Bermiso v.

Escano
February 28, 1959

Petitioners: Eufrocio Bermiso, et al.

Respondents: Hijos de F. Escano, et al.

Labrador, J.:

Facts:
 Hijos de F. Escano (The Company) is a domestic corporation engaged in the business of transporting passengers
and goods by water within the Philippines. The Katubsanan sa Mamumuo (The Union) is a labor organization
duly registered with the Department of Labor. It is composed mainly of laborers from Visayas and Mindanao. Its
members in Cebu are numerous and divided into chapters, one of which was headed by respondent Sabay as its
foreman or “Cabo” and known as the Sabay group. To this group formerly belonged some or all of the 45
petitioners.

 Members of the Sabay group performed work similar to that done by laborers of stevedoring and arrastre firms.
They load and unload vessels in the port of Cebu and haul the discharged cargo from the waterfront to the
shipper and consignees’ warehouses. There were occasions when they also performed work for certain persons
not parties to the case work other than loading, unloading, and hauling cargo.

 One of the carriers for which the Sabay men regularly serve as stevedores is the Escano. Their relation had its
inception when Sala, general manager of the said carrier, permitted the Sabay group to do the work of loading
and unloading its vessels to the exclusion of all other persons. From the beginning, The Company has not
directly paid the group any compensation for the services rendered by the Sabay group. The practice which they
have continuously followed was that the group collects from the shippers and consignees the charges for the
handling of the cargo, while The Company receives or collects from the shippers or consignees only the
freightage for the cargo.

 Aside from Sabay, the group has a collector, a timekeeper, a paymaster, and several capataces and subcapataces
(those who help in supervising the men). Generally, only the Sabay group was permitted to take part in this
work. But when work was voluminous, to avoid delay, services of non-members were enlisted. They were
treated as casual laborers and were paid on a daily basis.

 The amount collected from the shippers and consignees was considered the gross income of the group less its
expenses (gas, spare parts of trucks used, etc.). The net income was then divided into equal shares and
distributed among themselves, which constituted their wages for the week.

 Before the Minimum Wage Law went into effect, the number of hours each labourer worked was not taken into
account by the group. Even members who did not perform actual work were given their shares if their failure to
work was found to have been die to a reasonable cause. Records containing the manner by which the group’s
income was disposed were destroyed by water when a strong typhoon hit Cebu. From then on, the share was
given a fixed value. Under the modified sharing plan, if the computation would result on wages falling short of
the legal minimum wage because there were many laborers who worked, the group collected additional charges
from the shippers and consignees. If the latter refuse to pay due to delay attributable to the workers, the deficit
is covered by their so-called sinking fund. At times, laborers were rotated to obviate the possibility of wage
shortage.

 Petitioners, formerly composing the The Union instituted this action before the CIR, praying for the following:

Reinstatement with back wages; direct payment of wages to the laborers instead of through the union;
payment of accrued overtime pay and wage differentials; prohibition from carrying load in excess of 50
kilos; minimum daily wage of P5.00; vacation and sick leave; free hospitalization; accident insurance; free
choice of labour union and grievance committee.

 Of the original 45 petitioners, only 5 continued to take interest in the action. The CIR ordered the reinstatement
of said 5 laborers to their former work and positions in the Sabay group, but without backwages, and dismissed
all the other claims. CIR held that insofar as the stevedores loading and unloading its vessels are concerned, The
Company is an employer of the petitioners. With respect, however, to the arrastre service, it held that the
question is beyond the scope of the relationship between it and the petitioners.
  After a review of the petitioners’ testimonies, the CIR found that the claimants failed to establish any reasonable
basis of all their claims except that for their reinstatement. Hence, they filed this appeal via petition for
certiorari.

 Petitioners argue that the decision violates the law on direct payment of wages, relying on Sec. 10, par. (b) of RA
602, which provides:

Sec. 10 (b) Wages, including wages which may be paid retroactively for whatever reason, shall be paid
directly to the employee to who they are due, except:

(1) In cases where the employee is insured with his consent by the employer, the latter shall be
entitled to deduct from the wage of the employee the amount paid by the employer for premiums
on the insurance;
(2) In cases of force majeure rendering such payments impossible; and
(3) In cases where the right of the employee or his union to check-off has been recognized by the
employer or authorized in writing by the individual employees concerned.

Issue/Held:
WON the CIR erred in not finding a violation on the law of direct payment of wages. THERE WAS NO ERROR.
Decision of the CIR affirmed.

Ratio:
 There is no question that the work of stevedoring was undertaken by the laborers, not in their individual
capacities, but as a group. The contract to perform the service was made by the leader of the group, for and on
behalf of the latter, not for each and every one of them individually. As the group undertook to render service for
vessels other than those of The Company, it was absolutely necessary that some sort of leadership be instituted
in the group to determine which of the members will work for one vessel and which for another. Leadership is
also essential to obtain work for the group as employers naturally prefer to deal with a leader of a group than
with each member individually. Leadership was, therefore, essential not only to secure work for the group but to
arrange the laborers who are to perform the service. The leadership must be paid for and it was not shown that
the head of the groups got the lion's share of the cost of the service rendered. Under the circumstances we are
not prepared to say that the provision of law on direct payment of wages has been violated. The lower court
did not find sufficient evidence to show that racketeering was employed by the leaders. If any existed the
remedy cannot be found in this court; it is for the group to organize into a closely knitted union that would not
exploit them and which would secure the privileges they seek.

 Furthermore, there is no need for The Company to pay the stevedoring charges to the group for these were
already collected by the latter directly from the shippers and consignees themselves, without the intervention of
respondent Company. This was in accordance with the practice of the group. Also, the Court finds no ground for
requiring the Company to pay back wages for the latter did not deal with petitioners individually. Said Company
dealt with the group through its leaders. If the group, through its leaders, did not allow the petitioners to work
and share in the price paid, the one responsible is not the Company but the leader. As for the other claims
(vacation, sick leave, etc.), these matters are subject of collective bargaining and must be sought for through
labor organizations.