Labor Quamto

QUESTIONS ASKED MORE THAN ONCE IN THE

BAR

QuAMTO (1994-2006)

Labor Law and Social Legislation

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DISCLAIMER

THE RISK OF USE, MISUSE OR

NON-USE OF THIS BAR REVIEW MATERIAL

SHALL BE BORNE BY THE USER/

NON-USER.

LABOR STANDARDS

Q: How do the provisions of the law on labor relations interrelate, if at all, with the provisions pertaining to labor standards? (2003)

A: There are two classifications of labor legislations.

They are labor standards which provides for the minimum standards of terms and conditions of work; and labor relations which focuses on the regulation and stabilization of the relationship between employers and employees. Instead of being mutually exclusive, these two classifications work together in forming the entire legal framework of Philippine labor laws. An example wherein these two concepts are interrelated is during collective bargaining. In Instances of collective bargaining, labor standards prescribe the minimum terms and conditions of work; and as such, the employer cannot negotiate for terms and conditions lower than that of the prescribed minimum. On the other hand, labor relations govern the employer-employee relationship by providing for Collective Bargaining Negotiations, which is an avenue for the parties to settle and compromise on their differences.

Q: What are the rights of an employer and an employee? (1996)

A: An employer is a person who employs the services

of another and pays for their wages and salaries. As such, Art. XIII, Sec. 3 of the Constitution provides and guarantees them with the following rights:

1. Reasonable return of investment 2. Expansion

3. Growth

On the other hand, an employee is a person who works under the employ of another in exchange of a valuable consideration in the form of wages, salaries, benefits, etc. Art. XIII, Sec. 3 of the Constitution similarly provides and similarly guarantees them the following rights:

1. Security of tenure 2. Receive a living wage 3. Humane conditions of work

4. Just share in the fruits of production 5. Right to self-organization

7. Conduct collective bargaining or negotiation with management

8. Engage in peaceful concerted activities including strike

9. Participate in policy and decision making process

Q: An exclusive school for girls, run by a religious order, has a policy of not employing unwed mothers, women with live-in partners, and lesbians.

a. Is the policy violative of any provision of the Labor Code on employment of women?

b. The same school dismissed two female faculty members on account of pregnancy out of wedlock. Did the school violate any provision of the Labor Code on employment of women? (2000)

A:

a.) No. There was no violation of the provisions of the Labor Code against discrimination. Management prerogative is the right of an employer to regulate all aspects of employment such as hiring, work assignments, work methods, tools and equipment to be used and the process and procedures to be followed in performance of work, etc. However, it must be noted that such right is not absolute and may be limited by special laws.

In the case at bar, the school had validly executed its right to management prerogative. As an educational institution, its very nature calls for the adoption of measures that would enable it to enhance and develop its laudable objectives. In fact, the policy adopted by the school is in consonance with the constitutional precept of incorporating ethical and moral values in schools.

Furthermore, what the Labor Code prohibits is the discrimination of employees on the basis of their gender. The questioned policy is clearly not the discrimination prohibited under Art. 135 of the Labor Code because the school is still hiring women as teachers, however, by virtue of their management prerogative, they added ad additional qualification that their employees must have an outstanding moral and ethical values.

b.) No. The Labor Code was not violated because the school clearly acted within its right to dismiss the two faculty members who got pregnant out of wedlock, because tolerating such immoral conduct would be in contradiction to the school's laudable mission. The dismissal of employees in order to insure its adherence to the Constitutional precept is an exercise of management prerogative allowed by the law.

Pursuant to such Constitutional precept, and by virtue of its nature of as an institution that caters only to female students, it is the school's right and responsibility to hire and maintain the employment of educators that would serve as good role models to their students not only in terms of academic competency, but also in terms of the moral standards, values and dignity of a woman.

Q: Little Hands Garment Company, an unorganized manufacturer of children's apparel with around 1,000 workers, suffered losses for the first time in history when its US and European customers shifted their huge orders to China and Bangladesh. The management informed its employees that it could no longer afford to provide transportation shuttle services. Consequently, it announced that a

normal fare would be charged depending on the distance traveled by the workers availing of the service.

Was the Little Hands Garments Company within its rights to withdraw this benefit which it had unilaterally been providing to its employees? Select the best answer(s) and briefly explain your reason(s) therefor.

a. Yes, because it can withdraw a benefit that is unilaterally given

b. Yes, because it is suffering losses for the very first time

c. Yes, because this is a management prerogative which is not due any legal or contractual obligation

d. No, because this amounts to a diminution of benefits which is prohibited by the Labor Code e. No, because it is a fringe benefit that has

already ripened into a demandable right or entitlement (2005)

A: Letter B. As a general rule, the Labor Code

guarantees that any benefit voluntarily given by an employer cannot be withdrawn as it has become a part of the terms and conditions of work of the employees. Such can only be withdrawn upon mutual agreement of the parties. In order for this prohibition to apply, the employer must have given such benefit to his employees fully aware of the fact that the latter are not legally nor contractually entitled to such. The giving of such benefits must be deliberate and for a long period of time.

However, by way of exception, the prohibition against withdrawal of benefit will not apply if the payment of the benefits had been made dependent upon the profitability of the employer's business. Under such circumstances, the employees cannot demand for the benefit to be continuously given because the giving of such benefit is merely by reason of their employer's gratuity pr act of liberality.

By virtue of such principles, the applicable rule in the case shall be the exception. Little Hands is clearly within its right to withdraw the free shuttle service because the benefit is given merely out of its liberality thereby the employees are not legally nor contractually entitled to it. The law recognizes that the withdrawal of the benefit by reason of loss of profit is clearly within the employer's management prerogative. In addition, to require Little Hands to continue providing for such benefit would be tantamount to punishing it for its past generosity.

Q: Harbor View Hotel has an existing Collective Bargaining Agreement (CBA) with the union of rank-and-file employees consisting, among others, of bartenders, waiters, roomboys, housemen and

stewards. During the lifetime of the CBA, Harbor View Hotel, for reasons of economy and efficiency, decided to abolish the position of housemen and stewards who do the cleaning of the hotel's public areas. Over the protest of the Union, the Hotel contracted out the aforementioned job to the City Service Janitorial Company, independent contractor which has a substantial capital in the form of Janitorial tools, equipment, machineries and competent manpower. Is the action of the Harbor View Hotel legal and valid? (1994)

A: Labor laws are designed to afford full protection

to labor, and one of the avenues to which it upholds its constitutional mandate is through Art. 248 which provided the instances that constitute unfair labor practices. One specific provision in point is Art. 248 (c) which prohibits employers to contract out services in relation to tasks performed by union members, which would interfere or restrain the employees right to self organization.

However, Art. 248 (c) only applies if there was interference or restraint to the employees' right to self-organization; and in the case at bar, there has been no clear indication of any violation. In fact, the action of the employer was a valid exercise of

management prerogative, because the law

recognizes that for reasons of economy and efficiency, an employer may validly exercise measures to keep his business in existence provided that there will be no violation of any of the rights of employees protected by the laws.

Q: Bulacan Medical Hospital (BMH) entered into a Collective Bargaining Agreement (CBA) with its Union, wherein it is expressly stipulated in the Management Prerogative Clause that BMH shall, in the exercise of its management prerogatives, have the sole and exclusive right to promulgate, amend and modify rules and regulations for the employees within the bargaining unit. A year after the contract was signed, BMH issued its Revised Rules and Regulations and furnished a copy thereof to the Union for dissemination to all employees covered by the CBA. The Union wrote BMH demanding that the Revised Rules and Regulations be first discussed with them before its implementation. BMH refused. So, the Union filed an action for unfair labor practice (ULP) against BMH.

1. Is the Union correct?

2. Assuming that the CBA was signed "or executed before the 1987 Constitution was ratified, would your answer to the preceding question be different? (1994)

A:

1. The union is correct. An employer's management prerogative is respected by law only when there is no violation of any guaranteed and protected rights of the employees. In the case at bar, it cannot be

said that there is a valid exercise of management prerogative because the provision under the CBA not only interferes but restricts the employees' rights to negotiate matters relating to the terms and conditions of their employment. It is clearly guaranteed under Article 255 that employees have right to participate in the decision-making process of matters relating to their terms and conditions of work. The insistence of the employer to exclusively promulgate the rules results to its undermining the rights of his employees; and such action of the employer is tantamount to ULP as provided under Art. 248 (g) of the Labor Code.

It has been a well established doctrine that management prerogative is not an absolute right. Jurisprudence states that a clear line must be drawn between management prerogative in terms of

business operation in general and those

management prerogative affecting employees' terms and conditions of work. The State recognizes, protects and even encourages the first type of management prerogative because it gives the employers the full reins in operating his business. However, on the second type of management prerogative, the state requires that the employer must at least inform the employees of the decisions and modes of action. The issue in the case at bar falls under the second type, and it is but right for the employees to demand discussion of the Revised Rules and Regulations before its implementation. Dissemination of copies of the RRR does not satisfy the requirement in informing the employees, because the employees are not only entitled to be informed of the revised terms and conditions of their employment, they are also entitled to be informed of the procedure undertaken by the management in reaching such decisions.

2. Yes, the answer would still be the same. Even if the CBA was executed before the ratification of the 1987 Constitution, it has been a long known state policy in accordance with the Principle of Social Justice that has been embodied in our system of government that employees must be given the right to participate in the decision-making process of matters related to their terms and conditions of work.

Q: Teofilo Lacson was one of more than one hundred (100) employees who were terminated from employment due to the closure of LBM Construction Corporation (LBM). LBM was a sister company of Lastimoso Construction, Inc. and RL Realty & Development Corporation. All three (3) entities formed what came to be known as the Lastimoso Group of Companies. The three (3) corporations were owned and controlled by members of the Lastimoso Family; their incorporators and directors all belonged to the Lastimoso family. The three (3) corporations were engaged in the same line of business, under one

management, and used the same equipment including manpower services.

Teofilo Lacson and his co-employees filed a

complaint with the Labor Arbiter against LBM, RL Realty and Lastimoso Construction to hold them jointly and severally liable for backwages and separation pay. Lastimoso Construction, Inc. and RL Realty & Development Corporation interposed a Motion to Dismiss contending that they are Juridical entitles with distinct and separate personalities from LBM Construction Corporation and therefore, they cannot be held jointly and severally liable for the money claims of workers who are not their employees. Rule on the Motion to Dismiss. Should it be granted or denied? Why? (1999)

A: The Motion to Dismiss must be granted. In

determining the existence of an employer-employee relationship, the following elements must be taken into consideration: 1) the selection and engagement of the employee; 2) the payment of wages; 3) the power of dismissal; and 4) the employer’s power to control the employee’s conduct.

Applying the said elements in the case at bar, there is no doubt that it is LBM alone which is the employer of Teofilo Lacson because it is only LBM which exercises the abovementioned requisites. The fact that LBM and its sister companies Lastimoso Construction Inc. and RL Realty & Development are inter-related in terms of management, equipment and manpower is of no moment because in so far as Teofilo Lacson is concerned, it is only LBM which controls, directs and pays for his employment. Moreover, in the case of Concept Builders v. NLRC, the Supreme Court ruled that as a fundamental principle of Corporation Law, corporations are considered to have a separate and distinct entity from its stock holders and from other corporations which it may be connected to.

In conclusion, Lastimoso Construction Inc. and RL Realty & Development must not be burdened with the fault of LBM in the ground that the sister companies had no control over the employment of Teofilo Lacson and the decision to dismiss him was purely made on the part of LBM.

Q: Asia Security & Investigation Agency (ASIA) executed a one-year contract with the Baron Hotel (BARON) for the former to provide the latter with twenty (20) security guards to safeguard the persons and belongings of hotel guests, among others. The security guards filled up Baron application form and submitted the executed forms directly to the Security Department of Baron. The pay slips of the security guards bore Baron's logo and showed that Baron deducted therefrom the amounts for SSS premiums, medicare contributions and withholding taxes. Assignments of security

guards, who should be on duty or on call, promotions, suspensions, dismissals and award citations for meritorious services were all done upon approval by Baron's chief Security officer. After the expiration of the contract with Asia, Baron did not renew the same and instead executed another contract for security services with another agency. Asia placed the affected security guards on "floating status" on "no work no pay" basis. Having been displaced from work, the Asia security guards filed a case against the Baron Hotel for illegal dismissal, overtime pay, minimum wage differentials, vacation leave and sick leave benefits, and 13th month pay.

Baron Hotel denied liability alleging that Asia is the employer of the security guards and therefore, their complaint for illegal dismissal and payment of money claims should be directed against Asia. Nevertheless, Baron filed a Third Party Complaint against Asia.

1. Is there an employer-employee relationship between the Baron Hotel, on one hand, and the Asia security guards, on the other hand? Explain briefly.

2. Assuming that ASIA is the employer, is the act of ASIA in placing the security guards on "floating status" lawful? Why? (1999)

A:

1. Yes. As a general rule, in cases of job contracting, the employees of the job contracting agency remain as its employees and are not transferred under the wings of the principal. However, this case proves to be more of the exception rather than the general rule. Taking into consideration the attending circumstances that it is BARON which pays the wages as evident in the security guards’ pay slips which bears the logo of BARON, that it is BARON which deducts the SSS premiums and medicare contributions, that it is BARON which determines the assignment, promotions and suspension of the said security guards, it is clear that BARON is their employer and not ASIA. This is due to the fact that it is BARON which fulfills the requisites for the existence of an employer-employee relationship which are as follows: 1) the selection and management of employees; 2) the payment of wages; 3) the power of dismissal; and 4) the employer’s power to control the employee’s conduct.

Therefore, under the circumstances as well as the general rule and the exception provided by law, it appears that BARON had hired the security guards as its employees.

2. Yes. Art. 286 recognizes the so called “floating status” of an employee. Under such status, the employer-employee relationship is not terminated,

rather it is suspended for reasons such as suspension of business operations or the fulfillment by the employee of a military or civic duty. Art. 286 also mandates that the floating status of an employee shall not exceed 6 months. If the floating status exceeds the allowable period, the employee is deemed to have been illegally dismissed. (Valdez v.

NLRC et al., GR No.125028, February 9, 1998).

Therefore, ASIA, for reasons that there are no jobs available for the security guards, may lawfully place them under floating status for a period not exceeding 6 months and shall reinstate them thereafter. Only when the floating status exceeds 6 months without reinstatement will ASIA be liable for illegal dismissal.

Q: Solar Plexus Bar and Night Club allowed by tolerance fifty (50) Guest Relations Officers (GRO) to work without compensation in its establishment under the direct supervision of its Manager from 8:00 p.m. to 4:00 a.m. everyday, including Sundays and holidays. The GROs, however, are free to ply their trade elsewhere at anytime but once they enter the premises of the night club, they are required to stay up to closing time. The GROs earned their keep exclusively from commissions for food and drinks, and tips from generous customers. In time, the GROs formed the Solar Ugnayan ng mga Kababaihang Inaapi (SUKI); a labor union duly registered with DOLE. Subsequently, SUKI filed a petition for certification election in order to be recognized as the exclusive bargaining agent of its members. Solar Plexus opposed the petition for certification election on the singular ground of absence of employer-employee relationship between the GROs on one hand and the night club on the other hand. May the GROs form SUKI as a labor organization for purposes of collective bargaining? Explain briefly. (1999)

A: Yes. Despite the work conditions agreed upon by

the owner of Solar Plexus and the GRO’s, Art. 138 of the Labor Code mandates that women who work in certain workplaces such as night clubs, beer houses, cocktail lounges, massage clinics or bars, who are under the effective control or supervision of an employer shall be considered as employees of such establishments, for purposes of labor and social legislation.

In the case at bar, SUKI, may form a labor organization for purposes of collective bargaining because in the eyes of the law they are employees of Solar Plexus; and as employees, the right to self-organization is granted by law.

Q: Pablo was a farm-hand in a plantation owned by ABC & Co., working approximately 6 days a week for a good 15 years. Upon Pablo's death, his widow filed a claim for burial grant and pension benefits with the Social Security System (SSS). The claim was

denied on the ground that Pablo had not been a registered member-employee.

Pablo's widow filed a petition before the SSS asking that ABC & Co. be directed to pay the premium contributions of Pablo and that his name be reported for SSS coverage. ABC & Co. countered that Pablo was hired to plow, harrow and burrow, using his own carabao and other implements and following his own schedule of work hours, without any supervision from the company.

If proven, would this factual setting advanced by ABC & Co. be a valid defense against the petition? (2003)

A: Yes. ABC & Co. has a valid defense. If all the

allegations are proven, it will be shown that Pablo was an independent contractor who does not fall under the compulsory coverage of SSS. As defined by law, an independent contractor is one who exercises independent employment and contracts to do a piece of work according to his own methods and without being subject to the control of his employer except as to the result of the work. (Phil. Mfg. Co. v.

Geronimo, GR No. L-6969, November 29, 1954).

As shown by the facts of the case, Pablo had control over the method, equipment and schedule of the work that he had contracted to perform. Evidently, he is an independent contractor.

Therefore, by not falling under the category of an employee, ABC & Co. cannot be directed to pay Pablo’s premium contribution upon his death. Pablo however may be covered by a different SSS coverage as a self-employed person.

Q:"X" is a bona fide service contractor providing manpower services to various companies, possessing the necessary capital and equipment needed to effectively carry out its commitments. "Y" is an employee of "X" and assigned to work as a janitor in Company "Z". In the course of Y's assignment, Z's supervisors and employees would give verbal instructions to Y as to how and where to perform his work. X pays Y salary. Subsequently, Y's services were terminated by X. Y sued Z for Illegal dismissal. May Y's case against Z prosper? Why? (2001).

A: No, the charges of Y will not prosper because Z is

not his employer. It is X who is his employer even though he renders his services in the offices of Z. X is the independent contractor of Z.

Applying the four-fold tests in determining who the employer of Y is, the following elements must be present: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal and (4) the employer’s power to control the employee’s conduct.

In the present case, it is clear that the following elements are present in the relationship between X and Y. The fact that Z’s supervisors give verbal orders to Y during the performance of his service which may denote control over his conduct, it is insufficient to overthrow the other 3 elements present in the relationship of X and Y namely, (1) that it was X who selected and engaged in the employment of Y; (2) that it was X who paid Y’s salaries and (3) that it was X who had the power to dismiss X.

Q: Pandoy, an electronics technician, worked within the premises of Perfect Triangle, an auto accessory shop. He filed a complaint for illegal dismissal, overtime pay and other benefits against Perfect Triangle, which refused to pay his claims on the ground that Pandoy was not its employee but was an independent contractor. It was common practice for shops like Perfect Triangle to collect the service fees from customers and pay the same to the independent contractors at the end of each week. The auto shop explained that Pandoy was like a partner who worked within its premises, using parts provided by the shop, but otherwise Pandoy was free to render service in the other auto shops. On the other hand, Pandoy insisted that he still was entitled to the benefits because he was loyal to Perfect Triangle, it being a fact that he did not perform work for anyone else. Is Pandoy correct? Explain briefly. (2002)

A: Pandoy is incorrect. An independent contractor is

defined as one who exercises independent employment and contracts to do a piece of work according to his own methods and without being subject to the control of his employer except as to the result of the work.

In this case, the fact that Pandoy works within the premises of Perfect Triangle’s shop is not tantamount to his employment as a worker of Perfect Triangle. The common practice for auto accessory shops like the Perfect Triangle in engaging the services of Pandoy and allowing him to conduct his work in accordance to his own methods and in permitting him to contract other services outside Perfect Triangle falls squarely within the definition of an independent contractor. Therefore, not being an employee, his claim will not stand as he is not legally entitled to the remedies accorded by law only to employees, no matter how loyal he is to Perfect Triangle.

Q: Metro Grocery Inc. arranged with Mr. Juan Dado, a Barangay Chairman, to provide the grocery with workers who will work as cashiers, bag boys, shelf counter helpers and sanitation workers. The grocery will pay Mr. Dado an amount equivalent to the direct and hidden costs of the wages of each worker assigned, plus ten percent (10%) to cover the administrative costs related to their

arrangement. Mr. Dado, in turn, will pay directly the workers their wages. As far as the workers are concerned, Mr. Dado is their employer. A group of concerned workers consulted you if Mr, Dado is really under the law their employer.

1. How will you analyze the problem in order to formulate your answer?

2. What is the legal significance, if any, of the question of the concerned workers as to who is their employer? (2000)

A:

1. I will use the four-fold test in analyzing the situation. Under this test, in order to determine the existence of an

employer-employee relationship, the following

elements must be present: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal and (4) the presence or absence of the power to control. (Abante, Jr. v. Ladmadrid Bearing

and Parts Corporation et al., GR No. 159890, May 28, 2004).

In the case at bar, it is clear that the grocery store is the employer of the firstly because it pays to Mr. Dado of the hidden costs and other administrative costs related to the arrangement of the workers. This means that, although the manner of selection and engagement of the employees were in the hands of Mr. Dado, such is not within his full control for the funds needed for the selection and engagement were given by the grocery store. Secondly, it is the grocery store who pays their wages via the payment it gave to Mr. Dado for hidden costs. Lastly, it is clear that it is the grocery store who has complete control over the workers’ conduct and it also had the power to dismiss them. Mr. Dado was only there to furnish the grocery store with its needed employees. 2. The legal significance of the abovestated

problem would arise in cases where the employees were illegally dismissed. Since the employee arrangement is that of a Labor Only Contracting, it is prohibited by law. Under Sec. 6 of DO 18-02 Series of 2002, labor only contracting has been expressly declared prohibited by law. It is defined as an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and that the contractor or subcontractor does not have substantial capital or investment and that he does not exercise the power of control over the contractual employee.

Moreover, the determination of the real employer of the workers would result to the determination as to who is responsible for providing the workers with mandatory

legal privileges and benefits that

contractual employees are entitled to. Furthermore, in cases of illegal dismissal, the employees will know who between Mr. Dado and the grocery store are they going to file charges against.

Q: Clean Manpower Inc. (CMI) had provided janitorial services to the National Economic Development Authority (NEDA) since April 1988. Its service contract was renewed every three months. However, in the bidding held on July 1992, CMI was disqualified and excluded. In 1993, six janitors of CMI formerly assigned at NEDA filed a complaint for underpayment of wages. Both CMI and NEDA were impleaded as respondents for failure to comply with NCR Wage Orders Nos. 01 and 02, which took effect on November 1, 1990 and January 2, 1992, respectively.

Should NEDA, a government agency subject to budgetary constraints, be held liable solidarily with CMI for the payment of salary differentials due the complainants? Cite the legal basis of your answer. (2004)

A: Yes, NEDA should be impleaded as a defendant.

Art. 106 provides that in the event that the contractor or subcontractor fails to pay the wages the wages of his employees, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to the employees directly employed by him.

Q: What is a "labor-only" contract? (1994)

A: A labor-only contract shall refer to an

arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present: (a) the contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or (b) the contractor does not exercise the right to control over the performance of the work of the contractual employee. This form of arrangement is expressly prohibited by law. (Sec. 5

DOLE DO 18-02 SERIES OF 2002)

Q: Distinguish between "job contracting" and "labor only contracting." (1997)

A: When a person, not being an employer, contracts

with an independent contractor for the performance of any work, task, job or project, there is "JOB CONTRACTING." When the independent contractor does the work that is contracted out, he is not under the control of the person who contracted out the work to be done.

In "LABOR-ONLY CONTRACTING", a person supplies workers to an employer. Said person does not have substantial capital or investments in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities related to the principal business of the employer to whom the workers are supplied.

Q: Sta. Monica Plywood Corporation entered into a contract with Arnold for the milling of lumber as well as the hauling of waste wood products. The company provided the equipment and tools because Arnold had neither tools and equipment nor capital for the job. Arnold, on the other hand, hired his friends, relatives and neighbors for the job. Their wages were paid by Sta. Monica Plywood Corp. to Arnold, based on their production or the number of workers and the time used in certain areas of work. All work activities and schedules were fixed by the company.

A. Is Arnold a job contractor? Explain briefly. B. Who is liable for the claims of the workers hired by Arnold? Explain briefly. (2002)

A:

A. No. In the leading case of Baguio v. NLRC,

GR No. 79004, October 4, 1991, the

Supreme Court had the occasion to state the circumstances leading to the existence of a job contracting arrangement. Job contracting exists when (1) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) the contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business.

In the present case, it is obvious that Arnold is not a job contractor for he does not have the either the substantial capital or the control over the employees.

B. In this case, it shall be Sta. Monica Plywood who is liable for the claims of the workers as it is the real employer of the latter; and not Arnold as he is a labor-only contractor who merely deals with the furnishing of manpower to Sta. Monica.

Q: Distinguish the liabilities of an employer who engages the services of a bonafide "independent contractor" from one who engages a "labor-only" contractor? (1994)

A: An employer who engages the services of a bona

fide independent contractor is jointly and severally liable with the said independent contractor in the event that it fails to pay the recruited workers of their wages in accordance with the law, as provided under Art. 106.

Similarly, under the same abovestated provision, an employer who engages into a labor only contracting, shall be fully responsible for the employees in the same manner and extent as if he is the one who directly employed or recruited them; as the labor-only contractor is considered by law as merely an agent of the employer.

Q: TRX, a local shipping firm, maintains a fleet of motorized boats plying the island barangays of AP, a coastal town. At day’s end the boat operators/crew members turn over to the boat owner their cash collections from cargo fees and passenger fares, less the expenses for diesel fuel, food, landing fees and spare parts. Fifty percent (50%) of the monthly income or earnings derived from the operations of the boats are given to the boatmen by way of compensation. Deducted from the individual shares of the boatmen are their cash advance and peso value of their absences, if any. Are these boatmen entitled to overtime pay, holiday pay, and 13th month pay? (2004)

A: No. The boatmen are considered as workers who

are paid by results. More specifically, they are task workers who are paid not based on the number of units produced, but are paid based on the completion of their task, with appropriate deductions based on circumstances such as road and traffic conditions. (Adriano Quintos, et al. v. D.D.

Transportation Co., NLRC Case No. RB-IV-20941, May 31, 1979). In the case at bar, the boatmen’s payment

differs depending on conditions such as the increase or decrease of the price of diesel, food expenses, landing fees and spare parts.

In connection, their payment although being direct remunerations or compensation for their service cannot be considered as wages for they do not partake the nature of wages as defined by the laws on labor. Instead, their payment is considered as commissions; and as held by the Supreme Court in

the case of King of Kings Transport, Inc. et al. v.

Mamac, GR No. 166208, June 29, 2007, workers who

are paid by commission are not entitled to the 13th month pay.

Q: Ruben Padilla entered into a written agreement with Gomburza College to work for the latter in exchange for the privilege of studying in said institution. Ruben's work was confined to keeping clean the lavatory facilities of the school. One school day, Ruben got into a fist fight with a classmate, Victor Monteverde, as a result of which the latter sustained a fractured arm.

Victor Monteverde filed a civil case for damages against Ruben Padilla, impleading Gomburza College due to the latter's alleged liability as an employer of Ruben Padilla.

Under the circumstances, could Gomburza College be held liable by Victor Monteverde as an employer of Ruben Padilla? (1997)

A: No. Under Sec. 14, Rule X, Book III of the

Implementing Rules and Regulations, there is no employer-employee relationship between students on the one hand, and schools, colleges or universities on the other, where students work for the latter in exchange for the privilege to study free of charge, provided the students are given real opportunity, including such facilities as may be reasonably necessary, to finish their chosen course under such agreement.

Therefore, there being no employer-employee relationship between Gomburza College and Ruben Padilla, the former cannot be impleaded by Victor Monteverde in his complaint.

Q: Phil-Norksgard Company, Inc., a domestic corporation engaged in the optics business, imported from Sweden highly sophisticated and sensitive instruments for its laboratory. To install the instruments and operate them, the company intends to employ Borja Anders, a Swedish technician sojourning as a tourist in the Philippines.

As lawyer of the company, what measures will you take to ensure the legitimate employment of Borja Anders and at the same time protect Philippine labor. Discuss fully. (1995)

A: As the lawyer of the said company, in order to

ensure the legitimacy of hiring Borja Anders, I will consider the requisites in hiring non-resident aliens which are provided under Art. 40. Firstly, I would ensure that a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired is conducted. Subsequently, I would ascertain that an employment

permit issued by the Department of Labor is obtained by Borja Anders.

Q: A lady worker was born with a physical deformity, specifically, hard of hearing, speech impaired, and color blind. However, these deficiencies do not impair her working ability. Can the employer classify the lady worker as a handicapped worker so that her daily wage will only be seventy-five percent (75%) of the applicable daily minimum wage? (1998)

A: No. The mere fact that a worker has a disability

does not make her a handicapped worker if despite her disability, she can still efficiently perform her work. She must be considered as a qualified disabled worker who is entitled to the same treatment as qualified able-bodied workers. (Alcantara, 2009)

Q: Ana Cruz has a low IQ. She has to be told at least three times before she understands her daily work assignment. However, her work output is at least equal to the output of the least efficient worker in her work section. Is Ms, Cruz a handicapped worker? Explain. (2000)

A: No. Low IQ or low efficiency does not make the

worker "handicapped" in the contemplation of law. Under Art. 78, a handicap means such physical or mental infirmity that impairs capacity to work. The deficiency may also be due to age or injury.

Q: For humanitarian reasons, a bank hired several handicapped workers to count and sort out currencies. Their employment contract was for six (6) months. The bank terminated their employment on the ground that their contract has expired prompting them to file with the Labor Arbiter a complaint for illegal dismissal. Will their action prosper? (2006)

A: No. Art. 80 provides that in cases of employing

handicapped workers, an employment agreement must be contracted. Art. 80 further provides that such employment agreement shall contain the duration of the employment period.

In the case at bar, the action will not prosper for the bank cannot be held liable for illegal dismissal for the handicapped employees themselves have agreed that their term of employment will only be limited to 6 months.

Note: The contract signed by the workers is akin to a

probationary employment, during which the bank determined the employees’ fitness for the job. If the bank

renewed the contract after the lapse of the six-month probationary period, the employees will then become

regular employees since the task of counting and sorting bills is necessary and desirable to the business of the bank.

(Bernardo et. al. v. NLRC and Far East Bank and Trust Co. G.R. No. 122917, July 12, 1999)

Q: Mrs. Josie Juan is the confidential secretary of the Chairman of the Board of the bank. She is presently on maternity leave. In an arrangement where the Chairman of the Board can still have access to her services, the bank allows her to work in her residence during her leave. For this purpose, the bank installed a fax machine in her residence, and gave her a cellphone and a beeper. Is Mrs. Juan a homeworker under the law? Explain. (2000) A: No. A homeworker under the law is defined as a

person who carries out a work for an employer at home. Under this scheme, the employer may or may not furnish the materials needed for the completion of the task. Thereafter, the homeworker delivers the finished product to the employer.

Applying the legal definition, it is clear that Mrs. Juan is not a homeworker; instead, she is an officeworker because she does not contract work in which the finished product will be returned or repurchased by the bank. Rather, she performs secretarial work which does not produce several finished products to be sold or distributed.

Q: Nova Banking Corporation has a resthouse and recreational facility in the highlands of Tagaytay City for the use of its top executives and corporate clients. The resthouse staff includes a caretaker, two cooks and a laundrywoman. All of them are reported to the Social Security System as domestic or household employees of the resthouse and recreational facility and not of the bank. Can the bank legally consider the caretaker, cooks and laundrywoman as domestic employees of the resthouse and not of the bank? (2000)

A: No. In the case of Apex Mining Co., Inc. v. NLRC, et

al. (GR No. 94951, April 22, 1991), the Supreme

Court ruled that the legal definition of a “domestic employee” or a “househelp” cannot be interpreted as to include employees who are working in staff houses, or in this case the resthouse of Nova Banking Corporation, which is primarily for the use of its top executives and corporate clients. The rationale behind the ruling is that the Supreme Court recognized that in order for an employee to be regarded as a househelp, the criteria that must be satisfied is the nature of his/her work which is for the personal comfort and enjoyment of the family of the employer in the home of the said employer. In this case, while it may be true that the nature of the work of the caretaker, 2 cooks and laundrywoman in a home and in a company resthouse may be of similar in nature, the difference in their circumstances is that in the former instance, they are actually serving the family while in the latter case, whether it is a corporation or a single proprietorship engaged in business or industry or any other agricultural or similar pursuit, service is being rendered in the staffhouses, in this case

resthouses or within the premises of the business of the employer for the benefit of the employer, other employees and clients. In such instance, they are employees of the company or employer in the business concerned entitled to the privileges of regular employees.

Q: Determine whether the following minors should be prohibited from being hired and from performing their respective duties indicated hereunder:

1. A 17-year old boy working as miner at the Walwadi Mining Corporation.

2. An 11-year old boy who is an accomplished singer and performer in different parts of the country. (2006)

A:

1. Yes, he should be prohibited from being hired. By virtue of Sec. 12-D, paragraph 4 (c) of RA 9231, no child shall be engaged in the worst forms of child labor which includes hiring for work which, by its nature or the circumstances in which it is carried out, is hazardous or likely to be harmful to the health, safety or morals of children, such that it is

performed underground, underwater, or at

dangerous heights.

Applying the said prohibition, the hiring of a 17 year old boy to work as a miner at the Walwadi Mining Corporation falls within the scope of the prohibition for it is needless to say that working in a mine is not only dangerous but is also conducted underground. 2. No, he should not be prohibited from being hired. Sec. 12 (2) of RA 9231 provides that children below 15 years of age shall not be employed except where a child’s employment or participation in public entertainment or information through cinema, theater, radio or television is essential: Provided, the employment contract is concluded by the child’s parents and legal guardian, with the express agreement of the child concerned, if possible, and the approval of the Department of Labor and Employment: and Provided, further, That the following requirements in all instances are complied with:

a) The employer shall ensure the protection,

health, safety, morals and normal

development of the child;

b) The employer shall institute measures to

prevent the child’s exploitation or

discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time;

c) The employer shall formulate and

implement, subject to the approval and supervision of competent authorities, a

continuing program for training and skills acquisition of the child.

Q: You were asked by a paint manufacturing company regarding the possible employment as a mixer of a person, aged seventeen (17), who shall be directly under the care of the section supervisor. What advice would you give? Explain briefly. (2002)

A: I would advise the company not to hire the

17-year old. Under Sec. 3, Rule XI, Book III of the Implementing Rules and Regulations, any person of either sex, between 15 and 18 years of age may be employed in any non-hazardous work. Under the same section, the IRR clarified that non-hazardous work would mean an undertaking or activity in which the employee is not exposed to any risk which constitutes an imminent danger to his safety and health.

Applying the said legal principles to the case at bar, although the law allows the hiring of minors between the ages of 15 and 18, it is subject to the condition that the nature of the work for which they were hired must not post a threat to their health and safety. Therefore, under the circumstances, it is not only unwise, but also illegal for the company to hire the 17- year old because the nature of the work of a paint mixer clearly posts a threat to the health and safety of the child. Clearly, the company cannot meet the condition imposed by law.

Q: A spinster school teacher took pity on one of her pupils, a robust and precocious 12-year old boy whose poor family could barely afford the cost of his schooling. She lives alone at her house near the school after her housemaid left. In the afternoon, she lets the boy do various chores as cleaning, fetching water and all kinds of errands after school hours. She gives him rice and P30.00 before the boy goes home at 7:00 every night. The school principal learned about it and charged her with violating the law which prohibits the employment of children below 15 years of age. In her defense, the teacher stated that the work performed by her pupil is not hazardous, and she invoked the exception provided in the Department Order of DOLE for the engagement of persons in domestic and household service. Is her defense tenable? Reason. (2004) A: No. Sec.12 (1) of RA 9231 provides that children

below 15 years of age shall not be employed except when a child works directly under the sole responsibility of his/her parents or legal guardian and where only members of his family are

employed: Provided however, that his/her

employment neither endangers his/her normal development: Provided further, that the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education.

The exception provided under RA 9231 is very clear. And since a school teacher is neither a parent nor a legal guardian; and the attendant circumstances of the case does not fall within the circumstances exempted by law because no one in the student’s family is employed by the teacher, the defense of the teacher is not tenable on the ground that it does not fall under the exceptions provided for by law. Moreover, notwithstanding the Department Order of DOLE invoked by the teacher, the defense is still untenable for mere department orders cannot prevail over the clear wordings of the law; and department orders cannot go beyond the scope of the statute it seeks to implement.

Q: A Personnel Manager, while interviewing an attractive female applicant for employment, stared directly at her for prolonged periods, albeit in a friendly manner. After the interview, the manager accompanied the applicant to the door, shook her hand and patted her on the shoulder. He also asked the applicant if he could invite her for dinner and dancing at some future time. Did the Personnel Manager, by the above acts, commit sexual harassment? Reason. (2000)

A: Yes. The manager committed sexual harassment,

specifically sexual harassment in a work related or employment environment. Under Sec. 3 (a) of the Anti-Sexual Harassment Act of 1995, even if the act of the manager is friendly, and the employment of the applicant is not conditioned upon her agreement to go out with him, the act of the manager will result in an intimidating, hostile, or offensive environment for the female employee in the future.

Q: Pedrito Masculado, a college graduate from the province, tried his luck in the city and landed a job as utility/maintenance man at the warehouse of a big shopping mall. After working as a casual employee for six months, he signed a contract for probationary employment for six months. Being well-built and physically attractive, his supervisor, Mr. Hercules Barak, took special interest to befriend him. When his probationary period was about to expire, he was surprised when one afternoon after working hours, Mr. Barak followed him to the men’s comfort room. After seeing that no one else was around, Mr. Barak placed his arm over Pedrito’s shoulder and softly said: “You have great potential to become regular employee and I think I can give you a favorable recommendation. Can you come over to my condo unit on Saturday evening so we can have a little drink? I’m alone, and I’m sure you want to stay longer with the company.”

Is Mr. Barak liable for sexual harassment committed in a work-related or employment environment? (2004)

A: Yes, Mr. Barak is liable for sexual harassment.

Under Sec. 3 (a.1) of the Anti-Sexual Harassment Act of 1995, a work related sexual harassment can be committed when the sexual favor is made as a condition for the hiring, reemployment or continued employment of an employee or in the granting of favorable compensation, terms and conditions, promotions or privileges.

The case at bar clearly falls within Sec. 3 (a.1) of the Anti-Sexual Harassment Act of 1995 because the invitation of Mr. Barak, most especially the phrase “I’m alone, and I’m sure you want to stay longer

with the company.”; taking into consideration on

how most people use such term in the ordinary course of living, is clearly insinuating a meeting that is sexual in nature. More importantly, the favorable recommendation needed by Pedrito in order to be promoted as a regular employee is conditioned upon his meeting with Mr. Barak in his condominium.

Q: Can an individual, the sole proprietor of a business enterprise, be said to have violated the Anti-Sexual Harassment Act of 1995 if he clearly discriminates against women in the adoption of policy standards for employment and promotions in the enterprise? Explain. (2003)

A: No. In order for the employer to commit sexual

harassment under the Anti-Sexual Harassment Act of 1995, there must be a solicitation of sexual favor from the employee; and the refusal of the employee resulted to his discrimination by gender. However in this case, the employer did not solicit any sexual favor. Instead, he had gone outright and discriminated the female employees. At most, the employer would be liable for the violation of the prohibition against discrimination against women as provided under Art. 153.

Q: At any given time, approximately ninety percent (90%) of the production workforce of a semiconductor company are females. Seventy-five percent (75%) of the female workers are married and of child-bearing years. It is imperative that the Company must operate with a minimum number of absences to meet strict delivery schedules. In view of the very high number of lost working hours due to absences for family reasons and maternity leaves, the Company adopted a policy that it will employ married women as production workers only if they are at least thirty-five (35) years of age. Is the policy violative of any law? (1998)

A: No. Despite the prohibition against discrimination

against age, it cannot be said that the qualification imposed by the management falls within the said provision. There is no violation because the qualification imposed is justified by the company’s goal to meet the strict delivery schedules. The act of the management is a valid exercise of management prerogative which must be respected by law.

In addition, simple logic would prove that in order for a policy to be declared discriminatory, the said policy must be without basis, whimsical and capricious on the part of the employer. In this case, the policy is clearly justified.

RECRUITMENT

Q: Concerned Filipino contract workers in the Middle East reported to the Department of Foreign Affairs (DFA) that XYZ, a private recruitment and placement agency, is covertly transporting extremists to terrorist training camps abroad. Intelligence agencies of the government allegedly confirmed the report.

Upon being alerted by the DFA, the Department of Labor and Employment issued orders cancelling the licenses of XYZ, and imposing an immediate travel ban on its recruits for the Middle East. XYZ appealed to the Office of the President to reverse and set aside the DOLE orders, citing damages from loss of employment of its recruits, and violations of due process including lack of notice and hearing by DOLE. The DOLE in its answer claimed the existence of an emergency in the Middle East which required prompt measures to protect the life and limb of OFWs from a clear and present danger posed by the ongoing war against terrorism.

Should the DOLE orders be upheld or set aside? (2004)

A: Yes, the DOLE order must be upheld. Art. 35

bestows upon the Secretary of Labor the power to suspend or cancel the license or authority or recruitment agencies to recruit employees for overseas employment for violations of the rules and regulations issued by DOLE, the Bureau of Employment Services, the Overseas Employment Development Board, and the National Seamen Board, for violations of the provisions of the Labor Code and other Presidential Decrees, the Revised Penal Code, the Anti-Dummy Law, General Orders and Letters of Instructions.

Currently, we have the Human Security Act of 2007 which penalizes individuals who engage in the acts of terrorism either as principals, accomplices or accessories. In this case the Act of XYZ clearly falls within the said law. Therefore, in the interest of safeguarding the public from acts of terrorism, it is but justified that DOLE had cancelled its license.

Q: What qualifying circumstances will convert "illegal recruitment" to "economic sabotage," thus subjecting its perpetrator or perpetrators to a penalty of life imprisonment and a fine of at least P500,000.00? Please explain your answer briefly. (2005)

A: An illegal recruitment is considered to have

evolved into economic sabotage when it is committed by a syndicate or committed in large scale. Illegal recruitment is deemed to have been committed by a syndicate when the recruitment is carried out by a group of 3 or more persons conspiring and/or confederating with one another in carrying out any act under Art. 38. On the other hand, it is deemed committed in large scale it is committed against 3 or more persons individually or as a group. (Alcantara, 2009)

Q: Maryrose Ganda's application for the renewal other license to recruit workers for overseas employment was still pending with the Philippine Overseas Employment Administration (POEA). Nevertheless, she recruited Alma and her three sisters, Ana, Joan, and Mavic, for employment as housemates in Saudi Arabia. Maryrose represented to the sisters that she had a license to recruit workers for overseas employment. Maryrose also demanded and received P30,000.00 from each of them for her services. However, Maryrose's application for the renewal of her license was denied, and consequently failed to employ the four sisters in Saudi Arabia.

The sisters charged Maryrose with large scale illegal recruitment. Testifying in her defense, Maryrose declared that she acted in good faith because she believed that her application for the renewal of her license would be approved. Maryrose adduced in evidence the Affidavits of Desistance which the four private complainants had executed after the prosecution rested its case. In the said affidavits, they acknowledge receipt of the refund by Maryrose of the total amount of P120,000.00 and indicated that they were no longer interested to pursue the case against Maryrose. Resolve the case with reasons. (2005)

A: Yes, the charges against Maryrose will prosper.

First, her act of recruiting the sisters while her license was still pending renewal was in violation of the Migrant Workers’ Act of 1995. Under this statute, illegal recruitment is committed by a non-license or non-holder of authority who offers or promises employment abroad in consideration of a fee. In the case at bar, Maryrose could be considered as a non-licensee or non-holder of authority for her license to recruit was still pending renewal. Thus, for all intents and purposes, during the time that she recruited the sisters her license is to be considered expired and non-existent for it is still subject to the approval or denial of the proper government agency. The subsequent denial of her application to renew is immaterial for what is important is the status of the license at the time the recruitment happened. Nonetheless, the subsequent denial serves to bolster the sisters’ claims that Maryrose was an illegal recruiter.

Secondly, the sisters are correct in charging Maryrose with large scale illegal recruitment. Art. 38 (b) provides that illegal recruitment is considered committed in large scale when it is committed against 3 or more persons either individually or collectively. In the case at bar, the recruitment of Ana, Joan and Mavic falls within the second circumstance for they were recruited as a group. Lastly, the claims of Maryrose that she acted in good faith does not hold water for the Migrant Workers’ Act of 1995 is a special penal law which is in the nature of a malum prohibitum. Under this nature, good faith is not a defense for what is penalized is the commission of the criminal act and not the intent of the offender. (People v. Saulo, G.R. No.

125903, November 15, 2000)

Q: A Recruitment and Placement Agency declared voluntary bankruptcy. Among its assets is its license to engage in business. Is the license of the bankrupt agency an asset which can be sold in public auction by the liquidator? (1998)

A: No. Art. 29 provides for the rules on the

non-transferability of license or authority. The said provision states that no license or authority shall be used directly or indirectly by any person other than the one in whose favour it was issued or at any place other than that stated in the license or authority, nor may such license or authority be transferred, conveyed or assigned to any other person or entity. Therefore, if the law prohibits transfer, conveyance or assignment, then it can be inferred that it all the more prohibits the sale of a license or authority as it is a permanent transfer of the rights and privileges granted to a specific individual under the license or authority.

Q: Is a corporation, seventy percent (70%) of the authorized and voting capital of which is owned and controlled by Filipino citizens, allowed to engage in the recruitment and placement of workers, locally or overseas? Explain briefly. (2002)

A: No. The minimum requirement of authorized and

voting capital stock in a juridical entity to be able to engage in the recruitment of workers abroad is 75% as provided under Art. 27.

Q: Wonder Travel and Tours Agency (WTTA) is a well-known travel agency and an authorized sales agent of the Philippine Air Lines. Since majority of its passengers are overseas workers, WTTA applied for a license for recruitment and placement activities. It stated in its application that its purpose is not for profit but to help Filipinos find employment abroad. Should the application be approved? (2006)

A: No. The application should be disapproved. The