G.R. No.

L-29590

September 30, 1982

PHILIPPINE REFINING CO., INC. petitioner,

vs.
COURT OF APPEALS, SOCIAL SECURITY COMMISSION, SOCIAL SECURITY SYSTEM, BUKLOD NG
MANGGAGAWA and VICENTE GARCIA, respondents.
GUTIERREZ, JR., J.:
This is a petition to review the decision of the Court of Appeals affirming a resolution of the Social Security Commission
which declared that respondent Vicente Garcia and 22 workers represented by respondent Buklod Ng Manggagawa are
employees of the Philippine Refining Company for purposes of compulsory coverage under the Social Security Act, as
amended.
The Philippine Refining Company is engaged in the business of extracting and refining oil from copra and using the refined
oil in the manufacture of various products.
Respondent Vicente Garcia started working for the company in 1922 as a copra carrier. In 1931, he was promoted to
foreman with 21 or 22 men working under him. By 1948, these men were employed under pakiao arrangements but the
company paid the workers directly and the function of their foreman insofar as wages were concerned was to distribute the
money. The pakiao workers unloaded copra from trucks or carriers, stored it in the company warehouses at Isaac Peral
Street now United Nations Avenue, Manila and delivered copra from the warehouses to the company's Mill Day Bin. In
1955, the pakiao arrangement were formalized in writing through a series of written agreement and Garcia, the former copra
carrier and foremen, was given the authority to choose and hire the men to do the work assigned to him. Instead of the
company paying the workers directly with Garcia merely distributing their wages, the work was compensated on a volume
basis at so many centavos per metric ton handled by all of them in the various phases of the job - receipt, storage, and
distribution of copra - with the money being given to Garcia.
The work of the 22 laborers represented by the respondent union is an essential, permanent and indispensable process in
the business of the petitioner company. It is not an incidental or one time operations such as construction a company facility
or repairing a plant or machinery where the workers' job ends upon completion of the project. Copra is the basic raw material
in the manufacture of lard, cooking oil, soap, and various other products of the employer company and its handling, storage,
and distribution are an integral part of company operations.
When the Social Security Act was implemented on September 1, 1957 and up to April 27, 1961 when the respondent Labor
union filed a petition for compulsory coverage with the Social Security Commission, the Philippine Refining Commission
took no steps to report the 22 workers to the SSS for coverage in the belief the Vicente Garcia was an independent
contractor and the workers he employed pursuant to the pakiao agreement were his own employees for whom the company
was not accountable in any manner.
The argument of the petitioner and the findings of the Social Security Commission are summarized by the Court of Appeals
as follows:
The Philippine Refining Company contends that the petitioners are not its laborers, because:
1. It did not select, much less hire them.
2. Vicente Garcia pays their wages.
3. Vicente Garcia has control and supervision over them.
4. They do not have any service record on file with the company.
5. They are not in the payrolls of the company.
6. They are not members of the union with whom the company had entered into a collective bargaining.
On the other hand, the Social Security Commission maintains that:

1. Vicenta Garcia is not a bona fide contractor; he cannot carry on the burden of social security.
2. He is subject to the control of the company as to result.
3. He has no investment of his own; he assumes no risk of loss.
4. He merely sells his labor to the company.
5. The equipment used by the petitioners belong to the company.
6. He collects from the company the salary of petitioners.
7. The service rendered constitutes an integral part of the business operation of the company.
8. He services nobody but the company.
The grounds for this petition are:
First.
That the finding of the respondent Court of Appeals that an employer-employee relationship exists between
the petitioner and Vicente Garcia and his workers, notwithstanding the intervention of said Vicente Garcia
as an independent contractor is contrary to the law and the evidence;
Second.
That the finding of the respondent Court of Appeals that respondent Vicente Garcia cannot be considered
an independent contractor for the purpose of Social Security coverage is contrary to the evidence and
established jurisprudence;
Third.
That the finding of the respondent Court of Appeals that petitioner has reserved general control or
supervision over the work of Vicente Garcia's workers is contrary to the evidence;
Fourth.
That the finding of the respondent Court of Appeals that the, services rendered by Vicente Garcia's men
constitute an integral part of the industrial operation of the ompany is contrary to the evidence;
Fifth.
That the respondent Court of Appeals acted contrary to the law in ordering Vicente Garcia and his men to
be covered under the Social Security System.
It is understandable why the petitioner company, in the early years of the social security program in the Philippines, should
have seriously contended that the 22 affected workers are not its employees. There were apprehensions at the time that
the Philippine economy was not strong enough to shoulder the burden of social insurance and that money diverted to social
ends would have been more useful if channeled to production and investment, Among the devices adopted by some
employers to avoid the financial obligations not only of social security but other social and labor legislations was the,
independent contractor technique.
However, all of the above is behind us now. All major employers have accepted the fact, if not the wisdom, of social security.
Protection and compulsory coverage through successive amendments to the 'law, have become more and more universal
while benefit payment have increased. The Constitution now mandates in Article II, Section 7 that "The State shall establish,
maintain, and ensure adequate social services in the field of .... social security to guarantee the enjoyment by the people of
a decent standard of living."

There is a strong presumption in favor of greater coverage and protection. Consequently, We subject all assertions that an
intervening entity is an independent contractor to intense and rigorous scrutiny.
As stated in Social Security System vs. Court of Appeals (26 SCRA 458, 468):
Only thus could there be fealty to the purpose and objective of the act. If it were otherwise, what is
manifested is betrayal instead.
That is not to comply with judicial duty, which in the construction of statutes is to foster the legislative intent,
not to frustrate it. When as in the case of the Social Security Act, it is indisputable that the employeremployee relationship is, as is desirable, made to reflect the realities of the situation, any construction that
would yield the opposite finds no justification.
That such should be the case becomes more evident considering that the statute was undoubtedly enacted
to promote social justice and protect labor. Whenever a question as to its applicability comes up then, the
utmost care should be taken lest by inattention or insufficient awareness of the ways and methods of big
business, undoubtedly prompted by what to it is legitimate defense against any governmental measure
likely to curtail profits, the gains expected to be conferred on labor be disminished, if not entirely nullified.
At the same time, the possibility that a company may use bona fide independent contractors to undertake certain projects
or to furnish certain requirements of its business is not entirely discounted. In ascertaining whether or not an intervening
employer is a bona fide independent contractor who bears the obligation of registering his workers and paying the
employer's share of the SSS premium contributions, We have applied the "control" test. (Social Security System vs. Court
of Appeals, 39 SCRA 629).
Under the control test, We ascertain 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 which the same is accomplished.
(Investment Planning Corporation vs. Social Security System, 21 SCRA 924; Social Security System vs. Court of Appeals,
30 SCRA 210).
We affirm the factual findings of the Social Security Commission, sustained by the Court of Appeals.
Copra is the basic raw material of the petitioner-appellant's business. The company must have, and the facts show that it
has, positive and direct control over the handling of copra immediately prior to its being fed into the manufacturing process.
The conveyor is owned by the company. The load it may carry and the time and manner of its operation are controlled by
the appellant. A company employee ordered the supposed independent contractor where to store copra, when to bring out
copra, how much to load and where, and what class of copra to handle. The appellant limited the number of workers which
Mr. Garcia could hire to assure that statutory minimum wages were paid from the lump sum payments, given for the "pakiao
" work. Mr. Garcia had no office of his own. He had no independent funds to pay the men working under him. He could not
work for any other company but was completely dependent on the appellant. Mr. Vicente Garcia denies that he is an
independent contractor. The control test is more than satisfactorily met.
WHEREFORE, the petition is hereby dismissed for lack of merit. The September 12, 1968 decision of the Court of Appeals
is affirmed with costs against the petitioner-appellant.
SO ORDERED.
Teehankee (Chairman), Makasiar, Melencio-Herrera, Plana, Vasquez and Relova, JJ., concur.

G.R. No. L-55764

February 16, 1982

SOCIAL SECURITY SYSTEM, petitioner,

vs.
COURT OF APPEALS and MANILA COSMOS AERATED WATER FACTORY, INC., respondents.
ABAD SANTOS, J:
This is a petition to review a decision of the Court of Appeals in Social Security System, et al. vs. Manila Cosmos Aerated
Water Factory, Inc., CA-G.R. No. SP 03296-R, adverse to the petitioner. The antecedent facts consist of the following:
In a petition filed with the Social Security Commission SSC the Social Security System (SSS) together with Jose
Concepcion, Manuel Chan, Manuel Ong, Roberto Lai, Arturo Gonzales, William Co, Federico Marcial, Santiago Mancuba,
Jesus Crelencia, Alfredo So and Pedro Aquino, the individual petitioners were sought to be declared employees of Manila
Cosmos AerAted Water Factory, Inc. (Cosmos) and not independent contractors under the following Agreement to Peddle
Soft Drinks.
1. The MANUFACTURER shall provide the PEDDLER with a delivery truck to be used by the latter, under
his own responsibility, exclusively in the sales of the products of the former purchased by the PEDDLER
from the MANUFACTURER;
2. The PEDDLER himself shall carefully and in strict observance to traffic regulations, drive the truck
furnished him by the MANUFACTURER or should he employ a driver or helpers, such driver or helpers
shall be his employees under his direction and responsibility, and not that of the MANUFACTURER, and
their compensation including salaries, wages, overtime pay, separation pay, bonus or other remunerations
and privileges shall be for the PEDDLERS own account;
3. The PEDDLER shall be responsible for any damage to property, death or injuries to persons or damage
to the truck used by him caused by his own acts or that of his driver and helpers;
4. The PEDDLER shall secure at his own expense all necessary license and permits required by law or
ordinance, and shall bear any and all expenses which may be incurred by him in the sales of the
MANUFACTURER'S products, covered by this contract;
5. All goods soft drinks) purchased by the PEDDLER shall be charged to him at a factory price of P0.86 per
case of the 6.6 oz. size, ex-warehouse; PROVIDED, However, that, if the PEDDLER purchases a total of
not less than 200 cases of the 6.5 oz. size a day, he shall be entitled to a dealer's discount of P7.30;
6. Upon the execution of this agreement, the PEDDLER shall give a cash bond in the amount of P500.00
against which the MANUFACTURER shall charge the PEDDLER with any unpaid account at the end of the
day or with any damage to the truck or other account which is properly chargeable to the PEDDLER; within
30 days after termination of this agreement, the cash bond, after deducting proper charges, shall be
returned to the PEDDLER;
7. The PEDDLER shall liquidate and pay his account at the end of each day, and his failure to do so shall
subject his cash bond or so much thereof as may be necessary to such set offs and payments as shall be
proper against the accounts in question;
8. This contract shall be effective only up to December 31, 1962 and supersedes any or all other previous
contracts that may have been entered into between the parties; However, either of the parties may
terminate the same upon seven (7) days prior notice to the other;
9. Upon the termination of this agreement, unless the same is renewed, the delivery truck and such other
equipment furnished by the MANUFACTURER to the PEDDLER shall be returned by the latter in good
order and workable condition, ordinary wear and tear excepted, and shall promptly settle his outstanding
account if any, with the manufacturer. (Rollo, pp. 24-25.)
The status of the individual petitioners was important because if they were employees of Cosmos and not independent
contractors, then Cosmos would have "to pay the employer's share of premium contributions (employer's and employees'

share) for and in behalf of the delivery helpers, as employees of respondent corporation, plus the penalties thereon for late
remittance of premium contributions, covering the period of delinquency from the respective dates of their coverage up to
the present" as prayed for in the petition.
After hearing, the SSC rendered a resolution in favor of the SSS and the peddlers holding that an employer-employee
relationship existed between Cosmos and the peddlers. Cosmos appealed to the Court of Appeals and in a decision
promulgated on October 16, 1979, that Court affirmed the resolution of the SSC. However, upon a motion for
reconsideration, the Court of Appeals on October 13, 1980, set aside its previous decision and reversed the resolution of
the SSC. Hence, the instant appeal where the petitioner is the SSS alone; the individual peddlers have not seen fit to appeal.
We could have dismissed the instant petition by minute resolution because precedents warrant such an action. But to put
an end to litigations of this sort and arrest what Cosmos calls judicial harassment, a decision is in order.
In Mafinco Trading Corporation vs.Ople, et al. No. L-37790, March 25, 1976, 70 SCRA 139, the question was whether there
was an employer- employee relationship under the terms of a peddling contract in words almost Identical to the one quoted
above. This Court, thru Mr. Justice Aquino said:
A restatement of the provisions of the peddling contract is necessary in order to find out whether under that
instrument Repomanta and Moralde were independent contractors or mere employees of Mafinco.
Under the peddling contract, Mafinco would provide the peddler with a delivery truck to be used in the
distribution of Cosmos soft drinks (Par. 1). Should the peddler employ a driver and helpers, he would be
responsible for their compensation and social security contributions and he should comply with applicable
labor laws "in relation to his employees" (Par. 2).
The peddler would be responsible for any damage to persons or property or to the truck caused by his own
acts or omissions or those of his driver and helpers (Par. 3). Mafinco would bear the cost of gasoline and
maintenance of the truck (Par. 4). The peddler would secure at his own expense the necessary licenses
and permits and bear the expenses to be incurred in the sale of Cosmos products (Par. 5).
The soft drinks would be charged to the peddler at P2.52 per case of 24 bottles, ex-warehouse. Should he
purchase at least 250 cases a day, he would be entitled to a peddler's discount of eleven pesos (Par. 6).
The peddler would post a cash bond in the sum of P1,500 to answer for his obligations to Mafinco (Par. 7)
and another cash bond of P1,000 to answer for his obligations to his employees (Par. 11). He should
liquidate his accounts at the end of each day (Par. 8). The contract would be effective up to May 31, 1973.
Either party might terminate it upon five days prior notice to the other (Par. 9).
We hold that under their peddling contracts of Repomanta and Moralde were not employees of Mafinco but
were independent contractors as found by the NLRC and its fact-finder and by the committee appointed by
the Secretary of labor to look into the status of Cosmos and Mafinco peddlers. They were distributors of
Cosmos soft drinks with their own capital and employees. Ordinarily, an employee or a mere peddler does
not execute a formal contract of employment. He is simply hired and he works under the direction and
control of the employer.
Repomanta and Moralde voluntarily executed with Mafinco formal peddling contracts which indicate the
manner in which they would sell Cosmos soft drinks. That circumstance signifies that they were acting as
independent businessmen. 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 to reject it.
But having signed it, they were bound by its stipulations and the consequences thereof under existing labor
laws. One such stipulation is the right of the parties to terminate the contract upon five days' prior notice
(Par. 9). Whether the termination in this case was an unwarranted dismissal of an employee, as contended
by Repomanta and Moralde, is a point that cannot be resolved without submission of evidence. Using the
contract itself as the sole criterion, the termination should perforce be characterized as simply the exercise
of a right freely stipulated upon by the parties.
In determining the existence of employer-employee relationship, the following elements are generally
considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages: (3) the
power of dismissal: and (4) the power to control the employees' conduct although the latter is flip, most
important element (Viaa Al-Lagadan and Piga 99 Phil, 406, 411, Citing 35 Am. Jur. 445).

On the other hand, an independent contractor is "one who exercise independent employment and contracts
to do a piece of work according to his own methods and without being subject to control of his employer
except as to the result of the work" (Mansal vs. P.P. Gocheco Lumber Co., 96 Phil. 941).
Among the factors to be considered are whether the contractor is carrying on an independent business;
whether the work is part of the employer's general business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the right to assign the performance of the work to
another; the power to terminate the relationship; the existence of a contract for the performance of a
specified piece of work; the control and supervision of the work; the employer's powers and duties with
respect to the hiring, firing, and payment of the contractor'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.
(56 C.J.S. 46).
Those tests to determine the existence of an employer-employee relationship or whether the person doing
a particular work for another is an independent contractor cannot be satisfactorily applied in the instant
case. It should be obvious by now that the instant case is a penumbral, sui generis case lying on the
shadowy borderline that separates an employee from an independent contractor.
In determining whether the relationship is that of employer and employee or whether one is an independent
contractor, "each case must be determined on its own facts and all the features of the relationship are to
be considered" (56 C.J.S. 45). We are convinced that on the basis of the peddling contract, no employeremployee relationship was created. (At pp. 161-163, emphasis supplied.)
We hold that conformably to Mafinco, the peddling contract involved in the instant petition makes the peddler an independent
contractor. Additionally, We have taken into account the fact that the individual petitioners before the SSC who were the
principal beneficiaries of the petition have become indifferent to their cause.
WHEREFORE, the judgment of the Court of Appeals is hereby affirmed. Costs against the petitioner.
SO ORDERED.
Barredo (Chairman), Aquino, Concepcion, Jr., De Castro, Ericta and Escolin, JJ., concur.

AMERICAN PRES LINES vs. CLAVE

FACTS:
The Maritime Security Union through private respondent filed a complaint against petitioner for unfair labor practice under
RA 875. They contended that the petitioner had refused to negotiate an agreement with them and discriminated them
regarding their tenure of employment by dismissing them.
Petitioner entered into a contract with the Maritime Security Agency for the latter to guard the petitioners vessel. The term
of the contract is one year and may be terminated by either party upon 30 days notice.
The relationship between petitioner and Maritime Security Agency is that it was the latter who hired the guards and the
guards were not known to petitioner. A lump sum would be paid by the petitioner to the agency wherein the latter pays the
compensation to the guards. However, petitioner terminated the contract on its termination period with prior notice. After its
termination, petitioner executed a contact with another agency. Respondents protested on this.
ISSUE: W/N an employer-employee relationship exists between petitioner and watchmen
HELD:
No. It is the agency that hires the work of its watchmen. Hence, a watchman cannot perform any security service unless the
agency first accepts him. It is also the agency that pays the wages to a watchman. Neither does the petitioner have any
power of dismissal, because such power lies in the hands of the agency. Since the petitioner has to deal with the agency,
petitioner does not exercise any power over watchmens conduct. Thus, it is the agency that is answerable to the petitioner
for the conduct of its guards. It follows that petitioner cannot be guilty of unfair labor practice because under RA 875 Sec.
13, an unfair labor practice may be committed only within the context of an employer-employee relationship.

G.R. No. L-50358

November 2, 1982

SHIPSIDE, INCORPORATED, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and TITA ABEJON, EDUARDO ALVIARNE, FELICIANO ALVIARNE,
LIBERATO AMITA, ANACLETO ANCHETA, RICARDO ANCHETA, MOISES ANCHETA, et al., respondents.
Sycip, Salazar, Feliciano, Hernandez and Castillo for petitioner.
Francisco T. Gualberto for private respondents.
DE CASTRO, J.:
Petition for certiorari with preliminary injunction to set aside the decision 1 of respondent National Labor Relations
Commission dated October 11, 1978, which affirmed the decision of the Labor Arbiter dated November 22, 1977 issued in
NLRC Case No. RB-1-38-78, entitled Tita Abejon, et al., versus La Union Stevedores, Inc. and Shipside, Incorporated,
declaring La Union Stevedores, Inc. and Shipside, Incorporated jointly and severally liable to pay herein private respondents
their separation pay and the equivalent of their respective two-month salary as penalty for non-compliance with the
clearance requirement of the Labor Code, and the said respondent Commission's en banc resolution 2 of February 9, 1979
denying herein petitioner's motion for reconsideration, as well as the Order 3 of the said Labor Arbiter dated April 6, 1979,
directing the immediate execution of the aforestated decision and/or resolution.
Briefly, the records show the following undisputed facts: Petitioner Shipside, Incorporated, hereinafter referred to as
SHIPSIDE, is a domestic corporation engaged in the handling in bulk of all kinds of materials, products and supplies, and
operates harbor and wharfage facilities capable of servicing ocean vessels of deep draft at Barrio Poro, San Fernando, La
Union.
On December 27, 1963, SHIPSIDE entered into a "Contract for Services" 4 with La Union Stevedores, Inc., hereinafter
referred to as STEVEDORES, a stevedoring company, whereby the former shall give the exclusive right to handle
stevedoring services to the latter on all ships that may load or unload cargo at the piers and/or wharves owned and/or
controlled by the former in the Port of San Fernando, La Union. The terms and conditions of the contract were as follows:
(1) Stevedoring work shall embrace the handling of cargo from the ship to the pier and/or from the pier to
the ship;
(2) STEVEDORES shall furnish all the labor needed for the stevedoring work;
(3) Charges for all stevedoring shall be billed through SHIPSIDE to the shipping company, shipper or
consignee, as the case may be. Stevedoring rate to be charged will be worked out by both parties in
accordance with standard stevedoring practice, with mutual consent of both parties;
(4) STEVEDORES shall present its payroll to SHIPSIDE for payment after every operation, and the former
shag be responsible in paying its own men individually;
(5) The net balance from the stevedoring charges collected by SHIPSIDE from the shipping company,
shipper or consignee, as the case may be, after the payroll of STEVEDORES and other operating expenses
incurred by STEVEDORES and SHIPSIDE shall have been deducted, will be equally divided between
SHIPSIDE and STEVEDORES on a fifty-fifty basis;
(6) SHIPSIDE shall guarantee the exclusive right of STEVEDORES to do the stevedoring work that may
be contracted by the former; while STEVEDORES guarantees not to enter into any contract with any other
party or entity for any stevedoring work at the piers and/or wharves owned and/or controlled by SHIPSIDE,
without coursing the same to SHIPSIDE. STEVEDORES further guarantees to supply all the labor required
by SHIPSIDE at all times.
This contract shall take effect on January 1, 1964, and shall not be terminated by either party unless a
three-month termination notice in writing shall have been given to either party. Any violation of the
provisions of this contract by either party shall make the guilty party liable for damages that may be suffered

by the innocent party, in addition to attorney's fee and other expenses if and when the same is ventilated
in the courts of justice.
Pursuant to the above-quoted contract, Stevedores hired private respondents to constitute its labor force.
On August 28,1974, SHIPSIDE informed STEVEDORES that three (3) months after September 1, 1974, or effective as of
the close of business on November 30, following, the aforestated contract would be terminated because of financial
reverses. SHIPSIDE, however, proferred its readiness to absorb the operating personnel of STEVEDORES from the lowest
rank of stevedores up to the rank of foreman who desire to work under its employ on a vessel to vessel basis, as it would
thereafter undertake the stevedoring work independently b-, itself. Thus, SHIP-SIDE requested STEVEDORES to submit a
roster of its operating personnel as aforestated who desires to work for the former. 5
The business relations between SHIPSIDE and STEVEDORES was finally terminated on November 30,1974, and as a
result thereof, several stevedores and office personnel found themselves out of job. Since the dismissed employees, private
respondents herein among them, received no separation benefits, said respondents filed their complaint against SHIPSIDE
and STEVEDORES sometime in February 1975 for separation pay with the Ministry of Labor, subject of NLRC Case No.
RB-1-38-78.
After due hearing, the Labor Arbiter assigned on the case rendered judgment on November 22, 1977, declaring both
SHIPSIDE and STEVEDORES the employers of private respondents by virtue of the aforestated "Contract for Services",
which said Arbiter construed to be either a "joint venture" or a "partnership" and therefore, jointly and severally liable for the
separation pay claimed by private respondents. SHIPSIDE and STEVEDORES were also adjudged liable for an additional
amount equivalent to two months salary for each of the private respondents, as penalty for their failure to file or submit with
the Ministry of Labor the necessary clearance application or report of the termination of private respondents' employment
as required by the new Labor Code.
On separate appeal by SHIPSIDE and STEVEDORES, the above judgment of the Labor Arbiter was affirmed by the
respondent Commission in its decision of October 11, 1978, as earlier indicated. The motion for reconsideration of
SHIPSIDE was likewise denied by the respondent Commission, sitting en banc, in the resolution of February 9, 1979.
Hence, the present recourse. As prayed for, a temporary restraining order was issued on May 7, 1979, restraining the
respondent Commission, its agents or representatives, from enforcing and/or carrying out the questioned decision,
resolution and writ of execution dated October 11, 1978, February 9, 1979 and April 6, 1979, respectively.
The crux of the present controversy hinges on the question of whether or not SHIPSIDE can be held liable for the money
benefits, claimed by private respondents herein, which in turn requires resolution of the more basic and fundamental issue
of existence of employer-employee relationship between SHIPSIDE and private respondents, for in the absence of such
relationship the latter have no cause of action against the former. 6
In determining the existence of employer-employee relationship, the following elements are generally considered, namely;
(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power
to control the employee's conduct-although the latter is the most important element. 7
Tested from the foregoing criteria, in connection with the features of the relationship between the parties in this case as
may be shown hereunder, We fail to see how SHIPSIDE can be considered as the employer of private respondents, who
undisputedly were the employees of STEVEDORES. The records do not show any participation on the part of SHIPSIDE
with respect to the selection and engagement of the individual stevedores who will constitute the labor force of
STEVEDORES. Who the individual stevedores will be and under what terms and conditions their services will be rendered
are matters determined not by SHIPSIDE, but by STEVEDORES. Neither is there any direct employment relationship
between SHIPSIDE and private respondents. The former has no separate individual contracts with the latter whose only
possible connection with SHIPSIDE is through STEVEDORES which contracted them and in whose favor their services
were rendered, thus enabling STEVEDORES to fulfill its contractual obligations with SHIPSIDE. Withal, the individual
stevedores, who were not known to SHIPSIDE which dealt only with STEVEDORES on matters pertaining to the contracted
task, cannot perform any stevedoring service for SHIPSIDE unless STEVEDORES first accepts them as such.
Under the arrangement between SHIPSIDE and STEVEDORES, the former has no hand in deciding how much salary is to
be paid each of the individual stevedores. Payment of such salary is made not by SHIPSIDE, but by STEVEDORES to the
individual stevedores and said amount is beyond the power of SHIPSIDE to determine, which merely paid STEVEDORES
the aggregate amount as indicated in the payroll of the latter presented after every operation to the former for payment,
pursuant to their contract for services. Neither does SHIPSIDE reserve the power to dismiss the individual stevedores, as
We fail to see any evidence on record that it wielded such power.

We likewise found nothing in the records which would indicate that private respondents were under the control of SHIPSIDE
in respect of the means and methods they employed in the performance of their work, to be considered as the employees
of the latter. 8 On the contrary, it is sufficiently established that STEVEDORES exercised supervision and control over its
labor force. If in the course of private respondents' work, SHIPSIDE occasionally issued instructions to them, that alone
does not in the least detract from the fact that only STEVEDORES is the employer of private respondents, for in legal
contemplation, such instruction carry no more weight than mere requests, the privity of contract being between SHIPSIDE
and STEVEDORES, not between the former and the private respondents. Corollarily, such giving of instruction inevitably
spring from SHIPSIDE's right predicated on the "Contract for Services" entered into by it with STEVEDORES.
There are other considerations that militate against a finding of employer- employee relationship between SHIPSIDE and
private respondents. To start with, the contract between the former and STEVEDORES had already expired or terminated
in accordance with the last paragraph thereof, as earlier quoted. Indeed, after the expiration of said contract, SHIPSIDE
does the stevedoring work by itself and in fact had offered to absorb the operating personnel of STEVEDORES from the
lowest rank of stevedores up to the tank of foreman who desire to work under its employ on a vessel to vessel basis, but
for one reason or another, private respondents rejected said offer, although some of the stevedores who found themselves
out of job by reason of the termination of said contract, had accepted the offer and were thereupon hired by SHIPSIDE. In
other words, to now hold private respondents as the employees of SHIPSIDE and therefore entitled to labor benefits as
such, would not only be unfair to the latter, but would likewise violate its exclusive prerogative to determine whether it should
enter into an employment contract or not.
As succinctly held in Allied Free Workers' Union v. Compania Maritima, 19 SCRA 258, 277:
Lastly, to uphold the court a quo's conclusion would be tantamount to the imposition of an employeremployee relationship against the will of MARITIMA. This cannot be done, since it would violate
MARITIMA's exclusive prerogative to determine whether it should enter into an employment contract or not,
i.e., whether it should hire others or not. In Pampanga Bus Co. us. Pambusco Employees' Union, We said:
... The general right to make a contract in relation to one's business is an essential part of
the liberty of the citizens protected by the due process clause of the constitution. The right
of a laborer to sell his labor to such person as he may choose is, in its essence, the same
as the right of an employer to purchase labor from any person who it chooses. The
employer and the employee have thus an equality of right guaranteed by the constitution.
If the employer can compel the employee to work against the latter's will, this is servitude.
If the employee can compel the employer to give him work against the employer's will, this
is oppression.
What legal relationship existed between SHIPSIDE and STEVEDORES is a matter We cannot touch in this present petition,
the same being sub-judice, it appearing that prior to the institution of this suit sometime in February 1975, STEVEDORES
had filed a petition 9 against SHIPSIDE on December 2, 1974 in the Court of First Instance of La Union, docketed as Civil
Case No. 2624, for accounting, dissolution and winding up of partnership, wherein the concomitant issue of whether a
partnership and not simply a contract for services existed between the parties therein is raised. Said case appears to be
still pending before said court, of which the labor arbiter was properly apprised when SHIPSIDE had filed a motion to dismiss
the labor case, stating among others, that said civil case constitutes a prejudicial question determinative of the validity of
private respondents' claim which is grounded on the theory that SHIPSIDE and STEVEDORES being then "joint
adventurers" or "partners" in the stevedoring business, were their employers and are therefore liable for their claim. As
such, said labor arbiter should have refrained from declaring the questioned contract for services as a partnership or joint
venture arrangement if only to give due deference to the well-settled rule, assuming that the labor arbiter or respondent
Commission has jurisdiction to resolve the issue concurrently with the Court of First Instance, that when two or more courts
have concurrent jurisdiction, the first validly acquiring jurisdiction does so to the exclusion of all other courts. As the Court
of First Instance had previously assumed jurisdiction over the particular issue, it is unwarranted for the labor arbiter to pass
upon tills issue and for the respondent Commission to uphold such undue assumption of jurisdiction by the labor arbiter.
Moreover, even assuming that the contract for services could partake of the nature of a joint venture, or that of a partnership
agreement, that does not by itself justify the holding that SHIPSIDE may also be considered as the employer of the
employees of STEVEDORES absent a showing of the criteria above set forth.
Not being an employer of private respondents herein, SHIPSIDE has no duty to file or submit with the Ministry of Labor the
necessary clearance application or report of the termination of the services of private respondents. In so far as SHIPSIDE
is concerned, there is no termination of employment to speak of, but merely a termination of its contract for services with
STEVEDORES.

WHEREFORE, the petition is hereby granted. The questioned decision, resolution and order are hereby set aside in so far
as they hold petitioner liable to herein private respondents for the money claims therein stated. The temporary restraining,
order heretofore issued is hereby made permanent. No costs.
SO ORDERED.
Makasiar (Chairman), Aquino, Concepcion, Jr., Guerrero and Escolin, JJ., concur.
Abad Santos, J., took no part.