M.Y. San Biscuits, Inc. vs. Laguesma

The med-arbiter has original and exclusive authority to determine the existence of an employer-employee relationship in a certification election case, and the Secretary of Labor may review and reverse that finding on appeal; a contrary finding by a labor arbiter in a separate money-claims case does not render the Secretary's finding nugatory.

M.Y. San Biscuits, Inc. is the company whose delivery drivers and helpers the Philippine Transport and General Workers Organization sought to represent. The dispute turns on whether those drivers and helpers are employees of the company or of its salesmen. The Labor Code, as amended, allocates original and exclusive authority over labor-management relations to the BLR and its med-arbiters, and appellate authority over certification election orders to the Secretary of Labor and Employment.

On May 12, 1989, the Philippine Transport and General Workers Organization filed with the med-arbiter of the Department of Labor and Employment a petition for certification election as bargaining agent for a group of employees of M.Y. San Biscuits, Inc. The group consisted of delivery drivers and helpers. After the parties submitted their position papers, the med-arbiter issued an order on August 25, 1989 dismissing the petition for lack of merit because there was no employer-employee relationship between the company and the delivery drivers/helpers represented by the Union.

Meanwhile, the Union and several others filed before the NLRC Branch of Region No. IV a complaint for underpayment of wages, non-payment of 13th month pay, service incentive pay and COLA, damages and attorney's fees. On February 9, 1990, the labor arbiter rendered a decision dismissing the complaint on the ground that there was no employer-employee relationship between the parties. On February 26, 1990, the Union appealed to the NLRC.

In the certification election case, the Union appealed to the Secretary of Labor. On December 15, 1989, then DOLE Secretary Franklin Drilon promulgated a resolution reversing the med-arbiter and finding that an employer-employee relationship existed between the company and the Union's drivers/helpers. The resolution, which the SC reproduced with approval, applied the factors of selection and engagement, payment of wages, power of dismissal, and control over the means and methods of work. It found that the company's personnel were responsible for hiring; that even if a salesman engaged his own driver, the authority emanated from the company; that the drivers/helpers not being in the payroll was an administrative arrangement; that the company imposed disciplinary measures on erring drivers; and that the company gave daily instructions on what time the drivers were to report to the office and return. The Secretary concluded that the company was the real employer and that its use of salesmen as ostensible employers was an elaborate scheme to deprive the drivers/helpers of their right to self-organization. The resolution ordered a certification election among the drivers/helpers with the Philippine Transport and General Workers Organization and No Union as choices.

Petitioner filed a motion for reconsideration of the December 15, 1989 resolution on January 22, 1990 and a manifestation on February 12, 1990 asking that action be held in abeyance pending consideration of the other case in which the labor arbiter had declared the absence of an employer-employee relationship. On April 16, 1990, the public respondent issued an order denying the relief sought in the manifestation. Petitioner filed a motion for reconsideration, which was denied on June 18, 1990. Petitioner then filed this petition for certiorari with a prayer for a writ of preliminary prohibitory injunction and a temporary restraining order. On September 19, 1990, the NLRC promulgated a resolution reversing the labor arbiter and finding an employer-employee relationship between the parties; petitioner's motion for reconsideration was denied on November 16, 1990.

• Prejudicial Question: Petitioner argued that Acting Secretary Bienvenido E. Laguesma abused his discretion in denying the Manifestation on the ground of a prejudicial question involving the issue of employer-employee relationship pending before the NLRC.
• Jurisdiction: Petitioner argued that the Secretary has no jurisdiction to determine the existence of an employer-employee relationship between petitioner and private respondent, and that such determination is vested in the NLRC.

• Jurisdiction to Determine Employer-Employee Relationship: Whether the med-arbiter or the Secretary of Labor and Employment has the authority to determine the existence of an employer-employee relationship between the parties in a petition for certification election.
• Prejudicial Question: Whether the Acting Secretary abused his discretion in denying petitioner's Manifestation to hold action in abeyance pending the NLRC's determination of the employer-employee relationship.

• Jurisdiction to Determine Employer-Employee Relationship: Yes. Article 226 vests the BLR/med-arbiter with original and exclusive authority over labor-management relations, including the employer-employee relationship, and Article 259 gives the Secretary appellate jurisdiction over certification election orders.
• Prejudicial Question: No. The Secretary correctly denied the prayer to await the NLRC; the med-arbiter and Secretary may independently determine the employer-employee relationship in the certification election case.

• Jurisdiction to Determine Employer-Employee Relationship: Article 226 of the Labor Code, as amended, vests the BLR and the labor relations divisions in DOLE regional offices with original and exclusive authority to act on all inter-union and intra-union conflicts and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces, except those arising from the implementation or interpretation of collective bargaining agreements. Because the med-arbiter is an officer of the BLR, the med-arbiter necessarily has original and exclusive authority to determine the existence of an employer-employee relationship between the parties; once that relationship is determined, the med-arbiter can decide the certification election case. The authority is necessary and indispensable to the exercise of jurisdiction. The med-arbiter's finding may be reviewed and reversed by the Secretary of Labor under Article 259, which provides for appeal from certification election orders to the Secretary on the ground that the rules and regulations for the conduct of the election were violated, with the appeal to be decided within 15 calendar days. The Secretary's Dec. 15, 1989 resolution reversing the med-arbiter could not be rendered nugatory by the labor arbiter's contrary finding in the separate money-claims case. The SC reproduced with approval the Secretary's finding: using the factors of selection and engagement, payment of wages, power of dismissal, and employer's power to control the employee with respect to the means and methods of work, the company was the real employer. The company's personnel were responsible for hiring; even if a salesman engaged a driver, the authority emanated from the company; the drivers/helpers not being in the payroll was an administrative arrangement; the company imposed disciplinary measures; and the company gave daily instructions on work and report/return times. The salesmen were thus an ostensible employer, and the arrangement was an elaborate scheme to deprive the drivers/helpers of their right to self-organization.
• Prejudicial Question: The SC rejected the claim that the pending NLRC case posed a prejudicial question. The med-arbiter and the Secretary of Labor are not required to rely on or wait for the labor arbiter or NLRC in a separate proceeding; otherwise, if no separate complaint were filed, the med-arbiter and Secretary could never decide a certification election case or any labor-management dispute properly brought before them. The Secretary therefore correctly denied petitioner's manifestation to hold action in abeyance. The labor arbiter's contrary finding in the money-claims case did not render nugatory the Secretary's finding in the certification election case.

• Med-Arbiter's Authority to Determine Employer-Employee Relationship — In a certification election case, the med-arbiter, as an officer of the BLR, has original and exclusive authority to determine the existence of an employer-employee relationship as a necessary incident of jurisdiction over labor-management relations. The Secretary of Labor may review and reverse that finding on appeal. Applied: the Secretary's reversal of the med-arbiter was upheld.
• Independence of Certification Election and Money-Claims Proceedings — The med-arbiter and Secretary of Labor may make their own independent finding on the employer-employee relationship and need not await the labor arbiter or NLRC in a separate money-claims case. Applied: the Secretary correctly denied petitioner's manifestation to hold action in abeyance.
• Employer-Employee Relationship Factors — The factors are selection and engagement of employees, payment of wages, process of dismissal, and the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. Applied: the company was the real employer because it hired, disciplined, and controlled the drivers/helpers, and the payroll arrangement was merely administrative.

• "Necessarily, in the exercise of this jurisdiction over labor-management relations, the med-arbiter has the authority, original and exclusive, to determine the existence of an employer-employee relationship between the parties." — The core holding on the med-arbiter's jurisdiction in certification election cases.
• "It is absurd to suggest that the med-arbiter and Secretary of Labor cannot make their own independent finding as to the sentence of such relationship and must have to rely and wait for such a determination by the labor arbiter or NLRC in a separate proceeding." — The SC rejected the argument that the certification election case must await the NLRC's ruling in the money-claims case.
• "It has been well settled in jurisprudence that the factors to be considered in determining the existence of employer-employee relationship are as follows: (a) selection and engagement of the employees; (b) the payment of wages; (e) the process [sic] of dismissal; and, (d) the employer's power to control the employee with respect to the means and methods [with] which the work is to be accomplished." — The factors applied by the Secretary and reproduced with approval by the SC.
• "They are in truth and in fact the employees of the respondent and its attempt to seek refuge on its salesmen as the ostensible employer of the drivers/helpers was nothing but an elaborate scheme to deprive drivers/helpers their right to self-organization." — The Secretary's conclusion, approved by the SC, that the company was the real employer.

• Besa vs. Trajano, 146 SCRA 501 (1987) — Cited as supporting authority for the med-arbiter's authority to decide the certification election after determining the existence of an employer-employee relationship.

• Article 226, Labor Code, as amended — Vests the BLR and the labor relations divisions in DOLE regional offices with original and exclusive authority to act on inter-union and intra-union conflicts and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces, except those arising from the implementation or interpretation of collective bargaining agreements. Applied to hold that the med-arbiter may determine the employer-employee relationship in a certification election case.
• Article 259, Labor Code, as amended — Provides for appeal from certification election orders to the Secretary of Labor and Employment on the ground that the rules and regulations for the conduct of the election were violated, with the appeal to be decided within 15 calendar days. Applied to hold that the Secretary had appellate jurisdiction to reverse the med-arbiter's finding.