Question A.7, 2019 Labor Law Bar Exam

A.7.

(Question A.7, Labor Law, 2019 Bar Exam)

W Gas Corp. is engaged in the manufacture and distribution to the general public of various petroleum products. On January 1, 2010, W Gas Corp. entered into a Service Agreement with Q Manpower Co., whereby the latter undertook to provide utility workers for the maintenance of the former’s manufacturing plant. Although the workers were hired by q Manpower Co., they used the equipment owed by W gas Corp. in performing their tasks, and were likewise subject to constant checking based on W gas Corp.’s procedures.

On February 1, 2010, Mr. R, one of the utility workers, was dismissed from employment in line with the termination of the Service Agreement between W Gas Corp. and Q Manpower Co. Thus, Mr. R filed a complaint for illegal dismissal against W Gas Corp., claiming that Q Manpower Co. is only a labor-only contractor. In the course of the proceedings, W Gas Corp. presented no evidence to prove Q manpower Co.’s capitalization.

(a) Is Q Manpower Co. a labor-only contractor? Explain. (2.5%)

(b)Will Mr. R’s complaint for illegal dismissal against W Gas Corp. prosper? Explain. (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

In the case at bar, there are indications that Q Manpower Co. is a labor-only contractor, such as: (1) the employees used the equipment owned by W gas Corp. in performing their tasks; (2) they were subject to constant checking based on W gas Corp.’s procedures, which is an exercise of control by W Gas Corp.; (3) there is no evidence to prove Q manpower Co.’s capitalization. Apply

Thus, Q Manpower Co. is a labor-only contractor. Conclusion

(b) Yes. Answer

Under the Labor Code and DOLE regulations, in labor contracting, the principal is deemed as the employer of the workers of the contractor. The contractor is considered merely as an agent of the principal. Rule

In the case at bar, Mr. R was an employee of W Gas Corp. Hence, he should not have been dismissed with the termination of the Service Agreement between W Gas Corp. and Q Manpower Co. Rule

Thus, Mr. R’s complaint for illegal dismissal against W Gas Corp. prosper. 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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