’s defense: No dismissal because the contract allows them to recall security guards from assigned posts at the will of either party and that the Agency is allowed for a period of not more than six months, to retain the complainants on floating status. Agency should have been given a chance to give new assignments to complainants. Client’s defense: No ER-EE relationship. Job contract, separate corporate personalities and not necessary and desirable to the business or trade.

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Agency to give separation pay at the rate of ½ month pay for every year of service and

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Agency and Client to solidarily pay backwages and 13 th month pay for one year (Jan 1994-1995).

Issue: 1) WON there was illegal dismissal 2) And if so, WON Philam may be held liable Held:

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2) Yes there was illegal dismissal but SC does not agree with NLRC for its reasons for ruling that there was ID. NLRC’s reason: Client and Agency wanted to circumvent the Retirement Law. SC: You NLRC are speculating and your contention is unsupported! SOLGEN: Complainants were placed on temporary offdetail which is a standard stipulation in employment contracts since the availability of assignment for security guards is dependent on contracts entered into by the agency. Off-detail or Floating status means

SC (with conviction): “You are wrong SolGen! How dare you be wrong? You know that abandonment requires a deliberate and unjustified refusal of an employee to resume to his work coupled with a clear absence of any intention to return to his/her work and the fact that complainants did not pray for reinstatement is not a sufficient proof of abandonment, you moron. They reported to the Agency on several dates but it did not give any reassignment. Abandonment has been ruled to be incompatible with constructive dismissal as stated in Escobin vs NLRC. Because I am infallible and you are in dire need of enlightenment, let me demonstrate the correct reasoning why they are illegally dismissed.” It has been recognized that the management has a prerogative to transfer an employee from one office to another within the same business establishment as the exigency of the business may require provided that transfer: does not result in a demotion in rank diminution in salary, benefits, and other privileges not unreasonable, inconvenient or prejudicial to the latter not used as a subterfuge by the employer to rid himself of an undesirable worker

SC: “Solgen, in case you don’t know what a transfer means, let me extend my unparalleled mastery of this craft which,unfortunately, you don’t have: - Transfer may mean two things: a) from one position to another of equivalent rank, level or salary b) from one office to another within the same business establishment. Oh please, do not even think this is equivalent to promotion because the latter involves a scalar ascent.”

LA: Agency and Client ordered to pay solidarily complainants 13th month pay and service incentive leave benefits amounting to a little more than P60K. NLRC: There was constructive dismissal. Modified awards. Deleted 13th month pay for previous years. Twin remedies. Ordered:

“waiting to be posted” and this is not dismissal so long as such status does not continue beyond a reasonable time. However SOLGEN made a pronouncement that although abandonment is inconsistent with illegal dismissal, such rule is not applicable when the complainants expressly reject this relief and ask for separation pay instead.

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It should have been a mere changing of the guards, a reshuffling or exchange of their posts or assignments to their posts and such that no security guard would be without assignment. But did the Agency implement such recognized concept? NO!!! It hired new security guards, younger, braver, full of life men whose age are in their prime! This resulted in a lack of posts to which the senile, used and wrinkled men could have been reassigned. Floating status – requires the dire exigency of the employer’s bona fide suspension of operation, business or undertaking. In security services, this happens when the clients do not renew their contracts with a security agency but in the case at bar, the Client awarded a new contract to the Agency. No surplus of security guards over available assignments. No suspension of operation that would have justified placing the complainants offdetail and making them wait for 6 months. SC: “The logical conclusion here Solgen, in case you don’t know what’s logical, is that the Agency illegally dismissed the complainants. Only solidarily to the service incentive leave pay. Since no ER-EE relationship between Client and complainants, cannot be held liable for separation pay and backwages. Art 106, 107 and 109 provide when the principal who contracted the contractor/subcontractor may be held solidarily liable. Art 109 states that every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. In determining the extent of

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their civil liability under this Chapter, they shall be considered direct employers. Such liability covers service incentive leave pay of the complainant during the time they were posted at the Cebu Branch. Service had been rendered, liability accrued even when they were eventually transferred or reassigned. Art. 95 of the LC expressly provides that service incentive leave is expressly granted to every employee who has rendered at least one year or service shall be entitled to a yearly service incentive leave of five days with pay. IRR of the LC: Unused service incentive leave is commutable to its money equivalent as provided by Sec. 5: The service incentive leave shall be commutable to its money equivalent if not used or exhausted at the end of the year

Pau: May the contrary be stipulated? If yes, when? Supposing the employer gives more than 5 days of service incentive leave, can they now stipulate that such leaves may not be converted to its money equivalent? When can such leaves be not converted into cash?