Ruling in favor of labor

What are the tests to determine whether there is an employer and employee relationship? This is answered in this case of Dencio, Wally and Cardo, who were working in a rubber plantation owned by the spouses Manny and Mila.

Dencio, Wally and Cardo are rubber tree tappers collecting rubber lumps from small containers attached to the trunk of rubber trees and transferring them to another container.

Later on, they were ordered by the spouses to stop tapping the rubber tress. So, they filed before the labor arbiter a complaint for illegal dismissal, reinstatement or separation pay, under payment of wages, labor standards benefit, damages and attorney’s fees.

The labor arbiter dismissed the complaint on the ground that the relationship between the parties was that of a landlord and tenant and not of employer and employee. This ruling was reversed and set aside by the National Labor Relation Commission (NLRC), which remanded the case to the Executive Labor Arbiter for hearing on the merits.

Wally et. al. thus filed a Petition for Certiorari before the Court of Appeals (CA). The CA, however, decided the case on the merits instead of ruling on the procedural aspect raised by them. It found that they failed to overcome the burden of proving the existence of employee-employer relationship so they could not have been illegally dismissed from employment.

The Supreme Court (SC), however, ruled that while the CA correctly delved into the merits of the case, it erroneously ruled that the parties did not have an employer-employee relationships.

There are four-fold tests for determining the existence of the employer-employee relationships: (1) the power to hire; (2) the payment of wages; (3) the power to dismiss; (4) the power to control, which is the most important element.

The SC said that, as to the element of control, rubber tapping does not lend itself to the usual standards of assessing an employer’s control over the “means” and “methods” of an employee’s work. As discussed in the Court of Appeals decision, petitioner’s work only required the collection of “rubber lumps from the ‘bagol’ or small containers attached to the trunk and their placement in another container.” The activity may be better assessed for employer control through an alternative test, as provided by Francisco vs. National Labor Relations Commission (532 Phil. 399).

There are instances when, aside from the employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished, 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.

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

This two-tiered test provides a framework of analysis, taking 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.

Wally et. al. submitted sufficient collaborating testimonies of their colleagues that (1) they were required to work at set hour per day; (2) they were paid a set rate per day of work; (3) they worked under the spouse’s constant supervision and (4) they could be dismissed for violating the work standards set by the spouses.

The better approach would therefore be to adopt this two-tiered test, involving (1) the 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 relationship. Applying this two-tiered test, in this case, the spouses indeed exercised control over Wally et. al.

Besides, when the evidence of employer and employee are of equal weight, the scales must tip in favor of labor (PNB vs. Bulatao G.R 200972 Dec. 11, 2019).

This is consistent with the social justice supposition underlying labor laws to afford greater protection to labor. In any event, both parties offered the same type of evidence in support of their respective claims. Respondents’ controverting testimonial evidence, sourced from a “former caretaker” and several local government officials, is of equal weight with petitioners’ evidence, at best. When the evidence between employer and laborer are of equal weight, the scales must tip in favor of labor, consistent with Philippine National Bank v. Bulatao.

The CA decision is therefore reversed and set aside and Wally et. al. should be reinstated, paid the back wages and labor standards benefits from the time of their dismissal, until finality of judgment (Wahing et.al vs. spouse Daguio G.R 219755, April 18, 2022).