Anastacio Viaña vs. Alejo Al-lagadan and Filomena (2) It is not clear.

In determining the existence of employer-

employee relationship, the following elements are generally
Piga considered: (a) the selection and engagement of the
G.R. No. L-8967, May 31, 1956
employee; (b) the payment of wages; (c) the power of
dismissal; (d) the power to control the employee’s conduct –
FACTS: Anastacio Viaña owned the fishing sailboat “Magkapatid”
the latter being the most important. The first element,
which sunk on the night of September 3, 1948 between
considering the facts, are insufficient to warrant a
Bataan and Corregidor as a result of a collision with the US
reasonable conclusion, one way or the other, since the
vessel USS Tingles. Alejandro Al-lagadan disappeared with
practice commonly followed is on a share basis, that is, the
the sailboat and his parents, Alejo Al-lagadan and Filomena
hiring of the crew is done by the patron himself and not the
Piga, filed a claim for compensation under Act 3428. The
owner of the batel. When a patron enters into a contract
Workmen’s Compensation Commission (WCC) rendered a
with the ship owner, he already has a crew with him. This
decision ordering Viaña to pay Alejo and Filomena the sum
suggests that the members of the crew are chosen by the
of ₱1,500 in lump sum with 6% interest from Sept. 3, 1948
patron. But the report does not indicate if said practice was
until fully paid and the sum of ₱16 to the WCC as costs.
used in case at bar. On the other hand, petitioner contends
WCC Commissioner affirmed the aforesaid decision with an
that Alejandro was his partner, and that therefore, if the
additional fee of ₱5. Motion for Reconsideration by Viaña
crew was selected and engaged by the “patron”, the latter
was denied.
did so as agent of petitioner. If petitioner were a partner of
crew members, then neither the former nor the patron
ISSUE: (1) Does the case at bar fall within the purview of Act 3428 if
could control or dismiss the latter.
the annual income of a business is less than ₱10,000? (2) Is
Alejandro Al-lagadan an employee of petitioner?
Case is remanded to the WCC for further evidence and
findings on the following questions: (1) who selected the
RULING: (1) Yes, since petitioner only brought up the applicability of
crew of “Magkapatid”, (2) if selected and engaged by the
Act 3428 when it was brought to the Court for review. The
patron, did he do so in his own name and for his own
non-applicability of said Act to employers whose gross
account or on behalf and for the account of Viaña, (3)could
annual income is less than ₱20,000 cannot be availed of
Viaña have refused to accept any of the crew members
unless pleaded in the employer’s answer to the claim for
chosen and engaged by the patron, (4) did petitioner have
compensation filed by the employee or his heirs. Petitioner
authority to determine the time when, the place where
having thus failed to do so, said defense may not now be
and/or manner or conditions where the crew would work
entertained.
and (5) who could dismiss workers.
VERSION 2 Whether or not the mere fact that a person’s share in the understan
ding “could be reckoned in terms of money”, sufficed to characterize
FACTS: him as an employee of another.

The fishing sailboat “Magkapatid”,owned by Anastacio Viana, had a HELD:

collision with a U.S. Navy vessel and sunk to the waters. Alejandro Al
-Lagadan, a member of the crew of the former disappeared with the
No, the Court did not share with the Trial Referee and Commission’s
craft. Workmen’s Compensation Commission ordered Anastacio Via
view. However, petitioner’s theory to the effect that the deceased
na to pay the claimants, Alejo Al-Lagadan and Filomena Piga. Petion
was his partner, not an employee, simply because he (the deceased)
er said, however, that this case does not fall within the purview of A
shared in the profits, not in the losses cannot be accepted. In deter
ct No. 3428, because Alejandro Al-Lagadan was, at the time of his de
mining the existence of employer-employee relationship, the followi
ath, industrial partner, not his employee. He further contended that
ng elements are generally considered, namely:(1) the selection and
they were in a share basis— owner of the vessel, on one hand receiv
engagement of the employee; (2) the payment of wages; (3) the po
es one-half of the earnings of the sailboat, the other half is divided p
wer of dismissal;(4) the power to control the employees’ conduct —
ro rata among the members of the crew. The trial referee said, as we
although the latter is the most important element (35 Am. Jur. 445).
ll as the Workmen’s Compensation Commission that there was an e
Assuming that the share received by the deceased could partake of t
mployer-employee relation between the Respondent and the decea
he nature of wages and that the second element, therefore, exists in
sed, Alejandro Al-Lagadan, and the share which the deceased receiv
the case at bar, the record does not contain any specific data regardi
ed at the end of each trip was in the nature of ‘wages’ which is defin
ng the third and fourth elements.
ed under section 39 of the Compensation Act. This is so because suc
h share could be reckoned in terms of money. In other words, there
existed the relation of employer and employee between the Respon Furthermore, the report contained that the patron selects and enga
dent and Alejandro Al-Lagadan at the time of the latter’s death. ges the crew, and also, that the members thereof are subject to his c
ontrol and may be dismissed by him. To put it differently, the literal i
mport of said report is open to the conclusion that the crew has a co
ntractual relation, not with the owner of the vessel, but with the pat
ron, and that the latter, not the former, is either their employer or th
ISSUE: eir partner.
The case was remanded to the Workmen’s Compensation Commissi The Regional Director sustained petitioners' claim on the existence
on, for further proceedings in conformity with the decision of the Su of an employer-employee relationship using the determinants set
preme Court. forth by the Labor Code, specifically, the elements of control and
supervision, power of dismissal, payment of wages, and the
selection and... engagement of employees. He added that since the
METEORO V. CREATIVE CREATURES, INC. petitioners had worked for more than one year doing the same
routine work, they were regular employees with respect to the
Facts: activity in which they were employed.

Respondent is a domestic corporation engaged in the business of respondent elevated the matter to the Court of Appeal... s... the
producing, providing, or procuring the production of set designs and instant petition is GRANTED. For lack of jurisdiction... the Orders...
set construction services issued by respondent Secretary are hereby declared NULL and VOID.

On the other hand, petitioners were hired by respondent on various Issues:

dates as artists, carpenters and welders. Whether or not the Court of Appeals committed an error when it
petitioners filed their respective complaints for non-payment of ruled that the instant case falls within the exception clause of Article
night shift differential pay, overtime pay, holiday pay, 13th month 128 (b) of the Labor Code... whether or not petitioners were
pay, premium pay for Sundays and/or rest days, service incentive independent contractors/project employees/free lance workers
leave pay, paternity... leave pay, educational assistance, rice Ruling:
benefits, and illegal and/or unauthorized deductions from salaries
against respondent, before the Department of Labor and We sustain the appellate court's conclusion that the instant case
Employment falls within the exclusive jurisdiction of the NLRC.

In its position paper, respondent argued that the DOLE-NCR had no The DOLE Secretary and her authorized representatives, such as the
jurisdiction over the complaint of the petitioners because of the DOLE-NCR Regional Director, have jurisdiction to enforce compliance
absence of an employer-employee relationship. It added that with labor standards laws under the broad visitorial and
petitioners were free-lance individuals, performing special services enforcement powers conferred by Article 128 of the Labor Code
with skills and... expertise The last sentence of Article 128 (b) of the Labor Code, otherwise
DOLE Regional Director Maximo Baguyot Lim issued an Order... known as the "exception clause," provides an instance when the
directing respondent to pay petitioners Regional Director or his... representatives may be divested of
jurisdiction over a labor standards case.
Under prevailing jurisprudence, the so-called "exception clause" has NO DIGEST SORRY
the following elements, all of which must concur:
(a) that the employer contests the findings of the labor regulations
officer and raises issues thereon; SEVILLA VS. CA
(b) that in order to resolve such issues, there is a need to examine FACTS:
evidentiary matters; and A contract by and between Noguera and Tourist World
Service (TWS), represented by Canilao, wherein TWS leased the
(c) that such matters are not verifiable in the normal course of
premises belonging to Noguera as branch office of TWS. When the
inspection.
branch office was opened, it was run by appellant Sevilla payable to
In the present case, the CA aptly applied the "exception clause." TWS by any airline for any fare brought in on the efforts of Mrs.
Sevilla, 4% was to go to Sevilla and 3% was to be withheld by the
To resolve the issue raised by respondent, that is, the existence of an TWS.
employer-employee relationship, there is need to examine Later, TWS was informed that Sevilla was connected with
evidentiary matters. rival firm, and since the branch office was losing, TWS considered
Some businessmen, however, try to avoid an employer-employee closing down its office.
relationship from arising in their enterprises, because that juridical On January 3, 1962, the contract with appellee for the use
relation spawns obligations connected with workmen's of the branch office premises was terminated and while the
compensation, social security, medicare, termination pay, and effectivity thereof was January 31, 1962, the appellees no longer
unionism. used it. Because of this, Canilao, the secretary of TWS, went over to
the branch office, and finding the premises locked, he padlocked the
The most important index of an... employer-employee relationship is premises. When neither appellant Sevilla nor any of his employees
the so-called "control test," that is, whether the employer controls could enter, a complaint was filed by the appellants against the
or has reserved the right to control the employee, not only as to the appellees.
result of the work to be done, but also as to the means and methods TWS insisted that Sevilla was a mere employee, being the
by which the same is to be... accomplished. “branch manager” of its branch office and that she had no say on
the lease executed with the private respondent, Noguera.
the petition is DENIED for lack of merit.
ISSUE: W/N ER-EE relationship exists between Sevilla and TWS
SSS VS. CA (Dec. 14, 2000)
HELD:
 The records show that petitioner, Sevilla, was not subject to FACTS: De Vera and petitioner company entered into a contract
control by the private respondent TWS. In the first place, under the where respondent was to attend to the medical needs of
contract of lease, she had bound herself in solidum as and for rental petitioner’s employees while being paid a retainer fee of P4,000 per
payments, an arrangement that would belie claims of a master- month. Later, De Vera was informed y petitioner that the
servant relationship. That does not make her an employee of TWS, retainership will be discontinued. Respondent filed a case for illegal
since a true employee cannot be made to part with his own money dismissal.
in pursuance of his employer’s business, or otherwise, assume any
liability thereof. ISSUE: Whether or not de Vera is an employee of PhilComm or an
In the second place, when the branch office was opened, independent contractor.
the same was run by the appellant Sevilla payable to TWS by any
airline for any fare brought in on the effort of Sevilla. Thus, it cannot HELD: Applying the four fold test, de Vera is not an employee. There
be said that Sevilla was under the control of TWS. Sevilla in pursuing are several indicators apart from the fact that the power to
the business, relied on her own capabilities. terminate the arrangement lay on both parties:
It is further admitted that Sevilla was not in the company’s  from the time he started to work with petitioner, he never
payroll. For her efforts, she retained 4% in commissions from airline was included in its payroll; was never deducted any contribution for
bookings, the remaining 3% going to TWS. Unlike an employee, who remittance to the Social Security System (SSS);
earns a fixed salary, she earned compensation in fluctuating amount  he was subjected by petitioner to the ten (10%) percent
depending on her booking successes. withholding tax for his professional fee, in accordance with the
The fact that Sevilla had been designated “branch manager” National Internal Revenue Code, matters which are simply
does not make her a TWS employee. It appears that Sevilla is a bona inconsistent with an employer-employee relationship;
fide travel agent herself, and she acquired an interest in the business
 the records are replete with evidence showing that
entrusted to her. She also had assumed personal obligation for the
respondent had to bill petitioner for his monthly professional fees. It
operation thereof, holding herself solidary liable for the payment of
simply runs against the grain of common experience to imagine that
rentals.
an ordinary employee has yet to bill his employer to receive his
Wherefore, TWS and Canilao are jointly and severally liable
salary.
to indemnify the petitioner, Sevilla.
Finally, the element of control s absent. Petition granted.

JARDIN V. NLRC
PHIL. GLOBAL COMMUNICATIONS, INC. VS. DE VERA
FACTS: 2. WON the petitioners were illegally dismissed?
RULING:
Petitioners were drivers of private respondent, Philjama
International Inc., a domestic corporation engaged in the operation 1. Yes. On the issue of whether or not employer-employee
of "Goodman Taxi." Petitioners used to drive private respondent’s relationship exists, admitted is the fact that complainants are taxi
taxicabs every other day on a 24-hour work schedule under the drivers purely on the ‘boundary system’. Under this system the
boundary system. Under this arrangement, the petitioners earned driver takes out his unit and pays the owner/operator a fee
an average of P400.00 daily. Nevertheless, private respondent commonly called ‘boundary’ for the use of the unit. Petitioners are
admittedly regularly deducts from petitioners’ daily earnings the undoubtedly employees of private respondent because as taxi
amount of P30.00 supposedly for the washing of the taxi units. drivers they perform activities which are usually necessary or
Believing that the deduction is illegal, petitioners decided to form a desirable in the usual business or trade of their employer. The fact
labor union to protect their rights and interests. that the drivers do not receive fixed wages is not sufficient to
withdraw the relationship from that of employer and employee.
Upon learning about the plan of petitioners, private respondent
refused to let petitioners drive their taxicabs when they reported for 2. Yes. The termination of employment must be effectuated in
work on August 6, 1991, and on succeeding days. Petitioners accordance with law. The just and authorized causes for termination
suspected that they were singled out because they were the leaders of employment are enumerated under Articles 282, 283 and 284 of
and active members of the proposed union. Aggrieved, petitioners the Labor Code. The requirement of notice and hearing is set-out in
filed with the labor arbiter a complaint against private respondent Article 277 (b) of the said Code. Hence, petitioners, being employees
for unfair labor practice, illegal dismissal and illegal deduction of of private respondent, can be dismissed only for just and authorized
washing fees. The labor arbiter dismissed said complaint for lack of cause, and after affording them notice and hearing prior to
merit. On appeal, the NLRC reversed the decision of the labor termination. In the instant case, private respondent had no valid
arbiter. Private Respondent then filed a motion for reconsideration cause to terminate the employment of petitioners. Neither were
but was denied. Private Respondent filed another motion for there two (2) written notices sent by private respondent informing
reconsideration which eventually was granted dismissing the each of the petitioners that they had been dismissed from work.
complaint of the petitioners for lack of jurisdiction on the ground These lack of valid cause and failure on the part of private
that there was no employer-employee relationship. Petitioners respondent to comply with the twin-notice requirement
sought reconsideration of the labor tribunal’s latest decision which underscored the illegality surrounding petitioners’ dismissal.
was denied.
Under the law, an employee who is unjustly dismissed from work
ISSUE: shall be entitled to reinstatement without loss of seniority rights and
1. WON an employee-employer relationship exists?
other privileges and to his full backwages, inclusive of allowances, The respondents, for their part, denied the existence of an
and to his other benefits or their monetary equivalent computed employer-employee relationship between the respondent company
from the time his compensation was withheld from him up to the and the petitioner. They averred that the petitioner was an
time of his actual reinstatement. independent contractor as evidenced by the contract of service
which he and the respondent... company entered into.
With regard to the amount deducted for washing of the taxi units,
he Labor Arbiter rendered the Decision... finding the respondents
such was not illegal as such is indeed a practice in the taxi industry
guilty of illegal dismissal. The Labor Arbiter declared that the
and is dictated by fair play.
petitioner was a regular employee of the respondent company as he
was... performing a service that was necessary and desirable to the
latter's business.
CHAVEZ V NLRC
The contract of service invoked by the respondents was declared
The respondent company, Supreme Packaging, Inc. null and void as it constituted a circumvention of the constitutional
provision affording full protection to labor and security of tenure.
engaged the services of the petitioner, Pedro Chavez, as truck
driver... the petitioner expressed to respondent Alvin Lee, the appeal was dismissed by the NLRC in its Decision... as it affirmed
respondent company's plant manager, his (the petitioner's) desire to in toto the decision of the Labor Arbiter.
avail himself of the benefits that the regular employees were
The respondents sought reconsideration
receiving such as overtime pay, nightshift differential pay, and 13th
month pay,... among others. Although he promised to extend these Acting thereon, the NLRC rendered another Decision... reversing its
benefits to the petitioner, respondent Lee failed to actually do so. earlier decision and, this time, holding that no employer-employee
relationship... existed between the respondent company and the
the petitioner filed a complaint for regularization
petitioner. In reconsidering its earlier decision, the NLRC stated that
Before the case could be heard, respondent company terminated the respondents did not exercise control over the means and
the services of the petitioner. methods by which the petitioner accomplished his delivery services.

the petitioner filed an amended complaint against the respondents The appellate court rendered the Decision... reversing the
for illegal dismissal, unfair labor practice and non-payment of
Decision of the NLRC and reinstating the decision of the Labor
overtime pay, nightshift differential pay, 13th month pay, among
Arbiter... the CA ruled that the petitioner was a regular employee of
others.
the respondent company because as... its truck driver, he performed
a service that was indispensable to the latter's business.
However, on motion for reconsideration by the respondents, the CA Wages are defined as "remuneration or earnings, however
made a complete turn around as it rendered the assailed designated, capable of being expressed in terms of money, whether
Resolution... upholding the contract of service between the fixed or ascertained on a time, task, piece or commission basis, or
petitioner and the respondent company. other method of calculating the same, which is payable by an
employer to an... employee under a written or unwritten contract of
The CA cited the following circumstances: (1) the respondents had
employment for work done or to be done, or for service rendered or
no say on how the goods were to be delivered... to the customers; to be rendered."
(2) the petitioner had the right to employ workers who would be
under his direct control; and (3) the petitioner had no working time. That the petitioner was paid on a per trip basis is not significant.
Issues: Third. The respondents' power to dismiss the petitioner was
inherent in the fact that they engaged the services of the petitioner
whether there existed an employer-employee relationship between as truck driver.
the respondent company and the petitioner
Fourth. As earlier opined, of the four elements of the employer-
Ruling: employee relationship, the "control test" is the most important.
We rule in the affirmative. Compared to an employee, an independent contractor is one who
carries on a distinct and independent business and undertakes to
The elements to determine the existence of an employment perform the job, work,... or service on its own account and under its
relationship are: (1) the selection and engagement of the employee; own responsibility according to its own manner and method, free
(2) the payment of wages; (3) the power of dismissal; and (4) the from the control and direction of the principal in all matters
employer's power to control the employee's conduct. connected with the performance of the work except as to the
The most... important element is the employer's control of the results thereof.
employee's conduct, not only as to the result of the work to be It bears stressing that the existence of an... employer-employee
done, but also as to the means and methods to accomplish it. relationship cannot be negated by expressly repudiating it in a
All the four elements are present in this case. contract and providing therein that the employee is an independent
contractor when, as in this case, the facts clearly show otherwise.
First. Undeniably, it was the respondents who engaged the services Indeed, the employment status of a person is defined and...
of the petitioner prescribed by law and not by what the parties say it should be.
Second. As a rule, the employer bears the burden to prove that the dismissal
was for a valid and just cause.
 In this case, the respondents failed to prove any such cause for the Ruling
petitioner's dismissal.
Lagrama is an employee not an independent contractor
Thus, the lack of a valid and just cause in terminating the services of Applying Four Fold Test
the petitioner renders his dismissal illegal. Under Article 279 of the
Labor Code, an employee who is unjustly dismissed is entitled to A. Power of Control - Evidence shows that the Lagrama performed
reinstatement, without loss of seniority rights and other privileges,... his work as painter and under the supervision and control of Tan.
and to the payment of full backwages, inclusive of allowances, and 1. Lagrama worked in a designated work area
other benefits or their monetary equivalent, computed from the inside the theater of Tan for the use of which petitioner prescribed
time his compensation was withheld from him up to the time of his rules, which rules included the observance of cleanliness and
actual reinstatement. hygeine and prohibition against urinating in the work area and any
the instant petition is GRANTED other place other than rest rooms and
2. Tan's control over Lagrama's work extended
not only the use of work area but also the result of Lagrama;s work
TAN V. LAGRAMA and the manner and means by which the work was to be
accomplished
3. Lagrama is not an independent contractor
Facts because he did not enjoy independence and freedom from the
 Lagrama works for Tan as painter of billboards and murals control and supervision of Tan and he was subjected to Tan's control
for the motion pictures shown at the theaters managed by Tan for over the means and methods by which his work is to be performed
more than 10years and accomplished
 Lagrama was dismissed for having urinated in his working B. Payment of Wages
area 1. Lagrama worked for Tan on a fixed piece work basis is of no
 Lagrama filed a complaint for illegal dismissal and non moment. Payment by result is a method of compensation and does
payment of benefits not define the essence of the relation.
 Tan asserted that Lagrama was an independent contractor 2. Tat Lagrama was not reported as an employee to the SSS is
as he was paid in piece-work basis not conclusive, on the question whether he was an employee,
otherwise Tan would be rewarded for his failure or even neglect to
perform his obligation.
Issue C. Power of Dismissal – by Tan stating that he had the right to fire
W/N Lagrama is an independent contractor or an employee of Tan? Lagrama, Tan in effect acknowledged Lagrama to be his employee
 D. Power of Selection and Engagement of Employees – Tan
engaged the services of Lagrama without the intervention of third To support their claim that they were regular (and not project)
party employees of private respondents, petitioners cited their
performance of activities that were necessary or desirable in the
MARAGUINOT V. NLRC usual trade or business of private respondents and added that
their work was continuous,... i.e., after one project was completed
Petitioner Alejandro Maraguinot, Jr. they were assigned to another project.

Paulino Enero... sought the assistance of their supervisor, Mrs. The OSG likewise rejects petitioners' contention that since they
Alejandria Cesario, to facilitate their request that private were hired not for one project, but for a series of projects, they
respondents adjust their salary in accordance with the minimum should be deemed regular employees.
wage law.
the OSG asserts that what matters is that there... was a time-frame
Mrs. Cesario informed petitioners that Mr. Vic... del Rosario would for each movie project made known to petitioners at the time of
agree to increase their salary only if they signed a blank their hiring.
employment contract. As petitioners refused to sign, private
respondents forced Enero to go on leave... then refused to take Issues:
him back when he reported for work
whether an employer-employee relationship existed between
Meanwhile,... Maraguinot was... dropped from the company petitioners and private respondents or any one of private
payroll... private respondents terminated his services... found... respondents... whether petitioners were illegally dismissed
the Labor Arbiter... that complainants were illegally dismissed.
Ruling:
The NLRC, in reversing the Labor Arbiter, then concluded that
these circumstances, taken together, indicated that complainant... The relationship between VIVA and its producers or associate
s... were "project employees."... petitioners filed the instant producers seems to be that of agency,... as the latter make movies
petition, claiming that the NLRC committed grave abuse of on behalf of VIVA, whose business is to "make" movies. As such,
discretion amounting to lack or excess of jurisdiction in: (1)... the employment relationship between petitioners and... producers
finding that petitioners were project employees; (2) ruling that is actually one between petitioners and VIVA, with the latter being
petitioners were not illegally dismissed; and (3) reversing the the direct employer.
decision of the Labor Arbiter.
The employer-employee relationship between petitioners and regular employee. All that we hold today is that once a project or
VIVA can further be established by the "control test." While four work pool employee has been: (1) continuously, as opposed to
elements are usually considered in determining the existence of an intermittently, re-hired by the same... employer for the same tasks
employment relationship, namely: (a) the selection and or nature of tasks; and (2) these tasks are vital, necessary and
engagement of the employee; (b)... the payment of wages; (c) the indispensable to the usual business or trade of the employer, then
power of dismissal; and (d) the employer's power to control the the employee must be deemed a regular employee, pursuant to
employee's conduct, the most important element is the Article 280 of the Labor Code and jurisprudence.
employer's control of the employee's conduct, not only as to the
result of the work to be done but also as to the means and In closing then, as petitioners had already gained the status of
methods... to accomplish the same regular employees, their dismissal was unwarranted... the instant
petition is GRANTED.
These four elements are present here. In their position paper
submitted to the Labor Arbiter, private respondents narrated the AIR MATERIAL WING SAVINGS AND LOAN
following circumstances:
ASSOCIATION, INC. VS. NLRC
In the instant case, the evidence on record shows that petitioner
FACTS:
Enero was employed for a total of two (2) years and engaged in at
Private respondent Luis S. Salas was appointed "notarial and
least eighteen (18) projects, while petitioner Maraguinot was
legal counsel" for petitioner Air Material Wings Savings and Loan
employed for some three (3) years and worked on at least twenty-
Association in 1980. The appointment was renewed for three years
three (23)... projects.
in an implementing order dated January 23, 1987. Subsequently, on
January 9, 1990, the petitioner issued another order reminding Salas
Moreover, as petitioners' tasks involved, among other chores, the
of the approaching termination of his legal services under their
loading, unloading and arranging of movie equipment in the
contract. This prompted Salas to lodge a complaint against
shooting area as instructed by the cameramen, returning the
AMWSLAI for separation pay, vacation and sick leave benefits, cost
equipment to the Viva Films' warehouse, and... assisting in the
of living allowances, refund of SSS premiums, moral and exemplary
"fixing" of the lighting system, it may not be gainsaid that these
damages, payment of notarial services rendered from February 1,
tasks were vital, necessary and indispensable to the usual business
1980 to March 2, 1990, and attorney's fees.
or trade of the employer.
Instead of filing an answer, AMWSLAI moved to dismiss for
lack of jurisdiction. It averred that there was no employer-employee
Lest it be misunderstood, this ruling does not mean that simply
relationship between it and Salas and that his monetary claims
because an... employee is a project or work pool employee even
properly fell within the jurisdiction of the regular courts. Salas
outside the construction industry, he is deemed, ipso jure, a
opposed the motion and presented documentary evidence to show regular meetings. The petitioner paid him a monthly
that he was indeed an employee of AMWSLAI. Nevertheless, most compensation/retainer's fee for his services. Though his
of Salas' claims were dismissed by the labor arbiter in his decision appointment was for a fixed term of three years, the petitioner
dated November 21, 1991. reserved its power of dismissal for cause or as it might deem
It was there held that Salas was not illegally dismissed and necessary for its interest and protection. No less importantly,
so not entitled to collect separation benefits. His claims for vacation AMWSLAI also exercised its power of control over Salas by defining
leave, sick leave, medical and dental allowances and refund of SSS his duties and functions as its legal counsel, to wit: (1) To act on all
premiums were rejected on the ground that he was a managerial legal matters pertinent to his Office; (2) To seek remedies to effect
employee. He was also denied moral and exemplary damages for collection of overdue accounts of members without prejudice to
lack of evidence of bad faith on the part of AMWSLAI. Neither was initiating court action to protect the interest of the association; and
he allowed to collect his notarial fees from 1980 up to 1986 because (3) To defend by all means all suit against the interest of the
the claim therefore had already prescribed. However, the petitioner Association.
was ordered to pay Salas his notarial fees from 1987 up to March 2, In the earlier case of Hydro Resources Contractors Corp. vs.
1990, and attorney's fee equivalent to 10% of the judgment award. Pagalilauan (G.R. No. L-62909, April 18, 1989), the Court observed
On appeal, the decision was affirmed in toto by the that: “A lawyer, like any other professional, may very well be an
respondent Commission, prompting the petitioner to seek relief in employee of a private corporation or even of the government. It is
the Supreme Court, hence, the case at bar. not unusual for a big corporation to hire a staff of lawyers as its in-
house counsel, pay them regular salaries, rank them in its table of
ISSUE: organization, and otherwise treat them like its other officers and
whether or not Salas can be considered an employee of the employees. At the same time, it may also contract with a law firm to
petitioner company act as outside counsel on a retainer basis. The two classes of lawyers
often work closely together but one group is made up of employees
RULING: while the other is not. A similar arrangement may exist as to
The Supreme Court had held in a long line of decisions that doctors, nurses, dentists, public relations practitioners and other
the elements of an employer-employee relationship are: (1) professionals.”
selection and engagement of the employee; (2) payment of wages; The Supreme Court holds, therefore, that the public
(3) power of dismissal; and (4) employer's own power to control respondent committed no grave abuse of discretion in ruling that an
employee's conduct. employer-employee relationship existed between the petitioner and
The terms and conditions set out in the letter-contract the private respondent.
entered into by the parties on January 23, 1987, clearly show that ACCORDINGLY, the appealed judgment of the NLRC is
Salas was an employee of the petitioner. His selection as the AFFIRMED, with the modification that the award of notarial fees and
company counsel was done by the board of directors in one of its attorney's fees is disallowed.
 private respondents filed several complaints against petitioners in
the National Labor Relations Commission's Office... in Baguio City
VALLUM SECURITY SERVICES VS. NLRC for illegal dismissal... and unfair labor practices; for violation of
labor standards relating to underpayment of wages, premium
Facts: holiday and restday pay, uniform allowances and meal allowances.

petitioner Baguio Leisure Corporation (Hyatt Terraces Baguio)... the Labor Arbiter rendered a decision dismissing the complaints.
and petitioner Vallum Security Services... entered into a contract He found Vallum to be an independent contractor and,
for security services under the terms of which Vallum agreed to consequently, declined to hold Hyatt Baguio liable for dismissal of
protect the properties and premises... of Hyatt Baguio by providing private respondents.
fifty (50) security guards, on a 24-hour basis, a day.
the NLRC promulgated a resolution reversing the Labor Arbiter's
Heinrich L. Maulbecker, Hyatt Baguio's General Manager, wrote to decision
Domingo A. Inocentes, President of Vallum advising that... the
contract of security service would be terminated. Issues:

Vallum informed Mr. Maulbecker... that it was agreeable to the whether or not private respondent security guards are indeed
termination of the contract. employees of petitioner Hyatt Baguio

private respondents, who were security guards provided by Vallum Ruling:

to Hyatt Baguio, were informed by Vallum's Personnel Officer that
the contract between the two (2) had already expired. We find no basis for overturning the conclusions reached by the
NLRC that Vallum, in the specific circumstances of this case, was
They were also told that failure to report at Sucat would be taken not an independent contractor but was, rather, a "labor-only"
to mean that they were no longer interested in being re-assigned contractor.
to same other client of Vallum.
In the case at bar, we noted that Vallum did not have a branch
None of the private respondents reported at Sucat for re-- office in Baguio City and that Hyatt Baguio provided Vallum with
assignment. offices at Hyatt's own premises and allowed Vallum to use its
Security Department in the processing of applications. That was
the reason too why
Vallum had stipulated that Hyatt Baguio was to distribute the
salaries of the security guards directly to them and that Hyatt had
used its own corporate forms and pay slips in doing so. The
security guards were clearly performing activities directly related
to the business... operations of Hyatt Baguio, since the undertaking
to safeguard the person and belongings of hotel guests is one of
the obligations of a hotel vis-a-vis its guests and the general public.

Where labor-only contracting exists in a given case, the law itself

implies or establishes an employer-employee relationship between
the employer (the owner of the project or establishment) (here,
Hyatt Baguio) and the employees of the labor-only contractor
(here, Vallum) to... prevent any violation or circumvention of
provisions of the Labor Code.

We conclude that petitioners have not shown any grave abuse of

discretion or any act without or any in excess of jurisdiction an the
part of the National Labor Relations Commission