Gapayao vs. Fulo

An employer-employee relationship exists where a farm worker continuously renders services for the employer's business over multiple seasons, and the employer exercises the right to control the worker's performance, either directly or through an overseer; such relationship is binding upon the employer who expressly admits it in a compromise agreement voluntarily executed with full knowledge of its implications.

Petitioner Jaime Gapayao owned agricultural landholdings and various business establishments in San Julian, Irosin, Sorsogon. From 1983 until his death on November 4, 1997, Jaime Fulo performed work for Gapayao as a farm laborer harvesting abaca and coconut, processing copra, and clearing weeds. Fulo also occasionally performed repairs and worked in Gapayao's bakery, grocery, hardware store, and piggery. Following Fulo's death from electrocution while doing repairs at Gapayao's residence, Gapayao provided financial assistance to Fulo's widow, Rosario, who executed an Affidavit of Desistance and entered into a Compromise Agreement wherein Gapayao expressly acknowledged Fulo as his "employee."

• The Employment Relationship: From January 1983 to November 4, 1997, Jaime Fulo worked for petitioner Jaime Gapayao as a farm laborer, performing tasks such as harvesting abaca and coconut, processing copra, and clearing weeds. He received daily compensation ranging from ₱5.00 to ₱60.00. An SSS field investigation confirmed that Fulo was employed as a farm laborer from 1983 to 1997, with co-employees Leonor Delgra and Santiago Bolanos corroborating the employment.
• Nature of Work and Control: Fulo worked on a pakyaw basis but rendered services continuously year after year. During off-seasons, he performed other tasks for Gapayao's businesses, including construction work and serving as a helper in the bakery, grocery, hardware store, and piggery. Gapayao exercised control over Fulo's work through an overseer, Amado Gacelo, who managed the farm and supervised the laborers. Gacelo testified that Gapayao hired Fulo as one of the pakyaw workers whose salaries were derived from the gross proceeds of the harvest.
• The Accident and Initial Settlement: On November 4, 1997, Fulo died from acute renal failure secondary to burns sustained while doing repairs at Gapayao's residence and business establishment. Gapayao provided financial assistance, and on November 16, 1997, Rosario Fulo executed an Affidavit of Desistance waiving claims against Gapayao.
• Compromise Agreement: On January 14, 1998, the parties executed a Compromise Agreement wherein Gapayao, described as the "employer," agreed to pay ₱40,000.00 to the "surviving spouse of JAIME POLO [Fulo], an employee who died of an accident," in full settlement of claims arising from the employment. The agreement stated that Rosario Fulo, having received the amount, released and discharged the employer from any and all claims due the victim in connection with the victim's employment.
• SSC and CA Findings: The SSC found that Fulo was employed from January 1983 to November 4, 1997, working nine months a year and receiving minimum wage. The Court of Appeals affirmed these findings, holding that seasonal workers may be considered regular employees and that the Compromise Agreement constituted a declaration against interest admitting the employment relationship.

• Absence of Control: Gapayao maintained that Fulo was not under his control during the performance of his duties. Control was allegedly absent because Fulo worked independently, and any guidelines provided were merely intended to promote mutually desired results, not to establish employer dominance.
• Independent Contractor Status: Fulo was allegedly an independent contractor hired by Adolfo Gamba (for construction work) and by Amado Gacelo (the tenant managing the farm), rather than by Gapayao himself. As a tenant's hire, Fulo could not be considered Gapayao's employee because a tenant is not beholden to the landlord's control.
• Intermittent/Seasonal Worker: Fulo was allegedly an intermittent worker summoned only as needed, working on a pakyaw basis for short periods during harvesting seasons. Citing Article 280 of the Labor Code and Mercado, Sr. v. NLRC, Gapayao argued that seasonal employees who work for only one season or who are free to contract with other employers do not become regular employees.
• Invalidity of Compromise Agreement: The Compromise Agreement was allegedly executed under duress and threats from private respondent, amounting to "extortion camouflaged as an agreement." Gapayao claimed he paid the ₱40,000.00 and covered hospitalization and burial expenses merely out of compassion and to "buy peace," not to admit liability.

• Existence of Employer-Employee Relationship: Rosario Fulo argued that the fourteen-year duration of service and the diverse tasks performed indicated the necessity and indispensability of her husband's services to Gapayao's business.
• Control Through Overseer: The SSC contended that control was exercised through Amado Gacelo, the farm caretaker, and that pakyaw workers are considered employees as long as the employer exercises control over them. The right to control, not necessarily its actual exercise, establishes the relationship.
• Regular Seasonal Employment: The SSS and SSC maintained that farm workers who work continuously from year to year, even if not daily throughout the year, are regular seasonal employees entitled to compulsory coverage under the Social Security Law.
• Binding Nature of Compromise Agreement: The Compromise Agreement constituted a declaration against interest and a judicial admission of the employment relationship. It was validly executed with reasonable consideration and voluntary consent, and could not be circumvented by belated claims of duress.

• Employer-Employee Relationship: Whether an employer-employee relationship existed between petitioner Jaime Gapayao and the deceased Jaime Fulo sufficient to entitle the latter's widow to social security benefits.
• Regular Seasonal Employment: Whether a farm worker employed on a pakyaw basis for multiple consecutive years constitutes a regular seasonal employee under Article 280 of the Labor Code.
• Effect of Compromise Agreement: Whether the Compromise Agreement executed by petitioner, wherein he admitted being the "employer" of the deceased, constitutes a binding judicial admission of the employment relationship.

• Employer-Employee Relationship: An employer-employee relationship existed between Gapayao and Fulo. The relationship was established through Fulo's continuous performance of work necessary to Gapayao's agricultural business from 1983 to 1997, and Gapayao's exercise of control through his overseer Amado Gacelo. The right to control was present, exercised through the farm manager who supervised the laborers and derived their salaries from the harvest proceeds.
• Regular Seasonal Employment: Fulo was properly classified as a regular seasonal employee. Seasonal employees who are called to work from time to time and who perform activities usually necessary or desirable in the employer's business are considered regular employees, notwithstanding that they do not work every day throughout the year. The continuous nature of Fulo's employment for fourteen years, spanning multiple harvesting seasons, and his performance of other tasks during off-seasons, demonstrated the regularity of his employment and the necessity of his services to Gapayao's business.
• Effect of Compromise Agreement: The Compromise Agreement constituted a valid and binding admission of the employment relationship. Having been executed voluntarily with full knowledge that Gapayao was described as the "employer," and supported by reasonable consideration, the agreement precluded Gapayao from subsequently denying the employment relationship. The alleged threats and duress were unsubstantiated self-serving allegations that could not overcome the document's clear terms, which described the deceased as "an employee who died of an accident."

• Control Test — The most significant determinant of an employer-employee relationship is the power of the employer to control the work of the employee. The test requires only the existence of the right to control both the end achieved and the manner and means used to achieve that end, not necessarily the actual exercise of such right. It is sufficient that the employer has the right to wield the power, exercisable through an overseer or manager.
• Regular Seasonal Employees — Seasonal employees may be considered regular employees where there is a reasonable connection between the particular activity performed and the usual trade or business of the employer, and where the employment is continuous in the sense that it extends from year to year. The nature of the job determines regularity, not the length of time worked. Regular seasonal employees are those called to work from time to time who are temporarily laid off during off-seasons but reemployed when their services are needed.
• Binding Effect of Compromise Agreements — A compromise agreement is valid and binding when executed voluntarily by the parties with full understanding of its terms, supported by reasonable consideration, and made in good faith to settle differences. Personal and specific individual consent is required. Once executed, the agreement estops the parties from denying the admissions and obligations contained therein.
• Respect for Factual Findings of Administrative Agencies — Findings of fact of administrative agencies and quasi-judicial bodies exercising specialized expertise are accorded respect and finality when affirmed by the Court of Appeals, provided they are supported by substantial evidence.

• "The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer."
• "The power of the employer to control the work of the employee is considered the most significant determinant of the existence of an employer-employee relationship. This is the so-called control test and is premised on whether the person for whom the services are performed reserves the right to control both the end achieved and the manner and means used to achieve that end."
• "It should be remembered that the control test merely calls for the existence of the right to control, and not necessarily the exercise thereof. It is not essential that the employer actually supervises the performance of duties by the employee. It is enough that the former has a right to wield the power."
• "A Compromise Agreement is deemed valid and binding among the parties [once] executed by the workers or employees and their employers to settle their differences, and done in good faith."

• Mercado, Sr. v. NLRC, 278 Phil. 345 (1991) — Distinguished; held that seasonal workers who are free to contract their services with other farm owners are not regular employees, unlike the instant case where the worker rendered continuous service to one employer for fourteen years.
• Hacienda Fatima v. National Federation of Sugarcane Workers-Food & General Trade, 444 Phil. 587 (2003) — Distinguished; held that seasonal workers who have worked for one season only may not be considered regular employees.
• De Leon v. NLRC, 257 Phil. 626 — Cited for the test of regular employment based on the reasonable connection between the activity performed and the usual business of the employer.
• Legend Hotel Manila v. Realuyo, G.R. No. 153511, 18 July 2012, 677 SCRA 10 — Cited for the definition of the control test as the most significant determinant of employer-employee relationship.

• Article 280, Labor Code — Defines regular, project, and casual employment; provides that employment is regular where the employee performs activities usually necessary or desirable in the usual business of the employer, and that seasonal employment for the duration of the season does not preclude regularity if the work is continuous year after year.
• Section 24(a), Social Security Law — Imposes liability on employers who fail to report employees for coverage, including payment of benefits, unpaid contributions with penalties, and damages.
• Section 13, Social Security Law — Entitles covered employees or their beneficiaries to death benefits.
• Section 26, Rule 130, Rules of Court — Treats admissions against interest as evidence, applied to the Compromise Agreement wherein petitioner admitted the employment relationship.

Teresita J. Leonardo-De Castro, Lucas P. Bersamin, Martin S. Villarama, Jr., and Bienvenido L. Reyes.