In South East International Rattan, Inc. v. Coming, the Supreme Court reiterated the importance of the four-fold test in determining the existence of an employer-employee relationship. This test, which includes selection and engagement, payment of wages, power of dismissal, and the power to control, is crucial in resolving illegal dismissal cases. The Court emphasized that while no specific form of evidence is required, the finding of an employer-employee relationship must be based on substantial evidence, resolving doubts in favor of the laborer.

Rattan or Wrong? Unraveling Employment Status in Illegal Dismissal Claim

The case revolves around Jesus J. Coming’s complaint for illegal dismissal against South East International Rattan, Inc. (SEIRI). Coming claimed he was a regular employee, unjustly dismissed. SEIRI denied this, arguing Coming worked for their suppliers, not them. The Labor Arbiter sided with Coming, but the National Labor Relations Commission (NLRC) reversed this, finding no employer-employee relationship. The Court of Appeals (CA) sided with the Labor Arbiter. This discrepancy led the Supreme Court to review the evidence and determine whether an employer-employee relationship existed between Coming and SEIRI, applying the established four-fold test.

To determine the existence of an employer-employee relationship, Philippine jurisprudence consistently applies the **four-fold test**, which includes:

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 employee’s conduct, or the so-called “control test.”

Substantial evidence is needed to prove the existence of the employer-employee relationship. While no particular form of evidence is required, there must be enough relevant evidence that a reasonable mind might accept as adequate to justify a conclusion.

SEIRI presented several documents to refute Coming’s claim. These included Employment Reports to the Social Security System (SSS) from 1987 to 2002, certifications from alleged employers Mayol and Apondar, payroll sheets (1999-2000), individual pay envelopes and employee earnings records (1999-2000), and an affidavit from SEIRI’s Treasurer, Angelina Agbay. However, these payroll and pay records did not include Coming’s name. The affidavit of Angelina Agbay, SEIRI’s Treasurer, stated that the company never hired workers for varnishing and pole sizing, as they were acquired from suppliers. She emphasized that Coming was never hired by SEIRI and that the company president did not dispense employee salaries.

SEIRI also submitted the affidavit of Vicente Coming, Jesus Coming’s brother. In his affidavit, Vicente stated that Jesus worked for various furniture factories and rattan traders and was never an employee of SEIRI.

Allan Mayol’s certification stated that Jesus Coming worked with him as a rattan pole sizing/classifier from 1997 to 1998 and later as a sizing machine operator towards the end of 1999. He clarified that Jesus’s services were not regular, and he worked only when he wanted to.

Faustino Apondar’s certification claimed that Jesus worked for him through Vicente as a “sideline” since 1999 but only after regular working hours and “off and on” basis.

Conversely, Coming presented an affidavit from five former co-workers who attested that Coming was their co-worker at SEIRI. They affirmed that they were all employees of Estan Eslao Agbay and that Coming had been employed there for almost twenty years.

The Labor Arbiter gave more weight to the co-workers’ testimonies. He emphasized that Coming’s work was necessary for SEIRI’s business. The NLRC, however, reversed the Labor Arbiter’s decision, pointing out that SEIRI was incorporated only in 1986. The NLRC argued that Coming failed to present any pay slips or vouchers proving his employment. It gave weight to the certifications of Allan Mayol and Faustino Apondar and the affidavit of Vicente Coming. The CA gave more credence to the declaration of the five co-workers, emphasizing the control that SEIRI had over Coming’s work.

The Supreme Court, in affirming the CA’s decision, addressed the inconsistencies in the evidence. The Court noted that the fact that Coming was not reported to the SSS is not conclusive proof of the absence of an employer-employee relationship. The Court also pointed out that the payrolls and pay envelope records submitted by SEIRI only covered the years 1999 and 2000, not the entire 18-year period during which Coming supposedly worked for SEIRI.

The Court also scrutinized the certifications issued by Mayol and Apondar. The Court found that even assuming the truth of these statements, they did not foreclose Coming’s regular or full-time employment with SEIRI. Further, the Court pointed out that SEIRI had admitted that the five affiants who testified to Coming’s employment were former workers.

Based on the evidence presented, the Supreme Court found that an employer-employee relationship existed between Coming and SEIRI. As a regular employee, Coming was entitled to security of tenure, and his dismissal without just or authorized cause was illegal. This decision reaffirms the importance of the four-fold test in determining employment status and ensures that doubts are resolved in favor of the laborer.

FAQs

What is the four-fold test?	The four-fold test is a standard used to determine the existence of an employer-employee relationship, considering selection and engagement, payment of wages, power of dismissal, and control over the employee’s conduct. It helps courts determine whether a worker is an employee or an independent contractor.
What constitutes substantial evidence in labor cases?	Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. It is a lower standard than proof beyond a reasonable doubt but requires more than a mere scintilla of evidence.
Is SSS registration conclusive proof of employment?	No, the fact that a worker was not reported as an employee to the SSS is not conclusive proof of the absence of an employer-employee relationship. Employers may fail to register employees for various reasons, and such failure should not penalize the employee.
What rights does a regular employee have?	A regular employee has the right to security of tenure, meaning they can only be dismissed for a just or authorized cause as defined in the Labor Code. They are also entitled to reinstatement and back wages if illegally dismissed.
What is illegal dismissal?	Illegal dismissal occurs when an employee is terminated without a just or authorized cause and without due process. In such cases, the employee is entitled to reinstatement, back wages, and other benefits.
What are back wages?	Back wages are the compensation an employee is entitled to receive from the time of illegal dismissal until reinstatement. It includes all allowances and benefits or their monetary equivalent.
What is separation pay?	Separation pay is the amount paid to an employee who is terminated due to authorized causes such as redundancy or retrenchment. It is usually equivalent to one month’s salary for every year of service.
How are doubts resolved in labor disputes?	In any controversy between a laborer and their employer, doubts reasonably arising from the evidence are resolved in favor of the laborer. This principle ensures that labor laws are interpreted in a way that protects workers’ rights.

This case clarifies the application of the four-fold test in determining the existence of an employer-employee relationship. It underscores the importance of resolving doubts in favor of the laborer and reinforces the principle that employees are entitled to security of tenure. The decision serves as a reminder for employers to comply with labor laws and for employees to be aware of their rights.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: SOUTH EAST INTERNATIONAL RATTAN, INC. VS. JESUS J. COMING, G.R. No. 186621, March 12, 2014