Republic of the PhilippinesSupreme CourtManilaEN BANC[G.R. No. L-8967.May 31, 1956.]ANASTACIO VIAA,Petitioner, vs. ALEJO AL-LAGADAN and FILOMENA PIGA,Respondents.D E C I S I O NCONCEPCION,J.:PetitionerAnastacio Viaa owned the fishing sailboat Magkapatid, which, in the night of September 3, 1948, sunk in the waters between the province of Bataan and the island of Corregidor, as a consequence of a collision with the USS TINGLES, a vessel of the U.S. Navy. Inasmuch as Alejandro Al-Lagadan, a member of the crew of the Magkapatid, disappeared with the craft, his parents,RespondentAlejo Al-Lagadan and Filomena Piga, filed the corresponding claim for compensation under Act No. 3428. After appropriate proceedings, a Referee of the Workmens Compensation Commission rendered a decision, dated February 23, 1953:chanroblesvirtuallawlibrary1.Ordering Mr. Anastacio Viaa to pay the above-named claimants through the Workmens Compensation Commission, Manila, the sum of P1,560 in lump sum with interest at 6 per cent from September 3, 1948 until fully paid;chan roblesvirtualawlibraryand.To pay the sum of P16 to the Workmens Compensation Commission as costs.Said decision was, on petition for review filed by Viaa, affirmed by the Workmens Compensation Commissioner, on or about October 22, 1954, with additional fee of P5.00. Said Commissioner, having subsequently denied a reconsideration of this action, Viaa has brought the matter to us, for review by certiorari, upon the ground that this case does not fall within the purview of Act No. 3428, because the gross income of his business for the year 1947 was allegedly less than P10,000, and because Alejandro Al-Lagadan was, at the time of his death, his (Petitioners) industrial partner, not his employee.The first ground is untenable,Petitionernot having invoked it before the rendition of the Referees decision on February 23, 1953. The objection to the application of Act No. 3428, upon said ground, was made for the first time whenPetitionersought a review of said decision by the Workmens Compensation Commissioner. The non- applicability of said Act to employers whose gross income does not reach P20,000 is, however, a matter of defense, which cannot be availed of unless pleaded in the employers answer to the claim for compensation filed by the employee or his heirs.Petitionerherein having failed to do so, said defense may not now be entertained (Rolan vs. Perez, 63 Phil., 80, 85-86).As regards the second ground,Petitionermaintains, contrary to the finding of the Referee and said Commissioner, that the deceased was his industrial partner, not employee. In this connection, it is alleged in paragraph (6) of the petition:chanroblesvirtuallawlibraryThat the practice observed then and now in engaging the services of crewmen of sailboats plying between Mindoro and Manila is on a partnership basis, to wit:chanroblesvirtuallawlibrarythat the owner of the vessel, on one hand receives one-half of the earnings of the sailboat after deducting the expenses for the maintenance of the crew, the other half is divided pro rata among the members of the crew, the patron or captain receiving four parts, the piloto or next in command three parts, the wheelsman or timonel 1 1/2 parts and the rest of the members of the crew one part each, as per Annex B hereof.It appears that, before rendering his aforementioned decision, the Referee requested Mr. Manuel O. Morente, an attorney of the Workmens Compensation Commission, to look into and inquire and determine the method of and the basis of engaging the services of crewmen for sailboats (batel) of twenty (20) tons or more plying between Manila and Mariveles and moored along Manila North Harbor, and that, thereafter, said Atty. Morente reported:chanroblesvirtuallawlibraryThe basis of engaging the services of crewmen of a batel is determined in accordance with the contract executed between the owner and the patron. The contract commonly followed is on a share basis after deducting all the expenses incurred on the voyage. One half goes to the owner of the batel and the other half goes to the patron and the members of the crew and divided among themselves on a share basis also in accordance with their agreement with the patron getting the lions share. The hiring of the crew is done by the patron himself. Usually, when a patron enters into a contract with the owner of the batel, he has a crew ready with him. (Italics supplied.)In sustaining the Referees finding to the effect that the deceased was an employee of Viaa, the Workmens Compensation Commissioner said:chanroblesvirtuallawlibraryThe trial referee found that there was an employer-employee relation between theRespondentand the deceased, Alejandro Al-Lagadan, and the share which the deceased received at the end of each trip was in the nature of wages which is defined under section 39 of the Compensation Act. This is so because such share could be reckoned in terms of money. In other words, there existed the relation of employer and employee between theRespondentand Alejandro Al-Lagadan at the time of the latters death.We believe that the trial referee did not err in finding the deceased an employee of theRespondent. We cite the following cases which illustrate the point at issue:chanroblesvirtuallawlibraryThe officers and crews of whaling and other fishing vessels who are to receive certain proportions of produce of the voyage in lieu of wages;chan roblesvirtualawlibrary(Rice vs. Austin, 17 Mass. 206;chan roblesvirtualawlibrary2Y & C. 61);chan roblesvirtualawlibraryCaptains of merchant ships who, instead of wages, receive shares in the profits of the adventure;chan roblesvirtualawlibrary(4 Maule & C. 240);chan roblesvirtualawlibraryor who take vessels under an agreement to pay certain charges and receive a share of the earnings;chan roblesvirtualawlibrary(Tagard vs. Loring, 16 Mass. 336, 8 Am. Dec. 140;chan roblesvirtualawlibraryWinsor vs. Cutts, 7 Greenl. Me. 261) have generally been held not to be partners with theRespondent, and the like. Running a steamboat on shares does not make the owners partners in respect to the vessel (The Daniel Koine, 35 Fed. 785);chan roblesvirtualawlibraryso of an agreement between two parties to farm on shares;chan roblesvirtualawlibrary(Hooloway vs. Brinkley, 42 Ga. 226);chan roblesvirtualawlibraryA seaman who is to receive pay in proportion to the amount of fish caught is not a partner;chan roblesvirtualawlibrary(Holdren vs. French, 68 Me. 241);chan roblesvirtualawlibrarysharing profits in lieu of wages is not a partnership. There is no true contribution;chan roblesvirtualawlibrary(Crawford vs. Austin, 34 Md. 49;chan roblesvirtualawlibraryWhitehill vs. Shickle, 43 Mo. 538;chan roblesvirtualawlibrarySankey vs. Iron Works, 44 Ga. 228.) (Italics supplied.)In other words, in the opinion of the Referee, as well as of said Commissioner, the mere fact that Alejandros share in the understanding could be reckoned in terms of money, sufficed to characterize him as an employee of Viaa. We do not share this view. Neither can we accept, however,Petitioners theory to the effect that the deceased was his partner, not an employee, simply because he (the deceased) shared in the profits, not in the losses. In determining the existence of employer-employee relationship, the following elements are generally considered, namely:chanroblesvirtuallawlibrary(1) the selection and engagement of the employee;chan roblesvirtualawlibrary(2) the payment of wages;chan roblesvirtualawlibrary(3) the power of dismissal;chan roblesvirtualawlibraryand (4) the power to control the employees conduct although the latter is the most important element (35 Am. Jur. 445). Assuming that the share received by the deceased could partake of the nature of wages on which we need not, and do not, express our view and that the second element, therefore, exists in the case at bar, the record does not contain any specific data regarding the third and fourth elements.With respect to the first element, the facts before us are insufficient to warrant a reasonable conclusion, one way or the other. On the one hand, Atty. Morente said, in his aforementioned report, that the contract commonly followed is on a share basiscralawThe hiring of a crew is done by the patron himself. Usually, when a patron enters into a contract with the owner of the batel, he has a crew ready with him. This statement suggests that the members of the crew are chosen by the patron, seemingly, upon his sole responsibility and authority. It is noteworthy, however, that said report referred to a practice commonly and usually observed in a given place. The record is silent on whether such practice had been followed in the case under consideration. More important still, the language used in said report may be construed as intimating, not only that the patron selects and engages the crew, but, also, that the members thereof are subject to his control and may be dismissed by him. To put it differently, the literal import of said report is open to the conclusion that the crew has a contractual relation, not with the owner of the vessel, but with the patron, and that the latter, not the former, is either their employer or their partner.Upon the other hand, the very allegations of the petition show otherwise, forPetitionerexplicitly averred therein that the deceased Alejandro Al-Lagadan was his industrial partner. This implies that a contract of partnership existed between them and that, accordingly, if the crew was selected and engaged by the patron, the latter did so merely as agent or representative ofPetitionerherein. Again, ifPetitionerwere a partner of the crew members, then neither the former nor the patron could control or dismiss the latter.In the interest of justice and equity, and considering that a decision on the merits of the issue before us may establish an important precedent, it would be better to remand the case to the Workmens Compensation Commission for further evidence and findings on the following questions:chanroblesvirtuallawlibrary(1) who selected the crew of the Magkapatid and engaged their services;chan roblesvirtualawlibrary(2) if selected and engaged by the patron, did the latter act in his own name and for his own account, or on behalf and for the account of Viaa;chan roblesvirtualawlibrary(3) could Viaa have refused to accept any of the crew members chosen and engaged by the patron;chan roblesvirtualawlibrary(4) didPetitionerhave authority to determine the time when, the place where and/or the manner or conditions in or under which the crew would work;chan roblesvirtualawlibraryand (5) who could dismiss its members.Wherefore, let the case be remanded to the Workmens Compensation Commission, for further proceedings in conformity with this decision, without special pronouncement as to costs.SO ORDERED.Paras,C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Reyes, J.B.L., and Endencia,JJ., concur.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-19124 November 18, 1967

INVESTMENT PLANNING CORPORATION OF THE PHILIPPINES, petitioner-appellant, vs.SOCIAL SECURITY SYSTEM, respondent-appellee.

MAKALINTAL, J.:

Petitioner is a domestic corporation engaged in business management and the sale of securities. It has two classes of agents who sell its investment plans: (1) salaried employees who keep definite hours and work under the control and supervision of the company; and (2) registered representatives who work on commission basis.

On August 27, 1960 petitioner, through counsel, applied to respondent Social Security Commission for exemption of its so-called registered representatives from the compulsory coverage of the Social Security Act. The application was denied in a letter signed by the Secretary to the Commission on January 16, 1961. A motion to reconsider was filed and also denied, after hearing, by the Commission itself in its resolution dated September 8, 1961. The matter was thereafter elevated to this Court for review.

The issue submitted for decision here is whether petitioner's registered representatives are employees within the meaning of the Social Security Act (R.A. No. 1161 as amended). Section 8 (d) thereof defines the term "employee" for purposes of the Act as "any person who performs services for an 'employer' in which either or both mental and physical efforts are used and who receives compensation for such services, where there is, employer-employee relationship." (As amended by Sec.4, R.A. No. 2658). These representatives are in reality commission agents. The uncontradicted testimony of petitioner's lone witness, who was its assistant sales director, is that these agents are recruited and trained by him particularly for the job of selling "'Filipinos Mutual Fund" shares, made to undergo a test after such training and, if successful, are given license to practice by the Securities and Exchange Commission. They then execute an agreement with petitioner with respect to the sale of FMF shares to the general public. Among the features of said agreement which respondent Commission considered pertinent to the issue are: (a) an agent is paid compensation for services in the form of commission; (b) in the event of death or resignation he or his legal representative shall be paid the balance of the commission corresponding to him; (c) he is subject to a set of rules and regulations governing the performance of his duties under the agreement; (d) he is required to put up a performance bond; and (e) his services may be terminated for certain causes. At the same time the Commission found from the evidence and so stated in its resolution that the agents "are not required to report (for work) at any time; they do not have to devote their time exclusively to or work solely for petitioner; the time and the effort they spend in their work depend entirely upon their own will and initiative; they are not required to account for their time nor submit a record of their activities; they shoulder their own selling expenses as well as transportation; and they are paid their commission based on a certain percentage of their sales." The record also reveals that the commission earned by an agent on his sales is directly deducted by him from the amount he receives from the investor and turns over to the company the amount invested after such deduction is made. The majority of the agents are regularly employed elsewhere either in the government or in private enterprises.

Of the three requirements under Section 8 (d) of the Social Security Act it is admitted that the first is present in respect of the agents whose status is in question. They exert both mental and physical efforts in the performance of their services. The compensation they receive, however, is not necessarily for those efforts but rather for the results thereof, that is, for actual sales that they make. This point is relevant in the determination of whether or not the third requisite is also present, namely, the existence of employer-employee relationship. Petitioner points out that in effect such compensation is paid not by it but by the investor, as shown by the basis on which the amount of the commission is fixed and the manner in which it is collected.

Petitioner submits that its commission agents, engaged under the terms and conditions already enumerated, are not employees but independent contractors, as defined in Article 1713 of the Civil Code, which provides:

Art. 1713.By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material.

We are convinced from the facts that the work of petitioner's agents or registered representatives more nearly approximates that of an independent contractor than that of an employee. The latter is paid for the labor he performs, that is, for the acts of which such labor consists; the former is paid for the result thereof. This Court has recognized the distinction in Chartered Bank, et al. vs. Constantino, 56 Phil. 717, where it said:

On this point, the distinguished commentator Manresa in referring to Article 1588 of the (Spanish) Civil Code has the following to say. . . .

The code does not begin by giving a general idea of the subject matter, but by fixing its two distinguishing characteristics.

But such an idea was not absolutely necessary because the difference between the lease of work by contract or for a fixed price and the lease of services of hired servants or laborers is sufficiently clear. In the latter, the direct object of the contract is the lessor's labor; the acts in which such labor consists, performed for the benefit of the lessee, are taken into account immediately. In work done by contract or for a fixed price, the lessor's labor is indeed an important, a most important factor; but it is not the direct object of the contract, nor is it immediately taken into account. The object which the parties consider, which they bear in mind in order to determine the cause of the contract, and upon which they really give their consent, is not the labor but its result, the complete and finished work, the aggregate of the lessor's acts embodied in something material, which is the useful object of the contract. . . . (Manresa Commentarios al Codigo Civil, Vol. X, ed., pp. 774-775.)

Even if an agent of petitioner should devote all of his time and effort trying to sell its investment plans would not necessarily be entitled to compensation therefor. His right to compensation depends upon and is measured by the tangible results he produces.

The specific question of when there is "employer-employee relationship" for purposes of the Social Security Act has not yet been settled in this jurisdiction by any decision of this Court. But in other connections wherein the term is used the test that has been generally applied is the so-called control test, that is, whether the "employer" controls or has reserved the right to control the "employee" not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished.

Thus in Philippine Manufacturing Company vs. Geronimo, et al., L-6968, November 29, 1954, involving the Workmen's Compensation Act, we read:

. . . Garcia, a painting contractor, had a contract undertaken to paint a water tank belonging to the Company "in accordance with specifications and price stipulated," and with "the actual supervision of the work (being) taken care of by" himself. Clearly, this made Garcia an independent contractor, for while the company prescribed what should be done, the doing of it and the supervision thereof was left entirely to him, all of which meant that he was free to do the job according to his own method without being subject to the control of the company except as to the result.

Cruz, et al. vs. The Manila Hotel Company, L-9110, April 30, 1957, presented the issue of who were to be considered employees of the defendant firm for purposes of separation gratuity. LVN Pictures, Inc. vs. Phil. Musicians Guild, et al., L-12582, January 28, 1961, involved the status of certain musicians for purposes of determining the appropriate bargaining representative of the employees. In both instances the "control" test was followed. (See also Mansal vs. P.P. Gocheco Lumber Co., L-8017, April 30, 1955; and Viana vs. Allagadan, et al., L-8967, May 31, 1956.)

In the United States, the Federal Social Security Act of 1935 set forth no definition of the term 'employee' other than that it 'includes an officer of a corporation.' Under that Act the U.S. Supreme Court adopted for a time and in several cases the so-called 'economic-reality' test instead of the 'control' test. (U.S. vs. Silk and Harrison, 91 Law Ed. 1757; Bartels vs. Birmingham, Ibid, 1947, both decided in June 1947). In the Bartels case the Court said:

In United States v. Silk, No. 312, 331 US 704, ante, 1957, 67 SCt 1463, supra, we held that the relationship of employer-employee, which determines the liability for employment taxes under the Social Security Act was not to be determined solely by the idea of control which an alleged employer may or could exercise over the details of the service rendered to his business by the worker or workers. Obviously control is characteristically associated with the employer-employee relationship, but in the application of social legislation employees are those who as a matter of economic reality are dependent upon the business to which they render service. In Silk, we pointed out that permanency of the relation, the skill required, the investment in the facilities for work and opportunities for profit or less from the activities were also factors that should enter into judicial determination as to the coverage of the Social Security Act. It is the total situation that controls. The standards are as important in the entertainment field as we have just said, in Silk, that they were in that of distribution and transportation. (91 Law, Ed. 1947, 1953;)

However, the 'economic-reality' test was subsequently abandoned as not reflective of the intention of Congress in the enactment of the original Security Act of 1935. The change was accomplished by means of an amendatory Act passed in 1948, which was construed and applied in later cases. In Benson vs. Social Security Board, 172 F. 2d. 682, the U.S. Supreme Court said:

After the decision by the Supreme Court in the Silk case, the Treasury Department revamped its Regulation, 12 Fed. Reg. 7966, using the test set out in the Silk case for determining the existence of an employer-employee relationship. Apparently this was not the concept of such a relationship that Congress had in mind in the passage of such remedial acts as the one involved here because thereafter on June 14, 1948, Congress enacted Public Law 642, 42 U.S C.A. Sec. 1301 (a) (6). Section 1101(a) (6) of the Social Security Act was amended to read as follows:

The term "employee" includes an officer of a corporation, but such term does not include (1) any individual who, under the usual common-law rules applicable in determining the employer-employee relationship, has the status of an independent contractor or (2) any individual (except an officer of a corporation) who is not an employee under such common law rules.

While it is not necessary to explore the full effect of this enactment in the determination of the existence of employer-employee relationships arising in the future, we think it can fairly be said that the intent of Congress was to say that in determining in a given case whether under the Social Security Act such a relationship exists, the common-law elements of such a relationship, as recognized and applied by the courts generally at the time of the passage of the Act, were the standard to be used . . . .

The common-law principles expressly adopted by the United States Congress are summarized in Corpus Juris Secundum as follows:

Under the common-law principles as to tests of the independent contractor relationship, discussed in Master and Servant, and applicable in determining coverage under the Social Security Act and related taxing provisions, the significant factor in determining the relationship of the parties is the presence or absence of a supervisory power to control the method and detail of performance of the service, and the degree to which the principal may intervene to exercise such control, the presence of such power of control being indicative of an employment relationship and the absence of such power being indicative of the relationship of independent contractor. In other words, the test of existence of the relationship of independent contractor, which relationship is not taxable under the Social Security Act and related provisions, is whether the one who is claimed to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer except as to the result of the work. (81 C.J.S. Sec. 5, pp. 24-25); See also Millard's Inc. vs. United States, 46 F. Supp. 385; Schmidt vs. Ewing, 108 F. Supp. 505; Ramblin vs. Ewing, 106 F. Supp. 268.

In the case last cited (Rambin v. Ewing) the question presented was whether the plaintiff there, who was a sales representative of a cosmetics firm working on a commission basis, was to be considered an employee. Said the Court:

Plaintiff's only remuneration was her commission of 40%, plus $5 extra for every $250 of sales. Plaintiff was not guaranteed any minimum compensation and she was not allowed a drawing account or advance of any kind against unearned commissions. Plaintiff paid all of her traveling expenses and she even had to pay the postage for sending orders to Avon.

The only office which Avon maintained in Shreveport was an office for the city manager. Plaintiff worked from her own home and she was never furnished any leads. The relationship between plaintiff and Avon was terminable at will . . .

xxx xxx xxx

. . . A long line of decisions holds that commission sales representatives are not employees within the coverage of the Social Security Act. The underlying circumstances of the relationship between the sales representatives and company often vary widely from case to case, but commission sales representatives have uniformly been held to be outside the Social Security Act.

Considering the similarity between the definition of "employee" in the Federal Social Security Act (U.S.) as amended and its definitions in our own Social Security Act, and considering further that the local statute is admittedly patterned after that of the United States, the decisions of American courts on the matter before us may well be accorded persuasive force. The logic of the situation indeed dictates that where the element of control is absent; where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the amount thereof, we should not find that the relationship of employer and employee exists.

We have examined the contract form between petitioner and its registered representatives and found nothing therein which would indicate that the latter are under the control of the former in respect of the means and methods they employ in the performance of their work. The fact that for certain specified causes the relationship may be terminated (e.g., failure to meet the annual quota of sales, inability to make any sales production during a six-month period, conduct detrimental to petitioner, etc.) does not mean that such control exists, for the causes of termination thus specified have no relation to the means and methods of work that are ordinarily required of or imposed upon employees.

In view of the foregoing considerations, the resolution of respondent Social Security Commission subject of this appeal is reversed and set aside, without pronouncement as to costs.

Reyes, J.B.L., Dizon, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.Concepcion, C.J., took no part part.

FIRST DIVISION[G.R. No. 100388.December 14, 2000]SOCIAL SECURITY SYSTEM,petitioner, vs.THE COURT OF APPEALS and CONCHITA AYALDE,respondents.D E C I S I O NYNARES-SANTIAGO,J.:In a petition before the Social Security Commission, Margarita Tana, widow of the late Ignacio Tana, Sr., alleged that her husband was, before his demise, an employee of Conchita Ayalde as a farmhand in the two (2) sugarcane plantations she owned (known as Hda. No. Audit B-70 located in Pontevedra, La Carlota City) and leased from the University of the Philippines (known as Hda. Audit B-15-M situated in La Granja, La Carlota City).She further alleged that Tana worked continuously six (6) days a week, four (4) weeks a month, and for twelve (12) months every year between January 1961 to April 1979.For his labor, Tana allegedly received a regular salary according to the minimum wage prevailing at the time.She further alleged that throughout the given period, social security contributions, as well as medicare and employees compensation premiums were deducted from Tanas wages.It was only after his death that Margarita discovered that Tana was never reported for coverage, nor were his contributions/premiums remitted to the Social Security System (SSS).Consequently, she was deprived of the burial grant and pension benefits accruing to the heirs of Tana had he been reported for coverage.Hence, she prayed that the Commission issue an order directing:1.respondents Conchita Ayalde and Antero Maghari as her administrator to pay the premium contributions of the deceased Ignacio Tana, Sr. and report his name for SSS coverage; and2.the SSS to grant petitioner Margarita Tana the funeral and pension benefits due her.[1]The SSS, in a petition-in-intervention, revealed that neither Hda. B-70 nor respondents Ayalde and Maghari were registered members-employers of the SSS, and consequently, Ignacio Tana, Sr. was never registered as a member-employee.Likewise, SSS records reflected that there was no way of verifying whether the alleged premium contributions were remitted since the respondents were not registered members-employers.Being the agency charged with the implementation and enforcement of the provisions of the Social Security Law, as amended, the SSS asked the Commissions leave to intervene in the case.[2]In his answer, respondent Antero Maghari raised the defense that he was a mere employee who was hired as an overseer of Hda. B-70 sometime during crop years 1964-65 to 1971-72, and as such, his job was limited to those defined for him by the employer which never involved matters relating to the SSS.Hence, he prayed that the case against him be dismissed for lack of cause of action.[3]For her part, respondent Ayalde belied the allegation that Ignacio Tana, Sr. was her employee, admitting only that he was hired intermittently as an independent contractor to plow, harrow, or burrow Hda. No. Audit B-15-M.Tana used his own carabao and other implements, and he followed his own schedule of work hours.Ayalde further alleged that she never exercised control over the manner by which Tana performed his work as an independent contractor.Moreover, Ayalde averred that way back in 1971, the University of the Philippines had already terminated the lease over Hda. B-15-M and she had since surrendered possession thereof to the University of the Philippines.Consequently, Ignacio Tana, Sr. was no longer hired to work thereon starting in crop year 1971-72, while he was never contracted to work in Hda. No. Audit B-70.She also prayed for the dismissal of the case considering that Ignacio Tana, Sr. was never her employee.[4]After hearing both parties, the Social Security Commission issued a Resolution on January 28, 1988, the dispositive portion of which reads:After a careful evaluation of the testimonies of the petitioner and her witnesses, as well as the testimony of the respondent together with her documentary evidences, this Commission finds that the late Ignacio Tana was employed by respondent Conchita Ayalde from January 1961 to March 1979.The testimony of the petitioner which was corroborated by Agaton Libawas and Aurelio Tana, co-workers of the deceased Ignacio Tana, sufficienty established the latters employment with the respondent.As regards respondent Antero Maghari, he is absolved from liability because he is a mere employee of Conchita Ayalde.PREMISES CONSIDERED, this Commission finds and so holds that the late Ignacio Tana had been employed continuously from January 1961 to March 1979 in Hda. B-70 and Hda. B-15-M which are owned and leased, respectively, by respondent Conchita (Concepcion) Ayalde with a salary based on the Minimum Wage prevailing during his employment.Not having reported the petitioners husband for coverage with the SSS, respondent Conchita (Concepcion) Ayalde is, therefore, liable for the payment of damages equivalent to the death benefits in the amount of P7,067.40 plus the amount of P750.00 representing funeral benefit or a total of P7,817.40.Further, the SSS is ordered to pay to the petitioner her accrued pension covering the period after the 5-year guaranteed period corresponding to the employers liability.SO ORDERED.[5]Respondent Ayalde filed a motion for reconsideration[6]which the Commission denied for lack of merit in an Order dated November 3, 1988.[7]Not satisfied with the Commissions ruling, Ayalde appealed to the Court of Appeals, docketed as CA-G.R. SP No. 16427, raising the following assignment of errors:IThe Social Security Commission erred in not finding that there is sufficient evidence to show that:(a)The deceased Ignacio Tana, Sr. never worked in the farmland of respondent-appellant situated in Pontevedra, La Carlota City, otherwise known as Hacienda No. Audit B-70, (Pontevedra B-70 Farm for short), in any capacity, whether as a daily or monthly laborer or as independent contractor;(b)During the time that respondent-appellant was leasing a portion of the land of the University of the Philippines, otherwise known as Hacienda Audit No. B-15-M, (La Granja B-15 Farm for short), the deceased Ignacio Tana, Sr. was hired thereat on a pakyaw basis, or as an independent contractor, performing the services of an arador (Plower), for which he was proficient, using his own carabao and farming implements on his own time and discretion within the period demanded by the nature of the job contracted.IIThe Social Security Commission erred in holding that there is no evidence whatsoever to show that respondent-appellant was no longer leasing La Granja B-15 Farm.IIIThe Social Security Commission erred in not holding that the deceased Ignacio Tana, having been hired as an independent contractor on pakyaw basis, did not fall within the coverage of the Social Security Law.[8]The Court of Appeals rendered judgment in favor of respondent-appellant Conchita Ayalde and dismissed the claim of petitioner Margarita Tan.The SSS, as intervenor-appellee, filed a Motion for Reconsideration, which was denied on the ground that the arguments advanced are mere reiterations of issues and arguments already considered and passed upon in the decision in question which are utterly insufficient to justify a modification or reversal of said decision.[9]Hence, this petition for review oncertiorarion the following assigned errors:1)The Court of Appeals was in error in ruling that an employee working under the pakyaw system is considered under the law to be an independent contractor.2)The Court of Appeals was in error in not giving due consideration to the fundamental tenet that doubts in the interpretation and implementation of labor and social welfare laws should be resolved in favor of labor.3)The Court of Appeals was in error in disregarding the settled rule that the factual findings of administrative bodies on matters within their competence shall not be disturbed by the courts.4)The Court of Appeals was in error in ruling that even granting arguendo that Ignacio Tana was employed by Conchita Ayalde, such employment did not entitle him to compulsory coverage since he was not paid any regular daily wage or basic pay and he did not work for an uninterrupted period of at least six months in a year in accordance with Section 8(j) (1) of the SS Law.The pivotal issue to be resolved in this petition is whether or not an agricultural laborer who was hired on pakyaw basis can be considered an employee entitled to compulsory coverage and corresponding benefits under the Social Security Law.Petitioner, Social Security System (or SSS), argues that the deceased Ignacio Tana, Sr., who was hired by Conchita Ayalde on pakyaw basis to perform specific tasks in her sugarcane plantations, should be considered an employee; and as such, his heirs are entitled to pension and burial benefits.The Court of Appeals, however, ruled otherwise, reversing the ruling of the Social Security Commission and declaring that the late Ignacio Tana, Sr. was an independent contractor, and in the absence of an employer-employee relationship between Tana and Ayalde, the latter cannot be compelled to pay to his heirs the burial and pension benefits under the SS Law.At the outset, we reiterate the well-settled doctrine that the existence of an employer-employee relationship is ultimately a question of fact.[10]And while it is the general rule that factual issues are not within the province of the Supreme Court, said rule is not without exception.In cases, such as this one, where there are conflicting and contradictory findings of fact, this Court has not hesitated to scrutinize the records to determine the facts for itself.[11]Our disquisition of the facts shall be our guide as to whose findings are supported by substantial evidence.The mandatory coverage under the SSS Law (Republic Act No. 1161, as amended by PD 1202 and PD 1636) is premised on the existence of an employer-employee relationship, and Section 8(d) defines an employee as any person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation for such services where there is an employer-employee relationship. The essential elements of an employer-employee relationship are:(a)the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the means and methods by which the work is to be accomplished, with the power of control being the most determinative factor.[12]There is no question that Tana was selected and his services engaged by either Ayalde herself, or by Antero Maghari, her overseer.Corollarily, they also held the prerogative of dismissing or terminating Tanas employment.The dispute is in the question of payment of wages.Claimant Margarita Tana and her corroborating witnesses testified that her husband was paid daily wages per quincena as well as on pakyaw basis.Ayalde, on the other hand, insists that Tana was paid solely on pakyaw basis.To support her claim, she presented payrolls covering the period January of 1974 to January of 1976;[13]and November of 1978 to May of 1979.[14]A careful perusal of the records readily show that the exhibits offered are not complete, and are but a mere sampling of payrolls.While the names of the supposed laborers appear therein, their signatures are nowhere to be found.And while they cover the years 1975, 1976 and portions of 1978 and 1979, they do not cover the 18-year period during which Tana was supposed to have worked in Ayaldes plantations.Also an admitted fact is that these exhibits only cover Hda. B70, Ayalde having averred that all her records and payrolls for the other plantation (Hda. B-15-M) were either destroyed or lost.[15]To our mind, these documents are not only sadly lacking, they are also unworthy of credence.The fact that Tanas name does not appear in the payrolls for the years 1975, 1976 and part of 1978 and 1979, is no proof that he did not work in Hda. B70 in the years 1961 to 1974, and the rest of 1978 and 1979.The veracity of the alleged documents as payrolls are doubtful considering that the laborers named therein never affixed their signatures to show that they actually received the amounts indicated corresponding to their names.Moreover, no record was shown pertaining to Hda. B-15-M, where Tana was supposed to have worked.Even Ayalde admitted that she hired Tana as arador and sometimes as laborer during milling in Hda. B-15-M.[16]In light of her incomplete documentary evidence, Ayaldes denial that Tana was her employee in Hda. B-70 or Hda. B-15-M must fail.In contrast to Ayaldes evidence, or lack thereof, is Margarita Tanas positive testimony, corroborated by two (2) other witnesses.On the matter of wages, they testified as follows:Margarita Tana:Q.During the employment of your late husband, was he paid any wages?A.Yes, he was paid.Q.What was the manner of payment of his salary, was it on pakyaw or daily basis?A.Daily basis.Q.How many times did he receive his salary in a months time?A.2 times.Q.You mean, payday in Hda. B-70 is every15 days?A.Yes, sir.x x xx x xx x xATTY. GALVAN:To prove that it is material to the main question because if ever the hacienda maintains complete payrolls of their employees, then the burden of proof lies in the petitioner..HEARING OFFICER:Let the witness answer, if she knows.WITNESS:There was no payroll, only pad paper.ATTY. GALVAN: (continuing)Q.Were the names of workers of the hacienda all listed in that pad paper every payday?A.Yes, we just sign on pad paper because we have no payroll to be signed.x x xx x xx x xQ.What do you understand by payroll?A.Payroll is the list where the whole laborers are listed and receive their salaries.Q.And how did that differ from the pad paper which you said you signed?A.There is a difference.Q.What is the difference?A.In the payroll, at the end there is a column for signature but in the pad paper, we only sign directly.Q.Did it contain the amount that you receive?A.Yes, sir.Q.And the date corresponding to the payroll pad?A.I am not sure but it only enumerates our names and then we were given our salaries.Q.Now, did you have a copy of that?ATTY. GALVAN:Objection, Your Honor, it is not the petitioner who had a copy, it is usually the owner because the preparation of the payrolls is done by the employer who..ATTY. UNGCO:That is why Im asking ..HEARING OFFICER:Let the witness answer.Objection overruled.WITNESS:I dont have.x x xx x xx x xQ.When you are receiving daily wage of P4.00 how much was your quincenal together with your husband?A.The highest salary I received for my own was P30.00 in one quincena.Q.What about the salary of your husband, how much?A.The same.Q.Was this P30.00 per quincena later on increased?A.There was an increase because formerly it was P4.00 now it is P8.00.Q.In 1979 how much was your husbands salary per quincena?A.In one quincena my husband receives P60.00 while I only receive P30.00.[17]AGATON LIBAWAS:Q.During your employment, do you sign payrolls everytime you draw your salary?A.We sign on intermediate pad.Q.You mean, the practice of the hacienda is to have the names of the laborers receiving that salaries listed on that intermediate pad?A.Yes, sir.[18]AURELIO TANA:Q.By the way, how many times did you receive your salaries in a month?A.We receive our wages twice a month that is, every 15 days.Q.Did you sign payrolls everytime you received your salaries?A.In the pad paper as substitute payroll.Q.Do you know if all the workers of the hacienda were listed in that payrolls?A.Yes, sir.Q.Who was in charge in giving your salaries?A.Antero Maghari.[19]These witnesses did not waver in their assertion that while Tana was hired by Ayalde as an arador on pakyaw basis, he was also paid a daily wage which Ayaldes overseer disbursed every fifteen (15) days.It is also undisputed that they were made to acknowledge receipt of their wages by signing on sheets of ruled paper, which are different from those presented by Ayalde as documentary evidence.In fine, we find that the testimonies of Margarita Tana, Agaton Libawas and Aurelio Tana prevail over the incomplete and inconsistent documentary evidence of Ayalde.In the parallel case ofOpulencia Ice Plant and Storage v. NLRC, the petitioners argued that since Manuel P. Esitas name does not appear in the payrolls of the company it necessarily means that he was not an employee.This Court held:Petitioners further argue that complainant miserably failed to present any documentary evidence to prove his employment.There was no timesheet, pay slip and/or payroll/cash voucher to speak of.Absence of these material documents are necessarily fatal to complainants cause.We do not agree.No particular form of evidence is required to prove the existence of an employer-employee relationship.Any competent and relevant evidence to prove the relationship may be admitted.For, if only documentary evidence would be required to show that relationship, no scheming employer would ever be brought before the bar of justice, as no employer would wish to come out with any trace of the illegality he has authored considering that it should take much weightier proof to invalidate a written instrument.Thus,as in this case where the employer-employee relationship between petitioners and Esita was sufficiently proved by testimonial evidence, the absence of time sheet, time record or payroll has become inconsequential.[20](Underscoring ours)Clearly, then, the testimonial evidence of the claimant and her witnesses constitute positive and credible evidence of the existence of an employer-employee relationship between Tana and Ayalde.As the employer, the latter is duty-bound to keep faithful and complete records of her business affairs, not the least of which would be the salaries of the workers.And yet, the documents presented have been selective, few and incomplete in substance and content.Consequently, Ayalde has failed to convince us that, indeed, Tana was not her employee.The argument is raised that Tana is an independenent contractor because he was hired and paid wages on pakyaw basis.We find this assertion to be specious for several reasons.First, while Tana was sometimes hired as an arador or plower for intermittent periods, he was hired to do other tasks in Ayaldes plantations.Ayalde herself admitted as much, although she minimized the extent of Tanas labors.On the other hand, the claimant and her witnesses were direct and firm in their testimonies, to wit:MARGARITA TANA:Q.Was your late husbands work continuous or not?A.His work was continuous except on Sundays.Q.Mrs. Witness, in January 1961, how many days in a week did your late husband work?A.4 weeks in January 1961.Q.And how many months for that year did he work?A.12 months.Q.Is this working pattern of your husband, considering that you testified that he worked continuously, the same all throughout his employment from 1961 to 1978?A.Yes, he worked continuously from 1961 to 1978 for 6 days a week, 4 weeks a month and 12 months each year.Q.Mrs. Witness, how many months did your husband work in 1979 considering that he died in 1979?A.3 months.Q.What was the nature of the work of your late husband from 1961 until his death in 1979?A.Cutting canes, hauling canes with the use of canecarts, plowing, hauling fertilizers, weeding and stubble cleaning.x x xx x xx x xQ.Now, the other co-workers of yours, you said they were Agaton Libawas, Narciso Dueas, Juan Dueas, and Aurelio Tana, what were their jobs?A.Hauling canes by the use of bull carts and cutting canes.Their works are the same with that of my husbands.Q.But you mentioned among the duties of your husband as arador meaning plowing the fields?A.Yes, he was also plowing because that is one of his duties.[21]AGATON LIBAWAS:Q.How about petitioner Margarita Tana and the late Ignacio Tana, were they regular workers, or extra workers?A.They were regular workers.Q.In your case, Mr. Witness, considering that according to you, you are only a relief worker, please inform the Commission how many months each year from 1961 to 1984 did you work in Hda. B-70 and Hda. B-15M with Conchita Ayalde?A.During milling season, I worked 2 months, during cultivation if they are short of plowers then they would call me to work for at least 3 months as a plower.Q.So, all in all, each year, from 1961 to 1984 your average working months in Hda. B-70 and B-15M are 5 months each year?A.Yes, sir.Q.Mr. Witness, to prove that you have worked there, will you please inform at least 5 laborers of Hda. B-70 and B-15M of Conchita Ayalde?A.Juan Dueas, Narciso Dueas, Aurelio Tana, Ignacio and Margarita Tana.x x xx x xx x xQ.Will you please inform the Commission if the deceased Ignacio Tana which is according to you, was a regular worker of the 2 haciendas, if how many months did he work during lifetime from 1961 until he died in 1979?A.His work was continuous.Q.And by continuous you mean he worked straight 12 months each year except in 1979?A.He worked only for 10 months because the 2 months are already preparation for cultivation.x x xx x xx x xQ.And according to you, in a years time, you worked only for at least 5 months in Hda. B-70 and B-15M, is that correct?A.Yes.Q.And during this time that you are working in your riceland you will agree with me that you do not know whether the laborers of this Hda. B-70 and Had B-15M are really working because you are devoting your time in your riceland, is that correct?A.I knew because the place of their work is just near my house, it is along the way.Q.How about when the canes are already tall, can you actually see the workers in Hda. B-70 and B-15M when you are busy at your riceland?A.Yes, because they have to pass in my house.Q.Is there no other passage in that hacienda except that road in front of your house?A.Yes.Q.Are you sure about that?A.Yes, I am sure.[22]AURELIO TANA:Q.Do you know what is the work of the petitioner during the time when you were together working in the field?A.We were working together, like cutting and loading canes, hoeing, weeding, applying fertilizers, digging canals and plowing.Q.During your employment in the said hacienda where were you residing?A.There inside the hacienda.Q.What about the petitioner?A.The same.Q.How far is your house from the house of the petitioner?A.About 20 arms-length.Q.How far is Hda. B-70 from Hda. B-15.A.It is very near it is divided by the road.Q.What road are you referring to?A.Highway road from Barangay Buenavista to La Granja.Q.During your employment will you please inform the Commission the frequency of work of the late Ignacio Tana?A.4 weeks a month, 6 days a week, 12 months a year.Q.Why is it that you are in a position to inform the Commission about the period of employment of Ignacio Tana?A.Because we were together working.[23]It is indubitable, therefore, that Tana worked continuously for Ayalde, not only as arador on pakyaw basis, but as a regular farmhand, doing backbreaking jobs for Ayaldes business.There is no shred of evidence to show that Tana was only a seasonal worker, much less a migrant worker.All witnesses, including Ayalde herself, testified that Tana and his family resided in the plantation.If he was a mere pakyaw worker or independent contractor, then there would be no reason for Ayalde to allow them to live inside her property for free.The only logical explanation is that he was working for most part of the year exclusively for Ayalde, in return for which the latter gratuitously allowed Tana and his family to reside in her property.The Court of Appeals, in finding for Ayalde, relied on the claimants and her witnesses admission that her husband was hired as an arador on pakyaw basis, but it failed to appreciate the rest of their testimonies.Just because he was, for short periods of time, hired on pakyaw basis does not necessarily mean that he was not employed to do other tasks for the remainder of the year.Even Ayalde admitted that Tana did other jobs when he was not hired to plow.Consequently, the conclusion culled from their testimonies to the effect that Tana was mainly and solely an arador was at best a selective appreciation of portions of the entire evidence.It was the Social Security Commission that took into consideration all the documentary and testimonial evidence on record.Secondly, Ayalde made much ado of her claim that Tana could not be her employee because she exercised no control over his work hours and method of performing his task as arador. It is also an admitted fact that Tana, Jr. used his own carabao and tools.Thus, she contends that, applying the control test, Tana was not an employee but an independent contractor.A closer scrutiny of the records, however, reveals that while Ayalde herself may not have directly imposed on Tana the manner and methods to follow in performing his tasks, she did exercise control through her overseer.Be that as it may, the power of control refers merely to the existence of the power.It is not essential for the employer to actually supervise the performance of duties of the employee; it is sufficient that the former has a right to wield the power.[24]Certainly, Ayalde, on her own or through her overseer, wielded the power to hire or dismiss, to check on the work, be it in progress or quality, of the laborers.As the owner/lessee of the plantations, she possessed the power to control everyone working therein and everything taking place therein.Jurisprudence provides other equally important considerations which support the conclusion that Tana was not an independent contractor.First, Tana cannot be said to be engaged in a distinct occupation or business.His carabao and plow may be useful in his livelihood, but he is not independently engaged in the business of farming or plowing.Second, he had been working exclusively for Ayalde for eighteen (18) years prior to his demise.Third, there is no dispute that Ayalde was in the business of growing sugarcane in the two plantations for commercial purposes.There is also no question that plowing or preparing the soil for planting is a major part of the regular business of Ayalde.Under the circumstances, the relationship between Ayalde and Tana has more of the attributes of employer-employee than that of an independent contractor hired to perform a specific project.In the case ofDy Keh Beng v. International Labor,[25]we cited our long-standing ruling inSunripe Coconut Products Co. v. Court of Industrial Relations, to wit:When a worker possesses some attributes of an employee and others of an independent contractor, which make him fall within an intermediate area, he may be classified under the category of an employee when the economic facts of the relations make it more nearly one of employment than one of independent business enterprise with respect to the ends sought to be accomplished.(Underscoring Ours)[26]We find the above-quoted ruling to be applicable in the case of Tana.There is preponderance of evidence to support the conclusion that he was an employee rather than an independent contractor.The Court of Appeals also erred when it ruled, on the alternative, that if ever Tana was an employee, he was still ineligible for compulsory coverage because he was not paid any regular daily wage and he did not work for an uninterrupted period of at least six months in a year in accordance with Section 8(j) (I) of the Social Security Law.There is substantial testimonial evidence to prove that Tana was paid a daily wage, and he worked continuously for most part of the year, even while he was also occasionally called on to plow the soil on a pakyaw basis.As a farm laborer who has worked exclusively for Ayalde for eighteen (18) years, Tana should be entitled to compulsory coverage under the Social Security Law, whether his service was continuous or broken.Margarita Tana alleged that SSS premiums were deducted from Tanas salary, testifying, thus:Q.Were there deductions from the salaries of your husband while he was employed with the respondent from 1961 to 1979?A.Yes, there were deductions but I do not know because they were the ones deducting it.Q.Why do you know that his salaries were deducted for SSS premiums?A.Because Antero Maghari asked me and my husband to sign SSS papers and he told us that they will take care of everything.Q.How much were the deductions every payday?A.I do not know how much because our daily wage was only P4.00.[27]Agaton Libawas, also testified:Q.Mr. Witness, in your 15-day wages do you notice any deductions from it?A.There were deductions and we were informed that it was for SSS.Q.Mr. Witness, since when were there deductions from your salaries?A.Since 1961.Q.Up to when?A.Up to 1979.Q.Mr. Witness, are you a member of the SSS?A.No.Q.How about petitioner, if you know?A.No, also.Q.What happened to the deductions did you not ask your employer?A.We asked but we were answered that we were being remitted for our SSS.Q.Did you not verify?A.No, because I just relied on their statement.[28]Ayalde failed to counter these positive assertions.Even on the assumption that there were no deductions, the fact remains that Tana was and should have been covered under the Social Security Law.The circumstances of his employment place him outside the ambit of the exception provided in Section 8(j) of Republic Act No. 1611, as amended by Section 4 of R.A. 2658.WHEREFORE, in view of all the foregoing, the Decision of the Court of Appeals in C.A.-G.R. SP No. 16427 and the Resolution dated June 14, 1991 are hereby REVERSED and SET ASIDE.The Resolution of the Social Security Commission in SSC Case No. 8851 is REINSTATED.No costs.SO ORDERED.Davide, Jr., C.J., (Chairman), Puno, Kapunan,andPardo, JJ.,concur.

[1]Petition before SSC Case No. 8851; Original Record, p. 1.[2]Petition-in-Intervention, Case No. 8851; Original Record, pp. 9-12.[3]Answer of Antero Maghari, Case No. 8851; Original Record, p. 25.[4]Answer of Conchita Ayalde, Case No. 8851; Original Record, pp. 26-29.[5]Resolution of SSC; Original Record, pp. 134-135.[6]Motion for Reconsideration; Original Record, pp. 153-167.[7]Order of SSC; Original Record, pp. 175-178.[8]CA Decision promulgated March 14, 1991;Rollo, pp. 34-35.[9]CA Resolution promulgated June 14, 1991;Rollo, p. 39.[10]Great Pacific Life Assurance Corp.v. NLRC, 187 SCRA 694 (1990); Santos v. NLRC, 293 SCRA 113 (1998).[11]Arambulo v. CA, 293 SCRA 567 (1998); Jison v. CA, 286 SCRA 495 (1998).[12]Filipinas Broadcasting Network, Inc. v. NLRC, 287 SCRA 348 (1998); Cabalan Pastulan Negrito Labor Associationv. NLRC, 241 SCRA 643 (1995).[13]Exhibits 4, 4-A to 4-L, 5; 5-A to 5-J; 7, 7-A to 7-C (Exhibits for Ayalde).[14]Exhibits 8; 9; 9-A; 9-B; 10; 10-A to 10-F (Exhibits for Ayalde).[15]Deposition of Ayalde, January 28, 1986, p. 44 (Exhibits for Ayalde).[16]Deposition of Ayalde, January 28, 1986, p. 45.[17]T.S.N., Margarita Tana, June 13, 1985, pp. 9,11-12, 17.[18]T.S.N., Agaton Libawas, June 13, 1985, p. 25.[19]T.S.N., Aurelio Tana, September 30, 1985, pp. 37-38.[20]Opulencia Ice Plant and Storagev. NLRC, 228 SCRA 473 (1993).[21]T.S.N., Margarita Tana, June 13, 1985, pp. 8-9; 13.[22]T.S.N., Agaton Libawas, June 13, 1985, pp. 24; 26; 30-31.[23]T.S.N., Aurelio Tana, September 30, 1985, pp. 37-38.[24]MAM Realty Devt. Corp.v. NLRC, 244 SCRA 797 (1995).[25]90 SCRA 161 (1979).[26]83Phil. 518, 523, L-2009, April 30, 1949.[27]T.S.N., Margarita Tana, June 13, 1985, p. 17.[28]T.S.N., Agaton Libawas, September 30, 1985. p. 39.

Republic of the PhilippinesSUPREME COURTManilaFIRST DIVISIONG.R. No. L-32245 May 25, 1979DY KEH BENG,petitioner,vs.INTERNATIONAL LABOR and MARINE UNION OF THE PHILIPPINES, ET AL.,respondents.A. M Sikat for petitioner.D. A. Hernandez for respondents.DE CASTRO,J.:Petitioner Dy Keh Beng seeks a review by certiorari of the decision of the Court of Industrial Relations dated March 23, 1970 in Case No. 3019-ULP and the Court's Resolutionen bancof June 10, 1970 affirming said decision. The Court of Industrial Relations in that case found Dy Keh Beng guilty of the unfair labor practice acts alleged and order him toreinstate Carlos Solano and Ricardo Tudla to their former jobs with backwages from their respective dates of dismissal until fully reinstated without loss to their right of seniority and of such other rights already acquired by them and/or allowed by law.1Now, Dy Keh Beng assigns the following errors2as having been committed by the Court of Industrial Relations:IRESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS SOLANO AND TUDLA WERE EMPLOYEES OF PETITIONERS.IIRESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS SOLANO AND TUDLA WERE DISMISSED FROM THEIR EMPLOYMENT BY PETITIONER.IIIRESPONDENT COURT ERRED IN FINDING THAT THE TESTIMONIES ADDUCED BY COMPLAINANT ARE CONVINCING AND DISCLOSES (SIC) A PATTERN OF DISCRIMINATION BY THE PETITIONER HEREIN.IVRESPONDENT COURT ERRED IN DECLARING PETITIONER GUILTY OF UNFAIR LABOR PRACTICE ACTS AS ALLEGED AND DESCRIBED IN THE COMPLAINT.VRESPONDENT COURT ERRED IN PETITIONER TO REINSTATE RESPONDENTS TO THEIR FORMER JOBS WITH BACKWAGES FROM THEIR RESPECTIVE DATES OF DISMISSALS UNTIL FINALLY REINSTATED WITHOUT LOSS TO THEIR RIGHT OF SENIORITY AND OF SUCH OTHER RIGHTS ALREADY ACQUIRED BY THEM AND/OR ALLOWED BY LAW.The facts as found by the Hearing Examiner are as follows:A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket factory, for discriminatory acts within the meaning of Section 4(a), sub-paragraph (1) and (4). Republic Act No. 875,3by dismissing on September 28 and 29, 1960, respectively, Carlos N. Solano and Ricardo Tudla for their union activities. After preliminary investigation was conducted, a case was filed in the Court of Industrial Relations for in behalf of the International Labor and Marine Union of the Philippines and two of its members, Solano and Tudla In his answer, Dy Keh Beng contended that he did not know Tudla and that Solano was not his employee because the latter came to the establishment only when there was work which he did onpakiawbasis, each piece of work being done under a separate contract. Moreover, Dy Keh Beng countered with a special defense of simple extortion committed by the head of the labor union, Bienvenido Onayan.After trial, the Hearing Examiner prepared a report which was subsequently adoptedin totoby the Court of Industrial Relations. An employee-employer relationship was found to have existed between Dy Keh Beng and complainants Tudla and Solano, although Solano was admitted to have worked on piece basis.4The issue therefore centered on whether there existed an employee employer relation between petitioner Dy Keh Beng and the respondents Solano and Tudla .According to the Hearing Examiner, the evidence for the complainant Union tended to show that Solano and Tudla became employees of Dy Keh Beng from May 2, 1953 and July 15, 1955,5respectively, and that except in the event of illness, their work with the establishment was continuous although their services were compensated on piece basis. Evidence likewise showed that at times the establishment had eight (8) workers and never less than five (5); including the complainants, and that complainants used to receive ?5.00 a day. sometimes less.6According to Dy Keh Beng, however, Solano was not his employee for the following reasons:(1) Solano never stayed long enought at Dy's establishment;(2) Solano had to leave as soon as he was through with the(3) order given him by Dy;(4) When there were no orders needing his services there was nothing for him to do;(5) When orders came to the shop that his regular workers could not fill it was then that Dy went to his address in Caloocan and fetched him for these orders; and(6) Solano's work with Dy's establishment was not continuous. ,7According to petitioner, these facts show that respondents Solano and Tudla are only piece workers, not employees under Republic Act 875, where an employee8is referred to asshall include any employee and shag not be limited to the employee of a particular employer unless the Act explicitly states otherwise and shall include any individual whose work has ceased as a consequence of, or in connection with any current labor dispute or because of any unfair labor practice and who has not obtained any other substantially equivalent and regular employment.while an employer9includes any person acting in the interest of an employer, directly or indirectly but shall not include any labor organization (otherwise than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization.Petitioner really anchors his contention of the non-existence of employee-employer relationship on the control test. He points to the case ofMadrigal Shipping Co., Inc. v. Nieves Baens del Rosario, et al., L-13130, October 31, 1959, where the Court ruled that:The test ... of the existence of employee and employer relationship is whether there is an understanding between the parties that one is to render personal services to or for the benefit of the other and recognition by them of the right of one to order and control the other in the performance of the work and to direct the manner and method of its performance.Petitioner contends that the private respondents "did not meet the control test in the fight of the ... definition of the terms employer and employee, because there was no evidence to show that petitioner had the right to direct the manner and method of respondent's work.10Moreover, it is argued that petitioner's evidence showed that "Solano worked on apakiawbasis" and that he stayed in the establishment only when there was work.While this Court upholds the control test11under which an employer-employee relationship exists "where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end, " it finds no merit with petitioner's arguments as stated above. It should be borne in mind that the control test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right.12Considering the finding by the Hearing Examiner that the establishment of Dy Keh Beng is "engaged in the manufacture of baskets known askaing,13it is natural to expect that those working under Dy would have to observe, among others, Dy's requirements of size and quality of thekaing. Some control would necessarily be exercised by Dy as the making of thekaingwould be subject to Dy's specifications. Parenthetically, since the work on the baskets is done at Dy's establishments, it can be inferred that the proprietor Dy could easily exercise control on the men he employed.As to the contention that Solano was not an employee because he worked on piece basis, this Court agrees with the Hearing Examiner thatcircumstances must be construed to determine indeed if payment by the piece is just a method of compensation and does not define the essence of the relation. Units of time ... and units of work are in establishments like respondent (sic) just yardsticks whereby to determine rate of compensation, to be applied whenever agreed upon. We cannot construe payment by the piece where work is done in such an establishment so as to put the worker completely at liberty to turn him out and take in another at pleasure.At this juncture, it is worthy to note that Justice Perfecto, concurring with Chief Justice Ricardo Paras who penned the decision in "Sunrise Coconut Products Co. v. Court of Industrial Relations" (83 Phil..518, 523), opined thatjudicial notice of the fact that the so-called "pakyaw" system mentioned in this case as generally practiced in our country, is, in fact, a labor contract -between employers and employees, between capitalists and laborers.Insofar as the other assignments of errors are concerned, there is no showing that the Court of Industrial Relations abused its discretion when it concluded that the findings of fact made by the Hearing Examiner were supported by evidence on the record. Section 6, Republic Act 875 provides that in unfair labor practice cases, the factual findings of the Court of Industrial Relations are conclusive on the Supreme Court, if supported by substantial evidence. This provision has been put into effect in a long line of decisions where the Supreme Court did not reverse the findings of fact of the Court of Industrial Relations when they were supported by substantial evidence.14Nevertheless, considering that about eighteen (18) years have already elapsed from the time the complainants were dismissed,15and that the decision being appealed ordered the payment of backwages to the employees from their respective dates of dismissal until finally reinstated, it is fitting to apply in this connection the formula for backwages worked out by Justice Claudio Teehankee in "cases not terminated sooner."16The formula cans for fixing the award of backwages without qualification and deduction to three years, "subject to deduction where there are mitigating circumstances in favor of the employer but subject to increase by way of exemplary damages where there are aggravating circumstances.17Considering there are no such circumstances in this case, there is no reason why the Court should not apply the abovementioned formula in this instance.WHEREFORE; the award of backwages granted by the Court of Industrial Relations is herein modified to an award of backwages for three years without qualification and deduction at the respective rates of compensation the employees concerned were receiving at the time of dismissal. The execution of this award is entrusted to the National Labor Relations Commission. Costs against petitioner.SO ORDERED.Teehankee, Makasiar, Guerrero, and Melencio-Herrera, JJ., concur.Fernandez, J., took no part.#Footnotes1 Rollo, p. 48.2 petitioner's Brief, pp. 1-2.3 Republic Act 875, as amended, Section 4. Unfair Labor Practices. a) It will be unfair labor practice for an employer:(1) To interfere with, restrain or coerce employees in the exercise of their rights guaranteed in section three;xxx xxx xxx(4) To discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization; ...4 Rollo, p. 32.5 Id.,p. 23.6Id.7 Rollo, Annex A, p. 22.8 Section 2(d), Republic Act 875, As Amended, otherwise known as the Industrial Peace Act.9Id.,Section 2(c).10 Petitioner's Brief, pp. 5-7.11 LVN Pictures v. Philippine Musicians Guild, et. al., 110 Phil.12 Feati University v. Bautista, et al., L-21500, December 27 1966, 18 SCRA 1966,13 Rollo, p. 46.14 Among them are: Philippine Newspapers' Guild v. Evening News, Inc., 86 Phil 303; GPTC Employees Union v. Court of Industrial Relations, et. all 102 Phil 538; Community Sawmill Company v. Court of Industrial Relations and Community Effort Labor Union, L-24347, March 27, 1979; Gonzalo, Puyat & Sorts, Inc. v. Labayo, 62 SCRA 488; De Leon, et al., v. Pampanga Development Co., Inc., L-26844, September 30, 1969, 29 SCRA 628; Castillo, et al., v. Court of Industrial Relations, L-26124, May 29, 1971, 39 SCRA 75.15 Rollo, p. 36.16 Mercury Drug Co., et al. v. Court of Industrial Relations, L-23357, April 30, 1974, 56 SCRA 694, 712.17 Id.

Republic of the PhilippinesSUPREME COURTManilaFIRST DIVISIONG.R. No. 170087 August 31, 2006ANGELINA FRANCISCO,Petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA,Respondents.D E C I S I O NYNARES-SANTIAGO,J.:This petition for review oncertiorariunder Rule 45 of the Rules of Court seeks to annul and set aside the Decision and Resolution of the Court of Appeals dated October 29, 20041and October 7, 2005,2respectively, in CA-G.R. SP No. 78515 dismissing the complaint for constructive dismissal filed by herein petitioner Angelina Francisco. The appellate court reversed and set aside the Decision of the National Labor Relations Commission (NLRC) dated April 15, 2003,3in NLRC NCR CA No. 032766-02 which affirmed with modification the decision of the Labor Arbiter dated July 31, 2002,4in NLRC-NCR Case No. 30-10-0-489-01, finding that private respondents were liable for constructive dismissal.In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction permits and other licenses for the initial operation of the company.5Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did she attend any board meeting nor required to do so. She never prepared any legal document and never represented the company as its Corporate Secretary. However, on some occasions, she was prevailed upon to sign documentation for the company.6In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant in lieu of petitioner. As Acting Manager, petitioner was assigned to handle recruitment of all employees and perform management administration functions; represent the company in all dealings with government agencies, especially with the Bureau of Internal Revenue (BIR), Social Security System (SSS) and in the city government of Makati; and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation.7For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation.8In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was required to sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting of all employees of Kasei Corporation and announced that nothing had changed and that petitioner was still connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters.9Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did not receive her salary from the company. She made repeated follow-ups with the company cashier but she was advised that the company was not earning well.10On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was informed that she is no longer connected with the company.11Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter.Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that petitioner was hired in 1995 as one of its technical consultants on accounting matters and act concurrently as Corporate Secretary. As technical consultant, petitioner performed her work at her own discretion without control and supervision of Kasei Corporation. Petitioner had no daily time record and she came to the office any time she wanted. The company never interfered with her work except that from time to time, the management would ask her opinion on matters relating to her profession. Petitioner did not go through the usual procedure of selection of employees, but her services were engaged through a Board Resolution designating her as technical consultant. The money received by petitioner from the corporation was her professional fee subject to the 10% expanded withholding tax on professionals, and that she was not one of those reported to the BIR or SSS as one of the companys employees.12Petitioners designation as technical consultant depended solely upon the will of management. As such, her consultancy may be terminated any time considering that her services were only temporary in nature and dependent on the needs of the corporation.To prove that petitioner was not an employee of the corporation, private respondents submitted a list of employees for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among the employees reported to the BIR, as well as a list of payees subject to expanded withholding tax which included petitioner. SSS records were also submitted showing that petitioners latest employer was Seiji Corporation.13The Labor Arbiter found that petitioner was illegally dismissed, thus:WHEREFORE, premises considered, judgment is hereby rendered as follows:1. finding complainant an employee of respondent corporation;2. declaring complainants dismissal as illegal;3. ordering respondents to reinstate complainant to her former position without loss of seniority rights and jointly and severally pay complainant her money claims in accordance with the following computation:a. Backwages 10/2001 07/2002 275,000.00(27,500 x 10 mos.)b. Salary Differentials (01/2001 09/2001) 22,500.00c. Housing Allowance (01/2001 07/2002) 57,000.00d. Midyear Bonus 2001 27,500.00e. 13th Month Pay 27,500.00f. 10% share in the profits of KaseiCorp. from 1996-2001 361,175.00g. Moral and exemplary damages 100,000.00h. 10% Attorneys fees87,076.50P957,742.50If reinstatement is no longer feasible, respondents are ordered to pay complainant separation pay with additional backwages that would accrue up to actual payment of separation pay.SO ORDERED.14On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter, the dispositive portion of which reads:PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby MODIFIED as follows:1) Respondents are directed to pay complainant separation pay computed at one month per year of service in addition to full backwages from October 2001 to July 31, 2002;2) The awards representing moral and exemplary damages and 10% share in profit in the respective accounts of P100,000.00 and P361,175.00 are deleted;3) The award of 10% attorneys fees shall be based on salary differential award only;4) The awards representing salary differentials, housing allowance, mid year bonus and 13th month pay are AFFIRMED.SO ORDERED.15On appeal, the Court of Appeals reversed the NLRC decision, thus:WHEREFORE, the instant petition is hereby GRANTED. The decision of the National Labor Relations Commissions dated April 15, 2003 is hereby REVERSED and SET ASIDE and a new one is hereby rendered dismissing the complaint filed by private respondent against Kasei Corporation, et al. for constructive dismissal.SO ORDERED.16The appellate court denied petitioners motion for reconsideration, hence, the present recourse.The core issues to be resolved in this case are (1) whether there was an employer-employee relationship between petitioner and private respondent Kasei Corporation; and if in the affirmative, (2) whether petitioner was illegally dismissed.Considering the conflicting findings by the Labor Arbiter and the National Labor Relations Commission on one hand, and the Court of Appeals on the other, there is a need to reexamine the records to determine which of the propositions espoused by the contending parties is supported by substantial evidence.17We held inSevilla v. Court of Appeals18that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship.However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. There are instances when, aside from the employers power to control the employee with respect to the means and methods by which the work is to be accomplished, economic realities of the employment relations help provide a comprehensive analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity.The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship.This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on; and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latters employment.The control test initially found application in the case ofViaa v. Al-Lagadan and Piga,19and lately inLeonardo v. Court of Appeals,20where we held that there is an employer-employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end.InSevilla v. Court of Appeals,21we observed the need to consider the existing economic conditions prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee relationship based on an analysis of the totality of economic circumstances of the worker.Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity,22such as: (1) the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business.23The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business.24In the United States, the touchstone of economic reality in analyzing possible employment relationships for purposes of the Federal Labor Standards Act is dependency.25By analogy, the benchmark of economic reality in analyzing possible employment relationships for purposes of the Labor Code ought to be the economic dependence of the worker on his employer.By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the company and performing functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement.Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security contributions from August 1, 1999 to December 18, 2000.26When petitioner was designated General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship between petitioner and respondent corporation.27It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latters line of business.InDomasig v. National Labor Relations Commission,28we held that in a business establishment, an identification card is provided not only as a security measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioners salaries for the months stated therein, these matters constitute substantial evidence adequate to support a conclusion that petitioner was an employee of private respondent.We likewise ruled inFlores v. Nuestro29that a corporation who registers its workers with the SSS is proof that the latter were the formers employees. The coverage of Social Security Law is predicated on the existence of an employer-employee relationship.Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that petitioner never acted as Corporate Secretary and that her designation as such was only for convenience. The actual nature of petitioners job was as Kamuras direct assistant with the duty of acting as Liaison Officer in representing the company to secure construction permits, license to operate and other requirements imposed by government agencies. Petitioner was never entrusted with corporate documents of the company, nor required to attend the meeting of the corporation. She was never privy to the preparation of any document for the corporation, although once in a while she was required to sign prepared documentation for the company.30The second affidavit of Kamura dated March 7, 2002 which repudiated the December 5, 2001 affidavit has been allegedly withdrawn by Kamura himself from the records of the case.31Regardless of this fact, we are convinced that the allegations in the first affidavit are sufficient to establish that petitioner is an employee of Kasei Corporation.Grantingarguendo, that the second affidavit validly repudiated the first one, courts do not generally look with favor on any retraction or recanted testimony, for it could have been secured by considerations other than to tell the truth and would make solemn trials a mockery and place the investigation of the truth at the mercy of unscrupulous witnesses.32A recantation does not necessarily cancel an earlier declaration, but like any other testimony the same is subject to the test of credibility and should be received with caution.33Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was selected and engaged by the company for compensation, and is economically dependent upon respondent for her continued employment in that line of business. Her main job function involved accounting and tax services rendered to respondent corporation on a regular basis over an indefinite period of engagement. Respondent corporation hired and engaged petitioner for compensation, with the power to dismiss her for cause. More importantly, respondent corporation had the power to control petitioner with the means and methods by which the work is to be accomplished.The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from January to September 2001. This amounts to an illegal termination of employment, where the petitioner is entitled to full backwages. Since the position of petitioner as accountant is one of trust and confidence, and under the principle of strained relations, petitioner is further entitled to separation pay, in lieu of reinstatement.34A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee.35InGlobe Telecom, Inc. v. Florendo-Flores,36we ruled that where an employee ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation arises which creates an adverse working environment rendering it impossible for such employee to continue working for her employer. Hence, her severance from the company was not of her own making and therefore amounted to an illegal termination of employment.In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor Code to a greater number of employees. This would enable employees to avail of the benefits accorded to them by law, in line with the constitutional mandate giving maximum aid and protection to labor, promoting their welfare and reaffirming it as a primary social economic force in furtherance of social justice and national development.WHEREFORE, the petition isGRANTED. The Decision and Resolution of the Court of Appeals dated October