M.Y. SAN BISCUITS, INC., PETITIONER, VS. ACTING SECRETARY BIENVENIDO E. LAGUESMA AND PHILIPPINE TRANSPORT AND GENERAL WORKERS ORGANIZATIONS, RESPONDENTS.

M.Y. San Biscuits versus Laguesma

The Case

This is a special civil action for certiorari brought by M.Y. San Biscuits, Inc. against the Acting Secretary of Labor and Employment, Bienvenido Laguesma, and the Philippine Transport and General Workers Organization. The company asks the Supreme Court to annul the orders of the Secretary of Labor which found that an employer-employee relationship exists between the company and the delivery drivers and helpers sought to be represented by the union, and which accordingly called for a certification election. The case matters because it fixes where the power to determine the existence of an employer-employee relationship lies in a certification election proceeding — in the med-arbiter and, on appeal, in the Secretary of Labor — and settles that this power is not suspended by a contrary finding in a separate money claims case pending before a labor arbiter or the National Labor Relations Commission.

Procedural History

On May 12, 1989, the union filed a petition for certification election before the med-arbiter of the Department of Labor and Employment. After the parties submitted their position papers, the med-arbiter issued an order on August 25, 1989 dismissing the petition for lack of merit, finding no employer-employee relationship between the company and the delivery drivers and helpers. The union appealed to the Secretary of Labor. On December 15, 1989, then Secretary Franklin Drilon promulgated a resolution reversing the med-arbiter and declaring that an employer-employee relationship exists, and calling for a certification election. The company moved for reconsideration and filed a manifestation asking that action be held in abeyance pending the outcome of a separate money claims case, but the public respondent denied the relief sought on April 16, 1990, and denied reconsideration on June 18, 1990. The company then came to the Supreme Court on certiorari with a prayer for a writ of preliminary prohibitory injunction and a temporary restraining order. On September 19, 1990, the Court, without giving due course, required the respondents to comment and granted a temporary restraining order enjoining execution of the questioned orders.

Facts

On May 12, 1989, the Philippine Transport and General Workers Organization filed a petition for certification election as bargaining agent for a group of employees of M.Y. San Biscuits, Inc. before the med-arbiter. The company resisted, contending that the delivery drivers and helpers were not its employees but were engaged through its salesmen. On August 25, 1989, the med-arbiter dismissed the petition, finding no employer-employee relationship.

In the meantime, the union and several others filed a complaint before the National Labor Relations Commission branch in Region Four for underpayment of wages, non-payment of thirteenth month pay, service incentive pay and cost of living allowance, damages, and attorney's fees. On February 9, 1990, the labor arbiter dismissed that complaint on the same ground — that there was no employer-employee relationship between the parties. The union appealed to the National Labor Relations Commission.

In the certification election case, the union appealed to the Secretary of Labor. On December 15, 1989, Secretary Drilon reversed the med-arbiter, found an employer-employee relationship, and called for a certification election among the drivers and helpers, with the union and "No Union" as choices. The company's motions for reconsideration and its manifestation asking that action be held in abeyance were denied. Notably, on September 19, 1990, the National Labor Relations Commission itself reversed the labor arbiter and likewise found an employer-employee relationship, and denied the company's motion for reconsideration on November 16, 1990.

Issues

• Whether or not the Secretary of Labor and Employment has jurisdiction to determine the existence of an employer-employee relationship between the parties in a petition for certification election.
• Whether or not the Secretary of Labor acted with grave abuse of discretion in denying the company's manifestation that action be held in abeyance on the ground of a prejudicial question pending before the National Labor Relations Commission.

Applicable Provisions

Article 226 of the Labor Code, as amended, provides:

Article 226. Bureau of Labor Relations. — The Bureau of Labor Relations and the Labor Relations divisions in the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all work places whether agricultural or non-agricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and or voluntary arbitration. The Bureau shall have fifteen working days to act on labor cases before it, subject to extension by agreement of the parties.

This is the source of the med-arbiter's original and exclusive authority over labor-management relations, from which the Court derives the authority to determine the existence of an employer-employee relationship.

Article 259 of the Labor Code, as amended, provides:

Article 259. Appeal from certification election orders. — Any party to an election may appeal the order or results of the election as determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the ground that the rules and regulations or parts thereof established by the Secretary of Labor and Employment for the conduct of the election have been violated. Such appeal shall be decided within fifteen calendar days.

This is the source of the Secretary of Labor's appellate jurisdiction, which includes the power to review and reverse the med-arbiter's finding on the existence of an employer-employee relationship.

Ruling

On the first issue, the Court held that the Secretary of Labor does have jurisdiction. Under Article 226, the Bureau of Labor Relations has original and exclusive jurisdiction to decide all disputes, grievances, or problems arising from or affecting labor-management relations in all workplaces. Necessarily, in the exercise of that jurisdiction, the med-arbiter has the authority, original and exclusive, to determine the existence of an employer-employee relationship between the parties. Once that relationship is determined, the med-arbiter can then decide the certification election case. Because that authority is necessary and indispensable to the exercise of jurisdiction, the med-arbiter's finding may be reviewed and reversed only by the Secretary of Labor, who exercises appellate jurisdiction under Article 259.

On the second issue, the Court held that the Secretary did not abuse his discretion in denying the prayer to await the resolution of the National Labor Relations Commission. The finding of the Secretary cannot be rendered nugatory by a contrary finding of the labor arbiter in a separate dispute for money claims between the same parties. The Court called it absurd to suggest that the med-arbiter and the Secretary cannot make their own independent finding and must rely on and wait for the labor arbiter or the Commission in a separate proceeding, for then, where no separate complaint is filed, the med-arbiter and the Secretary could never decide a certification election case at all. The Court reproduced with approval the Secretary's findings applying the four factors — selection and engagement, payment of wages, power of dismissal, and the employer's power to control — and concluded that the company was the real employer of the drivers and helpers, its attempt to seek refuge in its salesmen being an elaborate scheme to deprive them of their right to self-organization.

Doctrine

The med-arbiter has original and exclusive authority to determine the existence of an employer-employee relationship as a necessary incident of the jurisdiction conferred by Article 226 of the Labor Code over all disputes, grievances, or problems arising from or affecting labor-management relations. That finding may be reviewed and reversed only by the Secretary of Labor and Employment on appeal under Article 259. The med-arbiter and the Secretary may make their own independent finding on the existence of an employer-employee relationship; they need not await, and are not bound by, a contrary finding of a labor arbiter or the National Labor Relations Commission in a separate money claims proceeding. The existence of such a relationship is determined by the four factors: the selection and engagement of the employee, the payment of wages, the power 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.

Disposition

The petition was dismissed, the temporary restraining order lifted, and costs taxed against the company; the Secretary of Labor's orders finding an employer-employee relationship and calling for a certification election stood.

Remember This

Memorize this line: the med-arbiter and the Secretary of Labor have the independent authority to determine the existence of an employer-employee relationship in a certification election case, and a contrary finding in a separate labor arbiter proceeding cannot render it nugatory. Examiners use this case to test jurisdiction over the employer-employee relationship in certification elections and the interplay between the med-arbiter, the Secretary of Labor, and the National Labor Relations Commission.