Title
United States Lines, et al. vs. Associated Watchmen and Security Union
Case
G.R. No. L-12208-11
Decision Date
May 21, 1958
A 1956 labor dispute involving watchmen seeking union recognition, employer-employee relationship determination, and certification election affirmed by the Supreme Court.
labor law
employer
employee
A

Case Summary (G.R. No. L-12208-11)

Factual Background

Before the certification petitions, the steamship companies had, for some time, contracted with watchmen agencies to provide watchmen to guard vessels in order to protect cargo and keep unauthorized persons away. Specifically, United States Lines contracted with the Maligaya Ships Watchmen Agency (owned by Tomas Caraveo), American President Lines contracted with the Marine Security Agency (owned by Bernard Bradbury), and Macondray & Co., Inc. contracted with several agencies, including Republic Ships Agency (owned by Fernando Derupe), Tagle Ships Watchmen and Security Agency (owned by Claro Tagle), and City Watchmen and Security Agency (owned by Villardo Purificacion and Eduardo Murillo).

The agencies functioned under business names registered with the Bureau of Commerce and held the required permits to supply watchmen. The shipping companies’ business arrangement continued through the years until late 1955, when respondent union presented demands asking recognition as collective bargaining representative of the watchmen assigned to the petitioners’ vessels. Petitioners refused for two main reasons: they claimed the watchmen were not their employees but were employees of the watchmen agencies; and they asserted respondent had not been selected by a majority of the watchmen.

In response, respondent members went on strike on February 18, 1956 and began picketing at the Manila South Harbor gates, joined by members of the Associated Workers Union, producing a suspension of loading and unloading operations. That strike was temporarily restrained when Judge Macadaeg issued an injunction on February 21, 1956 on the theory that no labor dispute existed between the picketing parties and the shipping companies. The injunction was later countermanded by the Supreme Court via a preliminary mandatory injunction on February 28, 1956 in G.R. No. L-10333, after which picketing resumed and again paralyzed port operations. Given the continued disruption, the President certified the controversy to the Court of Industrial Relations as a matter of national interest.

Court of Industrial Relations Proceedings

The Court of Industrial Relations conducted joint trial for Case No. 10-IPA and the related certification cases. Several watchmen agencies were allowed to intervene as respondents, including the City Watchmen and Security Agency, the Maligaya Ships Watchmen Agency, and the Marine Security Agency, which later filed answers.

On March 16, 1956, petitioners separately moved to dismiss, asserting that (1) the Court of Industrial Relations lacked subject-matter jurisdiction; (2) the petitions stated no cause of action; and (3) there was another action pending between the same parties for the same cause. The court deferred action on these motions until decision on the merits. Petitioners then filed answers alleging, among others, that the watchmen sought to be represented were employees of the intervening watchmen agencies, not employees of the shipping companies, and that the proposed bargaining unit was not appropriate.

During trial, respondent sought dismissal of sixteen certification cases in Case No. 10-IPA as to the shipping companies involved, and the petition was granted on May 23, 1956. The matters that remained concerned United States Lines, American President Lines, and Macondray & Co., Inc., with intervening watchmen agencies for each: Maligaya Ships Watchmen Agency for United States Lines, Marine Security Agency for American President Lines, and Kessel & Tagle Watchmen Agency, City Watchmen and Security Agency, and Republic Ships Security Agency for Macondray & Co., Inc.

After submission of evidence, the Court of Industrial Relations issued a decision on December 30, 1956, holding that it had jurisdiction because the controversy involved a labor dispute. It further found an employer-employee relationship between the shipping companies and the watchmen, and ordered a certification election. Petitioners moved for reconsideration, but the court en banc denied it, with Judge Lanting taking no part and Judge Martinez concurring in the result.

Issues Raised on Review

The shipping companies sought review, raising four principal issues: first, whether the findings that the watchmen were employees of the steamship companies were supported by substantial evidence; second, whether the industrial court’s reliance on “a certain degree of control” was the correct test for an employer-employee relationship; third, whether the Court of Industrial Relations was required under Republic Act No. 875 to determine the appropriate bargaining unit in certification petitions; and fourth, whether a business name registered with the Bureau of Commerce but not organized as a legitimate labor organization could lawfully represent employees for collective bargaining purposes.

Petitioners contended that the watchmen hired to guard their vessels were independent contractor employees of the intervening watchmen agencies. They asserted that the agencies hired and discharged the watchmen, determined and paid wages, and supervised the work. Respondent, in contrast, sustained the industrial court’s view that the agencies were not independent contractors but operated as extensions or agents of the shipping companies in recruitment, wage computation, and supervision, thus making the shipping companies the actual employers for purposes of labor representation.

Appellate Review Under Republic Act No. 875 and the Meaning of Substantial Evidence

The Supreme Court treated the first and central challenge as a question of fact. Citing Section 6 of Republic Act No. 875, which provided that findings of the Court on questions of fact supported by substantial evidence were conclusive and that appeals were limited to questions of law, the Court emphasized that the issue was whether the industrial court’s factual findings satisfied the statutory “substantial evidence” threshold.

The Court noted the absence of a statutory definition in Republic Act No. 875 and the lack of local precedent defining “substantial evidence.” It therefore drew guidance from American authority, adopting the understanding that substantial evidence required more than a scintilla and more than evidence that merely aroused suspicion. It referred to substantial evidence as relevant evidence that a reasonable mind could accept as adequate to support a conclusion, consistent with National Labor Relations Board vs. Columbian Enameling and Stamping Co., Inc., 306 U.S. 292-306.

Applying that standard, the Court held that the industrial court’s findings were supported by substantial evidence. It also pointed out that it had earlier resolved substantially identical factual issues in G.R. No. L-10333, involving the same union and the same shipping company, and it treated that prior ruling as res judicata and conclusive upon the Court.

Res Judicata Effect of G.R. No. L-10333 and Supporting Evidence

In G.R. No. L-10333, the Court had ruled against petitioners on similar assertions that watchmen were not their employees because they were employees of watchmen agencies. The Court reiterated the principle from that case: even if the complaint avoided directly stating the relationship, the “stubborn fact” remained that the watchmen were ultimately working for the steamship companies and ultimately paid by them. The services were availed of and compensation was paid through the agencies, even without direct intervention by the shipping companies.

In the present case, the Supreme Court found additional evidentiary support consistent with that earlier ruling. It recounted that the operators of the watchmen agencies were themselves employed and paid by the shipping companies in supervisory capacities: Tomas Caraveo, operator of the Maligaya Ships Watchmen Agency, served as headwatchman of United States Lines and was paid by that company; Bernard Bradbury, operator of the Marine Security Agency, served as supervisor of American President Lines and received pay from that company; and Fernando Derupe, operator of the Republic Ships Agency, served as headchecker of Macondray & Co., and received pay from that company. The record also showed that these agencies provided exclusive guard service to the respective companies and were paid a commission of ten percent (10%) of the wages of the watchmen.

The Court further pointed to evidence that the payrolls of the agency operators were subject to approval by ship officers and managers of the shipping companies before action, and that the application forms and identification cards for watchmen bore approval by superintendents of the shipping companies. It also noted that while agency operators recruited watchmen, supervision while the watchmen worked on board vessels was exercised not only by agency supervisors but also by ship officers, port captains, and company managers. It added that the shipping firms withheld and deducted income tax from watchmen’s wages, and in at least one instance, compensated watchmen for injuries sustained in line of duty.

Given this evidentiary matrix, the Court held that there was substantial evidence to support the industrial court’s conclusion of an employer-employee relationship for the purpose of certification.

Appropriate Bargaining Unit and the Effect of Agency Status as Business Names

The Supreme Court rejected the contention that the industrial court erred by failing to determine an appropriate bargaining unit. It observed that respondent’s petition expressly asked that a bargaining unit be chosen representing all watchmen rendering service on the vessels of the named shipping companies. No other bargaining unit was proposed by any party. Once the certification petition was gi

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