REPUBLIC OF THE PHILIPPINES, represented by the SOCIAL SECURITY COMMISSION and SOCIAL

SECURITY SYSTEM vs. ASIAPRO COOPERATIVE

Existence of EER as essential requisite for jurisdiction

FACTS: Respondent Asiapro, as a cooperative, is composed of owners-members. Its primary objectives are to
provide savings and credit facilities and to develop other livelihood services for its owners-members.
Respondent cooperative entered into several Service Contracts with Stanfilco—a division of DOLE
Philippines, Inc. 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. In order to enjoy the benefits under the Social Security Law of 1997, 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 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. Thus, respondent
cooperative should register itself with petitioner SSS as an employer and make the corresponding report and
remittance of premium contributions. Failing to comply with such, SSS filed a Petition before petitioner SSC
against the respondent cooperative and Stanfilco praying that the respondent cooperative or, in the
alternative, Stanfilco be directed to register as an employer and to report respondent cooperative’s owners-
members as covered employees under the compulsory coverage of SSS and to remit the necessary
contributions. Respondent, on the other hand, asserts that it is not an employer because its owners-members
are the cooperative itself; hence, it cannot be its own employer. Respondent alleges that no employer-
employee relationship exists between it and its owners-members, thus, petitioner SSC has no jurisdiction
over the respondent cooperative.

SSC: took cognizance of the petition and dismissed the respondent’s motion to dismiss. In it’s Order, it held
that as an incident to the issue of compulsory coverage, it may inquire into the presence or absence of an
employer-employee relationship without need of waiting for a prior pronouncement or submitting the issue
to the NLRC for prior determination.

Even before the petitioner SSC could make a determination of the existence of an employer employee
relationship, however, the respondent cooperative already elevated the Order of the petitioner SSC, denying
its Motion to Dismiss, to the Court of Appeals

CA: granted respondent’s petition and dismissed the petition- complaint filed by SSS before the SSC

ISSUES:
WON SSC has jurisdiction to determine existence of EER
WON there exists an EER relationship between Asiapro and its owners-members

RULING:
1. YES
The question on the existence of an employer-employee relationship is not within the exclusive jurisdiction of
the NLRC. Article 217 of the Labor Code enumerating the jurisdiction of the Labor Arbiters and the NLRC
provides that:
“ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. —(a) x x x.
xxxx
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.”20

Although the aforesaid provision speaks merely of claims for Social Security, it would necessarily include
issues on the coverage thereof, because claims are undeniably rooted in the coverage by the system. Hence,
the question on the existence of an employer-employee relationship for the purpose of determining the
coverage of the Social Security System is explicitly excluded from the jurisdiction of the NLRC and falls within
the jurisdiction of the SSC which is primarily charged with the duty of settling disputes arising under the
Social Security Law of 1997.

2. YES
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. 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. 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 four elements in
the four-fold test for the existence of an employment relationship have been complied with. 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.