Republic v Asiapro (Labor Relations)

REPUBLIC OF THE PHILIPPINES v ASIAPRO COOPERATIVE G.R. No. 172101 November 23, 2007  

FACTS:  

Respondent Asiapro, as a cooperative, is composed of owners‐members. Under its by‐laws, owners‐members are of two categories, to wit: (1) regular member, who is entitled to all the rights and privileges of membership; and (2) associate member, who has no right to vote and be voted upon and shall be entitled only to such rights and privileges provided in its by‐laws.8 Its primary objectives are to provide savings and credit facilities and to develop other livelihood services for its owners‐members. In the discharge of the aforesaid primary objectives, respondent cooperative entered into several Service Contracts9 with Stanfilco ‐ a division of  DOLE Philippines, Inc. and a company based in Bukidnon. The owners‐members do not receive compensation or wages from the respondent cooperative. Instead, they receive a share in the service surplus10 which the respondent cooperative earns from different areas of trade it engages in, such as the income derived from the said Service Contracts with Stanfilco. The owners‐members get their income from the service surplus generated by the quality and amount of services they rendered, which is determined by the Board of Directors of the respondent cooperative.  

In order to enjoy the benefits under the Social Security Law of 1997, the owners‐members of the respondent cooperative, who were assigned to Stanfilco requested the services of the latter to register them with petitioner SSS as self‐employed and to remit their contributions as such. Also, to comply with Section 19‐A of Republic Act No. 1161, as amended by Republic Act No. 8282, the SSS contributions of the said owners‐ members were equal to the share of both the employer and the employee.  

DECISION OF LOWER COURTS: * SSS: based on service contracts it executed with Stanfilco, respondent cooperative is actually a manpower contractor supplying employees to Stanfilco and for that reason, it is an employer of its owners‐members working with Stanfilco. * SSC: affirmed SSS. * CA: reversed decision of SSC.  

ISSUES & RULING: I. Whether the petitioner SSC has jurisdiction over the petition‐complaint filed before it by petitioner SSS against the respondent cooperative.  

YES, the SSC has jurisdiction. On the basis thereof, considering that the petition‐complaint of the petitioner SSS involved the issue of compulsory coverage of the owners‐members of the respondent cooperative, this Court agrees with the petitioner SSC when it declared in its Order dated 17 February 2004 that as an incident to the issue of compulsory coverage, it may inquire into the presence or absence of an employer‐employee relationship without need of waiting for a prior pronouncement or submitting the issue to the NLRC for prior determination  

Petitioner SSC's jurisdiction is clearly stated in Section 5 of Republic Act No. 8282 as well as in Section 1, Rule III of the 1997 SSS Revised Rules of Procedure.  

Section 5 of Republic Act No. 8282 provides:  

SEC. 5. Settlement of Disputes. – (a) Any dispute arising under this Act with respect to coverage, benefits, contributions and penalties thereon or any other matter related thereto, shall be cognizable by the Commission, x x x. (Emphasis supplied.)  

Similarly, Section 1, Rule III of the 1997 SSS Revised Rules of Procedure states:  

Section 1. Jurisdiction. – Any dispute arising under the Social Security Act with respect to coverage, entitlement of benefits, collection and settlement of contributions and penalties thereon, or any other matter related thereto, shall be cognizable by the Commission after the SSS through its President, Manager or Officer‐in‐charge of the Department/Branch/Representative Office concerned had first taken action thereon in writing.  

The question on the existence of an employer‐employee relationship is not within the exclusive jurisdiction of the National Labor Relations Commission (NLRC). Article 217 of the Labor Code enumerating the jurisdiction of the Labor Arbiters and the NLRC provides that:  

ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. ‐ (a) x x x.  

x x x x  

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer‐employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.20  Although the aforesaid provision speaks merely of claims for Social Security, it would necessarily include issues on the coverage thereof, because claims are undeniably rooted in the coverage by the system. Hence, the question on the existence of an employer‐employee relationship for the purpose of determining the coverage of the Social Security System is explicitly excluded from the jurisdiction of the NLRC and falls within the jurisdiction of the SSC which is primarily charged with the duty of settling disputes arising under the Social Security Law of 1997.  

II. Whether the owner‐members are employees of the cooperative  

YES, they are employees of the cooperative In determining the existence of an employer‐employee relationship, the following elements are considered: (1) the selection and engagement of the workers; (2) the payment of wages by whatever means; (3) the power of dismissal; and (4) the power to control the worker's conduct, with the latter assuming primacy in the overall consideration.25  

The most important element is the employer's control of the employee's conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish.26 The power of control refers to the existence of the power and not necessarily to the actual exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the employee; it is enough that the employer has the right to wield that power.27 All the aforesaid elements are present in this case.  

First. It is expressly provided in the Service Contracts that it is the respondent cooperative which has the exclusive discretion in the selection and engagement of the owners‐members as well as its team leaders who will be assigned at Stanfilco.  

Second. Wages are defined as "remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained, on 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 of employment for work done or to be done, or for service rendered or to be rendered." In this case, the weekly stipends or the so‐called shares in the service surplus given by the respondent cooperative to its owners‐members were in reality wages, as the same were equivalent to an amount not lower than that prescribed by existing labor laws, rules and regulations, including the wage order applicable to the area and industry; or the same shall not be lower than the prevailing rates of wages. It cannot be doubted then that those stipends or shares in the service surplus are indeed wages, because these are given to the owners‐ members as compensation in rendering services to respondent cooperative's client, Stanfilco.  

Third. It is also stated in the above‐mentioned Service Contracts that it is the respondent cooperative which has the power to investigate, discipline and remove the owners‐members and its team leaders who were rendering services at Stanfilco.  

Fourth. As earlier opined, of the four elements of the employer‐employee relationship, the "control test" is the most important. In the case at bar, it is the respondent cooperative which has the sole control over the manner and means of performing the services under the Service Contracts with Stanfilco as well as the means and methods of work.32 Also, the respondent cooperative is solely and entirely responsible for its owners‐ members, team leaders and other representatives at Stanfilco. All these clearly prove that, indeed, there is an employer‐employee relationship between the respondent cooperative and its owners‐members.  

A cooperative acquires juridical personality upon its registration with the Cooperative Development Authority. It has its Board of Directors, which directs and supervises its business; meaning, its Board of Directors is the one in charge in the conduct and management of its affairs. With that, a cooperative can be likened to a corporation with a personality separate and distinct from its owners‐members. Consequently, an owner‐member of a cooperative can be an employee of the latter and an employer‐employee relationship can exist between them.