G.R. No. 138254 . July 30, 2004.
ANGELITO L. LAZARO, Proprietor of Royal Star Marketing, petitioner, vs. SOCIAL SECURITY COMMISSION, ROSALINA LAUDATO, SOCIAL SECURITY SYSTEM and THE HONORABLE COURT OF APPEALS, respondents.

FACTS

Private respondent Rosalina Laudato filed a petition before the Social Security Commission (SSC) against petitioner Angelito Lazaro, proprietor of Royal Star Marketing, for compulsory social security coverage and remittance of unpaid contributions. Laudato alleged she was employed as a sales supervisor from April 1979 to March 1986. Lazaro denied an employer-employee relationship, contending Laudato was a mere sales agent paid purely on commission, not subject to definite hours or work conditions, and thus not an employee for SSS purposes.
The SSC ruled in favor of Laudato, applying the control test to find an employer-employee relationship. It ordered Lazaro to pay unremitted contributions and penalties. The Court of Appeals affirmed the SSC’s ruling. Lazaro elevated the case to the Supreme Court via a Petition for Review under Rule 45, reiterating that Laudato was not an employee due to her commission-based compensation and lack of controlled working hours.

ISSUE

Whether an employer-employee relationship existed between Lazaro/Royal Star Marketing and Laudato, making her subject to compulsory coverage under the Social Security Law.

RULING

The Supreme Court denied the petition and affirmed the lower rulings. The Court held that the determination of an employer-employee relationship for social security coverage hinges on the “control test”—whether the employer controls or has the right to control the employee not only as to the result of the work but also as to the means and methods to accomplish it. The SSC and the Court of Appeals, after examining evidence including cash vouchers and calling cards identifying Laudato as a “Sales Supervisor,” found this element present.
The Court rejected Lazaro’s arguments, which were mere reiterations of factual questions inappropriate for a Rule 45 petition. Precedent establishes that payment by commission alone does not negate an employment relationship, as held in Grepalife v. Judico. Similarly, not observing normal hours of work does not automatically preclude employment, especially for supervisory personnel measured by sales output, as clarified in Cosmopolitan Funeral Homes, Inc. v. Maalat. The SSC’s factual finding, sustained by the Court of Appeals and supported by substantial evidence, is conclusive. The element of control was established, making Laudato an employee entitled to SSS coverage.