Facts:

The case involves Agro Commercial Security Services Agency, Inc., as the petitioner, and the National Labor Relations Commission (NLRC), with Hon. Labor Arbiter Bienvenido V. Hermogenes and Manuel Jimenez, et al., as respondents. The dispute arises from a petition for certiorari and prohibition along with a request for a preliminary injunction questioning the NLRC’s resolution dated January 29, 1988. This resolution upheld the decision of Labor Arbiter Hermogenes on March 19, 1987, which found that the private respondents—forty-six security guards and janitors—had been illegally dismissed. The Labor Arbiter ordered the petitioner to pay the respondents separation pay amounting to one-half month of salary per year of service, 13th month pay for 1986, and monetary compensation for service incentive leave equal to fifteen days of salary, along with other allowances.

The private respondents worked under individual contracts with the petitioner, assigned to different firms and office

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Facts:

Background of the Case

• The petitioner, Agro Commercial Security Services Agency, Inc., employed private respondents as security guards and janitors under individual contracts.
• The employment contracts specified that the petitioner—notably responsible for procuring, assigning, and managing the work of the security guards—fulfilled the role of the employer by determining salaries, benefits, discipline, and work assignments.

Nature of the Employment Arrangement

• The individual contracts contained specific provisions, including:
• The agency’s obligation to procure or furnish the services of the security guard.
• The fixed monthly salary with specified pay dates.
• The exclusive right of the agency to withdraw or reassign the security guard.
• The provision allowing temporary suspension and change of employment status in the event of termination or reduction of the agency’s contract with its clients.
• These conditions evidenced the exercise of control and management over the private respondents’ work, salaries, allowances, and disciplinary measures.

Emergence of the “Floating Status”

• In the early part of 1986, due to the termination of several service contracts with various corporations and government agencies—largely as a consequence of sequestration by the Presidential Commission on Good Government—many of the private respondents were placed on a “floating status.”
• The “floating status” was characterized by an indefinite period of time during which the employees received no salary or financial benefits mandated by law.

Filing of the Complaint

• On July 25, 1986, private respondents filed a complaint for illegal dismissal before the Arbitration Branch of the Department of Labor and Employment.
• The complaint sought:
• Separation pay computed as one-half (1/2) month salary for every year of service.
• Payment of the 13th month pay for the year 1986.
• Service incentive leave pay corresponding to fifteen (15) days’ salary plus allowances.

Proceedings and Stipulated Facts

• The parties submitted position papers and entered into a stipulation of facts, which clarified:
• The actual service period of the private respondents, ranging from four (4) to more than ten (10) years.
• The comprehensive control exercised by petitioners over the employees’ assignments, promotions, salary increases, work schedules, and disciplinary actions.
• Petitioner consistently treated the private respondents as regular employees by:
• Reporting them as employees for social security purposes.
• Remitting their taxes and contributions to government agencies like the Bureau of Internal Revenue and the Pag-Ibig Fund.

Resolution by Lower Authorities

• The labor arbiter ruled in favor of the private respondents, holding that:
• The “floating status” of employees who were without work beyond a reasonable period (exceeding six months) amounted to illegal dismissal.
• Accordingly, those employees were entitled to the benefits claimed.
• The National Labor Relations Commission (NLRC) affirmed the labor arbiter’s decision via resolutions dated January 29, 1988, and April 18, 1988, with the noted exception of those respondents who had accepted employment elsewhere.

Petitioner’s Arguments and Court’s Observation

• The petitioner raised issues concerning:
• The alleged lack of due process, asserting that it was not afforded a fair hearing.
• The contention that the “floating status” was legal and did not amount to dismissal.
• The court found that:
• The petitioner was given ample opportunity to submit its position paper and even entered into an agreed stipulation of facts.
• The evidence clearly established that private respondents were regular employees under the petitioner’s direction, control, and benefits.

Issue:

Existence of an Employer-Employee Relationship

• Whether the contractual relationship and the manner in which the petitioner managed the work, salaries, and benefits of the private respondents constituted an employer-employee relationship.
• Whether the petitioner's control over the employee’s assignments, promotions, work hours, and disciplinary actions is sufficient to affirm the employment relationship despite the contractual clause regarding “floating status.”

Legality and Implications of the "Floating Status"

• Whether the so-called “floating status,” wherein employees remain without any salary or statutory benefits for an indefinite period, is a lawful arrangement under the employment context.
• Whether a prolonged “floating status” that exceeds six (6) months effectively amounts to constructive or illegal dismissal, thereby entitling the employees to separation pay and other benefits.

Justification for Dismissal Based on Acceptance of Other Employment

• Whether the petitioner’s disciplinary rule—stipulating that accepting employment elsewhere without resignation constitutes grounds for dismissal—is just cause under the established contractual provisions.
• The differential treatment between respondents who accepted other employment and those who remained on “floating status.”

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)