UNITED STATES LINES, ET AL., PETITIONERS, VS. ASSOCIATED WATCHMEN AND SECURITY UNION (PTWO), RESPONDENT.

BAUTISTA ANGELO, J.:

On February 21, 1956, the Associated Watchmen and
Security Union, hereinafter referred to as respondent, filed nineteen
(19) petitions for certification before the Court Of Industrial
Relations with nineteen shipping companies as respondents. The United
States Lines Company, American President Lines and Macondray & Co.,
Inc. were respondents in three of these certification cases, namely,
Cases Nos. 328-MC, 3E9-MC and 33E-MC, respectively.

On March 13, 1956, while the said certification
cases pending before the industrial court, the members of the
respondent union, assisted by members of the Associated Workers Union
(PTWO), another labor union which controls the dock workers employed by
the arrastre operators, Manila Port Service, picketed the vessels for
which the shipping companies are the agents in Manila for the purpose
of compelling them to recognize respondent union as the collective
bargaining representative of the watchmen working on board said
vessels. Because of this picket line, the loading and unloading of
cargoes to and from the foreign vessels in the piers at the Manila
south Harbor stopped. Due to the paralization of this operation which
was considered of national interest, the President of the Philippines
certified the dispute to the Court of Industrial Relations. The case as
certified was docketed as Case No. 10-IPA, with the shipping companies
as petitioners and the Associated Watchmen and Security Union as
respondent.

Joint trial was held by the industrial court of Case
No. 10-IPA and the nineteen certification Cases Nos. 326-MC to 344-MC.
Several watchmen agencies were allowed to intervene as respondents
among them the City Watchmen and Security Agency, the Maligaya Ships
Watchmen Agency and the Marine Security Agency, which later filed their
answers to respondent’s petition for certification. On March 16, 1956,
the shipping companies filed separately a motion to dismiss on the
common ground that the court has no jurisdiction over the
subject-matter of the case, that the petition states no cause of
action, and that there is another action pending between the same
parties for the same cause. The court deferred action on this motion
until the case is decided on the merits, and so the shipping companies
filed their answers alleging, among other grounds, that the watchmen
for whom representation is sought by respondent union were not their
employees but were the employees of the intervenors-watchmen agencies
and. that the alleged bargaining unit was not an appropriate bargaining
unit.

In the course of the trial, respondent union asked
for the dismissal of sixteen (16) of these certification cases in Case
No. 10-IPA in so far as the sixteen affected shipping companies are
concerned. Said petition was granted on May 23, 1956. The cases which
remained were those concerning the united States lines Company,
American President Lines, and Macondray & Co., Inc., and Case No.
10-IPA in so far as these shipping companies are concerned. The
watchmen agencies involved in these three cases are the Maligaya Ships
Watchmen Agency of the United States lines Company, the Marine Security
Agency of the American President Lines, and Kessel & Tagle Watchmen
Agency, City Watchmen and Security Agency and the Republic Ships
security Agency of Macondray & Co., Inc. After the submission of
the evidence of both, parties, the court rendered its decision on
December SO, 1956 declaring that it has Jurisdiction over the cases
because they involve a labor dispute and holding that there is an
employer-employee relationship between the different companies and the
watchmen and, consequently, ordered a certification election.

The shipping companies filed a motion for reconsideration, but it was denied by the court en banc, with Judge Lanting taking no part and Judgde Martinez concurring in the result. This decision and the resolution of the court en banc are now before this Court on a petition for review filed by the shipping companies.

Before discussing the issues raised in this appeal
by petitioners-shipping companies, it is well to state some facts which
serve as background and may give a clear view of the different
relations existing between the shipping companies, the watchmen and the
different watchmen agencies with which they are affiliated.

The various steamship companies which are either
owners or agents of foreign vessels calling at the port of Manila had
for sometime contracted with watchmen agencies to furnish watchmen on
board their vessels in order to guard and protect the cargoes thereon
and to keep unauthorized persons away from the ships. The United states
lines Company had a contract with the Maligaya Ships Watchmen Agency
which is owned by Tomas Caraveo; the American President Lines had a
contract with the Marine Security Agency which is owned by Bernard
Bradbury; and Macondray & Co., Inc. had contract with three
watchmen agencies,namely, Republic Ships Agency which is owned by
Fernando Derupe, Tagle Ships Watchmen and Security Agency which is
owned by Claro Tagle and the City Watchmen and Security Agency which is
owned by Villardo Purificacion and Eduardo Murillo. The Maligaya ships
Watchmen Agency is merely a business name which was regis» tered with
the Bureau of Commerce by its owner Tomas Caraveo. As of October, 1945,
the agency employed forty-two (42) watchmen but later the number was
reduced to thirty-nine (39). The Marine security Agency is also a
business name registered with the Bureau of Commerce which is operated
by Bernard Bradbury and managed by Lawrence Hunt. As of March 19, 1956,
this agency employed sixty-four (64) watchmen. The Republic Ships
Security Agency, Tagle Ships Watchmen and security Agency and City
Watchmen and Security Agency are also business names registered with
the Bureau of Commerce. The first employed forty-six (46) watchmen, the
second thirty-six (36) watchmen and the third sixty-four (64) watchmen.
These agencies are duly licensed by the city treasurer of Manila to
engage in the business of supplying watchmen to steamship companies.
They have secured permits from the Mayor of Manila to engage in
business under Ordinance No. 2162 of said city. They have also secured
annual permits to transact business from the Collector of Customs from
1951 up to the present time.

This arrangement between the shipping companies and
the watchmen agencies existed through the years until the latter part
of 1955 when the Associated Watchmen and Security Union (PTWO)
presented demands upon the shipping companies asking that it be
recognized as the collective bargaining representative of the watchmen
employed in their ships. The shipping companies refused to accede to
these demands for various reasons among which are that the watchmen are
not the employees of the shipping companies but of the watchmen
agencies, and that, even if they were, respondent union has not been
selected by a majority of said watchmen to represent them for purposes
of collective bargaining. Because of this refusal, the members of
respondent union went on strike on February 18, 1956 and started
picketing the gates of the piers at the Manila South Harbor. In this
strike, they were joined by the members of the Associated Workers Union
who also declared a sympathy strike. The inevitable result was the
paralization of the work of loading and unloading the Cargoes from the
ships to the piers. The strike however lost its coercive effect when
Judge Macadaeg of the Court of First Instance of Manila issued an
injunction on February 21, 1956 restraining the illegal picketing on
the ground that there -was no labor dispute involved between the
parties. Said injunction, however, was countermanded by the supreme
Court when it issued a preliminary mandatory injunction on February 28,
1956 in G. R. No. L-10333. The injunction lifted, the members of
respondent union resumed the picket lines thereby again paralyzing the
loading and unloading operations of the ships at the Manila South
Harbor, and so the dispute “was certified by the President of the
Philippines to the Court of Industrial Relations as a matter involving
national interest.

The main issues posed by the shipping companies are:
(1) Is the finding of the Court of Industrial Relations that the
watchmen involved in these cases are employees of the steamship
companies supported by substantial evidence?; (2} Is the determination
by said court that the existence of “a Certain degree of control”
exercised by an employer over an employee is a test of such
relationship, in accordance with law?; (3) Is the Court of Industrial
Relations required by Republic Act No. 875 to determine the appropriate
bargaining unit in cases of petitions for certification?; and (4) Is a
business name registered with the Bureau of Commerce but which is not a
legitimate labor organization qualified to represent employees for
purposes of collective bargaining?

The steamship companies contend that the watchmen
who render guard service in their vessels are not their employees but
of the intervenors-watchmen agencies who have contracts with said
companies as independent contractors to guard their vessels while in
the port of Manila. They claim that these watchmen are hired and
discharged by the watchmen agencies and not by petitioners, their wages
are determined and paid to them by the watchmen agencies, and their
work is supervised by them. The industrial court, however, found that
while it is a fact that the watchmen agencies recruit the watchmen,
compute their wages and supervise their work, still they are not
independent contractors, but mere agents which serve as extensions of
the offices of the different steamship companies. This finding is now
alleged as error. Counsel contends that in making this finding, the
industrial court has disregarded and ignored the overwhelming evidence
presented by petitioners in support of their claim that the watchmen
agencies are independent contractors and the watchmen recruited by them
are their employees.

Section 6 of Republic Act No. 875 provides in part that “The findings of the Court with respect to questions of fact if supported by substantial evidence on the record shall
be conclusive. The appeal to the Supreme Court shall be limited to
questions of law only.” (Underlining supplied) the question raised in
the first assignment of error evidently is one of fact 30 that if there
is substantial evidence on record to support it, the same is conclusive
upon this Court, the question then is : Are the above findings of the
court a quo supported by substantial evidence?

The laws does not contain any definition of the
term “substantial evidence.” Neither is there a precedent in ‘this
jurisdiction which may serve as guide in the determination of the
existence of “substantial evidence.” Evidently, the legislature
intended to leave this matter to the discretion and -wisdom of our
courts, since it is a matter which involves many factors, facts and
circumstances which cannot be predetermined but which can only arise
when a litigation involving a labor dispute is submitted to the court
for determination. Of course, in reaching a conclusion of fact, the
court should weigh all the evidence on hand and cannot just consider
the evidence of one side and disregard the evidence of the other. Much
depends upon the wisdom and discretion of the court.

Precedents, however, are not wanting in America.
Since our Magna Carta is of American origin, to enlighten us, we may
resort to American interpretation, more so in this instance when the
issue is raised for the first time. Thus, in one case, when a similar
issue was raised, the Supreme Court of the United States held that
“substantial evidence is more than a scintilla, and must do more than
create a suspicion of the existence of the fact to be established. It
means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.” In the same case it was pointed out
that substantial evidence means “evidence which is substantial, that
is, affording a substantial basis of fact from which the fact in issue
can be reasonably inferred” (National Labor Relations Board vs.
Columbian Enameling and Stamping Co., Inc., 306 U.S. 292-306). Do the
findings of fact made by the industrial court meet this test? Counsel
for the shipping companies answers this question in the negative
because, he contends, the Court of Industrial Relations disregarded and
ignored the documentary evidence submitted by them which would show
that there is no employer-employee relationship between the watchmen
and the shipping companies. Thus, counsel contends that if their
evidence were considered it will show the following facts:

“l. Ordinance No. 216S, as amended,
of the City of Manila (Exhibits ’74’ and ’75-Macondray’) which govern
the business of special watchmen agencies in Manila recognizes the fact
that persons employed by these special watchmen agencies to watch any
premises are employees of said watchmen agencies.

“2. The watchmen are hired, disciplined and discharged by the watchmen agencies and not by petitioner companies.

“3.
Their wages are determined and paid by the watchmen agencies and not by
petitioner companies. They sign payrolls of the watchmen agencies.

“4.
Their work aboard the vessels is supervised by the operators of these
agencies. Their hours of work, place of work, shift of work, manner of
doing the work, and preparation for the work are fixed and determined
by the watchmen agencies and not by petitioner companies.

“5.
The requirements for doing the wart, such as permits from the City
Mayor and the Collector of Customs and license fees paid to the City
Engineer are taken care of by the watchmen agencies. Personal records
and police clearances of the watchmen are also checked by the watchmen
agencies, and not by petitioner companies.

“6.
Petitioner steamship companies do not know who these watchmen are. Only
the intervenor watchmen agencies know who they are and keep a list of
these watchmen.

“7. These watchmen do not
receive the special privileges such as Christmas bonus, sick leave,
etc. given by petitioner companies to their employees.

“8. The watchmen agencies pay the petitioner companies the value of lost or stolen properties on board their vessels.

“9.
Some watchmen agencies deduct withholding income tax from the wages
they pay their watchmen and pay these tax withheld to the Bureau of
Internal Revenue.

“10. The watchmen agencies
make a profit out of their business. They maintain their respective
offices and keep records of their employees.”

But the Court of Industrial Relations, after proper
evaluation of the evidence on hand, found “that the Intervenors
Watchmen Agencies are not independent contractors, but are mere agents
which serve as extensions of the offices of the above-mentioned
Shipping Lines in the recruitment of watchmen, the computation of the
watchmen’s wages and the supervision of the work of the watchmen; that
the Intervenors Watchmen Agencies are paid for whatever service is
rendered by their watchmen.” The court also found “that there is a
certain degree of control that 13 exercised by the United states Lines,
the American President Lines and the Macondray & Company over the
watchmen of the Maligaya Ship Watchmen Agency, the Marine Security
Agency and the City Watchmen Security Agency, respectively.”
Consequently, the court concluded “that there is an employer-employee
relationship between the Shipping lines concerned and the watchmen of
the above-mentioned Intervenors Watchmen Agencies.”

These findings, we find, are supported by
substantial evidence within the meaning of the law. Thus, the evidence
on record discloses the following facts:

(1) On July 25, 1957, in G. R. No. L-10333, Associated Watchmen and security Union (PTWO), et al. vs.
United States lines , et al., wherein the same questions of fact were
involved, this Court said: “But no matter how studiously the complaint
avoids stating that the watchmen employed toy the steamship agencies
are not their employees, because they are employees ox the watchmen
agencies, the stubborn fact remains that the said watchmen are
ultimately working for the steamship companies and ultimately paid far
by the latter. It may have been true that these -watchmen are
contracted for by the watchmen agencies, but the fact remains that
their services were availed of and their compensation paid by the
steamship agencies, even if such were done thru the agencies and
without the direct intervention of the steamship agencies.”
(Underlining supplied) This is now res judicata and is conclusive upon this Court.

(2) The so-called operators or owners of the
watchmen agencies are also employed by the shipping companies. Thus,
the evidence shows that Tomas Caraveo, operator of the M1igaya Ships
Watchmen Agency, is the headwatchman of the United States
lines and receives his pay as such from the company. ) Bernard
Bradbury, the operator of the Marine Security Agency, is the supervisor
of the American President Lines and in that capacity he is paid by that
company. And Fernando Derupe, operator of the Republic Ships Agency, is
the headchecker of Macondray & Company and also receives his pay from that company. (The evidence also snows that these agencies render exclusive
guard service respectively to the companies in which their operators
are employed, and they are paid for their services a commission of 10$
of the wages of the watchmen.)

(3) The fact that these operators are mere agents of
those shipping companies in the recruitment of watchmen, in the
computation and payment of their wages, and in the supervision of their
work, is also borne out by the evidence. Photostatic copies of the
payrolls submitted by these operators show that they are approved by
the ship officers and managers of the shipping companies before they
are acted upon. Sven the application forms of these operators and the
identification cards given to the watchmen must bear the approval of
the superintendents of the shipping companies.

(4) Although the operators of these agencies do the
job of recruiting -watchmen, however, the supervision over these
watchmen while working on board the vessels are not only exercised by
the “supervisors” of the shipping companies but also by the ship
officers, the port captains, and the managers of the same firms. And
these shipping firms for a time deducted and withheld from the wages of
the watchmen the income taxes they were to pay under the law. And
according to Esteban Buenaventura, watchman of Macondray & Company,
this company paid compensation for injuries sustained by watchmen in
line of duty.

All the foregoing constitute substantial evidence
which supports not only the findings of the industrial court but those
made by this Court in G.R. No. L-10333.

It is true that the different watchmen agencies are
but business names registered with the Bureau of Commerce and they have
not been properly organized as a legitimate labor organization as
required by law. But this is no obstacle for the determination of the
proper collective bargaining unit that would represent the watchmen in
dealing with the different steamship companies for the order of the
industrial court precisely directed the certification election subject
to the condition that these agencies should first properly organize
themeselves into a legitimate labor organization. As a matter of fact,
one of them, the Maligaya Ships Watchmen Agency has already organized
itself into a labor union called Maligaya Ship Watchmen Union. In
effect, these agencies are but mere representatives of the watchmen
affiliated with them, in the same manner as any other labor union.

It is contended that the Industrial court erred In
failing to determine the appropriate bargaining unit which would
represent the watchmen in the three certification cases now pending
before this Court, but this can be clearly inferred from the petition
of respondent union wherein it is expressly requested that a collective
bargaining unit be chosen to represent all watchmen who render service
on the vessels of the different shipping companies mentioned therein.
No other unit has been proposed by any other party. When this petition
for certification was given due course, the Court of Industrial
Relations could not have intended certifying any bargaining unit other
than for said ship watchmen.

The Court of Industrial Relations did not also err
in ordering that in conducting the election the payrolls of the several
ships showing the watchmen who rendered services from January 18, 1958
to February 18,1956 be observed for such is the rule that is followed
in certification proceedings, The payroll of the month preceding the
labor dispute is the payroll to be used as voting list. But the court
did not only order the use of these payrolls but also allowed to take
part in the election those watchmen who are sick, on vacation, or on
rotation, and even those dismissed for unfair labor practices whose
status are still undefined. We see nothing improper in the rules laid
down by the trial court to be followed by the Department of Labor in
the conduct of the certification election. They have been adopted
having in view only the law and the interest of the watchmen.

Wherefore, the decision appealed from is affirmed, with costs against petitioners.

Paras, C.J., Bengzon, Reyes, A., Labrador, Concepcion, Reyes, J.B.L., Endencia, and Felix, JJ., concur.

Montemayor, J., reserves his vote.