Question 8, 2018 Labor Law Bar Exam

Atty. Jericho Del Puerto

Atty. Jericho Del Puerto

Lawyer, Author, Mentor


(Question VIII, Labor Law, 2018 Bar Exam)

Nathaniel has been a salesman assigned by Newmark Enterprises (Newmark) for nearly two years at the Manila office of Nutrition City, Inc. (Nutrition City). He was deployed pursuant to a service agreement between Newmark and Nutrition City, the salient provisions of which were as follows:

a) the Contractor (Newmark) agrees to perform and provide the Client (Nutrition City), on a non-exclusive basis, such tasks or activities that are considered contractible under existing laws, as may be needed by the Client from time to time;

b) the Contractor shall employ the necessary personnel like helpers, salesmen, and drivers who are determined by the Contractor to be efficiently trained;

c) the Client may request replacement of the Contractor’s personnel if quality of the desired result is not achieved;

d) the Contractor’s personnel will comply with the Client’s policies, rules, and regulations; and

e) the Contractor’s two service vehicles and necessary equipment will be utilized in carrying out the provisions of this Agreement.

When Newmark fired Nathaniel, he filed an illegal dismissal case against the wealthier company, Nutrition City, Inc., alleging that he was a regular employee of the same. Is Nathaniel correct? (2.5%)

Suggested Answer:

(a) Yes. Answer

Under the Labor Code and DOLE regulations, there is labor-only contracting if:

 1) the contractor or subcontractor’s employees recruited and placed are performing activities which are directly related to the main business operation of the principal; AND either: (i) The contractor or subcontractor does not have substantial capital; or (ii) The contractor or subcontractor does not have investments in the form of tools, equipment, machineries, supervision, work premises, among others; or,

2) The contractor or subcontractor does not exercise the right to control over the performance of the work of the employee. Rule

Under labor law jurisprudence, it has been held that principals requiring workers of contractors to comply with the principal’s company policies, is a form of control. Rule

Further, labor law provides that if there is a finding of labor-only contracting, the labor-only contractor shall be considered merely as an agent of the principal who shall be considered as the employer and who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Rule

In the case at bar, there are indications that Newmark is a labor-only contractor, such as: (1) the Client may request replacement of the Contractor’s personnel if quality of the desired result is not achieved; and (2) the Contractor’s personnel will comply with the Client’s policies, rules, and regulations. These are acts or indications of control on the part of the Client and thus results in a labor-only contracting arrangement. That being the case, Nathaniel is a regular employee of the principal/client, Nutrition City.  Apply

Thus, Nathaniel is correct. Conclusion


(Notice: The suggested answers simulate those that a bar examinee may provide, and thus specific citations are not provided. Notwithstanding, in the reviewers, the bar exam question is answered under the appropriate topic which discusses the concepts and principles, as well as provide for specific citations. Accordingly, please refer to it on the reviewer or in the Library.)



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