Lazaro vs.

Social Security Commission

435 SCRA 472 July 30, 2004
Facts:
Rosalina Laudato filed a petition before the Social Security Commission for social security
coverage and remittance of unpaid monthly social security contributions against her 3
employers. One of them is Lazaro. Laudato alleged that despite being a sales supervisor for 6
years for Royal Star, Laudato had failed to report her to SSC for compulsory coverage or remint
Laudato's social security contributions.
Lazaro, on the other hand, deny that Laudato was an employee of Royal Star as she was paid
on commission basis and was not subjected to definite hours and conditions of work.
SSC ruled in favor of Laudato. Applying the "control test" it held that Laudato was an employee
of Royal Star and ordered the company to pay the unremitted social security contributions of
Laudato as well as P15,680.07 worth of damages for not reporting her for social security
coverage.
Lazaro filed a Petition for review with the CA. However, CA affirmed the SSC's finding. Before
the SC, Lazaro again insisted that Laudato was not qualified for social security coverage, as she
was not an employee.
Issue:
WON there is an employer-employee relationship between Laudato and Royal Star.
Ruling:
Yes, as substantial evidence found by the SSC and CA have established the element of control
determinative of an employer-employee relationship.
Determination of employer-employee relationship warrants the application of the "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 done, but also as to the means and methods by which the same is
accomplished.
The fact that Laudato was paid by way of commission does not preclude the establishment of
an employer-employee relationship. Neither does it follow that a person who does not observe
normal hours of work cannot be deemed an employee.
The SSC found that Laudato was indeed a sales agent who oversaw and supervised the sales
agents of the company (as evidenced by cash vouchers, calling cards, and Certificates of
Appreciation issued by the company to Laudato), and thus was subject to the control of
management as to how she implements its policies and its end results. This is supported by
substantial evidence.
A piece of documentary evidence is a Memorandum by the general manages directing that no
commissions were to given on all main office sales from walk-in customers and enjoining
salesmen and sales supervisor to observe this new policy. This evinces that, contrary to
Lazaro's claim, Royal Star exercised control over its sales supervisors or agents such as
Laudato as to the means and methods through which these personnel performed their work.