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
on, for further proceedings in conformity with the decision of the Su
preme Court.
METEORO V. CREATIVE CREATURES, INC.
Facts:
Respondent is a domestic corporation engaged in the business of
producing, providing, or procuring the production of set designs and
set construction services
On the other hand, petitioners were hired by respondent on various
dates as artists, carpenters and welders.
petitioners filed their respective complaints for non-payment of
night shift differential pay, overtime pay, holiday pay, 13th month
pay, premium pay for Sundays and/or rest days, service incentive
leave pay, paternity... leave pay, educational assistance, rice
benefits, and illegal and/or unauthorized deductions from salaries
against respondent, before the Department of Labor and
Employment
In its position paper, respondent argued that the DOLE-NCR had no
jurisdiction over the complaint of the petitioners because of the
absence of an employer-employee relationship. It added that
petitioners were free-lance individuals, performing special services
with skills and... expertise
DOLE Regional Director Maximo Baguyot Lim issued an Order...
directing respondent to pay petitioners
The Regional Director sustained petitioners' claim on the existence
of an employer-employee relationship using the determinants set
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
petitioners had worked for more than one year doing the same
routine work, they were regular employees with respect to the
activity in which they were employed.
respondent elevated the matter to the Court of Appeal... s... the
instant petition is GRANTED. For lack of jurisdiction... the Orders...
issued by respondent Secretary are hereby declared NULL and VOID.
Issues:
Whether or not the Court of Appeals committed an error when it
ruled that the instant case falls within the exception clause of Article
128 (b) of the Labor Code... whether or not petitioners were
independent contractors/project employees/free lance workers
Ruling:
We sustain the appellate court's conclusion that the instant case
falls within the exclusive jurisdiction of the NLRC.
The DOLE Secretary and her authorized representatives, such as the
DOLE-NCR Regional Director, have jurisdiction to enforce compliance
with labor standards laws under the broad visitorial and
enforcement powers conferred by Article 128 of the Labor Code
The last sentence of Article 128 (b) of the Labor Code, otherwise
known as the "exception clause," provides an instance when the
Regional Director or his... representatives may be divested of
jurisdiction over a labor standards case.
Under prevailing jurisprudence, the so-called "exception clause" has
the following elements, all of which must concur:
(a) that the employer contests the findings of the labor regulations
officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to examine
evidentiary matters; and
(c) that such matters are not verifiable in the normal course of
inspection.
In the present case, the CA aptly applied the "exception clause."
To resolve the issue raised by respondent, that is, the existence of an
employer-employee relationship, there is need to examine
evidentiary matters.
Some businessmen, however, try to avoid an employer-employee
relationship from arising in their enterprises, because that juridical
relation spawns obligations connected with workmen's
compensation, social security, medicare, termination pay, and
unionism.
The most important index of an... employer-employee relationship is
the so-called "control test," that is, whether the employer controls
or has reserved the right to control the employee, not only as to the
result of the work to be done, but also as to the means and methods
by which the same is to be... accomplished.
the petition is DENIED for lack of merit.
SSS VS. CA (Dec. 14, 2000)
NO DIGEST SORRY
SEVILLA VS. CA
FACTS:
A contract by and between Noguera and Tourist World
Service (TWS), represented by Canilao, wherein TWS leased the
premises belonging to Noguera as branch office of TWS. When the
branch office was opened, it was run by appellant Sevilla payable to
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
TWS.
Later, TWS was informed that Sevilla was connected with
rival firm, and since the branch office was losing, TWS considered
closing down its office.
On January 3, 1962, the contract with appellee for the use
of the branch office premises was terminated and while the
effectivity thereof was January 31, 1962, the appellees no longer
used it. Because of this, Canilao, the secretary of TWS, went over to
the branch office, and finding the premises locked, he padlocked the
premises. When neither appellant Sevilla nor any of his employees
could enter, a complaint was filed by the appellants against the
appellees.
TWS insisted that Sevilla was a mere employee, being the
“branch manager” of its branch office and that she had no say on
the lease executed with the private respondent, Noguera.
ISSUE: W/N ER-EE relationship exists between Sevilla and TWS
HELD:
 The records show that petitioner, Sevilla, was not subject to
control by the private respondent TWS. In the first place, under the
contract of lease, she had bound herself in solidum as and for rental
payments, an arrangement that would belie claims of a master-
servant relationship. That does not make her an employee of TWS,
since a true employee cannot be made to part with his own money
in pursuance of his employer’s business, or otherwise, assume any
liability thereof.
In the second place, when the branch office was opened,
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
be said that Sevilla was under the control of TWS. Sevilla in pursuing
the business, relied on her own capabilities.
It is further admitted that Sevilla was not in the company’s
payroll. For her efforts, she retained 4% in commissions from airline
bookings, the remaining 3% going to TWS. Unlike an employee, who
earns a fixed salary, she earned compensation in fluctuating amount
depending on her booking successes.
The fact that Sevilla had been designated “branch manager”
does not make her a TWS employee. It appears that Sevilla is a bona
fide travel agent herself, and she acquired an interest in the business
entrusted to her. She also had assumed personal obligation for the
operation thereof, holding herself solidary liable for the payment of
rentals.
Wherefore, TWS and Canilao are jointly and severally liable
to indemnify the petitioner, Sevilla.
PHIL. GLOBAL COMMUNICATIONS, INC. VS. DE VERA
FACTS: De Vera and petitioner company entered into a contract
where respondent was to attend to the medical needs of
petitioner’s employees while being paid a retainer fee of P4,000 per
month. Later, De Vera was informed y petitioner that the
retainership will be discontinued. Respondent filed a case for illegal
dismissal.
ISSUE: Whether or not de Vera is an employee of PhilComm or an
independent contractor.
HELD: Applying the four fold test, de Vera is not an employee. There
are several indicators apart from the fact that the power to
terminate the arrangement lay on both parties:
 from the time he started to work with petitioner, he never
was included in its payroll; was never deducted any contribution for
remittance to the Social Security System (SSS);
 he was subjected by petitioner to the ten (10%) percent
withholding tax for his professional fee, in accordance with the
National Internal Revenue Code, matters which are simply
inconsistent with an employer-employee relationship;
 the records are replete with evidence showing that
respondent had to bill petitioner for his monthly professional fees. It
simply runs against the grain of common experience to imagine that
an ordinary employee has yet to bill his employer to receive his
salary.
Finally, the element of control s absent. Petition granted.
JARDIN V. NLRC
FACTS:
Petitioners were drivers of private respondent, Philjama
International Inc., a domestic corporation engaged in the operation
of "Goodman Taxi." Petitioners used to drive private respondent’s
taxicabs every other day on a 24-hour work schedule under the
boundary system. Under this arrangement, the petitioners earned
an average of P400.00 daily. Nevertheless, private respondent
admittedly regularly deducts from petitioners’ daily earnings the
amount of P30.00 supposedly for the washing of the taxi units.
Believing that the deduction is illegal, petitioners decided to form a
labor union to protect their rights and interests.
Upon learning about the plan of petitioners, private respondent
refused to let petitioners drive their taxicabs when they reported for
work on August 6, 1991, and on succeeding days. Petitioners
suspected that they were singled out because they were the leaders
and active members of the proposed union. Aggrieved, petitioners
filed with the labor arbiter a complaint against private respondent
for unfair labor practice, illegal dismissal and illegal deduction of
washing fees. The labor arbiter dismissed said complaint for lack of
merit. On appeal, the NLRC reversed the decision of the labor
arbiter. Private Respondent then filed a motion for reconsideration
but was denied. Private Respondent filed another motion for
reconsideration which eventually was granted dismissing the
complaint of the petitioners for lack of jurisdiction on the ground
that there was no employer-employee relationship. Petitioners
sought reconsideration of the labor tribunal’s latest decision which
was denied.
ISSUE:
1. WON an employee-employer relationship exists?
2. WON the petitioners were illegally dismissed?
RULING:
1. Yes. On the issue of whether or not employer-employee
relationship exists, admitted is the fact that complainants are taxi
drivers purely on the ‘boundary system’. Under this system the
driver takes out his unit and pays the owner/operator a fee
commonly called ‘boundary’ for the use of the unit. Petitioners are
undoubtedly employees of private respondent because as taxi
drivers they perform activities which are usually necessary or
desirable in the usual business or trade of their employer. The fact
that the drivers do not receive fixed wages is not sufficient to
withdraw the relationship from that of employer and employee.
2. Yes. The termination of employment must be effectuated in
accordance with law. The just and authorized causes for termination
of employment are enumerated under Articles 282, 283 and 284 of
the Labor Code. The requirement of notice and hearing is set-out in
Article 277 (b) of the said Code. Hence, petitioners, being employees
of private respondent, can be dismissed only for just and authorized
cause, and after affording them notice and hearing prior to
termination. In the instant case, private respondent had no valid
cause to terminate the employment of petitioners. Neither were
there two (2) written notices sent by private respondent informing
each of the petitioners that they had been dismissed from work.
These lack of valid cause and failure on the part of private
respondent to comply with the twin-notice requirement
underscored the illegality surrounding petitioners’ dismissal.
Under the law, an employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the
time of his actual reinstatement.
With regard to the amount deducted for washing of the taxi units,
such was not illegal as such is indeed a practice in the taxi industry
and is dictated by fair play.
CHAVEZ V NLRC
The respondent company, Supreme Packaging, Inc.
engaged the services of the petitioner, Pedro Chavez, as truck
driver... the petitioner expressed to respondent Alvin Lee,
respondent company's plant manager, his (the petitioner's) desire to
avail himself of the benefits that the regular employees were
receiving such as overtime pay, nightshift differential pay, and 13th
month pay,... among others. Although he promised to extend these
benefits to the petitioner, respondent Lee failed to actually do so.
the petitioner filed a complaint for regularization
Before the case could be heard, respondent company terminated
the services of the petitioner.
the petitioner filed an amended complaint against the respondents
for illegal dismissal, unfair labor practice and non-payment of
overtime pay, nightshift differential pay, 13th month pay, among
others.
The respondents, for their part, denied the existence of an
employer-employee relationship between the respondent company
and the petitioner. They averred that the petitioner was an
independent contractor as evidenced by the contract of service
which he and the respondent... company entered into.
he Labor Arbiter rendered the Decision... finding the respondents
guilty of illegal dismissal. The Labor Arbiter declared that the
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.
The contract of service invoked by the respondents was declared
null and void as it constituted a circumvention of the constitutional
provision affording full protection to labor and security of tenure.
the appeal was dismissed by the NLRC in its Decision... as it affirmed
in toto the decision of the Labor Arbiter.
The respondents sought reconsideration
Acting thereon, the NLRC rendered another Decision... reversing its
earlier decision and, this time, holding that no employer-employee
relationship... existed between the respondent company and the
petitioner. In reconsidering its earlier decision, the NLRC stated that
the respondents did not exercise control over the means and
methods by which the petitioner accomplished his delivery services.
The appellate court rendered the Decision... reversing the
Decision of the NLRC and reinstating the decision of the Labor
Arbiter... the CA ruled that the petitioner was a regular employee of
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
made a complete turn around as it rendered the assailed
Resolution... upholding the contract of service between the
petitioner and the respondent company.
The CA cited the following circumstances: (1) the respondents had
no say on how the goods were to be delivered... to the customers;
(2) the petitioner had the right to employ workers who would be
under his direct control; and (3) the petitioner had no working time.
Issues:
whether there existed an employer-employee relationship between
the respondent company and the petitioner
Ruling:
We rule in the affirmative.
The elements to determine the existence of an employment
relationship are: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the
employer's power to control the employee's conduct.
The most... important element is the 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 methods to accomplish it.
All the four elements are present in this case.
First. Undeniably, it was the respondents who engaged the services
of the petitioner
Second.
Wages are defined as "remuneration or earnings, however
designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece or commission basis, or
other method of calculating the same, which is payable by an
employer to an... employee under a written or unwritten contract of
employment for work done or to be done, or for service rendered or
to be rendered."
That the petitioner was paid on a per trip basis is not significant.
Third. The respondents' power to dismiss the petitioner was
inherent in the fact that they engaged the services of the petitioner
as truck driver.
Fourth. As earlier opined, of the four elements of the employer-
employee relationship, the "control test" is the most important.
Compared to an employee, an independent contractor is one who
carries on a distinct and independent business and undertakes to
perform the job, work,... or service on its own account and under its
own responsibility according to its own manner and method, free
from the control and direction of the principal in all matters
connected with the performance of the work except as to the
results thereof.
It bears stressing that the existence of an... employer-employee
relationship cannot be negated by expressly repudiating it in a
contract and providing therein that the employee is an independent
contractor when, as in this case, the facts clearly show otherwise.
Indeed, the employment status of a person is defined and...
prescribed by law and not by what the parties say it should be.
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
petitioner's dismissal.
Thus, the lack of a valid and just cause in terminating the services of
the petitioner renders his dismissal illegal. Under Article 279 of the
Labor Code, an employee who is unjustly dismissed is entitled to
reinstatement, without loss of seniority rights and other privileges,...
and to the payment of full backwages, inclusive of allowances, and
other benefits or their monetary equivalent, computed from the
time his compensation was withheld from him up to the time of his
actual reinstatement.
the instant petition is GRANTED
TAN V. LAGRAMA
Facts
 Lagrama works for Tan as painter of billboards and murals
for the motion pictures shown at the theaters managed by Tan for
more than 10years
 Lagrama was dismissed for having urinated in his working
area
 Lagrama filed a complaint for illegal dismissal and non
payment of benefits
 Tan asserted that Lagrama was an independent contractor
as he was paid in piece-work basis
Issue
W/N Lagrama is an independent contractor or an employee of Tan?
Ruling
Lagrama is an employee not an independent contractor
Applying Four Fold Test
A. Power of Control - Evidence shows that the Lagrama performed
his work as painter and under the supervision and control of Tan.
1. Lagrama worked in a designated work area
inside the theater of Tan for the use of which petitioner prescribed
rules, which rules included the observance of cleanliness and
hygeine and prohibition against urinating in the work area and any
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
and the manner and means by which the work was to be
accomplished
3. Lagrama is not an independent contractor
because he did not enjoy independence and freedom from the
control and supervision of Tan and he was subjected to Tan's control
over the means and methods by which his work is to be performed
and accomplished
B. Payment of Wages
1. Lagrama worked for Tan on a fixed piece work basis is of no
moment. Payment by result is a method of compensation and does
not define the essence of the relation.
2. Tat Lagrama was not reported as an employee to the SSS is
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.
C. Power of Dismissal – by Tan stating that he had the right to fire
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
party
MARAGUINOT V. NLRC
Petitioner Alejandro Maraguinot, Jr.
Paulino Enero... sought the assistance of their supervisor, Mrs.
Alejandria Cesario, to facilitate their request that private
respondents adjust their salary in accordance with the minimum
wage law.
Mrs. Cesario informed petitioners that Mr. Vic... del Rosario would
agree to increase their salary only if they signed a blank
employment contract. As petitioners refused to sign, private
respondents forced Enero to go on leave... then refused to take
him back when he reported for work
Meanwhile,... Maraguinot was... dropped from the company
payroll... private respondents terminated his services... found...
the Labor Arbiter... that complainants were illegally dismissed.
The NLRC, in reversing the Labor Arbiter, then concluded that
these circumstances, taken together, indicated that complainant...
s... were "project employees."... petitioners filed the instant
petition, claiming that the NLRC committed grave abuse of
discretion amounting to lack or excess of jurisdiction in: (1)...
finding that petitioners were project employees; (2) ruling that
petitioners were not illegally dismissed; and (3) reversing the
decision of the Labor Arbiter.
To support their claim that they were regular (and not project)
employees of private respondents, petitioners cited their
performance of activities that were necessary or desirable in the
usual trade or business of private respondents and added that
their work was continuous,... i.e., after one project was completed
they were assigned to another project.
The OSG likewise rejects petitioners' contention that since they
were hired not for one project, but for a series of projects, they
should be deemed regular employees.
the OSG asserts that what matters is that there... was a time-frame
for each movie project made known to petitioners at the time of
their hiring.
Issues:
whether an employer-employee relationship existed between
petitioners and private respondents or any one of private
respondents... whether petitioners were illegally dismissed
Ruling:
The relationship between VIVA and its producers or associate
producers seems to be that of agency,... as the latter make movies
on behalf of VIVA, whose business is to "make" movies. As such,
the employment relationship between petitioners and... producers
is actually one between petitioners and VIVA, with the latter being
the direct employer.
The employer-employee relationship between petitioners and
VIVA can further be established by the "control test." While four
elements are usually considered in determining the existence of an
employment relationship, namely: (a) the selection and
engagement of the employee; (b)... the payment of wages; (c) the
power of dismissal; and (d) the employer's power to control the
employee's conduct, the most important element is the
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
methods... to accomplish the same
These four elements are present here. In their position paper
submitted to the Labor Arbiter, private respondents narrated the
following circumstances:
In the instant case, the evidence on record shows that petitioner
Enero was employed for a total of two (2) years and engaged in at
least eighteen (18) projects, while petitioner Maraguinot was
employed for some three (3) years and worked on at least twenty-
three (23)... projects.
Moreover, as petitioners' tasks involved, among other chores, the
loading, unloading and arranging of movie equipment in the
shooting area as instructed by the cameramen, returning the
equipment to the Viva Films' warehouse, and... assisting in the
"fixing" of the lighting system, it may not be gainsaid that these
tasks were vital, necessary and indispensable to the usual business
or trade of the employer.
Lest it be misunderstood, this ruling does not mean that simply
because an... employee is a project or work pool employee even
outside the construction industry, he is deemed, ipso jure, a
regular employee. All that we hold today is that once a project or
work pool employee has been: (1) continuously, as opposed to
intermittently, re-hired by the same... employer for the same tasks
or nature of tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the employer, then
the employee must be deemed a regular employee, pursuant to
Article 280 of the Labor Code and jurisprudence.
In closing then, as petitioners had already gained the status of
regular employees, their dismissal was unwarranted... the instant
petition is GRANTED.
AIR MATERIAL WING SAVINGS AND LOAN
ASSOCIATION, INC. VS. NLRC
FACTS:
Private respondent Luis S. Salas was appointed "notarial and
legal counsel" for petitioner Air Material Wings Savings and Loan
Association in 1980. The appointment was renewed for three years
in an implementing order dated January 23, 1987. Subsequently, on
January 9, 1990, the petitioner issued another order reminding Salas
of the approaching termination of his legal services under their
contract. This prompted Salas to lodge a complaint against
AMWSLAI for separation pay, vacation and sick leave benefits, cost
of living allowances, refund of SSS premiums, moral and exemplary
damages, payment of notarial services rendered from February 1,
1980 to March 2, 1990, and attorney's fees.
Instead of filing an answer, AMWSLAI moved to dismiss for
lack of jurisdiction. It averred that there was no employer-employee
relationship between it and Salas and that his monetary claims
properly fell within the jurisdiction of the regular courts. Salas
opposed the motion and presented documentary evidence to show
that he was indeed an employee of AMWSLAI. Nevertheless, most
of Salas' claims were dismissed by the labor arbiter in his decision
dated November 21, 1991.
It was there held that Salas was not illegally dismissed and
so not entitled to collect separation benefits. His claims for vacation
leave, sick leave, medical and dental allowances and refund of SSS
premiums were rejected on the ground that he was a managerial
employee. He was also denied moral and exemplary damages for
lack of evidence of bad faith on the part of AMWSLAI. Neither was
he allowed to collect his notarial fees from 1980 up to 1986 because
the claim therefore had already prescribed. However, the petitioner
was ordered to pay Salas his notarial fees from 1987 up to March 2,
1990, and attorney's fee equivalent to 10% of the judgment award.
On appeal, the decision was affirmed in toto by the
respondent Commission, prompting the petitioner to seek relief in
the Supreme Court, hence, the case at bar.
ISSUE:
whether or not Salas can be considered an employee of the
petitioner company
RULING:
The Supreme Court had held in a long line of decisions that
the elements of an employer-employee relationship are: (1)
selection and engagement of the employee; (2) payment of wages;
(3) power of dismissal; and (4) employer's own power to control
employee's conduct.
The terms and conditions set out in the letter-contract
entered into by the parties on January 23, 1987, clearly show that
Salas was an employee of the petitioner. His selection as the
company counsel was done by the board of directors in one of its
regular meetings. The petitioner paid him a monthly
compensation/retainer's fee for his services. Though his
appointment was for a fixed term of three years, the petitioner
reserved its power of dismissal for cause or as it might deem
necessary for its interest and protection. No less importantly,
AMWSLAI also exercised its power of control over Salas by defining
his duties and functions as its legal counsel, to wit: (1) To act on all
legal matters pertinent to his Office; (2) To seek remedies to effect
collection of overdue accounts of members without prejudice to
initiating court action to protect the interest of the association; and
(3) To defend by all means all suit against the interest of the
Association.
In the earlier case of Hydro Resources Contractors Corp. vs.
Pagalilauan (G.R. No. L-62909, April 18, 1989), the Court observed
that: “A lawyer, like any other professional, may very well be an
employee of a private corporation or even of the government. It is
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
organization, and otherwise treat them like its other officers and
employees. At the same time, it may also contract with a law firm to
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
while the other is not. A similar arrangement may exist as to
doctors, nurses, dentists, public relations practitioners and other
professionals.”
The Supreme Court holds, therefore, that the public
respondent committed no grave abuse of discretion in ruling that an
employer-employee relationship existed between the petitioner and
the private respondent.
ACCORDINGLY, the appealed judgment of the NLRC is
AFFIRMED, with the modification that the award of notarial fees and
attorney's fees is disallowed.

VALLUM SECURITY SERVICES VS. NLRC
Facts:
petitioner Baguio Leisure Corporation (Hyatt Terraces Baguio)...
and petitioner Vallum Security Services... entered into a contract
for security services under the terms of which Vallum agreed to
protect the properties and premises... of Hyatt Baguio by providing
fifty (50) security guards, on a 24-hour basis, a day.
Heinrich L. Maulbecker, Hyatt Baguio's General Manager, wrote to
Domingo A. Inocentes, President of Vallum advising that... the
contract of security service would be terminated.
Vallum informed Mr. Maulbecker... that it was agreeable to the
termination of the contract.
private respondents, who were security guards provided by Vallum
to Hyatt Baguio, were informed by Vallum's Personnel Officer that
the contract between the two (2) had already expired.
They were also told that failure to report at Sucat would be taken
to mean that they were no longer interested in being re-assigned
to same other client of Vallum.
None of the private respondents reported at Sucat for re--
assignment.
private respondents filed several complaints against petitioners in
the National Labor Relations Commission's Office... in Baguio City
for illegal dismissal... and unfair labor practices; for violation of
labor standards relating to underpayment of wages, premium
holiday and restday pay, uniform allowances and meal allowances.
the Labor Arbiter rendered a decision dismissing the complaints.
He found Vallum to be an independent contractor and,
consequently, declined to hold Hyatt Baguio liable for dismissal of
private respondents.
the NLRC promulgated a resolution reversing the Labor Arbiter's
decision
Issues:
whether or not private respondent security guards are indeed
employees of petitioner Hyatt Baguio
Ruling:
We find no basis for overturning the conclusions reached by the
NLRC that Vallum, in the specific circumstances of this case, was
not an independent contractor but was, rather, a "labor-only"
contractor.
In the case at bar, we noted that Vallum did not have a branch
office in Baguio City and that Hyatt Baguio provided Vallum with
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