Title
Abante, Jr. vs. Lamadrid Bearing and Parts Corp.
Case
G.R. No. 159890
Decision Date
May 28, 2004
Commission-based salesman denied employee status due to lack of control; Supreme Court upheld no employer-employee relationship, dismissing claims of coercion and illegal dismissal.
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Case Digest (G.R. No. 159890)

Facts:

Employment and Role of Petitioner

  • Petitioner Empermaco B. Abante, Jr. was employed by respondent Lamadrid Bearing & Parts Corp. in June 1985 as a salesman, earning a 3% commission on total paid-up sales in Mindanao. His average monthly income was approximately P16,000.00, later increased to P20,269.50.
  • Aside from selling, petitioner was tasked with collecting payments from customers. Respondent company, through its president Jose Lamadrid, exercised control over his work by directing him to specific areas for sales and collections and requiring him to attend conferences in Manila.

Bad Accounts and Issuance of Checks

  • In 1998, petitioner encountered five customers with bad accounts totaling P687,166.62. Respondent Lamadrid confronted petitioner and demanded that he issue personal checks to cover the bad accounts, threatening to withhold his commissions and terminate his employment if he refused.
  • Petitioner issued checks under the condition that they would not be deposited and would be offset against his commissions. However, respondents allegedly tricked him into signing a Promissory Note and a Deed of Real Estate Mortgage.

SSS Coverage and Dispute Escalation

  • Petitioner discovered he was not covered by the Social Security System (SSS) and was denied benefits. When he raised this issue, respondent Lamadrid berated him and deposited the checks, which were dishonored due to a "Account Closed" status.
  • Petitioner sent letters offering to settle the debt through his commissions, but respondents pursued legal action, including filing a case under Batas Pambansa Blg. 22 (Bouncing Checks Law).

Legal Proceedings

  • Petitioner filed a complaint for illegal dismissal with money claims before the National Labor Relations Commission (NLRC). The Labor Arbiter ruled in his favor, awarding him P1,336,729.62 for separation pay, back wages, unpaid commissions, and damages.
  • The NLRC reversed the decision, dismissing the case for lack of cause of action. The Court of Appeals affirmed the NLRC's decision, prompting petitioner to file this petition for review.

Issue:

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Ruling:

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Ratio:

  1. Employer-Employee Relationship: The Court applied the four-fold test to determine the existence of an employer-employee relationship: (a) selection and engagement, (b) payment of wages, (c) power of dismissal, and (d) power of control. The "control test" is the most crucial factor. In this case, petitioner was not subject to significant control by the respondent company. He operated independently, was not required to report daily, and had no fixed working hours or quotas.
  2. Commission-Based Work: The Court emphasized that being paid on a commission basis does not automatically establish an employer-employee relationship. Petitioner was free to offer his services to other companies and was not under the direct supervision of the respondent.
  3. Coercion and Bad Accounts: The Court found no sufficient evidence to support petitioner's claim of coercion in signing the Promissory Note and Deed of Real Estate Mortgage. Petitioner, as a seasoned salesman, would have been aware of the implications of such documents.
  4. Article 280 of the Labor Code: The Court clarified that Article 280, which distinguishes between regular and casual employees, does not apply when the existence of an employment relationship is in dispute.

Conclusion:

The Supreme Court upheld the findings of the Court of Appeals, ruling that petitioner was not an employee of respondent corporation but an independent commission-based salesman. The absence of control by the respondent company over petitioner's work negated the existence of an employer-employee relationship.


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