Labor Law: Elements of Employer-Employee Relationship


What are the elements of employer-employee relationship?

The Supreme Court has repeatedly enunciated in its cases, such as in Lirio vs. Genova (G.R. No. 169757, November 23, 2011) the elements of employer-employee relationship, to wit:

Before a case for illegal dismissal can prosper, it must first be established that an employer-employee relationship existed between petitioner and respondent.

The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. The most important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.

It is settled that no particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted.

The determination of the existence of employer-employee relationship is very important, as it also affects the issue on jurisdiction on the part of Labor Arbiter, and the claims that the parties are praying for.


Case Brief: San Miguel Corporation and Andres vs. Secretary of Labor, NLRC, and Yanglay

G.R. No. L-39195   May 16, 1975





Yanglay, a thirty-year old married man residing at Cavite City, after leaving the plant at three o’clock in the afternoon of April 22, 1972, was apprehended by Patrolman E. Reyes of the Manila Police Department outside the company compound. Yanglay was carrying a bagful of drugs.  He admitted that he was caught in possession of the said drugs which he had bought from his coworkers and which had been given to them free of charge so as to keep them in the “pink of health”.

At the investigation on June 27, Yanglay denied that he was trafficking illegally in drugs of the company. He said that he bought the drugs from his coworkers in the same way that some workers bought the rice rations of their coworkers.

On the basis of that investigation, Yanglay was dismissed on July 19, 1972.  At the meeting of the union and management panels on September 22, 1972 to thresh out Yanglay’s grievance, the union representative contended that there was no company rule against trafficking in drugs, which were no longer owned by the company after having been issued to its workers, and that the sale of the drugs was like the sale of rice rations which sale was allegedly tolerated by the company officials. The union conceded that suspension should be the proper disciplinary action but not dismissal. Yanglay had been in the service of the company for nine years.

The management panel countered that it is evident that Yanglay’s dismissal was not due to union activities; that the sale of the drugs was a subversion of the company’s efforts to give medical benefits to its workers and that trafficking in rice rations cannot be cited as a justification because the value of the rice is reflected in the workers’ income tax returns.

On December 4, 1972 Yanglay filed a complaint with the NLRC alleging that there was no evidence to justify his dismissal, that the truth was that he owned the medicines in question and that he was dismissed because of his union activities as a “militant shop steward of the Ilaw at Buklod ng Manggagawa”, the union representing the workers of the corporation (NLRC Case No. MC-180).

The case was scheduled for mediation on January 10, 1973. The record does not show what transpired on that date. On January 12, 1973 the corporation filed a memorandum wherein it contended (1) that Yanglay’s case was outside the NLRC’s jurisdiction which extends only to disputes and grievances occurring after September 21, 1972; (2) that Yanglay’s dismissal was justified and (3) that, if the dismissal was not justified, his remedy was to ask for separation pay under the Termination Pay Law.  Yanglay did not submit any memorandum. On February 21, 1973 the mediator submitted a report wherein he concluded that Yanglay “was dismissed on a shaky ground” because the employer had not shown any violation of any company rule or regulation and that the persons to be penalized should be those who sold or delivered the drugs to Yanglay.

As such, the mediator recommended Yanglay’s reinstatement with backwages, and the NLRC adopted the same.

The San Miguel Corporation moved for the reconsideration of the decision on the ground that it was premature because section 14 of the NLRC’s Rules and Regulations requires that the mediator’s factfinding report be passed upon by an arbitrator. The motion was treated as an appeal by the Secretary of Labor. As already stated, he denied it in his resolution dated July 9, 1974. Thereafter, the company, instituted this certiorari proceeding.

Yanglay raised a jurisdictional question which was not brought up by respondent public officials. He contends that this Court has no jurisdiction to review the decisions of the NLRC and the Secretary of Labor “under the principle of separation of powers” and that judicial review is not provided for in Presidential Decree No. 21.


Whether or not the Court has a jurisdiction over the decision of the NLRC and the Secretary of labor under the “Principle of Separation of powers” and judicial review is not provided under Presidential Decree 21 (Creating a National Labor Relations Commission)


The Court has jurisdiction over the case.

It is generally understood that as to administrative agencies exercising quasi-judicial or legislative power there is an underlying power in the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute. The purpose of judicial review is to keep the administrative agency within its jurisdiction and protect substantial rights of parties affected by its decisions, It is part of the system of checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications.

Judicial review is proper in case of lack of jurisdiction, grave abuse of discretion, error of law, fraud or collusion.

The courts may declare an action or resolution of an administrative authority to be illegal (1) because it violates or fails to comply with some mandatory provision of the law or (2) because it is corrupt, arbitrary or capricious.


Whether or not Yanglay’s dismissal is proper.


No.  Yanglay’s dismissal is not proper.

That was the first time he was caught trafficking in company-supplied drugs. He confessed that necessity forced him to buy the drugs. He promised not to do it again. His impression was that, like the rice rations whose sale was tolerated by the company officials, he could engage in the buy-and-sell of the drugs. He argued that his co-workers, who gave or sold to him the drugs, were equally culpable in sabotaging the company’s practice of rendering free medical assistance to its employees.

The misconduct of employees or workers in misrepresenting to the company that they needed medicines when in fact their purpose was to sell the same should not be tolerated. For such misrepresentations or deceptions, appropriate disciplinary action should be taken against them. On the other hand, in view of the high cost of living and the difficulties of supporting a family it is not surprising that members of the wage-earning class would do anything possible to augment their small income.

Taking into account the circumstances of the case, particularly Yanglay’s initial attitude of confessing that his error was dictated by necessity and his promise not to repeat the same mistake, we are of the opinion that his dismissal was a drastic punishment. He should be reinstated but without back wages because the company acted in good faith in dismissing him.  He has been sufficiently penalized by the loss of his wages from July 19, 1972 up to this time.

Labor Laws: Illegal Dismissal, Procedural Due Process, and Twin-Notice Rule


In the case of Erector Advertising Sign Group, Inc. and Amoroto vs. NLRC (G.R. No. 167218, July 2, 2010), the Supreme Court reiterated the basic requirements for the legality of an employee’s dismissal, to wit:

The validity of an employees dismissal from service hinges on the satisfaction of the two substantive requirements for a lawful termination. These are, first, whether the employee was accorded due process the basic components of which are the opportunity to be heard and to defend himself. This is the procedural aspect. And second, whether the dismissal is for any of the causes provided in the Labor Code of the Philippines. This constitutes the substantive aspect.

The first requisite (as to the procedural aspect) is further explained by the Supreme Court as follows:

With respect to due process requirement, the employer is bound to furnish the employee concerned with two (2) written notices before termination of employment can be legally effected. One is the notice apprising the employee of the particular acts or omissions for which his dismissal is sought and this may loosely be considered as the proper charge. The other is the notice informing the employee of the managements decision to sever his employment. This decision, however, must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge, thereby giving him ample opportunity to be heard and defend himself with the assistance of his representative should he so desire. The requirement of notice, it has been stressed, is not a mere technicality but a requirement of due process to which every employee is entitled.

In this case, the Supreme Court held Erector guilty of illegal dismissal. The court held that a letter sent to the employee, telling him that he will be suspended on several grounds, is not enough compliance with the twin-notice rule:

This, inasmuch as the order refers to a four (4) day absence supposedly incurred between May 12, 2000 and May 15, 2000 for which Cloma has actually been sanctioned with suspension. In this regard, it suffices to say that even assuming that the May 15, 2000 order could validly take the place of the first notice, still, Clomas dismissal cannot be validly effected, because an employee may be dismissed only if the grounds mentioned in the pre-dismissal notice were the ones cited for the termination of employment.

A digest of this case will be posted on this blog soon.


Case Brief: Indias vs Philippine Iron Mines

G.R. No. L-9987 April 29, 1957
GRACIANO INDIAS, petitioner,


Graciano Indias, petitioner, filed a complaint before the Court of Industrial Relations (CIR) alleging that respondent, Philippine Iron Mines, has engaged in unfair labor practice within the meaning of Section 4(a), paragraph 1,2,3,4, and 5 of RA 875. Respondent answered the complaint by alleging that petitioner was dismissed from the service for a cause.

Hearings were then conducted by the hearing examiner of CIR in which both parties appeared with their counsel. After the presentation of both sides, hearing examiner rendered his report stating that the charge filed by complainant relating to unfair labor practice, has not been substantiated by evidence and that petitioner’s dismissal was with sufficient cause.

CIR approved the hearing examiner’s report and recommendation which dismissed the complaint against respondent. Petitioner filed a motion for reconsideration but was then denied by the court. Hence, the petition for review.


1. Whether or not the order issued by the CIR, dismissing a case without stating the facts and the law which supports the decision, is valid.

2. Whether or not the petitioner’s allegation, that he was dismissed by respondent because of his involvement in union activities and not because of the alteration he had with another employee who was outside the workplace and beyond work hours, should be taken into consideration.


1. The Supreme Court found no merit in the first issue by complainant. Statement of facts or discussion of evidence is not necessary if the court is satisfied with the report of its examiner, which already contains a full discussion of the case and findings.

2. As regards to the dismissal of petitioner, the evidence is clear that respondent served the dismissal on the ground that petitioner committed grave misconduct due to his violent temper. His quarrel against a co-employee resulted to a court action by the latter, showing that petitioner possess a degree of violent character which was contrary to the company’s rules and regulations that laborers should possess good behavior as norm of conduct in order to avoid untoward incident in the company’s underground tunnels.

Also, the issue being contested is a question of fact in which the Supreme Court cannot consider because under Section 6 of Republic Act No. 875, the Supreme Court is limited only to the interpretation considering the question of law.

The order of CIR is affirmed. An employer cannot legally be compelled to continue with employment of a person who admittedly was guilty of misfeasance or malfeasance towards his employer and those continuance in the service of the latter is patently inimical to his interest.

Labor Laws: What are the limitations to Management Prerogative?


The concept of management prerogative is not absolute.  What are the limitations on the exercise of management prerogative?

1. It must be exercised in good faith.
2. It must not be tainted with unfair labor practice.
3. The exercise of management prerogative must be within the limitations set by law.
4. It must be within the limitations set by the Collective Bargaining Agreement.
5. The exercise must be consistent with the principles of fair play and justice.

RA8042 as amended by RA10022: Migrant Workers and Overseas Filipinos Act


Migrant Workers and Overseas Filipinos Act RA8042 as amended by RA 10022

(Click to download full text of the law)


I included both the provisions of RA8042 and RA10022 for comparison.  Nonetheless, the old provisions are shown in strikethrough format so as to distinguish it from the new ones.

Case Brief: Miller vs. Mardo and Gonzales

G.R. No. L-15138 July 31, 1961
BILL MILLER, petitioner-appellee,
ATANACIO A. MARDO, and MANUEL GONZALES, respondents-appellants.


This is a consolidation of cases, which originated from different CFIs posing question about the validity of Reorganization Plan No. 20-A by Government Survey and Reorganization Commission under RA997 as amended by RA 1241 in so far as it confers jurisdiction to RO of DOLE created in said Plan to decide claims of laborers for wages, overtime and separation pay, et al.

Manuel Gonzales filed before Regional Office (RO) of DOLE against his employer Bill Miller of Miller Motors, claiming that he was his dirver from 1956 to 1956, on which he was arbitrarily dismissed without separation pay. The Chief Hearing Office required Miller to file for an answer. Miller filed before CFI of Baguio a petition to prohibit CHO from proceeding with the case for he does not have jurisdiction to hear and decide the subject matter. CFI issued writ of preliminary injunction.


Whether the new conferment to DOLE of jurisdiction to take cognizance of cases affecting money claims not before exercised by it is valid under Constitution and applicable statutes as accorded under RO Plan 20-A.


No. RO Plan 20-A in so far it confers quasi-judicial function to RO of DOLE is invalid and without effect.

RA 997, which was later amended by RA 1241 created Government Survey and Reorganization Commission (GSRC). GSRC was empowered to: 1) abolish department offices which may not be necessary and 2. Create those which may be necessary for efficient conduct of the government service, activities and functions.

GSRC, an administrative body, was merely granted power to create functions in connection with reorganization and should not validly confer quasi-judicial power. GSRC argued that this defect was cured when Congress did not disapprove of the same under the provisions of Section 691 of RA997.

The Supreme Court held that procedure of enactment of law by legislative inaction is not countenanced in this jurisdiction. Under our Constitution, to pass a bill or law, there must be a requisite for and separate action by each House of Congress to pass a law. Mere non-disapproval will not suffice as source for conferment of quasi-judicial function.

Legislature may confer on administrative bodies quasi-judicial powers involving exercise of discretion and judgement as incident to performance of administrative functions. But in so doing must be stated in express terms that leave no doubt.