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SSS vs.

G.R. No. L-46058 | December 14, 1987
Topics: Elements of Employer-Employee Relationship;
1. QTC, formerly U.S. Tobacco Corporation, is a firm engaged in the
manufacture and sale of cigarettes. QTC, as VENDOR, entered into an
agreement with CARREON, as VENDEE. The salient provisions of which
a) QTC determines mode of payment by Carreon for cigarettes, that is,
cash basis only;
b) Carreon shall sell cigarettes only within Quezon Province and/or
such other places as may be designated by QTC and only to
specified persons in those territories, at such prices set by QTC;
c) Carreon is solely responsible for any loss of the cigarettes delivered
him by QTC as well as proceed of sales;
d) Carreon may borrow delivery trucks from QTC but only for the
purposes of the contract, and Carreon shall shoulder expenses for
gas, repairs, etc.;

2. The contract was eventually terminated by QTC. Carreon thus filed a petition
with Social Security Commission, alleging that he was an employee of QTC,
and asking that QTC be ordered to report him for coverage under the Social
Security Law. QTC answered, claiming that Carreon has not been an
employee but was an independent businessman. SSC ruled in Carreon’s favor.

3. On appeal, CA ruled in favor of QTC. Basing solely on Mafinco vs. Ople

ruling, the CA reversed the SSC. Hence, this petition.
Issue: Whether Carreon is an employee of QTC.
Ratio Decidendi:
YES. SC noted that some businessmen with the aid of lawyers have tried to
avoid the bringing about of an employer-employee relationship in some of their
enterprises because that juridical relation spawns obligations connected with
workmen's compensation, social security, medicare, minimum wage, termination
pay and unionism.
Thus, to constitute an employer-employee relationship, there must be: a)
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 with respect to
the means and method by which the work is to be accomplished. The last, which is
the so-called "control test", is the most important element.
With reference to the control test, where a person who works for another does
so more or less at his own pleasure and is not subject to definite hours or conditions
of work, and in turn is compensated according to the result of his effort, the
relationship of employer-employee does not exist.
The CA relied solely on the Mafinco ruling, believing that the contract therein
is similar to that of the contract in the instant case. In Mafinco, it was ruled that the
party concerned was an independent contractor, as per the terms of the contract (he
can hire his own drivers/helpers, and shall be responsible for their compensation,
As a general rule, the SC can only resolve questions of law as the factual
findings of the CA are conclusive upon it. However, it can resolve questions of fact
or review CA’s factual findings (1) when the findings of fact of CA are contrary to
those of the trial court and (2) when the findings of fact of the CA are premised on
the supposed absence of evidence and are contradicted by evidence on record.
In this case, in applying Mafinco, CA merely considered portions and not the
entirety of the contract in the instant case. This led it to rule that Carreon was an
independent contractor. However, in applying the control test, the following facts
pointed out by SolGen indicate that there exists an employer-employee relationship
between Carreon and QTC, to wit:
(a) QTC assigned a definite sales territory for Romeo Carreon;
(b) QTC provided Romeo Carreon with a delivery truck for the exclusive use
of the latter in his sales activities;
(c) QTC dictated the price of the cigarettes sold by Romeo Carreon;
(d) QTC prescribed what brand of cigarettes Romeo Carreon could sell;
(e) QTC determined the persons to whom Romeo Carreon could sell;
(f) QTC issued circulars and memoranda relative to Romeo Carreon's sales
(g) QTC required Romeo Carreon to submit to it daily, weekly and monthly
(h) QTC grounded Romeo Carreon for six months in 1966;
(i) Romeo Carreon was supervised by sales coordinators of QTC;
(j) Romeo Carreon was subject to payment of damages and loss even of
accrued rights for any violation of instructions made by QTC in relation to his sales
activities; and
(k) Romeo Carreon was paid an allowance by QTC.

All these indicate control and supervision over Carreon's work.