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, manner
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 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
affirms 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 (Guaranteed Labor Contractor) is no business expense or capital
outlay of the latter. What the contractor receives is just 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.