Gapayao v. Fulo
REITERATIONFacts
The Antecedents: Jaime Fulo died on November 4, 1997, due to electrocution while doing repairs at the residence and business establishment of petitioner Jaime N. Gapayao. Petitioner provided financial assistance to the deceased's widow, Rosario Fulo, who executed an Affidavit of Desistance waiving her right to file any action. Subsequently, both parties executed a Compromise Agreement where petitioner agreed to pay P40,000.00 as full payment for all claims due the victim, and private respondent released petitioner from any and all claims. Private respondent filed a claim for social security benefits with the SSS, but it was discovered that the deceased was not a registered SSS member. Upon insistence that the deceased was employed by petitioner from 1983 to 1997, the SSS conducted a field investigation which yielded findings from co-employees and petitioner's wife indicating that the deceased was a farm laborer and was hired for various tasks on an "extra basis" or "pakyaw" from 1983 until his death, receiving daily compensation. The SSS demanded remittance of contributions, and when petitioner denied employment, private respondent filed a petition with the Social Security Commission (SSC) for social security coverage and payment of contributions. Petitioner, in his Answer, disclaimed liability, asserting the deceased was an independent contractor and, alternatively, an intermittent worker not entitled to SSS premiums for non-work periods. The SSS filed a Petition-in-Intervention. Procedural History: The SSC, in a Resolution dated March 14, 2007, found that Jaime Fulo was employed by Jaime N. Gapayao from January 1983 to November 4, 1997, working nine months a year at the minimum wage. The SSC ordered petitioner to pay unpaid SS contributions, penalties, and damages for failure to report the deceased for coverage. The SSS was directed to pay private respondent death benefits. Petitioner's Motion for Reconsideration was denied. The Court of Appeals (CA), in a Decision dated March 17, 2010, affirmed the SSC Resolution, holding that sufficient basis existed to conclude an employer-employee relationship and that petitioner should bear the consequences of failing to report the deceased for coverage. The CA found the Compromise Agreement as a declaration against interest. Petitioner filed a petition for review on certiorari with the Supreme Court. The Petition: The sole issue presented to the Supreme Court was whether an employer-employee relationship existed between the deceased Jaime Fulo and petitioner Jaime N. Gapayao, which would merit an award of benefits under social security laws.
Issue(s)
Whether an employer-employee relationship existed between the deceased Jaime Fulo and petitioner Jaime N. Gapayao. Whether the Compromise Agreement executed by the parties is a bar to the claim for social security benefits.
Ruling
The Petition for Review on Certiorari is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP. No. 101688 dated March 17, 2010 and August 13, 2010, respectively, are AFFIRMED.
Ratio Decidendi
On the existence of an employer-employee relationship: The Court affirmed the findings of the SSC and CA that an employer-employee relationship existed. The Court reiterated that findings of fact of administrative agencies, when affirmed by the CA, are accorded respect and finality if supported by substantial evidence. The deceased worked as a farm laborer, abaca harvester, and repairman for petitioner from 1983 until his death in 1997, performing tasks necessary and desirable to petitioner's business. The Court emphasized that "pakyaw" workers and seasonal farm workers can be considered regular employees if they are subject to the employer's control. The existence of the right to control, not necessarily the actual exercise thereof, is the determinant factor. Petitioner exercised control through his farm manager, Amado Gacelo, and the nature of the work performed by the deceased was essential to petitioner's agricultural and business ventures. The Court also noted that the deceased performed tasks in petitioner's other businesses like a bakery and grocery, even during the off-season for farm work, further bolstering the continuous employment. On the effect of the Compromise Agreement: The Court held that the Compromise Agreement, wherein petitioner admitted to being the employer of the deceased, was a valid declaration against interest and did not serve as a bar to the claim for social security benefits. The Court found that petitioner entered into the agreement with full knowledge of his role as employer and his belated attempt to circumvent it by claiming duress or extortion was not given credence. The Court stressed that compromise agreements, when entered into voluntarily and in good faith to settle differences, are valid and binding. The fact that the deceased was not a registered SSS member and that the employer failed to remit contributions does not prejudice the employee's right to social security benefits. The law provides that an employee is still entitled to benefits even if the employer fails or refuses to remit contributions.
Main Doctrine
The existence of an employer-employee relationship is established by the control test, which requires the employer's right to control the manner and means of performing the work, not necessarily the actual exercise of such control. Pakyaw workers and seasonal farm workers can be considered regular employees if they are subject to the employer's control and their work is necessary or desirable to the employer's business. A compromise agreement admitting an employer-employee relationship, if entered into voluntarily and in good faith, is binding and can serve as evidence against the employer.