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Republic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-12582 January 28, 1961

LVN PICTURES, INC., petitioner-appellant,vs.PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL RELATIONS, respondents-appellees.

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G.R. No. L-12598 January 28, 1961

SAMPAGUITA PICTURES, INC., petitioner-appellant,vs.PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL RELATIONS, respondents-appellees.

Nicanor S. Sison for petitioner-appellant.Jaime E. Ilagan for respondent-appellee Court of Agrarian Relations.Gerardo P. Cabo Chan for respondent-appellee Philippine Musicians Guild.

CONCEPCION, J.:

Petitioners herein, LVN Pictures, Inc. and Sampaguita Pictures, Inc. seek a review by certiorariof an order of

the Court of Industrial Relations in Case No. 306-MC thereof, certifying the Philippine Musicians Guild (FFW),petitioner therein and respondent herein, as the sole and exclusive bargaining agency of all musicians workingwith said companies, as well as with the Premiere Productions, Inc., which has not appealed. The appeal ofLVN Pictures, Inc., has been docketed as G.R. No. L-12582, whereas G.R. No. L-12598 is the appeal ofSampaguita Pictures, Inc. Involving as they do the same order, the two cases have been jointly heard in thisCourt, and will similarly be disposed of.

In its petition in the lower court, the Philippine Musicians Guild (FFW), hereafter referred to as the Guild,averred that it is a duly registered legitimate labor organization; that LVN Pictures, Inc., Sampaguita Pictures,Inc., and Premiere Productions, Inc. are corporations, duly organized under the Philippine laws, engaged in themaking of motion pictures and in the processing and distribution thereof; that said companies employ musiciansfor the purpose of making music recordings for title music, background music, musical numbers, finale musicand other incidental music, without which a motion picture is incomplete; that ninety-five (95%) percent of all themusicians playing for the musical recordings of said companies are members of the Guild; and that the same

has no knowledge of the existence of any other legitimate labor organization representing musicians in saidcompanies. Premised upon these allegations, the Guild prayed that it be certified as the sole and exclusivebargaining agency for all musicians working in the aforementioned companies. In their respective answers, thelatter denied that they have any musicians as employees, and alleged that the musical numbers in the filing ofthe companies are furnished by independent contractors. The lower court, however, rejected this pretense andsustained the theory of the Guild, with the result already adverted to. A reconsideration of the order complainedof having been denied by the Court en banc, LVN Pictures, inc., and Sampaguita Pictures, Inc., filed thesepetitions for review forcertiorari.

Apart from impugning the conclusion of the lower court on the status of the Guild members as allegedemployees of the film companies, the LVN Pictures, Inc., maintains that a petition for certification cannot beentertained when the existence of employer-employee relationship between the parties is contested. However,this claim is neither borne out by any legal provision nor supported by any authority. So long as, after duehearing, the parties are found to bear said relationship, as in the case at bar, it is proper to pass upon the

merits of the petition for certification.It is next urged that a certification is improper in the present case, because, "(a) the petition does not allege andno evidence was presented that the alleged musicians-employees of the respondents constitute a proper

bargaining unit, and (b) said alleged musicians-employees represent a majority of the other numerousemployees of the film companies constituting a proper bargaining unit under section 12 (a) of Republic Act No.875."

The absence of an express allegation that the members of the Guild constitute a proper bargaining unit is fatalproceeding, for the same is not a "litigation" in the sense in which this term is commonly understood, but a mereinvestigation of a non-adversary, fact finding character, in which the investigating agency plays the part of adisinterested investigator seeking merely to ascertain the desires of employees as to the matter of theirrepresentation. In connection therewith, the court enjoys a wide discretion in determining the procedurenecessary to insure the fair and free choice of bargaining representatives by employees. 1 Moreover, it isalleged in the petition that the Guild it a duly registered legitimate labor organization and that ninety-five (95%)percent of the musicians playing for all the musical recordings of the film companies involved in these cases aremembers of the Guild. Although, in its answer, the LVN Pictures, Inc. denied both allegations, it appears that, atthe hearing in the lower court it was merely the status of the musicians as its employees that the filmcompanies really contested. Besides, the substantial difference between the work performed by said musiciansand that of other persons who participate in the production of a film, and the peculiar circumstances underwhich the services of that former are engaged and rendered, suffice to show that they constitute a properbargaining unit. At this juncture, it should be noted that the action of the lower court in deciding upon anappropriate unit for collective bargaining purposes is discretionary (N.L.R.B. v. May Dept. Store Co., 66 Sup.Ct. 468. 90 L. ed. 145) and that its judgment in this respect is entitled to almost complete finality, unless itsaction is arbitrary or capricious (Marshall Field & Co. v. N.L.R.B. [C.C.A. 19431, 135 F. 2d. 891), which is farfrom being so in the cases at bar.

Again, the Guild seeks to be, and was, certified as the sole and exclusive bargaining agency for the musici answorking in the aforesaid film companies. It does not intend to represent the other employees therein. Hence, itwas not necessary for the Guild to allege that its members constitute a majority of all the employees of said filmcompanies, including those who are not musicians. The real issue in these cases, is whether or not themusicians in question are employees of the film companies. In this connection the lower court had the followingto say:

As a normal and usual course of procedure employed by the companies when a picture is to bemade, the producer invariably chooses, from the musical directors, one who will furnish the musicalbackground for a film. A price is agreed upon verbally between the producer and musical director forthe cost of furnishing such musical background. Thus, the musical director may compose his ownmusic specially written for or adapted to the picture. He engages his own men and pays thecorresponding compensation of the musicians under him.

When the music is ready for recording, the musicians are summoned through 'call slips' in the nameof the film company (Exh 'D'), which show the name of the musician, his musical instrument, and the

date, time and place where he will be picked up by the truck of the film company. The film companyprovides the studio for the use of the musicians for that particular recording. The musicians are alsoprovided transportation to and from the studio by the company. Similarly, the company furnishesthem meals at dinner time.

During the recording sessions, the motion picture director, who is an employee of the company,supervises the recording of the musicians and tells what to do in every detail. He solely directs theperformance of the musicians before the camera as director, he supervises the performance of allthe action, including the musicians who appear in the scenes so that in the actual performance to beshown on the screen, the musical director's intervention has stopped.

And even in the recording sessions and du ring the actual shooting of a scene, the technici ans,soundmen and other employees of the company assist in the operation. Hence, the work of themusicians is an integral part of the entire motion picture since they not only furnish the music but are

also called upon to appear in the finished picture.The question to be determined next is what legal relationship exits between the musicians and thecompany in the light of the foregoing facts.


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We are thus called upon to apply R.A. Act 875. which is substantially the same as and patternedafter the Wagner Act substantially the same as a Act and the Taft-Hartley Law of the United States.Hence, reference to decisions of American Courts on these laws on the point-at-issue is called for.

Statutes are to be construed in the light of purposes achieved and the evils sought to be remedied.(U.S. vs. American Tracking Association, 310 U.S. 534, 84 L. ed. 1345.) .

In the case ofNational Labor Relations Board vs. Hearts Publication, 322 U.S. 111, the UnitedStates Supreme Court said the Wagner Act was designed to avert the 'substantial obstruction to thefree flow of commerce which results from strikes and other forms of industrial unrest by eliminatingthe causes of the unrest. Strikes and industrial unrest result from the refusal of employers' to bargain

collectively and the inability of workers to bargain successfully for improvement in their workingconditions. Hence, the purposes of the Act are to encourage collective bargaining and to remedy theworkers' inability to bargaining power, by protecting the exercise of full freedom of association anddesignation of representatives of their own choosing, for the purpose of negotiating the terms andconditions of their employment.'

The mischief at which the Act is aimed and the remedies it offers are not confined exclusively to'employees' within the traditional legal distinctions, separating them from 'independent contractor'.Myriad forms of service relationship, with infinite and subtle variations in the term of employment,blanket the nation's economy. Some are within this Act, others beyond its coverage. Large numberswill fall clearly on one side or on the other, by whatever test may be applied. Inequality of bargainingpower in controversies of their wages, hours and working conditions may characterize the status ofone group as of the other. The former, when acting alone may be as helpless in dealing with theemployer as dependent on his daily wage and as unable to resist arbitrary and unfair treatment as

the latter.'

To eliminate the causes of labor dispute and industrial strike, Congress thought it necessary tocreate a balance of forces in certain types of economic relationship. Congress recognized thoseeconomic relationships cannot be fitted neatly into the containers designated as 'employee' and'employer'. Employers and employees not in proximate relationship may be drawn into commoncontroversies by economic forces and that the very dispute sought to be avoided might involve'employees' who are at times brought into an economic relationship with 'employers', who are nottheir 'employers'. In this light, the language of the Act's definition of 'employee' or 'employer' shouldbe determined broadly in doubtful situations, by underlying economic facts rather than technicallyand exclusively established legal classifications. (NLRB vs. Blount, 131 F [2d] 585.)

In other words, the scope of the term 'employee' must be understood with reference to the purposesof the Act and the facts involved in the economic relationship. Where all the conditions of relation

require protection, protection ought to be given .By declaring a worker an employee of the person for whom he works and by recognizing andprotecting his rights as such, we eliminate the cause of industrial unrest and consequently wepromote industrial peace, because we enable him to negotiate an agreement which will settledisputes regarding conditions of employment, through the process of collective bargaining.

The statutory definition of the word 'employee' is of wide scope. As used in the Act, the termembraces 'any employee' that is all employees in the conventional as well in the legal sense expectthose excluded by express provision. (Connor Lumber Co., 11 NLRB 776.).

It is the purpose of the policy of Republic Act 875; (a) To eliminate the causes of industrial unrest byprotecting the exercise of their right to self-organization for the purpose of collective bargaining. (b)To promote sound stable industrial peace and the advancement of the general welfare, and the bestinterests of employers and employees by the settlement of issues respecting terms and conditions of

employment through the process of collective bargaining between employers and representatives oftheir employees.

The primary consideration is whether the declared policy and purpose of the Act can be effectuatedby securing for the individual worker the rights and protection guaranteed by the Act. The matter isnot conclusively determined by a contract which purports to establish the status of the worker, not asan employee.

The work of the musical director and musicians is a functional and integral part of the enterpriseperformed at the same studio substantially under the direction and control of the company.

In other words, to determine whether a person who performs work for another is the latter'semployee or an independent contractor, the National Labor Relations relies on 'the right to control'test. Under this test an employer-employee relationship exist where the person for whom the

services are performed reserves the right to control not only the end to be achieved, but also themanner and means to be used in reaching the end. (United Insurance Company, 108, NLRB No.115.).

Thus, in said similar case of Connor Lumber Company, the Supreme Court said:.

'We find that the independent contractors and persons working under them areemployees' within the meaning of Section 2 (3) of its Act. However, we are of the opinionthat the independent contractors have sufficient authority over the persons working undertheir immediate supervision to warrant their exclusion from the unit. We shall include inthe unit the employees working under the supervision of the independent contractors, butexclude the contractors.'

'Notwithstanding that the employees are called independent contractors', the Board will hold them tobe employees under the Act where the extent of the employer's control over them indicates that the

relationship is in reality one of employment. (John Hancock Insurance Co., 2375-D, 1940, Teller,Labor Dispute Collective Bargaining, Vol.).

The right of control of the film company over the musicians is shown (1) by calling the musiciansthrough 'call slips' in 'the name of the company; (2) by arranging schedules in its studio for recordingsessions; (3) by furnishing transportation and meals to musicians; and (4) by supervising anddirecting in detail, through the motion picture director, the performance of the musicians before thecamera, in order to suit the music they are playing to the picture which is being flashed on thescreen.

Thus, in the application of Philippine statutes and pertinent decisions of the United States Courts onthe matter to the facts established in this case, we cannot but conclude that to effectuate the policiesof the Act and by virtue of the 'right of control' test, the members of the Philippine Musicians Guildare employees of the three film companies and, therefore, entitled to right of collective bargaining

under Republic Act No. 875.

In view of the fact that the three (3) film companies did not question the union's majority, thePhilippine Musicians Guild is hereby declared as the sole collective bargaining representative for allthe musicians employed by the film companies."

We are fully in agreement with the foregoing conclusion and the reasons given in support thereof. Both aresubstantially in line with the spirit of our decision in MaligayaShipWatchmen Agency vs. Associated Watchmenand Security Union, L-12214-17 (May 28, 1958). In fact, the contention of the employers in the Maligaya cases,to the effect that they had dealt with independent contractors, was stronger than that of the film companies inthese cases. The third parties with whom the management and the workers contracted in the Maligaya caseswere agencies registeredwith the Bureau of Commerce and duly licensed by the City of Manila to engage inthe business of supplying watchmen to steamship companies, with permits to engage in said business issuedby the City Mayorand the Collector of Customs. In the cases at bar, the musical directors with whom the film

companies claim to have dealt with had nothingcomparable to the business standing of said watchmenagencies. In this respect, the status of said musical directors is analogous to that of the alleged independentcontractor in Caro vs. Rilloraza, L-9569 (September 30, 1957), with the particularity that the Carocase involvedthe enforcement of the liabilityof an employer under the Workmen's Compensation Act, whereas the cases


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before us are merely concerned with the right of the Guild to representthe musicians as a collective bargainingunit. Hence, there is less reason to be legalistic and technical in these cases, than in the Caro case.

Herein, petitioners-appellants cite, in support of their appeal, the cases of Sunripe Coconut Product Co., Inc vs.CIR(46 Off. Gaz., 5506, 5509), Philippine Manufacturing Co. vs. Santos Vda. de Geronimo, L-6968 (November29, 1954), Viana vs. Al-Lagadan, L-8967 (May 31, 1956), and Josefa Vda. de Cruz vs. The Manila HotelCo. (53 Off. Gaz., 8540). Instead of favoring the theory of said petitioners-appellants, the case of the SunripeCoconut Product Co., Inc. is authority for herein respondents-appellees. It was held that, although engaged aspiece-workers, under the "pakiao" system, the "parers" and "shellers" in the case were, not independentcontractor, but employees of said company, because "the requirement imposed on the 'parers' to the effect that'the nuts are pared whole or that there is not much meat wasted,' in effect limits or controls the means or detailsby which said workers are to accomplish their services" as in the cases before us.

The nature of the relation between the parties was not settled in the Viana case, the same having beenremanded to the Workmen's Compensation Commission for further evidence.

The case of the Philippine Manufacturing Co. involved a contract between said company and Eliano Garcia,who undertook to paint a tank of the former. Garcia, in turn engaged the services of Arcadio Geronimo, alaborer, who fell while painting the tank and died in consequence of the injuries thus sustained by him.Inasmuch as the company was engaged in the manufacture of soap, vegetable lard, cooking oil and margarine,it was held that the connection between its business and the painting aforementioned was purely casual; thatEliano Garcia was an independent contractor; that Geronimo was not an employee of the company; and thatthe latter was not bound, therefore, to pay the compensation provided in the Workmen's Compensation Act.Unlike the Philippine Manufacturing case, the relation between the business of herein petitioners-appellantsand the work of the musicians is not casual. As held in the order appealed from which, in this respect, is not

contested by herein petitioners-appellants "the work of the musicians is an integral partof the entire motionpicture." Indeed, one can hardly find modern films without music therein. Hence, in the Caro case (supra), theowner and operator of buildings for rent was held bound to pay the indemnity prescribed in the Workmen'sCompensation Act for the injury suffered by a carpenter while working as such in one of said buildings eventhough his services had been allegedly engaged by a third party who had directly contracted with said owner. Inother words, the repair work had not merely a casual connection with the business of said owner. It was anecessary incident thereof, just as music is in the production of motion pictures.

The case ofJosefa Vda. de Cruz vs. The Manila Hotel Co., L-9110 (April 30, 1957) differs materially from thepresent cases. It involved the interpretation of Republic Act No. 660, which amends the law creating andestablishing the Government Service Insurance System. No labor law was sought to be construed in that case.In act, the same was originally heard in the Court of First Instance of Manila, the decision of which was, onappeal, affirmed by the Supreme Court. The meaning or scope if the term "employee," as used in the IndustrialPeace Act (Republic Act No. 875), was not touched therein. Moreover, the subject matter of said case was a

contract between the management of the Manila Hotel, on the one hand, and Tirso Cruz, on the other, wherebythe latter greed to furnish the former the services of his orchestra, consisting of 15 musicians, including TirsoCruz, "from 7:30 p.m. to closing time daily." In the language of this court in that case, "what pieces theorchestra shall play, and how the music shall be arranged or directed, the intervals and other details suchare left to the leader's discretion."

This is not situation obtaining in the case at bar. The musical directors above referred to have no such controlover the musicians involved in the present case. Said musical directors control neither the music to be played,nor the musicians playing it. The film companies summon the musicians to work, through the musical directors.The film companies, through the musical directors, fix the date, the time and the place of work. The filmcompanies, not the musical directors, provide the transportation to and from the studio. The film companiesfurnish meal at dinner time.

What is more in the language of the order appealed from "during the recording sessions, the motion

picture director who is an employee of the company" not the musical director "supervises the recording ofthe musicians and tells them what to do in every detail". The motion picture director not the musical director "solely directs and performance of the musicians before the camera". The motion picture director "supervises

the performance of all the actors, including the musicians who appear in the scenes, so that in the actualperformance to be shown in the screen, the musical director's intervention has stopped." Or, as testified to inthe lower court, "the movie director tells the musical director what to do; tells the music to be cut or tellsadditional music in this part or he eliminates the entire music he does not (want) or he may want more drums ormove violin or piano, as the case may be". The movie director "directly controls the activities of the musicians."He "says he wants more drums and the drummer plays more" or "if he wants more violin or he does not likethat.".

It is well settled that "an employer-employee relationship exists . . .where the person for whom the services areperformed reserves a right to control not only the endto be achieved but also the means to be used in reachingsuch end . . . ." (Alabama Highway Express Co., Express Co., v. Local 612, 108S. 2d. 350.) The decisive natureof said control over the "means to be used", is illustrated in the case of Gilchrist Timber Co., et al., Local No.2530 (73 NLRB No. 210, pp. 1197, 1199-1201), in which, by reason of said control, the employer-employeerelationship was held to exist between the management and the workers, notwithstanding the intervention of analleged independent contractor, who had, and exercise, the power to hire and fire said workers. Theaforementioned control over the means to be used" in reading the desired end is possessed and exercised bythe film companies over the musicians in the cases before us.

WHEREFORE, the order appealed from is hereby affirmed, with costs against petitioners herein. It is soordered.


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SUPREME COURTManila

FIRST DIVISION

G.R. No. L-53590 July 31, 1984

ROSARIO BROTHERS INC. (MANILA COD DEPARTMENT STORE), petitioner,vs.HON. BLAS F. OPLE, THE NATIONAL LABOR RELATIONS COMMISSION, and LEONARDO LOVERIA,MARIETTA GALUT, LINDA TAPICERIA, JESUS S. OLIVER, CLARITA SANGLE, RICARDO ROXAS,ANTONIO MABUTOL, LUZ BAYNO, NESTOR SANCHEZ, TITO CASTALEDA, EDDIE RODRIGUEZ,MANUEL MEJES, FRANCISCA TAPICERIA, EDITHA BAYNO, ET AL., respondents.

Bueno & Primicias Law Office for petitioner.

The Solicitor General for respondents.

RELOVA, J.:

The issue raised in this case is whether an employer-employee relationship exists between the petitioner andthe private respondents. It is the submission of petitioner that no such relationship exists or has been createdbecause the "series of memoranda" issued by petitioner to the private respondents from 1973 to 1977 wouldreveal that it had no control and/or supervision over the work of the private respondents.

Private respondents are tailors, pressers, stitchers and similar workers hired by the petitioner in its tailoringdepartment (Modes Suburbia). Some had worked there since 1969 until their separation on January 2, 1978.For their services, they were paid weekly wages on piece-work basis, minus the withholding tax per Bureau ofInternal Revenue (BIR) rules. Further, they were registered with the Social Security System (SSS) asemployees of petitioner and premiums were deducted from their wages; they were also members of the

Avenida-Cubao Manila COD Department Store Labor Union which has a Coll ective Bargaining Agreement withthe company and; they were required to report for work from Monday through Saturday and to stay in thetailoring shop for no less than eight (8) hours a day, unless no job order was given them after waiting for two tothree hours, in which case, they may leave and may come back in the afternoon. Their attendance wasrecorded through a bundy clock just like the other employees of petitioner. A master cutter distributes job ordersequally, supervises the work and sees to it that they were finished as soon as possible. Quoting from thecomment of the Solicitor General, petitioner, in its memorandum, said

Once the job orders and the corresponding materials were distributed to them, privaterespondents were on their own. They were free to do their jobs either in the petitioner'sshop or elsewhere at their option, without observing the regular working time of thecompany provided that they finished their work on time and in accordance with thespecifications. As a matter of fact, they were allowed to contract other persons to do the

job for them; and also to accept tailoring jobs from other establi shments. (p. 202, Rollo)

On September 7, 1977, the private respondents filed with the Regional Office of the Department (now Ministry)of Labor a complaint for violation of Presidential Decree 851 (13th month pay) and Presidential Decree 525, asamended by Presidential Decree 1123 (Emergency Living Allowance) against herein petitioner.

After petitioner had filed its answer, the case was certified for compulso ry arbitration to the Labor Arbiter who,after due hearing, rendered a decision on December 29, 1977 dismissing "private respondents" claims forunpaid emergency living allowance and 13th month pay, for lack of merit, upon finding that the complainants(herein private respondents) are not employees of the respondent (herein petitioner) withinthe meaning of

Article 267(b)of the Labor Code. As a consequence, the private respondents were dismissed on January 2,1978 and this prompted them to file a complaint for illegal dismissal with the Ministry of Labor. Meanwhile, theNational Labor Relations Commission (NLRC) affirmed the decision of the Labor Arbiter and dismissed private

respondents' appeal for lack of merit. However, upon appeal to the Minister of Labor, the latter reversed theresolution of the NLRC in a decision, dated March 27, 1979, holding that

The decision appealed from must be reversed. It is clearly erronious. Ccmplainants andrespondent are correct (sic) in considering their relationship as one between employeesand employer. The labor arbiter should not have made a different finding.

Complainants were employed as tailors, pressers, stitchers and coatmakers in thetailoring department of the respondent. They are hired through a master cutter and thedepartment head and upon the approval of the personnel department and themanagement. They report to the shop from Monday to Saturday and record their

attendance with a bundy clock. They are required to stay in the shop premises "for noless than 8 hours a day" unless no job is given them "after waiting for two or three hours"in which case, they are "allowed to leave."

The employees (tailors, pressers and stitchers) are paid by piece per week according tothe rates established by the company. They are registered as employees with the SocialSecurity System for which premiums are deducted from their wages. Taxes are alsowitheld from their wages pursuant to BIR rules. Moreover, they enjoy the benefits due toemployees under their collective agreement with the company.

The tailors are given deadlines on their assigned jobs. They are required to work on joborders as soon as these are given to them. The master cutter is ordered "to watch out fortailors who postponed their assigned job up to the last few days of the deadline" and toreport violators "for proper action." Tailors are also required to follow the company code

of discipline and the rules and regulations of the tailoring department. Outright dismissalis meted on anyone who brings out company patterns.

Under these facts, the existence of the employment relations can not be disputed. Therespondent itself, in its very first position papers, accepts this fact. The labor arbitercertainly erred in making a different finding.

However, respondent contends that the employees are excluded from the coverage ofPD 525, 851 and 1123 because of the nature of their employment, there being 'no fixednumber with regards to entry and exit and no fixed number of days of work, with respectto said employees. We have, however, examined carefully the decrees and findabsolutely no indication therein that the employees are indeed excluded. Nor are therules implementing the decrees supportive of the respondent's contention. On thecontrary, the rules argue for the contrary view.

Section 2 of the rules implementing PD 525 provides: "The Decree shall apply to allemployees of covered employers, regardless of their position, designation or employmentstatus, and irrespective of the method by which their wages are paid, includingtemporary, casual, probationary, and seasonal employees and workers." And Section 3,of the rules implementing PD 851 provides that "all employees of covered employersshall be entitled to benefits provided under the Decree ... regardless of their position,designation or employment status, and irrespective of the method by which their wagesare paid." Section 2 of the same rules explicitly provides that the rules apply to "workerspaid on piece-rate basis" or "those who are paid a standard amount for every piece orunit of work produced that is more or less regularly replicated, without regard to the timespent in producing the same."

WHEREFORE, respondent is hereby ordered to pay the emergency allowances underPD 525 and 1123 and the 13th month pay under PD 851 from the date of the effectivity of

said decrees but not earlier than September 7, 1974 to the following complainants:Leonardo Loveria, Editha Bayno, Fe Bonita, Ricardo Roxas, Marietta Galut, MercedesOliver, Antonio Mabutol, Clarita Sangle and Jesus Oliver; and the emergency allowances


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and 13th month pay under said decrees from the date of the effectivity of said decreesbut not earlier than the date of the date of the start of their employment, as indicated inthe parenthesis after their names, to the following complainants: Linda Tapiceria (July 14,1975), Luz Bayno, (September 22, 1975), Tito Castaeda (October 20, 1976), FranciscoTapiceria (February 14, 1977), Manuel Mejes (February 20, 1977), Eddie Rodriguez (July4, 1977) and Nestor Sanchez (July 22, 1977). The Socio-Economic Analyst of theNational Labor Relations Commission is hereby directed to compute the amount of theawards stated in this order and to submit a report thereon within 20 calendar days fromreceipt of this order. (pp. 37-40, Rollo)

Thereafter, private respondents filed a motion for issuance of a writ of execution of the aforesaid decision of the

Minister of Labor which was granted and, partially implemented.

On February 28, 1980, the Labor Arbiter, issued an order directing the Chief of the Research and InformationDepartment of the Commission to designate a Socio-Economic Analyst to compute the balance of privaterespondents' claims for the 13th month pay and emergency living allowance in accordance with respondentMinister's decision of March 27, 1979. Pursuant thereto, a report, dated March 4, 1980, was submittedcomputing the balance of private respondents' claims for emergency living allowance and 13th month pay up toFebruary 29,1980 in the total amount of P71,131.14. A writ of execution was issued for the satisfaction of saidamount.

Hence, the filing of this petition for certiorari, praying, among others, to annul and set aside the decision ofpublic respondent Minister of Labor and to dismiss the claims of private respondents.

We cannot sustain the petition. It was filed on April 1, 1980 which was too late because the Labor Minister's

decision of March 27, 1979, subject of this judicial review, had already become final. And, not only that. Thequestioned decision has already been partially implemented by the sheriff as shown by his return, dated July17, 1979 (p. 96, Rollo). What is left for execution is the balance of private respondents' claim.

Further, the petition is devoid of merit. As held in Mafinco Trading Corporation vs. Ople, 70 SCRA 139, theexistence of employer-employee relationship is determined by the following elements, namely: (1) the selectionand engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power tocontrol employees' conduct although the latter is the most important element. On the other hand, anindependent contractor is one who exercises independent employment and contracts to do a piece of workaccording to his own methods and without being subjected to control of his employer except as to the result ofhis work.

1. In the case at bar, as found by the public respondent, the selection and hiring of private respondents weredone by the petitioner, through the master cutter of its tailoring department who was a regular employee. Theprocedure was modified when the employment of personnel in the tailoring department was made by the

management itself after the applicants' qualifications had been passed upon by a committee of four. Later,further approval by the Personnel Department was required.

2. Private respondents received their weekly wages from petitioner on piece-work basis which is within thescope and meaning of the term "wage" as defined under Article 97(f) of the New Labor Code (PD 442), thus

(f) "Wage" paid to any employee shag mean the remuneration or earnings, however,designated, capable of being expressed in terms of money, whether fixed or ascertainedon a time, task, piece, or commission basis, or other method of calculating the same,which is payable by an employer to an employee under a written or unwritten contract ofemployment for work done or to be done or for services rendered or to be rendered, andincludes the fair and reasonable value, as determined by the Secretary of Labor, ofboard, lodging or other facilities customarily furnished by the employer to the employee....

3. Petitioner had the power to dismiss private respondents, as shown by the various memoranda issued forstrict compliance by private respondents, violations of which, in extreme cases, are grounds for outright

dismissal. In fact, they were dismissed on January 2, 1978, although, the dismissal was declared illegal by theLabor Arbiter. The case is pending appeal with the National Labor Relations Commission.

4. Private respondents' conduct in the performance of their work was controlled by petitioner, such as: (1) theywere required to work from Monday through Saturday; (2) they worked on job orders without waiting for thedeadline; (3) they were to observe cleanliness in their place of work and were not allowed to bring out tailoringshop patterns; and (4) they were subject to quality control by petitioner.

5. Private respondents were allowed to register with the Social Security System (SSS) as employees ofpetitioner and premiums were deducted from their wages just like its other employees. And, withholding taxeswere also deducted from their wages for transmittal to the Bureau of Internal Revenue (BIR).

6. Well-established is the principle that "findings of administrative agencies which have acquired expertisebecause their jurisdiction is confined to specific matters are generally accorded not only respect but evenfinality. Judicial review by this Court on labor cases do not go so far as to evaluate the sufficiency of theevidence upon which the Deputy Minister and the Regional Director based their determinations but are limitedto issues of jurisdiction or grave abuse of discretion (Special Events & Central Shipping Office Workers Unionvs. San Miguel Corporation, 122 SCRA 557)." In the case at bar, the questioned decision and order ofexecution of public respondents are not tainted with unfairness or arbitrariness that would amount to abuse ofdiscretion or lack of jurisdiction and, therefore, this Court finds no necessity to disturb, much less, reverse thesame.

WHEREFORE, premises considered, the petition is dismissed for lack of merit.

SO ORDERED.


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SUPREME COURTManila

SECOND DIVISION

G.R. No. 64948 September 27, 1994

MANILA GOLF & COUNTRY CLUB, INC., petitioner,vs.

INTERMEDIATE APPELLATE COURT and FERMIN LLAMAR, respondents.

Bito, Misa & Lozada for petitioner.

Remberto Z. Evio for private respondent.

NARVASA, C.J.:

The question before the Court here is whether or not persons rendering caddying services for members of golfclubs and their guests in said clubs' courses or premises are the employees of such clubs and therefore withinthe compulsory coverage of the Social Security System (SSS).

That question appears to have been involved, either directly or peripherally, in three separate proceedings, allinitiated by or on behalf of herein private respondent and his fellow caddies. That which gave rise to the present

petition for review was originally filed with the Social Security Commission (SSC) via petition of seventeen (17)persons who styled themselves "Caddies of Manila Golf and Country Club-PTCCEA" for coverage andavailment of benefits under the Social Security Act as amended, "PTCCEA" beingthe acronym of a labor organization, the "Philippine Technical, Clerical, Commercial Employees Association,"with which the petitioners claimed to be affiliated. The petition, docketed as SSC Case No. 5443, alleged inessence that although the petitioners were employees of the Manila Golf and Country Club, a domesticcorporation, the latter had not registered them as such with the SSS.

At about the same time, two other proceedings bearing on the same question were filed or were pending; thesewere:

(1) a certification election case filed with the Labor Relations Division of the Ministry ofLabor by the PTCCEA on behalf of the same caddies of the Manila Golf and CountryClub, the case being titled "Philippine Technical, Clerical, Commercial Association vs.

Manila Golf and Country Club" and docketed as Case No. R4-LRDX-M-10-504-78; itappears to have been resolved in favor of the petitioners therein by Med-Arbiter OrlandoS. Rojo who was thereafter upheld by Director Carmelo S. Noriel, denying the Club'smotion for reconsideration; 1

(2) a compulsory arbitration case initiated before the Arbitration Branch of the Ministry ofLabor by the same labor organization, titled "Philippine Technical, Clerical, CommercialEmployees Association (PTCCEA), Fermin Lamar and Raymundo Jomok vs. Manila Golfand Country Club, Inc., Miguel Celdran, Henry Lim and Geronimo Alejo;" it wasdismissed for lack of merit by Labor Arbiter Cornelio T. Linsangan, a decision lateraffirmed on appeal by the National Labor Relations Commission on the ground that therewas no employer-employee relationship between the petitioning caddies and therespondent Club. 2

In the case before the SSC, the respondent Club filed answer praying for the dismissal of the petition, allegingin substance that the petitioners, caddies by occupation, were allowed into the Club premises to renderservices as such to the individual members and guests playing the Club's golf course and who themselves paid

for such services; that as such caddies, the petitioners were not subject to the direction and control of the Clubas regards the manner in which they performed their work; and hence, they were not the Club's employees.

Subsequently, all but two of the seventeen petitioners of their own accord withdrew their claim for socialsecurity coverage, avowedly coming to realize that indeed there was no employment relationship between themand the Club. The case continued, and was eventually adjudicated by the SSC after protracted proceedingsonly as regards the two holdouts, Fermin Llamar and Raymundo Jomok. The Commission dismissed thepetition for lack of merit, 3ruling:

. . . that the caddy's fees were paid by the golf players themselves and not by respondentclub. For instance, petitioner Raymundo Jomok averred that for their services as caddies

a caddy's Claim Stub (Exh. "1-A") is issued by a player who will in turn hand over tomanagement the other portion of the stub known as Caddy Ticket (Exh. "1") so that bythis arrangement management will know how much a caddy will be paid (TSN, p. 80, July23, 1980). Likewise, petitioner Fermin Llamar admitted that caddy works on his own inaccordance with the rules and regulations (TSN, p. 24, February 26, 1980) but petitionerJomok could not state any policy of respondent that directs the manner of caddying(TSN, pp. 76-77, July 23, 1980). While respondent club promulgates rules andregulations on the assignment, deportment and conduct of caddies (Exh. "C") the sameare designed to impose personal discipline among the caddies but not to direct orconduct their actual work. In fact, a golf player is at liberty to choose a caddy of hispreference regardless of the respondent club's group rotation system and has thediscretion on whether or not to pay a caddy. As testified to by petitioner Llamar that theirincome depends on the number of players engaging their services and liberality of thelatter (TSN, pp. 10-11, Feb. 26, 1980). This lends credence to respondent's assertion thatthe caddies are never their employees in the absence of two elements, namely, (1)payment of wages and (2) control or supervision over them. In this connection, ourSupreme Court ruled that in the determination of the existence of an employer-employeerelationship, the "control test" shall be considered decisive (Philippine Manufacturing Co.vs. Geronimo and Garcia, 96 Phil. 276; Mansal vs. P.P. Coheco Lumber Co., 96 Phil.941; Viana vs.

Al-lagadan, et al., 99 Phil. 408; Vda, de Ang, et al. vs. The Manila Hotel Co., 101 Phil.358, LVN Pictures Inc. vs. Phil. Musicians Guild, et al.,L-12582, January 28, 1961, 1 SCRA 132. . . . (reference being made also to InvestmentPlanning Corporation Phil. vs. SSS 21 SCRA 925).

Records show the respondent club had reported for SS coverage Graciano Awit andDaniel Quijano, as bat unloader and helper, respectively, including their ground men,house and administrative personnel, a situation indicative of the latter's concern with therights and welfare of its employees under the SS law, as amended. The unrebuttedtestimony of Col. Generoso A. Alejo (Ret.) that the ID cards issued to the caddies merelyintended to identify the holders as accredited caddies of the club and privilege(d) to plytheir trade or occupation within its premises which could be withdrawn anytime for loss ofconfidence. This gives us a reasonable ground to state that the defense posture ofrespondent that petitioners were never its employees is well taken. 4

From this Resolution appeal was taken to the Intermediate appellate Court by the union representing Llamarand Jomok. After the appeal was docketed 5and some months before decision thereon was reached andpromulgated, Raymundo Jomok's appeal was dismissed at his instance, leaving Fermin Llamar the loneappellant. 6

The appeal ascribed two errors to the SSC:

(1) refusing to suspend the proceedings to await judgment by the Labor RelationsDivision of National Capital Regional Office in the certification election case (R-4-LRD-M-10-504-78) supra, on the precise issue of the existence of employer-employee


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relationship between the respondent club and the appellants, it being contended that saidissue was "a function of the proper labor office"; and

(2) adjudicating that self same issue a manner contrary to the ruling of the Director of theBureau of Labor Relations, which "has not only become final but (has been) executed or(become) res adjudicata." 7

The Intermediate Appellate Court gave short shirt to the first assigned error, dismissing it as of the leastimportance. Nor, it would appear, did it find any greater merit in the second alleged error. Although said Courtreserved the appealed SSC decision and declared Fermin Llamar an employee of the Manila Gold and CountryClub, ordering that he be reported as such for social security coverage and paid any corresponding benefits, 8it

conspicuously ignored the issue ofres adjudicata raised in said second assignment. Instead, it drew basis forthe reversal from this Court's ruling in Investment Planning Corporation of the Philippines vs . Social SecuritySystem, supra 9and declared that upon the evidence, the questioned employer-employee relationship betweenthe Club and Fermin Llamar passed the so-called "control test," establishment in the case i.e., "whether theemployer controls or has reserved the right to control the employee not only as to the result of the work to bedone but also as to the means and methods by which the same is to be accomplished," the Club's controlover the caddies encompassing:

(a) the promulgation of no less than twenty-four (24) rules and regulations just aboutevery aspect of the conduct that the caddy must observe, or avoid, when serving assuch, any violation of any which could subject him to disciplinary action, which mayinclude suspending or cutting off his access to the club premises;

(b) the devising and enforcement of a group rotation system whereby a caddy is assigned

a number which designates his turn to serve a player;(c) the club's "suggesting" the rate of fees payable to the caddies.

Deemed of title or no moment by the Appellate Court was the fact that the caddies were paid by the players, notby the Club, that they observed no definite working hours and earned no fixed income. It quoted with approvalfrom an American decision 10to the effect that: "whether the club paid the caddies and afterward collected inthe first instance, the caddies were still employees of the club." This, no matter that the case which producedthis ruling had a slightly different factual cast, apparently having involved a claim for workmen's compensationmade by a caddy who, about to leave the premises of the club where he worked, was hit and injured by anautomobile then negotiating the club's private driveway.

That same issue ofres adjudicata, ignored by the IAC beyond bare mention thereof, as already pointed out, isnow among the mainways of the private respondent's defenses to the petition for review. Considered in theperspective of the incidents just recounted, it illustrates as well as anything can, why the practice of forum-

shopping justly merits censure and punitive sanction. Because the same question of employer-employeerelationship has been dragged into three different fora, willy-nilly and in quick succession, it has birthedcontroversy as to which of the resulting adjudications must now be recognized as decisive. On the one hand,there is the certification case [R4-LRDX-M-10-504-78), where the decision of the Med-Arbiter found for theexistence of employer-employee relationship between the parties, was affirmed by Director Carmelo S. Noriel,who ordered a certification election held, a disposition never thereafter appealed according to the privaterespondent; on the other, the compulsory arbitration case (NCR Case No. AB-4-1771-79), instituted by or forthe same respondent at about the same time, which was dismissed for lack of merit by the Labor Arbiter, whichwas afterwards affirmed by the NLRC itself on the ground that there existed no such relationship between theClub and the private respondent. And, as if matters were not already complicated enough, the samerespondent, with the support and assistance of the PTCCEA, saw fit, also contemporaneously, to initiate still athird proceeding for compulsory social security coverage with the Social Security Commission (SSC Case No.5443), with the result already mentioned.

Before this Court, the petitioner Club now contends that the decision of the Med-Arbiter in the certification casehad never become final, being in fact the subject of three pending and unresolved motions for reconsideration,as well as of a later motion for early resolution. 11Unfortunately, none of these motions is incorporated or

reproduced in the record before the Court. And, for his part, the private respondent contends, not only that saiddecision had been appealed to and been affirmed by the Director of the BLR, but that a certification electionhad in fact been held, which resulted in the PTCCEA being recognized as the sole bargaining agent of thecaddies of the Manila Golf and Country Club with respect to wages, hours of work, terms of employment,etc. 12Whatever the truth about these opposing contentions, which the record before the Court does notadequately disclose, the more controlling consideration would seem to be that, however, final it may become,the decision in a certification case, by thevery nature of that proceedings, is not such as to foreclose all further dispute between the parties as to theexistence, or non-existence, of employer-employee relationship between them.

It is well settled that forres adjudicata, or the principle of bar by prior judgment, to apply, the following essential

requisites must concur: (1) there must be a final judgment or order; (2) said judgment or order must be on themerits; (3) the court rendering the same must have jurisdiction over the subject matter and the parties; and (4)there must be between the two cases identity of parties, identity of subject matter and identity of cause ofaction. 13

Clearly implicit in these requisites is that the action or proceedings in which is issued the "prior Judgment" thatwould operate in bar of a subsequent action between the same parties for the same cause, be adversarial, orcontentious, "one having opposing parties; (is) contested, as distinguished from an ex parte hearing orproceeding. . . . of which the party seeking relief has given legal notice to the other party and afforded the latteran opportunity to contest it" 14and a certification case is not such a proceeding, as this Court already ruled:

A certification proceedings is not a "litigation " in the sense in which the term is commonlyunderstood, but mere investigation of a non-adversary, fact-finding character, in whichthe investigating agency plays the part of a disinterested investigator seeking merely to

ascertain the desires of the employees as to the matter of their representation. The courtenjoys a wide discretion in determining the procedure necessary to insure the fair andfree choice of bargaining representatives by the employees. 15

Indeed, if any ruling or judgment can be said to operate as res adjudicata on the contested issue of employer-employee relationship between present petitioner and the private respondent, it would logically be that renderedin the compulsory arbitration case (NCR Case No. AB-4-771-79, supra), petitioner having asserted, withoutdispute from the private respondent, that said issue was there squarely raised and litigated, resulting in a rulingof the Arbitration Branch (of the same Ministry of Labor) that such relationship did not exist, and which rulingwas thereafter affirmed by the National Labor Relations Commission in an appeal taken by said respondent. 16

In any case, this Court is not inclined to allow private respondent the benefit of any doubt as to which of theconflicting ruling just adverted to should be accorded primacy, given the fact that it was he who actively soughtthem simultaneously, as it were, from separate fora, and even if the graver sanctions more lately imposed by

the Court for forum-shopping may not be applied to him retroactively.Accordingly, the IAC is not to be faulted for ignoring private respondent's invocation ofres adjudicata; oncontrary, it acted correctly in doing so.

Said Courts holding that upon the facts, there exists (or existed) a relationship of employer and employeebetween petitioner and private respondent is, however, another matter. The Court does not agree that saidfacts necessarily or logically point to such a relationship, and to the exclusion of any form of arrangements,other than of employment, that would make the respondent's services available to the members and guest ofthe petitioner.

As long as it is, the list made in the appealed decisi on detailing the various matters of conduct, dress, language,etc. covered by the petitioner's regulations, does not, in the mind of the Court, so circumscribe the actions or

judgment of the caddies concerned as to leave t hem little or no freedom of choice whatsoever in the manner ofcarrying out their services. In the very nature of things, caddies must submit to some supervision of their

conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whateverclub they do their work in. For all that is made to appear, they work for the club to which they attach themselveson sufference but, on the other hand, also without having to observe any working hours, free to leave anytime


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they please, to stay away for as long they like. It is not pretended that if found remiss in the observance of saidrules, any discipline may be meted them beyond barring them from the premises which, it may be supposed,the Club may do in any case even absent any breach of the rules, and without violating any right to work ontheir part. All these considerations clash frontally with the concept of employment.

The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies asstill another indication of the latter's status as employees. It seems to the Court, however, that the intendmentof such fact is to the contrary, showing that the Club has not the measure of control over the incidents of thecaddies' work and compensation that an employer would possess.

The Court agrees with petitioner that the group rotation system so-called, is less a measure of employer control

than an assurance that the work is fairly distributed, a caddy who is absent when his turn number is calledsimply losing his turn to serve and being assigned instead the last number for the day. 17

By and large, there appears nothing in the record to refute the petitioner's claim that:

(Petitioner) has no means of compelling the presence of a caddy. A caddy is not requiredto exercise his occupation in the premises of petitioner. He may work with any other golfclub or he may seek employment a caddy or otherwise with any entity or individualwithout restriction by petitioner. . . .

. . . In the final analysis, petitioner has no was of compelling the presence of the caddiesas they are not required to render a definite number of hours of work on a single day.Even the group rotation of caddies is not absolute because a player is at liberty to choosea caddy of his preference regardless of the caddy's order in the rotation.

It can happen that a caddy who has rendered services to a player on one day may stillfind sufficient time to work elsewhere. Under such circumstances, he may then leave thepremises of petitioner and go to such other place of work that he wishes ( sic). Or a caddywho is on call for a particular day may deliberately absent himself if he has moreprofitable caddying, or another, engagement in some other place. These are thingsbeyond petitioner's control and for which it imposes no direct sanctions on the caddies. . .. 18

WHEREFORE, the Decision of the Intermediate Appellant Court, review of which is sought, is reversed and setaside, it being hereby declared that the private respondent, Fermin Llamar, is not an employee of petitionerManila Golf and Country Club and that petitioner is under no obligation to report him for compulsory coverageto the Social Security System. No pronouncement as to costs.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-55674 July 25, 1983

LA SUERTE CIGAR AND CIGARETTE FACTORY, petitioner,vs.DIRECTOR OF THE BUREAU OF LABOR RELATIONS, THE LA SUERTE CIGAR AND CIGARETTEFACTORY PROVINCIAL (Luzon) AND METRO MANILA SALES FORCE ASSOCIATION-NATU, and THENATIONAL ASSOCIATION OF TRADE UNIONS, respondents.

Angara, Abello, Concepcion, Regala & Cruz Law Office for petitioner.

The Solicitor General for respondents.

Marcelino Lontok, Jr. for respondent NATU.

GUERRERO, J.:

In the determination of the basic issue raised in the case at bar involving the status of some 14 members ofprivate respondent local union whether they are employees of petitioner company in which case they should beincluded in the 30% jurisdictional requirement necessary to support the petition for certification election, orindependent contractors and hence, excluded therefrom, Our rulings in Mafinco Trading Corp. vs. Ople, 70SCRA 139, where We reiterated the "control test" earlier laid down in Investment Planning Corp. vs. SocialSecurity System, 21 SCRA 924, and in Social Security System vs. Hon. Court of Appeals and Shriro (Phils.)Inc., 37 SCRA 579 are authoritative and controlling.

In the Mafinco case, the Court, through Justice Aquino, said:

In a petition for certiorari, the issue of whether respondents are employees orindependent contractors should be resolved mainly in the light of their peddlingcontracts. Pro hac vice the issue of whether Repomanta and Moralde were employees ofMafinco or were independent contractors should be resolved mainly in the light of theirpeddling contracts. A different approach would lead this Court astray into the field offactual controversy where its legal pronouncements would not rest on solid grounds.

A contract whereby one engages to purchase and sell soft drinks on trucks supplied by

the manufacturer but providing that other party (peddler) shall have the right to employhis own workers, shall post a bond to protect the manufacturer against losses, shall beresponsible for damages caused to third persons, shall obtain the necessary licenses andpermits and bear the expenses incurred in the sale of the soft drinks is not a contract ofemployment.-We hold that under their peddling contracts Repomanta and Moralde werenot employees of Mafinco but were independent contractors as found by the NLRC andits factfinder and by the committee appointed by the Secretary of Labor to look into thestatus of Cosmos and Mafinco peddlers. They were distributors of Cosmos soft drinkswith their own capital and employees. Ordinarily, an employee or a mere peddler doesnot execute a formal contract of employment. He is simply hired and he works under thedirection and control of the employer. Repomanta and Moralde voluntarily executed withMafinco formal peddling contracts which indicate the manner in - which they would seCosmos soft drinks. That circumstance signifies that they were acting as independentbusinessmen. They were free to sign or not to sign that contract. If they did not want to

sell Cosmos products under the conditions defined in that contract, they were free toreject it. But having signed it, they were bound by its stipulations and the consequencesthereof under existing labor laws. One such stipulation is the right of the parties to


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terminate the contract upon 5 days' prior notice. Whether the termination in this case wasan unwarranted dismissal of an employee, as contended by Repomanta and Moralde, isa point that cannot be resolved without submission of evidence. Using the contract itselfas the sole criterion, the termination should perforce be characterized as simply theexercise of a right freely stipulated upon by the parties.

Tests for determining the existence of employer-employee relationship.-In determiningthe existence of employer-employee relationship, the following elements are generallyconsidered, namely: (1) the selection and engagement of the employee; (2) the paymentof wages; (3) the power of dismissal; and (4) the power to control the employees'conduct-although the latter is the most important element.

Factors to determine existence of independent contract relationship. An independentcontractor is one who exercises independent employment and contracts to do a piece ofwork according to his own methods and without being subject to control of his employerexcept as to the result of the work. 'Among the factors to be considered are whether thecontractor is carrying on an independent business; whether the work is part of theemployer's general business; the nature and extent of the work; the skill required; theterm and duration of the relationship; the right to assign the performance of the work toanother; the power to terminate the relationship; the existence of a contract for theperformance of a specified piece of work; the control and supervision of the work; theemployer's powers and duties with respect to the hiring, firing, and payment of thecontractor's servants; the control of the premises; the duty to supply the premises, tools,appliances, material and labor, and the mode, manner, and terms of payment.'

In the Shriro case, We held that the common law rule of determining the existence of employer-employeerelationship, principally the "control test", applies in its jurisdiction. Where the element of control is absent;where a person who works for another does so more or less at his own pleasure and is not subject to definitehours or conditions of work, and in turn is compensated according to the result of his efforts and not the amountthereof, relationship of employer and employee does not exist.

And supplementing the above jurispr udence is Our ruling in Social Security System vs. The Hon. Court ofAppeals, Manila Jockey Club, Inc., Phil. Racing Club, 30 SCRA 210 wherein the Supreme Court, speakingthrough then Associate Justice, now Chief Justice Fernando, held:

The question of when there is employer-employee relationship for purposes of the SocialSecurity Act has been settled in this jurisdiction in the case of Investment Planning Corp.vs. Social Security System, 21 SCRA 924 which applied the so-called control test, that is,whether the employer controls or has reserved the right to control the employee not only

as to the result of the work to be done but also as to the means and methods by whichthe same is to be accomplished. In other words, where the element of control is absent;whether a person who works for another does so more or less at his own pleasure and isnot subject to definite hours or conditions of work, and in turn is compensated accordingto the result of his efforts and not the amount thereof, we should not find that therelationship of employer and employee exists. This decision rejected the economic factsof the relation test.

The instant petition for certiorari seeks to reverse the resolution of the Director of the Bureau of Labor Relationsdated January 15, 1980 ordering that a certification election be conducted among the sales personnel of LaSuerte Cigar and Cigarette Factory, as well as his resolution dated November 18, 1980 denying the motion forreconsideration and directing that a certification election be conducted immediately. The said resolutionsreversed and set aside the order of dismissal dated August 29, 1979 of the Med-Arbiter.

The antecedent facts show that on April 7, 1979, the La Suerte Cigar and Cigarette Factory Provincial (Luzon)and Metro Manila Sales Force Association (herein referred to as the local union) applied for and was grantedchapter status by the National Association of Trade Unions (hereinafter referred to as NATU).

On April 16, 1979, some thirty-one (31) local union members signed a joint letter withdrawing their membershipfrom NATU.

Nonetheless, on April 18, 1979, the local union and NATU filed a petition for direct certification or certificationelection which alleged among others, that forty-eight of the sixty sales personnel of the Company weremembers of the local union; that the petition is supported by no less than 75% of the sales force; that there isno existing recognized labor union in the Company representing the said sales personnel; that there is likewiseno existing collecting bargaining agreement; and that there had been no certification election in the last twelvemonths preceding the filing of the petition.

The Company then filed a motion to dismiss the petition on June 13, 1979 on the ground that it is not supported

by at least 30% of the members of the proposed bargaining unit because (a) of the alleged forty-eight (48)members of the local union, thirty-one (31) had withdrawn prior to the filing of the petition; and (b) fourteen (14)of the alleged members of the union were not employees of the Company but were independent contractors.

NATU and the local union opposed the Company's motion to dismiss alleging that the fourteen dealers areactually employees of the Company because they are subject to its control and supervision.

On August 29, 1979, the Med-Arbiter issued an order dismissing the petition for lack of merit as the fourteendealers who joined the union should not be counted in determining the 30% consent requirement because theyare not employees but independent contractors and the withdrawal of the 31 salesmen from the union prior tothe filing of the petition for certification election was uncontroverted by the parties.

Thereafter, on September 24, 1979, the local union on its own signed only by the local union President, filed amotion for reconsideration and/or appeal from the order of dismissal on the following grounds: (a) the findingsof facts of the med-arbiter as it appears on the order are contrary to facts and (b) in finding that no employer-

employee relationship exists between the alleged dealers and respondent firm, the med-arbiter decided in amanner not in accord with the factual circumstances attendant to the relationship.

Acting on the motion for reconsideration/appeal, the Director of the Bureau of Labor Relations, in the Reso lutiondated January 15, 1980, reversed and set aside the order of dismissal, holding that the withdrawal of the 31signatories to the petition two days prior to the filing of the instant petition did not establish the fact that thesame was executed freely and voluntarily and that the records are replete with company documents showingthat the alleged dealers are in fact employees of the company.

The Company then filed a motion to set aside the resolution dated January 15, 1980 of the Director of theBureau of Labor Relations, contending that the appeal was never perfected or is jurisdictionally defective, copyof the motion for reconsideration/appeal not having been served upon the Company, and that the Resolutionwas based solely on the distorted and self-serving allegations of the union.

The local union opposed the Company's motion for reconsideration and submitted a memorandum on April 22,1980 in amplification of its opposition.

At this juncture, the legal counsel of NATU filed a manifestation on May 15, 1980 stating that the act of the localunion of engaging another lawyer to handle the case amounts to disaffiliation, for which reason said legalcounsel was withdrawing from the case. The local union counter manifested that the local union had not beenofficially notified of its expulsion from the NATU; that there was no valid ground for its expulsion; that theNational Executive Council of NATU had not approved such expulsion; and that it had no objection to thewithdrawal of Atty. Marcelino Lontok, Jr. as its counsel.

Then came a motion of NATU through its President and legal counsel withdrawing as petitioner and contendingthat since the local union was no longer affiliated with it, it was no longer interested in the case. Twelvemembers of the National Executive Council then came in and manifested that they constitute a majority of theExecutive Board of NATU and affirmed that the local union was still an affiliate of NATU.

There followed a counter-manifestation of Atty. Marcelino Lontok, Jr. on August 27, 1980 stating that sixsignatories to the aforesaid manifestation had no authority to make the said foregoing statement as they hadresigned from the Executive Board en masse; that the acts of the President may not be reversed by the


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Executive Council; and that the twelve signatories did not constitute a majority of the sixty (60) members of theExecutive Council.

The local union made its reply to the counter-manifestation stating that the power to expel an affiliateexclusively belonged to the National Executive Council of NATU, under Section 2, Article V of the NATUConstitution and By-Laws; that such power could only be wielded after due investigation and hearing; thatdisaffiliation is effected only by voluntary act of the local union, which is not the case here, because it is thePresident and legal counsel who are trying to expel the union.

Simultaneously with said reply, the local union filed an opposition to Atty. Lontok's motion to dismiss-withdrawpetition, stating that Atty. Lontok had no more personality to file the same inasmuch as he had previously

withdrawn as counsel in his manifestation dated May 7, 1980, and the local union has accepted the same in itscounter-manifestation dated May 16, 1980; that expulsion requires two-thirds vote of the members of theNational Executive Council, as well as investigation and hearing; that engaging another lawyer is not a groundfor expulsion of an affiliate; and that the local union was compelled to hire another lawyer because up to the lastday of the reglementary period, Atty. Lontok still had not filed an appeal from the decision of the Med-Arbiter.

On November 18, 1980, the Director of the Bureau of Labor Relations promulgated a resolution denying theCompany's motion for reconsideration and directing that the certification election be conducted immediately.Hence, this petition.

In the apparently simple task of determining whether the Director of the Bureau of Labor Relations committedgrave abuse of discretion amounting to lack of jurisdiction in ordering the direct certification election, threedifficult issues must be resolved, namely:

I. Whether or not the 14 dealers are employees or independent contractors.

II. Whether or not the withdrawal of 31 union members from the NATU affected the petition for certificationelection insofar as the thirty per cent requirement is concerned.

III. Whether or not the withdrawal of the petition for certification election by the NATU, through its President andlegal counsel, was valid and effective.

A basic factor underlying the exercise of rights under the Labor Code is status of employment. The question ofwhether employer-employee relationship exists is a primordial consideration before extending labor benefitsunder the workmen's compensation, social security, medicare, termination pay and labor relations law. It isimportant in the determination of who shall be included in a proposed bargaining unit because it is the sine quanon, the fundamental and essential condition that a bargaining unit be composed of employees. Failure toestablish this juridical relationship between the union members and the employer affects the legality of theunion itself. It means the ineligibility of the union members to present a petition for certification election as wellas to vote therein. Corollarily, when a petition for certification election is supported by 48 signatories in abargaining unit composed of 60 salesmen, but 14 of the 48 lacks employee status, the petition is vitiatedthereby. Herein lies the importance of resolving the status of the dealers in this case.

It is the contention of the company that the dealers in the sale of its tobacco products are independentcontractors. On the other hand, the Union contends that such dealers are actually employees entitled to thecoverage and benefits of labor relations laws.

According to the petitioner, to effectively market its products, the Company maintains a ne twork of dealers allover the country. These arrangements are covered by a dealership agreement signed between the Companyand a dealer in a particular area or territory. And attached to the petition is a representative copy of the saiddealership agreement which We quote below:

DEALERSHIP AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This DEALERSHIP AGREEMENT, executed at Pasay City, Philippines, this 8 day ofMarch 1977, entered into by JOSE TEN SIU KEE, JR., of legal age, married and a

resident of 178-E San Ramon Street, Iloilo City, hereinafter referred to as DEALER, andTELENGTAN BROTHERS & SONS, INC., doing business under the style of "LASUERTE CIGAR & CIGARETTE FACTORY", hereinafter referred to as FACTORY, bearswitness that:

WHEREAS, JOSE TAN SIU KEE, JR. of 178-E San Ramon Street, Iloilo City, hadapplied to be a DEALER of the FACTORY for the territories of ILOILO and/or such otherterritories that the FACTORY may designate from time to time; and

WHEREAS, the FACTORY had accepted the application of JOSE TAN SIU KEE, JR.,and therefore, appointed him as one of its dealers in ILOILO and/or such other territories

that the FACTORY may designate from time to time, who is willing and able to do so assuch for the main purpose of extensively selling the products of the FACTORY in the saidterritories, under the following express terms and conditions, to wit:

1. That the DEALER shall handle for sale and distribution of cigarette products of thefactory covering the territories of ILOILO and/or such other territories that the FACTORYmay designate from time to time, in accordance with existing laws and regulations of thegovernment, without however, incurring any expenses in doing so, without the previouswritten consent of the FACTORY being first had and obtained;

2. That for the purpose of selling the cigarettes or products of the FACTORY, theDEALER shall send his orders to the FACTORY plant in Paraaque, Metro Manila, eitherin cash or on credit; Provided, however, that in cases of credit order the DEALER canonly get or order the supply of cigarettes up to the amount of not more than FIFTYTHOUSAND PESOS (P50,000.00) only at any given time during the existence of thisContract, unless allowed by the FACTORY to get more;

3. That the FACTORY shall supply the DEALER with a truck or panel delivery and allexpenses shall be borne by the FACTORY; driver shall be borne by the DEALER;

4. That the DEALER shall not receive any commission from the FACTORY but the lattershall give the DEALER a discount for all sales either on consignment or in cash, and saiddiscount shall be decided by the FACTORY from time to time;

5. That the FACTORY shall not be liable for any violation of any law, which the DEALERmay commit, and that the DEALER alone shall be responsible for any violation;

6. The geographical area (hereinafter referred to as "Territory") covered by thisAgreement in which the DEALER shall undertake the responsibilities provided he rein isILOILO. It is, however, agreed and understood that the FACTORY may from time to time,upon written notice thereof THE DEALER, change or subdivide the Territory as thebusiness exigencies, and the policy of the FACTORY with respect thereto will dictate.

7. The DEALER agrees that during the term of this Agreement:

(a) He will diligently, loyally and faithfully serve the FACTORY asits DEALER and diligently canvass for buyers of the FACTORY'sProducts in the Territory;

(b) He shall not sell or distribute goods of a similar nature or suchas would compete and interfere with the sale of the Products of theFACTORY in the Territory, either on his account or on behalf of anyother person whatsoever;

(c) Furnish to the FACTORY every three (3) months a list of the

buyers/customers in the Territory, specifying the names andaddress of such customers as well as their individual dailysupply/stock requirements;


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(d) He will faithfully and religiously abide by the FACTORY policy,rules and regulations, particularly with respect to the pricing of allProducts to be sold and distributed by him;

(e) He will keep account of all his dealings hereunder and promptlyliquidate his account with the FACTORY with respect to theProducts sold by him in the Territory;

(f) He will not engage in any activity which will in any mannerprejudice either the business or name of the FACTORY, such as,but not limited to, "black- marketing" operations;

(g) He will not withdraw cigarettes if the maximum volume allottedto him by the FACTORY has been exceeded;

(8) That the DEALER shall sell the Products of the FACTORY at a price to be agreedupon between both parties;

(9) That the DEALER shall hereby bind and obligate himself to furnish the FACTORY,within a week from the date of this Contract with Surety or Cash Bond in the amount ofnot less than FIFTY THOUSAND PESOS (P 50,000.00). The surety bond should beissued by one or several bonding companies acceptable to and approved by theFACTORY to guarantee and secure complete and faithful performance of the DEALERand his obligations herein enumerated, particularly the payment of his financialobligations with the FACTORY. The bond may be increased as required by theFACTORY;

10. In the event that the DEALER should become incapacitated to discharge hisundertakings and responsibilities under this Agreement, for any reason whatsoever, theFACTORY may designated, for the duration of such incapacity, a substitute to handle thesale and distribution of the Products in the Territory;

11. The FACTORY reserves its right to determine, from time to time, the amount of creditgranted or to be granted to the DEALER with respect to the Products to be sold anddistributed in the Territory;

12. This Agreement may be cancelled and/or terminated by the FACTORY should theDEALER violate its undertaking under this Agreement especially with respect toParagraph 7(f) hereof. It is understood, however, that the failure of the FACTORY toenforce at any time or for any period of time, any right, power or remedy accruing to theFACTORY upon default by the DEALER of his undertakings under this Agreement shallnot impair any such right, power or remedy or to be construed to be a waver or anacquiescence in such default; nor shall the action of the FACTORY in respect of anydefault, or any acquiescence by it in any default, affect or impair any right, power orremedy of the FACTORY in respect of any other default.

13. That either party may terminate this Contract without cause by giving to the otherparty fifteen (15) days notice in writing but without prejudice to any right or claim which asof that date may have accrued to either of the parties hereunder, however, in the event ofbreach of this Contract, the FACTORY may terminate this Contract without notice to theDEALER.

14. That it is hereby finally stipulated and agreed that in case of litigation arising out of orin connection with this Contract, the Municipal Court of Paraaque or the Court of FirstInstance cf Rizal, as the case may be, shall be the competent court wherein to file such

action or actions.

15. That this Contract shall supersede any Contract which the DEALER may have withthe FACTORY.

IN WITNESS WHEREOF, these presents are signed at Pasay City, Philippines on this 8 day of March 1977.

TELENGTAN BROTHERS & SONS, INC.

(La Suerte Cigar & Cigarette Factory)

FACTORY

By:

(SGD.) LIM HAN ENG (SGD.) JOSE TAN SIU KEE, JR.

Assistant Manager Dealer

Sales Department TAN 5976-397-9

SIGNED IN THE PRESENCE OF:

(SGD.) ILLEGIBLE (SGD.) ILLEGIBLE"

(Acknowledgment omitted)

The records embody standard copies of the Dealership Supplementary Agreement which We also quotehereunder:

DEALERSHIP SUPPLEMENTARY AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This Supplementary Agreement, made and entered into this 14th day ofFebruary, 1975in Pasay City, Philippines, by and between:

TELENGTAN BROTHERS & SONS, INC., a corporation dulyorganized and existing under the laws of the Philippines and doingbusiness under the business name and style of "LA SUERTECIGAR & CIGARETTE FACTORY", with principal place of businessat Km. 14 South Super Highway, Paranaque, Rizal, represented inthis act by its duly authorized Manager, Mr. ROBERT UY,hereinafter referred to as COMPANY;

and

MR. PURISIMO EMBING of legal age, married, Filipino and withpostal address at 3047 Lawaan, UP II, Paranaque, Rizalhereinafter referred to as DEALER,

WITNESSETH: That

For and in consideration of the mutual covenants and agreements made herein, by oneto the other, the COMPANY and the DEALER, by these presents, enter into thisSupplementary Agreement whereby the COMPANY will avail of the services of theDEALER to handle the sale and distribution of its cigarette products, consisting ofMARLBORO REGULAR, MARLBORO KING SIZE, MARLBORO 100'S; PHILIP MORRISREGULAR, PHILIP MORRIS FILTER KING, PHILIP MORRIS 100'S MENTHOL, PHILIPMORRIS 100'S REGULAR; ALPINE 100'S; MR. SLIM 100'S REGULAR, MR. SLIM 100'SMENTHOL, subject to the following terms and conditions:

1. The COMPANY hereby constitutes and appoints the DEALER as its authorized dealerfor the sale and distribution of the COMPANY's products as enumerated above,


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(hereinafter referred to as "Products") and the DEALER hereby accepts suchappointment, all upon the terms and conditions herein contained.

2. The geographical area (hereinafter referred to as "Territory") covered by thisAgreement in which the DEALER shall undertake the responsibilities provided he reinis GREATER MANILA AND SUBURBS. It is, however, agreed and understood that theCOMPANY may from time to time, upon written notice thereof to the DEALER, change orsubdivide the Territory as the business exigencies, and the policy of the COMPANY withrespect thereto will dictate.

3. The DEALER agrees that during the term of this Agreement:

(a) He will diligently, loyally and faithfully serve the COMPANY asits DEALER and diligently canvass for buyers of the COMPANY'sProducts in the Territory;

(b) He shall not sell or distribute goods of a similar nature or suchas would compete and interfere with the sale or the Products of theCOMPANY in the Territory, either on this account or on behalf ofany other person whatsoever;

(c) Furnish to the COMPANY every three (3) months a list of thebuyers/customers in the Territory, specifying the names andaddress of such customers as well as their individual dailysupply/stock requirements;

(d) He will faithfully and religiously abide by the COMPANY policy,rules and regulations, particularly with respect to the pricing of allProducts to be sold and distributed by him;

(e) He will keep account of all his dealings hereunder and promptlyliquidate his account with the COMPANY with respect to theProducts sold by him in the Territory;

(f) He will not engage in any activity which will in any mannerprejudice either the business or name of the COMPANY, such as,but not limited to, "Black marketing" operations;

(g) He will not withdraw cigarettes if the maximum volume allottedto him by the COMPANY has been exceeded;

5. The DEALER shall put up a bond, or additional bond, with the COMPANY in suchamount or amounts, as in the judgment of the COMPANY, will be satisfactory. It isagreed that the COMPANY can apply against said bond or additional bond, suchdamages as may be suffered by the COMPANY by reason of breach on the part of theDEALER of any of the latter's undertakings under this Agreement.

6. In the event that the DEALER should become incapacitated to discharge hisundertakings and responsibilities under this Agreement, for any reason whatsoever, theCOMPANY may designate for the duration of such incapacity, a substitute to handle thesale and distribution of the Products in the Territory;

7. The COMPANY reserves its right to determine, from time to time, the amount of creditgranted or to be granted to the DEALER with respect to the Products to be sold anddistributed in the Territory.

8. This Agreement may be cancelled and/or terminated by the COMPANY should theDEALER violate its undertaking under this Agreement especially with respect toParagraph 4(f) hereof. It is understood. however, that the failure of the COMPANY to

enforce at any time or for any period of time, any right, power or remedy accruing to theCOMPANY upon default by the DEALER of his undertakings under this Agreement shallnot impair any such right, power or remedy or be construed to be a waiver or anacquiescence in such default; nor shall the action of the COMPANY in respect of anydefault, or any acquiescence by it in any default, affect or impair any right, power orremedy of the COMPANY in respect of any other default.

(9) In the appropriate cases, this Agreement shall constitute as a supplement, revision ormodification of any agreement between the company and the DEALER now existing.However, should there be a conflict between the provisions of this Agreement and anysuch existing agreement between the COMPANY and the DEALER, this Agreement shall

prevail.

IN WITNESS WHEREOF, the parties hereto have caused these presents to be signed atthe place and on the date hereinabove written.TELENGTAN BROTHERS & SONS, INC.(La Suerte Cigar & Cigarette Factory)By:(SGD.) ROBERT UY (SGD.) PURISIMO EMBINGManager DEALER(Signature of Witnesses & Acknowledgment Omitted)

Following the rule in the Mafinco case that in a petition for certiorari, the issue of whether respondents areemployees or independent contractors should be resolved mainly in the light of their peddling contracts, somust We likewise resolve the status of the 14 members of the local union involved herein mainly on theirdealership agreements for verily, "a different approach would lead this Court astray into the field of factual

controversy where its legal pronouncements would not rest on solid grounds." We must stress the SupremeCourt is not a trier of facts.

Accordingly, after considering the terms and stipulations of the Dealership Contracts which are clear and l eaveno doubt upon the intention of the contracting parties in establishing the relationship between the dealers onone hand and the company on the other as that of buyer and seller, We find that the status thereby created isone of independent contractorship, pursuant to the first rule in the interpretation of contracts that the literalmeaning of the stipulations shall control. (Article 1370, New Civil Code)

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