ANGELINA FRANCISCO v NLRC LA: found that Francisco was illegally dismissed.
August 3, 2008 / YNARES-SANTIAGO, J. / Digest by Chimi NLRC: affirmed with modification the decision of the LA.
NATURE Petition for Review on Certiorari
PETITIONER Angelina Francisco
RESPONDENT S National Labor Relations Commission, Kasei Corporation, Seiichiro
Takahashi, Timoteo Acedo, Delfin Liza, Irene Ballesteros, Trinidad Liza
and Ramon Escueta
SUMMARY. Petitioner Francisco was hired as an accountant, liaison officer, and corporate
secretary of Kasei Incorporation. However, Fransisco never exercised the role of a corporate
secretary. She was reassigned as a manager, and later on replaced by another employee. Her
salary was reduced from P27K to P2.5K. She did not receive her salary in October 2001. She
filed for constructive dismissal. The LA and NLRC ruled for Francisco. The CA reversed the
NLRC decision. The SC found that there was ER-EE relationship following the tests for
control and economic realities surrounding the work of Francisco.
DOCTRINE. Following the two-tiered test, in determining the existence of an ER-EE
relationship, apart from the control test, the economic realities or the totality of
circumstances surrounding the relationship of the parties must be considered. The test is
whether or not the worker is dependent on the alleged employer for his continued
employment in that line of business.
FACTS.
In 1995, petitioner Francisco was hired by Kasei Corporation as its accountant, liaison
officer to Makati City, and corporate secretary during Kaseis incorporation stage.
Although designated as a corporate secretary, Francisco:
o Was not entrusted with corporate documents
o Never attended board meetings
o Never prepared legal documents for Kasei
o Never represented the company as its corporate secretary
In 1996, Francisco was designated as acting manager and was assigned with the
recruitment of Kaseis employees, and with liaising matters with the government (e.g.,
BIR, SSS, Makati City). Her salary was P27.5 thousand with P3 thousand housing
allowance, and 10% share in Kaseis profits.
In January 2001, she was replaced by another manager, but was reassured that she will
still be with Kasei as the technical assistant of Seiji Kamura, and as liaison officer to the
BIR. Her salary was reduced to P2.5 thousand and was not paid mid-year bonus.
In October 2001, she did not receive her salary since the company was not doing well.
Thereafter, she was told that she was no longer connected to Kasei.
Francisco went to the Labor Arbiter to file for constructive dismissal.
Petitioner Kasei: Francisco was merely a technical consultant on accounting matters.
Francisco did not have a daily time record like other Kaseis employees. Kasei did not
interfere with her work. Her salary was her professional fee subject to 10% expanded
withholding tax on professionals. As a proof, she was not included in the list of employees
submitted to the BIR during the years 1999 and 2000. Thus, being a technical assistant,
her consultancy services may be terminated.
CA: reversed the NLRC decision.
ISSUE & RATIO.
1. Whether or not CA erred in finding that ER-EE relationship existed between
petitioner and respondent Kasei Corporation. YES.
The SC held in Sevilla v. CA that there is no uniform test to determine ER-EE
relationship. Generally, the courts use the right of control test.
However, given the complexities inherent in an employer and employee
relationship, the control test seems to be not enough.
Thus, the economic realities of employment relations must be considered in
analyzing the true employment status of an employee (e.g., independent
contractor, employee, corporate officer, etc.)
Following, the SC adopted a two-tiered test involving:
o Putative employers power to control the means and methods of the
work
o Economic realities of a relationship.
The two-tiered test considers not only the control of the putative employer but
the TOTALITY OF CIRCUMSTANCES SURROUNDING THE NATURE OF
RELATIONSHIP BETWEEN PARTIES such as:
o Services performed are integral part of the employers business
o Extent of workers investment in equipment and facilities
o Nature and degree of control exercised by employer
o Workers opportunity for profit and loss
o Amount of initiative, skill, judgment or foresight for the success of the
business
o Permanency and duration of relationship between the ER and EE
o Degree of dependency of the worker upon the employer for continued
employees.
The SC found Francisco to be engaged by Kasei for compensation and that she
was economically dependent upon respondent for her continued employment in
that line of business.
The ER-EE relationship having been established, the SC held that there was
constructive dismissal when Franciscos salary was reduced. Diminution of pay,
being prejudicial to an employee, amounts to constructive dismissal. Thus,
Franciscos resolve to no longer report to work was not of her own choice, but that
of Kasei, which amounted to illegal termination of employment.
DECISION.
Petition for certiorari granted. CA decision is annulled and set aside. Case is remanded to LA
for recomputation of backwages and separation pay. .