MAMERTO S. BESA, DOING BUSINESS UNDER THE NAME AND STYLE OF BESA’S CUSTOMBUILT SHOES, PETITIONER, VS. THE HONORABLE CRESENCIANO B. TRAJANO, DIRECTOR OF THE BUREAU OF LABOR RELAT…

Besa versus Trajano

The Case

This is a petition for certiorari with prohibition filed by Mamerto Besa, doing business under the name and style of Besa's Custombuilt Shoes, against the Director of the Bureau of Labor Relations and the union Kaisahan ng Manggagawang Pilipino. Besa asks the Supreme Court to annul the Director's decision affirming a Med-Arbiter's order that found an employer-employee relationship between Besa and seventeen shoeshiners and directed that a certification election be held. The case matters because it fixes the test for the existence of an employer-employee relationship and shows how that relationship is the threshold requirement for a valid certification election.

Procedural History

In January 1985 the union filed a petition for certification election before the Med-Arbiter of the National Labor Relations Division of the National Capital Region. Besa opposed it, alleging that no employer-employee relationship existed, that the matter was barred by res judicata, that the petition failed to comply with the mandatory requirements of the Omnibus Rules, and that the Commission had no jurisdiction. The Med-Arbiter issued an order declaring that an employer-employee relationship existed and directing that an election be conducted. Besa appealed to the Director of the Bureau of Labor Relations, who dismissed the appeal and upheld the Med-Arbiter. Besa then filed with the Supreme Court a petition for certiorari with prohibition. The Court first dismissed the petition for lack of merit, but reconsidered it upon Besa's motion for reconsideration. A certification election was in fact held on November 26, 1985, with forty-nine of fifty-three eligible voters casting votes: thirty-three for the union and sixteen for no union, seventeen of the thirty-three being shoeshiners.

Facts

Besa operated a shoe-repair business. Seventeen shoeshiners worked in connection with it, and the question was whether they were employees of Besa or something else. Earlier, the defunct Court of Industrial Relations had dismissed unfair labor practice cases filed by the shoeshiners against Besa, and in its decision of December 21, 1965 it declared that the shoeshiner is distinct from a piece worker, that the shoeshiner is paid directly by the customer, that the proceeds are divided share and share alike with Besa, and that Besa exercises no degree of control or supervision over the shoeshiners' person and work. The Court of Industrial Relations concluded that the shoeshiner, in relation to Besa, is a partner in the trade, and that no employer-employee relationship existed.

Later, the Director of the Bureau of Working Conditions of the Ministry of Labor and Employment, in a letter dated December 27, 1983, opined that entitlement to minimum wage and allowances presupposes an employer-employee relationship, determined by the right to hire, payment of wages, the right to fire, and control and supervision, the most important being control and supervision. Applying that to the shoeshiners, and relying on the earlier Court of Industrial Relations decision, the Director concluded that no employer-employee relationship existed.

When the union filed its certification election petition, the Med-Arbiter and then the Director of the Bureau of Labor Relations found that supervisors were appointed to oversee the bootblacks' performance and upheld the existence of an employer-employee relationship, treating that as a finding of fact entitled to respect and holding that res judicata did not lie because the parties and causes of action differed. The Solicitor General, as counsel for the public respondent, agreed that no employer-employee relationship existed.

Issues

• Whether or not an employer-employee relationship exists between Besa and the seventeen shoeshiners who are members of the respondent union.
• Whether or not, the shoeshiners being ineligible, the certification election results can stand, given that the union would then have only sixteen yes votes against sixteen no votes, a tie.

Applicable Provisions

The decision applies the settled test for the existence of an employer-employee relationship, as stated in the Rosario Brothers case:

Existence of employer-employee relationship is determined by the following elements, namely, a] selection and engagement of the employee b] payment of wages; c] powers of dismissal; and d] power to control the employee's conduct although the latter is the most important element.

This four-element test is the measure against which the shoeshiners' status must be judged, and control is its most important element.

The decision also relies on the rule that the status of employment is a precondition to the exercise of rights under the Labor Code:

A basic factor underlying the exercise of rights under the Labor Code is the status of employment. It is important in the determination of who shall be included in a proposed bargaining unit because it is sine qua non. The fundamental and essential condition that a bargaining unit be composed of employees. Failure to establish this juridical relationship between the union members and the employer affects the legality of the union itself. It means the ineligibility of the union members to present a petition for certification election as well as to vote therein.

This bears directly on whether the shoeshiners could petition for certification election or vote in it.

Ruling

On the first issue, the Court held that no employer-employee relationship exists between the seventeen shoeshiners and Besa. The records showed that the shoeshiners are paid directly by the customer, that the proceeds are divided share and share alike with Besa, and that Besa exercises no control or supervision over their person and work. The Court quoted with approval the Court of Industrial Relations' characterization that the shoeshiner, in relation to Besa, is a partner in the trade, and it noted that the Office of the Solicitor General agreed that no employer-employee relationship exists. Applying the four-element test, the element of control, the most important, was absent.

On the second issue, the Court reasoned that the question of employer-employee relationship was a primordial consideration in resolving whether the shoeshiners had the juridical personality and standing to present a petition for certification election and to vote therein. If the seventeen shoeshiners are declared ineligible and their votes nullified, the result would be sixteen yes votes and sixteen no votes, a tie, and the union would not have obtained a clear majority of the valid votes cast as required. The union therefore could not be certified as the sole and exclusive bargaining agent.

Doctrine

An employer-employee relationship exists only when all four elements concur: the selection and engagement of the employee, the payment of wages, the power of dismissal, and the power to control the employee's conduct, the last being the most important. Where the worker is paid directly by the customer, shares the proceeds equally with the owner, and is not subject to the owner's control or supervision, no employer-employee relationship arises, and the worker cannot be counted as an employee for purposes of a certification election. The status of employment is a condition sine qua non, a prerequisite, to the exercise of rights under the Labor Code; without it, the workers are ineligible to present a petition for certification election or to vote in it, and a union that fails to obtain a clear majority of the valid votes cast cannot be certified as the sole and exclusive bargaining agent.

Disposition

The Court gave due course to the petition, declared void the decision of the Director of the Bureau of Labor Relations dated September 27, 1985, and dismissed the petition for certification election.

Remember This

The single line to memorize: control is the most important element of the employer-employee relationship, and without it the shoeshiner is a partner, not an employee. Examiners use this case to test the four-element test and the rule that employment status is a precondition to a valid certification election.