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VOL. 123, JULY 25, 1983 679

La Suerte Cigar & Cigarette Factory vs. Director of the
Bureau of Labor Relations

*
No, L-55674. July 25, 1983.

LA SUERTE CIGAR AND CIGARETTE FACTORY,

petitioner, vs. DIRECTOR OF THE BUREAU OF LABOR
RELATIONS, THE LA SUERTE CIGAR AND
CIGARETTE FACTORY PROVINCIAL (Luzon) AND
METRO MANILA SALES FORCE ASSOCIATION-NATU,
and THE NATIONAL ASSOCIATION OF TRADE
UNIONS, respondents.

Labor Law; The issue of whether a dealer is an employee or

independent contractor must he resolved from the terms of the
dealership agreement.—Following the rule in the Mafinco case
that in a petition for certiorari, the issue of whether respondents
are employees or independent contractors should be resolved
mainly in the light of their peddling contracts, so must We
likewise resolve the status of the 14 members of the local union
involved herein mainly on their dealership agreements for verily,
“a different approach would lead this Court astray into the field of
factual controversy where its legal pronouncements would not
rest on solid grounds.” We must stress the Supreme Court is not a
trier of facts.

Same; Contracts; Dealership agreement at bar establishes an

independent contractual relationship not employment.—
Accordingly, after considering the terms and stipulations of the
Dealership Contracts which are clear and leave no doubt upon the
intention of the contracting parties in establishing the
relationship between the dealers on one hand and the company on
the other as that of buyer and seller, We find that the status
thereby created is one of independent contractorship, pursuant to
the first rule in the interpretation of contracts that the literal
meaning of the stipulations shall control. (Article 1370, New Civil
Code).

Same; Same; Same.—From the plain language of the

Dealership Agreement. We find that the same is premised with
the prefatory statement “the factory has accepted the application
of (name of applicant) and therefore has appointed him as one of
its dealers.” Its terms and conditions include the following: that
the dealer shall handle the products in accordance with existing
laws and regulations

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_______________

* SECOND DIVISION.

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of the government (par. 1); that the dealer shall send his orders to
the factory plant in cash in any amount or on credit up to the
amount of not more than P10,000.00 only at any given time (par.
2); that the factory shall supply the dealer with a truck or a panel
delivery and all expenses for repairs shall be borne by the factory
(par. 3); and that the dealer shall not receive any commission but
shall be given a discount for all sales and said discount shall be
decided by the factory from time to time (par. 4).

Same; Same; Same; Non-employment of words “to hire and

employ” lends credence to theory dealership at bar does not
establish employer-employee relationship.—It is likewise
immediately noticeable that no such words as “to hire and
employ” are present. The Dealership Agreement uses the words
“the factory has accepted the application of (name of applicant)
and therefore has appointed him as one of its dealers”; whereas
the Dealership Supplementary Agreement is prefaced with the
statement: “For and in consideration of the mutual covenants and
agreements made herein, by one to the other, the COMPANY and
the DEALER by these presents, enter into this Supplementary
Agreement whereby the COMPANY will avail of the services of
the DEALER to handle the sale and distribution of the cigarette
products”. Nothing in the terms and conditions likewise reveals
that the dealers were engaged as employees.

Same; Same; Same; Agreement on giving factory discount to

dealer rather than on commission basis indicates independent
contractual relationship.—Again, on the basis of the clear terms of
the dealership agreements, no mention is made of the wages of
the dealers. In fact, it specifies that the dealer shall not receive
any commission from the factory but the latter shall give the
dealer a discount for all sales either on consignment or in cash
(par. 4).

Same; Same; Same; Same.—It is not disputed that under the

dealership agreement, the dealer purchases and sells the
cigarettes manufactured by the company under and for his own
account. The dealer places his order for the purchase of cigarettes
to be sold by him in a particular territory by filling up an Issuance
Slip. The Issuance Slip is approved by the Sales Manager and
after the sale is approved, a Sales Invoice is then issued to the
dealer. On the basis of the approved Issuance Slip and the Sales

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Invoice, the dealer secures the delivery of his order from the
warehouse of the company and upon

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delivery of the cigarettes from the warehouse, the dealer has the
obligation to pay whether the cigarettes are disposed or not. The
dealer on his own account sells the cigarettes in any manner he
deems best without constraint as to time. The dealers do not
devote their full time in selling company products. They are
likewise engaged in other livelihood and businesses while selling
cigarettes manufactured by the company.

Same; Evidence; Evidence varying terms of an agreement not

admissible.—In the first place, We cannot accept nor consider
evidence varying the terms of the agreement other than the
contents of the writing itself, pursuant to Section 7, Rule 130 of
the Revised Rules of Court.

Certiorari; Contracts; Certiorari not proper remedy if there

had been changes in practice in application of contracts.—If there
are changes by reason of actual practice and operation, certiorari
is not the proper proceeding or remedy therefor.

Evidence; Appeal; Extraneous evidence or evidence dehors the

records in other cases not admissible or reviewable for first time on
appeal.—In the second place, petitioner’s claim that respondent
local union relies heavily on evidence dehors the record or
extraneous evidence found in cases other than the one at bar, as
the testimony in the Limarez case, NCR Case AB-3-4960-80 cited
extensively (pp. 63, 64, 65-66, 66-67, 68-69, 70-72, 73-76, 77-83,
84-85, 86-87, 89, 90-94, 97-98, 107, Comment of Local Union) and
that practically all the appendages to the Comment of Local
Union constituting the main bulk thereof (Annexes 1 to 52) were
evidence introduced in other cases and not in the case at bar, is
meritorious. We reject said evidence dehors the record and the
appendages raised for the first time on appeal as extrinsic, beyond
the scope of this review.

Labor Law; No employment status established where company

control on dealer performance is merely conjectural.—We hold
further that the terms and conditions for the termination of the
contract are the usual and common stipulations in independent
contractorship agreements. In any event, the contention that the
totality of the powers expressly reserved to the company establish
company control over the manner and details of performance is
merely speculative and conjectural.

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Same; Evidence; Withdrawal of laborers from a union before

filing of petition, for certification election is presumed voluntary
and affects the 30% requirement for holding elections.—On the
second issue—whether or not the withdrawal of 31 union
members from NATU affected the petition for certification
election insofar as the 30% requirement is concerned, We reverse
the Order of the respondent Director of the Bureau of Labor
Relations, it appearing undisputably that the 31 union members
had withdrawn their support to the petition before the filing of
said petition. It would be otherwise if the withdrawal was made
after the filing of the petition for it would then be presumed that
the withdrawal was not free and voluntary. The presumption
would arise that the withdrawal was procured through duress,
coercion or for valuable consideration. In other words, the
distinction must be that withdrawals made before the filing of the
petition are presumed voluntary unless there is convincing proof
to the contrary, whereas withdrawals made after the filing of the
petition are deemed involuntary.

PETITION for certiorari to review the resolutions of the

Director of the Bureau of Labor Relations.

The facts are stated in the opinion of the Court.

          Angara, Abello, Concepcion, Regala & Cruz Law
Office for petitioner.
     The Solicitor General for respondents.
     Marcelino Lontok, Jr. for respondent NATU.

GUERRERO, J.:

In the determination of the basic issue raised in the case at

bar involving the status of some 14 members of private
respondent local union whether they are employees of
petitioner company in which case they should be included
in the 30% jurisdictional requirement necessary to support
the petition for certification election, or independent
contractors and hence, excluded therefrom, Our rulings in
Mafinco Trading Corp. vs. Ople, 70 SCRA 139, where We
reiterated the “control test” earlier laid down in Investment
Planning Corp. vs. Social Security System, 21 SCRA 924,
and in Social

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Security System vs. Hon. Court of Appeals and Shriro

(Phils.) Inc., 37 SCRA 579 are authoritative and
controlling.
In the Mafinco case, the Court, through Justice Aquino,
said:

“In a petition for certiorari, the issue of whether respondents are

employees or independent contractors should be resolved mainly
in the light of their peddling contracts.—Pro hac vice the issue of
whether Repomanta and Moralde were employees of Mafinco or
were independent contractors should be resolved mainly in the
light of their peddling contracts. A different approach would lead
this Court astray into the field of factual controversy where its
legal pronouncements would not rest on solid grounds.
“A contract whereby one engages to purchase and sell soft
drinks on trucks supplied by the manufacturer but providing that
other party (peddler) shall have the right to employ his own
workers, shall post a bond to protect the manufacturer against
losses, shall be responsible for damages caused to third persons,
shall obtain the necessary licenses and permits and bear the
expenses incurred in the sale of the soft drinks is not a contract of
employment.—We hold that under their peddling contracts
Repomanta and Moralde were not employees of Mafinco but were
independent contractors as found by the NLRC and its factfinder
and by the committee appointed by the Secretary of Labor to look
into the status of Cosmos and Mafinco peddlers. They were
distributors of Cosmos soft drinks with their own capital and
employees. Ordinarily, an employee or a mere peddler does not
execute a formal contract of employment. He is simply hired and
he works under the direction and control of the employer.
Repomanta and Moralde voluntarily executed with Mafinco
formal peddling contracts which indicate the manner in which
they would sell Cosmos soft drinks. That circumstance signifies
that they were acting as independent businessmen. They were
free to sign or not to sign that contract. If they did not want to sell
Cosmos products under the conditions defined in that contract,
they were free to reject it. But having signed it, they were bound
by its stipulations and the consequences thereof under existing
labor laws. One such stipulation is the right of the parties to
terminate the contract upon 5 days’ prior notice. Whether the
termination in this case was an unwarranted dismissal of an
employee, as contended by Repomanta and Moralde, is a point
that cannot be resolved without submission of evidence. Using the
contract itself as the sole criterion,

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the termination should perforce be characterized as simply the

exercise of a right freely stipulated upon by the parties.
“Tests for determining the existence of employer-employee
relationship.—In determining the existence of employer-employee
relationship, the following elements are generally considered,

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namely: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to
control the employees’ conduct—although the latter is the most
important element.
‘‘Factors to determine existence of independent contract
relationship.—An independent contractor is one who exercises
independent employment and contracts to do a piece of work
according to his own methods and without being subject to control
of his employer except as to the result of the work. ‘Among the
factors to be considered are whether the contractor is carrying on
an independent business; whether the work is part of the
employer’s general business; the nature and extent of the work;
the skill required; the term and duration of the relationship; the
right to assign the performance of the work to another; the power
to terminate the relationship; the existence of a contract for the
performance of a specified piece of work; the control and
supervision of the work; the employer’s powers and duties with
respect to the hiring, firing, and payment of the contractor’s
servants; the control of the premises; the duty to supply the
premises, tools, appliances, material and labor; and the mode,
manner, and terms of payment.’ ”

In the Shriro case, We held that the common law rule of

determining the existence of employer-employee
relationship, principally the “control test”, applies in this
jurisdiction. Where the element of control is absent; where
a person who works for another does so more or less at his
own pleasure and is not subject to definite hours or
conditions of work, and in turn is compensated according to
the result of his efforts and not the amount thereof,
relationship of employer and employee does not exist.
And supplementing the above jurisprudence is Our
ruling in Social Security System vs. The Hon. Court of
Appeals, Manila Jockey Club, Inc., Phil. Racing Club, 30
SCRA 210 wherein the Supreme Court, speaking through
then Associate Justice, now Chief Justice Fernando, held:

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“The question of when there is employer-employee relationship for

purposes of the Social Security Act has been settled in this
jurisdiction in the case of investment Planning Corp. vs. Social
Security System, 21 SCRA 924 which applied the so-called control
test, that is, whether the employer controls or has reserved the
right to control the employee not only as to the result of the work
to be done but also as to the means and methods by which the
same is to be accomplished. In other words, where the element of
control is absent; whether a person who works for another does so
more or less at his own pleasure and is not subject to definite
hours or conditions of work, and in turn is compensated according
to the result of his efforts and not the amount thereof, we should

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not find that the relationship of employer and employee exists.

This decision rejected the economic facts of the relation test.”

The instant petition for certiorari seeks to reverse the

resolution of the Director of the Bureau of Labor Relations
dated January 15, 1980 ordering that a certification
election be conducted among the sales personnel of La
Suerte Cigar and Cigarette Factory, as well as his
resolution dated November 18, 1980 denying the motion for
reconsideration and directing that a certification election
be conducted immediately. The said resolutions reversed
and set aside the order of dismissal dated August 29, 1979
of the Med-Arbiter.
The antecedent facts show that on April 7, 1979, the La
Suerte Cigar and Cigarette Factory Provincial (Luzon) and
Metro Manila Sales Force Association (herein referred to as
the local union) applied for and was granted chapter status
by the National Association of Trade Unions (hereinafter
referred to as NATU).
On April 16, 1979, some thirty-one (31) local union
members signed a joint letter withdrawing their
membership from NATU.
Nonetheless, on April 18, 1979, the local union and
NATU filed a petition for direct certification or certification
election which alleged among others, that forty-eight of the
sixty sales personnel of the Company were members of the
local union; that the petition is supported by no less than
75% of the sales force; that there is no existing recognized
labor union in the

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Company representing the said sales personnel; that there

is likewise no existing collecting bargaining agreement;
and that there had been no certification election in the last
twelve months preceding the filing of the petition.
The Company then filed a motion to dismiss the petition
on June 13, 1979 on the ground that it is not supported by
at least 30% of the members of the proposed bargaining
unit because (a) of the alleged forty-eight (48) members of
the local union, thirty-one (31) had withdrawn prior to the
filing of the petition; and (b) fourteen (14) of the alleged
members of the union were not employees of the Company
but were independent contractors.
NATU and the local union opposed the Company’s
motion to dismiss alleging that the fourteen dealers are
actually employees of the Company because they are
subject to its control and supervision.
On August 29, 1979, the Med-Arbiter issued an order
dismissing the petition for lack of merit as the fourteen
dealers who joined the union should not be counted in

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determining the 30% consent requirement because they are

not employees but independent contractors and the
withdrawal of the 31 salesmen from the union prior to the
filing of the petition for certification election was
uncontroverted by the parties.
Thereafter, on September 24, 1979, the local union on its
own signed only by the local union President, filed a motion
for reconsideration and/or appeal from the order of
dismissal on the following grounds: (a) the findings of facts
of the med-arbiter as it appears on the order are contrary
to facts and (b) in finding that no employer-employee
relationship exists between the alleged dealers and
respondent firm, the med-arbiter decided in a manner not
in accord with the factual circumstances attendant to the
relationship.
Acting on the motion for reconsideration/appeal, the
Director of the Bureau of Labor Relations, in the
Resolution dated January 15, 1980, reversed and set aside
the order of dismissal, holding that the withdrawal of the
31 signatories to the petition two days prior to the filing of
the instant petition
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did not establish the fact that the same was executed freely
and voluntarily and that the records are replete with
company documents showing that the alleged dealers are
in fact employees of the company.
The Company then filed a motion to set aside the
resolution dated January 15, 1980 of the Director of the
Bureau of Labor Relations, contending that the appeal was
never perfected or is jurisdictionally defective, copy of the
motion for reconsideration/appeal not having been served
upon the Company, and that the Resolution was based
solely on the distorted and self-serving allegations of the
union.
The local union opposed the Company’s motion for
reconsideration and submitted a memorandum on April 22,
1980 in amplification of its opposition.
At this juncture, the legal counsel of NATU filed a
manifestation on May 15, 1980 stating that the act of the
local union of engaging another lawyer to handle the case
amounts to disaffiliation, for which reason said legal
counsel was withdrawing from the case. The local union
counter-manifested that the local union had not been
officially notified of its expulsion from the NATU; that
there was no valid ground for its expulsion; that the
National Executive Council of NATU had not approved
such expulsion; and that it had no objection to the
withdrawal of Atty. Marcelino Lontok, Jr. as its counsel.

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Then came a motion of NATU through its President and

legal counsel withdrawing as petitioner and contending
that since the local union was no longer affiliated with it, it
was no longer interested in the case. Twelve members of
the National Executive Council then came in and
manifested that they constitute a majority of the Executive
Board of NATU and affirmed that the local union was still
an affiliate of NATU.
There followed a counter-manifestation of Atty.
Marcelino Lontok, Jr. on August 27, 1980 stating that six
signatories to the aforesaid manifestation had no authority
to make the said foregoing statement as they had resigned
from the Executive Board en masse; that the acts of the
President may not be

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reversed by the Executive Council; and that the twelve

signatories did not constitute a majority of the sixty (60)
members of the Executive Council.
The local union made its reply to the counter-
manifestation stating that the power to expel an affiliate
exclusively belonged to the National Executive Council of
NATU, under Section 2, Article V of the NATU
Constitution and By-Laws; that such power could only be
wielded after due investigation and hearing; that
disaffiliation is effected only by voluntary act of the local
union, which is not the case here, because it is the
President and legal counsel who are trying to expel the
union.
Simultaneously with said reply, the local union filed an
opposition to Atty. Lontok’s motion to dismiss—withdraw
petition, stating that Atty. Lontok had no more personality
to file the same inasmuch as he had previously withdrawn
as counsel in his manifestation dated May 7, 1980, and the
local union has accepted the same in its counter-
manifestation dated May 16, 1980; that expulsion requires
two-thirds vote of the members of the National Executive
Council, as well as investigation and hearing; that
engaging another lawyer is not a ground for expulsion of an
affiliate; and that the local union was compelled to hire
another lawyer because up to the last day of the
reglementary period, Atty. Lontok still had not filed an
appeal from the decision of the Med-Arbiter.
On November 18, 1980, the Director of the Bureau of
Labor Relations promulgated a resolution denying the
Company’s motion for reconsideration and directing that
the certification election be conducted immediately. Hence,
this petition.
In the apparently simple task of determining whether
the Director of the Bureau of Labor Relations committed

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grave abuse of discretion amounting to lack of jurisdiction

in ordering the direct certification election, three difficult
issues must be resolved, namely:

I. Whether or not the 14 dealers are employees or

independent contractors.
II. Whether or not the withdrawal of 31 union
members

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from the NATU affected the petition for

certification election insofar as the thirty per cent
requirement is concerned.
III. Whether or not the withdrawal of the petition for
certification election by the NATU, through its
President and legal counsel, was valid and effective.

A basic factor underlying the exercise of rights under the

Labor Code is status of employment. The question of
whether employer-employee relationship exists is a
primordial consideration before extending labor benefits
under the workmen’s compensation, social security,
medicare, termination pay and labor relations law. It is
important in the determination of who shall be included in
a proposed bargaining unit because it is the 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.
Corollarily, when a petition for certification election is
supported by 48 signatories in a bargaining unit composed
of 60 salesmen, but 14 of the 48 lacks employee status, the
petition is vitiated thereby. Herein lies the importance of
resolving the status of the dealers in this case.
It is the contention of the company that the dealers in
the sale of its tobacco products are independent
contractors. On the other hand, the Union contends that
such dealers are actually employees entitled to the
coverage and benefits of labor relations laws.
According to the petitioner, to effectively market its
products, the Company maintains a network of dealers all
over the country. These arrangements are covered by a
dealership agreement signed between the Company and a
dealer in a particular area or territory. And attached to the
petition is a representative copy of the said dealership
agreement which We quote below:

690

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“DEALERSHIP AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This DEALERSHIP AGREEMENT, executed at Pasay City,

Philippines, this 8 day of March 1977, entered into by JOSE TEN
SIU KEE, JR., of legal age, married and a resident of 178-E San
Ramon Street, Iloilo City, hereinafter referred to as DEALER,
and TELENGTAN BROTHERS & SONS, INC., doing business
under the style of “LA SUERTE CIGAR & CIGARETTE
FACTORY”, hereinafter referred to as FACTORY, bears witness
that:
WHEREAS, JOSE TAN SIU KEE, JR. of 178-E San Ramon
Street, Iloilo City, had applied to be a DEALER of the FACTORY
for the territories of ILOILO and/or such other territories that the
FACTORY may designate from time to time; and
WHEREAS, the FACTORY had accepted the application of
JOSE TAN SIU KEE, JR., and therefore, appointed him as one of
its dealers in ILOILO and/or such other territories that the
FACTORY may designate from time to time, who is willing and
able to do so as such for the main purpose of extensively selling
the products of the FACTORY in the said territories, under the
following express terms and conditions, to wit:

1. That the DEALER shall handle for sale and distribution of

cigarette products of the factory covering the territories of
ILOILO and/or such other territories that the FACTORY
may designate from time to time, in accordance with
existing laws and regulations of the government, without
however, incurring any expenses in doing so, without the
previous written consent of the FACTORY being first had
and obtained;
2. That for the purpose of selling the cigarettes or products of
the FACTORY, the DEALER shall send his orders to the
FACTORY plant in Parañaque, Metro Manila, either in
cash or on credit; Provided, however, that in cases of credit
order the DEALER can only get or order the supply of
cigarettes up to the amount of not more than FIFTY
THOUSAND PESOS (P50,000.00) only at any given time
during the existence of this Contract, unless allowed by
the FACTORY to get more;
3. That the FACTORY shall supply the DEALER with a
track or panel delivery and all expenses shall be borne by
the FACTORY; driver shall be borne by the DEALER;

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That the DEALER shall not receive any commission from

4. the FACTORY but the latter shall give the DEALER a
discount for all sales either on consignment or in cash, and
said discount shall be decided by the FACTORY from time
to time;
5. That the FACTORY shall not be liable for any violation of
any law, which the DEALER may commit, and that the
DEALER alone shall be responsible for any violation;
6. The geographical area (hereinafter referred to as
“Territory”) covered by this Agreement in which the
DEALER shall undertake the responsibilities provided
herein is ILOILO. It is, however, agreed and understood
that the FACTORY may from time to time, upon written
notice thereof THE DEALER, change or subdivide the
Territory as the business exigencies, and the policy of the
FACTORY with respect thereto will dictate.
7. The DEALER agrees that during the term of this
Agreement:

(a) He will diligently, loyally and faithfully serve the

FACTORY as its DEALER and diligently canvass for
buyers of the FACTORY’S Products in the Territory;
(b) He shall not sell or distribute goods of a similar nature or
such as would compete and interfere with the sale of the
Products of the FACTORY in the Territory, either on his
account or on behalf of any other person whatsoever;
(c) Furnish to the FACTORY every three (3) months a list of
the buyers/customers in the Territory, specifyng the
names and address of such customers as well as their
individual daily supply/stock requirements;
(d) He will faithfully and religiously abide by the FACTORY
policy, roles and regulations, particularly with respect to
the pricing of all Products to be sold and distributed by
him;
(e) He will keep account of all his dealings hereunder and
promptly liquidate his account with the FACTORY with
respect to the Products sold by him in the Territory;
(f) He will not engage in any activity which will in any
manner prejudice either the business or name of the
FACTORY, such as, but not limited to, “black-marketing”
operations;
(g) He win not withdraw cigarettes if the maximum volume
allotted to him by the FACTORY has been exceeded;

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(8) That the DEALER shall sell the Products of the

FACTORY at a price to be agreed upon between both
parties;

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(9) That the DEALER shall hereby bind and obligate himself
to furnish the FACTORY, within a week from the date of
this Contract with Surety or Cash Bond in the amount of
not less than FIFTY THOUSAND PESOS (P50,000.00).
The surety bond should be issued by one or several
bonding companies acceptable to and approved by the
FACTORY to guarantee and secure complete and faithful
performance of the DEALER and his obligations herein
enumerated, particularly the payment of his financial
obligations with the FACTORY. The bond may be
increased as required by the FACTORY;
10. In the event that the DEALER should become
incapacitated to discharge his undertakings and
responsibilities under this Agreement, for any reason
whatsoever, the FACTORY may designated, for the
duration of such incapacity, a substitute to handle the sale
and distribution of the Products in the Territory;
11. The FACTORY reserves its right to determine, from time
to time, the amount of credit granted or to be granted to
the DEALER with respect to the Products to be sold and
distributed in the Territory;
12. This Agreement may be cancelled and/or terminated by
the FACTORY should the DEALER violate its
undertaking under this Agreement especially with respect
to Paragraph 7(f) hereof. It is understood, however, that
the failure of the FACTORY to enforce at any time or for
any period of time, any right, power or remedy accruing to
the FACTORY upon default by the DEALER of his
undertakings under this Agreement shall not impair any
such right, power or remedy or to be construed to be a
waiver or an acquiescence in such default; nor shall the
action of the FACTORY in respect of any default, or any
acquiescence by it in any default, affect or impair any
right, power or remedy of the FACTORY in respect of any
other default.
13. That either party may terminate this Contract without
cause by giving to the other party fifteen (15) days notice
in writing but without prejudice to any right or claim
which as of that date may have accrued to either of the
parties hereunder, however, in the event of breach of this
Contract, the FACTORY may terminate this Contract
without notice to the DEALER.

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14. That it is hereby finally stipulated and agreed that in case

of litigation arising out of or in connection with this
Contract, the Municipal Court of Parañaque or the Court
of First Instance of Rizal, as the case may be, shall be the
competent court wherein to file such action or actions.

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That this Contract shall supersede any Contract which the

15. DEALER may have with the FACTORY.

IN WITNESS WHEREOF, these presents are signed at Pasay

City, Philippines on this 8 day of March 1977.

TELENGTAN BROTHERS & SONS, INC.

(La Suerte Cigar & Cigarette Factory)

     FACTORY

By:

(SGD.) LIM HAN ENG (SGD.) JOSE TAN SIU KEE, JR.
Assistant Manager      Dealer
Sales Department      TAN 5976-397-9
SIGNED IN THE PRESENCE OF:
(SGD.) ILLEGIBLE (SGD.) ILLEGIBLE”
(Acknowledgment omitted)F  

The records embody standard copies of the Dealership

Supplementary Agreement which We also quote hereunder:

“DEALERSHIP SUPPLEMENTARY AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This Supplementary Agreement, made and entered into this 14th

day of February, 1975 in Pasay City, Philippines, by and between:

TELENGTAN BROTHERS & SONS, INC., a corporation duly organized

and existing under the laws of the Philippines and doing business under
the business name and style of “LA SUERTE CIGAR & CIGARETTE
FACTORY”, with principal place of business at Km. 14 South Super
Highway, Parañaque,

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Rizal, represented in this act by its duly authorized Manager, Mr.

ROBERT UY, hereinafter referred to as COMPANY;

and

MR. PURISIMO EMBING, of legal age, married, Filipino and with

postal address at 3047 Lawaan, UP II, Parañaque, Rizal, hereinafter
referred to as DEALER,

WITNESSETH: That

For and in consideration of the mutual covenants and

agreements made herein, by one to the other, the COMPANY and
the DEALER, by these presents, enter into this Supplementary
Agreement whereby the COMPANY will avail of the services of
the DEALER to handle the sale and distribution of its cigarette
products, consisting of MARLBORO REGULAR, MARLBORO

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KING SIZE, MARLBORO 100’S; PHILIP MORRIS REGULAR,

PHILIP MORRIS FILTER KING, PHILIP MORRIS 100’S
MENTHOL, PHILIP MORRIS 100’S REGULAR; ALPINE 100’S;
MR. SLIM 100’S REGULAR, MR. SLIM 100’S MENTHOL,
subject to the following terms and conditions:

1. The COMPANY hereby constitutes and appoints the

DEALER as its authorized dealer for the sale and
distribution of the COMPANY’S products as enumerated
above, (hereinafter referred to as “Products”) and the
DEALER hereby accepts such appointment, all upon the
terms and conditions herein contained.
2. The geographical area (hereinafter referred to as
“Territory”) covered by this Agreement in which the
DEALER shall undertake the responsibilities provided
herein is GREATER MANILA AND SUBURBS. It is,
however, agreed and understood that the COMPANY may
from time to time, upon written notice thereof to the
DEALER, change or subdivide the Territory as the
business exigencies, and the policy of the COMPANY with
respect thereto will dictate.
3. The DEALER agrees that during the term of this
Agreement:

(a) He will diligently, loyally and faithfully serve the

COMPANY as its DEALER and diligently canvass for
buyers of the COMPANY’s Products in the Territory;

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(b) He shall not sell or distribute goods of a similar nature or

such as would compete and interfere with the sale or the
Products of the COMPANY in the Territory, either on this
account or on behalf of any other person whatsoever;
(c) Furnish to the COMPANY every three (3) months a list of
the buyers/customers in the Territory, specifying the
names and address of such customers as well as their
individual daily supply/stock requirements;
(d) He will faithfully and religiously abide by the COMPANY
policy, rules and regulations, particularly with respect to
the pricing of all Products to be sold and distributed by
him;
(e) He will keep account of all his dealings hereunder and
promptly liquidate his account with the COMPANY with
respect to the Products sold by him in the Territory;
(f) He will not engage in any activity which will in any
manner prejudice either the business or name of the
COMPANY, such as, but not limited to, “Black marketing”
operations;

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(g) He will not withdraw cigarettes if the maximum volume

allotted to him by the COMPANY has been exceeded;

5. The DEALER shall put up a bond, or additional bond,

with the COMPANY in such amount or amounts, as in the
judgment of the COMPANY, will be satisfactory. It is
agreed that the COMPANY can apply against said bond or
additional bond, such damages as may be suffered by the
COMPANY by reason of breach on the part of the
DEALER of any of the latter’s undertakings under this
Agreement.
6. In the event that the DEALER should become
incapacitated to discharge his undertakings and
responsibilities under this Agreement, for any reason
whatsoever, the COMPANY may designate for the
duration of such incapacity, a substitute to handle the sale
and distribution of the Products in the Territory;
7. The COMPANY reserves its right to determine, from time
to time, the amount of credit granted or to be granted to
the DEALER with respect to the Products to be sold and
distributed in the Territory.
8. This Agreement may be cancelled and/or terminated by
the COMPANY should the DEALER violate its
undertaking under this Agreement especially with respect
to Paragraph 4(f) hereof. It is

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understood, however, that the failure of the COMPANY to

enforce at any time or for any period for time, any right,
power or remedy accruing to the COMPANY upon default
by the DEALER of his undertakings under this Agreement
shall not impair any such right, power or remedy or be
construed to be a waiver or an acquiescence in such
default; nor shall the action of the COMPANY in respect
of any default, or any acquiescence by it in any default,
affect or impair any right, power or remedy of the
COMPANY in respect of any other default.
(9) In the appropriate cases, this Agreement shall constitute
as a supplement, revision or modification of any
agreement between the company and the DEALER now
existing. However, should there be a conflict between the
provisions of this Agreement and any such existing
agreement between the COMPANY and the DEALER, this
Agreement shall prevail.

IN WITNESS WHEREOF, the parties hereto have caused

these presents to be signed at the place and on the date
hereinabove written.

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TELENGTAN BROTHERS & SONS, INC.

(La Suerte Cigar & Cigarette Factory)

By:

(SGD.) ROBERT UY (SGD.) PURISIMO EMBING

     Manager      DEALER”
     (Signature of Witnesses & Acknowledgment Omitted)

Following the rule in the Mafinco case that in a petition for

certiorari, the issue of whether respondents are employees
or independent contractors should be resolved mainly in
the light of their peddling contracts, so must We likewise
resolve the status of the 14 members of the local union
involved herein mainly on their dealership agreements for
verily, “a different approach would lead this Court astray
into the field of factual controversy where its legal
pronouncements would not rest on solid grounds.” We must
stress the Supreme Court is not a trier of facts.
Accordingly, after considering the terms and
stipulations of the Dealership Contracts which are clear
and leave no doubt

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upon the intention of the contracting parties in

establishing the relationship between the dealers on one
hand and the company on the other as that of buyer and
seller, We find that the status thereby created is one of
independent contractorship, pursuant to the first rule in
the interpretation of contracts that the literal meaning of
the stipulations shall control. (Article 1370, New Civil
Code)
From the plain language of the Dealership Agreement,
We find that the same is premised with the prefatory
statement “the factory has accepted the application of
(name of applicant) and therefore has appointed him as one
of its dealers.” Its terms and conditions include the
following: that the dealer shall handle the products in
accordance with existing laws and regulations of the
government (par. ); that the dealer shall send his orders to
the factory plant in cash in any amount or on credit up to
the amount of not more than P10,000.00 only at any given
time (par. 2); that the factory shall supply the dealer with a
truck or a panel delivery and all expenses for repairs shall
be borne by the factory (par. 3); and that the dealer shall
not receive any commission but shall be given a discount
for all sales and said discount shall be decided by the
factory from time to time (par. 4).
It also provides that the dealer alone shall be
responsible for any violation of any law (par. 5); that the

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dealer shall be assigned to a particular territory which the

factory may decide from time to time (par. 6); that the
dealer shall sell the products at the price to be agreed upon
between the parties (par. 7); and that the dealer shall post
a surety bond of not less than P10,000.00 to guarantee and
secure complete and faithful performance (par. 8).
Either party may terminate the contract without cause
by giving 15 days notice in writing; however, in the event of
breach or failure to comply with any of the conditions, the
factory may terminate or rescind the contract immediately
(par. 9 and 10).
The Dealership Supplementary Agreement reiterates
that the Company “hereby constitute and appoints the
DEALER as its authorized dealer for the sale and
distribution of the

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COMPANY products” and “the DEALER hereby accepts

such appointment” (par. 1). It also provides that the
geographical area in which the dealer shall undertake his
responsibilities is Greater Manila and Suburbs. However,
the Company may change or subdivide the territory as the
business exigencies and the policy of the Company will
dictate (par. 2).
Under said supplementary agreement, the dealer
undertakes to: (a) diligently canvass for buyers of the
Company’s products; (b) refrain from selling or distributing
goods of similar nature; (c) furnish the Company every 3
months a list of buyers/customers, specifying their
addresses and individual daily supply; (d) abide by the
Company policy, particularly with respect to pricing; (e)
keep account of all his dealings and promptly liquidate his
accounts; (f) refrain from engaging in any activity which
will prejudice the Company from withdrawing cigarettes
beyond the maximum volume allotted to him (par. 3.)
In case of incapacity of the dealer, the Company may
designate a substitute (par. 6). The Company also reserves
the right to determine, from time to time, the amount of
credit granted or to be granted to the dealer (par. 7).
It is likewise immediately noticeable that no such words
as “to hire and employ” are present. The Dealership
Agreement uses the words “the factory has accepted the
application of (name of applicant) and therefore has
appointed him as one of its dealers”; whereas the
Dealership Supplementary Agreement is prefaced with the
statement: “For and in consideration of the mutual
covenants and agreements made herein, by one to the
other, the COMPANY and the DEALER by these presents,
enter into this Supplementary Agreement whereby the
COMPANY will avail of the services of the DEALER to

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handle the sale and distribution of the cigarette products”.

Nothing in the terms and conditions likewise reveals that
the dealers were engaged as employees.
Again, on the basis of the clear terms of the dealership
agreements, no mention is made of the wages of the
dealers. In

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fact, it specifies that the dealer shall not receive any

commission from the factory but the latter shall give the
dealer a discount for all sales either on consignment or in
cash (par. 4).
Considering the matter of wages, the term “wages” as
defined in Section 2 of the Minimum Wage Law (Rep. Act
No. 602) as amended, is as follows:

“(g) ‘Wage’ paid to any employee shall mean the remuneration or

earnings, however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time, task,
piece, commission basis, or other method of calculating the same,
which is payable by an employer under a written or unwritten
contract of employment for work done or to be done or for services
rendered or to be rendered, and includes the fair and reasonable
value, as determined by the Secretary of Labor, of board, lodging,
or other facilities customarily furnished by the employer to the
employee x x x.”

Section 10(k) of the same law also provides;

“(k) Notification of wage conditions.—It shall be the duty of every

employer to notify his employees at the time of hiring of the wage
conditions under which they are employed, which shall include
the following:

(1) The rate of wages payable:

(2) The method of calculation of wages;
(3) The periodicity of wage payment; the day, the hour and
place of payment; and
(4) Any change with respect to any of the foregoing items.’’

then, par. (h) of Sec. 10 of said law provides that such

“wages” must be paid to them periodically at least once
every two weeks or twice a month. Considering the
foregoing, the dealer’s discount lacks the foregoing
characteristics of the term “wage”. Since it varies from
month to month depending on the volume of the sales, it
lacks the characteristic of periodicity in the manner and
procedure contemplated in the Minimum Wage Law.

700

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Respondents, in effect, admit the clarity of the terms and

conditions of the agreements which covenant that the
relationship between the dealers and the Company is one
of buyer and seller of La Suerte products, and therefore,
one of an independent contractorship when they claimed
that the dealership arrangement as established under the
Dealership Agreement and the Dealership Supplementary
Agreement is essentially a legal cover, cloak or disguise to
hide the continuing Employer-Employee relationship
established prior to 1964. (Respondents’ Joint
Memorandum, p. 34).
Precisely, there was need to change the contract of
employment because of the change of relationship, from an
employee to that of an independent dealer or contractor.
The employees were free to enter into the new status, to
sign or not to sign the new agreement. As in the Mafinco
case, the respondents therein as in the instant case, were
free to reject the terms of the dealership but having signed
it, they were bound by its stipulations and the
consequences thereof under existing labor laws. The fact
that the 14 local union members voluntarily executed with
La Suerte formal dealership agreements which indicate the
distribution and sale of La Suerte cigarettes signifies that
they were acting as independent businessmen.
We ruled earlier that the terms and stipulations of the
dealership agreement leave no room for doubt that the
parties entered into a transaction for the distribution and
sale of La Suerte products whereby the distributor/seller or
dealer assumes the status of an independent contractor.
We note that the applicant who is appointed dealer “is
willing and able to do as such for the main purpose of
extensively selling the products of the FACTORY in the
said territories under certain expressed terms and
conditions” among them: “1. That the DEALER shall
handle for sale and distribution cigarette products of the
factory x x x”; “2. That for the purpose of selling cigarettes
or products of the factory, the dealer shall send his order to
the factory plant in Parañaque, Metro Manila either in
cash or on credit x x x”; “4. That the dealer shall not receive
any commission from the factory but the latter shall

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give the dealer a discount for all sales either on

consignment or in cash x x x”; “7. (b) He shall not sell or
distribute goods of a similar nature or such as would
compete and interfere with the sale of the products of the
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factory in the territory, either on his account or on behalf of

any other person whatsoever x x x”; “8. That the dealer
shall sell the products of the factory at a price to be agreed
upon between both parties.”
It is not disputed that under the dealership agreement,
the dealer purchases and sells the cigarettes manufactured
by the company under and for his own account. The dealer
places his order for the purchase of cigarettes to be sold by
him in a particular territory by filling up an Issuance Slip.
The Issuance Slip is approved by the Sales Manager and
after the sale is approved, a Sales Invoice is then issued to
the dealer. On the basis of the approved Issuance Slip and
the Sales Invoice, the dealer secures the delivery of his
order from the warehouse of the company and upon
delivery of the cigarettes from the warehouse, the dealer
has the obligation to pay whether the cigarettes are
disposed or not. The dealer on his own account sells the
cigarettes in any manner he deems best without constraint
as to time. The dealers do not devote their full time in
selling company products. They are likewise engaged in
other livelihood and businesses while selling cigarettes
manufactured by the company.
The sales to the dealers are either on cash or credit
basis. Where it is on cash basis, the amount is paid
immediately upon the delivery of the products from the
company’s warehouse. If it is on credit, the dealer would
usually settle his account within one week from the time
the credit is extended to him. Upon payment of the
purchase price, a company official receipt is issued to him.
Private respondents contend that there are essential
differences between the dealership agreement and that in
actual practice and operation, then proceeded to point them
in the attempt to prove the control of La Suerte over the
sales effort of the dealers. They also contend that the
dealership agreement, as stated earlier, is essentially a
legal cover, a cloak

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or disguise to hide the continuing employer-employee

relationship established prior to 1964.
We reject both contentions as being without merit.
In the first place, We cannot accept nor consider
evidence varying the terms of the agreement other than the
contents of the writing itself pursuant to Section 7, Rule
130 of the Revised Rules of Court, which provides that:

“Section 7. Evidence of written agreements.—When the terms of

an agreement have been reduced to writing, it is to be considered
as containing all such terms, and, therefore, there can be,
between the parties and their successors in interest, no evidence

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of the terms of the agreement other than the contents of the

writing except in the following cases:

(a) Where a mistake or imperfection of the writing, or its

failure to express the true intent and agreement of the
parties, or the validity of the agreement is put in issue by
the pleadings.
(b) When there is an intrinsic ambiguity in the writing.
The term ‘agreement’ includes wills.”

If there are changes by reason of actual practice and

operation, certiorari is not the proper proceeding or remedy
therefor.
In the second place, petitioner’s claim that respondent
local union relies heavily on evidence dehors the record or
extraneous evidence found in cases other than the one at
bar, as the testimony in the Limarez case, NCR Case AB-3-
4960-80 cited extensively (pp. 63, 64, 65-66, 66-67, 68-69,
70-72, 73-76, 77-83, 84-85, 86-87, 89, 90-94, 97-98, 107,
Comment of Local Union) and that practically all the
appendages to the Comment of Local Union constituting
the main bulk thereof (Annexes 1 to 52) were evidence
introduced in other cases and not in the case at bar, is
meritorious. We reject said evidence dehors the record and
the appendages raised for the first time on appeal as
extrinsic, beyond the scope of this review.
Private respondents contend that under the dealership
agreement, the totality of the powers expressly reserved to
the company, respecting essential aspects or facets of the
sales

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operation of the dealers, clearly establish company control

over the manner arid details of performance. And they cite
the following: “(1) The dealer shall be assigned to a
particular territory which the factory shall decide from
time to time (par. 6); (2) The dealer shall handle for sale
and distribution cigarette products of the company . . .
without however incurring any expense in doing so,
without previous written consent of the factory being first
had and obtained (par. 1); (3) In cases of credit order, the
dealer can only get or order the supply of cigarettes up to
the amount of not more than P10,000.00 only at any given
time during the existence of this contract, unless allowed
by the factory to get more (par. 2); (4) The company shall
give the dealer a discount for all sales . . . and said discount
shall be decided by the factory from time to time (par. 4);
(5) It is however agreed and understood that the company
may, from time to time, upon written notice thereof to the
dealer, change or divide the territory as the business

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exigencies and policy of the factory with respect thereto

will dictate (par. 2 Annex 10); (6) Each dealer will faithfully
and religiously abide by the company policy, rules and
regulations, particularly with respect to pricing of all
products to be sold and distributed by him (par. 3, sub-par,
(d), Annex 10); (7) The dealer shall put up a bond or
additional bond with the company in such amounts as in
the judgment of the company may be satisfactory (par. 5,
Annex 10); (8) In the event that the dealer should become
incapacitated for any reason whatsoever, the factory may
designate for the duration of said incapacity a substitute to
handle the sale and distribution of the products in the
territory (par. 6, Annex 10); (9) The company reserves the
right to determine, from time to time, the amount of credit
granted or to be granted the dealer (par. 7, Annex 10); (10)
This agreement may be cancelled and/or terminated by the
company should the dealer violate its undertaking under
this Agreement, especially par. 7(f) hereof (par. 8, Annex
10); (11) That either party may terminate this contract
without cause by giving to the other party 15 days notice in
writing (par. 9, Annex 9); and (12) In the event of breach of
this contract, the company may terminate this contract
without notice to the
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1
dealer (proviso in par. 9, Annex 9).”
Disputing private respondents’ above contention that
the company exercises company control over the manner
and details of the sales operation of the dealers and not
merely over the result of the work of each dealer, petitioner
maintains that:

1 . The allocation of a definite territory to be assigned

to a dealer or distributor is standard practice in
dealership agreements, whether international or
domestic. Allocation of area responsibility and
territorial and customer restrictions are common
features of dealership agreements. Thus, a company
may be appointed exclusive distributor or dealer of
a product in the Philippines, the Asian region or in
the Far East in the same way that some Philippine
manufacturers appoint exclusive dealers for the
United States or Canada;
2. In the Shriro case, the expenses for handling and
delivery of the goods to the customers are all for the
account of the company (See Social Security System
vs. Hon. Court of Appeals & Shriro (Phil.) Inc., 37
SCRA 579) and there, the Supreme Court did not
consider the facts as indicia of an employment
relation;

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3. In limiting a credit order for cigarettes up to the

amount of P10,000.00 only at any given time during
the existence of the contract, unless allowed by the
factory to get more, the company merely controls
the result of the work of the dealer. The credit order
is limited because in a dealership contract, the
transaction is one of buy and sell and once an order
is made, specially a credit order, the risk of loss is
passed on to the dealer;
4. In the Mafinco case, the peddlers are given also a
discount and the Supreme Court held that the
peddling contract is not a contract of employment
but signifies an independent contractor
relationship.
5. The change or division of the territory to which a
dealer is assigned as the business exigencies and
policy of the factory with respect thereto will dictate
from time to time is no indicia of company control
over the means and methods for in the Mafinco case
the peddlers are also assigned definite area routes
or zones.
6. That the dealers shall abide with the company
policies and

_______________

1 Annex 9 refers to the Dealership Supplementary Agreement; Annex

10, to the Dealership Agreement.

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La Suerte Cigar & Cigarette Factory vs. Director of the
Bureau of Labor Relations

rules, particularly in pricing of products is a

standard practice in dealership agreements and
more so in franchising agreements. The fact that a
person has to conform with standards of conduct set
by the company does not declassify such a person as
an independent contractor so long as he can
determine his own day to day activities. In
independent contracts, there is always the element
of control as to what shall be done as distinguished
from how it should be done.
7. The posting of a surety bond under par. 8 of the
Dealers Agreement is similar to the giving of a cash
bond under par. 7, Peddlers Contract in the
Mafinco case wherein it is ruled that the Peddlers
Contract involved therein is not an employment
agreement.
8. The right to designate a substitute dealer in the
event of the incapacity of the regular dealer is no
indication of an employer-employee relationship. It
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is just business prudence to provide for substitute

dealers in case of the regular dealer’s incapacity.
9. That the company may determine from time to time
the amount of credit granted or to be granted the
dealer is more a control over the result rather than
the means as in Shriro case where the company
even reserves the right to approve or reject a sales
order, whether on cash or on credit basis.
10. The power to cancel or terminate should the dealer
violate its undertaking under the agreement on the
basis of the company’s opinion that the dealer must
engage in any activity which will in any manner
prejudice either the business or name of the factory
is a standard practice in dealership agreements.

We agree with the petitioner. We hold further that the

terms and conditions for the termination of the contract are
the usual and common stipulations in independent
contractorship agreements. In any event, the contention
that the totality of the powers expressly reserved to the
company establish company control over the manner and
details of performance is merely speculative and
conjectural.
There are indeed striking similarities between the
Peddler’s Contract in the Mafinco case and the Dealer’s
Agreement and Supplementary Dealer’s Agreement in the
case at bar. Thus:

1. Use of company facilities—La Suerte provides

dealers with truck or panel delivery (par. 3,
Dealer’s Agreement) whereas in

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La Suerte Cigar & Cigarette Factory vs. Director of the
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Mafinco, the company also provides peddler with

delivery truck (par. 1, Peddling Contract);
2. Salary of drivers—Dealer in this La Suerte case
pays salary of driver (par. 3. Dealer’s Agreement).
In Mafinco, the salary of drivers is for peddler’s
account (par. 2, Peddling Contract);
3. Expenses of operation and maintenance—La Suerte
pays for expenses and repair pertaining to the truck
or panel delivery (par. 3, Dealership Agreement). In
Mafinco, the company furnishes gasoline and oil to
run trucks and bear costs of maintenance and
repair (par. 4, Peddling Contract);
4. Profit Margin—In instant La Suerte case, no
commission given. Company gives a sales discount
(par. 4, Dealership Agreement). In Mafinco, no

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commission is also given. Peddler given a sales

discount (par. 6, Peddler’s Contract);
5. Collateral—Dealer in La Suerte gives a surety bond
(par. 8, Dealer’s Agreement). In Mafinco, peddler
gives a cash bond (par. 7), Peddler’s Contract);
6. Payment—Dealer required to promptly liquidate
account (par. 3, (e), Supplementary Dealer’s
Contract). In Mafinco, peddler liquidates everyday
at the end of each day, otherwise his cash bond
shall answer for unliquidated account (par. 8,
Peddler’s Contract);
7. Termination—In La Suerte case, no fixed period
but either party may terminate after 15 days
written notice (par. 9, Dealer’s Contract). In
Mafinco, the contract is for one year but either
party may terminate earlier upon 5-day written
notice (par. 9. Peddler’s Contract);
8. Government licenses—Dealers secure own
municipal license and Mayor’s permit (Annexes 23
to 24, Comment of Local Union). In Mafinco,
peddler secure own licenses to peddle (Committee
Report, 70 SCRA 157);
9. Working hours—Dealers have to get quotas daily
but no fixed time. In Mafinco, peddlers get their
trucks in the morning and have to report daily
(Report of Committee, 70 SCRA 154-156). No fixed
time;
10. Territory—Dealer assigned a particular territory
(par. 6, Dealer’s Agreement). In Mafinco, peddlers
have a fixed territory in Manila, see whereas clause
of Peddler’s Contract, subject to pre-arranged
routes, areas and zones agreed upon by Peddler’s
association (Committee Report, 70 SCRA 158);

707

VOL. 123, JULY 25, 1983 707

La Suerte Cigar & Cigarette Factory vs. Director of the
Bureau of Labor Relations

11. Supervision—Supervisors also for market analysis

in La Suerte casa In Mafinco, Liaison Officer or
Supervisors for market analysis (Committee
Report, 70 SCRA 156);
12. Basic Agreement—In the instant La Suerte case,
the dealer is “appointed” (not hired as in
employment contract) “to handle” products without
commission but with sales discount through sales
invoices which state “sold to” dealer (Annex B,
Petition; Annex D, Petition). Payments duly
receipted (Annex E, Petition). In Mafinco, the
peddler is “desirous of buying and selling” (70
SCRA 143).

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On the second issue—whether or not the withdrawal of 31

union members from NATU affected the petition for
certification election insofar as the 30% requirement is
concerned, We reserve the Order of the respondent Director
of the Bureau of Labor Relations, it appearing
undisputably that the 31 union members had withdrawn
their support to the petition before the filing of said
petition. It would be otherwise if the withdrawal was made
after the filing of the petition for it would then be presumed
that the withdrawal was not free and voluntary. The
presumption would arise that the withdrawal was procured
through duress, coercion or for valuable consideration. In
other words, the distinction must be that withdrawals
made before the filing of the petition are presumed
voluntary unless there is convincing proof to the contrary,
whereas withdrawals made after the filing of the petition
are deemed involuntary.
The reason for such distinction is that if the withdrawal
or retraction is made before the filing of the petition, the
names of employees supporting the petition are supposed to
be held secret to the opposite party. Logically, any such
withdrawal or retraction shows voluntariness in the
absence of proof to the contrary. Moreover, it becomes
apparent that such employees had not given consent to the
filing of the petition, hence the subscription requirement
has not been met.
When the withdrawal or retraction is made after the
petition is filed, the employees who are supporting the
petition become known to the opposite party since their
names are attached to the petition at the time of filing,
Therefore, it would not be

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La Suerte Cigar & Cigarette Factory vs. Director of the
Bureau of Labor Relations

unexpected that the opposite party would use foul means

for the subject employees to withdrawal their support.
In recapitulation, We hold and rule that the 14 members
of respondent local union are dealers or independent
contractors. They are not employees of petitioner company.
With the withdrawal by 31 members of their support to the
petition prior to or before the filing thereof, making a total
of 45, the remainder of 3 out of the 48 alleged to have
supported the petition can hardly be said to represent the
union. Hence, the dismissal of the petition by the Med-
Arbiter was correct and justified. Respondent Director
committed grave abuse of discretion in reversing the order
of the Med-Arbiter.
With the above pronouncements, the resolution of the
third issue raised herein is unnecessary.
WHEREFORE, IN VIEW OF ALL THE FOREGOING,
the Resolution dated January 15, 1980 of respondent

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Director of the Bureau of Labor Relations and the

Resolution dated November 18, 1980 are hereby
REVERSED and SET ASIDE, and the petition for
certification election is ordered dismissed.
No costs.
SO ORDERED.

          Makasiar (Chairman), Concepcion, Jr., Abad

Santos and Escolin, JJ., concur.
     Aquino, J., in the result.
     De Castro, J., is on leave.

Resolutions reversed and set aside.

Notes.—A certification election is the sole concern of the

workers. The only exception is where the employer has to
file a petition for certification election pursuant to Art. 259
of the Labor Code because it was requested to bargain
collectively. Thereafter, the role of the employer in the
certification process ceases. (Trade Unions of the
Philippines and Allied Services (TUPAS) vs. Trajano, 120
SCRA 64.)
709

VOL. 123, JULY 25, 1983 709

Ramirez vs. Sandiganbayan

By filing a ULP case against the labor union the employer

had in effect abandoned the Issue ix raised on the legality
of the strike in the certification election case. (Dairy Queen
Products Co. of the Philippines, Inc. vs. C.I.R., 78 SCRA
439.)
The Med-Arbiter may order that a motion to dismiss a
petition for certification election be held in abeyance to be
considered thereafter in the final disposition of the petition.
(Benguet Exploration Miners’ Union vs. Noriel 76 SCRA
107.)
The holding of elections is unnecessary where the
winner and certified union enjoys the full support of the
workers. (Reyes vs. Ople, 89 SCRA 279.)
A new CBA hastily entered into which may prevent the
holding of a certification election cannot constitute a bar to
the holding of said election. (Association Trade Unions-
ATU vs. Noriel, 88 SCRA 96).

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