In Philippine Labor Law, the four-fold test is used to determine the existence of an employer-employee relationship. The test asks who has the power to hire and fire, pay wages, dismiss, and control—if the answer points to one entity, then that entity is the employer.

What happens if a new hire does not push through because the head office abolished the position before the commencement date of said position? 

Pedro was offered the position of Swine Technical Manager – Pacific (STMP) by ABC Corp. He signed an offer-letter dated April 1. The letter indicated that his commencement date is July 1. On April 25, Pedro resigned from his employment with DEF Corp.

While this was happening, ABC’s head office implemented a global restructuring on May 15. As a result of the program, the position of STMP became redundant and was abolished. ABC communicated the unfortunate news to Pedro through a letter on June 10. ABC offered an amount equivalent to one-month salary as a gesture of good will. Aggrieved, Pedro filed a complaint before the Labor Arbiter.

Was there an employer-employee relationship between Pedro and ABC?

Yes, there was. An employment contract, like any other contract, is perfected at the moment the parties come to agree upon its terms and conditions. The four-fold test could also not be used as ABC does not deny that it offered an employment contract to Pedro, which Pedro accepted. The four-fold test is used when the issue turns on the existence of an employer-employee relationship and the employer denies the existence of such. Here, it would not be proper to check whether there was power to hire and fire, pay wages, dismiss, and control, when the factual circumstance readily shows an employment agreement was entered into which ABC unilaterally cancelled before the arrival of the definite suspensive period.

Was Pedro illegally dismissed?

Yes, he was. The affidavit submitted by ABC did not sufficiently demonstrate how the alleged restructuring program led to the abolition of specific positions. It did not specify how it affected particular positions or why these positions were identified for abolition.

Aragones v. Alltech, G.R. No. 251736, April 2, 2025, Per J. Caguioa. Third Division.