Republic VS Asiapro Coop Digest

G.R. No.
172101 November 23, 2007

REPUBLIC OF THE PHILIPPINES, represented by the SOCIAL SECURITY COMMISSION
and SOCIAL SECURITY SYSTEM, Petitioners, vs. ASIAPRO COOPERATIVE, Respondent.
Facts:
Respondent Asiapro, as a cooperative, is composed of owners-members. Under its by-laws,

owners-members are of two categories, to wit: (1) regular member, who is entitled to all the
rights and privileges of membership; and (2) associate member, who has no right to vote and be
voted upon and shall be entitled only to such rights and privileges provided in its by-laws. Its
primary objectives are to provide savings and credit facilities and to develop other livelihood
services for its owners-members. In the discharge of the aforesaid primary objectives,
respondent cooperative entered into several Service Contracts with Stanfilco - a division of
DOLE Philippines, Inc. and a company based in Bukidnon. The owners-members do not receive
compensation or wages from the respondent cooperative. Instead, they receive a share in the
service surplus which the respondent cooperative earns from different areas of trade it engages
in, such as the income derived from the said Service Contracts with Stanfilco. The owners-
members get their income from the service surplus generated by the quality and amount of
services they rendered, which is determined by the Board of Directors of the respondent
cooperative.
The owners-members of the respondent cooperative, who were assigned to Stanfilco requested
the services of the latter to register them with petitioner SSS as self-employed and to remit their
contributions as such. However, petitioner SSS informed the respondent cooperative that based
on the Service Contracts it executed with Stanfilco, respondent cooperative is actually a
manpower contractor supplying employees to Stanfilco and for that reason, it is an employer of
its owners-members working with Stanfilco.
Issue:
Whether or not there is an employer-employee relationship between Asiapro
Cooperative and its owner-members.
Ruling:
Yes, there is an employer-employee relationship between Asiapro Cooperative and its owner-
members.
In determining the existence of an employer-employee relationship, the following elements are

considered: (1) the selection and engagement of the workers; (2) the payment of wages by
whatever means; (3) the power of dismissal; and (4) the power to control the worker’s conduct,
with the latter assuming primacy in the overall consideration. The most important element is the
employer’s control of the employee’s conduct, not only as to the result of the work to be done,
but also as to the means and methods to accomplish. The power of control refers to the
existence of the power and not necessarily to the actual exercise thereof. It is not essential for
the employer to actually supervise the performance of duties of the employee; it is enough that
the employer has the right to wield that power. All the aforesaid elements are present in this
case.
First. It is expressly provided in the Service Contracts that it is the respondent cooperative which
has the exclusive discretion in the selection and engagement of the owners-members as well as
its team leaders who will be assigned at Stanfilco. Second. Wages are defined as "remuneration
or earnings, however designated, capable of being expressed in terms of money, whether fixed
or ascertained, on a time, task, piece or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under a written or unwritten contract of
employment for work done or to be done, or for service rendered or to be rendered." In this
case, the weekly stipends or the so-called shares in the service surplus given by the respondent
cooperative to its owners-members were in reality wages, as the same were equivalent to an
amount not lower than that prescribed by existing labor laws, rules and regulations, including
the wage order applicable to the area and industry; or the same shall not be lower than the
prevailing rates of wages. It cannot be doubted then that those stipends or shares in the service
surplus are indeed wages, because these are given to the owners-members as compensation in
rendering services to respondent cooperative’s client, Stanfilco. Third. It is also stated in the
above-mentioned Service Contracts that it is the respondent cooperative which has the power to
investigate, discipline and remove the owners-members and its team leaders who were
rendering services at Stanfilco. Fourth. As earlier opined, of the four elements of the employer-
employee relationship, the "control test" is the most important. In the case at bar, it is the
respondent cooperative which has the sole control over the manner and means of performing
the services under the Service Contracts with Stanfilco as well as the means and methods of
work. Also, the respondent cooperative is solely and entirely responsible for its owners-
members, team leaders and other representatives at Stanfilco. All these clearly prove that,
indeed, there is an employer-employee relationship between the respondent cooperative and its
owners-members.
It is true that the Service Contracts executed between the respondent cooperative and Stanfilco
expressly provide that there shall be no employer-employee relationship between the
respondent cooperative and its owners-members. This Court, however, cannot give the said
provision force and effect. The respondent cooperative must not be allowed to deny its
employment relationship with its owners-members by invoking the questionable Service
Contracts provision, when in actuality, it does exist. The existence of an employer-employee
relationship cannot be negated by expressly repudiating it in a contract, when the terms and
surrounding circumstances show otherwise. The employment status of a person is defined and
prescribed by law and not by what the parties say it should be.
In Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja, the Court held that:
A cooperative, therefore, is by its nature different from an ordinary business concern, being run
either by persons, partnerships, or corporations. Its owners and/or members are the ones who
run and operate the business while the others are its employees x x x.
An employee therefore of such a cooperative who is a member and co-owner thereof cannot
invoke the right to collective bargaining for certainly an owner cannot bargain with himself or his
co-owners. In the opinion of August 14, 1981 of the Solicitor General he correctly opined that
employees of cooperatives who are themselves members of the cooperative have no right to
form or join labor organizations for purposes of collective bargaining for being themselves co-
owners of the cooperative.
However, in so far as it involves cooperatives with employees who are not members or co-
owners thereof, certainly such employees are entitled to exercise the rights of all workers to
organization, collective bargaining, negotiations and others as are enshrined in the Constitution
and existing laws of the country.
The situation in the aforesaid case is very much different from the present case. The declaration
made by the Court in the aforesaid case was made in the context of whether an employee who
is also an owner-member of a cooperative can exercise the right to bargain collectively with the
employer who is the cooperative wherein he is an owner-member. Obviously, an owner-member
cannot bargain collectively with the cooperative of which he is also the owner because an owner
cannot bargain with himself. In the instant case, there is no issue regarding an owner-member’s
right to bargain collectively with the cooperative. The question involved here is whether an
employer-employee relationship can exist between the cooperative and an owner-member.
It not disputed that the respondent cooperative had registered itself with the Cooperative
Development Authority, as evidenced by its Certificate of Registration No. 0-623-2460. In its by-
laws, its Board of Directors directs, controls, and supervises the business and manages the
property of the respondent cooperative. Clearly then, the management of the affairs of the
respondent cooperative is vested in its Board of Directors and not in its owners-members as a
whole. Therefore, it is completely logical that the respondent cooperative, as a juridical person
represented by its Board of Directors, can enter into an employment with its owners-members.

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G.R. No.

172101 November 23, 2007

Respondent Asiapro, as a cooperative, is composed of owners-members. Under its by-laws,

In determining the existence of an employer-employee relationship, the following elements are

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