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University of San
Carlos
College of Law
Labor Standards
2 Rm 402
| 35
be cognizable by the
Commission
after the SSS through
its President, Manager
or Officer-in-charge of
theDepartment/Branch
/Representative Office
concerned had first
taken action thereon in
writing.(Emphasis
supplied.)It is clear
then from the
aforesaid provisions
that any issue
regarding the
compulsory coverage
of the SSS iswell
within the exclusive
domain of the
petitioner SSC.It is
important to note,
though, that the
mandatorycoverage
under the SSS Law is
premised on the
existence of an
employer-employee
relationship except
incases of compulsory
coverage of the selfemployed.
It is axiomatic that the
allegations in the
complaint, not the
defenses set up in the
Answer or in the
Motion toDismiss,
by thecourt, it remains
with it until the full
termination of the
case. The said
principle may be
applied even to quasijudicial bodies.In this
case, the petitioncomplaint filed by the
petitioner SSS before
the petitioner SSC
against the
respondentcooperative
and Stanfilco alleges
that the ownersmembers of the
respondent cooperative
are subject to
thecompulsory
coverage of the SSS
because they are
employees of the
respondent
cooperative.Conseque
ntly, therespondent
cooperative being the
employer of its
owners-members must
register as employer
and report its ownersmembers as covered
members of the SSS
and remit the
necessary premium
contributions in
accordance with
theSocial Security
Law of 1997.
Accordingly, based on
the aforesaid
allegations in the
petition-complaint
filed before
thepetitioner SSC, the
employeremployeerelationship
between itself and its
owners-members, the
same is not enough to
deprive the petitioner
SSC of its jurisdiction
over the petitioncomplaint filed before
it.Thus, the petitioner
SSC cannot be faulted
for initiallyassuming
jurisdiction over the
petition-complaint of
the petitioner
SSS.Nonetheless,
since the existence of
an employer-employee
relationship between
the respondent
cooperative and
itsowners-members
employeerelationship
that exists between the
respondent
cooperative and its
owners-members.The
question on the
existence of an
employer-employee
relationship is not
within the exclusive
jurisdiction of
theNational Labor
Relations Commission
(NLRC).Article 217
of the Labor Code
enumerating the
jurisdiction of
theLabor Arbiters and
the NLRC provides
that:ART. 217.
JURISDICTION OF
LABOR ARBITERS
AND THE
COMMISSION
. - (a) x x6.
Except claims for
Employees
Compensation,
Social Security
, Medicare and
maternity benefits, all
other claims, arising
from employer-
employee relations,
including those
ofpersons in domestic
or household service,
involving an amount
exceeding five
thousandpesos
(P5,000.00) regardless
of whether
accompanied with a
claim for
reinstatement.Althoug
h the aforesaid
provision speaks
merely of claims for
Social Security, it
would necessarily
includeissues 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
thecoverage of the
Social Security
System
is explicitly excluded
from the jurisdiction
of the NLRC and falls
University of San
Carlos
College of Law
Labor Standards
2 Rm 402
| 36
within the jurisdiction
of the SSC which is
primarily charged with
the duty of settling
disputes arising
underthe Social
Security Law of
1997.On the basis
thereof, considering
that the petitioncomplaint of the
petitioner SSS
involved the issue of
compulsorycoverage
of the ownersmembers of the
respondent
cooperative, this Court
agrees with the
petitioner SSC when
itdeclared in its Order
dated 17 February
2004 that as an
incident to the issue of
compulsory coverage,
it may inquireinto the
presence or absence of
an employer-employee
relationship without
need of waiting for a
priorpronouncement
or submitting the issue
to the NLRC for prior
determination.Since
both the petitioner
SSC and theNLRC are
independent bodies
and their jurisdiction
are well-defined by
the separate statutes
creating
them,petitioner SSC
has the authority to
inquire into the
relationship existing
between the worker
and the person or
entityto whom he
renders service to
determine if the
employment, indeed,
is one that is excepted
by the Social
SecurityLaw of 1997
from compulsory
coverage.In
determining the
existence of an
employer-employee
relationship, the
methods to
accomplish.
The power of control
refers to the existence
of thepower and not
necessarily to the
actual exercise
thereof.It is not
essential for the
employer to actually
supervise
theperformance of
duties of the
employee; it is enough
that the employer has
the right to wield that
power. All
theaforesaid elements
are present in this
case.
First
.It is expressly
provided in the
Service Contracts that
it is the respondent
cooperative which has
the
exclusivediscretion in
the
selection and
engagement of the
owners-members as
well as its team
leaders who will
beassigned at Stanfilco
.
Second
.
Wages are defined as
remuneration or
earnings, however
designated
, capable of
beingexpressed in
terms of money,
whether fixed or
ascertained, on a time,
task, piece or
commission basis, or
othermethod of
calculating the same,
which is
payable by an
employer to an
employee under a
written or
unwrittencontract of
employment for work
done or to be done, or
for service rendered or
to be rendered
. In this case, the
weekly
existinglabor 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
servicesurplus are
indeed wages, because
these are given to the
owners-members as
compensation in
rendering services
torespondent
cooperatives client,
Stanfilco.
Third
respondentcooperative
which has the sole
control over the
manner and means of
performing the
services under the
ServiceContracts with
Stanfilco as well as the
means and methods of
work
relationship between
the respondent
cooperative and its
owners-members.It is
true that the Service
Contracts executed
between the
respondent
cooperative and
Stanfilco expressly
providethat there shall
be no employeremployee relationship
between the
respondent
cooperative and its
owners-members.This
Court, however,
cannot give the said
provision force and
effect.
University of San
Carlos
College of Law
Labor Standards
Finals Case Digests
Ma. Cecelia
Timbal LlB
2 Rm 402
| 37
As previously pointed
out by this Court, an
employee-employer
relationship actually
exists between the
respondentcooperative
and its ownersmembers.The four
elements in the four-
Service Contracts
provision, when in
actuality, itdoes exist.
The existence of an
employer-employee
relationship cannot be
negated by expressly
repudiating it in
acontract, when the
terms and surrounding
circumstances show
otherwise.The
employment status of
a person isdefined and
prescribed by law and
not by what the parties
say it should be
.
stipulations, clauses,
terms and conditions
as they want,and their
agreement would have
the force of law
between
them.However,
the
agreed terms and
conditions must notbe
contrary to law,
morals, customs,
public policy or public
order
. The Service Contract
provision in question
must be struck down
for being contrary to
law and public policy
since it is apparently
being used by the
respondentcooperative
merely to circumvent
the compulsory
coverage of its
employees, who are
also its ownersmembers, bythe Social
Security Law.This
Court is not unmindful
of the pronouncement
it made in
Cooperative Rural
Bank of Davao City,
Inc. v. Ferrer-Calleja
wherein it held that:A
cooperative, therefore,
is by its nature
different from an
ordinary business
concern, being run
either by
persons,partnerships,
or corporations. Its
owners and/or
members are the ones
who run and operate
the business while
theothers are its
employees x x x.
An employee therefore
of such a cooperative
who is a member and
co-owner thereof
in so far as it involves
cooperatives with
employees who are
not members or coowners
thereof,certainly such
employees are entitled
to exercise the rights
of all workers to
organization,
collective bargaining,
negotiations and
others as are enshrined
in the Constitution and
existing laws of the
country.The situation
in the aforesaid case is
very much different
from the present
case.The declaration
made by theCourt in
the aforesaid case was
to bargain collectively
with the
cooperative.Thequesti
on involved here is
whether an employeremployee relationship
can exist between the
cooperativeand an
owner-member.In fact,
a closer look at
Cooperative Rural
Bank of Davao City,
Inc.
will show that
itactually recognized
that an owner-member
of a cooperative can
be its own employee.It
bears stressing, too,
that a cooperative
acquires juridical
University of San
Carlos
College of Law
Labor Standards
Finals Case Digests
Ma. Cecelia
Timbal LlB
2 Rm 402
| 38
members.Consequentl
y, an owner-member
of a cooperative can
be an employee of the
latter and anemployeremployee relationship
can exist between
them.In the present
case, it is not disputed
Directors directs,
controls, and
supervises the
business and manages
the property of
therespondent
cooperative.Clearly
then, the management
of the affairs of the
respondent
cooperative is vestedin
("Jaguar") is a private
corporation engaged
in the business
ofproviding security
services to its clients,
one of whom is Delta
Milling Industries,
Inc. ("Delta").Private
respondents Rodolfo
Sales, Melvin
Tamayo, Dionisio
Caranyagan, Jesus
Silva, Jr., Jaime
Moron and
DanethFetalvero were
hired as security
guards by Jaguar.
They were assigned at
the premises of Delta
in Libis, Quezon
City.Caranyagan and
Tamayo were
terminated by Jaguar
on May 26, 1998 and
August 21, 1998,
respectively.
Allegedlytheir
dismissals were
arbitrary and illegal.
Sales, Moron,
Fetalvero and Silva
remained with Jaguar.
All the guard-
Caranyagan and
Tamayo argue that
they were entitled to
separation pay and
back wages, for the
timethey were
illegally dismissed
until finality of the
decision. Furthermore,
all respondents claim
for moral
andexemplary
damages.On
September 18, 1998,
respondent security
guards instituted the
instant labor case
before the labor
arbiter.On May 25,
1999, the labor arbiter
rendered a decision in
favor of private
respondents Sales, et
al., the
dispositiveportion of
which
provides:"WHEREFO
RE, judgment is
hereby rendered
dismissing the charges
of illegal dismissal on
the part of
thecomplainants
MELVIN R.
TAMAYO and
DIONISIO C.
CARANYAGAN for
lack of merit but
ordering
respondents JAGUAR
SECURITY AND
INVESTIGATION
AGENCY and DELTA
MILLING
INDUSTRIES, INC.,
to jointly andseverally
pay all the six
complainants, namely:
RODOLFO A.
SALES, MELVIN R.
TAMAYO, JAIME
MORON
andDANETH
FETALVERO the
following money
month pay
differentials
University of San
Carlos
College of Law
Labor Standards
Finals Case Digests
Ma. Cecelia
Timbal LlB
2 Rm 402
| 39
g) five days service
incentive leave pay
per year subject to the
exception earlier
cited.The Research
and Information Unit
of this Commission is
hereby directed to
compute and quantify
the above awardsand
submit a report
thereon within 15 days
from receipt of this
decision.For purposes
of any appeal, the
appeal bond is
tentatively set at
P100,000.00.All other
claims are
DISMISSED for lack
of merit.SO
ORDERED."On July
1, 1999, petitioner
Jaguar filed a partial
appeal questioning the
failure of public
respondent NLRC to
resolveits cross-claim
theregular court
having jurisdiction
over the subject
matter, for the purpose
of proving the liability
of Delta. Jaguar
sought reconsideration
of the dismissal, but
the Commission
denied the same in its
Resolution
datedNovember 9,
2001.Petitioner filed a
petition for certiorari
with the CA, which, in
the herein assailed
Decision dated
October 21, 2002
andResolution dated
February 13, 2004,
dismissed the petition
for lack of merit.
Issue:
Whether or not
petitioner may claim
reimbursement from
Delta Milling through
a cross-claim filed
with thelabor court?
Held:
The Court ruled in the
negative.The
jurisdiction of labor
Milling to reimburse
petitioner will only
arise if and when
petitioner actually
pays itsemployees the
adjudged liabilities.
Payment, which
means not only the
delivery of money but
also the
performance,in any
College of Law
Labor Standards
Finals Case Digests
Ma. Cecelia
Timbal LlB
2 Rm 402
| 40
employmentof
petitioners on the
same date. Believing
that SSASI was a
labor-only contractor,
and having
continuously worked
asglass cutters and
quality controllers for
the respondent functions which are
Accreditation
Agreement. SSASI
averred that it was the
one whohired
petitioners and
assigned them to work
for respondent on
occasions that the
latters work force
could not meet
Are Almeda, et al
employees of Asahi
Glass even
considering that they
were originally hired
by San
SebastianAllied
Services, Inc.?
Held:
subcontractor the
performance or
completion of a
specific job, work or
service within adefinite
or predetermined
period, regardless of
whether such job,
work or service is to
be performed or
completedwithin or
independent business
and undertakes
toperform the job,
work or service on its
own account and
under its own
responsibility
according to its
ownmanner and
method, and free from
the control and
direction of the
principal in all matters
connected withthe
performance of the
work except as to the
results thereof;(b) The
contractor or
subcontractor has
substantial capital or
investment; and(c) The
agreement between
workers to perform a
job, work or service
for a principal. In
labor-only contracting,
the
following elements are
present:
(a) The contractor or
subcontractor does not
have substantial capital
or investment to
actually perform
the job, work or
service under its own
account and
responsibility;(b) The
employees recruited,
supplied or placed by
such contractor or
subcontractor is
performing
activitieswhich are
circumvention of labor
laws.
The contractor is
considered as merely
the agent of the
principal employerand
the latter is responsible
to the employees of
the labor-only
contractor as if such
employees are directly
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