FRANCISCO vs.

NLRC Case Digest

ANGELINA FRANCISCO vs. NLRC
500 SCRA 690 (2006)

Facts: Petitoner was hired by Kasei Corporation during the incorporation stage. She was designated
as accountant and corporate secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liason Officer to the City of Manila to secure permits for the
operation of the company.

In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment of
all employees and perform management administration functions. In 2001, she was replaced by Liza
Fuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month which was until
September. She asked for her salary but was informed that she was no longer connected to the
company. She did not anymore report to work since she was not paid for her salary. She filed an
action for constructive dismissal with the Labor Arbiter.

The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the decision while
CA reversed it.

Issue: Whether or not there was an employer-employee relationship.

Ruling: The court held that in this jurisdiction, there has been no uniform test to determine the
existence of an employer-employee relation. Generally, courts have relied on the so-called right of
control test where the person for whom the services are performed reserves a right to control not
only the end to be achieved but also the means to be used in reaching such end. In addition to the
standard of right-of-control, the existing economic conditions prevailing between the parties, like the
inclusion of the employee in the payrolls, can help in determining the existence of an employer-
employee relationship.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employers 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.

In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic
conditions prevailing between the parties, in addition to the standard of right-of-control like the
inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of an
employer-employee relationship based on an analysis of the totality of economic circumstances of
the worker.

Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, such as: (1) the extent to which the services
performed are an integral part of the employers business; (2) the extent of the workers investment
in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the
workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight
required for the success of the claimed independent enterprise; (6) the permanency and duration of
the relationship between the worker and the employer; and (7) the degree of dependency of the
worker upon the employer for his continued employment in that line of business. The proper
standard of economic dependence is whether the worker is dependent on the alleged employer for
his continued employment in that line of business.

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 corporations
 Technical Consultant. It is therefore apparent that petitioner is economically dependent on
respondent corporation for her continued employment in the latters line of business.

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. Her main job function
involved accounting and tax services rendered to Respondent Corporation on a regular basis over
an indefinite period of engagement. 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.

5M contractuals hope for end to endo

April 25, 2016 9:54 pm

by NELSON S. BADILLA, REPORTER

Tweet
ALMOST 35 million contractual workers could be freed from a labor contract system that is good
only for 5 months whoever wins the presidential elections on May 9.
The next President ridding labor of contractualization was welcomes on Monday by the workers
coalition Nagkaisa led by the Trade Union Congress of the Philippines (TUCP).
Alan Tanjusay, spokesan for Nagkaisa-TUCP, said the country has almost 35 million contractual
workers out of 67.1 million workers as of 2016.
Contractualization or endo (end of contract) or 555 is a work arrangement whereby workers are
only hired for only about 5 months without security of tenure, monetary, non-monetary and social
protection benefits.
The law requires regularization or termination of those employed for 6 months.
All the five candidates for President, including Manuel Mar Roxas 2nd, the official candidate of the
Aquino administration who had never lifted a finger in addressing the massive contractualization,
promised to solve the labor problem.
Roxas vowed to end endo within three months of his presidency through a law.
Rep. Raymond Democrito Mendoza, TUCP president, said his group expressed hope that
contractualization will be addressed by the incoming President.
Its been many years of struggle against contractual work arrangement and we only see a bright
hope in ending it after last nights debate, Mendoza added.
Jose Matula, president of the Federation of Free Workers (FFW), also welcomed the development in
the fight against contractualization in the Philippines.
But, Matula said, the FFW believes that only Vice President Jejomar Binay has the true intention to
solve the problem because Binay was with the workers and lawyered for them in upholding the
constitutional right to security of tenure in a number of illegal dismissal and regularization cases.
During the debate, the Vice President said contractualization is against the law.
Creating many permanent jobs, according to Binay, will solve the problem.
Wilson Fortaleza, spokesman for the Partido Manggagawa, though the statements of the five
presidential candidates, including Sen. Grace Poe whom PM is supporting, lack concrete steps to
end contractualization, the good thing is that the issue became mainstream. Whoever wins has to
deal with [his or her] commitments to labor. This issue doesnt need a single champion. Everyone
must support this cause.
Fortaleza said the next President and the labor sector, particularly PM, would work together to
seriously solve the problem.
According to Tanjusay, While large and small corporations and businesses are thriving for many
years now because of economic growth, contractual workers are deprived of their fair share of the
wealth they helped build. Workers under this work scheme are called working poor because they
cannot cope with basic standards of cost of living.
He explained that under the scheme [of contractualization], companies undermine the Labor Code
by hiring the services of a recruitment or manpower agency or cooperative for the services they
needed to avoid a direct employer-employee relationship for less than six months. They then rehire
workers or renew contracts with the agency if employers still wanted to pursue their services. Other
employers create dummy manpower or recruitment agencies for them to avoid direct employee-
employers relationship.
Tanjusay said the contracted workers receive less than the mandated minimum wage without social
protection benefits such as Social Security System, Pag-IBIG and PhilHealth.
They are also deprived of overtime and holiday pays, non-cash perks and benefits, he added.
Legislative efforts to marginalize the contractualization scheme are introduced in every Congress at
the Senate and House of Representatives through the proposed Security of Tenure Act bill but the
push for its approval into law is always opposed by powerful business and employers groups
including manpower agencies and cooperatives, Tanjusay said.