LABOR2 Prepared by: MENDOZA, Ranielle
022_Singer Sewing Machine Company v. Drilon
TOPIC: The Right to Self-Organization Continued
Citation G.R. No. 91307
Date January 24, 1991
Ponente GUTIERREZ, JR., J
Petitioner SINGER SEWING MACHINE COMPANY,
Respondent HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B. CHAGUILE, JR., and SINGER
MACHINE COLLECTORS UNION-BAGUIO (SIMACUB)
Relevant Codal
Provision
Case Doctrine/s Related to Topic
Since private respondents are not employees, they are not entitled to the constitutional right to join or form a labor
organization for purposes of collective bargaining. Accordingly, there is no constitutional and legal basis for their
"union" to be granted their petition for direct certification.
Case Summary
SIMACUB filed a petition for direct certification as the sole and exclusive bargaining agent of all collectors of the
Singer Sewing Machine Company, Baguio City branch (Singer Company). Singer Company opposed the petition on
the ground that the union members are actually not employees but are independent contractors as evidenced by the
collection agency agreement which they signed. SC held that members of SIMACUB are not employees since the
agreement confirms the status of the collecting agent as an independent contractor not only because he is explicitly
described as such but also because the provisions permit him to perform collection services without being subject
to the control except only as to the result of his work. In this case, the last and most important element of the control
test is not satisfied by the terms and conditions of the contracts.
FACTS:
1. Feb. 15, 1989 - SIMACUB filed a petition for direct certification as the sole and exclusive bargaining agent of all
collectors of the Singer Sewing Machine Company, Baguio City branch (Singer Company).
2. Singer Company opposed the petition on the ground that the union members are actually not employees but are
independent contractors as evidenced by the collection agency agreement which they signed.
3. Med-Arbiter: there is an employer-employee relationship, hence granted the petition for certification (basis not given)
4. On appeal: Secretary of Labor Franklin M. Drilon affirmed it (basis not given).
5. Petition to the SC:
a) Singer Company arguments:
• DOLE has no jurisdiction since the existence of employer-employee relationship is at issue.
• Evidence of the union members' being commission agents was disregarded by the Labor Secretary.
• SIMACUB disregarded the rule that commission agents are not employees but are independent contractors.
• Used as basis the following provisions in their agreement:
1. a collector is designated as a "collecting agent" who is to be considered at all times as an independent
contractor and not employee.
2. Collection of all payments on installment accounts are to be made monthly or oftener;
3. An agent is paid his compensation for service in the form of a commission of 6% of all collections made
and turned over plus a bonus on said collections;
4. Agent is required to post a cash bond of P3,000 to assure observance of the agreement;
5. he is subject to all the terms and conditions in the agreement;
6. the agreement is effective for one year from the date of its execution and renewable on a yearly basis; and
7. Services shall be terminated in case of failure to satisfy the minimum monthly collection performance
required, failure to post a cash bond, or cancellation of the agreement at the instance of either party.
b) SIMACUB arguments:
• Members "perform the most desirable and necessary activities for the Company" (Art 280 of the Labor Code).
• Termination of the agreement by the petitioner pending the resolution of the case before the DOLE "only
shows the weakness of petitioner's stand" and was "for the purpose of frustrating the constitutionally mandated
rights of the members of private respondent union to self-organization and collective organization."
• Under Section 8, Rule 8, Book No. III of the Omnibus Rules Implementing the Labor Code, which defines job-
contracting, they cannot legally qualify as independent contractors who must be free from control of the alleged
employer, who carry independent businesses and who have substantial capital or investment in the form of
equipment, tools, and the like necessary in the conduct of the business.
• Use the following provisions in the agreement as arguments:
1. Par. 2: An agent shall utilize only receipt forms authorized and issued by the Company.
2. Par. 3: An agent has to submit and deliver at least once a week or as often as required a report of all
collections made using report forms furnished by the Company.
3. Par. 4: on the monthly collection quota required is deemed as a control measure over the means.
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LABOR2 Prepared by: MENDOZA, Ranielle
022_Singer Sewing Machine Company v. Drilon
TOPIC: The Right to Self-Organization Continued
ISSUE – HELD – RATIO:
ISSUE # 1 HELD
WON there is No. Agreement confirms the status of the collecting agent as an independent contractor not only
an EE-ER because he is explicitly described as such but also because the provisions permit him to perform
relationship. collection services without being subject to the control except only as to the result of his work.
RATIO
The last and most important element of the control test is not satisfied by the terms and conditions of the
contracts.
1. The requirement of utilizing only receipt forms and report forms issued by the Company and that reports shall be
submitted at least once a week is not necessarily an indication of control. The agreement explains this is to avoid
comingling of personal funds.
2. The use of standard report forms as well as the regular time within which to submit a report of collection are intended
to facilitate order in office procedures. Even if these are called control measures, any control is only with respect to
the end result of the collection since the requirements regulate the things to be done after the performance of the
collection job or the rendition of the service.
3. The monthly collection quota is a normal requirement to encourage a collecting agent to report at least the minimum
amount of proceeds. In fact, Par. 5, section b gives a bonus, aside from the regular commission every time the
quota is reached.
Union member did not object to the facts below asserted by the company.
1. They are not required to observe office hours or report to office everyday except during remittance.
2. They do not have to devote their time exclusively for SINGER. They do not need to account for their time and submit
a record of their activity.
3. The manner and method of effecting collections are left solely to the discretion of the collection agents.
4. Agents shoulder their transportation expenses incurred in the collections of the accounts assigned to them.
5. Agents are paid strictly on commission basis. They do not receive any commission if they do not effect any collection.
6. The commissions earned by the collection agents are directly deducted by them from the amount of collections they
are able to effect. The net amount is what is then remitted to Singer.
The plain language of the agreement reveals that the designation as collection agent does not create an
employment relationship and that the applicant is to be considered at all times as an independent contractor.
1. This is consistent with the first rule of interpretation that the literal meaning of the stipulations in the contract controls.
2. No such words as "to hire & employ" are present. Agreement did not fix an amount for wages nor the required
working hours.
3. Agent does his work "more or less at his own pleasure" without a regular daily time frame imposed on him.
4. The grounds specified in the contract for termination of the relationship do not support the view that control exists
"for the causes of termination thus specified have no relation to the means and methods of work that are ordinarily
required of or imposed upon employees."
Art. 280 of the Labor Code & Sec. 8, Rule 8, Book III of the IRR of Labor Code do not apply in this case.
1. Article 280 merely distinguishes between two kinds of employees (regular and casual), it does not apply where the
existence of an employment relationship is in dispute.
2. With regards to Sec. 8, Rule 8 Book III of the IRR - There is no showing that a collection agent needs tools and
machineries. Section 8, Rule 8, Book III and Article 106 are relevant in determining whether the employer is solidarily
liable to the employees of an alleged contractor and/or sub-contractor for unpaid wages in case it is proven that
there is a job-contracting situation.
ISSUE – HELD – RATIO:
ISSUE # 1 HELD
WON members of SIMACUB are entitled to the constitutional right to join or No. Because there is no EE-ER
form a labor organization for purposes of collective bargaining? relationship.
RATIO
1. Since there is no EE-ER relationship, they are not entitled to the constitutional right to join or form a labor
organization for purposes of collective bargaining.
2. Hence, there is no constitutional and legal basis for their "union" to be granted their petition for direct certification.
3. La Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor Relations: 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.
RULING:
WHEREFORE, the Order of Med-Arbiter & the reso and Order of Sec. Drilon are hereby REVERSED and SET ASIDE.
The petition for certification election is ordered dismissed and the temporary restraining order is made permanent.
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