Employers

“Employer” – includes any person acting in the interest of an employer, directly or indirectly.

1. Concept

“Employer” – includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer. (Article 219[e], Ibid.)

“Employee” – includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment. (Article 219, P.D. 442, Labor Code)

a. Legal basis

“Employer” includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer. (Article 219[e], Ibid.)
“Employee” includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment. (Article 219[f], P.D. 442, Labor Code)

b. Complementary definition: “includes”

The use of the word “includes” is intentional.

As with a much older law (R.A. 875), the Labor Code adopted a similar definition for employers and employees with the intention that the definition is not meant to be comprehensive “but only a complementary definition.” The intent being is for the term to encompass “those in the ordinary parlance” considered to be “employers” and “employees”. (See Feati University v. Bautista, En Banc, G.R. No. L-21278, 21462, and 21500, 27 December 1966)

FEATI UNIVERSITY v. BAUTISTA, G.R. No. L-21278, 21462, and 21500, 27 December 1966

⦁ It will be noted that in defining the term “employer” [r.a.875] Act uses the word “includes”, which it also used in defining “employee”. [Sec. 2 (d)], and “representative” [Sec. 2(h)]; and not the word “means” which the Act uses in defining the terms “court” [Sec. 2(a)], “labor organization” [Sec. 2(e)], “legitimate labor organization” [Sec. 2(f)], “company union” [Sec. 2(g)], “unfair labor practice” [Sec. 2(i)], “supervisor” [Sec. 2(k)], “strike” [Sec. 2(l)] and “lock-out” [Sec. 2(m)]. A methodical variation in terminology is manifest. This variation and distinction in terminology and phraseology cannot be presumed to have been the inconsequential product of an oversight; rather, it must have been the result of a deliberate and purposeful act, more so when we consider that as legislative records show, Republic Act No. 875 had been meticulously and painstakingly drafted and deliberated upon. In using the word “includes” and not “means”, Congress did not intend to give a complete definition of “employer”, but rather that such definition should be complementary to what is commonly understood as employer. Congress intended the term to be understood in a broad meaning because, firstly, the statutory definition includes not only “a principal employer but also a person acting in the interest of the employer”; and, secondly, the Act itself specifically enumerated those who are not included in the term “employer”, namely: (1) a labor organization (otherwise than when acting as an employer), (2) anyone acting in the capacity of officer or agent of such labor organization [Sec. 2(c)], and (3) the Government and any political subdivision or instrumentality thereof insofar as the right to strike for the purpose of securing changes or modifications in the terms and conditions of employment is concerned (Section 11). Among these statutory exemptions, educational institutions are not included; hence, they can be included in the term “employer”. This Court, however, has ruled that those educational institutions that are not operated for profit are not within the purview of Republic Act No. 875.

⦁ As stated above, Republic Act No. 875 does not give a comprehensive but only a complementary definition of the term “employer”. The term encompasses those that are in ordinary parlance “employers.” What is commonly meant by “employer”? The term “employer” has been given several acceptations. The lexical definition is “one who employs; one who uses; one who engages or keeps in service;” and “to employ” is “to provide work and pay for; to engage one’s service; to hire.” (Webster’s New Twentieth Century Dictionary, 2nd ed., 1960, p. 595). The Workmen’s Compensation Act defines employer as including “every person or association of persons, incorporated or not, public or private, and the legal representative of the deceased employer” and “includes the owner or lessee of a factory or establishment or place of work or any other person who is virtually the owner or manager of the business carried on in the establishment or place of work but who, for reason that there is an independent contractor in the same, or for any other reason, is not the direct employer of laborers employed there.” [Sec. 39(a) of Act No. 3428.] The Minimum Wage Law states that “employer includes any person acting directly or indirectly in the interest of the employer in relation to an employee and shall include the Government and the government corporations”. [Rep. Act No. 602, Sec. 2(b)]. The Social Security Act defines employer as “any person, natural or juridical, domestic or foreign, who carries in the Philippines any trade, business, industry, undertaking, or activity of any kind and uses the services of another person who is under his orders as regards the employment, except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government.”

2. Categories of Employers

Generally, employers may be categorized into two:

1) The Government; and

2) The Private Sector Employers

a. Government

Government employers may be categorized as follows:

1) National Government Offices/Agencies/Instrumentalities;

2) Local Government; and

3) Government -Owned or -Controlled Corporations

b. Private Sector Employers

Private sector employers may be categorized as follows:

1) Individuals;

2) Businesses or Companies; and

3) Labor Organizations

1) Individuals

Individuals may be considered as employers in relation to those they employ as domestic workers (kasambahay) and those that are under their personal service (e.g. drivers, personal assistants, etc.)

2) Businesses or Companies

Business or Companies are employers in relation to those that they have hired or engaged as employees.

In terms of organization, businesses may be organized as follows:

1) Sole proprietorship;

2) Partnership;

3) Corporation; or

4) Cooperative.

3) Labor Organizations

[T]here is no legal impediment for a union to be an “employer”. (Allied Free Workers’ Union [PLUM] v. Compañia Maritima, En Banc, G.R. Nos. L-22951, L-22952, 22971, 31 January 1967)

The mere fact that [an organization] is a labor union does not mean that it cannot be considered an employer of the persons who work for it. Much less should it be exempted from the very labor laws which it espouses as labor organization. (Bautista v. Inciong, G.R. No. L-52824, 16 March 1988)

ALLIED FREE WORKERS’ UNION (PLUM) v. COMPAÑIA MARITIMA, EN BANC, G.R. Nos. L-22951, L-22952, 22971, 31 January 1967)

⦁ It is true that MARITIMA admits that it did not answer [the Union] AFWU’s proposal for a collective bargaining agreement. From this it does not necessarily follow that it is guilty of unfair labor practice. Under the law the duty to bargain collectively arises only between the “employer” and its “employees”. Where neither party is an “employer” nor an “employee” of the other, no such duty would exist. Needless to add, where there is no duty to bargain collectively the refusal to bargain violates no right. So, the question is: Under the CONTRACT, was MARITIMA the “employer” and AFWU and/or its members the “employees” with respect to one another?

⦁ The court a quo held that under the CONTRACT, AFWU was an independent contractor of MARITIMA…

⦁ The conclusion thus reached by the court a quo is in full accord with the facts and the applicable jurisprudence. We totally agree with the court a quo that AFWU was an independent contractor. And an independent contractor is not an “employee”.

⦁ Neither is there any direct employment relationship between MARITIMA and the laborers. The latter have no separate individual contracts with MARITIMA. In fact, the court a quo found that it was AFWU that hired them. Their only possible connection with MARITIMA is through AFWU which contracted with the latter. Hence, they could not possibly be in a better class than AFWU which dealt with MARITIMA.

⦁ In this connection, it is interesting to note that the facts as found by the court a quo strongly indicate that it is AFWU itself who is the “employer” of those laborers. The facts very succinctly show that it was AFWU, through its officers, which (1) selected and hired the laborers, (2) paid their wages, (3) exercised control and supervision over them, and (4) had the power to discipline and dismiss them. These are the very elements constituting an employer-employee relationship.

⦁ Of course there is no legal impediment for a union to be an “employer”. Under the particular facts of this case, however, AFWU appears to be more of a distinct and completely autonomous business group or association. Its organizational structure and operational system is no different from other commercial entities on the same line. It even has its own bill collectors and trucking facilities. And that it really is engaged in business is shown by the fact that it had arrastre and stevedoring contracts with other shipping firms in Iligan City.

⦁ Now, in its all-out endeavor to make an “employer” out of MARITIMA, AFWU citing an impressive array of jurisprudence, even goes to the extent of insisting that it be considered a mere “agent” of MARITIMA. Suffice it to say on this point that an agent can not represent two conflicting interests that are diametrically opposed. And that the cases sought to be relied upon did not involve representatives of opposing interests.

References

Book V, Presidential Decree No. 442, a.k.a. Labor Code of the Philippines

Book V, Omnibus Rules Implementing the Labor Code

/Updated: February 8, 2023

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