CHARLIE JAO, PETITIONER, VS. BCC PRODUCTS SALES INC., AND TERRANCE TY, RESPONDENTS.

Charlie Jao versus BCC Products Sales

The Case

This is a labor case about the threshold question that every employment dispute must answer before anything else: was there an employer and employee relationship at all? Charlie Jao claimed that BCC Products Sales and its president, Terrance Ty, hired him as comptroller beginning September 1995, and that he was illegally dismissed when the company's security guards barred him from the premises. The company answered that Jao was never its employee, but the comptroller of Sobien Food Corporation, BCC's major creditor and supplier, posted at BCC to protect Sobien's interests. The case matters because it shows how the Supreme Court weighs the four elements of employment, especially the control test, and how it treats the burden of proof when the claimant's own evidence and admissions cut against him.

Procedural History

Jao filed a complaint for illegal dismissal, reinstatement with full backwages, non-payment of wages, damages, and attorney's fees. Labor Arbiter Felipe Pati ruled in his favor, but the National Labor Relations Commission vacated that ruling and remanded the case for further proceedings. On remand, Labor Arbiter Jovencio Mayor dismissed the complaint on September 20, 2001 for want of an employer-employee relationship. Jao appealed, and on July 31, 2002 the National Labor Relations Commission reversed, declaring him illegally dismissed and ordering unpaid salaries, backwages, thirteenth month pay, separation pay, and attorney's fees. The company's motion for reconsideration was denied.

The company then went to the Court of Appeals on certiorari. On February 27, 2004, the Court of Appeals reversed the National Labor Relations Commission, found no employer-employee relationship, and reinstated the Labor Arbiter's dismissal. Jao's motion for reconsideration was denied on May 14, 2004. He sought an extension to file a petition for review, which the Supreme Court initially denied, and the petition itself was denied on August 18, 2004. On his motion for reconsideration, however, the Supreme Court reinstated the petition and required the respondents to comment. The case thus reached the Supreme Court through a petition for review on certiorari.

Facts

Jao, a certified public accountant, alleged that BCC and Ty employed him as comptroller from September 1995 with a monthly salary of 20,000 pesos, to handle the financial aspect of BCC's business. He claimed that on October 19, 1995, BCC's security guards, upon Ty's instruction, barred him from entering the premises, and that his attempts to report for work in November and on December 12, 1995 were likewise frustrated. He filed his complaint on December 28, 1995.

The company denied any employment, insisting that Sobien Food Corporation, its major creditor and supplier, had posted Jao as its own comptroller at BCC to oversee BCC's finances and look after Sobien's investments. The company explained that the identification card issued to Jao merely facilitated his entry into the premises for that purpose.

Jao had executed an affidavit in March 1996 stating that he was associated with, or employed by, Sobien Food Corporation, and that he had been entrusted by that employer to oversee and supervise collections of receivables due Sobien from its customers, including BCC. The company also presented an affidavit of Alfredo So, Sobien's president, who recounted that Ty had asked him about Jao as a possible comptroller and that he later learned Ty had employed Jao as comptroller as of September 1995.

Issues

• Whether or not an employer-employee relationship existed between Charlie Jao and BCC Products Sales.
• Whether or not, the relationship being absent, the claim of illegal dismissal could prosper.

Applicable Provisions

The decision does not quote a statutory provision; it applies the settled four-element test for the existence of an employer-employee relationship, which the Court states as follows:

(a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee on the means and methods by which the work is accomplished.

These four elements are the lens through which every piece of Jao's evidence was measured.

The Court also relies on the control test, which it describes in the words of the Court of Appeals:

The control test, under which the person for whom the services are rendered reserves the right to direct not only the end to be achieved but also the means for reaching such end, is generally relied on by the courts.

Control over the means and methods of the work is the decisive element in this case.

Ruling

On the first issue, the Court held that no employer-employee relationship existed. The existence of such a relationship is a question of fact, and the Court ordinarily reviews only questions of law on a petition for review on certiorari. But because the findings of the Labor Arbiter, the National Labor Relations Commission, and the Court of Appeals conflicted, the Court examined the evidence and drew its own conclusions.

Jao offered an identification card naming him comptroller, a payroll he approved, bills and receipts bearing his signature, checks he signed, a court order treating his identification card as proof of employment, his letter to the Department of Justice on a criminal complaint for non-payment of wages, affidavits of co-employees, and a notice of raffle he received for BCC. The Court found these easily explainable by the respondents' account. His March 1996 affidavit, in which he described himself as employed by Sobien and entrusted to oversee collections from its customers including BCC, supported the company's position. The Court found it implausible that Sobien would still post him at BCC after December 1995 if BCC had already dismissed him and barred him from the premises, given the strained relations between the parties.

The Court stressed that Jao contested the company's challenge to his authority over some 158 checks by pointing to the arrangements between BCC and Sobien, showing that he acted for the benefit and in the interest of Sobien more than of BCC. He presented no document setting out the terms of his employment, which did not square with his status as a highly educated professional. He admitted receiving no salary for the three months of his claimed employment, and his name did not appear in the payroll he approved as comptroller. His inconsistent dates of dismissal, October 19, 1995 in his petition and December 12, 1995 in his complaint, further cast doubt on his claim.

On the second issue, the Court held that with no employment relationship, a discussion of illegal dismissal was unnecessary. The petition lacked merit.

Doctrine

To establish an employer-employee relationship, the claimant must prove all four elements: the selection and engagement of the employee, the payment of wages, the power of dismissal, and the employer's power of control over the means and methods by which the work is accomplished. The control test is the most important element, and the other requisites may even be disregarded when control is shown to be absent.

The existence of an employer-employee relationship is a question of fact. As a rule, the Supreme Court does not re-examine factual findings on a petition for review on certiorari, but it may do so when the findings of the Labor Arbiter, the National Labor Relations Commission, and the Court of Appeals conflict.

The burden of proving employment with legal certainty rests on the one who asserts it. An identification card, signed checks, and affidavits of co-employees are not decisive when the surrounding circumstances show that the person acted for the benefit of another entity. A claimant's own affidavit and admissions against interest, his failure to receive wages, his absence from the payroll, and inconsistencies in his account all weaken his case.

Disposition

The Supreme Court affirmed the decision of the Court of Appeals and ordered Jao to pay the costs of suit.

Remember This

Memorize the four elements of employment with the control test as the most important, and remember that the burden of proving employment lies on the claimant. Examiners use this case to test the control test and the rule that conflicting findings of the Labor Arbiter, the National Labor Relations Commission, and the Court of Appeals allow the Supreme Court to review facts in labor cases.