G.R. No. 159890; May 28, 2004
Empermaco B. Abante, Jr., petitioner, vs. Lamadrid Bearing & Parts Corp. and Jose Lamadrid, President, respondents.

FACTS

Petitioner Empermaco Abante was employed by respondent Lamadrid Bearing & Parts Corp. in 1985 as a commission salesman for Mindanao, also tasked with collecting payments. Respondent President Jose Lamadrid exercised control over his work, directing his sales areas and requiring his attendance at conferences. In 1998, Abante was confronted over uncollected bad accounts from customers totaling P687,166.62. Under threat of losing his job and his withheld commissions, he reluctantly issued personal checks to cover the amounts, allegedly on the condition they would not be deposited but offset against his future commissions. He was also made to sign a Promissory Note and a Deed of Real Estate Mortgage over his property.
When Abante later discovered he had no SSS coverage and raised this with his employer, he was berated. Contrary to their alleged agreement, the respondents deposited the remaining checks, which were dishonored. After a demand letter from the company’s counsel, Abante sent letters proposing to settle the debt by having 100% of his future commissions applied to it and hinting at potential legal actions for unfair labor practices and tax issues.

ISSUE

The core issue is whether an employer-employee relationship existed between Abante and Lamadrid Bearing & Parts Corp., which determines the jurisdiction of labor tribunals over his claims.

RULING

Yes, an employer-employee relationship existed. The Supreme Court reversed the Court of Appeals and the NLRC, which had erroneously ruled that Abante was an independent contractor. The Court applied the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer’s power to control the employee’s means, methods, and results. The element of control is paramount. The facts show that respondent Lamadrid exercised control over Abante by frequently directing him to report to specific sales areas and requiring him to attend company conferences in Manila regarding product strategies. Furthermore, Abante was paid commissions, a recognized form of wage, and was threatened with dismissal if he did not cover the bad accounts. His work of selling and collecting was clearly necessary and desirable to the usual business of the respondent corporation, making him a regular employee. Consequently, the labor tribunals have jurisdiction over his complaint for illegal dismissal and monetary claims. The case was remanded to the Labor Arbiter for further proceedings on the merits.