G.R. No. 116960 , April 02, 1996
Bernardo Jimenez and Jose Jimenez, as Operators of JJ’s Trucking, Petitioners, vs. National Labor Relations Commission, Pedro Juanatas and Fredelito Juanatas, Respondents.

FACTS

Private respondents Pedro Juanatas and his son Fredelito were hired by petitioner Bernardo Jimenez for JJ’s Trucking in December 1987 as driver/mechanic and helper, respectively. They were assigned to a truck hauling soft drinks and were paid on a commission basis, initially 17% later increased to 20% of the gross income. The Juanatases filed a complaint in June 1990 for illegal dismissal and unpaid commissions, alleging they received only partial payment (P84,000) against a claimed gross income of nearly P1,000,000 for 1988-1989, leaving an unpaid balance. They contended the refusal to pay was a ploy for their illegal termination. Petitioners countered that Fredelito was not a company employee but merely assisted his father, that all commissions were fully paid, and that the truck was sold, negating illegal dismissal.
The Labor Arbiter dismissed Fredelito’s complaint for lack of employer-employee relationship but awarded Pedro separation pay. On appeal, the NLRC modified the decision, declaring Fredelito an employee entitled to share in the award and ordering petitioners to pay unpaid commissions totaling P84,387.05. Petitioners filed this certiorari, arguing the NLRC committed grave abuse of discretion in finding unpaid commissions and in recognizing Fredelito as an employee.

ISSUE

Whether the NLRC committed grave abuse of discretion in its findings on the payment of commissions and the employment status of Fredelito Juanatas.

RULING

The Supreme Court partially granted the petition. On the first issue, the Court upheld the NLRC’s finding of unpaid commissions. The legal logic is grounded on the rules of evidence regarding the burden of proof. Petitioners, who asserted the affirmative defense of full payment, bore the burden of proving such payment. The Court emphasized that the general rule places the burden on the debtor to prove payment has been made to extinguish an obligation. Petitioners failed to present sufficient evidence to discharge this burden. The admission of partial payment by the claimants does not shift this burden; it remains with the debtor to prove full payment with legal certainty. Thus, the NLRC did not gravely abuse its discretion in finding unpaid commissions due.
On the second issue, the Court reversed the NLRC and reinstated the Labor Arbiter’s finding that Fredelito Juanatas was not an employee of JJ’s Trucking. The Court applied the four-fold test for an employer-employee relationship: selection and engagement, payment of wages, power of dismissal, and power of control. The Labor Arbiter’s findings, which the NLRC did not effectively traverse, indicated that Fredelito was never hired by petitioners. His services were engaged by his father Pedro, who also supervised his work and paid his commissions. This absence of the fundamental element of control by the alleged employer (Jimenez) over Fredelito negated an employment relationship. Therefore, the NLRC’s contrary conclusion constituted grave abuse of discretion. The award was modified by deleting Fredelito’s share.