Escao vs NLRC

GR 59229; August 22, 1991

Topic: Functions of Arrastre operator

 In 1974, the Philippine Port Authority implemented an integrated program of port

development wherein it mandated the “one pier, one arrastre/stevedoring company” policy.
Because of this, several individual contractors of Pier 8 merged to form PIER 8 A&S.
 Initially from Pier 8, Escano Co. had its vessels transferred to Pier 16. This resulted to PIER 8
A&S losing business. Due to manpower surplus, PIER 8 A&S altered the work schedule of the
stevedores and rotated them. The stevedores boycotted Pier 8 leading to their termination.
 NOWM, a labor union composed of stevedores from PIER 8 A&S, filed a complaint before
MOLE against PIER 8 A&S for unfair labor practice and illegal dismissal. It later amended the
complaint to implead petitioner Escano and demand monetary claims.
 The stevedores claim that they had long been servicing Escano vessels (even before and after
the merger), hence, they should be considered as Escano employees.
 LA ruled for NOWM. It held that PIER 8 A&S was a labor only contractor, thus, Escano was the
principal employer making it solidarily liable for the money claims. NLRC affirmed LA.
 Petitioner Escano denies there is an EE/ER. Escano argues that complainants are included in
the payroll of PIER 8 A&S; they provided no direct evidence (SSS, Medicare or payrolls) to
prove their allegations and failed to substantiate how Escano exercised control over them.
ISSUE+ RULING: Whether the stevedores are employees of Escano
NO. In this case, Escano is a corporation engaged in inter-island shipping business, being the operator
of the Escaño Shipping Lines. It is not alleged that Escano is engaged in stevedoring/arrasre service.
Stevedoring is not ordinarily included in the business of transporting goods, It consists of the
handling of cargo from the hold of the ship to the dock, in case of pier-side unloading, or to a barge,
in case of unloading at sea. Arrastre involves the handling of cargo deposited on the wharf or between
the establishment of the consignee or shipper and the ships tackle.
Considering that a shipping company is not normally or customarily engaged in stevedoring and
arrastre activities either for itself or other vessels, it contracts with other companies offering those
services. The employees, however, of the stevedoring and/or arrastre company should not be
deemed the employees of the shipping company, in the absence of any showing, that the
arrastre and/or stevedoring company in fact acted as an agent only of the shipping company.
No such showing was made in this case. Thus, the stevedores are not employees of Escano.
Meanwhile, SC held that PIER 8 A&S is guilty of unfair labor practice when it restrained its
employees from exercising their right to self-organize and when it interfered in the formation or
administration of the labor organization (Art. 248) PIER 8 A&S is also liable for illegal dismissal
because it did not obtain prior required clearance from MOLE before it dismissed the stevedores.