Gaspar vs. M.I.Y. Real Estate Corp.

A person who fails to prove by substantial evidence the concurrence of the four-fold test components—particularly the employer’s power to control the means and methods of work—cannot be considered an employee of the putative corporate employer, even where the person performs work in a building that also houses the corporation’s office, if the evidence shows the person was actually engaged as a domestic worker for a household occupant.

Flordivina M. Gaspar alleged she was hired by M.I.Y. Real Estate Corporation (“M.I.Y.”) on 10 April 2013 as Facilities Maintenance and Services personnel at Goldrich Mansion, Makati City, a building where M.I.Y. conducted business and its director Melissa Ilagan Yu maintained a penthouse residence. Gaspar performed cleaning, maintenance, and monitoring tasks throughout the building’s floors, including commercial establishments such as a spa and transient rooms, as well as Yu’s office penthouse. She claimed respondents compelled her to sign resignation letters every six months to prevent her from attaining regular status and that on 2 July 2014 she was barred from entering the premises and dismissed. M.I.Y. denied any employment relationship, insisting it had only four employees, none of whom included Gaspar. Yu countered that Gaspar was a domestic worker originally hired by Yu’s mother to serve Yu’s household in Pasig, later transferred to the Goldrich Mansion penthouse solely for household upkeep.

• The Complaint: Gaspar filed a complaint for illegal dismissal with money claims on 14 August 2014. She alleged she was a regular employee of M.I.Y., hired on 10 April 2013 as Facilities Maintenance and Services (FM&S) personnel at Goldrich Mansion, Makati City, where M.I.Y. operated its business and where Yu maintained a separate penthouse residence. Her duties included monitoring and maintaining the cleanliness of every floor, including a spa, massage parlor, salon, bar, transient rooms, and an agency (yaya.com); she cleaned, mopped, washed glass windows, changed bed linens, pillows, and curtains in transient rooms, maintained spa and massage parlor supplies, and monitored staff. She also handled, monitored, and cleaned the penthouse where Yu’s office was located. Gaspar claimed respondents instituted a policy whereby she was made to copy a resignation letter and affix her signature every six months, take a two-week vacation, and then return to work, thus preventing her from attaining regular status. She reported an eye injury caused by a co-employee’s negligence, for which she received no medical assistance. She last returned to work on 13 December 2013 and performed her duties until 2 July 2014, when a supervisor told her not to report for work anymore. When she sought clarification, she was allegedly forced to sign an end-of-contract statement or an unsigned Notice of Termination dated 11 July 2014, and was told she would not receive her last salary if she refused. She further alleged that Yu sent threatening text messages warning her not to file a labor case. Gaspar contended that her engagement lasting nearly 15 months, the necessity and desirability of her work to M.I.Y.’s business, and the scheme to avoid regularization all established her status as a regular employee.

• M.I.Y.’s Defense: M.I.Y. asserted in its Position Paper that it was a small realty and development company with only four employees, and Gaspar was not among them. It presented payment receipts to the Social Security System, Home Development Mutual Fund, and Philippine Health Corporation, which bore no trace of Gaspar’s name. M.I.Y. maintained that Gaspar was a domestic worker or kasambahay of Yu, who was a director of M.I.Y. and a resident of the penthouse in the same building.

• Yu’s Position: Yu claimed that Gaspar was originally hired by Yu’s mother in April 2013 to help with household needs at Yu’s residence in Pasig City. Due to frequent fights with other domestic workers, Yu transferred Gaspar to her penthouse at Goldrich Mansion, Makati City, where she was assigned to clean and maintain its orderliness from time to time, for which she was paid PHP 4,000.00 monthly. Yu alleged that Gaspar’s behavior caused ire, and that Gaspar left the household on 1 July 2014.

• Labor Arbiter’s Ruling: Applying the four-fold test, the Labor Arbiter found no employer-employee relationship between Gaspar and M.I.Y. The Arbiter held that Gaspar was a domestic worker who rendered household work for Yu and was under Yu’s control. The complaint was dismissed for lack of merit and jurisdiction.

• NLRC Decision: The NLRC affirmed the Labor Arbiter, ruling that Gaspar bore the burden of proving her employment with M.I.Y. by substantial evidence but failed to do so. The evidence presented—clearances from “Asian Group of Companies,” unsigned petty cash vouchers, and an unauthenticated ATM card—was insufficient to establish the elements of an employer-employee relationship. The NLRC further noted that Gaspar did not specifically deny Yu’s allegations that she was hired as a domestic worker, and that her engagement as a domestic worker was inconsistent with company employment.

• CA Decision: The Court of Appeals found that the NLRC did not commit grave abuse of discretion, its findings being supported by substantial evidence. The CA stressed that what remained undisputed was that Gaspar was hired by Yu as a house helper, initially assigned to Yu’s Pasig residence and later transferred to the Makati penthouse. This strengthened M.I.Y.’s argument that Gaspar was not its employee. Since no employer-employee relationship was proven, there was no illegal dismissal, and Gaspar was not entitled to separation pay, backwages, or damages.

• Grave Abuse of Discretion: Petitioner argued that the Court of Appeals committed grave abuse of discretion amounting to lack or in excess of jurisdiction when it affirmed the finding that she was a domestic worker of Yu and not a regular employee of M.I.Y. The labor tribunals’ conclusion was allegedly contrary to the evidence and the law.

• Nature of Work and Workplace as Commercial Establishment: Petitioner contended that she was not a domestic worker because she did not serve for the personal comfort and enjoyment of Yu’s family; instead, she worked in a commercial establishment—Goldrich Mansion—where Yu’s businesses and M.I.Y.’s office were located and operated. She invoked Apex Mining Company, Inc. v. National Labor Relations Commission and Remington Industrial Sales Corporation v. Castaneda, arguing that a house helper working in staff houses of an industrial company was deemed a regular employee, and that her situation was analogous.

• Scheme to Prevent Regularization: Petitioner maintained that M.I.Y. imposed a scheme whereby she was compelled to copy and sign resignation letters every six months and take forced vacation breaks, demonstrating an intent to prevent her from attaining regular employee status despite rendering work that was necessary and desirable to the business for nearly 15 months.

• Absence of Employer-Employee Relationship with M.I.Y.: M.I.Y. countered that it was a small corporation with only four employees, and petitioner was never among them. It presented government remittance records (SSS, HDMF, PhilHealth) that did not list petitioner, proving she was not in its employ.

• Petitioner as Domestic Worker of Yu: Yu argued that petitioner was a domestic worker (kasambahay) hired through Yu’s mother, initially to serve Yu’s Pasig household and later transferred to the penthouse in Makati, where she performed purely household tasks for PHP 4,000.00 monthly. Her engagement was inconsistent with company employment, and her departure on 1 July 2014 negated any claim of illegal dismissal by M.I.Y.

• Existence of Employer-Employee Relationship with M.I.Y.: Whether petitioner was a regular employee of M.I.Y. under the four-fold test, so as to establish jurisdiction and a cause of action for illegal dismissal against the corporation.

• Classification as Domestic Worker: Whether petitioner was a domestic worker of Yu under Republic Act No. 10361, thereby excluding her from the coverage of Book III, Title I of the Labor Code and precluding any entitlement to overtime pay, holiday pay, separation pay, and backwages.

• Existence of Employer-Employee Relationship with M.I.Y.: The appellate court did not commit grave abuse of discretion; petitioner failed to establish by substantial evidence an employer-employee relationship with M.I.Y. Applying the two-tiered test reiterated in Ditiangkin v. Lazada E-Services Philippines, Inc., the four-fold test required proof of selection and engagement, payment of wages, power to dismiss, and power to control. Petitioner’s clearances from “Asian Group of Companies” did not show that M.I.Y. hired her. The petty cash vouchers were signed only by petitioner, the portion for “approved for payment” was unsigned, and they were standard over-the-counter forms that could easily be fabricated. The ATM card presented was unauthenticated and did not identify M.I.Y. as the payor. The Notice of Termination remained unsigned by any M.I.Y. representative, and no connection between the named alleged supervisor and M.I.Y. was established. Crucially, no evidence showed M.I.Y. controlled the means and methods by which petitioner performed her tasks; the power to control—the most significant factor—was absent. Because the control test was sufficient to negate an employment relationship, resort to the economic dependence test was unnecessary. Thus, the labor tribunals’ uniform conclusion that no employer-employee relationship existed was supported by substantial evidence and binding on the Court.

• Classification as Domestic Worker: Petitioner was correctly classified as a domestic worker of Yu. Republic Act No. 10361 defines “domestic work” as work performed in or for a household, and a “domestic worker” as any person engaged in domestic work within an employment relationship, such as general house help. Undisputed evidence showed petitioner was originally hired as a house helper at Yu’s Pasig residence and later transferred to Yu’s Makati penthouse. That the penthouse was located in the same building where M.I.Y. held its office did not transform petitioner into an employee of the corporation. Her tasks were household work solely for Yu’s benefit. The cases of Apex Mining and Remington were inapplicable because petitioner did not work in staff houses maintained for the business operations of M.I.Y.; she worked in Yu’s private residence. As a domestic worker, petitioner fell under the express exclusion in Article 82 of the Labor Code and was not entitled to overtime pay, holiday pay, premium pay, service incentive leave, or backwages. Consequently, no illegal dismissal attributable to M.I.Y. existed.

• Four-Fold Test for Employer-Employee Relationship — The existence of an employer-employee relationship is determined by the concurrence of four factors: (1) the employer’s selection and engagement of the employee; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employee’s conduct. Among these, the power to control is the most significant element. Under this test, it is sufficient that the employer possesses the right to wield the power of control, even without its actual exercise. In this case, petitioner failed to establish any of the elements, particularly the power to control, thus no employment relationship with M.I.Y. arose.

• Two-Tiered Test (Four-Fold Test and Economic Dependence Test) — The Court applies the economic dependence test only when the control test is insufficient to determine the true nature of the relationship. Because the absence of control was clear here, the economic dependence test was not applied.

• Domestic Worker under Republic Act No. 10361 — “Domestic work” is work performed in or for a household, and a “domestic worker” or “kasambahay” is any person engaged in such work within an employment relationship, including general house help. A person who performs household work in a private residence, even if the residence is located within a commercial building, remains a domestic worker and is excluded from the coverage of labor standards under Book III, Title I of the Labor Code. The household character of the work, not the location, is determinative.

• Scope of Judicial Review in Labor Cases under Rule 45 — In a petition for review on certiorari from a Court of Appeals decision in a labor case, review is limited to determining whether the appellate court correctly found that the National Labor Relations Commission committed grave abuse of discretion. Factual findings of the NLRC, when supported by substantial evidence, are accorded great weight and finality.

• Grave Abuse of Discretion — Defined as a capricious and arbitrary exercise of judgment equivalent to lack of jurisdiction, including any action contrary to the Constitution, law, or jurisprudence. In labor cases, NLRC decisions may be imputed with grave abuse of discretion when unsupported by substantial evidence, when necessary to prevent substantial wrong or to do substantial justice, when the NLRC findings contradict those of the Labor Arbiter, or when necessary to arrive at a just decision.

• “The power to control is the most significant among the four factors. Under this 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 to be used in reaching that end.” — This passage encapsulates the control test as the determinative factor in the four-fold test.

• “It is sufficient that the employer ‘has a right to wield the power [of control]’ even without actually exercising such power.” — Clarifies that latent control suffices to establish the relationship.

• “What is undisputed under the records is that [Gaspar] was hired by [Yu] as house helper and was assigned initially at the latter’s residence in Pasig. Later she was transferred to [Yu’s Makati City residence] located in the same building where [M.I.Y.] holds office. These pieces of factual evidence strengthen the allegation that [Gaspar] is not an employee of [M.I.Y.].” — The CA’s reasoning, adopted by the Court, showing how the undisputed household engagement negated corporate employment.

• “Since the employer-employee relationship was not proven, there is no illegal dismissal to speak of. Therefore, [Gaspar] is not entitled to separation pay, backwages, and damages.” — The dispositive legal consequence of the absence of an employment tie with the corporate respondent.

• Ditiangkin v. Lazada E-Services Philippines, Inc., G.R. No. 246892, 21 September 2022 — Reiterated by the Court as controlling authority on the two-tiered test (four-fold test and economic dependence test) for determining an employer-employee relationship, and on the instances when the NLRC may be deemed to have committed grave abuse of discretion. The Court applied the four-fold test and concluded that the control test sufficed.

• Apex Mining Company, Inc. v. National Labor Relations Commission, 273 Phil. 477 (1991) and Remington Industrial Sales Corporation v. Castaneda, 537 Phil. 549 (2006) — Invoked by petitioner but distinguished. Those cases involved house helpers in staff houses of industrial companies, where the employer was the company itself. Here, petitioner worked in Yu’s private household, not in staff houses maintained by M.I.Y. for its operations.

• St. Martin Funeral Home v. National Labor Relations Commission, 356 Phil. 811 (1998) — Cited for the proposition that NLRC decisions may be reviewed by the Court of Appeals via a Rule 65 petition on grounds of grave abuse of discretion.

• Article 82, Labor Code of the Philippines — Expressly excludes “domestic helpers” and “persons in the personal service of another” from the coverage of Book III, Title I on working conditions. Because petitioner was a domestic worker, she was not entitled to overtime pay, holiday pay, premium pay, or service incentive leave under the Labor Code.

• Republic Act No. 10361 (Batas Kasambahay), Section 4(c) and (d) — Defines “domestic work” as work performed in or for a household, and “domestic worker” or “kasambahay” as any person engaged in domestic work within an employment relationship, including general house help. The Court applied these definitions to conclude that petitioner’s work for Yu fell squarely within the statutory concept of domestic work.

Chief Justice Gesmundo (Chairperson) and Justices Zalameda, Rosario, and Marquez concurred.