The Manila Hotel Corp.

v NLRC, 343 SCRA 1 (2000)

In May 1988, Marcelo Santos was an overseas worker in Oman. In June 1988, he was recruited by Palace Hotel
in Beijing, China. Due to higher pay and benefits, Santos agreed to the hotels job offer and so he started
working there in November 1988. The employment contract between him and Palace Hotel was however without
the intervention of the Philippine Overseas Employment Administration (POEA). In August 1989, Palace Hotel
notified Santos that he will be laid off due to business reverses.
In September 1989, he was officially terminated.

In February 1990, Santos filed a complaint for illegal dismissal against Manila Hotel Corporation (MHC) and
Manila Hotel International, Ltd. (MHIL). The Palace Hotel was impleaded but no summons were served upon it.
MHC is a government owned and controlled corporation. It owns 50% of MHIL, a foreign corporation (Hong
Kong). MHIL manages the affair of the Palace Hotel. The labor arbiter who handled the case ruled in favor of
Santos. The National Labor Relations Commission (NLRC) affirmed the labor arbiter.

ISSUE: Whether or not the NLRC has jurisdiction over the case.

HELD: No. The NLRC is a very inconvenient forum for the following reasons:
1. The only link that the Philippines has in this case is the fact that Santos is a Filipino;
2. However, the Palace Hotel and MHIL are foreign corporations MHC cannot be held liable because it merely
owns 50% of MHIL, it has no direct business in the affairs of the Palace Hotel. The veil of corporate fiction cant
be pierced because it was not shown that MHC is directly managing the affairs of MHIL. Hence, they are
separate entities.
3. Santos contract with the Palace Hotel was not entered into in the Philippines;
4. Santos contract was entered into without the intervention of the POEA (had POEA intervened, NLRC still does
not have jurisdiction because it will be the POEA which will hear the case);
5. MHIL and the Palace Hotel are not doing business in the Philippines; their agents/officers are not residents of
the Philippines;

Due to the foregoing, the NLRC cannot possibly determine all the relevant facts pertaining to the case. It is not
competent to determine the facts because the acts complained of happened outside our jurisdiction. It cannot
determine which law is applicable. And in case a judgment is rendered, it cannot be enforced against the Palace
Hotel (in the first place, it was not served any summons).

The Supreme Court emphasized that under the rule of forum non conveniens, a Philippine court or agency may
assume jurisdiction over the case if it chooses to do so provided:
(1) that the Philippine court is one to which the parties may conveniently resort to;
(2) that the Philippine court is in a position to make an intelligent decision as to the law and the facts; and
(3) that the Philippine court has or is likely to have power to enforce its decision.
None of the above conditions are apparent in the case at bar.

II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2) that MHICL was liable for
Santos' retrenchment, still MHC, as a separate and distinct juridical entity cannot be held liable.
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock. However, this is not
enough to pierce the veil of corporate fiction between MHICL and MHC.
Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the corporate fiction is used to
defeat public convenience, justify wrong, protect fraud or defend a crime. 41 It is done only when a corporation is
a mere alter ego or business conduit of a person or another corporation.

In Traders Royal Bank v. Court of Appeals,
42
we held that "the mere ownership by a single stockholder or by
another corporation of all or nearly all of the capital stock of a corporation is not of itself a sufficient reason for
disregarding the fiction of separate corporate personalities."

The tests in determining whether the corporate veil may be pierced are: First, the defendant must have control or
complete domination of the other corporation's finances, policy and business practices with regard to the
transaction attacked. There must be proof that the other corporation had no separate mind, will or existence with
respect the act complained of.Second, control must be used by the defendant to commit fraud or wrong. Third,
the aforesaid control or breach of duty must be the proximate cause of the injury or loss complained of. The
absence of any of the elements prevents the piercing of the corporate veil.
43


It is basic that a corporation has a personality separate and distinct from those composing it as well as from that
of any other legal entity to which it may be related.
44
Clear and convincing evidence is needed to pierce the veil
of corporate fiction.
45
In this case, we find no evidence to show that MHICL and MHC are one and the same
entity.

III. MHICL not Liable
Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his employment contract with
the Palace Hotel. This fact fails to persuade us.

First, we note that the Vice President (Operations and Development) of MHICL, Miguel D. Cergueda signed the
employment contract as a mere witness. He merely signed under the word "noted".

When one "notes" a contract, one is not expressing his agreement or approval, as a party would.
46
In Sichangco
v. Board of Commissioners of Immigration,
47
the Court recognized that the term "noted" means that the person
so noting has merely taken cognizance of the existence of an act or declaration, without exercising a judicious
deliberation or rendering a decision on the matter.

Mr. Cergueda merely signed the "witnessing part" of the document. The "witnessing part" of the document is that
which, "in a deed or other formal instrument is that part which comes after the recitals, or where there are no
recitals, after the parties(emphasis ours)."
48
As opposed to a party to a contract, a witness is simply one who,
"being present, personally sees or perceives a thing; a beholder, a spectator, or eyewitness."
49
One who "notes"
something just makes a "brief written statement"
50
a memorandum or observation.

Second, and more importantly, there was no existing employer-employee relationship between Santos and
MHICL. In determining the existence of an employer-employee relationship, the following elements are
considered:
51

"(1) the selection and engagement of the employee;
"(2) the payment of wages;
"(3) the power to dismiss; and
"(4) the power to control employee's conduct."

MHICL did not have and did not exercise any of the aforementioned powers. It did not select respondent Santos
as an employee for the Palace Hotel. He was referred to the Palace Hotel by his friend, Nestor Buenio. MHICL
did not engage respondent Santos to work. The terms of employment were negotiated and finalized through
correspondence between respondent Santos, Mr. Schmidt and Mr. Henk, who were officers and representatives
of the Palace Hotel and not MHICL. Neither did respondent Santos adduce any proof that MHICL had the power
to control his conduct. Finally, it was the Palace Hotel, through Mr. Schmidt and not MHICL that terminated
respondent Santos' services.

Neither is there evidence to suggest that MHICL was a "labor-only contractor."
52
There is no proof that MHICL
"supplied" respondent Santos or even referred him for employment to the Palace Hotel.

Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the same entity. The fact
that the Palace Hotel is a member of the "Manila Hotel Group" is not enough to pierce the corporate veil between
MHICL and the Palace Hotel.

Canlubang Security Agency Corporation v. NLRC, et al 216 SCRA 280 (1992)

The real issue raised in this illegal dismissal case is whether or not respondent National
Labor Relations Commission (NLRC) committed grave abuse of discretion in ruling that
the petitioner, Canlubang Security Agency (CSA, for short ), and not Canlubang
Automotive Resources Corporation (CARCO, for short), was the employer of private
respondents, Arsenio A. Bartolay, et al. (hereinafter referred to as "private
respondents").

The facts, as narrated by the Solicitor General, are as follows:
CARCO had a security service contract with CSA whereby the latter agreed to secure,
guard and protect CARCO's properties and interest. This contractual relation continued
until February 14, 1985 when CARCO notified CSA that in view of recent developments
and performance of the security personnel detailed with CARCO, the latter decided to
engage the services of another agency (Annex "B", Petition).

Sometime in February, 1985, several security guards, supervisors, and officers headed
by private respondent Arsenio A. Bartolay, filed a complaint for illegal termination
against CSA and CARCO. On May 14, 1985, however, private respondents filed a Motion
to Dismiss said complaint as against CSA (Annex "H", Petition). Pertinent allegations of
said Motion read:

"2. After a careful and thorough analysis of the circumstances giving rise to this case, we
are convinced and of the conviction that we have no cause of action whatsoever against
CSA, the latter not being our employer but CARCO.

3. Hence, we hereby forever release and discharge CSA, its owners, officers, employees,
successors and assigns from any and all manner of actions, suits, debts, claims,
demands and liabilities whatsoever we now have or may have in law or equity against
the said company, its owners, officers, employees, successors and assigns by reason or
as a consequence of, or in connection with, or incident to, our employment as security
guards, our intention being to release and discharge completely, absolutely and finally
said CSA, its owners, officers, employees, successors or assigns;

4. We further hereby waive, renounce and forego all claims, particularly separation pay,
sick leave, vacation leave and any other claim under any law or contract which we have
or might have against CSA by virtue of our employment as security guards.
Labor Arbiter Cresencio Ramos, in his Order dated May 5, 1985 (Annex "J", Petition),
granted said Motion. CARCO appealed therefrom and resolving the same, the NLRC, in
its Resolution dated January 26, 1986, set aside the Order of Labor Arbiter Ramos and
remanded the case to the Arbitration Branch for further proceedings. The NLRC observed
that the Labor Arbiter erred in dismissing the case as against CSA which is an
indispensable party to the case and as such should be impleaded as party respondent
(Annex "N", Petition).

In said hearing, the CSA did not present any evidence and opted to adopt the evidence
presented by private respondents.
In the Decision dated September 15, 1988 (Annex "B", Petition) Labor Arbiter Alvarez
found private respondents' dismissal to be illegal but held only CSA liable therefor and
dismissed the complaint as against CARCO for lack of employer-employee relationship.
In an appeal therefrom, the NLRC, in its Resolution dated October 12, 1989 modified the
foregoing Decision by dismissing the complaint as against both CSA and CARCO (Annex
"F", Petition).

Private respondents moved to reconsider the foregoing Decision and the NLRC, in this
Resolution dated December 19, 1990 (Annex "A", Petition) granted the same and
reinstated the appealed Decision of Labor Arbiter Alvarez which found only CSA liable to
private respondents for illegal termination.
CSA's Motion for Reconsideration was denied by the NLRC in its Resolution dated January
31, 1991 (Annex "C", Petition).

Hence, this Petition upon the contention that:
In issuing the Resolution (Annex "A") complained of Public Respondent National Labor
Relations Commission (NLRC) acted with great abuse of discretion making the
followingfindings which are contrary to law and evidence, to wit:
I. NLRC's findings that the quitclaim clearly . . . was premised on an erroneous belief
that respondent CARCO is the real employer (p. 9).

II. NLRC's finding that exonerate respondency (sic) CSA is contrary to the declared
policy of the law to afford protection to labor and to assure them the right to security of
tenure (p. 9).

III. NLRC's finding that while rights may be waived, the same must not be contrary to
law, public order, morals and good customs or prejudicial to a third person with a right
recognized by law (p. 9).

IV. NLRC's finding that the affidavit of Antonio Yulo, as officer of CSA is indeed self-
serving and should be held suspect. His declaration cannot overcome the documentary
evidence presented by respondent CARCO to controvert the same. (pp. 225-229, Rollo.)

The petition is without merit.
In determining the existence of employer-employee relationship, the following elements
are generally considered, namely: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; (4) the power to control the
employee's conduct although the latter is the most important element (Brotherhood
Labor Unity Movement of the Philippines vs. Zamora, 147 SCRA 49; Social Security
System vs. Court of Appeals, 156 SCRA 383; Broadway Motors, Inc. vs. NLRC, 156 SCRA
522; Bautista vs. Inciong, 158 SCRA 665).

In the case at bar, the contract for security service entered into between CSA and
CARCO provided, among other terms, as follows:
1. Firearms and other ammunitions needed by the guards for effectively securing
CARCO's premises shall be provided by CSA.
2. Replacement of security guards shall be reposed on CSA.
3. Discipline of the guards as well as their dismissal shall be within the regulation of the
agency or CSA.
4. The guards are employees of the agency and not that of the client company.
5. All wages, benefits, and increments due under existing laws to the guards shall be
the sole and exclusiveresponsibility of CSA.
6. The agency shall hold CARCO "free from any liability, claim or causes of action, case,
claim, which may be filed by security guards employed by the agency which matters
involve the provisions of wage act or laws . . . or where such claim involve the question
of employment as said guards are in no sense personnel or employees of the client
company." (pp. 52-53, Rollo.)

The right-of-control test, i.e., "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 an end" (Sevilla vs. Court of Appeals, 160 SCRA 171) belonging to
petitioner CSA by express stipulation of its contract with CARCO, is determinative of the
existence of employer-employee relationship between CSA and its guards, the private
respondents herein. Where no employer-employee relationship has been proven to exist
between the private respondents and CARCO, the labor case filed by the private
respondents against CARCO with DOLE's arbitration body should be dismissed for there
is no legal basis for the private respondents' claims for separation pay and other benefits
against CARCO.

In the similar case of AMERICAN PRESIDENT LINES vs. CLAVE (114 SCRA 826, 833), we
ruled:
In the light of the foregoing standards, We fail to see how the complaining watchmen of
the Marine Security Agency can be considered as employees of the petitioner. It is the
agency that recruits, hires, and assigns the work of its watchmen. Hence, a watchman
cannot perform any security service for the petitioner's vessels unless the agency first
accepts him as its watchmen. With respect to his wages, the amount to be paid to a
security guard is beyond the power of the petitioner to determine. Certainly, the lump
sum amount paid by the petitioner to the agency in consideration of the latter's service
is much more than the wages of any one watchman. In point of fact, it is the agency that
quantifies and pays the wages to which the watchman is entitled.

Neither does the petitioner have any power to dismiss the security guards. In fact, We
fail to see any evidence in the record that it wielded such a power. It is true that it may
request the agency to change a particular guard. But this, precisely, is proof that the
power lies in the hands of the agency.

Since the petitioner has to deal with the agency, and not the individual watchmen, on
matters pertaining to the contracted task, it stands to reason that the petitioner does not
exercise any power over the watchman's conduct. Always, the agency stands between
the petitioner and the watchmen; and it is the agency that is answerable to the
petitioner for the conduct of its guards.

Petitioner CSA disclaims any liability for the termination of private respondents from
their employment because of the QUITCLAIM/WAIVER contained in the latter's Motion to
Dismiss their complaint against CSA based on their belief that their employer was
CARCO and not CSA.

That argument deserves scant consideration for as the Solicitor General aptly observed:
The alleged Quitclaim/Waiver is patently invalid being premised on a wrong conviction or
belief. As pointed out above, the existence of an employer-employee relationship, as a
condition for the availment of provisions of the Labor Code, is determined by evidence
and jurisprudence and the task of determining the same is judicial in character.
Consequently, private respondents may not arrogate unto themselves the authority to
determine unilaterally, the existence of an employer-employee relationship, otherwise,
the disposition of the case would be made to depend, to a large extent, on the "belief
and conviction" of a party litigant and not on the evidence adduced and jurisprudence
applicable thereto. (pp. 230-231, Rollo.)

The issue of whether employer-employee relationship existed between the parties is a
question of fact which was resolved by the labor arbiter against CSA and upheld by the
NLRC. Review of the labor cases are confined to questions of jurisdiction or grave abuse
of discretion. (Aboitiz Shipping Employees Association vs. NLRC, 186 SCRA 825.) In this
case, we find that no grave abuse of discretion was committed by the NLRC. The findings
of facts of the labor arbiter and the NLRC are binding on this Court.

WHEREFORE, the petition for certiorari is DISMISSED for lack of merit. No costs.
SO ORDERED.






Social Security System v. Court of Appeals, 348 SCRA 1 (2000)

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; and
2. 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:
I

The 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.
II

The 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.
III

The 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 on certiorari on 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 every 15 days?
A. Yes, sir.
x x x x x x x x x
ATTY. 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 x x x x x x x
Q. 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 x x x x x x x
Q. 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 of Opulencia 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 x x x x x x x
Q. 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 x x x x x x x
Q. 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 x x x x x x x
Q. 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 of Dy Keh Beng v. International Labor,
[25]
we
cited our long-standing ruling in Sunripe 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.