View full case

EMPERMACO B. ABANTE v. LAMADRID BEARING

FACTS:

The petitioner, an employee of Lamadrid Bearing and Parts Corporation, worked as a salesman earning a 3% commission on sales in Mindanao. He was also responsible for collecting payments from customers. In 1998, the petitioner encountered five customers with bad accounts, which led to a confrontation with respondent Lamadrid. The petitioner was warned that if he did not issue his own checks to cover the bad accounts, his commissions would not be released and he could lose his job. Reluctantly, the petitioner issued personal checks on the condition that they would not be deposited and would be offset against his commissions. However, the respondent tricked the petitioner into signing a Promissory Note and a Deed of Real Estate Mortgage. The petitioner later discovered that he was not covered by the Social Security System and did not receive benefits. When he brought this to his employer's attention, they berated him and deposited the remaining dishonored checks. The respondent demanded that the petitioner make good the dishonored checks or pay their cash equivalent. In response, the petitioner offered to have his earned commission deducted as partial payment and threatened to seek legal advice and file counter charges. The respondent then sent a letter warning customers not to deal with the petitioner and stating that he was no longer recognized as a commission salesman. As a result, the petitioner filed a complaint for illegal dismissal with money claims against the respondent company and its president.

ISSUES:

  1. Whether there exists an employer-employee relationship between the petitioner and the respondent corporation.

  2. Whether the power of control, which is an essential element to determine an employer-employee relationship, is present in this case.

  3. Whether or not petitioner is an employee of respondent corporation.

  4. Whether or not the control test is satisfied.

  5. Whether there is cogent reason to overturn the factual and legal findings of the appellate court.

  6. Whether the petition of Empermaco B. Abante should be granted.

RULING:

  1. The Court of Appeals denied the petition and affirmed the decision of the NLRC dismissing the case for lack of cause of action.

  2. The Court of Appeals found that the power of control is wanting in this case.

  3. An employer-employee relationship is notably absent in this case based on the control test. Petitioner was a commission salesman who received commission based on his gross sales. No quota was imposed on him and a dismal performance or dead result will not result in any sanction or provide a ground for dismissal. Petitioner was not required to report to the office or submit periodic written reports. He pursued his selling activities without interference or supervision from the respondent company and relied on his own resources. The manner of selling the merchandise was not prescribed by the respondent. Petitioner was also free to offer his services to other companies engaged in similar marketing activities.

  4. According to the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means to be used in reaching that end. In this case, the control test is not satisfied as petitioner had the freedom to perform his selling activities without interference or supervision from the respondent company and had the discretion to adopt any style or strategy to entice customers.

  5. There is no cogent reason to overturn the factual and legal findings of the appellate court.

  6. The petition of Empermaco B. Abante should be denied.

PRINCIPLES:

  • The existence of an employer-employee relationship is a question of fact that should be supported by substantial evidence.

  • The power of control is an essential element in determining an employer-employee relationship.

  • The control test is commonly regarded as the most crucial and determinative indicator of the existence or absence of an employer-employee relationship.

  • The absence of control indicates the absence of an employer-employee relationship.

  • Article 280 of the labor code does not apply where the existence of an employment relationship is in dispute.

  • The payment of compensation on a commission basis is not conclusive proof of the existence of an employer-employee relationship.

  • The burden of proof lies on the one who claims that force or intimidation was employed in a transaction.

  • Private transactions are presumed to have been prosecuted fairly and regularly, with sufficient consideration for every contract.

  • The Supreme Court will not disturb the factual and legal findings of the appellate court unless there is a cogent reason to overturn them.