G.R. No. 86693 - Cosmopolitan Funeral Homes, Inc. vs. Maalat

In 1962, Cosmopolitan Funeral Homes, Inc. (petitioner) engaged Noli Maalat as a "supervisor" to handle solicitation of mortuary arrangements, sales, and collections.
Maalat’s duties included arranging funeral services such as the removal of the corpse, embalming, casketing, viewing, and delivery.
His compensation was solely commission-based at 3.5% of the amounts actually collected and remitted.

On January 15, 1987, Maalat was dismissed for multiple violations despite prior warnings.

Understating the reported contract price compared to the actual contract price charged and paid by customers.
Misappropriation of funds through non-remittance of collections and failure to issue Official Receipts.
Charging customers additional fees for medicines, linen, and security services and pocketing the excess without issuing Official Receipts.
Non-reporting of certain embalming and re-embalming charges with subsequent misappropriation of such funds.
Engaging in tomb making and including the tomb’s price in the package without informing customers or the company.

Maalat filed a complaint for illegal dismissal and non-payment of commissions.
Labor Arbiter Newton R. Sancho initially declared his dismissal illegal and ordered the petitioner to pay separation pay, commissions, interests, and attorney’s fees totaling P205,571.52.
On appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter’s decision on May 31, 1988, and rendered a new decision:

Dismissal was declared justified and with lawful cause.
Ordered payment of separation pay equivalent to one-half month’s average income per year of service, subject to counterclaims and deductions, as equitable relief.
Admitted claims for accrued commissions, subject to proofs, with deductions for company counterclaims.
Fixed attorney’s fees at two percent (2%) of the final monetary award to the complainant.
Remanded the case for further proceedings with all other claims dismissed for lack of merit.

Cosmopolitan Funeral Homes, Inc. filed a petition for review after its motion for reconsideration was denied, challenging:

The NLRC’s finding of an employment relationship between the parties.
The equitable basis for the award of one-half month’s separation pay per year of service.

Whether the NLRC erred in ruling that an employment relationship existed between Cosmopolitan Funeral Homes, Inc. and Maalat.
Whether Maalat, performing his duties as a "supervisor", was merely an independent commission agent or actually an employee under the control of the petitioner.

Whether there was an equitable basis for awarding separation pay equivalent to one-half month’s average income per year of service.
Whether the dismissal for violations, particularly those involving dishonesty and infraction of company rules, justified the grant of partial separation pay under the doctrine of social and compassionate justice.