Suggested Answers to 2015

Labor Law Bar Exam

 I.

A. Rocket Corporation is a domestic corporation registered with the

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. (2%)

SUGGESTED ANSWER:

No, Rocket Corporation is not allowed to engage in the recruitment

and placement of workers, locally and overseas. Under Art. 27 of the Labor
Code, only Filipino citizens or corporations, partnerships or entities at least
seventy-five percent (75%) of the authorized and voting capital stock of
which is owned and controlled by Filipino citizens shall be permitted to
participate in the recruitment and placement of workers, locally or overseas.

B. When does the recruitment of workers become an act of

economic sabotage? (2%)

SUGGESTED ANSWER:

Illegal recruitment when committed by a syndicate or in large scale

shall be considered an offense involving economic sabotage and shall be
penalized in accordance with Article 39 of the Labor Code. [Art. 38 (b)]  

Note:

 Illegal recruitment is deemed committed by a syndicate if carried out

by a group of three (3) or more persons conspiring and/or
confederating with one another in carrying out any unlawful or illegal
transaction, enterprise or scheme defined under this first paragraph
hereof.
 Illegal recruitment is deemed committed in large scale if committed
against three (3) or more persons individually or as a group.
II.

LKG Garments Inc. makes baby clothes for export. As part of its
measures to meet its orders, LKG requires its employees to work
beyond eight (8) hours everyday, from Monday to Saturday. It pays
its employees an additional 35% of their regular hourly wage for
work rendered in excess of eight (8) hours per day.

Because of additional orders, LKG now requires two (2) shifts of

workers with both shifts working beyond eight (8) hours but only up
to a maximum of four ( 4) hours. Carding is an employee who used
to render up to six ( 6) hours of overtime work before the change in
schedule. He complains that the change adversely affected him
because now he can only earn up to a maximum of four ( 4) hours'
worth of overtime pay. Does Carding have a cause of action against
the company? (4%)

SUGGESTED ANSWER:

Carding does not have a cause of action against the company. The
right to establish working hours is an exercise of employer’s management
prerogative. Except as limited by special law, an employer is free to
regulate, according to his own judgment and discretion, all aspects of
employment, including 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, worker
supervision, layoff of workers and the discipline, dismissal and recall of
workers…. as long as the exercise of its management prerogativeis done
reasonably, in good faith, and in a manner not otherwise intended to defeat
or circumvent the rights of workers. (Imasen Philippine Manufacturing
Corporation vs. Ramonchito T. Alcon and Joann S. Papa, G.R. No. 194884)

III.

Benito is the owner of an eponymous clothing brand that is a top

seller. He employs a number of male and female models who wear
Benito's clothes in promotional shoots and videos. His deal with the
models is that Benito will pay them with 3 sets of free clothes per
week. Is this arrangement allowed? (2%)

SUGGESTED ANSWER:

No. Art. 102 of the Labor Code states that no employer shall pay the
wages of an employee by means of promissory notes, vouchers, coupons,
tokens, tickets, chits, or any object other than legal tender, even when
expressly requested by the employee.

IV.

Far East Bank (FEB) is one of the leading banks in the country. Its
compensation and bonus packages are top of the industry. For the
last 6 years, FEB had been providing the following bonuses across-
the-board to all its employees:

(a) 13th month pay; (b) 14th to 18th month pay; (c) Christmas
basket worth P6,000; ( d) Gift check worth P4,000; and (e)
Productivity-based incentive ranging from a 20o/o to 40% increase
in gross monthly salary for all employees who would receive an
evaluation of"Excellent" for 3 straight quarters in the same year.

Because of its poor performance over-all, FEB decided to cut back on

the bonuses this year and limited itself to the following:

(a) 13th month pay; (b) 14th month pay; (c) Christmas basket worth
P4,000; and ( d) Gift check worth :P2,000
Katrina, an employee of FEB, who had gotten a rating of "Excellent"
for the last 3 quarters was looking forward to the bonuses plus the
productivity incentive bonus. After learning that FEB had modified
the bonus scheme, she objected. Is Katrina's objection justified?
Explain.

SUGGESTED ANSWER:

No, Katrina's objection is not justified. Bonuses, as a rule are not

demandable and enforceable obligation. They may be withdrawn when the
management sees the necessity of doing so, unless they have been made a
part of the wage of the employees or made subject to the express
agreement between the parties. (American Wire and Cable Daily Rated
Employees Union, Aprl 29, 2005) Whether or not bonus forms part of the
wage depends upon the circumstances and conditions of its payment. If it is
an additional compensation which the employer promised and agreed to give
without any conditions imposed for its payment, then it is part of the wage.
But if it is paid only if profits are realized or a certain amount of productivity
is achieved, it cannot be considered part of the wage, hence, not
demandable.(Atok-Big Wedge, March 3, 1953)

V.

Soledad, a widowed school teacher, takes under her wing one of her
students, Kiko, 13 years old, who was abandoned by his parents and
has to do odd jobs in order to study. She allows Kiko to live in her
house, provides him with clean clothes, food, and a daily allowance
of 200 pesos. In exchange, Kiko does routine housework, consisting
of cleaning the house and doing errands for Soledad. One day, a
representative of the DOLE and the DSWD came to Soledad's house
and charged her with violating the law that prohibits work by
minors. Soledad objects and offers as a defense that she was not
requiring Kiko to work as the chores were not hazardous. Further,
she did not give him chores regularly but only intermittently as the
need may arise. Is Soledad's defense meritorious?

SUGGESTED ANSWER:

No, Soledad's defense is not meritorious. The general rule is that

employment of minors under 15 years of age is prohibited except: 1. When
the child works directly under the sole responsibility of parents and legal
guardians and where only members of the employer's family are employed
and; 2. When a child's employment or participation in public &
entertainment or information through cinema, theater, radio or television is
essential. (Sec. 12, RA 7610)

VI.

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 floral arranger. Ador offers his services and
Nico agrees. They shake hands on it, agreeing that Nico will pay
Ador :P20,000.00 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.

(a) Is there an employer-employee relationship between Nico and

Ador?

(b) Will Nico need to register Ador with the Social Security System
(SSS)?

SUGGESTED ANSWER:

(a) In order to determine the existence of an employer-employee

relationship, the Court has frequently applied the four-fold test:

(1) the selection and engagement of the employee;

(2) the payment of wages;

(3) the power of dismissal; and

(4) the power to control the employees conduct.

Under the control test, the person for whom the services are
performed reserves the right to control not only the end achieved, but also
the manner and means to be used in reaching that end. Applying the
aforementioned test, there is clearly an absence of control being exercised
by Nico over Ador. (Abante, Jr. v. Lamadrid Bearing & Parts Corp., G.R. No.
159890)

(b) No. As the contract is for services rendered, Nico need not register
Ador with the SSS.

VII.

Don Don is a contractual employee of CALLHELP, a call center. His

contract is expressly for a term of four months. Don Don is hired for
3 straight contracts of four months each but at 2 week interval
between contracts. After the 3rd contract ended, Don Don is told
that he will no longer be given another contract because of poor
performance. Don Don files a suit for regularization and for illegal
dismissal claiming that he is a regular employee of Call Help and that
he was dismissed without cause. If you are the labor arbiter, how
would you decide the case?

SUGGESTED ANSWER:

I will rule in Don Don's favor. His claim for regularization is with merit.
The repeated rehiring and the continuing need for the services of a
contractual are sufficient evidence of the necessity and indispensability to
the employer's business or trade (Baguio Country Club Corp. v NLRC No.
71664). The primary standard of determining a regular employment is the
reasonable connection between the particular activity performed by the
employee in relayion to the usual business or trade of the employer. Also, if
the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of
the necessity or if not the indispensability of that activity to the business (De
leon vs NLRC GR No. 70705). Don Don has rendered his services to Callhelp
for more than a year regardless of the express stipulation in the contract
fixing the term of his employment. For this, he is considered a regular
employee because of his repeated rehiring which can be considered that his
services are necessary for Callhelp's business. Thus making Don Don's
dismissal illegal. Callhelp's claim of Don Don's poor performance as a reason
to terminate his employment cannot be a credible defense because Callhelp
would not rehire Don Don if the latter indeed performed poorly on the job.
Although the power to dismiss is a normal prerogative of the employer, this
right is subject to regulation by the State because the preservation of the
lives of the citizen is a basic duty of the State, more vital than the
preservation of profits. (Manila Electric Co. vs NLRC).

VIII.

Star Crafts is a lantern maker based in Pampanga. It supplies

lanterns to stores in Luzon, Metro Manila and parts of Visayas with
the months of August to November being the busiest months. is
factory employs 2000 workers who make different lanterns daily for
the whole year. Because of increased demand, Star Crafts entered
into a contractual arrangement with People Plus, a service
contractor, to supply the former with 100 workers for only four
months, August to November, at a rate different from what they pay
their regular employees. The contract with People plus stipulates
that all equipments and raw materials will be supplied by Star Crafts
with express condition that the workers cannot take any of the
designs home and must complete their tasks within the premises of
Star Crafts. Is there employer-emplyee relationship between Star
Crafts and the workers from People Plus? Explain.

SUGGESTED ANSWER:

Yes, there is employer-employee relationship between the Star Crafts

and the workers from People Plus. Employer-emplyee relationshipwhen the
employer has the control or the right to control the employee not
onlyastothe result of the work to be done but also as to the means and
methods by which the same is to accomplished. By the stipulation of the
contract between the parties in this case, that the workers cannot take any
of the designs home and must complete their tasks within the premises of
Star Crafts clearly shows that Star Crafts has control as to the means and
methods by which the work is to be doneespecially that work is to be
performed under the supervision of Star Crafts.

This is a case of Labor Only Contracting where people Plus merely

supplies or placesworkers to perform a job for Star Crafts. The elements of
Labor only contracting are present in this case. To wit: (a) the contractor
does not have the substantial capital or investment which relates to the work
to be performed and the employees supplied by the contaractor are
performing activities which are directly related to the main business of the
principal and (b) the contractor does not exercise the right of control over
the performance of the work of the employee. By the express stipulation in
the contract between the parties that all equipments and raw materials will
be supplied by Star Crafts shows that the contractor does not have the
capital which relates to lantern making and the workers are tasked to make
lanterns which is directly related to Star Crafts' business. And lastly, People
Plus does not have the right of conyrol over the performance of the work
since such work is to be done within Star Craft's premises. An an effect
thereof, Star Craft shall be deemed the employer of the workers and People
Plus, merely an agent.

IX.

Din Din is a single mother with one child. She is employed as a sales
executive at a prominent supermarket. She and her child live in
Quezon City and her residence and workplace are a 15 minute drive
apart. One day, Din Din is informed by her boss that she is being
promoted to a managerial position but she is now being transfered
to Visayas. Din Din does not want to uproot her family and refuses
the offer. Her boss is so humiliated by Din Din's refusal of the offer
and she gives Din Din unsatisfactory evaluation that result in Din Din
being removed from the supermarket. Din Din approaches you as
counsel for legal advice. What would you advice her?

SUGGESTED ANSWER:

Din Din may file a case for illegal dismissal against her employer. It is
given that management has its prerogative to dismiss an employee.
However, an employer may only dismiss an emplyee for just causes and one
of which is willful disobedience. Willful disobedience of the employee may
constitute a just cause for terminating his employment when two requisites
are met: (a) the employee's assailed conduct must have been willful or
intentional, the willfulness being characterized by a wrongful and perverse
attitude and (b) the order violated must have been lawful, reasonable and
made known to the employee and must pertain to the duties which he had
been engaged to discharge (Gold City Integrated Port Services Inc. vs NLRC
GR No. 86000). The disobedience and consequent dismissal may or may not
be valid depending on the presence of those two requisites. Disobedience of
a valid transfer order may justify dismissal; disobedience of an invalid
transfer does not.
 Din Din's refusal of the promotion and transfer may constitute
disobedience but such is not willful to validate her dismissal. It was proper
that she refused the offer of promotion. A promotion can be refused and it
will not result in punishment. A promotion that results from a transfer
requires consent of the emplyee. An employee cannot be promoted, even if
merely as a result of transfer without his consent (PT&T vs CA GR No.
152057). The order of the employer to transfer is unreasonable and unlawful
because she has to be transfered hundreds of miles away from her original
post which is only a fifteen minute drive from her residence, making it
inconvenient for her. Inconvenience to the employee doe not
necessarilyinvalidate a transfer order (Homeowners Savings and Loan
Assoc. Inc. vs NLRC GR No. 97067). However, inconvenience caused by the
unreasonableness of the transfer order makes the order itself invalid and
disobedience thereof is not a reason to dismiss the worker. Although mere
inconvenience doesn't justify disobedience to a transfer order, the transfer
order itself becomes flawed and unenforceable if it fails the criteria of
unreasonableness and lawfulness.

X.

Karina Santos is a famous news anchor appearing nightly in the

country’s most watched newscast. She is surprised, after one
newscast to receive a notice of hearing before the station’s vice-
president for human resources and calls the vp immediately to ask
what was wrong. Karina is told over the phone that one of her crew
filed a complaint against her for verbal abuse and that management
is duty bound to investigate and give her a chance to air her side.
Karina objects and debies that she had ever verbally assaulted her
crew. The vp then informed her that pending the investigation she
will be placed on a 30-day preventive suspension without pay and
that she will not be allowed to appear in the newscast during this
time.

Is the preventive suspension of Karina valid? Discuss the reasons for

your answer.

SUGGESTED ANSWER:

Yes, the preventive suspension is valid. Preventive suspension is

generally a legally recognized measure used by an employer to suspend an
employee during an investigation in relation to an incident affecting the
workplace. According to the Omnibus Rules Implementing the Labor Code of
the Philippines:

“Section 8. Preventive suspension. The employer may place the worker

concerned under preventive suspension only if his continued employment
poses a serious and imminent threat to the life or property of the employer
or of his workplace” (Rule XXII, Book V)

Based on the case at bar, the complaint against Karina for verbal
abuse qualifies as a threat to life and property in the workplace which
justifies the issuance of a preventive suspension.
 With regard to the salary during the period of suspension, an
employee placed under preventive suspension is not entitled to payment of
wages. However, if the basis for suspension is later proven to be unfounded
or invalid, Karina is entitled for the salary during the whole period of
suspension. (Gatborton ns. NLRC)

Lastly, preventive suspension should not last for more than thirty (30)
days. The employee should be made to resume his work after 30 days.
However, the same can be extended provided the employer pays the
suspended employee his wages and other benefits.

XI.

Rico has a temper and, in his work as division manager of Matatag

Insurance, frequently loses his temper with his staff. One day, he
physically assaults his staff member by slapping him. The staff
member sues him for physical injuries. Matatag Insurance decides to
terminate Rico, after notice and hearing, on the ground of loss of
confidence. Rico claims that he is entitled to the presumption of
innocence because he has not yet been convicted. Comment on
Matatag’s action in relation to Rico’s argument.

SUGGESTED ANSWER:

Loss of confidence is a valid ground for dismissing an employee and

proof beyond reasonable doubt of the employee’s misconduct is not
required, the quantum of proof required is merely substantial evidence. It is
sufficient if there is some basis for such loss of confidence of if the employer
has reasonable ground to believe or to entertain the moral conviction that
the employee concerned is responsible for the misconduct and that the
nature of his participation therein rendered him unworthy of the trust and
confidence demanded by his position.

XII.

Blanks garments, inc (blank) a clothing manufacturer, employs more

than 200 employees in its manufacturing business. Because of its
high overhead, blank decided to sell its manufacturing business to
bleach garments, inc (bleach) lock, stock, and barrel which include
goodwill, equipment and personnel. After taking on blank’s business,
bleach reduces the workforce by not hiring half the workers
specifically the ones with seniority. Blank and bleach are still
discerned to be sister companies with identical incorporators. The
laid-off employees sue both blank and bleach for unlawful
termination.

(A) How would you decide the case?

(B) What is the “successor employer” doctrine?

SUGGESTED ANSWER:

(A) I would decide in favor of labor for unfair labor practice. The case at
bar involves a transfer of ownership of a business to another. However,
when the incorporators are significantly similar, it operates as the
transferee employer is the same personality as the transferor although
the name of the business is changed. Whenever the change of ownership
 is made in bad faith or is effected to defeat the rights of labor, the
successor-employer is deemed to have absorbed the employees and is
held liable for the transgressions of the former company.
(B) Successor employer doctrine means that if the “new” company is
engage in the same business as the closed company or department, or is
owned by the same people, and the “closure” is calculated to defeat the
worker’s organizational right, the closure may be declared a “subterfuge”,
then the new company will be treated as a continuation or successor of
the one that closed. In such case, the separated employees will have to
be employed in the “new” firm because in the first place they should not
have been separated at all.

XIII.

Luisa is an unwed mother with 3 children from different fathers. In

2004, she became a member of the Social Security System. That
same year, she suffered 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?

SUGGESTED ANSWER:

Yes. Luisa is entitled to claim maternity benefits. Entitlement is not

dependent on the claimant’s being legally married. Provided, however, that
Luisa has paid at least three monthly contributions in the twelve-month
period immediately preceding the semester of her miscarriage. In such case,
she shall be paid a daily maternity benefit equivalent to one hundred percent
(100%) of her average daily salary credit.

XIV.

Luis, a PNP officer, was off duty and resting at home when he heard
a scuffle outside his house. He saw two of his neighbors fighting and
he rushed out to pacify them. One of the neighbors shot Luis by
mistake, which resulted in Luis’ death. Marian, Luis’ widow, filed a
claim with the GSIS seeking death benefits. The GSIS denied the
claim on the ground that the death of Luis was not service-related as
he was off-duty when the incident happened. Is the GSIS correct?

SUGGESTED ANSWER:

No. The GSIS is incorrect. Under the 24-hour duty doctrine which was
held in the case of Hinoguin vs. ECC, soldiers, policemen and firemen by the
nature of their work may be considered on duty round-the clock. It relaxes
the workplace factor but still requires work connection. However, in the case
of GSIS vs Alegre, the Supreme Court held that the 24-hour doctrine should
not be sweepingly applied to all acts and circumstance causing the death of
a police officer but only to those which, although not on official line of duty
are nonetheless basically police service in character. In the instant case,
Luis, although he was off duty at the time of his death, his act was
essentially police service in character. Thus, Marian is entitled to claim death
benefits under the GSIS Act.

XV.

Victor was hired by a local manning agency as a seafarer cook on

board a luxury vessel for an eight-month cruise. While on board,
Victor complained of chronic coughing, intermittent fever, and joint
pains. He was advised by the ship’s doctor to take complete bed rest
but was not given any other medication. His condition persisted but
the degree varied from day to day. At the end of the cruise, Victor
went home to Iloilo and there had himself examined. The
examination revealed that he had tuberculosis.

a) Victor sued for medical reimbursement, damages, and

attorney’s fees, claiming that tuberculosis was a compensable
illness. Do you agree with Victor? Why or why not? (2%)
b) Due to his prolonged illness, Victor was unable to work for
more than 120 days. Will this entitle him to claim total
permanent disability benefits? (2%)

SUGGESTED ANSWER:

a) Yes, Victor is entitled to medical reimbursement if he can establish

that his sickness is a result of the nature of his employment or that the
risk of acquiring the same is increased by the working conditions.
As for attorney’s fees, Art. 203 of the Labor Code provides that
the retention or deduction of any amount from any benefit granted
under the employees’ compensation program is prohibited, thus,
attorney’s fees cannot be charged from the benefits that may be
received by Victor.

b) Yes, as provided under Art. 192 (c) of the Labor Code a disability
arising lasting continuously for more than one hundred twenty days
shall be deemed permanent and total.
Permanent total disability may arise although the employees does not
lose the use of any part of his body. Where the employee is unable to
perform his customary job for more than 120 days, permanent total
disability arises (Ijares v. CA, G.R. No. 105854, Aug. 26, 1999).

XVI.

The Alliance of Independent Labor Unions (AILU) is a legitimate

labor federation which represents a majority of the appropriate
bargaining unit at the Lumens Brewery (LB). While negotiations
were ongoing for a renewal of the collective bargaining agreement
(CBA), LB handed down a decision in a disciplinary case that was
pending, which resulted in the termination of the AILU’s treasurer
and two other members for cause. AILU protested the decision,
claiming that LB acted that LB acted in bad faith and asked that LB
reconsider. LB refused to reconsider. AILU then walked out of the
negotiations and declared a strike without notice of strike or strike
vote. AILU members locked in the LB management panel by
barricading the doors and possible exits (including windows and fire
escapes). LB requested the DOLE to assume jurisdiction over the
dispute and to certify it for compulsory arbitration.

The Secretary of Labor declined to assume jurisdiction, finding

that the dispute was not one that involved national interest. LB then
proceeds to terminate all of the members of the bargaining agent on
the ground that it was unlawful to: (1) barricade the management
panel in the building, and (2) participate in an illegal strike.

(a) Was AILU justified in declaring a strike without a strike

vote and a notice of strike? Why or why not? (3%)
(b) Was the Secretary of Labor correct in declining to assume
jurisdiction over the dispute? (2%)
(c) Was LB justified in terminating all those who were
members of AILU on the two grounds cited? (3%)

SUGGESTED ANSWER:

a) No, AILU is not justified in declaring a strike without a strike vote

and a notice of strike.
The conduct of strike action without a strike vote violates Art.
263(f)- “In every case, the union or the employer shall furnish the
DOLE the results of the voting at least 7 days before the intended
strike” to enable the DOLE and the parties to exert the last effort to
settle the dispute without strike action.
The failure of the union to serve the company a copy of the
notice of strike is a clear violation of Sec. 7, Rule XXII, Book V of the
Rules Implementing the LC. The Constitutional precepts of due process
mandate that the other party be notified of the adverse action of the
opposing party. (Filipino Pipe and Foundry Corp. v. NLRC, G.R. No.
115180, November 16, 1999)
The non-compliance with any of the requisites of a strike may
cause such to be declared illegal.

b) Yes, the Secretary of Labor correct in declining to assume

jurisdiction over the dispute because as provided by the Labor law, the
Secretary of Labor may only assume jurisdiction over a labor dispute if
in his opinion it may cause or likely to cause a strike or lockout in an
industry indispensable to the national interest. In the case, the dispute
is clearly not indispensable to the national interest to national interest.

c) No, LB is not justified in terminating all those who were

members of AILU. As ruled in the case of Arellano University
Employees and Workers Union v. Court of Appeals, 502 SCRA 219,
that unless there is proof that the employees knowingly participated in
the commission of the illegal acts during the strike, the employees
may not be declared to have lost their employment by mere
participation in an illegal strike.

XVII.
The Collective Bargaining Agreement (CBA) between Libra Films and
its union, Libra Films Employees' Union (LFEU), contains the
following standard clauses:
1. Maintenance of membership;
2. Check off for union dues and agency fees; and
3. No strike, no lock-out.
While Libra Films and LFEU are in re-negotiations for an
extension of the CBA, LFEU discovers that some of its members have
resigned from the union, citing their constitutional right to organize
(which includes the right NOT to organize). LFEU demands that Libra
Films institute administrative proceedings to terminate those union
members who resigned in violation of the CBA' s maintenance of
membership clause. Libra Films refuses, citing its obligation to
remain a neutral party. As a result, LFEU declares a strike and after
filing a notice of strike and taking a strike vote, goes on strike.
The union claims that Libra Films grossly violated the terms of
the CBA and engaged in unfair labor practice.
(a) Are LFEU's claims correct? Explain. (4%)
(b) Distinguish between a "closed shop" clause and a
"maintenance of membership" clause. (2%)
(c) Distinguish between "union dues" and "agency fees." (2%)

SUGGESTED ANSWER:

a) No, the claim of LFEU is not correct. The law provides that it is
gross violation of the CBA that constitutes ULP. Gross violation means
non-observance of the economic provisions of the CBA. In the case at
bar the act of the Employer does not constitute gross violation of the
CBA.

b) In closed shop agreement, only union members can be hired, while

in maintenance of membership agreement, non-members are not
compelled to join the union. Closed shop conditions employees to
remain union members to retain employment, while the other requires
that present and future union members must remain in good standing
in the union.

c) Union dues applies to Union members, while Agency fees apply to

the non-members of the Union. Union dues are paid by reason of their
membership, and agency fees are paid by reason of the benefits they
enjoyed under the CBA. Union dues require a written authorization for
dues to be deducted from salaries, while in agency fees, written
authorization is not required.

XVIII.

George is an American who is working as a consultant for a local IT

company. The company has a union and George wants to support the
union. How far can George go in terms of his support for the union?
(3%)

SUGGESTED ANSWER:
 Alien employees with valid working permits issued by DOLE may
exercise their right to self-organization and join or assist labor unions for
purposes of collective bargaining if they are nationals of a country which
grants the same or similar rights to Filipino workers, as certified by the
Department of Foreign Affairs. (Rule II, Sec. 2 of DO No. 40-03)

XIX.

What is the rule on the equity of the incumbent”?

SUGGESTED ANSWER:

Under the original text of the Labor Code, Article 240 thereof which
was later on repealed, states the rule on the Equity of the Incumbent, thus:

“Equity of the incumbent. All existing federations and national unions

which meet the qualifications of a legitimate labor organization and none of
the grounds for cancellation shall continue to maintain their existing affiliates
regardless of the nature of the industry and the location of the affiliates.”

XX.

A. XYZ Company and Mr. AB, a terminated employee who also

happens to be the president of XYZ Employees Union, agree in
writing to submit Mr. AB’s illegal dismissal case to voluntary
arbitration. Is this agreement a valid one?

SUGGESTED ANSWER:

The well entrenched rule is that when a case does not involve the
parties to a CBA ,i.e, the employer and the bargaining union, it is not
subject to voluntary arbitration. This rule was lately affirmed in the 2009
case of Tabigue v. International Copra Export Corporation (GR. No.
183335, 12/23/09). Consequently, only disputes involving the union and
the company shall be referred to the grievance machinery or voluntary
arbitrators.
The prominence of this rule is highlighted in termination disputes
where the bargaining union is not named a party to the illegal dismissal
suit either because it failed to object to the dismissal of the employee of
the suit was initiated by the employee alone without the assistance of his
union.

B. XYZ Company and XYZ Employees Union (XYZEU) reach a

deadlock in their negotiation for a new collective bargaining
agreement (CBA). XYZEU files a notice of strike, XYZ proposes to
XYZEU that the deadlock be submitted instead to voluntary
arbitration. If you are counsel for XYZEU, what advice would you
give the union as to the: (1) propriety of the request of XYZ
Company, and (2) the relative advantages/disadvantages
between voluntary arbitration and compulsory arbitration?
 SUGGESTED ANSWER:

1). The request of XYZ Company is proper. Under Article 262 of the Labor
Code, upon agreement of the parties, the Voluntary Arbitrator or panel of
Voluntary Arbitrators may also hear and decide all other labor disputes,
including unfair labor practices and bargaining deadlocks. For this
purpose, before or at any stage of the compulsory arbitration process,
parties to a labor dispute may agree to submit their case to voluntary
arbitration.

2). (Self explanatory, below are mere suggestions.)

Voluntary arbitration strengthens collective bargaining, shortens the

proceedings, renders appeals redundant, ensures that intent of the
parties prevail in resolving cases involving interpretation and
implementation of CBAs, including personnel discipline cases, and
reduces the costs of arbitration and/or further litigation. Its disadvantage
lies on the rule that once decision has been rendered, it becomes final,
executory and unappealable.

Under compulsory arbitration it ensures that cases involving national

interest are taken to compulsory arbitration even before a strike is
declared. Its disadvantage lies on its being litigious in nature.

XXI.

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 her 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 a regular court and not the NLRC.

(a) Is NNN's remedy correct? Why or why not? (3%)

(b) What are the grounds for a labor injunction to issue? (2%)

(c) Distinguish the jurisdiction of a Labor Arbiter from that of the

NLRC. (3%)

SUGGESTED ANSWER:

(a) No. Labor injunction from NLRC is not a proper remedy in this
case. It only applies to enjoin or restrain any actual or threatened
commission from any or all prohibited or unlawful acts under Article
218 of the labor Code and can only be exercised in labor disputes. In
the case at bar, the issue involves breach of stipulations in an
 employer-employee contract. This is cognizable not by the NLRC but
the RTC.

(b) Article 218 (e) of the Labor Code provides that The Commission
shall have the power and authority to issue labor injunction:

 To enjoin or restrain any actual or threatened commission of any

or all prohibited or unlawful acts or

 To require the performance of any particular act in any labor

dispute which, if not retrained or performed forthwith, may
cause grave or irreparable damage to any party or render
ineffectual any decision in favor of such party

(c)Definitions Articles 217 and 218

XXII.

Mario comes from a family of coffee bean growers. Deciding to

incorporate his fledgling coffee venture, he invites his best friend,
Carlo, to join him. Carlo is hesitant because he does not have money
to invest but Mario suggests a scheme where Carlo can be the Chief
Marketing Agent of the company, earning a salary and commissions.
Carlo agrees and the venture is formed. After one year, the
business is so successful that they were able to declare dividends.
Mario is so happy with Carlo's work that he assigns 100 shares of
stock to Carlo as part of the latter's bonus.

Much later on, it is discovt~red that Carlo had engaged in unethical

conduct which caused embarrassment to the company. Mario is
forced to terminate Carlo but he does so without giving Carlo the
opportunity to explain.

Carlo filed a case against Mario and the company for illegal
dismissal. Mario objected on the ground that the Labor Arbiter had
no jurisdiction over the case as it would properly be considered as
an intra-corporate controversy cognizable by the RTC. Further,
Mario claimed that because Carlo's dismissal was a corporate act, he
cannot be held personally liable.

(a) As the Labor Arbiter assigned to this case, how would you
resolve the jurisdiction question. (3%)

(b) What is the rule on personal liability of corporate officers for

a corporate act declared to be unlawful? (2%)

SUGGESTED ANSWER:

(a) Disputes arising out of termination of employment fall solely

within the jurisdiction of the labor arbiter. It is necessary to determine
the existence of employer-employee relationship by applying the four
fold test to wit: 1) the power to hire, 2) the power to pay the salary of
 an employee, 3) power to fire and employee, and 4) power to control.
The case at bar suggests that the relationship between Mario and Carlo
are compliant to the four fold test. Thus, there being an employer-
employee relationship, as a Labor Arbiter, I would take cognizance of
the case.

(b) Before a director or officer of a corporation can be held

personally liable for corporate obligations, however, the following
requisites must concur: (1) the complainant must allege in the
complaint that the director or officer assented to patently unlawful acts
of the corporation, or that the officer was guilty of gross negligence or
bad faith; and (2) the complainant must clearly and convincingly prove
such unlawful acts, negligence or bad faith.