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Employer - Employee Relationship and Management Prerogative
Employer - Employee Relationship and Management Prerogative
this case fall squarely with the case of Insular Life Assurance Co., Ltd. vs. NLRC.
In said case, we held that:
"Logically, the line should be drawn between rules that merely serve
as guidelines towards the achievement of the mutually desired result
without dictating the means or methods to be employed in attaining it,
and those that control or fix the methodology and bind or restrict the
party hired to the use of such means. The first, which aim only to
promote the result, create no employer-employee relationship unlike
the second, which address both the result and the means used to
achieve it. The distinction acquires particular relevance in the case of
an enterprise affected with public interest, as is the business of
insurance, and is on that account subject to regulation by the State
with respect, not only to the relations between insurer and insured but
also to the internal affairs of the insurance company. Rules and
regulations governing the conduct of the business are provided for in
the Insurance Code and enforced by the Insurance Commissioner. It
is, therefore, usual and expected for an insurance company to
promulgate a set of rules to guide its commission agents in selling its
policies that they may not run afoul of the law and what it requires or
prohibits. . . . None of these really invades the agent's contractual
prerogative to adopt his own selling methods or to sell insurance at
his own time and convenience, hence cannot justifiably be said to
establish an employer-employee relationship between him and the
company."
(AFP MUTUAL BENEFIT ASSOCIATION, INC., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and EUTIQUIO
BUSTAMANTE, respondents, G.R. No. 102199. January 28, 1997)
From jurisprudence, an important lesson that the first Insular Life case
teaches us is that a commitment to abide by the rules and regulations of an
insurance company does not ipso facto make the insurance agent an
employee. Neither do guidelines somehow restrictive of the insurance
agent's conduct necessarily indicate "control" as this term is defined in
jurisprudence. Guidelines indicative of labor law "control," as the first
Insular Life case tells us, should not merely relate to the mutually desirable
result intended by the contractual relationship; they must have the nature of
dictating the means or methods to be employed in attaining the result, or of
fixing the methodology and of binding or restricting the party hired to the
use of these means. In fact, results-wise, the principal can impose production
quotas and can determine how many agents, with specific territories, ought
to be employed to achieve the company's objectives. These are management
policy decisions that the labor law element of control cannot reach. Our
ruling in these respects in the first Insular Life case was practically reiterated
in Carungcong. Thus, as will be shown more fully below, Manulife's codes
of conduct, all of which do not intrude into the insurance agents' means and
manner of conducting their sales and only control them as to the desired
results and Insurance Code norms, cannot be used as basis for a finding that
the labor law concept of control existed between Manulife and Tongko.
(GREGORIO V. TONGKO, petitioner, vs. THE MANUFACTURERS
LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE
DIOS, respondents, G.R. No. 167622 June 29, 2010)
In Sevilla v. Court of Appeals, we observed the need to consider the
existing economic conditions prevailing between the parties, in addition to
the standard of right-of-control like the inclusion of the employee in the
payrolls, to give a clearer picture in determining the existence of an
employer-employee relationship based on an analysis of the totality of
economic circumstances of the worker.
Thus, the determination of the relationship between employer and
employee depends upon the circumstances of the whole economic activity,
such as: (1) the extent to which the services performed are an integral part of
the employer's business; (2) the extent of the worker's investment in
equipment and facilities; (3) the nature and degree of control exercised by
the employer; (4) the worker's opportunity for profit and loss; (5) the amount
of initiative, skill, judgment or foresight required for the success of the
claimed independent enterprise; (6) the permanency and duration of the
relationship between the worker and the employer; and (7) the degree of
dependency of the worker upon the employer for his continued employment
in that line of business.
The proper standard of economic dependence is whether the worker is
dependent on the alleged employer for his continued employment in that line
of business. In the United States, the touchstone of economic reality in
analyzing possible employment relationships for purposes of the Federal
Labor Standards Act is dependency. By analogy, the benchmark of economic
reality in analyzing possible employment relationships for purposes of the
Labor Code ought to be the economic dependence of the worker on his
employer.
In Domasig v. National Labor Relations Commission, we held that in
a business establishment, an identification card is provided not only as a
security measure but mainly to identify the holder thereof as a bona fide
employee of the firm that issues it. Together with the cash vouchers covering
petitioner's salaries for the months stated therein, these matters constitute
substantial evidence adequate to support a conclusion that petitioner was an
employee of private respondent.
We likewise ruled in Flores v. Nuestro that a corporation who registers
its workers with the SSS is proof that the latter were the former's employees.
The coverage of Social Security Law is predicated on the existence of an
employer-employee relationship. (ANGELINA FRANCISCO, petitioner,
vs. NATIONAL LABOR RELATIONS COMMISSION, KASEI
CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO,
contributing factor. If the basic inspiration for the act of the employer is
derived from the affiliation or activities of the union, the former's
assignment of another reason, no matter how seemingly valid, is unavailing.
Concededly, the determination to cease operations is a management
prerogative that the State does not usually interfere in. Indeed, no business
can be required to continue operating at a loss, simply to maintain the
workers in employment. That would be a taking of property without due
process of law. But where it is manifest that the closure is motivated not by a
desire to avoid further losses, but to discourage the workers from organizing
themselves into a union for more effective negotiations with management,
the State is bound to intervene. (ME-SHURN CORPORATION AND
SAMMY CHOU, petitioners, vs. ME-SHURN WORKERS UNION-FSM
AND ROSALINA CRUZ, respondents, G.R. No. 156292, January 11,
2005)
Jurisprudence recognizes the exercise of management prerogative to
transfer or assign employees from one office or area of operation to another,
provided there is no demotion in rank or diminution of salary, benefits, and
other privileges, and the action is not motivated by discrimination, made in
bad faith, or effected as a form of punishment or demotion without sufficient
cause.
To determine the validity of the transfer of employees, the employer
must show that the transfer is not unreasonable, inconvenient, or prejudicial
to the employee; nor does it involve a demotion in rank or a diminution of
his salaries, privileges and other benefits. Should the employer fail to
overcome this burden of proof, the employee's transfer shall be tantamount
to constructive dismissal. (AILEEN G. HERIDA, petitioner, vs. F & C
PAWNSHOP and JEWELRY STORE/MARCELINO FLORETE, JR.,
respondents, G.R. No. 172601, April 16, 2009.)
It is noteworthy to state that an employer is free to manage and
regulate, according to his own discretion and judgment, all phases of
employment, which includes hiring, work assignments, working methods,
time, place and manner of work, supervision of workers, working
regulations, transfer of employees, lay-off of workers, and the discipline,
dismissal and recall of work. While the law recognizes and safeguards this
right of an employer to exercise what are clearly management prerogatives,
such right should not be abused and used as a tool of oppression against
labor. The company's prerogative must be exercised in good faith and with
due regard to the rights of labor. A priori, they are not absolute prerogatives
but are subject to legal limits, collective bargaining agreements and the
general principles of fair play and justice. (PHILEX GOLD
PHILIPPINES, INC., GERARDO H. BRIMO, LEONARD P. JOSEF, and
JOSE B. ANIEVAS, petitioners, vs. PHILEX BULAWAN SUPERVISORS
UNION, represented by its President, JOSE D. PAMPLIEGA,
respondents, G.R. No. 149758, August 25, 2005 Citing PhilippineSingapore Transport Services, Inc. v. NLRC)