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PART I: SUGGESTED ANSWERS TO THE 2016 BAR EXAMINATION QUESTIONS IN

LABOR AND SOCIAL LEGISLATIONS

-I-
What are the requisites of a valid quitclaim? (5%)
SUGGESTED ANSWER:
Goodrich Manufacturing Corporation v. Ativo, G.R. No. 188002, February 1, 2010,
discussed the rule on the validity of quitclaims in this manner:
It is true that the law looks with disfavor on quitclaims and releases by employees who have
been inveigled or pressured into signing them by unscrupulous employers seeking to evade
their legal responsibilities and frustrate just claims of employees. (Sime Darby Pilipinas,
Inc. v. Arguilla, G.R. No. 143542, June 8, 2006, 490 SCRA 183, 200) In certain cases,
however, the Supreme Court has given effect to quitclaims executed by employees if the
employer is able to prove the following requisites, to wit: (1) the employee executes a deed
of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3)
the consideration of the quitclaim is credible and reasonable; and (4) the contract is not
contrary to law, public order, public policy, morals or good customs, or prejudicial to a third
person with a right recognized by law. (Id. at 201)
The pronouncement of the Supreme Court in Periquet v. National Labor Relations
Commission, G.R. No. 91298, June 22, 1990, 186 SCRA 724, on this matter cannot be
more explicit:
Not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement, it is binding on the parties
and may not later be disowned simply because of a change of mind. It is only where there
is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the
terms of settlement are unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as a valid and
binding undertaking. (Id. at 730-731)
NOTE: The foregoing answer can be found in page 189 of the book entitled Principles and
Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano. Questions involving
the same subejct matter were given during the 2010, 1999 and 1994 Bar Examinations
-II-
Gregorio was hired as an insurance underwriter by the Guaranteed Insurance Corporation
(Guaranteed). He does not receive any salary but solely relies on commissions earned for
everyinsurance policy approved by the company. He hires and pays his own secretary but
is provided free office space in the office of the company. He is, however, required to meet
a monthly quota of twenty (20) insurance policies, otherwise, he may be terminated. He
was made to agree to a Code of Conduct for underwriters and is supervised by a Unit
Manager.
[a] Is Gregorio an employee of Guaranteed? Explain. (2.5%)
SUGGESTED ANSWER:
Yes, as an insurance underwriter Gregorio is an employee of Guaranteed.
The four elements 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 employer’s
power to control the employee’s conduct. (Lakas sa Industriya ng Kapatirang Haligi ng
Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame v. Burlingame
Corporation, G.R. No. 162833, June 15, 2007, 524 SCRA 690, 695, citing Sy v. Court of
Appeals, 398 SCRA 301, 307-308 (2003); Pacific Consultants International Asia, Inc. v.
Schonfeld, G.R. No. 166920, February 19, 2007, 516 SCRA 209, 228)
The four elements are clear on the facts of the case. Gregorio was hired as an insurance
underwirter, he was paid his compensation on a commission basis, he can be terminated
for failure to achieve the quota and he is under the control of a Unit Manger.
COMMENT: Take note that the problem statedt thatGregorio was hired as an insurance
underwriter and not as its agent. An insurance underwriters are employed by insurance
companies to help price life insurance, health insurance, commercial liability insurance and
homeowners insurance, among others. Evaluating an insurer's risk prior to the policy period
and at renewal is a vital function of an underwriter.
(www.investopedia.com/terms/i/insurance-underwriter.asp visited last November 12,
2016). If he was hired as an insurance agent then the answer would be different. There
would be no employer-employee relationship. This is becasue according to jurisprudence
( see Insular Life Assurance Co., Ltd. v. NLRC (4th Division) G.R. No. 119930, March 12,
1998, 287 SCRA 476 and Great Pacific Life Assurance Corporation v. NLRC, G.R. Nos.
80750-51, July 23, 1990, 187 SCRA 694.) the guidelines indicative of labor law "control" do
not merely relate to the mutually desirable result intended by the contractual relationship;
they must have the nature of dictating the means and methods to be employed in attaining
the result. Tested by this norm, insurance company's instructions regarding the objectives
and sales targets, in connection with the training and engagement of other agents, are
among the directives that the principal may impose on the agent to achieve the assigned
tasks. They are targeted results that an insurance company wishes to attain through its
agents. Even an insurance company's codes of conduct, likewise, do not necessarily
intrude into the insurance agents' means and manner of conducting their sales. Codes of
conduct are norms or standards of behavior rather than employer directives into how
specific tasks are to be done. These codes, as well as insurance industry rules and
regulations, are not per se indicative of labor law control under our jurisprudence.
[b] Suppose Gregorio is appointed as Unit Manager and assigned to supervise several
underwriters. He holds office in the company premises, receives and overriding
commission on the commissions of his underwriters, as well as a monthly allowance from
the company, and is supervised by a branch manager. He is governed by the Code of
Conduct for Unit Managers. Is he an employee of Guaranteed? Explain. (2.5%)
SUGGESTED ANSWER:
Yes, as Unit Manger Gregorio is an employee of Guaranteed.
The four elements 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 employer’s
power to control the employee’s conduct. (Lakas sa Industriya ng Kapatirang Haligi ng
Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame v. Burlingame
Corporation, G.R. No. 162833, June 15, 2007, 524 SCRA 690, 695, citing Sy v. Court of
Appeals, 398 SCRA 301, 307-308 (2003); Pacific Consultants International Asia, Inc. v.
Schonfeld, G.R. No. 166920, February 19, 2007, 516 SCRA 209, 228)
The four elements are clear on the facts of the case. Gregorio was hired as a Unit Manger,
he was paid his compensation on a commission basis and he is under the control of a
branch manager.
NOTE: The foregoing answers in a and b can be found in page 332 of the book entitled
Principles and Cases Labor Standards and Social Legislation, First Edition 2015, by Atty.
Voltaire T. Duano. The topic on employer-employee relation has been time and again the
subject matter of bar questions, more specifically during the 2014, 2012, 2011, 2010, 2008,
2002, 1996 and 1991 Bar Examinations.
-III-
Inggo is a drama talent hired on a per drama "participation basis" by DJN Radio Company.
He worked from 8:00 a.m until 5:00p.m., six days a week. On a gross rate of P80.00 per
script, earning an average of P20,000.00 per month. Inggo filed a complaint before the
Department of Labor and Employment (DOLE) against DJN Radio for illegal deduction,
non-payment of service incentive leave, and 13th month pay, among others. On the basis
of the compalint, the DOLE conducted a plant level inspection.
The DOLE Regional Director issued an order rulling that Inggo is an employee of DJN
Radio, and that Inggo is entitled to his monetary claims in the total amount of P30,000.00.
DJN Radio elevated the case to the secretary of Labor who affirmed the order. The case
was brought to the Court of Appeals. The radio station contended that there is no employer-
employee relationship because it was the drama directors and producers who paid,
supervised, and disciplined him. Moreover, it argued that the case falls under the
jurisdiction of the NLRC and not the DOLE because Inggo's claim exceeded P5,000.00.
[a] May DOLE make a prima facie determination of the existence of an employer-employee
relationship in the exercise of its visitorial and enforcement powers? (2.5%)
SUGGESTED ANSWER:
Yes, the DOLE can make a prima facie determination of the existence of an employer-
employee relationship in the exercise of its visitorial and enforcement powers.
In People’s Broadcasting Service (Bombo Radyo Phils., Inc.) v. The Secretary of the
Department of Labor and Employment, the Regional Director, DOLE Region VII, and
Jandeleon Juezan, G.R. No. 179652, March 6, 2012, the question now arises, may the
DOLE make a determination of whether or not an employer-employee relationship exists,
and if so, to what extent?
The first portion of the question must be answered in the affirmative.
xxx.
No limitation in the law was placed upon the power of the DOLE to determine the existence
of an employer-employee relationship. No procedure was laid down where the DOLE would
only make a preliminary finding, that the power was primarily held by the NLRC. The law
did not say that the
xxx
The determination of the existence of an employer-employee relationship by the DOLE
must be respected. The expanded visitorial and enforcement power of the DOLE granted
by RA 7730 would be rendered nugatory if the alleged employer could, by the simple
expedient of disputing the employer-employee relationship, force the referral of the matter
to the NLRC. The Court issued the declaration that at least a prima facie showing of the
absence of an employer-employee relationship be made to oust the DOLE of jurisdiction.
But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that
will weigh it, to see if the same does successfully refute the existence of an employer-
employee relationship.
If the DOLE makes a finding that there is an existing employer-employee relationship, it
takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no
jurisdiction only if the employer-employee relationship has already been terminated, or it
appears, upon review, that no employer-employee relationship existed in the first place.
xxx
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully
empowered to make a determination as to the existence of an employer-employee
relationship in the exercise of its visitorial and enforcement power, subject to judicial review,
not review by the NLRC.
NOTE: The foregoing answers in a and b can be found in page 590 of the book entitled
Principles and Cases Labor Standards and Social Legislation, First Edition 2015, by Atty.
Voltaire T. Duano. This was the very first time that the said question was aksed in the bar
examination in so far as the power to determine the existence of er-ee relationship by the
DOLE in so far as the 1990 to 2015 Bar Examinations are concerned.
[b] if the DOLE finds that there is an employee-employer relationship, does the case fall
under the jurisdiction of the LaborArbiter considering that the claim of Inggo is more then
P5,000.00. Explain. (2.5%)
SUGGESTED ANSWER:
No, the case will not fall under the jurisdiction of the LaborArbiter even if the claim of Inggo
is more then P5,000.00.
In Balladares v. Peak Ventures Corporation, G.R. No. 161794, June 16, 2009, the Supreme
Court, in explaining the visitorial and enforcement powers of the DOLE Regional Director
to order and enforce compliance with labor standard laws even where the individual claim
exceeds P5,000.00, said:
It should be noted that petitioners’ complaint involved underpayment of wages and other
benefits. In order to verify the allegations in the complaint, DOLE conducted an inspection,
which yielded proof of violations of labor standards. By the nature of the complaint and from
the result of the inspection, the authority of the DOLE, under Article 128, came into play
regardless of the monetary value of the claims involved. The extent of this authority and
the powers flowing therefrom are defined and set forth in Article 128 of the Labor Code, as
amended by R.A. No. 7730, (Cirineo Bowling Plaza, Inc. v. Sensing, G.R. No. January 14,
2005, 448 SCRA 175, 186) xxx.
This Court has held in a plethora of cases (Bay Haven, Inc. v. Abuan, G.R. No. 160859,
July 30, 2008, 560 SCRA 457; V.L. Enterprises v. Court of Appeals, supra; EJR Crafts
Corporation v. Court of Appeals, G.R. No. 154101, March 10, 2006, 484 SCRA 340; Cirineo
Bowling Plaza, Inc. v. Sensing, supra; Batong Buhay Gold Mines, Inc. v. Dela Serna, G.R.
No. 86963, August 6, 1999, 312 SCRA 22) that reliance on the Servando ruling is no longer
tenable in view of the enactment of R.A. No. 7730, amending Article 128 (b) of the Labor
Code. The Secretary of Labor or his duly authorized representatives is now empowered to
hear and decide, in a summary proceeding, any matter involving the recovery of any
amount of wages and other monetary claims arising out of employer-employee relations at
the time of the inspection, even if the amount of the money claim exceeds P5,000.00. In
Ex-Bataan Veterans Security Agency, Inc. v. Laguesma, G.R. No. 152396, November 20,
2007, 537 SCRA 651, 652 the Court elucidated:
In Allied Investigation Bureau, Inc. v. Sec. of Labor, we ruled that:
While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has
jurisdiction to hear and decide cases where the aggregate money claims of each employee
exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized representatives.
Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended
by R.A. No. 7730) x x x
The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the
Labor Code by the phrase “(N)otwithstanding the provisions of Articles 129 and 217 of this
Code to the contrary x x x” thereby retaining and further strengthening the power of the
Secretary of Labor or his duly authorized representatives to issue compliance orders to
give effect to the labor standards provisions of said Code and other labor legislation based
on the findings of labor employment and enforcement officer or industrial safety engineer
made in the course of inspection.
NOTE: The foregoing answers in a and b can be found in page 587 of the book entitled
Principles and Cases Labor Standards and Social Legislation, First Edition 2015, by Atty.
Voltaire T. Duano. Questions involving the same subejct matter were asked during the
2012, 2009, and 1991 Bar Examinations.
-IV-
Hagibis Motors Corporation (Hagibis) has 500 regular employees in its car assembly plant.
Due to the Asian financial crisis, Hagibis experienced very low car sales resulting to huge
financial losses. It implemented several cost-cutting measures such as cost reduction on
use of office supplies, employment hiring freeze, prohibition on representation and travel
expenses, separation of casuals and reduced work week. As counsel of Hagibis, what are
the measures the company should undertake to implement a valid retrenchment? Explain.
(5%)
SUGGESTED ANSWER:
The measures the company should undertake to implement a valid retrenchment are as
follows:
In Pepsi-cola Products, Philippines, Inc. vs. Molon, G.R. No. 175002, February 18, 2013,
the Supreme Court ruled:
“Essentially, the prerogative of an employer to retrench its employees must be exercised
only as a last resort, considering that it will lead to the loss of the employees’ livelihood. It
is justified only when all other less drastic means have been tried and found insufficient or
inadequate. (Supra note 46, at 144, citing Guerrero v. NLRC, 329 Phil. 1069, 1076 (1996);
and Somerville Stainless Steel Corporation v. NLRC, 350 Phil. 859, 870 [1998]) Corollary
thereto, the employer must prove the requirements for a valid retrenchment by clear and
convincing evidence; otherwise, said ground for termination would be susceptible to abuse
by scheming employers who might be merely feigning losses or reverses in their business
ventures in order to ease out employees. (Id) These requirements are:
(1) That retrenchment is reasonably necessary and likely to prevent business losses which,
if already incurred, are not merely de minimis, but substantial, serious, actual and real, or
if only expected, are reasonably imminent as perceived objec-tively and in good faith by
the employer;
(2) That the employer served written notice both to the employees and to the Department
of Labor and Employment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one (1)
month pay or at least one-half (½) month pay for every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees’ right to security
of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for certain workers. (Id. at 144-145,
citing Asian Alcohol Corporation v. NLRC, 364 Phil. 912, 926-927 [1999])
NOTE: The foregoing answer can be found in page 848 of the book entitled Principles and
Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano. Questions involving
the same subejct matter were asked during the 2012, 2011, 2006, 2003 and 2001 Bar
Examinations
-V-
Asia Union (Union) is the certified bargaining agent of the rank-and-file employees of Asia
Pacific Hotel (Hotel).
The Union submitted its Collective Bargaining Aggreement (CBA) negotiation proposals to
the hotel. Due to the bargaining deadlock, the Union, on December 20, 2014, filed a Notice
of Strike with the National Conciliation and Mediation Board (NCMB). Consequently, the
Union conducted a Strike Vote on January 14, 2015, when it was approved.
The next day, waiters who are members of the Union came out of the Union office sporting
closely cropped hair or cleanly shaven heads. The next day, all the male Union members
came to work sporting the same hair style. The Hotel prevented these workers from
entering the premises, claiming that they violated the company rule on Grooming
Standards.
On January 16, 2015, the Union subsequently staged a picked outside the Hotel premises
and prevented other workers from entering the Hotel. The Union members blocked the
ingress and egress of customers and emplyees to the Hotel premises, which caused the
Hotel severe lack of manpower and forced the Hotel to temporarily cease operations
resulting to substantial losses.
On January 20, 2015, the Hotel issued notices to Union members, preventively suspending
them and charging them with the following offenses: (1) illegal picket; (2) violation of the
company rule on Grooming Standards; (3) illegal strike; and (4) commission of illegal acts
during the illegal strike. The Hotel later terminated the Union officials and members who
participated in the strike. The Union denied it engaged in an illegal strike and countered
that the Hotel committed an unfair labor practice (ULP) and a breach of the freedom of
speech.
[a] Was the the picketing legal? Was the mass action of the Union officials and members
an illegal strike? Explain. (2.5%)
SUGGESTED ANSWER:
The picketing is not legal.
The Supreme Court in Phimco Industries, Inc. v. Phimco Industries Labor Association
(PILA), G.R. No. 170830, August 11, 2010, discussed the protected picketing as follows:
While the right of employees to publicize their dispute falls within the protection of freedom
of expression (CONSTITUTION, Art. III, Sec. 4; Gonzales v. Commission on Elections, 137
Phil. 471 (1969); The Insular Life Assurance Co., Ltd. Employees Association-NATU v. The
Insular Life Assurance Co., Ltd., 147 Phil. 194 (1971); Zaldivar v. Sandiganbayan, 243 Phil.
988 (1988); ABS-CBN Broadcasting Corporation v. Commission on Elections, 380 Phil.
780 (2000); Chavez v. Secretary Gonzalez, G.R. No. 168337, February 15, 2008, 545
SCRA 441; Schenck v. United States, 249 U.S. 47 (1919); Near v. Minnesota, 283 U.S.
697 (1931); New York Times v. United States, 403 U.S. 713 [1971]) and the right to
peaceably assemble to air grievances, (CONSTITUTION, Art. III, Sec. 4; Philippine
Blooming Mills Employees Association v. Philippine Blooming Mills, 151-A Phil. 656 (1973);
J.B.L. Reyes v. Mayor Bagatsing, 210 Phil. 457 (1983); De la Cruz v. Court of Appeals, 364
Phil. 786 (1999); Acosta v. Court of Appeals, 389 Phil. 829 (2000); Bayan v. Ermita, G.R.
No. 169838, April 25, 2006, 488 SCRA 1) these rights are by no means absolute. Protected
picketing does not extend to blocking ingress to and egress from the company premises.
(48 Am. Jur. 2d, Sec. 3562, p. 623, citing I.T.O. Corp. of Baltimore (1981) 255 NLRB 1050,
107 BNA LRRM 1035, 1980-81 CCH NLRB, par. 18055. See also 48 Am. Jur. 2d, Sec.
739, p. 456, citing Ark C 5-71-214) That the picket was moving, was peaceful and was not
attended by actual violence may not free it from taints of illegality if the picket effectively
blocked entry to and exit from the company premises.
NOTE: The foregoing answer can be found in page 508 of the book entitled Principles and
Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano. Question involving
the same subejct matter was asked in the 2000 Bar Examination.
On t he other hand, the mass action also constitute an illegal strike.
In Toyota Motors Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations
Commission, G.R. Nos. 158786 & 158789, October 19, 2007, the Supreme Court explained
when is a strike illegal as follows:
Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike, viz:
(1) [when it] is contrary to a specific prohibition of law, such as strike by employees
performing governmental functions; or
(2) [when it] violates a specific requirement of law [,such as Article 263 of the Labor Code
on the requisites of a valid strike]; or
(3) [when it] is declared for an unlawful purpose, such as inducing the employer to commit
an unfair labor practice against non-union employees; or
(4) [when it] employs unlawful means in the pursuit of its objective, such as a widespread
terrorism of non-strikers [for example, prohibited acts under Art. 264(e) of the Labor Code];
or
(5) [when it] is declared in violation of an existing injunction[, such as injunction, prohibition,
or order issued by the DOLE Secretary and the NLRC under Art. 263 of the Labor Code];
or
(6) [when it] is contrary to an existing agreement, such as a no-strike clause or conclusive
arbitration clause. (II C.A. Azucena, Jr., The Labor Code 528 (6th ed., 2007); citing I Teller,
314-317)
With the foregoing parameters as guide and the following grounds as basis, we hold that
the Union is liable for conducting an illegal strike for the following reasons:
First, the Union's violation of the Hotel's Grooming Standards was clearly a deliberate and
concerted action to undermine the authority of and to embarrass the Hotel and was,
therefore, not a protected action. xxx.
In view of the Union's collaborative effort to violate the Hotel's Grooming Standards, it
succeeded in forcing the Hotel to choose between allowing its inappropriately hair styled
employees to continue working, to the detriment of its reputation, or to refuse them work,
even if it had to cease operations in affected departments or service units, which in either
way would disrupt the operations of the Hotel. This Court is of the opinion, therefore, that
the act of the Union was not merely an expression of their grievance or displeasure but,
indeed, a calibrated and calculated act designed to inflict serious damage to the Hotel's
finances or its reputation. Thus, we hold that the Union's concerted violation of the Hotel's
Grooming Standards which resulted in the temporary cessation and disruption of the Hotel's
operations is an unprotected act and should be considered as an illegal strike.
Fourth, the Union failed to observe the mandatory 30-day cooling-off period and the seven-
day strike ban. (NATIONAL UNION OF WORKERS IN THE HOTEL RESTAURANT AND
ALLIED INDUSTRIES (NUWHRAIN-APL-IUF) DUSIT HOTEL NIKKO CHAPTERv. Court
of Appeals, G.R. No. 163942, November 11, 2008/ G.R. No. 166295, November 11, 2008
it was ruled that:
NOTE: The foregoing answer can be found in pages 535-536 of the book entitled Principles
and Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano. The question on
picketing was asked in the 2000 Bar Examination while the subejct matter inovlving the
procedural requirements for a valid strike were asked in the 2014, 2007, 2004, 2001 and
1994 Bar Examinations.
[b] Rule on the allegations of ULP and violation of freedom of speech. Explain. (2.5%)
The Hotel did not commit any ULP. This is because they did not interfere, restrain or coerce
the Union from exercising their right to self-organization or committed any of the acts
enumerated under the Labor Code that constitute ULP. Further, the Union cannot use
freedom of expression to validate the commission of prohibited acts during a strike. While
the right of employees to publicize their dispute falls within the protection of freedom of
expression these rights are by no means absolute. Protected picketing does not extend to
blocking ingress to and egress from the company premises. (Phimco Industries, Inc. v.
Phimco Industries Labor Association (PILA), G.R. No. 170830, August 11, 2010). Well-
settled is the rule that even if the strike were to be declared valid because its objective or
purpose is lawful, the strike may still be declared invalid where the means employed are
illegal. (Association of Independent Unions in the Philippines (AIUP) v. National Labor
Relations Commission, 364 Phil. 697, 707 [1999]) Among such limits are the prohibited
activities under Article 264 of the Labor Code.
NOTE: The foregoing answer can be found in pages 508 and 531 of the book entitled
Princples and Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano.
Question imvolving the same subejct matter was asked in the 2000 Bar Examination.
-VI-
Pedro, a bus driver of Biyahe sa Langit Transport, was involved in a collision with a car,
damaging the bus. The manager accused him of being responsible for the damage and
was told to submit his written explanation within 48 hours. Pedro submitted his explanation
within the period. The day after, Pedro received a notice of termination stating that he is
dismissed for reckless driving resulting to damage to company preperty, effective
immediately. Pedro asks you, as his counsel, if the company complied with the procedural
due process with respect to dismissal of employees.
[a] explain the twin notice and hearing rule. (2.5%)
SUGGESTED ANSWER:
The twin notice and hearing rule as interpreted in King of Kings Transport, Inc. v. Mamac,
G.R. No. 166208, June 29, 2007, where the Supreme Court laid down the manner by which
the procedural due process can be satisfied:
To clarify, the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific causes
or grounds for termination against them, and a directive that the employees are given the
opportunity to submit their written explanation within a reasonable period. ”Reasonable
opportunity” under the Omnibus Rules means every kind of assistance that management
must accord to the employees to enable them to prepare adequately for their defense. This
should be construed as a period of at least five (5) calendar days from receipt of the notice
to give the employees an opportunity to study the accusation against them, consult a union
official or lawyer, gather data and evidence, and decide on the defenses they will raise
against the complaint. Moreover, in order to enable the employees to intelligently prepare
their explanation and defenses, the notice should contain a detailed narration of the facts
and circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art. 282 is being
charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify
their defenses to the charge against them; (2) present evidence in support of their defenses;
and (3) rebut the evidence presented against them by the management. During the hearing
or conference, the employees are given the chance to defend themselves personally, with
the assistance of a representative or counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve
the employees a written notice of termination indicating that: (1) all circumstances involving
the charge against the employees have been considered; and (2) grounds have been
established to justify the severance of their employment.
[b] Did the Biyahe sa Langit Transport comply with the prior procedural requirements for
dismissal? (2.5%)
Biyahe sa Langit Transport did not comply with the procedural requirements for dismissal.
In King of Kings Transport, Inc. v. Mamac, G.R. No. 166208, June 29, 2007, the Supreme
Court explained that the opportunity to submit the written explanation should be within a
reasonable period and ”Reasonable opportunity” under the Omnibus Rules means every
kind of assistance that management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed as a period of at least five
(5) calendar days from receipt of the notice to give the employees an opportunity to study
the accusation against them, consult a union official or lawyer, gather data and evidence,
and decide on the defenses they will raise against the complaint.
Applying the above doctrinal rule, Pedro was not given the reasonable opportunity to
explain as he was only given 48 hours to submit his explanation.
NOTE: The foregoing answers can be found in page 584 of the book entitled Principles and
Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano. Questions involving
the same subejct matter This question was during the 2012, 2009, 2006, 2004, 1999 and
1998 Bar Examinations.
-VII-
Forbes Country Club (Club) owns a golf course and has 250 rank-and-file employees who
are members of the Forbes Country Club Union(Union). The Club has a CBA with the Union
and one of the stipulations is a Union Security Clause, which reads: "All regular rank-and-
file employees who are members of the union shall keep their membership in good
standings as a conditon for their continued employment during the lifetime of this
agreement."
Peter, Paul and Mary were the Treasurer, Assistant Treasurer, and Budget Officer of the
Union, respectively. They were expelled by the Board of Directors of the Union for
malversation. The Union then demanded that the Club dismiss said officials pursuant to the
Union Security Clause that required maintenance of union membership. The Club required
the three officials to show cause in writing why they should not be dismissed. Later, the
Club called the Three Union officials for a conference regarding the charges against them.
After considering the dismissed the erring officials. The dismissed officials sued the Club
and the Union for illegal dismissal because there was really no malversation based on the
documents presented and their dismissal form the Union was due to the fact that they were
organizing another union.
[a] Is the dismissal of Peter, Paul and Mary by the Club valid? (2.5%)
The dismissal of Peter, Paul and Mary by the Club is not valid.
In PICOP Resources, Incorporated (PRI) v. Dequila, G.R. No. 172666, December 7, 2011,
it was held: When an employer exercises its power to terminate an employee by enforcing
the union security clause, it needs to determine and prove the following: (1) the union
security clause is applicable; (2) the union is requesting for the enforcement of the union
security provision in the CBA; and (3) there is sufficient evidence to support the decision of
the union to expel the employee from the union. Further in Bank of the Philippines Islands
v. BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No.
164301, October 19, 2011, it was explained that in termination of employment by virtue of
a union security clause embodied in a CBA due process must be observed:
We have also previously held that the fundamental guarantee of security of tenure and due
process dictates that no worker shall be dismissed except for a just and authorized cause
provided by law and after due process is observed. (Cosep v. National Labor Relations
Commission, 353 Phil. 148, 157 (1998); Archbuild Masters and Construction, Inc. v.
National Labor Relations Commission, 321 Phil. 869, 877 [1995]) Even as we now
recognize the right to continuous, unbroken employment of workers who are absorbed into
a new company pursuant to a merger, it is but logical that their employment may be
terminated for any causes provided for under the law or in jurisprudence without violating
their right to security of tenure. As Justice Carpio discussed in his dissenting opinion, it is
well-settled that termination of employment by virtue of a union security clause embodied
in a CBA is recognized in our jurisdiction. (Justice Carpios Dissenting Opinion, Bank of the
Philippine Islands v. BPI Employees Union-Davao Chapter-Federation of Unions in BPI
Unibank, supra note 3 at 667, citing Alabang Country Club, Inc. v. National Labor Relations
Commission, G.R. No. 170287, February 14, 2008, 545 SCRA 351, 361) In Del Monte
Philippines, Inc. v. Saldivar, G.R. No. 158620, October 11, 2006, 504 SCRA 192 we
explained the rationale for this policy in this wise:
Article 279 of the Labor Code ordains that “in cases of regular employment, the employer
shall not terminate the services of an employee except for a just cause or when authorized
by [Title I, Book Six of the Labor Code].” Admittedly, the enforcement of a closed-shop or
union security provision in the CBA as a ground for termination finds no extension within
any of the provisions under Title I, Book Six of the Labor Code. Yet jurisprudence has
consistently recog¬nized, thus: “It is State policy to promote unionism to enable workers to
negotiate with management on an even playing field and with more persuasiveness than if
they were to individually and separately bargain with the employer. For this reason, the law
has allowed stipulations for ‘union shop’ and ‘closed shop’ as means of encouraging
workers to join and support the union of their choice in the protection of their rights and
interests vis-a-vis the employer.” (Id. at 203-204) (Emphasis supplied.)
Although it is accepted that non-compliance with a union security clause is a valid ground
for an employee’s dismissal, jurisprudence dictates that such a dismissal must still be done
in accordance with due process. This much we decreed in General Milling Corporation v.
Casio, G.R. No. 149552, March 10, 2010, 615 SCRA 13 to wit:
The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v.
Ramos that:
While respondent company may validly dismiss the employees expelled by the union for
disloyalty under the union security clause of the collective bargaining agreement upon the
recommendation by the union, this dismissal should not be done hastily and summarily
thereby eroding the employees’ right to due process, self-organization and security of
tenure. The enforcement of union security clauses is authorized by law provided such
enforcement is not characterized by arbitrariness, and always with due process. Even on
the assumption that the federation had valid grounds to expel the union officers, due
process requires that these union officers be accorded a separate hearing by respondent
company.
The twin requirements of notice and hearing constitute the essential elements of procedural
due process. The law requires the employer to furnish the employee sought to be dismissed
with two written notices before termination of employment can be legally effected: (1) a
written notice apprising the employee of the particular acts or omissions for which his
dismissal is sought in order to afford him an opportunity to be heard and to defend himself
with the assistance of counsel, if he desires, and (2) a subsequent notice informing the
employee of the employer’s decision to dismiss him. This procedure is mandatory and its
absence taints the dismissal with illegality.
In the given facts, the Club cannot dispense with the requirements of termination before
dismissing Peter, Paul and Mary even when said dismissal is pursuant to the union security
clause provision in the CBA. The rights of an employee to be informed of the charges
against him and to reasonable opportunity to present their side in a controversy with either
the company or his own union are not wiped away by a union security clause or a union
shop clause in a collective bargaining agreement.
NOTE: The foregoing answer can be found in pages 873-874 of the book entitled Principles
and Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano. Questions
involving the same subejct matter were asked in the 2012 and 2004 Bar Examinations.
[b] If the expulsion by the Union was found by the Labor Arbiter to be baseless, is the Club
liable to Peter, Paul and Mary? Explain. (2.5%)
In that case, the Club is liable to Peter, Paul and Mary. This is because the Union and Club
violated the right to security of tenure of the said union officers under the Consitution and
the Labor Code.
NOTE: The foregoing answer can be found in page 579 of the book entitled Principles and
Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano.
-VIII-
Differentiate learnership from apprenticeship with respect to the period of training, type of
work, salary and qualifications. (5%)
Learnership and Apprenticeship are distinguished as follows:
As to the period of training
In learnership, the agreement period shall not be more than three (3) months; (Article 75
(c), Labor Code, 3.10, TESDA Circular No. 16, Series of 2004) while Apprenticeship, the
agreement shall not be less than four (4) months and not more than six (6) months; (Articles
58 [c] in relation to Article 61 and 3.10, TESDA Circular No. 16, Series of 2004);
As to the type of work
In learnership, the occupations involves are semi-skilled and other industrial occupations
which are non-apprenticeable and learnable occupations must be approved by TESDA
(Articles 73, Labor Code and 3.3, TESDA Circular No. 16, Series of 2004) while in
apprenticeship, the occupations involves “highly technical industries” which means trade,
business, enterprise, industry, or other activity, which is engaged in the application of
advanced technology and apprenticeable occupations must be approved by TESDA;
(Articles 60, Labor Code and 3.3, TESDA Circular No. 16, Series of 2004).
As to salary
In both, the learners and apprentices are entitled to receive a wage equivalent to 75 percent
of the prevailing minimum wage and other benefits including overtime pay. (see 3.8.
TESDA Circular No. 16, Series of 2004; Articles 61 and 75 [c], Labor Code) Unless the the
elarner is employed iun piece or incentive –rate jobs during the training period shall be paid
in full for the work done. (Article 76, Labor Code)
As to qualifications
In learnership, the law did not provide such qualifications. However, reasons or justifications
for hiring are provided by law (Articles 74, Labor Code) while in apprenticeship, the
qualifications are (a) At least fifteen (15) years of age; (b) Possess vocational aptitude and
capacity for appropriate tests; and (c) Possess the ability to comprehend and follow oral
and written instructions and no justifications or reasons given by law for hiring; (Articles 59,
Labor Code).
NOTE: The foregoing answers in a and b can be found in pages 313-314 of the book
entitled Principles and Cases Labor Standards and Social Legislation, First Edition 2015,
by Atty. Voltaire T. Duano. The relevant questions regarding learnership and
apprenticeship were asked during the 2012 and 2011 Bar Examinations.
-IX-
Zienna Corporation (Zienna) informed the Department of Labor and Employment Regional
Director of the end of its operations. To carry out the cessation, Zienna sent a Letter of
Request for Intervention to the NLRC for permission and guidance in effecting payment of
separation benefits for its fifty (50) terminated employees.
Each of the terminated employees executed a Quitclaim and Release before Labor Arbiter
Nocomora, to whom the case was assigned. After the erstwhile employees received their
separation pay, the Labor Arbiter declared the Labor dispute dismissed with prejudice on
the ground of settlement. Thereafter, Zienna sold all of its assets to Zandra Company
(Zandra) which in turn hired its own employees.
Nelle, one of the fifty (50) terminated employees, filed a case for illegal dismissal against
Zienna. She argued that Zienna did not cease from operating since the corporation subsists
as Zandra. Nelle ponted out that aside from the two companies having essentially the same
equipment, the managers and owners of the Zandra and Zienna are likewise one and the
same.
For its part, Zienna countered the Nelle is barred from filing a complaint for illegal dismissal
against the corporation in view of her prior acceptance of separation pay.
Is Nelle correct in claiming that she was illegaly dismissed? (5%)
The legality or illegality of Nelle’s termination will depend on whether the transfer of
ownership of the business is made in good faith or bad faith.
In Penafrancia Tours and Travel Transport, Inc. v. Sarmiento, G.R. No. 178397, October
20, 2010, the Supreme Court explained the effect of change of business ownership in bad
faith as follows: On this ground, petitioner terminated the employment of respondents.
However, what petitioner apparently made was a transfer of ownership. It is true that, as
invoked by petitioner, in Manlimos, et al. v. NLRC, et al., 312 Phil. 178, 190 (1995) we held
that a change of ownership in a business concern is not proscribed by law. Lest petitioner
forget, however, we also held therein that the sale or disposition must be motivated by good
faith as a condition for exemption from liability. (Id. at 191) Thus, where the charge of
ownership is done in bad faith, or is used to defeat the rights of labor, the successor-
employer is deemed to have absorbed the employees and is held liable for the
transgressions of his or her predecessor. (Philippine Airlines, Inc. v. NLRC, 358 Phil. 919,
938 [1998])
Applying the above doctrinal rule, if the transfer of ownership of the business from Zienna
to Zandra is made in good faith then there can be no illegal dismissal to speak of. However,
if made in bad faith or is used to defeat the rights of Nelle, the successor-employer is
deemed to have absorbed Nelle and is held liable for the transgressions of Zienna.
NOTE: The foregoing answer can be found in page 877 of the book entitled Principles and
Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano.
-X-
Lazaro, an engineer, organized a union in Garantisado Construction Corporation
(Garantisado) which has 200 employees. He immediately filed a Petition for Certification
Election, attaching thereto the signatures of 70 employees. Garantisado vehemently
opposed the petition, alleging that 25 signatories are probationary employees, while 5 are
supervisors. It submitted the contracts of the 25 probationary employees and the job
description of the supervisors. It argued that if the 30 is deducted from the 70, it gives a
balance of 40 valid signatures which is way below the minimum number of 50 signatories
needed to meet the alleged 25% requirement. If you are the Director of Labor Relations,
will you approve the holding of a Certification Election. Explain your answer. (5%)
SUGGESTED ANSWER:
I will approve the holding of a Certification Election. This is because under the Labor Code,
the conduct of a Certification Election is automatic whether the establishment is an
unorganized or organized.
If it is unorganized there is no need for the petiton to be supported by the written consent
of at least 25% of all employees in the bargaining unit. However, in organized establishment
by established jurisprudence the written consent of at least 25% of all employees in the
bargaining unit may not be strictly enforced. Thus, the conduct of the Certication Election
can still be approved.
NOTE: The foregoing answer is based on Articles 268 [256] and 269 [257] discussed in
pages 422-427 of the book entitled Principles and Cases Labor Relations, First Edition
2016, by Atty. Voltaire T. Duano. See also California Manufacturing Corporation v.
Laguesma, G. R. No. 97020, Juine 8, 1992. As an alternative answer, it can be argued that
the one who has the authority to approve is the Med Arbiter of the BLR or Regional Office
and not the Director of the Labor Relations. Since it is the Med-Arbiter who is the officer
required to hear representation cases there is jurisdictional issue in the given case.

PART II: SUGGESTED ANSWERS TO THE 2016 BAR EXAMINATION QUESTIONS IN


LABOR AND SOCIAL LEGISLATIONS
-XI-
Dion is an Accounting Supervisor in a trading company. He has rendered exemplary
service to the company for 20 years. His co-employee and kumpadre, Mac, called him over
the phone and requested him to punch his (Mac's) daily time card as he (Mac) was caught
in a monstrous traffic jam. Dion accede to Mac's request but was later caught by the
Personnel Manager while punching Mac's card. The company terminated the employment
of Dion on the ground of misconduct. Is the dismissal valid and just? Explain. (5%)
SUGGESTED ANSWER:
The dismissal is not valid and just.
The elements of misconduct are not present.
In Philippine Aeolus Automotive United Corporation v. NLRC, G.R. No. 124617, April 28,
2000: The Supreme Court ruled: “in a litany of decisions on serious misconduct warranting
dismissal of an employee, has ruled that for misconduct or improper behavior to be a just
cause for dismissal (a) it must be serious; (b) must relate to the performance of the
employee’s duties; and, (c) must show that the employee has become unfit to continue
working for the employer. (Molato v. NLRC, G.R. No. 113085, 2 January, 1997, 266 SCRA
42, Aris Philippine Inc. v. NLRC, G.R. No. 97817, 10 November 1994, 238 SCRA 59)
The act of Dion in acceding to Mac’s request may be considered, from a lay man’s
perspective, as a serious misconduct. However, in order to consider it a serious misconduct
that would justify dismissal under the law, it must have been done in relation to the
performance of his duties as would show him to be unfit to continue working for his
employer. The act complained of, under the circumstances they were done, did not in any
way pertain to his duties as an Accounting Supervisor.
NOTE: The foregoing answer can be found in page 773 of the book entitled Principles and
Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano. However, as an
aleternative answer it can be argued that the dismissal is valid and just on the grounds of
fraud or commission of a crime (falsification or tampering the time card) or analogous
causes. The questions involving serious misconduct were asked during the 2013,2012,
1996 and 1995 Bar Examinations.
-XII-
Amaya was employed as a staff nurse by St. Francis Hospital (SFH) on July 8, 2014 on a
probationary status of six (6) months. Her probationary contract required, among others,
strict compliance with SFH's Code of Discipline.
On October 16, 2014, Dr. Ligaya, filed a Complaint with the SFH Board of Trustees against
Amaya for utteing slanderous remarks against the former. Attached to the complaint was a
letter of Minda, mother oa a patient, who confirmed the following remarks against Dr.
Ligaya:
"Bakit si Dr. Ligaya pa ang napili mong pedia eh ang tanda-tanda na n'un? E
makakalimutan mo na yun x x x alam mo ba, kahit wala namang diperensya yung baby,
ipinapa-isolate nya?"
The SFH President asks you, being the hospital's counsel, which of these two (2) options
is the legal and proper way of terminating Amaya: a) terminate her for a just cause under
Article 288 of the Labor Code (Termination by Employer); or b) terminate her for violating
her probationary contract. Explain. (5%)
SUGGESTED ANSWERS:
In Univac Development, Inc. v. Soriano, G.R. No. 182072, June 19, 2013, the limitations
on the power of the employer to terminate a probationary employee was discussed as
follows:
Indeed, the power of the employer to terminate a probationary employee is subject to three
limitations, namely: (1) it must be exercised in accordance with the specific requirements
of the contract; (2) the dissatisfaction on the part of the employer must be real and in good
faith, not feigned so as to circumvent the contract or the law; and (3) there must be no
unlawful discrimination in the dismissal. (Id. at 387, citing Dusit Hotel Nikko v. Gatbonton,
G.R. No. 161654, May 5, 2006, 489 SCRA 671)
Applying the above doctrinal rule, I will recommend the two options.
NOTE: The foregoing answer can be found in page 749 of the book entitled Principles and
Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano. Question involving
the same subejct matter was asked during the 2001Bar Examination. The above question
was based in the decision of the Supreme Court in Pasamba v. NLRC, G. R. No. 168421,
June 8, 2007, where it was held: SLMC is engaged in a business whose survival is
dependent on the reputation of its medical practitioners. To impute unethical behavior and
lack of professionalism to a medical professional, to one who is also a hospital official,
would be inimical to the interests of SLMC. This would also show tremendous disloyalty on
the part of the employee who makes such derogatory statements. Moreover, the petitioners
bad faith became evident when, instead of addressing these disparaging remarks to the
proper hospital officers, she addressed them to a former patient, whose child was at that
time a patient in SLMC and entrusted to the care of the medical professional in question.
An employer cannot be compelled to retain an employee who is guilty of acts inimical to
the interests of the employer. A company has the right to dismiss employees guilty of acts
of dishonesty and disloyalty, if only as a measure of self-protection. Dismissal of an
employee guilty of such a serious infraction would be reasonable.
-XIII-
Matibay Shoe and Repair Store, as added service to its customers, devoted a portion of its
store to a shoe shine stand. The shoe shine boys were tested for their skill before allowed
to work and given ID cards. They were told to be present from the opening of the store up
to closing time and were required to follow the company rules on cleanliness and decorum.
They bought their own shoe shine boxes, polish, and rags. The boys were paid by their
customers for their services but the payment is coursed through the stores's cashier, who
pays them before closing time. They were not supervised in their work by any managerial
employee of the store but for a valid complaint by a customer of for violation of any company
rule, they can be refused admission to the store. Were the boys employees of the store?
Explain. (5%)
SUGGESTED ANSWER:
Yes, the boys are employees of the store.
The four elements 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 employer’s
power to control the employee’s conduct. (Lakas sa Industriya ng Kapatirang Haligi ng
Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame v. Burlingame
Corporation, G.R. No. 162833, June 15, 2007, 524 SCRA 690, 695, citing Sy v. Court of
Appeals, 398 SCRA 301, 307-308 (2003); Pacific Consultants International Asia, Inc. v.
Schonfeld, G.R. No. 166920, February 19, 2007, 516 SCRA 209, 228)
The four elements are clear on the facts of the case. The boys were hired by the store as
added service to its customers, they were paid for their services by the store cashier and
they were under the control of the store’s any managerial employee.
NOTE: The foregoing answer can be found in page 332 of the book entitled Principles and
Cases Labor Standards and Social Legislation, First Edition 2015, by Atty. Voltaire T.
Duano. The topic on employer-employee relation has been time and again the subject
matter of bar questions, more specifically during the 2014, 2012, 2011, 2010, 2008, 2002,
1996 and 1991 Bar Examinations.
-XIV-
Tess, a seamstress at Marikit Clothing Factory, became pregnant. Because of morning
sickness, she frequently absented herself from work and often came to the factory only four
(4) days a week. After two (2) months, the personnel manager told her that her habitual
absences rendered her practically useless to the company and, thus, asked for to resign.
She begged to be retained, citing her pregnancy as reason for her absences. Tess asked
for leave of absence but her request was denied. She went on leave nevertheless. As a
result, she was thus dismissed for going on leave wothout permission of management.
Tess filed a complaint for illegal dismissal. The company's defense: she was legally
dismissed because of her numerous absences without leave and not because of her
pregnancy. On the other hand, Tess argues that her dismissal was an act of discrimination,
based as it was on her pregnancy which the company treated as a disease. Whose potition
is meritorious - the company's or tess'? Explain. (5%)
SUGGESTED ANSWER:
Tess‘ position is meritorious.
Obviously, Tess was terminated on account of her pregnancy.
In Del Monte Philippines, Inc. v. Velasco, G.R. No. 153477, March 6, 2007, the essential
question is whether the employment of respondent had been validly terminated on the
ground of excessive absences without permission. Corollary to this is the question of
whether the petitioner discharged the respondent on account of pregnancy, a prohibited
act. In resolving the essential question and the issue corollary to it, the High Court ruled in
this manner:
xxx
The Court agrees with the CA in concluding that respondents sickness was pregnancy-
related and, therefore, the petitioner cannot terminate respondents services because in
doing so, petitioner will, in effect, be violating the Labor Code which prohibits an employer
to discharge an employee on account of the latters pregnancy.
Article 137 of the Labor Code provides:
Art. 137. Prohibited acts. It shall be unlawful for any employer:
xxx
(2) To discharge such woman on account of her pregnancy, while on leave or in
confinement due to her pregnancy; or
xxx
xxx
The Court is convinced that the petitioner terminated the services of respondent on account
of her pregnancy which justified her absences and, thus, committed a prohibited act
rendering the dismissal illegal.
NOTE: The foregoing answer can be found in page 635 of the book entitled Principles and
Cases Labor Standards and Social Legislation, First Edition 2015, by Atty. Voltaire T.
Duano. It is the first time that this question was asked in the bar examination in so far as
the bar examinations from 1990 to 2015 are concerned.
-XV-
Jim is the holder of a certificate of public convenience for a jeepney. He entered into a
contract of lease with Nick, whereby they agreed that the lease period is for one (1) year
unless sooner terminated by Jim for any of the cause laid down in the contract. The rental
is thirty thousand pesos (P30,000.00) monthly. All the expenses for the repair of the
jeepney, together with expenses for diesel, oil and service, shall be for the account of Nick.
Nick is required to make a deposit of three (3) months to answer for the restoration of the
vehicle to its good operating condition when the contract ends. It is stipulated that Nick is
not an employee of Jim and he holds the latter free and harmless from all suits or claims
which may arise from the implementation of the contract. Nick has the right to use the
jeepney at any hour of the day provided it is operated on the approved line of operation.
After five (5) months of the lease and payment of the rentals, Nick became delinquent in
the payment of the rentals for two (2) months. Jim, as authorized by the contract, sent a
letter of demand rescinding the contract and asked for arrearages. Nick responded by filling
a complaint with the NLRC for illegal dismissal, claiming that the contract is illegal and he
was just forced by Jim to sign it so he can drive. He claims he is really a driver if Jim on a
boundary system and the reason he was removed is because he failed to pay the complete
daily boundary of one thousand (P1,000.00) for two (2) months due to the increase in the
number of tricycles.
[a] Jim files a motion to dismiss the NLRC case on the ground that the regular court has
jurisdiction since the agreement is a lease contract. Rule on the motion and explain. (2.5%)
SUGGESTED ANSWER:
I will grant the motion to dismiss on the ground of lack of jurisdiction over the subject matter.
In Sorreda v. Cambridge Electronics Corporation, G.R. No. 172927, February 11, 2010 it
was ruled that there should be employer-employee relation for the Labor Arbiter to exercise
jurisdiction. Thus, the High Court said:
In Pioneer Concrete Philippines, Inc. v. Todaro, G.R. No. 154830, 8 June 2007, 524 SCRA
153, 163, the Court reiterated that where no employer-employee relationship exists
between the parties, and the Labor Code or any labor statute or collective bargaining
agreement is not needed to resolve any issue raised by them, it is the Regional Trial Court
which has jurisdiction.
In Uy v. Bueno, G.R. No. 159119, March 14, 2006 held: This requirement of employer-
employer relationship is jurisdictional for the provisions of the Labor Code, specifically Book
VI thereof, on Post-Employment, to apply. Since the employer-employee relationship
between petitioner Uy and respondent Bueno was not established, the labor arbiter never
acquired jurisdiction over petitioner Uy. The case of Domondon v. National Labor Relations
Commission, G.R. No. 154376, September 30, 2005, also discussed the jurisdictional
provisions of Article 217 [now 224] as follows:
In all these instances, the matrix is the existence of an employer-employee relationship. In
the case at bar, there is no dispute that petitioner is an employee of the respondents. In
Baez v. Valdevilla, 331 SCRA 584 (2000) we held:
x x x Presently, and as amended by R.A. 6715, the jurisdiction of Labor Arbiters and the
NLRC in Article 217 is comprehensive enough to include claims for all forms of damages
arising from the employer-employee relations.
Whereas this Court in a number of occasions had applied the jurisdictional provisions of
Article 217 to claims of damages filed by employees, (Citing Poloton-Tuvera v. Dayrit, 160
SCRA 423 (1988); Dizon v. Court of Appeals, 210 SCRA 107 (1992); Pepsi-Cola Bottling
Company of the Philippines v. Martinez, 198 Phil. 296) we hold that by the designating
clause arising from the employer-employee relations Article 217 should apply with equal
force to the claim of an employer for actual damages against its dismissed employee, where
the basis for the claim arises from or is necessarily connected with the fact of termination,
and should be entered as a counterclaim in the illegal dismissal case.
The facts of the case is clear that the contract entered into between Jim and Nick is a lease
of chattel and not a relationship between jeepney owners/operators on one hand and
jeepney drivers on the other under the boundary system.
In a number of cases decided by the Supreme Court, (National Labor Union vs. Dinglasan,
98 Phil. 649, 652 (1996); Magboo vs. Bernardo, 7 SCRA 952, 954 (1963); Lantaco, Sr. vs.
Llamas, 108 SCRA 502, 514 [1981]), it was ruled that the relationship between jeepney
owners/operators on one hand and jeepney drivers on the other under the boundary system
is that of employer-employee and not of lessor-lessee. It was explained that in the lease of
chattels, the lessor loses complete control over the chattel leased although the lessee
cannot be reckless in the use thereof, otherwise he would be responsible for the damages
to the lessor. In the case of jeepney owners/operators and jeepney drivers, the former
exercise supervision and control over the latter. The management of the business is in the
owner’s hands. The owner as holder of the certificate of public convenience must see to it
that the driver follows the route prescribed by the franchising authority and the rules
promulgated as regards its operation. Now, the fact that the drivers do not receive fixed
wages but get only that in excess of the so-called “boundary” they pay to the owner/operator
is not sufficient to withdraw the relationship between them from that of employer and
employee. The above doctrine was applied by analogy to the relationships between bus
owner/operator and bus conductor, (Doce vs. Workmen’s Compensation Commission, 104
Phil. 946, 948 [1958]) auto-calesa owner/operator and driver, (Citizens’ League of
Freeworkers vs. Abbas, 18 SCRA 71, 73 [1966]) and recently between taxi owners/
operators and taxi drivers. (Martinez vs. NLRC, 272 SCRA 793, 800 [1997])
NOTE: The foregoing answer can be found in pages 34-35 of the book entitled Princples
and Cases Labor Relations, First Edition 2016 and pages 341-342 of the book entitled
Principles and Cases Labor Standards and Social Legislation, First Edition 2015, by Atty.
Voltaire T. Duano. This question has been the subject matter of the 1999 and 1995 Bar
Examinations
[b] Assuming that Nick is an employee of Jim, was Nick validly dismissed?
SUGGESTED ANSWER:
Yes, Nick can be validly dismissed on the ground of his failure to pay the complete daily
boundary of one thousand (P1,000.00) for two (2) months. The said acts and omissions
can be classified as analogous causes beause it is susceptible of comparison with the just
causes for termination in general or specific detail or has a close relationship with the said
grounds. Nick can be considered to be grossly inefficient as a driver.
NOTE: The foregoing answer can be found in pages 833-834 of the book entitled Principles
and Cases Labor Standards and Social Legislation, First Edition 2015, by Atty. Voltaire T.
Duano. Questions on analogous causes for termination were asked during the 2010 and
2008 Bar Examinations. However, it can be argued as an alternative answer that there was
no valid grounds for termination as there were no just causes for termination based on the
facts.
-XVI-
In a case for illegal dismissal and non-payment of benefits, with prayer for Damages, Apollo
was awarded the following: 1) P200,000.00 as backwages; 2) P80,000.00 as unpaid
wages: 3) P20,000.00 as unpaid holiday pay; 4) P5,000.00 as unpaid service incentive
leave pay; 5) P50,000.00 as moral damages; and 6) P10,000.00 as exemplary damages.
Attorney's fees of ten percent (10%) of all the amounts covered by items 1 to 6 inclusive,
plus interests of 6% per annum from the date the same were unlawfully withheld, were also
awarded.
[a] Robbie, the employer, contest the award of attorney fees amounting to 10% on all the
amounts adjudged on the ground that Article 111 of the Labor Code authorizes only 10%
"of the amount wages recovered". Rule on the issue and explain. (2.5%)
SUGGESTED ANSWER:
I will rule by affirming the award of ttorney's fees of ten percent (10%) of all the amounts
covered by items 1 to 6 inclusive, plus interests of 6% per annum from the date the same
were unlawfully withheld.
In Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union v.
Manila Water Company, Inc., G.R. No. 174179, November 16, 2011, the Supreme Court
explained the concepts of attorney’s fees as follows:
We explained in PCL Shipping Philippines, Inc. v. National Labor Relations Commission,
G.R. No. 153031, December 14, 2006, 511 SCRA 44 that there are two commonly
accepted concepts of attorney’s fees – the ordinary and extraordinary. In its ordinary
concept, an attorney’s fee is the reasonable compensation paid to a lawyer by his client for
the legal services the former renders; compensation is paid for the cost and/or results of
legal services per agreement or as may be assessed. In its extraordinary concept,
attorney’s fees are deemed indemnity for damages ordered by the court to be paid by the
losing party to the winning party. The instances when these may be awarded are
enumerated in Article 2208 of the Civil Code, specifically in its paragraph 7 on actions for
recovery of wages, and is payable not to the lawyer but to the client, unless the client and
his lawyer have agreed that the award shall accrue to the lawyer as additional or part of
compensation. (Id. at 64-65, citing Dr. Reyes v. Court of Appeals, 456 Phil. 520, 539-540
[2003])
We also held in PCL Shipping that Article 111 of the Labor Code, as amended,
contemplates the extraordinary concept of attorney’s fees and that Article 111 is an
exception to the declared policy of strict construction in the award of attorney’s fees.
Although an express finding of facts and law is still necessary to prove the merit of the
award, there need not be any showing that the employer acted maliciously or in bad faith
when it withheld the wages. In carrying out and interpreting the Labor Code’s provisions
and implementing regulations, the employee’s welfare should be the primary and
paramount consideration. This kind of interpretation gives meaning and substance to the
liberal and compassionate spirit of the law as embodied in Article 4 of the Labor Code
(which provides that “[a]ll doubts in the implementation and interpretation of the provisions
of [the Labor Code], including its implementing rules and regulations, shall be resolved in
favor of labor”) and Article 1702 of the Civil Code (which provides that “[i]n case of doubt,
all labor legislation and all labor contracts shall be construed in favor of the safety and
decent living for the laborer”). (Ibid.)
Thus, it is settled that in actions for recovery of wages, or where an employee was forced
to litigate and, thus, incur expenses to protect his rights and interests, a monetary award
by way of attorney’s fees is justifiable under Article 111 of the Labor Code; Section 8, Rule
VIII, Book III of its Implementing Rules; and paragraph 7, Article 2208 of the Civil Code.
NOTE: The foregoing answer can be found in pages 526-527 of the book entitled Principles
and Cases Labor Standards and Social Legislation, First Edition 2015, by Atty. Voltaire T.
Duano. As an alternative answer, it can be argued that the law (Article 111 of the Labor
Code) simply provided ten (10%) percent of the amount of wages recovered. Questions on
attorney’s fees were asked during the 2001 and 1993 Bar Examinations.
[b] Robbie likewise questions the imposition of interest on the amounts in question because
it was not claimed by Apollo, and the Civil Code provison on interest does not apply to a
labor case. Rule on the issue and explain. (2.5%)
SUGGESTED ANSWER:
I will affirm the award of interest.
In Sameer Overseas Placement Agency, Inc. v. Cabiles, G. R. No. 170139, August 5, 2014,
it was explained that with regard particularly to an award of interest in the concept of actual
and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed,
as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e.,
a loan or forbearance of money, the interest due should be that which may have been
stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6%
per annum to be computed from default, i.e., from judicial or extrajudicial demand under
and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an
interest on the amount of damages awarded may be imposed at the discretion of the court
at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims
or damages, except when or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil
Code), but when such certainty cannot be so reasonably established at the time the
demand is made, the interest shall begin to run only from the date the judgment of the court
is made (at which time the quantification of damages may be deemed to have been
reasonably ascertained). The actual base for the computation of legal interest shall, in any
case, be on the amount finally adjudged. 3. When the judgment of the court awarding a
sum of money becomes final and executory, the rate of legal interest, whether the case
falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality
until its satisfaction, this interim period being deemed to be by then an equivalent to a
forbearance of credit.
The award of interest is therefore proper.
NOTE: The case of Sameer Overseas Placement Agency, Inc. v. Cabiles, G. R. No.
170139, August 5, 2014 was also cited in page 686 of the book entitled Principles and
Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano. This is the first time
that this question was asked in so far as the 1990 to 2015 bar examinations are concerned.
-XVII-
Baldo, a far worker on pakyaw basis, had been working on Dencio's land by harvesting
abaca and coconut, processing copra, and clearing weeds from year to year starting
January 1993 up to his death in 2007. He worked continuously in the sense that it was done
for more than one harvesting season.
[a] Was Dencio required to report Baldo for compulsary social security coverage under SSS
law? Explain. (2.5%)
SUGGESTED ANSWER:
Yes, Dencio is required to report Baldo for compulsory social security coverage.
The existence of employer-employee relationship is a requirement for compulsory covered
under the SSS Law. An employee under the Social Security Law is any person who
performs services for an employer in which either or both mental or physical efforts are
used and who receives compensation for such services, where there is an employer-
employee relationship.
Baldo is a (regular seasonal) employee of Dencio.
In Paz v. Northern Tobacco Redrying Co., Inc., G.R. No. 199554, February 18, 2015, the
Supreme Court explained a regular seasonal employees as follows:
Jurisprudence also recognizes the status of regular seasonal employees. (Gapayao v.
Fulo, G.R. No. 193493, June 13, 2013, 698 SCRA 485, 499 [Per CJ. Sereno, First Division],
citing AAG Trucking v. Yuag, G.R. No. 195033, October 12, 2011, 659 SCRA 91, 102 [Per
J. Sereno (now C.J.), Second Division])
xxx
On the other hand, the workers of La Union Tobacco Redrying Corporation in Abasolo v.
National Labor Relations Commission, 400 Phil. 86 (2000) [Per J. De Leon, Jr., Second
Division] were considered regular seasonal employees since they performed services
necessary and indispensable to the business for over 20 years, even if their work was only
during tobacco season. (Id. at 103-–104)
xxx
The sugarcane workers in Hacienda Fatima v. National Federation of Sugarcane Workers-
Food and General Trade, 444 Phil. 587 (2003) [Per J. Panganiban, Third Division] were
also considered as regular employees since they performed the same tasks every season
for several years:
For respondents to be excluded from those classified as regular employees, it is not enough
that they perform work or services that are seasonal in nature. They must have also been
employed only for the duration of one season. . . . Evidently, petitioners employed
respondents for more than one season. Therefore, the general rule of regular employment
is applicable.
In the given facts, the employer-employee relationship is obvious becasue Baldo has been
engaged from year to year starting January 1993 up to his death in 2007. He worked
continuosly in the sense that it was done for more than one harvesting season.
NOTE: The foregoing answer can be found in page 862 of the book entitled Principles and
Cases Labor Standards and Social Legislation, First Edition 2015, by Atty. Voltaire T.
Duano and pages 719 to 721 of the book entitled Principles and Cases Labor Relations,
First Edition 2016, by Atty. Voltaire T. Duano. Questions on SSS coverage were asked
during the 2009 and 1999 Bar Examinations.
[b] What are the liabilities of the employer who fails to report his employee for social security
coverage? Explain. (2.5%)
SUGGESTED ANSWER:
The employer is liable under the penal clause of the SSS Law, more specifically for failure
or refusal to comply with the provisions of the SSS Law and its rules and regulations and
for misappropriation of fumds under the SSS Law and Revised Penal Code.
NOTE: The foregoing answer can be found in page 886 of the book entitled Principles and
Cases Labor Standards and Social Legislation, First Edition 2015, by Atty. Voltaire T.
Duano and pages 719 to 721 of the book entitled Principles and Cases Labor Relations,
First Edition 2016, by Atty. Voltaire T. Duano.
-XVIII-
Empire Brands (Empire) contracted the service of Style Corporation (Style) for the
marketing and promotion of its clothing line. Under the contract, Style provided Empire with
Trade Merchandising Representatives (TMR's) whose services began on September 15,
2004 and ende on June 6, 2007, when Empire terminated the promotions contract with
Style.
Empire then entered into agreement for manpower supply with Wave Human Resources
(Wave). Wave owns its condo office, owns equipment for the use by the TMRs, and has
assets amounting to P1,000,000.00. Wave provided supervisors who supervised the
TMRs, who, in turn, received orders from the Marketing Director of Empire. In their
agreement, the parties stipulated that Wave shall be liable for the wages and salaries of its
employees or workers, including benefits, and protection due them, as well as remittance
to the proper government entities of all wothholding taxes, Social Security Service, and
Philhealth premiums, in accordance with the relevant laws.
As the TMRs wanted to continue working at Empire, they submitted job application as
TMRs with Wave. Consequently, Wave hired them for a term of five (5) months, or June 7,
2007 to November 6, 2007, specifically to promote Empire's products.
When TMRs' 5-months contracts with Wave were about to expre, they sought renewal
thereof, but were refused. Their contracts with Wave were no longer renewed as Empire
hired another agency. This prompted them to file a complaints for illegal dismissal,
regulariztion, non-payment of service incentive leave and 13th monthy pay against Empire
and Wave.
[a] Are the TMRs employees of Empire? (2.5%)
SUGGESTED ANSWER:
As to whether the TMRs are employees of Empire will depend whether the arrangement
between Empire and Waive is a legitimate contracting (job-contracting) or a labor-only
contracting.
Contracting or subcontracting shall be legitimate if all the following circumstances concur:
(a) The contractor must be registered in accordance with these Rules and carries a distinct
and independent business and undertakes to perform the job, work or service on its own
responsibility, according to its own manner and method, and free from control and direction
of the principal in all matters connected with the performance of the work except as to the
results thereof;
(b) The contractor has substantial capital and/or investment; and
(c) The Service Agreement ensures compliance with all the rights and benefits under Labor
Laws. (Section 4, D.O. No. 18-A Series of 2011)
While labor-only contracting shall refer to an arrangement where:
(a) The contractor does not have substantial capital or investments in the form of tools,
equipment, machineries, work premises, among others, and the employees recruited and
placed are performing activities which are usually necessary or desirable to the operation
of the company, or directly related to the main business of the principal within a definite or
predetermined period, regardless of whether such job, work or service is to be performed
or completed within or outside the premises of the principal; or
(b) The contractor does not exercise the right to control over the performance of the work
of the employee. (Section 6, D.O. No. 18-A Series of 2011)
In the given facts, it does not show that Wave have complied with the requirements of
legitimate contracting or job contracting. Thus, the TMRs are employees of Empire. The
element of control is also present with Empire as the facts clearly stated that the TMRs
received orders from the Marketing Director of Empire.
While Wave may have investments in the form of tools, equipment, machineries, work
premises, among others however, the employees recruited and placed are performing
activities which are usually necessary or desirable to the operation of Empire or directly
related to the main business of Empire, the principal. Further, there is a presumption that
Wave is engaged in labor-only contracting as it was not duly registered as required by the
rules. Thus, Wave is a labor-only contractor.
In that case, considering the arrangement is labor-only contracting Wave is considered as
an agent of Empire and the TMRs are therefore its employees.
NOTE: The foregoing answer can be found in pages 499 and 502 of the book entitled
Principles and Cases Labor Standards and Social Legislation, First Edition 2015, by Atty.
Voltaire T. Duano. Questions on this subject matter have been repeatedly asked during the
2014, 2013, 2012, 2011, 2009, 2004, 2002, 2001, 2000, 1997 and 1994 Bar Examinations.
[b] Were the TMRs illegally dismissed by Wave? (2.5%)
Yes, the TMRs were illegally dismissed. The case of Vigilla v. Philippine College of
Criminology, Inc. G.R. No. 200094, June 10, 2013, ruled that in labor-only contracting, the
statute creates an employer-employee relationship for a comprehensive purpose: to
prevent a circumvention of labor laws. The contractor is considered merely an agent of the
principal employer and the latter is responsible to the employees of the labor-only
contractor as if such employees had been directly employed by the principal employer. The
principal employer therefore becomes solidarily liable with the labor-only contractor for all
the rightful claims of the employees.
The fact that the TMRs were not engaged by Empire due to the non-renewal of the contract
with Wave amounts to their illegal dismissal.
NOTE: The foregoing answer can be found in page 509 of the book entitled Principles and
Cases Labor Standards and Social Legislation, First Edition 2015, by Atty. Voltaire T.
Duano. Questions on this subject matter have been repeatedly asked during the 2014,
2013, 2012, 2011, 2009, 2004, 2002, 2001, 2000, 1997 and 1994 Bar Examinations.
-XIX-
Filmore Corporation was ordered to pay P49 million to its employees by the Labor Arbiter.
It interposed an appeal by filling a Notice of Appeal and paid the correspinding appeal fee.
However, instead of filling the required appeal bond equivalent to the total amount of the
monetary award, Filmore filed a Motion to Reduce the Appeal Bond to P4,000,000.00 but
submitted a surety bond in the amount of P4.9 million. Filmore cited finacial difficulties as
justification for its inability to post the appeal bond in full owing to the shutdown of its
operation. It submitted its audited finacial statements showing a loss of P40 million in the
previous year. To show its good faith, Filmore also filed its memorandum of Appeal.
The NLRC dismissed the appeal for non-perfection on the ground that posting of an appeal
bond equivalent to the monetary award is indispensable for the perfection of the appeal
and the reduction of the appeal bond, absent any showing of meritorious ground to justify
the same, is not warranted. Is the dismissal of the appeal correct? Explain (5%)
SUGGESTED ANSWER:
The dismissal of the appeal is not correct.
In Halite v. SS Ventures International, Inc., G.R. No. 195109, February 4, 2015, the
Supreme Court explained when is a bond sufficient to perfect an appeal in case a motion
to reduce was filed. Thus, the High Court said:
In McBurnie v. Ganzon, G.R. Nos. 178034, 178117 and 186984-85, October 17, 2013 we
harmonized the provision on appeal that its procedures are fairly applied to both the
petitioner and the respondent, assuring by such application that neither one or the other
party is unfairly favored. We pronounced that the posting of a cash or surety bond in an
amount equivalent to 10% of the monetary award pending resolution of the motion to
reduce appeal bond shall be deemed sufficient to perfect an appeal.
xxx
The rule We set in McBurnie was clarified by the Court in Sara Lee Philippines v. Ermilinda
Macatlang, G.R. Nos. 180147-180150, 180319 and 180685, June 4, 2014. Considering the
peculiar circumstances in Sara Lee, We determined what is the reasonable amount of
appeal bond. We underscored the fact that the amount of 10% of the award is not a
permissible bond but is only such amount that shall be deemed reasonable in the meantime
that the appellant’s motion is pending resolution by the Commission.
NOTE: The foregoing answer can be found in page 154 of the book entitled Principles and
Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano. Questions regarding
bond were asked during the 2007, 2001 and 1993 Bar Examinations. It can be argued as
an alternative answer that under Section 4 [a] Rule VI, of the 20011 NLRC Rules the posting
of a bond equivalent to the monetary award exclusive of damages and attorney’s fees, is
mandatory and jurisdictional to perfect an appeal.
-XX-
Mario Brothers, plumbing works contractor entered into an agreement with Axis business
Corporation (Axis) for the plumbing works of its building under construction. Mario Brothers
engaged the services of Tristan, Arthur, and Jojo as plumber, pipe fitter, and threader,
respectively. These workers have worked for Mario Brothers in numerous construction
projects in the past but because of their long relationship, they were never asked to sign
contracts for each project. No reports to government agencies were made regarding their
work in the company.
During the implementation of the works contract, Axis suffered financial difficulties and was
not able to pay Mario Brothers its past billings. As a result, the three (3) employees were
not paid their salaries for two (2) months and their 13th month pay. Because Axis cannot
pay, Mario Brothers cancelled thge contract and laid off Tristan, Arthur, and Jojo. The 3
employees sued Mario Brothers and Axis for illegal dismissal, Unpaid wages, and benefits.
[a] Mario Brothers claims the 3 workers are project employees. It explains that the
agreement is, if the works contract is cancelled due to the fault of the client, the period of
employment is automatically terminated. Is the contractor correct? Explain. (2.5%)
SUGGESTED ANSWER:
The contractor is not correct.
In Gadia v. Sykes Asia, G.R. No. 209499, January 28, 2015, the Supreme Court explained
when an employee is deemed project-based or regular in this manner:
In Omni Hauling Services, Inc. v. Bon, G.R. No. 199388, September 3, 2014 the Court
extensively discussed how to determine whether an employee may be properly deemed
project-based or regular, to wit: According to jurisprudence, the principal test for
determining whether particular employees are properly characterized as “project[-based]
employees” as distinguished from “regular employees,” is whether or not the employees
were assigned to carry out a “specific project or undertaking,” the duration (and scope) of
which were specified at the time they were engaged for that project. The project could either
be (1) a particular job or undertaking that is within the regular or usual business of the
employer company, but which is distinct and separate, and identifiable as such, from the
other undertakings of the company; or (2) a particular job or undertaking that is not within
the regular business of the corporation. In order to safeguard the rights of workers against
the arbitrary use of the word “project” to prevent employees from attaining a regular status,
employers claiming that their workers are project[-based] employees should not only prove
that the duration and scope of the employment was specified at the time they were
engaged, but also, that there was indeed a project. (Emphases and underscoring supplied)
Also in the said case of Omni Hauling Services, Inc. v. Bon, G.R. No. 199388, September
3, 2014 the High Court explained the effect of absence of a written (project employment)
contract in this wise: Even though the absence of a written contract does not by itself grant
regular status to respondents, such a contract is evidence that respondents were informed
of the duration and scope of their work and their status as project employees. (See Dacuital
v. L.M. Camus Engineering Corp., G.R. No. 176748, September 1, 2010, 629 SCRA 702,
714) As held in Hanjin Heavy Industries and Construction Co., Ltd. v. Ibañez, 578 Phil. 497
(2008) citing numerous precedents on the matter, where no other evidence was offered,
the absence of the employment contracts raises a serious question of whether the
employees were properly informed of their employment status as project employees at the
time of their engagement.
The facts clearly shows the absence of contracts for each project. The 3 workers are
therefore not project employees.
NOTE: The foregoing answer can be found in pages 700 and 702-703 of the book entitled
Principles and Cases Labor Relations, First Edition 2016, by Atty. Voltaire T. Duano.
Questions regarding project employee were asked during the 2005 and 1998 Bar
Examinations.
[b] Can Axis be made solidarily liable with Mario Brothers to pay the unpaid wages and
13th month pay of Tristan, Arthur, and Jojo? Explain. (2.5%)
SUGGESTED ANSWER:
Yes, Axis can be made solidarily liable with Mario Brothers to pay the unpaid wages and
13th month pay of Tristan, Arthur, and Jojo. Whether the arrangment between Axis and
Mario Brothers is either legitimate contracting or labor-only contracting there is solidary
liability in by the principal for monetary claims of the employees of the cotnractor. The
diffence on the solidary liability was discussed in the case of Vigilla v. Philippine College of
Criminology, Inc. G.R. No. 200094, June 10, 2013, as follows:
Jurisprudence is also replete with pronouncements that a job-only contractor is solidarily
liable with the employer. One of these is the case of Philippine Bank of Communications v.
NLRC, 230 Phil. 430 (1986), where this Court explained the legal effects of a job-only
contracting, to wit:
Under the general rule set out in the first and second paragraphs of Article 106, an employer
who enters into a contract with a contractor for the performance of work for the employer,
does not thereby create an employer-employees relationship between himself and the
employees of the contractor. Thus, the employees of the contractor remain the contractor’s
employees and his alone. Nonetheless when a contractor fails to pay the wages of his
employees in accordance with the Labor Code, the employer who contracted out the job to
the contractor becomes jointly and severally liable with his contractor to the employees of
the latter “to the extent of the work performed under the contract” as such employer were
the employer of the contractor’s employees. The law itself, in other words, establishes an
employer-employee relationship between the employer and the job contractor’s employees
for a limited purpose, i.e., in order to ensure that the latter get paid the wages due to them.
A similar situation obtains where there is “labor only” contracting. The “labor-only”
contractor-i.e “the person or intermediary” - is considered “merely as an agent of the
employer.” The employer is made by the statute responsible to the employees of the “labor
only” contractor as if such employees had been directly employed by the employer. Thus,
where “labor-only” contracting exists in a given case, the statute itself implies or establishes
an employer-employee relationship between the employer (the owner of the project) and
the employees of the “labor only” contractor, this time for a comprehensive purpose:
“employer for purposes of this Code, to prevent any violation or circumvention of any
provision of this Code.” The law in effect holds both the employer and the “labor-only”
contractor responsible to the latter’s employees for the more effective safeguarding of the
employees’ rights under the Labor Code. (Id. at 439-440) [Emphasis supplied].
In this case, Mario Brothers failed to pay the salaries of the three employees. Therefore,
Axis can be held solidarily liable.
NOTE: The foregoing answer can be found in page 509 of the book entitled Principles and
Cases Labor Standards and Social Legislation, First Edition 2015, by Atty. Voltaire T.
Duano. Questions regarding the solidary liability have been the subject matter of the 2014,
2013, 2012, 2011, 2009, 2004, 2002, 2001, 2000, 1997 and 1994 Bar Examinations.