G.R. No. L-59229; August 22, 1991
HIJOS DE F. ESCAÑO INC., and PIER 8 ARRASTRE AND STEVEDORING SERVICES, INC., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, NATIONAL ORGANIZATION OF WORKINGMEN (NOWM) PSSLU-TUCP and ROLANDO VILLALOBOS, respondents.

FACTS

Private respondent labor union filed a complaint for unfair labor practice and illegal dismissal against Pier 8 Arrastre & Stevedoring Services, Inc. (PIER 8 A&S), later amending it to include money claims and to implead Hijos de F. Escaño, Inc. (Escaño) as a respondent. The stevedores were employed by PIER 8 A&S, which provided arrastre and stevedoring services. Due to a port authority policy consolidating services, PIER 8 A&S was formed from a merger of two prior contractors. When Escaño’s vessels transferred to another pier, PIER 8 A&S implemented a work rotation scheme due to reduced business. The affected stevedores resisted and were dismissed on August 10, 1978, without prior clearance from the Ministry of Labor.
The Labor Arbiter found both petitioners jointly and severally liable, ruling PIER 8 A&S was a labor-only contractor and Escaño was the principal employer. The NLRC affirmed. Petitioners assail this finding of an employer-employee relationship between Escaño and the stevedores and the award of backwages.

ISSUE

Whether an employer-employee relationship existed between Hijos de F. Escaño, Inc. and the stevedores, making it solidarily liable with PIER 8 A&S for illegal dismissal and unfair labor practice.

RULING

The Supreme Court modified the decisions, holding that no employer-employee relationship existed between Escaño and the stevedores. The Court applied the four-fold test: selection and engagement, payment of wages, power of dismissal, and power of control. The evidence showed PIER 8 A&S alone hired, paid, and dismissed the stevedores. Escaño merely contracted for stevedoring services with PIER 8 A&S; it did not exercise control over the means and methods of the stevedores’ work. The arrangement was one of legitimate job contracting, not labor-only contracting. Therefore, only PIER 8 A&S was the employer.
However, the Court affirmed the findings of unfair labor practice and illegal dismissal against PIER 8 A&S. The dismissal due to the workers’ union activities constituted unfair labor practice. Furthermore, the dismissal without the required prior clearance from the Ministry of Labor was conclusively presumed illegal under the law then in force. Consequently, only PIER 8 A&S was liable for reinstatement and payment of backwages from August 10, 1978, to March 27, 1979, the latter date being when the workers refused a return-to-work order due to the pending case.