View full case

SUSAN G. CARUNGCONG v. NLRC

FACTS:

Susan Carungcong is a career agent and new business manager for Sun Life Assurance Company of Canada. She signed an Agent Agreement with Sun Life in 1974, which was superseded by two new agreements in 1979. In 1986, another agreement was executed naming Carungcong as the New Business Manager. All these agreements explicitly stated that Carungcong was an independent contractor and not an employee of Sun Life.

In 1989, an inquiry was conducted into the special fund availments of Carungcong and other New Business Managers. Carungcong was confronted with discrepancies in the reimbursement of expenses and was subsequently terminated by Sun Life for fraudulent reimbursement.

Carungcong filed a case for illegal dismissal and obtained a favorable judgment from the Labor Arbiter. However, on appeal, the National Labor Relations Commission reversed the Arbiter's judgment but awarded Carungcong lost average commission.

The petitioner, Corazon Carungcong, was employed as Sun Life's New Business Manager and had the authority to claim reimbursement for expenses incurred in performing her duties. However, she was accused of defrauding the company of P6,000. Carungcong denies the accusation and argues that it was fabricated by her Unit Managers, who were promoted after her termination. She also claims that Sun Life failed to observe procedural due process in dismissing her.

The National Labor Relations Commission (NLRC) awarded Carungcong lost average commission, but later eliminated it on the basis that there was no employment relationship between the parties. Carungcong files a certiorari petition seeking to invalidate the NLRC's decision and restore the Labor Arbiter's awards. The parties extensively discussed the issues and submitted evidence before the Labor Arbiter, establishing facts that cannot be ignored.

ISSUES:

  1. Whether or not there was an employer-employee relationship between Susan Carungcong and Sun Life Assurance Company of Canada.

  2. Whether or not Carungcong was illegally dismissed by Sun Life.

RULING:

  1. Employer-Employee Relationship

    • The Supreme Court held that there was no employer-employee relationship between Susan Carungcong and Sun Life Assurance Company of Canada. The contractual agreements explicitly stated that Carungcong was an independent contractor, and her own admissions supported this status.

  2. Illegal Dismissal

    • Given the absence of an employer-employee relationship, the claim of illegal dismissal was not sustained. Sun Life’s termination of its contractual relationship with Carungcong was found to be lawful and in accordance with the terms of their agreement.

PRINCIPLES:

  1. Independent Contractor Status

    • Clear stipulations in a contract indicating that a party is an independent contractor and not an employee are pivotal and determinative.

  2. Control Test

    • The control exercised by the company must pertain to both the results to be achieved and the means and methods for achieving those results to establish an employer-employee relationship. The absence of control over means and methods denotes the status of an independent contractor.

  3. Employer-Employee Relationship

    • An employer-employee relationship does not exist without the element of control over how the work is performed, not merely the end result.

  4. Due Process in Termination

    • In cases involving independent contractors, the terms of the underlying contract dictate the procedures and justifications for termination, not statutory employment laws.

  5. Certiorari and Grave Abuse of Discretion

    • Errors in judgment regarding evidence appreciation or application of law by administrative agencies do not inherently constitute grave abuse of discretion warranting judicial correction unless they are egregious to the point of being arbitrary or whimsical.