● CONTROL TEST

ANASTACIO VIANA v. ALEJO AL-LAGADAN, GR No. 8967, 1956-05-31

Facts:
Petitioner Anastacio Viana owned the fishing sailboat "Magkapatid"... sunk in the
waters
Alejandro Al-Lagadan, a member of the crew of the "Magkapatid"... disappeared with
the craft... respondent Ale jo
Al-Lagadan and Filomena Piga... filed the corresponding claim for compensation under
Act No 3428
Referee of the Workmen's Compensation Commission
Viaiia to pay the above-named claimants... pay the sum of P16 to the Workmen's
Compensation Commission as costs
Commissioner, having subsequently denied a... reconsideration
Viana has brought the matter to us, for review by certiorari... ground that this case
does not fall within the purview of Act No. 3428... gross income of his ... business for
the year 1947 was allegedly less than P10,000
Al-Lagadan was, at the time of his death, His (petitioner's) industrial partner, not his
employee... first ground is untenable... second ground, petitioner maintains... the
deceased was his industrial partner, not employee.
the practice observed then and now in engaging the services of crewmen of
sailboats... on a partnership basis... the owner of the vessel... receives one-half of the...
earnings of the sailboat after deducting the expenses for the maintenance of the
crew... other half is divided pro rata among' the members, of the crew
'patron' or captain receiving ... four parts
'piloto' or next in command three parts... wheelsman or 'timonel' 1 1/2 parts... rest of
the members of the crew one part each... basis of engaging the services of crewmen
of a batel... contract executed between the owner and the patron... hiring of the crew is
done by the patron himself
Issues:
there existed the relation of employer and employee between the respondent and
Alejandro .Al-Lagadan at the time of the latter's death
Ruling:
trial referee found that there was an employer-employee relation
Principles:
claim for compensation under Act No 3428
A seaman who is to receive pay in... proportion to the amount of fish caught is not a
partner;... sharing profits in lieu of wages is not a partnership
There is no true contribution... mere fact that Alejandro's share in the understanding
"could be reckoned in terms of money", sufficed to characterize him as an employee...
of Viaña... existence of employer-employee relationship, the following elements are
generally considered, namely: (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
employees' conduct although the latter is the most important element

SOUTH EAST INTERNATIONAL RATTAN v. JESUS J. COMING, GR No. 186621,

2014-03-12
Facts:
Petitioner South East International Rattan, Inc. (SEIRI)... engaged in the business of
manufacturing and exporting furniture to various countries, while petitioner Estanislao
Agbay, as per records,... is the President and General Manager of SEIRI.
On 2003, respondent Jesus J. Coming filed a complaint... for illegal dismissal,
underpayment of wages, non-payment of holiday pay, 13th month pay and service
incentive leave pay, with prayer for reinstatement, back wages, damages and
attorney's... fees.
Respondent alleged that he was hired by petitioners as Sizing Machine Operator on
March 1984. Initially, his compensation was on "pakiao" basis but sometime in June
1984, it was fixed at P150.00 per day... which was paid weekly.
In 1990, without any apparent reason, his employment was interrupted as he was told by
petitioners to resume work in two months time. Being an uneducated person,
respondent was persuaded by the management as well as his brother not to complain,...
as otherwise petitioners might decide not to call him back for work.
Nonetheless, after two months he reported back to work upon order of management.
Despite being an employee for many years with his work performance never questioned
by petitioners, respondent was dismissed on 2002 without lawful cause.
He was told that he will be terminated because the company is not doing well financially
and that he would... be called back to work only if they need his services again
Respondent waited for almost a year but petitioners did not call him back to work. When
he finally filed the complaint before the regional arbitration branch, his brother Vicente
was used by management to... persuade him to withdraw the case.
On their part, petitioners denied having hired respondent
They stressed that respondent was not included in the list of employees submitted to the
Social Security System (SSS).
With the denial of petitioners that respondent was their employee, the latter submitted an
affidavit... signed by five former co-workers stating that respondent was one of the
pioneer employees who worked in SEIRI for almost twenty years.
Labor Arbiter... ruled that respondent is a regular employee of SEIRI and that the
termination of his employment was illegal.
Petitioners appealed to NLRC... here they submitted the following additional evidence:
(1) copies of SEIRI's payrolls and individual pay records of employees... the NLRC...
rendered its Decision
DISMISSING the complaint.
The NLRC likewise denied respondent's motion for reconsideration.
Respondent elevated the case to the CA via a petition for certiorari under Rule 65.
CA reversed the NLRC and ruled that there existed an employer-employee relationship
between petitioners and respondent who was dismissed without just and valid cause.
Petitioners filed a motion for reconsideration but the CA denied it
Hence, this petition
Issues:
hether or not an employer-employee relationship exist
Ruling:
We affirm the CA.
the fact that a worker was not reported as an employee to the SSS is not conclusive
proof of the absence of employer-employee relationship. Otherwise, an employer would
be rewarded for his... failure or even neglect to perform his obligation.
Nor does the fact that respondent's name does not appear in the payrolls and pay
envelope records submitted by petitioners negate the existence of employer-employee
relationship. For a payroll to be utilized to disprove the employment of a person, it must
contain a... true and complete list of the employee.
In this case, the exhibits offered by petitioners before the NLRC consisting of copies of
payrolls and pay earnings... do not cover the entire 18-year period... during which
respondent supposedly worked for SEIRI.
In any controversy between a laborer and his master, doubts reasonably arising from the
evidence are resolved in favor of the laborer.
As a regular employee, respondent enjoys the right to security of tenure under Article
279[42] of the Labor Code and may only be dismissed for a just... or authorized... cause,
otherwise the dismissal becomes... illegal.
Respondent, whose employment was terminated without valid cause by petitioners, is
entitled to reinstatement without loss of seniority rights and other privileges and to his full
back wages, inclusive of allowances and other benefits or their monetary equivalent,
computed from... the time his compensation was withheld from him up to the time of his
actual reinstatement. Where reinstatement is no longer viable as an option, back wages
shall be computed from the time of the illegal termination up to the finality of the
decision. Separation pay... equivalent to one month salary for every year of service
should likewise be awarded as an alternative in case reinstatement in not possible.
WHEREFORE, the petition for review on certiorari is DENIED.

● Economic Reality Test

JESUS G. REYES v. GLAUCOMA RESEARCH FOUNDATION, GR No. 189255, 2015-
06-17
Facts:
Petitioner alleged that: on August 1, 2003, he was hired by respondent corporation as
administrator of the latter's Eye Referral Center (ERC); he performed his duties as
administrator and continuously received his monthly salary... beginning February 2005,
respondent withheld petitioner's salary without notice but he still continued to report for
work;... petitioner wrote a letter to respondent
Agulto... who is the Executive Director of respondent corporation, informing the latter
that he has not been receiving his salaries since February 2005 as well as his 14th
month... pay for 2004... petitioner did not receive any response from Agulto... petitioner
was informed... that he is no longer the Administrator of the ERC; subsequently,
petitioner's... office was padlocked and closed without notice... he still continued to
report for work but... he was no longer allowed by the security guard on duty to enter the
premises of the ERC.
respondents contended that... they engaged his services as a consultant or adviser in
the formulation of an updated organizational set-up and... employees' manual which is
compatible with their present condition;... based on his claim that there is a need for an
administrator for the ERC, he later designated himself as such on a trial basis... there is
no employer-employee relationship between them because respondents had no...
control over petitioner in terms of working hours... respondents also had no control as to
the manner in which he performs his alleged duties as consultant;... petitioner was not
dismissed as he was the one who voluntarily severed his relations with respondents.
LA

LA held... that petitioner failed to establish that the elements of an employer-employee

relationship existed between him and... respondents because he was unable to show
that he was, in fact, appointed as administrator of the ERC and received salaries as
such;... he also failed to deny that during his stint with respondents, he was, at the same
time, a consultant of various government agencies
NLRC NLRC reversed and set aside the Decision of the LA.

CA annulled and set aside the judgment of the NLRC and reinstated the Decision of the
LA.
The CA held that the LA was correct in ruling that, under the control test and the
economic reality test, no employer-employee relationship existed between...
respondents and petitioner.
Issues:
NO

COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION IN RULING THAT NO

EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN RESPONDENTS AND
PETITIONER.
Ruling:
CONTROL TEST

Indeed, 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.[28]
This test 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.
In the present case, petitioner contends that, as evidence of respondents' supposed
control over him, the organizational plans he has drawn were subject to the approval of
respondent corporation's Board of Trustees.
[Respondents'] power to approve or reject the organizational plans drawn by [petitioner]
cannot be the control contemplated in the "control test." It is but logical that one who
commissions another to do a piece of work should have the right to accept or reject the...
product. The important factor to consider in the "control test" is still the element of control
over how the work itself is done, not just the end result thereof.
Well settled is the rule that where a person who works for another performs his job more
or less at his own pleasure, in the manner he sees fit, not subject to definite hours or
conditions of work, and is compensated according to the result of his efforts and not the
amount... thereof, no employer-employee relationship exists.
petitioner was never subject to definite working hours. He never denied that he goes to
work and leaves therefrom as he pleases.
In fact,... he went on leave without... seeking approval from the officers of respondent
company.
ECONOMIC REALITY TEST

Court has also used the economic reality test in determining whether an employer-
employee relationship exists between the parties.
Under this test, the economic realities prevailing within the activity or between the
parties... are examined, taking into consideration the totality of circumstances
surrounding the true nature of the relationship between the parties.
In our... jurisdiction, the benchmark of economic reality in analyzing possible
employment relationships for purposes of applying the Labor Code ought to be the
economic dependence of the worker on his employer.
In the instant case, as shown by the resume of [petitioner], he concurrently held
consultancy positions with the Manila International Airport Authority... and the Anti-
Terrorist Task Force for
Aviation and Air Transportation Sector... during his stint with the Eye Referral Center
Accordingly, it cannot be said that the [petitioner] was wholly dependent on [respondent]
company.[34]
In bolstering his contention that there was an employer-employee relationship, petitioner
draws attention to the pay slips he supposedly received from respondent corporation.
However, he does not dispute the findings of the CA that there are no deductions for
SSS and withholding... tax from his compensation, which are the usual deductions from
employees' salaries. Thus, the alleged pay slips may not be treated as competent
evidence of petitioner's claim that he is respondents' employee.

● Two-Tiered Test
ANGELINA FRANCISCO v. NLRC, GR NO. 170087, 2006-08-31
Facts:
In 1995,... petitioner was hired by Kasei Corporation during its incorporation stage. She
was designated as Accountant and Corporate Secretary and... as Liaison Officer to the
City of Makati to... secure business permits, construction permits and other licenses for
the initial operation of the company.
Although she was designated as Corporate Secretary, she was not entrusted with the
corporate documents; neither did she attend any board meeting nor required to do so.
She never prepared any legal document and never represented the company as its
Corporate Secretary. However, on... some occasions, she was prevailed upon to sign
documentation for the company.
In 1996, petitioner was designated Acting Manager.
was assigned to handle recruitment of all employees and perform management
administration functions
For five years, petitioner performed the duties of Acting Manager.
As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance
and a 10% share in the profit of Kasei Corporation.
In... petitioner was replaced by Liza R. Fuentes as Manager.
Petitioner alleged that she was required to sign a prepared resolution for her
replacement but she was assured that she would still be connected with Kasei
Corporation.
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning
January up to September 2001 for a total reduction of P22,500.00 as of September
2001. the... officers but she was informed that she is no longer connected with the
company.
Since she was no longer paid her salary, petitioner did not report for work and filed an
action for constructive dismissal before the labor arbiter.
Private respondents averred that petitioner is not an employee of Kasei Corporation.
They alleged that petitioner was hired in 1995 as one of its technical consultants...
petitioner... performed her work at her own discretion without control and supervision of
Kasei Corporation. Petitioner had no daily time record and she came to the office any
time she wanted. The company never interfered with her work except that from time to
time, the management would ask... her opinion on matters relating to her profession.
Petitioner did not go through the usual procedure of selection of employees, but her
services were engaged through a Board Resolution designating her as technical
consultant. The money received by petitioner from the corporation... was her
professional fee subject to the 10% expanded withholding tax on professionals, and that
she was not one of those reported to the BIR or SSS as one of the company's
employees.
Petitioner's designation as technical consultant depended solely upon the will of
management. As such, her consultancy may be terminated any time considering that her
services were only temporary in nature and dependent on the needs of the corporation.
private respondents submitted a list of employees for the years 1999 and 2000 duly
received by the BIR showing that petitioner was not among the employees reported to
the BIR
The Labor Arbiter found that petitioner was illegally dismissed... the NLRC affirmed
On appeal, the Court of Appeals reversed the NLRC decision... rendered dismissing the
complaint filed by private respondent against Kasei
Corporation, et al. for constructive dismissal.
The appellate court denied petitioner's motion for reconsideration, hence, the present
recourse.
Issues:
whether there was an employer-employee relationship between petitioner and private
respondent Kasei Corporation; and if in the affirmative, (2) whether petitioner was
illegally dismissed.
Ruling:
The better approach would... be to adopt a two-tiered test involving: (1) the putative
employer's power to control the employee with respect to the means and methods by
which the work is to be accomplished; and (2) the underlying economic realities of the
activity or... relationship.
wo-tiered test would provide us with a framework of analysis, which would take into
consideration the totality of circumstances surrounding the true nature of the relationship
between the parties.
This is especially appropriate in this case where there is no written... agreement or terms
of reference to base the relationship on; and due to the complexity of the relationship
based on the various positions and responsibilities given to the worker over the period of
the latter's employment.
By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura,
the corporation's Technical Consultant. She reported for work regularly and served in
various capacities... as Accountant, Liaison Officer, Technical Consultant, Acting
Manager and Corporate Secretary... rendering
Under the broader economic reality test, the petitioner can... be said to be an employee
of respondent corporation because she had served the company for six years before her
dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month
pay, bonuses and allowances, as well as deductions and Social Security contributions.
When petitioner was designated General Manager, respondent corporation made a
report to the SSS.
It is therefore apparent that petitioner is economically dependent on respondent
corporation for her continued employment in the latter's line of business.
Based on the foregoing, there can be no other conclusion that petitioner is an employee
of respondent Kasei Corporation. She was selected and engaged by the company for
compensation, and is economically dependent upon respondent for her continued
employment in that line of... business.
Respondent corporation hired and engaged petitioner for compensation, with the power
to dismiss her for cause. More... importantly, respondent corporation had the power to
control petitioner with the means and methods by which the work is to be accomplished.
The corporation constructively dismissed petitioner when it reduced her salary by P2,500
a month from January to September 2001. This amounts to an illegal termination of
employment, where the petitioner is entitled to full backwages. Since the position of
petitioner as... accountant is one of trust and confidence, and under the principle of
strained relations, petitioner is further entitled to separation pay, in lieu of reinstatement.
A diminution of pay is prejudicial to the employee and amounts to constructive dismissal.
Constructive dismissal is an involuntary resignation resulting in cessation of work
resorted to when continued employment becomes impossible, unreasonable or unlikely;
when there is a... demotion in rank or a diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to an employee.