ALVINO AGULAY, PETITIONER, VS. THE NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION), AND CITY FARM AND/OR JOEL KAAMINO, RESPONDENTS.

Agulay versus National Labor Relations Commission

The Case

This is a petition for certiorari filed by Alvino Agulay against the National Labor Relations Commission and City Farm and its owner Joel Kaamino. Agulay claims he was a farm worker who was illegally dismissed and is owed money; Kaamino insists Agulay was never his employee but his business partner in a crop-sharing arrangement. The case matters because it is a clean illustration of who bears the burden of proving an employer-employee relationship, and of the four-fold test that decides whether a labor tribunal has jurisdiction at all. If there is no employer-employee relationship, the Labor Arbiter has no power over the complaint, and the claim must fail at the threshold.

Procedural History

Agulay and his son Jun Ric filed a complaint for illegal dismissal with money claims before the Labor Arbiter. The Labor Arbiter dismissed the illegal dismissal claim for lack of merit but ordered Kaamino to pay Agulay unpaid salaries, thirteenth month pay, and service incentive leave pay, on the strength of Kaamino's admission that Agulay was the caretaker of his farm. Kaamino appealed to the National Labor Relations Commission. The Commission reversed and set aside the Labor Arbiter's decision, holding that the complainants failed to substantiate their claim of employment. Agulay moved for reconsideration, which the Commission denied. Agulay then filed this petition for certiorari under Rule 65, and the case reached the Supreme Court by that original action.

Facts

Agulay and his son alleged that Kaamino engaged their services sometime in September 2002 as maintenance workers and farmers on Kaamino's seven-hectare farm, known as City Farm, in Impasug-ong, Bukidnon. They said they herded farm animals, cultivated crops, and oversaw the farm; that they were paid three thousand pesos and one thousand pesos per month; and that they were allowed to live inside the farm with a rice allowance. Beginning June 2007, Kaamino stopped paying their wages and later filed a criminal case for estafa against Agulay. They said they were then forced to move out and stop working.

Kaamino denied that the complainants were his employees. He claimed that Agulay was his business partner in the farm cultivation, that the son merely helped his father, and that they agreed to share the net harvest equally. He said Agulay withdrew from the partnership because of inefficiency, and that Agulay misappropriated eighteen thousand pesos entrusted to him for the purchase of a cow, which prompted the estafa case.

The Labor Arbiter relied on Kaamino's admission in the estafa proceedings that Agulay was the caretaker of his farm, and concluded that Agulay was therefore an employee. The Commission disagreed, finding no substantial evidence of employment, and the Supreme Court took a thorough scrutiny of the records.

Issues

• Whether or not the National Labor Relations Commission committed grave abuse of discretion amounting to lack or excess of jurisdiction when it declared that the Labor Arbiter had no jurisdiction for lack of an employer-employee relationship between the petitioner and the private respondent.
• Whether or not the petitioner established by substantial evidence the existence of an employer-employee relationship with the respondent.

Applicable Provisions

The decision rests on the four-fold test for determining the existence of an employer-employee relationship, which the Court states as follows:

Consequently, on petitioner lies the burden to pass the well-settled tests to determine the existence of an employer-employee relationship, viz: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct.

These four elements are the measure of whether a labor tribunal has jurisdiction, because without an employer-employee relationship the Labor Arbiter has no authority over the complaint.

Ruling

On the first issue, the Court held that the Commission did not commit grave abuse of discretion. The existence of an employer-employee relationship is the core issue, and the Commission correctly found that the petitioner failed to establish it by evidence.

On the second issue, the Court ruled that the petitioner failed to discharge his burden. In filing a complaint for illegal dismissal on the premise that he was an employee, it was incumbent upon him to prove the employer-employee relationship by substantial evidence. The Labor Arbiter had relied solely on the respondent's admission that the petitioner was the caretaker of his farm, but the Court held that this admission did not relieve the petitioner of the burden of proof. The Court explained that there was still a need to characterize the nature of a farm caretaker to determine whether the petitioner was an employee.

Applying the four-fold test, the Court found that the petitioner could not submit competent proof that the respondent engaged his services as an employee, paid his wages as an employee, or could dictate his conduct at work. The decisive factor was the control exercised by the respondent over the petitioner. The records were bereft of any evidence that the petitioner and his son were to observe set hours of work, that the respondent laid down regulations for their work, that they were obliged to report for duty, or that the respondent prescribed the manner of performing their duties. The Court concluded that there was an absence of that degree of control evincive of an employer-employee relationship.

The petitioner also invoked payslips attached to his position paper, but the records were bereft of those documents. The Court adopted the Commission's finding:

Xxx complainant Alvino did not present any proof, documentary or otherwise, like payroll, salary, voucher receipt, employment contract, appointment Identification Card or SSS registration evidencing that he was in fact an employee of respondent Kaamino from September 2002 until July 2007.

Accordingly, the Court sustained the Commission's finding that the petitioner failed to establish by evidence that he was an employee of the respondent.

Doctrine

An employer-employee relationship is determined by the four-fold test: the selection and engagement of the employee, the payment of wages, the power of dismissal, and the power to control the employee's conduct. The burden of proving the existence of that relationship rests on the party who asserts it, and it must be discharged by substantial evidence. A bare admission that a person was a caretaker of a farm does not, by itself, establish employment; the nature of the work must still be characterized against the four-fold test. The decisive element is the power of control, meaning the right to dictate not only what work is to be done but how it is to be done. Absent proof of set hours, regulations, reporting for duty, or prescribed manner of performance, there is no employment, and the Labor Arbiter has no jurisdiction over the complaint.

Disposition

The petition was denied, and the resolutions of the National Labor Relations Commission were affirmed. The respondent prevailed.

Remember This

Memorize this line: the four-fold test governs, and the decisive factor is the power of control, which the party claiming employment must prove by substantial evidence. Examiners like to use this case to test jurisdiction, the burden of proof in illegal dismissal complaints, and the distinction between an employee and a caretaker or business partner under a crop-sharing arrangement.