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.
-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
-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.
-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.
-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.
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.
[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.
-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.
[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.
-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.
-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. In this case, Mario Brothers failed to pay the salaries of
the three employees. Therefore, Axis can be held
solidarily liable.
[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].