G.R. No. 193493; June 13, 2013
JAIME N. GAPAYAO, Petitioner, vs. ROSARIO FULO, SOCIAL SECURITY SYSTEM and SOCIAL SECURITY COMMISSION, Respondents.

FACTS

On November 4, 1997, Jaime Fulo died from electrocution while performing repair work at the residence and business establishment of petitioner Jaime N. Gapayao. Moved by his faith, Gapayao extended financial assistance to the widow, Rosario Fulo. On November 16, 1997, Rosario executed an Affidavit of Desistance, waiving her right to file any criminal or civil action. Subsequently, on January 14, 1998, the parties executed a Compromise Agreement wherein Gapayao, identified as the “employer,” agreed to pay ₱40,000 to Rosario, the “surviving spouse of JAIME POLO, an employee who died of an accident,” as full payment for all claims, and Rosario released Gapayao from all claims connected to the victim’s employment.
Rosario later filed a claim for social security death benefits with the SSS. An investigation revealed Jaime Fulo was not a registered SSS member. The SSS field investigation report, based on interviews with co-workers and Gapayao’s wife, found that Jaime Fulo worked for Gapayao as a farm laborer from 1983 to 1997, performed various tasks (farm labor, abaca harvesting, house repairs), was paid on a daily basis (ranging from ₱5 to ₱60), and was one of 50-100 persons hired when necessary. Gapayao denied an employer-employee relationship, claiming Fulo was an independent contractor or an intermittent worker not subject to his control. The Social Security Commission (SSC) ruled that an employer-employee relationship existed from January 1983 to November 4, 1997, with Fulo working nine months a year at the minimum wage. It ordered Gapayao to pay unpaid contributions, penalties, and damages for failure to report Fulo for coverage, and directed the SSS to pay Rosario the appropriate death benefit. The Court of Appeals affirmed the SSC’s resolution. Gapayao elevated the case to the Supreme Court.

ISSUE

Whether or not there exists an employer-employee relationship between the deceased Jaime Fulo and petitioner Jaime N. Gapayao that would merit an award of social security benefits in favor of respondent Rosario Fulo.

RULING

Yes, an employer-employee relationship existed. The Supreme Court affirmed the decisions of the SSC and the CA. 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 conduct, which is the most important element. The evidence, particularly the SSS field report, established that Gapayao hired Fulo for various tasks over 14 years, paid him daily wages, and his work was necessary to Gapayao’s business. The control element was satisfied as Gapayao, through his overseer, determined what work was to be done. Furthermore, the Compromise Agreement executed by Gapayao constituted a judicial admission that Fulo was his “employee,” which was binding and could not be contradicted unless shown to have been made through a palpable mistake. Gapayao failed to prove such a mistake. Consequently, Gapayao was liable for the unpaid SSS contributions, penalties, and damages for failing to report Fulo for compulsory coverage. The SSS was ordered to pay Rosario Fulo the appropriate death benefits pursuant to the Social Security Law.