Philippine Bar review · Question

Practice question: Labor-only Contracting

Multiple Choice Hard Jurisprudence

Practice question

A beverage company contracts with a genuinely independent distributor that uses its own relevant resources, runs a distinct business and controls its workers' methods, while the beverage company specifies only agreed outputs. The service agreement preserves labor rights and all applicable requirements are met. A critic says the distribution link alone makes the arrangement labor-only contracting. Which is best?
  1. The critic is right because every distribution contract is prohibited.
  2. Own resources are always irrelevant.
  3. Distribution workers can never have any employment rights.
  4. Every service agreement is immune from review.
  5. Relatedness alone does not establish labor-only contracting; the assumed independent undertaking must be distinguished from a mere manpower supply under principal control.

Legal references

  • DOLE Department Order 174 s. 2017, primary issuance reproduced: https://palscon.org/public/assets/img/labor-laws-advisory/DO%20174-17%20Rules%20Implementing%20%20Articles%20106%20to%20109%20of%20the%20Labor%20Code,%20As%20Amended.pdf — Sections 3(h),5,7–8.
  • Macalino v Coca-Cola Beverages Philippines, G.R. 275357 and 275955, August 6 2025, main opinion: https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/70006

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