Atty. Julius Gregory Delgado
“RICHARD N. WAHING, ET AL. VS. SPOUSES AMADOR AND ESING DAGUIO”, G.R. NO. 219755, APRIL 18, 2022: ECONOMIC REALITY TEST TO DETERMINE EMPLOYER-EMPLOYEE RELATIONSHIP
Petitioners Richard N. Wahing (Wahing), Ronald L. Calago (Calago), and Pablo P. Mait (Mait) (collectively, petitioners Wahing et al.) were placed under the operational and economic control of Amador Daguio and Esing Daguio (respondents Spouses Daguio). On October 15, 2006, Mait was ordered to “stop tapping rubber tree”. On February 6, 2007, Wahing and Calago were similarly ordered to stop working on the respondents Spouses Daguio’s rubber trees.
Petitioners Wahing, et al. filed a case for illegal dismissal before the Labor Arbiter which dismissed the case finding that there is no employer-employee relationship but that of landlord-tenant. Petitioners Wahing, et al. elevated their case before the National Labor Relations Commission (Commission) which vacated the ruling and remanded the case for decision on the merits. The Labor Arbiter directed the parties to submit their respective Position Papers. Only petitioners Wahing, et al. were able to submit their Position Paper. Respondents Spouses Daguio failed to do so despite notices. The Labor Arbiter decided on the merits in favor of petitioners Wahing, et al. Respondent Spouses Daguio appealed the case which decided in their favor again remanding the case before the Labor Arbiter for reception of their evidence.
Failing to have the Commission ruling reconsidered, petitioners Wahing, et al. filed a Petition for Certiorari before the Court of Appeals. The Court of Appeals resolved the case on the merits and found no employer-employee relationship between petitioners Wahing, et al. and respondents Spouses Daguio. Failing to have the decision of the appellate court reconsidered, petitioners Wahing, et al. filed a Petition for Review on Certiorari before the Supreme Court. On the procedural aspect, petitioners Wahing, et al. argue that it was erroneous to consider the arguments of respondents Spouses Daguio since they failed to present evidence before the Labor Arbiter and that they failed to perfect their appeal before the Commission for failure to post the correct amount of bond.
On the procedural aspect, the Supreme Court held that the Court of Appeals has the authority to review and decide the case on the merits, consistent with the principle of judicial economy and in avoidance of “dispensing piecemeal justice”. The Court held that while petitioners Wahing, et al. were correct that the Court of Appeals should generally review only the issues raised in the parties’ pleadings, the Court of Appeals may review the case “in its entire context” to ensure its effective resolution, and to ensure the least control to the judiciary and to the party litigants.
On the substantive aspect or the merits of the case, the Supreme Court went beyond the usual four-fold test to determine employer-employee relationship, but decided the case on a so-called “economic reality” test which requires “the totality of economic circumstances of the worker” in order to determine the existence of an employer-employee relationship. The Court citing Francisco vs. National Labor Relations Commission, 532 Phil. 399 (2006), the Supreme Court held:
“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 employer’s business,· (2) the extent of the worker’s investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the worker’s 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.”
Applying the above-quoted case, the Supreme Court held that petitioners Wahing, et al. were able to establish through the economic reality test that respondents Spouses Daguio exercised control over petitioners Wahing, et al. particularly their hours, means and methods of work. Petitioners Wahing, et al. were able to show to be economically dependent upon respondent Spouses Daguio for their livelihood. The Court held:
“Likewise, the lack of proof of other plantations willing to employ petitioners cannot discount the proof presented that: (1) respondents exercised control over petitioners by constantly supervising them during their required work hours; (2) petitioners had no opportunity to exercise initiative or control their own profit or loss from their work, as they were paid a set daily wage; and (3) petitioners could be dismissed for repeatedly violating their required daily work engagements.
The foregoing circumstances, when applied to the two-tier test in Francisco, show that respondents exercised control over petitioners’ hours, means, and methods of work. Petitioners were also shown to be economically dependent upon respondents for their livelihood. Thus, there exists an employer- employee relationship between the parties.”
In this case, the Supreme Court clearly relied heavily on economic reality or dependence of the workers of their livelihood to their employer. But how can this be different from independent farm contractors like those who work to spray and cover the fruits of mango plantations? There is clearly a thin red line between those who are really farm contractors and receive percentage or share from the harvest, like many arrangements of rubber tappers in Mindanao, and that of this case of petitioners Wahing, et al. wherein workers are also leasehold tenants living in the plantations. For sure, the Supreme Court will further refine this in future cases brought before its halls.