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 contr...


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