In 1989, a labor union filed a petition with a sewing machine company
to be the sole and exclusive bargaining agent that represents the
company’s collectors. The company refused to recognize the labor union,
explaining that the union members were not actually their employees but
were independent contractors. To support its claim, the company showed a
collection agency agreement. Due to their disagreement, the matter was
brought to mediation.
During mediation, the med-arbiter found an employer-employee
relationship to exist between the union members and the company. This
was likewise affirmed by the Secretary of Labor. The collectors thus
continued to assert that they performed the most desirable and necessary
activities for the continuous and effective operations of the business
of the company.
On a petition for certiorari, the Supreme Court (SC) reiterated the
importance of the control test in order to conclude if an
employer-employee relationship exists -
The present case mainly calls for the application of the control
test, which if not satisfied, would lead us to conclude that no
employer-employee relationship exists. Hence, if the union members are
not employees, no right to organize for purposes of bargaining, nor to
be certified as such bargaining agent can ever be recognized. The
following elements are generally considered in the determination of the
employer-employee relationship: “(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.”
Under the collection agency agreement, the collection agents were
paid their compensation for their services on a commission basis,
particularly six percent of all collections made by the collecting
agent. From here, it is clear that the agreement did not fix an amount
for wages nor the required number working hours the collecting agents
must put it. Thus, the Court held that collecting agents that are paid
on a commission basis are considered independent contractors and not
employees of the company. In such a situation, the company does not pass
the control test because the company has no control over the collecting
agent’s performance of collection services. On the contrary, the
company only has control over the amount of collections made, which is a
result of his work. In order for the company to have control over the
commission agents, the company should not only have control over the end
or result to be achieved but also over the means and methods in
achieving the end.
Citing Investment Planning Corp. of the Philippines v. Social
Security System, the SC also differentiated independent contractors from
employees -
[T]he work of petitioner’s agents or registered representatives more
nearly approximates that of an independent contractor than that of an
employee. The latter is paid for the labor he performs, that is, for the
acts of which such labor consists the former is paid for the result
thereof… Even if an agent of petitioner should devote all of his time
and effort trying to sell its investment plans he would not necessarily
be entitled to compensation therefor. His right to compensation depends
upon and is measured by the tangible results he produces.
Lastly, the Court reiterated that those who are not considered
employees of a company, such as independent contractors, are not
entitled to the constitutional right to join or form a labor
organization for purposes of collective bargaining. Accordingly, there
is no constitutional and legal basis to grant a petition for direct
certification to the “union” (Singer Sewing Machine Company v. Drilon,
G.R. No. 91307, 24 January 1991, J. Gutierrez, Sr.).
source: Manila Times Column of Benchpress
