SYLLABUS FOR THE 2022 BAR EXAMINATIONS

LABOR LAW AND SOCIAL LEGISLATION

I. GENERAL PRINCIPLES

1. Enumerate at least four (4) policies enshrined in Section 3, Article XIII of the
Constitution that are not covered by Article 3 of the Labor Code on declaration of basic
policy? (2009)

Four (4) policies enshrined in Section 3, Article XIII of the 1987 Constitution
which are not covered by Article 3 of the Labor Code on the declaration of basic policy
are:

1. All workers shall have the right to peaceful concerted activities including the
right to strike in accordance with the law
2. They shall be entitled to a living wage
3. They shall participate in policy and decision-making processes affecting their
rights and benefits as may be provided bylaw
4. The state shall promote the principle of shared responsibility between workers
and employers

2. Explain the extent of the workers right to participate in policy and decision-making
process as provided under Article XIII, Sec. 3 of the Philippine Constitution. Does it
include membership in the Board of Directors of a Corporation? (2008)

Under Article XIII, Sec. 3 of the Philippine Constitution, the workers shall
participate in policy and decision making affecting their rights, duties, welfare and
benefits, through labor management councils (Art. 211[g] and 255 of the Labor
Code). The worker’s rights do not include membership in the Board of Directors of a
Corporation (See Meralco v Meralco Employees, G.R. No. 127598, January 27,
1999)

3. What is the principle of codetermination? (2007)

The principle of codetermination is one which grants the workers the right to
participate in policy and decision-making processes affecting their rights and benefits.
(Art. 255, Labor Code)

Alternative Answer:

By the principle of codetermination, the workers have the right to participate in

the decision-making process of the employers on matters affecting their rights and
benefits, through collective bargaining agreements, grievance machineries, voluntary
modes of settling disputes and conciliation proceedings mediated by government.

Alternative Answer:

Codetermination is a term identified with worker’s participation in the

determination of business policy. Under the German model, the most common form of
codetermination, employees of some firms are allocated control rights by law, in the
form of board seats. It is based on the conviction that democratic legitimacy cannot be
confined to government but must apply to all sectors of society. Besides corporate
control rights, the German system deals with dual channels of representation of
employees by union (at the industry wide, and microeconomic level) and work councils
(at the firm level).

4. What are the salient features of the protection to labor provision of the Constitution?
(1998)

The salient features of the protection to labor provision of the Constitution

(Article XIII, Sec. 3) are as follows:

1. Extent of Protection – Full protection to labor;

2. Coverage of Protection – Local and overseas, organized and unorganized;
3. Employment Policy – Full employment and equality of employment
opportunities for all;
4. Guarantees Unionism and Method of Determination Conditions of Employment
– Right of all workers to self-organization, collective bargaining and negotiations;
5. Concerted Activities – Right to engage in peaceful concerted activities,
including the right to strike in accordance with law;
6. Working Conditions – Right to security of tenure, humane conditions of work
and a living wage;
7. Decision Making Processes – Right to participate in policy and decision-making
processes affecting their rights and benefits; and
8. Share in Fruits of Production – Recognition of right of labor to its just share in
fruits of production.

5. In her State of the Nation Address, The President Stressed the need to provide an
investor-friendly business environment so that the country can compete in the global
economy that now suffers from crisis bordering on recession. Responding to the call,
Congress passed two innovative legislative measures, namely: (1) a law abolishing the
security of tenure clause in the Labor Code; and (2) a law allowing contractualization in
all areas needed in the employer’s business operations. However, to soften the impact
of these measures, the law requires that all employers shall obtain mandatory
unemployment insurance coverage for all their employees.
 The constitutionality of the two (2) laws is challenged in court. As judge, how will
you rule? (2009)

The first innovative measure, on abolition of the security of tenure clause in the
Labor Code, is unconstitutional as it goes against the entitlement of workers to security
of tenure under Sec. 3, Art XIII of the 1987 Constitution.

The second innovation measure, on a law allowing contractualization in all areas

needed in the employer’s business operations, is legal. Article 106 of the Labor Code
already allows the Secretary of Labor and Employment not to make appropriate
distinction between the labor-only and job contracting. This means that the Secretary
may decide, through implementing regulation, arrangement where the person supplying
workers to an employer does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others, and the workers recruited
and place by such person are performing activities which are directly related to the
principal business of the employer.

Hence, it would be legal for Congress to do any with the prohibition on labor-
only and allow contractualization in all areas needed in the employer’s business
operations. Assuming, of course, that contractual workers are guaranteed their security
of tenure.

II. RECRUITMENT AND PLACEMENT OF WORKERS

1. As a rule, direct hiring of migrant workers is not allowed. What are the exceptions?
Explain your answer. (2017)

The exceptions are:

1. Direct hiring by members of the diplomatic organizations, head of the state

and government officials with the rank of at least deputy minister, and such other
employers as maybe allowed by the Secretary of Labor.

The reasons for the ban on direct hiring are:

A. A worker hired directly by a foreign employer without government intervention

may not be assured of the best possible terms and conditions of employment.
B. A foreign employer must also be protected. Without the intervention of the
government, the foreign employer might also be entering into a contract with a Filipino
who is not qualified for the job.
C. The mandatory requirement for remittance to the Philippines of a portion of
the worker’s foreign exchange earnings can be easily be evaded by the worker.
Alternative answer:

Direct hires are workers directly hired by employers for overseas employment as
authorized by the Secretary of Labor and Employment and processed by the POEA,
including:

1. Those hired by international organizations

2. Those hired members of the diplomatic corps
3. Name hires or workers who are able to secure overseas employment
opportunity with an employer without assistance or participation of any agency. [Labor
Code, POEA Rules] (Section 1(1), Rule II, Omnibus Rules and Regulations
Implementing the Migrant Workers and Overseas Filipinos Act of 1995 as
amended by Republic Act. No. 10022). The direct hires are exceptions to the ban
on direct-hiring under Article 18 of the Labor Code.

2. Rocket Corporation is a domestic corporation registered with SEC, with 30% of its
authorized capital stock owned by foreigners and 70% of its authorized capital stock
owned by Filipinos. Is Rocket Corporation allowed to engage in the recruitment and
placement of workers, locally and overseas? Briefly state the basis for your answer.
(2015)

No. Foreign ownership of a corporation engaged in recruitment, whether local or

overseas is limited to 25%. (Art. 27, PD 442, as amended)

3. When does the recruitment of workers becomes an act of economic sabotage?

(2015)

The recruitment of workers becomes an act of economic sabotage when:

1. Committed by a syndicate, i.e., by three or more persons acting in conspiracy

with one another; and
2. Committed in large scale, i.e., against three or more persons, whether dealt
with individually or as a group. (Art. 38, PD442, as amended)

4. On December 12, 2008, A signed a contract to be part of the crew of ABC Cruises,
Inc. through its Philippine manning agency XYZ. Under the standard employment
contract of the Philippine Overseas Employment Administration (POEA), his employment
commences upon his actual departure from the port in the point of hire, Manila, from
where he would take a flight to the USA to join the cruise ship ‘MS Carnegie’. However,
more than three months after A secured his exit clearance from the POEA for his
supposed departure on January 15, 2009, XYZ still had not deployed him for no valid
reason. Is A entitled to relief? (2010)
 Yes. Even if no departure took place, the contract of employment has already
been perfected which creates certain rights and obligations, the breach of which may
give rise to a cause of action against the erring party.

A can file a complaint for Recruitment Violation for XYZ’s failure to deploy him
within the prescribed period without any valid reason, a ground for the imposition of
administrative sanctions against XYZ under Sec. 2, Rule I, Part V of the 2003 POEA
Rules of Employment of Seafarers. At the same time, A can file for illegal recruitment
under Section 6 (L) of RA No. 8042.

A may file a complaint for breach of contract and claim damages therefore
before the NLRC, despite absence of employer-employee relationship. Section 10 of RA
8042 conferred jurisdiction on the Labor Arbiter not only claims arising out of E-ER, but
also by virtue of any law or contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of damages. (Santiago v
CF Sharp Crew Management, 527 SCRA 165 [2007])

5. A was approached for possible overseas deployment to Dubai by X, an interviewer of

job applicants for Alpha Personnel Services, Inc., an overseas recruitment agency. X
required A to submit certain documents (passport, NBI clearance, and medical
certificate) and to pay P25,000.00 as processing fee. Upon payment of the said amount
to the agency cashier, A was advised to wait for his visa. After five months, A visited
the office of Alpha Personnel Services, Inc. during which X told him that he could no
longer be deployed for employment abroad. A was informed by the Philippine Overseas
Employment Administration (POEA) that while Alpha Personnel Services, Inc. was a
licensed agency, X was not registered as its employee, contrary to POEA Rules and
Regulations. Under POEA Rules and Regulations, the obligation to register personnel
with the POEA belongs to the officers of a recruitment agency. May X be held criminally
liable for illegal recruitment? Explain. (2010)

No. X performed his work with the knowledge that he works for a licensed
recruitment agency. He is in no position to know that the officers of said recruitment
agency failed to register him as personnel (People v Chowdury). The fault being not
attributable to him, he may be considered to have apparent authority to represent
Alpha in recruitment for overseas employment.

May the officers having control, management or direction of Alpha Personnel Services,
Inc. be held criminally liable for illegal recruitment?

Yes. Alpha, being a licensed recruitment agency, still has obligation to A for
processing his papers for overseas employment. Under Section 6(m) of RA No. 8042,
failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for the purposes of deployment, in cases where the
deployment does not actually take place without the worker’s fault, amounts to illegal
recruitment.

III. LABOR STANDARDS

1. After working from 10 AM to 5 PM on a Thursday as one of the 5,000 employees in a

beer factory, A hurried home to catch the early evening news and have dinner with his
family. At around 10 PM of the same day, the plant manager called and ordered A to fill
in for C who missed the second shift. May A validly refuse the plant manager’s
directive? Explain. (2010)

Yes. A may validly refuse to fill in for C. A may not be compelled to perform
overtime work considering that the plant manager’s directive is not for an emergency
overtime work, as contemplated under Art. 89 of the Labor Code.

2. A Ladies Dormitory run or managed by a charitable non-profit organization claims

that it is exempt from the coverage of the Weekly Rest Period provision of the Labor
Code. Is the claim valid? (1998)

No. The claim is not valid. The provisions on weekly rest periods in the Labor
Code cover every employer, whether operating for profit or not. (See Art. 91 of the
Labor Code)

3. Under what condition may a ‘compressed work week’ schedule be legally authorized
as an exception to the ‘eight-hour a day’ requirement under the Labor Code? (2004)

The conditions for an allowable ‘compressed work week’ are the following: the
workers agree to the temporary change of work schedule and they do not suffer any
loss of over time pay, fringe benefits or their weekly or monthly take-home pay. (DOLE
Explanatory Bulletin on the Reduction of Workdays on Wages issued on July
23, 1985)

Alternative Answer:

‘Compressed work week’ is resorted to by the employer to prevent serious losses

due to causes beyond his control, such as when there is a substantial slump in the
demand for his goods or services or when there is lack of raw materials.

4. As a tireman in a gasoline station, open twenty-four (24) hours a day with only five
(5) employees, Goma worked from 10 PM until 7 AM of the following day. He claims he
is entitled to night shift differential. Is he correct? Explain briefly. (2002)
 Yes. Under Art. 86 of the Labor Code, night differential shall be paid to every
employee for work performed between 10 PM until 6 AM. Therefore, Goma is entitled to
night shift differential for work performed from 10 PM until 6 AM of the day following,
but not 6 AM to 7 AM of the same day.

Alternative Answer:

The Omnibus Rules Implementing the Labor Code (in Book III, Rule II dealing
with night shift differential) provides that its provisions on night differential shall not
apply to employees of “retail and service establishments regularly employing not more
than five (5) workers”. Because of this provision, Goma is not entitled to night
differential because the gasoline station where he works has only five employees.

5. A case against an employer company was filed charging it with having violated the
prohibition against offsetting undertime for overtime work on another day. The
complainants were able to show that, pursuant to Collective Bargaining Agreement
(CBA), employees of the union had been required to work “overtime” on Saturday but
were paid only at regular rates of pay on the thesis that they were not required to
complete, and they did not in fact complete the eight-hour work period daily from
Monday through Friday. Given the circumstances, the employer contended that the
employees were not entitled to overtime compensation, i.e., with premium rates of pay.
Decide the controversy. (2003)

The employer is correct. While Art. 88 of the Labor Code clearly provides that the
undertime work on any other particular day shall not be offset by overtime work on any
other day, this rule is inapplicable in this case pertaining to Saturday work which in
reality does not constitute overtime work as Saturday is still a working day under the
law and there is no CBA stipulation against it.

Alternative Answer:

Art. 88 of the Labor Code provides that undertime work on any particular day
shall not be offset by overtime work on any other day. The CBA being the law between
the parties and the Union having shown that the employees rendered overtime work on
Saturday, the contention of the employer is not tenable. The employer cannot use the
undertime of Monday through Friday to offset the overtime on Saturday. Hence, the
employees are entitled to overtime compensation, i.e., premium rates of pay on
Saturday.

IV. SOCIAL WELFARE LEGISLATION

1. Luisa is an unwed mother with 3 children from different fathers. In 2004, she
became a member of Social Security System (SSS). That same year, she suffered in a
miscarriage of a baby out of wedlock from the father of her third child. She wants to
claim maternity benefits under the SSS Act. Is she entitled to claim? (2015)

Yes. Provided that Luisa has reported to her employer her pregnancy and date of
expected delivery and paid at least three-monthly contributions during the 12-month
period immediately preceding her miscarriage, then she is entitled to maternity benefits
up to four deliveries. As to the fact that she got pregnant out of wedlock, as in her past
pregnancies. This will not bar her claim because the SSS is non-discriminatory.
Likewise, the system is morally-free; hence, the several men in her life are immaterial.

2. Baldo, a farm 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 on 2007. He works continuously in the sense that
it was done for more than one harvesting season. Was Dencio required to report Baldo
for compulsory social security coverage under the SSS law? Explain. (2016)

Dencio is required to report Baldo for compulsory social security coverage under
the SSS law. From the facts mentioned, Baldo is clearly an employee of Dencio.
Considering the length of time that Baldo has worked with Dencio, it may be justifiably
concluded that he is engaged to perform activities necessary or desirable in the usual
trade or business of Dencio and is therefore a regular employee. Length of service was
used by the Supreme Court in the case of Brotherhood Labor Unity Movement of the
Philippines v. Zamora, to pronounce that the individual involved is a regular employee.
Baldo, is thus, not a casual or temporary employee, exempted from the coverage of the
SSS Law.

What are the liabilities of the employer who fails to report his employee for social
security coverage? Explain.

The employer is subject to the following liabilities: It shall pay to the SSS
damages equivalent to the benefit which the employee would have been entitled had
his name been reported on time to the SSS except that in case of pension benefits, the
employer shall be liable to pay the SSS damages equivalent to five years monthly
pension; however, if the contingency occurs within thirty days from date of
employment, the employer shall be relieved of his liability for damages (Sec. 24 (a), RA
1161, as amended). It shall pay the corresponding unremitted contributions and
penalties thereon (Sec. 24 (b), RA 1161, as amended).

3. Can a member of a cooperative be deemed an employee for purposes of compulsory

coverage under the Social Security Act? Explain. (2009)

Yes. An employee of a cooperative, not over sixty years of age, under the SSS
Law, subject to compulsory coverage. The Section 8(d) SSS Law defines an employee
as any person who performs services for an employer in which either or both mental
and physical efforts are used and who receives compensation for such service where
there is an employer-employee relationship.

4. Tito Pacencioso is an employee of a laundry shop in Malabon, Metro Manila. He is

barely able to make ends meet with his salary of P4,000.00 a month. One day, he
asked his employer to stop deducting from his salary his SSS monthly contribution,
reasoning out that he is waiving his social security coverage. If you were Tito’s
employer, would you grant his request? Why? (2008)

No. Payment of monthly SSS contribution is compulsory and cannot be waived.

To grant Tito’s request will violate the SSS law and expose me to the risk of punishment
of fine or imprisonment or both at the discretion of the Court. (Section 9, Social
Security Act, RA 8282)

5. Marvin Patrimonio is a caddy rendering caddying services for the members and
guests of the Barili Golf and Country Club. As such caddy, he is subject to Barili golf
rules and regulations governing Caddies regarding conduct, dress, language, etc.
However, he does not have to observe any working hours, he is free to leave anytime
he pleases and he can stay away for as long as he likes. Nonetheless, if he is found
remiss in the observance of club rules, he can be disciplined by being barred from the
premises of Barili Golf. Is Marvin within the compulsory coverage of the Social Security
Act? Why?

No. Marvin is not an employee of the Barili Golf and Country Club, Marvin is not
within the compulsory coverage of the Social Security System. Marvin is not an
employee of the club because under the specific circumstances of his relations with the
club, he is not under the orders of the club with regards employment which would have
made him an employee of the club. (See Manila Golf & Country Club, Inc. v. IAC).
But Marvin is within the compulsory coverage of the SSS as a self-employed person.
(See Section 9 A, Social Security Law of 1957)

V. LABOR RELATIONS

1. Do workers have a right not to join a labor organization? Do the following workers
have the right to self-organization? Reasons/basis. (2000)

Employees of non-stock, non-profit organizations? Alien employees?

Yes. Workers decide whether they will or will not become members of a labor
organization. That’s why a union’s constitution and by-laws need the members’
adoption and ratification. Moreover, if they are members of the religious group whose
doctrine forbids union membership, their right not to be compelled to become union
members has been upheld. However, if the workers are not a ‘religious objector’ and
there is a union security clause, he may be required to join the union if he belongs to
the bargaining unit. [Reyes v Trajano, 209 SCRA 484(1992)].

(i) Even employees of non-stock non-profit organizations have the right to self-
organization. This is explicitly provided for in Art 243 of the Labor Code. A possible
exception, however, are employee-members of non-stock non-profit cooperatives.

(ii) Alien Employees with valid work permit in Republic of the Philippines may
exercise the right to self-organization on the basis of parity or reciprocity, that is, if
Filipino workers in the aliens’ country are given the same right. (Art. 269, Labor
Code)

2. Nexturn Corporation employed Nini and Nono, whose tasks involved directing and
supervising rank-and-file employees engaged in the company operations. Nini and Nono
are required to ensure that such employees obey company rules and regulations and
recommend to the company’s Human Resources Department any required disciplinary
action against erring employees. In Nextum Corporation, there are two independent
unions, representing rank-and-file and supervisory employees, respectively. (2018)

May Nini and Nono join a union?

Yes. Nini and Nono, in effect, are supervisors as defined under Art. 219 (m) who
may join a supervisory union pursuant to Art. 255 of the Labor Code.

Alternative Answer:

No. Nini and Nono are confidential employees as they have access to confidential
labor relations information. The broad rationale behind this rule is that employees
should not be placed in a position involving a potential conflict of interest.

May two unions be affiliated with the same Union Federation?

Yes. Art. 255 [245], Labor Code as amended by Republic Act 9481, allows a
rank-and-file union and supervisor’s union operating within the same establishment to
join one and the same federation or national union as affiliates thereof.

3. Philhealth is a government-owned and controlled corporation employing thousands of

Filipinos. Because of the desire of the employees of Philhealth to obtain better terms
and conditions of employment from the government, they formed the Philhealth
Employees Association (PEA) and demanded Philhealth to enter into negotiations with
PEA regarding terms and conditions of employment which are not fixed by law. (2014)
Are the employees of Philhealth allowed to self-organize and form PEA and thereafter
demand Philhealth to enter into negotiations with PEA for better terms and conditions
of employment?

Under E.O. 180, Philhealth employees can organize. Thru their organization, they
can negotiate with Philhealth cover terms and conditions of employment not fixed by its
charter, Civil Service Law, or applicable salary standardization law.

In case of unresolved grievances, can PEA resort to strikes, walkouts, and other
temporary work stoppages to pressure the government to accede to their demands?

No. Although the right to organize implies the right to strike, law may withhold
said right. EO 180 withholds from government employees the right to strike. Hence,
they cannot resort to strikes and similar concerted activities to compel concessions from
the government.

4. Who are managerial, supervisory and rank-and-file employees?(1996)

MANAGERIAL EMPLOYEES is one who is vested with powers or prerogatives to

lay down and execute management policies or to hire, transfer, suspend, layoff, recall,
discharge, assign or discipline employees.

SUPERVISORY EMPLOYEES are those who, in the interest of the employer,

effectively recommend such managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but requires the use of independent judgment.

All employees who are neither managerial staff or supervisory employees are
considered RANK-AND-FILE EMPLOYEES. (Art. 212 (m) of the Labor Code)

5. A labor union lawyer opined that a labor organization is a private and voluntary
organization; hence, a union can deny membership to any and all applicants. Is the
opinion of counsel in accord with law? (1998)

NO. The opinion of the counsel is not in accord with law. The Labor Code in Art.
249 (a and b) provides that a labor organization has the right to prescribe its own rules
for the acquisition or retention of the membership, but it is an unfair labor practice act
for a labor organization to restrain or coerce employees in the exercise of their right to
self-organization. Thus, a labor organization cannot discriminate against any employee
by denying such employee membership in the labor organization on any ground other
than the usual terms and conditions under which membership or continuation of union
membership is made available to other members.
VI. TERMINATION OF EMPLOYMENT

1. The Pizza Corporation (PizCorp) and Ready Supply Cooperative (RSC) entered into a
“service contract” where RSC in consideration of service fees to be paid by PizCorp’s will
exclusively supply PizCorp with a group of RSC motorcycle owning cooperative
members who will henceforth perform PizCorp’s pizza delivery service. RSC assumes
under the agreement full obligation for the payment of the salaries and other statutory
monetary benefits of its members deployed to PizCorp. The parties also stipulated that
there shall be no employer-employee relationship between PizCorp and the RSC
members. However, if PizCorp is materially prejudiced by any act of the delivery impose
disciplinary sanctions on, including the power to dismiss, the erring RSC member/s. Is
the contractual stipulation that there is no employer/employee relationship binding on
labor officials? Why? Explain fully. (2008)

NO. A contract of employment is impressed with public interest. The provisions

of the applicable statutes are deemed written into the contract and the parties are not
at liberty to insulate themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other. (Magsalin v National
Organization of Working Men, GR No. 148492, May 09, 2003)

2. 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 every insurance 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. Is Gregorio an employee of
Guaranteed? (2016)

NO. Gregorio is not an employee of Guaranteed. Control is the most important

element of employer-employee relationship, which refers to the means and methods by
which the result is to be accomplished (Avelino Lambo and Vicente Belocura v
NLRC and J.C. Tailor Shop citing Makati Haberdashery, Inc. v NLRC). The
requirement of complying with quota, company code of conduct and supervision by unit
managers do not go into the means and methods by which Gregorio must achieve his
work. He has full discretion on how to meet his quota requirement, hence, there is no
employer-employee relationship between Gregorio and Guaranteed.

Alternative Answer:

YES. Gregorio is Guaranteed’s employee. The fact that Gregorio was made to
agree to a Code of Conduct and was supervised by a unit Manager are indicators that
he is an employee of Guaranteed by using the control test mentioned in the Makati
Haberdashery case. Furthermore, the fact that he was given a quota and can be
terminated if he does not meet it all the more indicates that he is indeed an employee
of Guaranteed. In Angelina Francisco v NLRC Kasei Corporation, GR No. 170087, August
31, 2006, the court added another element to ascertain employer-employee
relationship. This is whether or not the worker is dependent on the alleged employer for
his continued employment. This was dubbed as the economic dependence test. The
fact that Guaranteed can terminate Gregorio if he does not meet the quota of 20
insurance policies a month, means that the latter is economically dependent on the
former which negates his status as an independent contractor and proves that he is an
employee.

3. Ador is a student working on his master’s degree in horticulture. To make ends meet,
he takes on jobs to come up with flower arrangements for friends. His neighbor, Nico,
is about to get married to Lucia and needs a flower arranger. Ador offers his services
and Nico agrees. They shake hands on it, agreeing that Nico will pay Ador P120,000.00
for his services but that Ador will take care of everything. As Ador sets about to
decorate the venue, Nico changes all of Ador’s plans and ends up designing the
arrangements himself with Ador simply executing Nico’s instructions. Is there an
employer-employee relationship between Nico and Ador? Will Nico need to register Ador
with the Social Security System (SSS)? (2015)

Ador is a worker paid on a task basis; hence, there is employer-employee

relationship between him and Nico. When the latter assumed the control of both result
and manner of performance from Ador, all vestiges of independent contractorship
disappeared. What replaced it was employer-employee relationship. Ador is a purely
casual employee; hence, Nico need not report him for SSS coverage.

4. Don Luis, a widower, lived alone in a house with a large garden. One day, he noticed
that the plants in his garden needed trimming. He remembered that Lando, a 17-year-
old out-of-school youth had contacted him in church the other day looking for work. He
contacted Lando immediately attended to Don Luis’s garden and finished the job in
three days. Is there an employer-employee relationship between Don Luis and Lando?
Does Don Luis need to register Lando with the Social Security System?

There is employer-employee relationship between Don Luis and Lando. Firstly,

Lando who was looking for work finally rendered personal services for Don Luis.
Secondly, Lando could not have been the master of his time, means and methods under
the circumstances (Sec. 8, RA 8282).

Don Luis does not need to register Lando with the SSS because he is purely a
casual employee, hence outside SSS coverage (RA 8282). Neither should he report
Lando from SSS coverage under Kasambahay Act because, although a gardener, he is
an occasional if not sporadic employee. Therefore, he is not a kasambahay who is
entitled to SSS coverage (RA 10361).
5. Applying the tests to determine the existence of an employer-employee relationship,
is a jeepney driver operating under the boundary system an employee of his jeepney
operator or a mere lessee of the jeepney? Explain your answer. (2017)

In a number of cases decided by the Supreme Court, (National Labor Union v

Dinglasan), 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.

VII. MANAGEMENT PREROGATIVE

1. ABC Tomato Corporation, owned and managed by three elderly brothers and two
sisters, has been in business for 40 years. Due to serious business losses and financial
reverses during the last five (5) years, they decided to close the business. Is the closure
allowed by law? (2012)

YES. The determination to cease or suspend operations is a prerogative of

management that the State usually does not interfere with, as no business can be
required to continue operating to simply maintain the workers in employment. (San
Pedro Hospital of Digos v Secretary of Labor)

2. Bobby, who was assigned as company branch accountant in Tarlac where his family
also lives, was dismissed by Theta Company after anomalies in the company’s accounts
were discovered in the branch Bobby filed a complaint and was ordered reinstated with
full backwages after the Labor Arbiter found that he had been denied due process
because no investigation actually took place.

Theta Company appealed to the National Labor Relations Commission (NLRC) and at
the same time wrote Bobby, advising him to report to the main company office in
Makati where he would be reinstated pending appeal Bobby refused to comply with his
new assignment because Makati is very far from Tarlac and he cannot bring his family
with him due to the higher cost of living in Makati.

Is Bobby’s reinstatement pending appeal legally correct?

NO. it is not legally correct. The transfer of an employee ordinarily lies within the
ambit of management prerogatives. But like other rights, there are limits thereto. This
managerial prerogative to transfer personnel must be exercised without grave abuse of
discretion, bearing in mind the basic element of justice and fair play. Thus, the transfer
of Bobby from Tarlac to Makati must be done in good faith, and it must be
unreasonable, inconvenient or prejudicial to the employee. For another, the
reinstatement of Bobby ought to be his former position, much akin to return to work
order, i.e., to restore the status quo in the work place (Composite Enterprises v
Capamaroso).

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

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?

NO. The policy does not violate the Labor Code. The practice is a valid exercise
of management function. Considering the nature and reason for existence of the school,
it may adopt such policy as will advance its laudable objectives. In fact, the policy
accords with the constitutional precept of inculcating ethical and moral values in
schools. The school policy does not discriminate against women solely on account of
sex (Art. 135, Labor Code) nor are the acts prohibited under Art. 137 of the Labor
Code.

ALTERNATIVE ANSWER
The school violated Art. 137 (2) of the Labor Code which states that: “It shall be
unlawful for any employer to discharge such woman on account of pregnancy.” The
pregnancy here could obviously have resulted from love and such only lends substance
to the saying that “the hearts have reason of its own which reason does not know”, a
matter that cannot be so casually equated with morality.

4. 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,
a bona fide 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?

The action of the Harbor View Hotel legal and valid. The valid exercise of
management prerogative, discretion and judgment encompasses all aspects of
employment, including the hiring, work assignments, working methods, time, place, and
manner of work, tools to be used, processes to be followed, supervision of workers,
working regulations, transfer of employees, lay-off of workers, and the discipline,
dismissal, and recall of workers, except as provided for or limited by special laws.

Company policies and regulations are, unless shown to be gross, oppressive or

contrary to law, generally binding and valid on the parties and must be complied with
until finally revised or amended unilaterally or preferably through negotiation or by
competent authority. (San Miguel Corporation vs. Reynaldo R. Ubaldo and Emmanuel
Noel A. Cruz, Chairman and member respectively of the Voluntary Arbitration Panel, et
al GR. No. 92859, 1 February 1993. J. Campos, Jr., 218 SCRA 293)

ALTERNATIVE ANSWER

The action of the Harbor View Hotel is legal and valid. Contracting out services or
functions being performed by union members is not illegal per se. In fact, it is the
prerogative of management to adopt cost-saving measures to ensure economy and
efficiency. Contracting out services or functions being performed by union members
becomes illegal only when it interferes with, restrains, or coerces employees in the
exercise of their right to self-organization.

5. 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 or 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. Is the union correct?

The union is correct. A provision in the collective bargaining agreement

concerning management prerogatives, may not be interpreted as cession of the
employees right to participate in the deliberation of matters which mat affect their right
and the formulation of policies relative thereto, such as the formulation of a code of
discipline.

A line must be drawn between management prerogatives regarding business

operations per se and those which affect the rights of the employees, and in treating
the latter, management should see to it that its employees are at least properly
informed of its decisions or mode of actions.

The attainment of a harmonious labor-management relationship and the existing

state policy of enlightening workers concerning their rights as employees demand no
less than the observance of transparency in managerial moves affecting employees’
right. (PAL v NLRC, 13 August 1993, J. Melo. 225 SCRA 258, 301.)

VIII. JURISDICTION AND RELIEFS

1. Luningning Foods engaged the services of Lamitan Manpower, Inc., a bonafide
independent contractor, to provide “tasters” that will check on food quality.
Subsequently, these “tasters” joined the union of rank-and-file employees of Luningning
and demanded that they be made regular employees of the latter as they are
performing functions necessary and desirable to operate the company’s business.
Luningning rejected the demand for regularization. On behalf of the “tasters”, the union
then filed a notice of strike with the Department of Labor and Employment (DOLE). In
response, Luningning sought a restraining order from the Regional Trial Court arguing
that the DOLE does not have jurisdiction over the case since it does not have an
employer-employee relationship with the employees of an independent contractor. If
you were the RTC judge, would you issue a restraining order against the union?

I will not issue the TRO. The dispute brought to the RTC is a labor dispute
despite the fact that the disputants may not stand in the proximate relation of employer
and employee (Art. 212, LC). Moreover, the issue of regularization is resolvable solely
thru the application of labor laws. Under both Reasonable Causal Connection Rule and
Reference to Labor Law Rule, the dispute is for labor tribunals to resolve. For lack of
jurisdiction, therefore, I will dismiss the case.

2. PD 1508 requires the submission of disputes before the Barangay Lupong

Tagapamayapa prior to the filing of cases with the courts or other government bodies.
May this decree be used to defeat a labor case filed directly with the Labor Arbiter?
Discuss fully.

No. requiring conciliation of labor dispute before the Barangay Lupong

Tagapamayapa would defeat the salutary purposes of the law. Instead of simplifying
labor proceedings designed at expeditious settlement or referral to the proper courts or
office to decide it finally, the conciliation of the issues before the Barangay Lupong
Tagapamayapa would only duplicate the conciliation proceedings and would unduly
delay the disposition of labor cases. (Montayo v Escayo, 171 SCRA 446 [1989])

3. May a decision of the Labor Arbiter which has become final and executory be
novated through a compromise agreement of the parties?

Yes, although Article 221 of the Labor Code requires the Labor Arbiter to exert all
efforts to amicably settle the case before him or before the first hearing, it must be
noted that neither the Labor Code nor its implementing rule as well as the NLRC Rules
prohibit the amicable settlement of cases during the pendency or after a judgment is
issued thereupon.

The established rule is that the compromise agreement or amicable settlement

may still be made even after the judgment has become final and executory. Settlement
of case is encouraged and authorized by law. Article 2040 pf the Civil Code impliedly
authorizes this. It is even encouraged by express provision of law.

4. Professor Juan dela Cruz, an author of the textbook Commentaries on the Labor
Code of the Philippines, citing an American case, wrote: It is said that the prohibition
against the issuance of a writ of injunction in labor cases creates substantive and not
purely procedural law.” Is there any statutory basis for the statement/comment under
Philippine law?

Yes. The statutory basis is Article 254 of the Labor Code. It prohibits the
issuance of injunction, as a matter of policy, to resolve disputes except as otherwise
provided in Articles 218 and 264 of the Labor Code. (Caltex Filipino Managers and
Supervisors Association v CZR, 44 SCRA 350 [1972])

5. Philippine News Network (PNN) engages the services of Anya, a prominent news
anchor from a rival station, National News Network (NNN). NNN objects to the transfer
of Anya claiming that she is barred from working in a competing company for a period
of three years from the expiration of the contract. Anya proceeds to sign with PNN
which then asks her to anchor their nightly newscast. NNN sues Anya and PNN before
the National Labor Relations Commission (NLRC) asking for a labor injunction. Anya and
PNN object claiming that it is a matter cognizable by the regular court and not the
NLRC. Is NNN’s remedy correct? Why or why not?

The NLRC has no jurisdiction. As to PNN, there is no employer-employee

relationship between itself and NNN; hence, the NLRC cannot hear and resolve their
dispute (Reasonable Causal Connection Rule). As to Anya, the injunctive power of the
NLRC is ancillary in nature; hence, it requires a principal case which is absent in the
instant case. Besides, the dispute between her and PNN is not resolvable solely thru the
application of the Labor Code, other labor statutes, CBA, or employment contract (Sole
Reference to Labor Law Rule.)