AGRO COMMERCIAL SECURITY SERVICES AGENCY, INC., PETITIONER, VS. THE NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER BIENVENIDO V. HERMOGENES AND MANUEL JIMENEZ, ET AL., …

Is there an employer-employee relationship between a security
agency and its security guards?  Is the
so-called “floating status” of a security guard lawful and could such
prolonged status amount to illegal dismissal? 
These are the issues raised in this petition for certiorari and
prohibition with preliminary injunction
questioning the prohibition resolution dated January 29, 1988 of public
respondent National Labor Relations Commission (NLRC) affirming the decision of
public respondent labor arbiter Bienvenido V. Hermogenes dated March 19, 1987 finding private respondents
to have been illegally dismissed and ordering petitioner to pay them separation pay of
one-half (1/2) month salary for every year of service, 13th month pay for
the year 1986 and the money value of their respective service incentive leave amounting to fifteen (15) days salary
each with allowances.  The petition also assails the
resolution of the respondent NLRC dated
April 18, 1988 denying the
motion for reconsideration filed
by petitioner.

Private respondents, numbering forty-six (46) in all, worked as security guards and/or
janitors under individual contracts with petitioner.  They were assigned to firms and offices where
petitioner had contracts providing security
and janitorial services.  Their
service period and last rates of salary are stated in the decision of the labor
arbiter.^[1]
Their individual contracts of employment provide, among others, as follows:

“3.d. That the
security guard, agrees to temporary suspension of his employment completely to
include such changes in his employment status with the Agency, in case of
termination of contract between the Agency and its Client, or reduction in
force of same;”

In the early part of 1986, petitioner’s service contracts with
various corporations and government agencies to which private respondents were
previously assigned had been terminated generally due to the sequestration of the said offices by
the Presidential Commission on Good Government. 
Accordingly, many of the private respondents were placed on “floating status” on September
16, 1986.  A number of them
had been put on that status even earlier. 
“Floating status” means an indefinite period of time when
private respondents do not receive any salary
or financial benefit provided by law. 
A number of them later obtained employment in other security agencies.

On account of the uncertainty of their employment with the
petitioner, on July 25,
1986, private respondents filed a complaint for illegal dismissal in the Arbitration Branch of the Department of Labor and
Employment against petitioner.  They
sought the payment of their respective separation pay, 13th month pay for 1986
and service incentive leave pay.  After
due proceedings where the parties were required to submit their position papers
and stipulation of facts, the respondent labor arbiter ruled in favor of the private respondents
whose decision as above-related was affirmed by the NLRC.

Hence, the herein petition alleging that the petitioner was
denied due process of law by the NLRC and it committed a grave abuse of
discretion in considering private respondents
as employees of petitioner, in ruling that the “floating status” of
private respondents amounted to an illegal dismissal, and in causing the execution of the
judgment pending a complete and full adjudication of the issues.

Forthwith, the allegation of denial of due process is without basis.  Petitioner was afforded the opportunity to file its position
paper.  It even entered into a stipulation of
facts with private respondent.

As to the issue of employer-employee relationship, an examination of the
records shows that private respondents are
regular employees of petitioner.  Their
individual length of service ranges from four (4) to more than ten (10)
years.  In accordance with the
stipulation of facts, it appears that private respondents worked with
petitioner as security guards/janitors. 
Their employment contracts provide, among others:

“1.  That the AGENCY hereby undertakes to look for, procure, and/or furnish the
services of the SECURITY GUARD,
with any individual, business
establishment, residential houses or any entity whatsoever, and the
SECURITY GUARD agrees to supply
his services, assignments, position and
undertaking, subject to the following conditions:

a)  That the SECURITY GUARD upon acceptance of his
position or undertaking for employment, shall observe, follow and obey all rules, regulations, code of conduct required
by the AGENCY and any of its contracted
client, in accordance with the provisions of RA 5487 and its implementing Rules
and Regulations;

b)  That the AGENCY shall pay the monthly SECURITY
GUARD a monthly salary of P/day
payable on the 5th and 20th of the month;

c)  That the AGENCY shall
have the exclusive right to withdraw or re-assign the SECURITY GUARD;

d)  That the SECURITY GUARD, agrees to temporary
suspension of his employment completely to include such changes
in his employment status with the AGENCY, in case of termination of contract between the AGENCY and its client, or
reduction in force same;

e)  That the AGENCY may terminate or dismiss the
SECURITY GUARD, if, after proper and due investigation it is shown that the
SECURITY GUARD has violated any rule, regulation, code of conduct and discipline, imposed by the AGENCY;

f)  That the terms and conditions pertinent to
service and discipline embodied in the Agreement executed between the AGENCY
and any person, establishment, or entity with
whom the SECURITY GUARD is going to serve or is assigned shall be
considered part of this Agreement
and therefore binding on SECURITY GUARD.”^[2]

It was petitioner who
determined how much private respondents received as their monthly salary, overtime/night
differential pay, mid-year and
Christmas bonus and 13th month pay,
uniforms and meal allowances and other benefits mandated by law.  Private respondents were reported by the petitioner as its employees for
purposes of social
security coverage.  Petitioner
remitted their withholding taxes to the Bureau of Internal Revenue and made
monthly contributions to the Pag-Ibig fund for their
benefit.  It was petitioner who
determined and decided on the assignments, promotions and salary increases of
private respondents, their working
hours, the firearms to be issued to
them and janitorial devices and tools to be used.  Likewise, it was petitioner who imposed the appropriate
disciplinary measures on private respondents by way of reprimand, suspension and
dismissal.

In determining the
existence of an employee-employer relationship, the following elements are
generally considered:

1) the selection and engagement of the employees;

2) payment of wages;

3) the power of dismissal; and

4) the power to control the employees’ conduct.^[3]

It is clear, therefore,
that private respondents are petitioner’s regular employees who enjoy security of tenure and who cannot be dismissed except
for cause.^[4]

As to the alleged illegal dismissal of private respondents, the records show that
they filed their complaint against petitioner on July 25, 1986. 
At the time they filed their
complaint, most of them were still on the job or on assignments and it was only in September 1986 when most of
them were placed on “floating status.”

Obviously, the filing of the complaint was premature.  Apparently, this issue was not raised at all
and so it is deemed waived.  Thus, when
the labor arbiter rendered his decision, he considered those who have been out of work or “floating status”
for a period exceeding six (6) months to have been terminated from the service
without just cause thus entitling them to the corresponding benefits for such
separation.  We agree.

Under Article 286 of the Labor Code it is provided as follows:

“ART. 286.  When
employment not deemed
terminated. – The bonafide suspension of the operation of a business or undertaking for a period
not exceeding six months, or the fulfillment by the employee of a
military or civic duty shall not terminate employment.  In all such cases, the employer shall
reinstate the employee to his former
position without loss of seniority rights if he indicates his desire to
resume his work not later than one month from the resumption of operations of his employer or from his relief from the
military or civic duty.”

From
the foregoing it is clear that when the bonafide suspension of the operation of a
business or undertaking exceeds six (6) months then the employment of the
employee shall be deemed terminated.  By
the same token and applying the said rule by analogy to security guards, if they
remained without work or assignment, that
is in “floating status” for a period exceeding six (6) months,
then they are in effect constructively dismissed.

The labor arbiter disagreed with the representations of
petitioner that the private respondents who accepted assignments in other
security agencies without previously resigning should be considered to have
been dismissed with just cause.  In the
stipulation of facts, the parties admitted that the disciplinary rules
promulgated by petitioner for its employees provide that acceptance by an
employee of other employment without first resigning from the agency is a cause
for dismissal.

In this case, it appears that twenty-seven (27) of the private
respondents violated this rule by accepting employment in other security
agencies without previously resigning from employment with petitioner.  No doubt, this is a just cause for
termination of their services and as such they are not entitled to any
separation pay.^[5]

As regards the other seventeen (17) private respondents, they
admittedly remained in “floating status” for more then six (6)
months.  Such a “floating
status” is not unusual for security guards employed in security agencies as their assignments
primarily depend on the contracts
entered into by the agency with third parties. 
Such a stipulated status is, therefore, lawful.

The “floating status” of such an employee should last
only for a reasonable time.  In this case, respondent labor arbiter
correctly held that when the “floating status” of said employees
lasts for more than six (6) months, they may
be considered to have been illegally dismissed from the service.  Thus, they are entitled to the corresponding benefits for their
separation.

WHEREFORE, the petition is GRANTED insofar as the
twenty-seven (27) private respondents are concerned who have accepted employment elsewhere.  The questioned resolutions of the NLRC dated January 29, 1988 and April 18, 1988 are hereby modified as
to said twenty-seven (27) private
respondents in that their complaint is hereby dismissed for lack of merit.  The questioned resolutions are hereby
affirmed in all other respects as to the other private respondents.  No pronouncement as to costs.

SO ORDERED.

Narvasa, (Chairman), Cruz, Griño-Aquino, and Medialdea, JJ., concur.

^[1] Annex C, Petition; pages 40 to 44, Rollo.

^[2] Page 5, Rollo.

^[3] Social Security System vs. Court of Appeals, 39 SCRA 629 (1971).

^[4] Article 279, Labor Code; American President
Lines vs. Clave 114 SCRA 826
(1982) and Social Security System vs. Court of Appeals, supra.

^[5] Article 282 (e), Labor Code.