PROPOSAL

I. Topics:

Termination of Employment:

Employer Employee Relationship

Four Fold Test

Kinds of Employment:

Probationary Employment

Regular Employment

A. Introduction

For the longest time, the Labor Law field in the Philippines has continually been
changing and evolving. The Labor Code has been amended by several
Presidential Decrees, Executive Orders, mga Batas Pambansa and republic Acts
from the time of its enactment in 1974. Jurisprudential rulings, Department Orders,
and even the Labor Code itself had been amended to conform to the most
pressing needs of the current state of living and economic factors affecting the
Philippines. In turn, conflicting opinions and decisions have been produced
throughout the course of the transition.
It is undisputed that problems and conflict in the workplace occurs due to varying
reasons ranging from the legality of the employment to the different personalities
in the workplace. Even employers and employees will have differences of opinion
or even larger issues since no relationship is immune to potential conflicts.
Terminating an employee in the Philippines is taken very seriously and can be a
complex process, especially after the employee is regularized. An equality of
rights exists between employer and employee. While the employer cannot force
the employee to work against his or her will, neither can the employee compel the
employer to continue giving him or her work if there is a lawful reason not to do
so.
The study seek to divulge into the specifics in the Termination of Employment in
relation to the accepted doctrines of the Employer Employee Relationship and
the most utilized test of determining such existence: The Four Fold Test. A critical
evaluation of these accepted doctrines and exploration of some other relevant
principles on the matter will be ventured throughout the study. In addition, the
study seek to trace the historical development of related legal provisions or
doctrines and provide for comparative jurisprudence on the area.

B. Statement of the Problem

Main Problem:
 Is the Termination procedure recognizing the employer employee
relationship embodied in the Labor Code of the Philippines consistent with the
Constitutional Provisions on Section 10, Article II and Section 1, Article III of
the 1987 Constitution?

Sub Problems:
1. How does the constitution provide for safeguards to the Labor sector
specifically on the aspect of termination?
2. How did the drafters of the Constitution understand this provision? What does
a study of the history of the Philippine constitution in this regard reveal?
3. What are the principal points of divergence between our Constitutional
provisions and the concept of Termination of Employment embodied in Labor
Code?
4. What is the present practiced Legislation on the aspect of Termination of
Employment?
5. How does the historical background of termination of employment both in
jurisprudential rulings and legislation did came to the present practiced rulings.
6. What are the different Kinds of Employment?

C. Objective and Significance of the Study

The objectives of the research are:

To be able to analyse the situation of the Philippine Labor Law
specifically on Termination of employment and the recognition of the
employer employee relationship.
To be able to trace back the historical background of the present
jurisprudence and legislations on the termination of employment.
To provide for possible information that would be important for the
government in solving certain issues on the labor market.

D. Limitations of the study

The study will only cover the following parameters. The research analyzed the
impact of Termination of Employment in the present and tracing back historical
backgrounds rooted on the Philippine constitution. Leading up to the different
Philippine Labor Law orders, regulations, legislations and jurisprudence with the
analytical comparison and analysis of the different decisions.
IV. TERMINATION OF EMPLOYMENT

CONSTITUTIONAL PROVISIONS RELATING TO TERMINATION OF EMPLOYMENT:

Under Article III (Bill of Rights):

Due process and equal protection of the law.1

Non-impairment of obligations of contracts. 2

Right to speedy disposition of cases in judicial, quasi-judicial or administrative bodies. 3

Prohibitions against involuntary servitude.4

Under Article XIII (Social Justice and Human Rights):

a. Protection-to-Labor Clause:

Section 3. The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all. It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage. They shall also participate in policy
and decision-making processes affecting their rights and benefits as may be provided
by law.

The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to foster industrial
peace. The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and the right of
enterprises to reasonable returns to investments, and to expansion and growth.5

TERMINATION OF EMPLOYMENT UNDER THE LABOR CODE

BOOK SIX
POST EMPLOYMENT

Title I
TERMINATION OF EMPLOYMENT
Art. 278. Coverage. The provisions of this Title shall apply to all establishments or
undertakings, whether for profit or not.
Art. 279. Security of tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement

1 Article 3, Section 1, 1987 Philippine Constitution.

2 Article 3, Section 10, 1987 Philippine Constitution.
3 Article 3, Section 16, 1987 Philippine Constitution.
4 Para 2, Section 18, 1987 Philippine Constitution.
5 Article 13, Section 3, 1987 Philippine Constitution.
without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement. (As
amended by Section 34, Republic Act No. 6715, March 21, 1989)
Art. 280. Regular and casual employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be performed is seasonal
in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists.
Art. 281. Probationary employment. Probationary employment shall not exceed six (6)
months from the date the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The services of an employee who
has been engaged on a probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his engagement. An employee who
is allowed to work after a probationary period shall be considered a regular employee.6

OMNIBUS RULES

IMPLEMENTING THE LABOR CODE

BOOK SIX

Post Employment

TITLE I

Termination of Employment

ARTICLE 278. Coverage. The provisions of this Title shall apply to all establishments
or undertakings, whether for profit or not.

ARTIXLE 279. Security of tenure. In case of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and to his backwages computed from the
time his compensation was withheld from him up to the time of his reinstatement.

ARTICLE 280. Regular and casual employment. The provisions of written agreement
to the contrary notwithstanding and regardless of the oral agreements of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer except where the employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of

6 Title 1, Book 6 of the Labor Code

the engagement of the employee or where the work or service to be performed is seasonal
in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That any employee who has rendered at least one year of service,
where the position no longer exists at the time of reinstatement for reasons not attributable
to the fault of the employer, the employee shall be entitled to separation pay equivalent
to at least one-month salary or to one-month salary for every year of service, whichever
is higher, a fraction of at least six months being considered as one whole year. (Articles
278 to 280 and then Section 5, these are what appeared in the official version)

SECTION 5. Regular and casual employment. (a) The provisions of written

agreements to the contrary notwithstanding and regardless of the oral agreements of the
parties, an employment shall be considered to be regular employment for purposes of
Book VI of the Labor Code where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer
except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement
of the employee or where the work or service to be performed is seasonal in nature and
the employment is for the duration of the season.

(b) Employment shall be deemed as casual in nature if it is not covered by the preceding
paragraph; Provided, That any employee who has rendered at least one year of service,
whether such service is continuous or not, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while
such activity exists.

(c) An employee who is allowed to work after a probationary period shall be considered a
regular employee.

SECTION 6. Probationary employment. (a) Where the work for which an employee
has been engaged is learnable or apprenticeable in accordance with the standards
prescribed by the Department of Labor, the probationary employment period of the
employee shall be limited to the authorized learnership or apprenticeship period,
whichever is applicable.

(b) Where the work is neither learnable nor apprenticeable, the probationary employment
period shall not exceed six (6) months reckoned from the date the employee actually
started working.

(c) The services of an employee who has been engaged on probationary basis may be
terminated only for a just cause or when authorized by existing laws, or when he fails to
qualify as a regular employee in accordance with reasonable standards prescribed by the
employer.

(d) In all cases involving employees engaged on probationary basis, the employer shall
make known to the employee the standards under which he will qualify as a regular
employee at the time of his engagement.7

7 Book 6, Title 1, Sec 1,IRR

 DEPARTMENT ORDER NO. 147-15 AMENDING THE IMPLEMENTING RULES AND
REGULATIONS OF BOOK VI OF THE LABOR CODE OF THE PHILIPPINES, AS
AMENDED

RULE I-A
APPLICATION OF JUST AND AUTHORIZED CAUSES OF TERMINATION
Section 1. Guiding Principles. The workers right to security of tenure is guaranteed under
the Philippine Constitution and other laws and regulations. No employee shall be
terminated from work except for just or authorized cause and upon observance of due
process.

Section 2. Coverage. This Rules shall apply to all parties of work arrangements where
employer employee relationship exists. It shall also apply to all parties of legitimate
contracting/subcontracting arrangements with existing employer employee
relationships

Section 3. Employer Employee Relationship. To ascertain the existence of an employer

employee relationship, the four fold test shall apply, to wit: (1) the selection and
engagement of the employee; 920 the payment of wages; (3) the power of dismissal;
and (4) the power to control the employees conduct, or the so called control test. The
so-caclled control test is commonly regarded as the most crucial and determinative
indicator of the presence of an employer employee relationship. Under the control test,
an employer employee relationship exists where the person for whom the services are
performed reserves the right to control not only the end achieved, but also the manner
and means used to achieve the end.8

Section 4. Definition of Terms

(g) Employee refers to any person in the employ of an employer. It shall include any
individual whose work has ceased as a result of or in connection with any current labor
dispute or because of any unfair labor practice.9

(h) Employer refers to any person acting in the interest of an employer, directly or
indirectly.10 It shall include corporation, partnership, sole proprietorship and cooperative.
11

8 David vs. Macasio, G.R. No. 1954661, July 2, 2014

9 Article 219 (212) (f) of the Labor Code of the Philippines, as amended
10 Article 219 (212) (e) of the Labor Code of the Philippines, as amended
11 Book 6, Rule 1, Section 4, D.O. 147- 15, IRR
 A. EMPLOYER EMPLOYEE RELATIONSHIP

The law generally defines an employer as any person acting in the interest of an
employer, directly or indirectly.12 It does not include a labor organization or any of its
officers or agents unless they are acting as an employer.13
On the other hand, an employee is likewise broadly defined as any person in the employ
of another.14 The definition includes any individual whose work has ceased as a result of
or in connection with any current labor dispute or because of any unfair labor practice if
he has not obtained any other substantially equivalent and regular employment.15 It is not
limited to employees of a particular employer, except if so explicitly stated by law. 16
To give context to the definitions given above, the four-fold test of employment is taken
into consideration to establish whether there is an employer employee relationship. The
elements to the test are: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employees conduct. The most important element is the employers power of control of
the employees conduct, the expected results of the work to be done, as well as the means
and methods to accomplish it.17
Lirio v. Genovia
G.R. No. 169757, 27 November 2011
Before a case for illegal dismissal can prosper, it must first be established that an
employer-employee relationship existed between petitioner and respondent.
It is settled that no particular form of evidence is required to prove the existence of an
employer-employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted.
In this case, the documentary evidence presented by respondent to prove that he was
an employee of petitioner are as follows: (a) a document denominated as payroll (dated
July 31, 2001 to March 15, 2002) certified correct by petitioner, which showed that
respondent received a monthly salary of P7,000.00 (P3,500.00 every 15th of the month
and another P3,500.00 every 30th of the month) with the corresponding deductions due
to absences incurred by respondent; and (2) copies of petty cash vouchers, showing the
amounts he received and signed for in the payrolls.
The said documents showed that petitioner hired respondent as an employee and he
was paid monthly wages of P7,000.00. Petitioner wielded the power to dismiss as
respondent stated that he was verbally dismissed by petitioner, and respondent,
thereafter, filed an action for illegal dismissal against petitioner. The power of control
refers merely to the existence of the power. It is not essential for the employer to actually
supervise the performance of duties of the employee, as it is sufficient that the former has
a right to wield the power. Nevertheless, petitioner stated in his Position Paper that it was
agreed that he would help and teach respondent how to use the studio equipment. In
such case, petitioner certainly had the power to check on the progress and work of
respondent.
An employment relation is essentially contractual in nature. That is to say, the employer
offered employment to the employee who accepted in exchange for remuneration. Thus,
the employer and employee are prohibited from entering into an employment contract

12 Article 219 (e), Labor Code

13 Article 219 (e), Labor Code
14 Article 219 (f), Labor Code
15 Article 219 (f), Labor Code
16 Article 219 (f), Labor Code
17 Article 219 (f), Labor Code
which practically amounts to involuntary servitude, under any guise whatsoever.18 Being
contractual in nature, an employment ends when the employer consent on either and
employee to proceed is no longer existing and the law on termination is complied.
During employment, issues may arise related to employment. A labor dispute is any
controversy affecting the terms and conditions of employment, as well as any issue on
the association or representation for purposes of individual or collective bargaining on
these terms and conditions, irrespective of whether the parties stand in the proximate
relation of employer and employee.19
Before any labor case may proceed, it is required first to establish the employer and
employee relationship between the parties.20Hence, as indicated earlier, the four-fold test
will be used to determine the existence of employment relationship.
And in the case of Victor Meteoro et. al. vs Creative Creatures, Inc., the court
stated that to establish the 4 elements of employer employee relationship, any
competent and relevant evidence may be considered including but not limited to:

Identification Cards;
Cash Vouchers;
Social Security Registration;
Appointment Letters;
Employment Contracts;
Payrolls;
Organization Charts; and
Personnel List.

Of the 4 elements of employer employee relationship, the control test is

generally regarded as the most crucial and determinative indicator of the
presence or absence of an employer-employee relationship. Under this test, an
employer-employee relationship is said to exist where the person for whom the
services are performed reserves the right to control not only the end result but
also the manner and means utilized to achieve the same.

However, as seen in the case of Royale Homes Marketing Corporation vs. Fidel
P. Alcantara, not every form of control is indicative of an employer-
employee relationship. The subjection of the service provider to the clients
rules, regulations, and code of ethics does not make the service provider an
employee when the level of control does not dictate the methodology in
performing the tasks. The client has the right to establish guidelines towards the
achievement of a mutually desired result.

An employment contract is not just a legally binding agreement between the

employer and employee. It is also one that is imbued with public interest and
therefore is subject to the police power of the state.

It is the employers duty to ensure that terms and conditions of employment are
in compliance with the Labor Code of the Philippines. Employment terms and

18 Article 1703, Civil Code

19 Article 219 (l), Labor Code
20 Cesar C. Lirio v. Wilmer D. Genovia, G.R. No. 169757, 27 November 2011.
conditions that are in violation of the Labor Code shall be unlawful and deemed
null and void even when both the employer and employee mutually consented to
it. Moreover, any doubts, uncertainties, ambiguities and insufficiencies shall be
resolved in favor of labor.

The determination of whether employer-employee relation exists between the parties is very
important. For one, entitlement to labor standards benefits such as minimum wages, hours of
work, overtime pay, etc., or to social benefits under laws such as social security law, workmens
compensation law, etc., or to termination pay, or to unionism and other labor relations provisions
under the Labor Code, are largely dependent on the existence of employer-employee
relationship between the parties.
Another thing is that the existence of employer-employee relationship between the parties will
determine whether the controversy should fall within the exclusive jurisdiction of labor agencies
or not. If for example the parties are not employer-employee of each other, respectively, but
perhaps partners or associates, then any dispute between them will be not be covered by the
jurisdiction of labor agencies but by regular courts.

Economic reality test

In view of todays highly specialized workforce, the court are often faced with situations where
the right-of-control-test alone can no longer adequately determine the existence of employer-
employer relationship. Subsequently, another test has been devised to fill the gap, known as the
economic reality test.
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, 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.
Economic realities of the employment relations help provide a comprehensive analysis of the true
classification of the individual, whether as employee, independent contractor, corporate officer or
some other capacity.
Under economic reality test, the benchmark in analyzing whether employment relation exists
between the parties is the economic dependence of the worker on his employer. That is, whether
the worker is dependent on the alleged employer for his continued employment in the latters
line of business.
Applying this test, if the putative employee is economically dependent on putative employer for
his continued employment in the latters line of business, there is employer-employee
relationship between them. Otherwise, there is none.
Two-tiered test (or Multi-factor test)
The economic reality test is not meant to replace the right of control test. Rather, these two test
are often use in conjunction with each other to determine the existence of employment relation
between the parties. This is known as the two-tiered test, or multi-factor test. This two-tiered test
involves the following tests:
The putative employers power to control the employee with respect to the means and
methods by which the work is to be accomplished; and
The underlying economic realities of the activity or relationship.
Existence of employer-employee relationship; how proved - G.R. No. 169757

G.R. No. 169757

"x x x.

Before a case for illegal dismissal can prosper, it must first be established that
an employer-employee relationship existed between petitioner and
respondent.[27]

The elements to determine the existence of an employment relationship are: (a)

the selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employers power to control the employees
conduct. The most important element is the employers control of the employees
conduct, not only as to the result of the work to be done, but also as to the
means and methods to accomplish it.[28]

It is settled that no particular form of evidence is required to prove the existence

of an employer-employee relationship.[29] Any competent and relevant evidence
to prove the relationship may be admitted.[30]

In this case, the documentary evidence presented by respondent to prove that

he was an employee of petitioner are as follows: (a) a document denominated as
"payroll" (dated July 31, 2001 to March 15, 2002) certified correct by
petitioner,[31] which showed that respondent received a monthly salary of
P7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every
30th of the month) with the corresponding deductions due to absences incurred
by respondent; and (2) copies of petty cash vouchers,[32] showing the amounts
he received and signed for in the payrolls.

The said documents showed that petitioner hired respondent as an employee

and he was paid monthly wages of P7,000.00. Petitioner wielded the power to
dismiss as respondent stated that he was verbally dismissed by petitioner, and
respondent, thereafter, filed an action for illegal dismissal against petitioner. The
power of control refers merely to the existence of the power.[33] It is not
essential for the employer to actually supervise the performance of duties of the
employee, as it is sufficient that the former has a right to wield the power.[34]
Nevertheless, petitioner stated in his Position Paper that it was agreed that he
would help and teach respondent how to use the studio equipment. In such
case, petitioner certainly had the power to check on the progress and work of
respondent.

On the other hand, petitioner failed to prove that his relationship with respondent
was one of partnership. Such claim was not supported by any written agreement.
The Court notes that in the payroll dated July 31, 2001 to March 15, 2002,[35]
there were deductions from the wages of respondent for his absence from work,
which negates petitioners claim that the wages paid were advances for
respondents work in the partnership. In Nicario v. National Labor Relations
Commission,[36] the Court held:

It is a well-settled doctrine, that if doubts exist between the evidence presented

by the employer and the employee, the scales of justice must be tilted in favor of
the latter. It is a time-honored rule that in controversies between a laborer and
his master, doubts reasonably arising from the evidence, or in the interpretation
of agreements and writing should be resolved in the formers favor. The policy is
to extend the doctrine to a greater number of employees who can avail of the
benefits under the law, which is in consonance with the avowed policy of the
State to give maximum aid and protection of labor. This rule should be applied in
the case at bar, especially since the evidence presented by the private
respondent company is not convincing. x x x[37]

Based on the foregoing, the Court agrees with the Court of Appeals that the
evidence presented by the parties showed that an employer-employee
relationship existed between petitioner and respondent.

In termination cases, the burden is upon the employer to show by substantial

evidence that the termination was for lawful cause and validly made.[38] Article
277 (b) of the Labor Code[39] puts the burden of proving that the dismissal of an
employee was for a valid or authorized cause on the employer, without
distinction whether the employer admits or does not admit the dismissal.[40] For
an employees dismissal to be valid, (a) the dismissal must be for a valid cause,
and (b) the employee must be afforded due process.[41] Procedural due process
requires the employer to furnish an employee with two written notices before the
latter is dismissed: (1) the notice to apprise the employee of the particular acts or
omissions for which his dismissal is sought, which is the equivalent of a charge;
and (2) the notice informing the employee of his dismissal, to be issued after the
employee has been given reasonable opportunity to answer and to be heard on
his defense.[42] Petitioner failed to comply with these legal requirements; hence,
the Court of Appeals correctly affirmed the Labor Arbiters finding that
respondent was illegally dismissed, and entitled to the payment of backwages,
and separation pay in lieu of reinstatement.

x x x."
1. Four Fold Test
2. Kinds of Employment
a. Probationary
b. Regular