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ANGELINA FRANCISCO v. NLRC

FACTS:

Petitioner Angelina Francisco was hired by Kasei Corporation in 1995 as an Accountant and Corporate Secretary. She was also assigned as the Liaison Officer to the City of Makati. In 1996, she was designated as Acting Manager and was responsible for recruitment, management administration, and representing the company in dealings with government agencies. She performed the duties of Acting Manager for five years and received a salary, housing allowance, and a share in the company's profits. In January 2001, she was replaced as Manager but was assured that she would still be connected with the company. Her salary was then reduced, and on October 2001, she was informed that she was no longer connected with the company. She filed a complaint for constructive dismissal. The Labor Arbiter found her dismissal illegal and ordered reinstatement and payment of money claims. The NLRC affirmed with modification. However, the Court of Appeals reversed the decision and dismissed the complaint. The core issues to be resolved were whether an employer-employee relationship existed and whether the dismissal was illegal.

ISSUES:

  1. Whether there was an employer-employee relationship between petitioner Angelina Francisco and private respondent Kasei Corporation.

  2. Whether petitioner was illegally dismissed.

RULING:

  1. Existence of Employer-Employee Relationship:

    • The Supreme Court ruled that there was indeed an employer-employee relationship between petitioner Angelina Francisco and Kasei Corporation. The Court utilized both the control test and the economic realities test to determine the relationship, finding that petitioner was under the direct control and supervision of respondent corporation.

    • Petitioner performed services integral to the business, had no substantial investment in facilities, did not have the opportunity for profit or loss independent of the employer, and was economically dependent on the corporation for her continued employment.

  2. Constructive Dismissal:

    • The Supreme Court held that petitioner was constructively dismissed when her salary was reduced by P2,500 per month from January to September 2001. This constituted illegal termination of employment, entitling her to full backwages and separation pay in lieu of reinstatement.

    • The diminution of pay was prejudicial to petitioner and rendered continued employment unreasonable, creating an adverse working environment that justified her filing for constructive dismissal.

PRINCIPLES:

  • Control Test: An employer-employee relationship exists when the person for whom services are performed reserves the right to control not only the end achieved but also the means to achieve that end.

  • Economic Realities Test: This test includes factors such as the extent to which services performed are integral to the employer’s business, the worker's investment in equipment and facilities, employer’s control, worker’s opportunity for profit and loss, the amount of initiative, skill, judgment or foresight required, and the permanence of the relationship.

  • Illegal Termination and Constructive Dismissal: A significant reduction in salary or a demotion can amount to constructive dismissal, qualifying as involuntary resignation due to unbearable working conditions created by the employer.

  • Strained Relations Doctrine: In cases where reinstatement is impractical due to strained relations, separation pay in lieu of reinstatement is granted.