VISAYAN STEVEDORE TRANSPORTA­TION COMPANY (VISTRANCO) AND RAFAEL XAUDARO, PETITIONERS, VS. COURT OF INDUSTRIAL RELATIONS, UNITED WORKERS’ & FARMERS’ ASSOCIATION (UWFA), VENANCIO…

Visayan Stevedore Transportation Company versus United Workers and Farmers Association

The Case

This is a petition for review by certiorari brought by the Visayan Stevedore Transportation Company, together with its branch manager Rafael Xaudaro, against the Court of Industrial Relations, the United Workers and Farmers Association, and the one hundred thirty-nine workers named in the complaint. The Company challenges the order of the Court of Industrial Relations finding it guilty of unfair labor practice and directing it to cease and desist from that practice and to reinstate the complainants with back wages. The case matters because it settles two questions that recur in every seasonal industry: who is the real employer when a labor organization supplies the men, and what happens to the employment relation when the season ends.

Procedural History

The complaint for unfair labor practice was filed with the Court of Industrial Relations and docketed as Case Number 62-ULP-Cebu. The Presiding Judge of that court issued the order appealed from, finding the respondents guilty of unfair labor practice as charged, directing them to cease and desist, and ordering reinstatement with back wages from the date of layoff until reinstatement. The Court of Industrial Relations sitting en banc affirmed that order. The Company and Xaudaro then came to the Supreme Court by petition for review by certiorari.

Facts

The Company is engaged in the loading and unloading of vessels, with a branch office in Hinigaran, Negros Occidental, under the management of Rafael Xaudaro. Its workers were supplied by the United Workers and Farmers Association, a labor organization whose men, affiliated with various labor unions, had regularly worked as laborers of the Company during every milling season since immediately after the Second World War.

After the first milling season following liberation, the complainants simply reported for work at the beginning of each succeeding milling season, and their services were invariably availed of by the Company. An officer of the union determined which laborers would work at a given time, following a rotation system. But in the performance of their duties the complainants worked under the direction and control of the Company's officers, and the Company's paymaster paid their compensation directly, with the complainants acknowledging receipt in the Company's payrolls.

In November 1955 the Company refused to engage the services of Venancio Dano-og, Buenaventura Agarcio, and one hundred thirty-seven other persons. The workers not admitted to work beginning from November 1955 were precisely those belonging to the union, and Xaudaro told them point blank that severance of their connection with the union was the remedy if they wanted to continue working with the Company.

Issues

• Whether or not there is an employer-employee relationship between the Company and the complainants.
• Whether or not the Company has been guilty of unfair labor practice.
• Whether or not the order of reinstatement of the complainants with back wages is a reversible error.

Applicable Provisions

The decision quotes the provision of the industrial peace statute that vests in the Court of Industrial Relations the power to order affirmative relief, including reinstatement with or without back pay:

If, after investigation, the Court shall be of the opinion that any person named in the complaint has engaged in or is engaging in any unfair labor practice, then the Court shall state its findings of fact and shall issue and cause to be served on such person an order requiring such person to cease and desist from such unfair labor practice and take such affirmative action as will effectuate the policies of this Act, including (but not limited to) reinstatement of employees with or without back pay and including rights of the employees prior to dismissal including seniority.

This provision bears on the case because it is the source of the Court of Industrial Relations' authority to order the very relief the petitioners challenge, and it places that relief within the court's discretion.

Ruling

On the first issue, the Court held that the Company's pretense is untenable. There was no independent contract between the union, as an organization, and the Company. The complainants merely reported for work at the beginning of each milling season and their services were invariably availed of, even though a union officer determined who would work at a given time under a rotation system. Since the complainants worked under the direction and control of the Company's officers, and the Company's paymaster paid them directly against the Company's payrolls, they are the Company's employees. The union merely performed the role of a representative or agent of the employer in the recruitment of men needed for the operation of the latter's business, in the same manner as watchmen or security guards furnished by security agencies.

On the alleged termination at the end of each milling season, the Court held it settled that the workers concerned are considered, not separated from the service, but merely on leave of absence without pay during the off-season, their employer-employee relationship being merely deemed suspended, not severed, in the meantime.

On the second issue, the Court found with the Court of Industrial Relations that the charge of unfair labor practice is substantially borne out by the evidence, it appearing that the workers not admitted to work beginning from November 1955 were precisely those belonging to the union, and that Xaudaro had told them point blank that severance of their connection with the union was the remedy if they wanted to continue working with the Company.

On the third issue, the Court held that the law explicitly vests in the Court of Industrial Relations discretion to order the reinstatement with back pay of laborers dismissed due to union activities, and the record disclosed no cogent reason to warrant interference with the action taken by that court.

Doctrine

Three rules must be retained. First, when a labor organization merely supplies men to an employer, determines who works at a given time, and performs the role of a representative or agent in recruitment, while the men work under the direction and control of the employer and are paid directly by the employer's paymaster against the employer's payrolls, the men are the employees of the employer, not of the labor organization. Second, seasonal workers are not separated from the service at the close of each season; they are merely on leave of absence without pay, and the employer-employee relationship is suspended, not severed, during the off-season. Third, under the quoted provision, the Court of Industrial Relations has discretion to order reinstatement with back pay of laborers dismissed because of union activities, and that discretion will not be disturbed absent a cogent reason.

Disposition

The Supreme Court affirmed the order and resolution appealed from, with costs against the petitioners, so the Company lost and the reinstatement with back wages stood.

Remember This

The line worth memorizing is that the off-season does not sever the tie: the seasonal worker is merely on leave of absence without pay, and the relationship is suspended, not ended. Examiners use this case to test the labor-only supply arrangement, the control and payroll test for identifying the true employer, and the discretion of the labor tribunal to award reinstatement with back pay.