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BAR EXAMS IN LABOR AND SOCIAL LEGISLATION

Compiled by: CYRILL ACEBRON – DOCTOR

PRELIMINARY TITLE
ARTICLES 1 - 12
2003

Question No. 15 ART 4 1993

In what manner do the labor laws show its solicitous compassionate policy towards the
working man? Explain your answer.

ANSWER:

Labor laws show solicitous compassionate policy towards the working man by providing that
all doubts in the implementation and interpretation of labor laws including its implementing
rules and regulations shall be resolved in favor of labor. Thus, among others, the Constitution
recognizes that workers are entitled to security of tenure, humane conditions of work and a
living wage. Labor laws should be liberally interpreted to ensure that the above rights are given
to workers. Many times, an employee commits an offense that is a valid ground for disciplinary
action but law and jurisprudence do not automatically provide for the termination of the guilty
employer because termination may be too harsh a penalty, his employment may, more often
that not, be the sole source of his means of livelihood. (ART 4, LC; ART XIII, SEC 3, CONSTI)

BOOK ONE – PRE-EMPLOYMENT

TITLE I – RECRUITMENT AND PLACEMENT OF WORKERS
TITLE II – EMPLOYMENT OF NON-RESIDENT ALIENS
ARTICLES 13 - 42
2003

Question No. XV RECRUITMENT 2002

A. When is illegal recruitment considered a crime of economic sabotage? Explain briefly.

B. Is a corporation, 70% of the authorized and voting capital of which is owned and
controlled by Filipino citizens, allowed to engage in the recruitment and placement of workers,
locally or overseas? Explain briefly.

SUGGESTED ANSWER:

A. According to ART 28,LC, illegal recruitment is considered a crime of economic sabotage

when committed by a syndicate or in a large scale.
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Illegal recruitment is deemed committed by a syndicate if carried out by a group of 3 or

more persons conspiring and/or confederating with one another in carrying out any unlawful or
illegal transaction, enterprise or scheme which is an act of illegal recruitment.

Illegal recruitment is deemed committed in large scale if committed against 3 or more

persons individually or as a group.

B. No. A corporation, 75% of the authorized and voting capital stock of which is owned and
controlled by Filipino citizens cannot be permitted to participate in the recruitment and
placement of workers, locally or overseas, because ART 27, LC requires at least 75%.

Question No. 10 RECRUITMENT 1991

Marino Palpak, Eddie Angeles and Jose Berdugo advertised in the Manila Bulletin the
following information: “20 Teachers wanted for Egypt. Apply at No. 123, Langit, Manila.”
Salvacion Inocente applied and was made to pay minimal fees to cover administrative expenses
and the cost of her passport and visa. For one reason or another, Salvacion did not get the job
and filed a complaint with the POEA. Marino, Eddie and Jose admitted having no license or
authority but claimed that they are not covered by the Labor Code since they are not engaged
in the recruitment and placement for profit and, at any rate, only one prospective worker was
involved.

May Marino, Eddie and Jose be prosecuted? If so, for what specific offenses?

ANSWER:

Marino, Eddie and Jose can be prosecuted. Recruitment and placement by persons without
a license or authority constitute illegal activities. Marino, Eddie and Jose were engaged in the
recruitment and placement when they advertised that 20 teachers were wanted to Egypt.
Advertising for employment is one of the acts considered as recruitment and placement in the
Labor Code.

That they were not engaged in recruitment and placement for profit does not mean that the
conditions for a person to engage in recruitment and placement found in the Labor Code are not
applicable to them. The Code applies to any recruitment or placement, whether for profit or
not.

The fact that only one prospective worker was involved does not mean that they were not
engaged in recruitment or placement. They were. The reference in the Code that any person
who offers employment to “two or more persons” as being engaged in recruitment and placemen
does not mean that there must be at least two persons involved. This reference is merely
evidentiary.

They may be prosecuted for these specific offenses:

1. They were engaged in recruitment and placement without a license or authority to do

so.
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2. They already charged fees even if they have not yet obtained employment for the
applicant.

BOOK TWO – HUMAN RESOURCES DEVELOPMENT PROGRAM

ARTICLES 43 - 81
2003

CHAPTER I - APPRENTICES
2003

CHAPTER II - LEARNERS
2003

CHAPTER III – HANDICAPPED WORKERS

2003

BOOK THREE – CONDITIONS OF EMPLOYMENT

TITLE I – WORKING CONDITIONS AND REST PERIODS
ARTICLES 82 - 96
2003

CHAPTER I – HOURS OF WORK

2003

Question No. III ART 82 – HOURS OF WORK 2002

Socorro is a clerk-typist in the Hospicio de San Jose, a charitable institution dependent for
its existence on contributions and donations from well wishers. She renders work 11 hours a
day but has not been given overtime pay since her place of work is a charitable institution. Is
Socorro entitled to overtime pay? Explain briefly.
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SUGGESTED ANSWER:

Yes. Socorro is entitled to overtime compensation. She does not fall under any of the
exceptions to the coverage of ART 82, under the provisions of Hours of Work. The Labor Code is
equally applicable to non-profit institutions. A covered employee who works beyond 8 hours is
entitled to overtime compensation.

Question No. 11 HOURS OF WORK 1988

Manila Laundry is a mechanized operation. It relies on washing machines, driers, and

mechanical ironing/pressing machines for sheets. In the period of extensive brown-outs, its
machines could not be used regularly. The Secretary of Commerce and Industry proposed a
Voluntary Loss Control Plan so that firms with high electric power needs could schedule one
shut-down day per week so that the available energy could be better allotted to reduce the
uncertainties of when brown-outs would occur and interrupt work in process. Manila Laundry
joined the plan and set one shut-down day each week. Its union protested and demanded that
they be paid their basic wage for the shut-down day. The company declined and a case was
filed for non-payment of wages.

a) The case is assigned to you as Labor Arbiter. Decide.

b) if the cause of the one day shut-down each week had been due to the very frequent
break-down of equipment would your decision be the same? Explain.

ANSWER:

a) If the contract of employment of the workers provides that the workers are to be paid on
a daily basis, and there is no provision in the contract that they are guaranteed to work for a
certain number of days per week, the fact that Manila Laundry joined a plan that scheduled one
shut-down day per week does not mean that Manila Laundry is under legal obligation to pay the
daily wage of the workers for the one shut-down day that they do not work. There is no law that
imposes this obligation of an employer. The general rule is: “no work, no pay”. The Rules and
Regulations implementing the Labor Code provide that the time during which an employer is
inactive by reason of interruption in his work beyond his control shall be considered time worked
either if the imminence of the resumption of work requires the employees presence at the place
of work or if the interval is too brief to be utilized effectively and gainfully in the employees
own interest. This Rule can not be applied here because there is adequate notice about the one
shut down day.

b) My decision will be the same as in (a) above. The applicable rule will still be No work No
pay.

Question No. VI LS – HOURS OF WORK (ART 88) 2003

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A case against an employer company was filed charging it with having violated the
prohibition against offsetting undertime for overtime work on another day. The complainants
were able to show that, pursuant to the CBA, employees of the unions had been required to
work “overtime” on Saturday but were paid only at regular rates of pay on the thesis that they
were not required to complete, and they did not in fact complete, the 8-hour work period daily
from Monday through Friday. Given the circumstances, the employer contended that the
employees were not entitled to overtime compensation, i.e. with premium rates of pay.
Decide the controversy.

SUGGESTED ANSWER:

The employer is correct. While ART 88, LC clearly provides that undertime work on any
other particular day shall not be offset by overtime work on any other day, this rule is
inapplicable in this case pertaining to Saturday work which in reality does not constitute
overtime work as Saturday is still a working day under the law and there is no CBA stipulation
against it.

Another Suggested Answer:

ART 88, LC, provides that undertime work on any particular day shall not be offset by
overtime work on any other day. The CBA being the law between the parties and the Union
having shown that the employees rendered overtime work on Saturday, the contention of the
employer is not tenable. The employer cannot use the undertime of Monday through Friday to
offset the overtime on Saturday. Hence, the employees are entitled to overtime compensation,
i.e. premium rates of pay on Saturday.

Question No. X LS - BONUS 2003

XYZ Employees Association filed a complaint against ABC Bank for wrongful diminution of
benefits. It alleged that the bank had been providing for a mid-year bonus equivalent to one-
month basic pay and a Christmas bonus equivalent to one-month basic pay since 1971. Upon
the effectivity of PD 851 in 1975 which granted the 13 th month pay, the bank started giving its
employees a one-month basic pay as mid-year bonus, one-month basic pay as Christmas bonus,
and one-month basic pay as 13 th month pay. In 1980, the bank was placed under
conservatorship and by virtue of a monetary board resolution of the Central Bank, the bank
only gave one month basic pay mandated by PD 851, and it no longer gave its employees the
traditional mid-year and Christmas bonuses. Could ABC Bank be compelled, given the
circumstances, to continue paying its employees the traditional mid-year and Christmas bonuses
in addition to the 13th month pay?

SUGGESTED ANSWER:
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BAR EXAMS IN LABOR AND SOCIAL LEGISLATION
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No. The grant of a bonus is a prerogative, not an obligation, of the employer. The
matter of giving a bonus over and above that which is required by law is entirely dependent on
the financial capability of the employer to give it.

Hence, given the circumstances, ABC Bank cannot be compelled to continue paying its
employees the traditional mid-year and Christmas bonuses in addition to the 13 th month pay.

CHAPTER II – WEEKLY REST PERIODS

2003

CHAPTER III – HOLIDAYS, SERVICE INCENTIVE & SERVICE

CHARGES
2003

Question No. V ART 82 - HOLIDAY PAY 2002

Nemia earns P7.00 for every manicure she does in the barber shop of a friend which has 19
employees. At times she takes home P175.00 a day and at other times she earns nothing. She
claims holiday pay. Is Nemia entitled to this benefit? Explain briefly.

SUGGESTED ANSWER:

No, Nemia is not entitled to holiday pay.

ART 82, LC, provides that workers who are paid by results are, among others, not entitled
to holiday pay. Nemia is a worker who is paid by results. She earns P7.00 for every manicure
she does.

Another Suggested Answer:

Yes. Nemia is entitled to holiday pay.

The Supreme Court has ruled: “As to other benefits, namely, holiday pay, premium pay, 13 th
month pay, and service incentive leave which the labor arbiter failed to rule on but which the
petitioners prayed for in their complaint, we hold that petitioners are so entitled to these
benefits. Three factors lead us to conclude that petitioners, although piece rate workers, were
regular employees of private respondents. First as to the nature of the petitioner’s tasks, their
job of repacking snack food was necessary or desirable in the usual business of private
respondents, who were engaged in the manufacture and selling of such food products; second,
petitioners worked for private respondents throughout the year, their employment not having
been dependent on a specific project or season; and third, the length of time that petitioners
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worked for private respondents. Thus, while petitioner’s mode of compensation was on a “per
piece basis” the status and nature of their employment was that of regular employees.”

Question No. X HOLIDAY PAY 2002

Eaglestar Company required a 24-hour operation and embodied this requirement in the
employment contracts of its employees. The employees agreed to work on Sundays and
Holidays if their work schedule required them to do so for which they would be paid additional
compensation as provided by law. Last March 2000, the union filed a notice of strike. Upon
Eaglestar’s petition, the Secretary of Labor certified the labor dispute to the NLRC for
compulsory arbitration. On April 20, 2000 (Maunday Thursday), while conciliation meetings
were pending, the union officers and members who were supposed to be on duty did not report
for work. Neither did they report for work on April 21 (Good Friday) and on April 22 (Black
Saturday), disrupting the factory’s operations and causing it huge losses. The union denied it
had gone on a strike because the days when its officers and members were absent from work
were legal holidays. Is the contention of the union correct? Explain briefly.

SUGGESTED ANSWER:

The contention of the union is NOT correct.

In the case, it is clear that the employees agreed to work on Sundays and Holidays if their
work schedule required them to do so for which they would be paid additional compensation as
provided by law.

The above-mentioned agreement that the employees voluntarily entered into is valid. It is
not contrary to law. It is provided in the agreement that if they will work on Sundays or
Holidays that they will be paid additional compensation as provided by law. Neither is the
agreement contrary to morals, good customs, public order or public policy.

Thus, when the workers did not report for work when by agreement they were supposed to
be on duty, there was a temporary stoppage of work by the concerted action of the employees
as a result of an industrial or labor dispute because they were on strike.

Question No. XIII NIGHT DIFFERENTIAL (ART 68)

2002

A. As a tireman in a gasoline station, open 24 hours a day with only 5 employees, Goma
worked from 10:00 PM until 7:00 AM of the following day. He claims he is entitled to night
shift differential? Is he correct? Explain briefly.

B. On orders of his superior, Efren, a high-speed sewing machine technician, worked on

May 1, Labor Day. If he worked 8 hours on that day, how much should he receive if his daily
rate is P400.00?
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BAR EXAMS IN LABOR AND SOCIAL LEGISLATION
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SUGGESTED ANSWER:

A. Yes. Under ART 68, LC, night shift differential shall be paid to every employee for work
performed between 10:00 in the evening to 6:00 in the morning.

Therefore, Goma is entitled to night shift differential for work performed from 10:00 am.
Until 6:00 am of the day following, but not from 6:00 am to 7:00 am of the same day.

Another Suggested Answer:

The Omnibus Rules Implementing the Labor Code (BOOK III, RULE II dealing with night shift
differential) provides that its provisions on night shift differential shall NOT apply to employees
of “retail and service establishments regularly employing not more than 5 workers.” Because of
this provision, Goma is not entitled to night shift differential because the gasoline station where
he works has only 5 employees.

SUGGESTED ANSWER:

B. Efren should receive P800.00. ART 92, LC provides that the employer may require an
employee to work on any regular holiday but such employee shall be paid a compensation
equivalent to twice his regular rare.

Question No. XIV ART 93 & 94 2002

This year, National Heroes Day (August 25) falls on a Sunday. Sunday if the rest day of
Bonifacio whose daily rate is 500.00

A. If Bonifacio is required by his employer to work on that day for 8 hours, how much
should he be paid for his work? Explain.

B. If he works for 10 hours on that day, how much should he receive for his work? Explain.

SUGGESTED ANSWER:

A. For working on his scheduled rest day, according to ART 93 [a], Bonifacio should be paid
P500.00 (his daily rate) plus P150.00 (30% of his daily rate) = P650.00. This amount of P650.00
should be multiplied by 2 = P1,300.00. This is the amount that Bonifacio as employee working
on his scheduled rest day which is also regular holiday, should receive. ART 94 [c], LC, provides
that an employee shall be paid a compensation equivalent to twice his regular rate for work on
any regular holiday. The “regular rate” of Bonifacio on May 1, 2002 is with an additional thirty
percent because the day is also his scheduled rest day.

B. P1,300 which is the amount that Bonifacio is to receive for working on May 1, 2002
should be divided by 8 to determine his hourly rate of P162.50. This hourly rate should be
multiplied by 2 (the number of hours he worked overtime). Thus, the amount that Bonifacio is
entitled to receive for his overtime work on May 1, 2002 is P325.00.
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Question No. 11 SEAMEN - OVERTIME 1993

Pedro Sisid is a seaman who was employed in 1990 by Kuhol Ocean Transport. In May 1993,
he was discharged and correspondingly paid vacation pay, terminal pay and overtime pay for
the number of hours he actually rendered service in excess of his eight (8) working hours a day.
Pedro Sisid, however, is dissatisfied with his overtime pay contending that he is on board the
vessel 24 hours a day, or even beyond his 8 working hours which circumstance renders him on
call whenever his service is needed. Therefore, he insists that he be paid 16 hours a day by way
of overtime. Is the contention of seaman Pedro Sisis tenable? Why?

ANSWER:

No. The contention of seaman Sisid is not tenable.

The fact that he is on board the vessel 24 hours a day does not mean that beyond his 8
working hours, he could be also considered as working because he is on call, and thus, is entitled
to overtime pay.

Because he is a seaman, this circumstance means he is board his vessel while at sea. But he
is not thereby on call as to be entitled to overtime pay because when it is not his working time,
he can, if he chooses to do so, use said non-working time effectively and gainfully for his own
purpose.

Alternative Answer:

No, there being a record of actual overtime services rendered. An estimated period of
actual overtime is valid as a basis for payment of overtime, only in a case where overtime
services are actually being rendered regularly but no record of the hours were kept.

Question No. 1 ART 92 1992

Republic Drug Co. has 1,000 employees, including 50 managerial personnel, 90 supervisors
and 150 sale representatives. The regular workday in the Company is from 8:00 a.m. to 5:00
p.m. The sales representatives register their presence with the timekeeper at 8:00 A.M.
everyday before they go to their respective sales territories. They are paid a basic salary plus
commission. Sixty of the sales representatives are members of the Republic Seamen Union
which sent to the Company a set of bargaining proposals, including a demand for payment of
overtime pay of the sales representatives for working beyond 5:00 P.M. everyday. The
Company refused to consider the bargaining proposals and rejected the demand for overtime
pay for the reason that the sales representatives are not entitled thereto. The Union filed an
unfair labor practice case against the Company for refusal to bargain, and after complying with
the legal requirements declared a strike.

a) Was the Company legally justified in rejecting the Union’s demand for overtime pay?
Reason.

SUGGESTED ANSWER:
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The Company was legally justified.

Under the Labor Code, (ART 92), “field personnel” are among those classes of workers who
are not entitled to overtime pay, and the phrase “personnel” includes sales representatives who,
like other field personnel, are non-agricultural employees who regularly perform their duties
away from the principal place of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty.

Alternative Answer:

If the demand for overtime pay is in the nature of a proposal made in the collective
bargaining table and the only reason for rejecting such demand is that “the sales representatives
are not entitled thereto”, this is not a legal justification for rejecting outright the Union’s
demand for overtime pay.

It is true that under the Labor Code, field personnel and this phrase includes sales
representatives – are not entitled to overtime pay.

But it is precisely as regards benefits that are not rights under the law that collective
bargaining is used by Labor to secure these benefits that are over and above what the law gives.

On the other hand, the rejection by the Company of the Union’s demand for overtime pay is
not per se illegal. The Labor Code provides that the duty to bargain collectively does not
compel any party to agree to a proposal or to make any concession. (ART 252, LC)

Question No. 16 OVERTIME HOLIDAY PAY 1991

Ping Gabo is the Chief Engineer of the National Publishing Corp. with a monthly salary of
P3,000. He works over 8 hours daily from Monday to Saturday. In May, June and July 1991, he
rendered, each month, 10 hours beyond his regular work schedule.

Is he entitled to overtime pay and holiday pay? Why?

ANSWER:

The entitlement of Gabo to overtime pay and holiday pay is dependent on whether he is a
managerial employee or not. If he is a managerial employee, he is not entitled to overtime pay
and holiday pay. The Labor Code provides that the provisions that grant overtime pay and
holiday pay shall not apply, among others, to managerial employees.

A managerial employee is defined by the Labor Code as referring to those whose primary
duty consists of the management of the establishment in which they are employed or of a
department or subdivision thereof, and to other officers or members of the managerial staff.

Gabo, as Chief Engineer, appears to be a managerial employee. On the other hand, his
monthly pay is rather low for a managerial employee. Despite his title, his duty may not consist
of a management or department or of a subdivision thereof.
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Question No. 2 OVERSEAS WORKER 1987

The Overseas Construction Company, a domestic corporation with a recruitment license,

hired two thousand Filipino workers and assigned them to its construction project in Kuwait.
They were given free housing, work clothing and food.

The master employment contract approved for them by the Philippine Overseas
Employment Administration (POEA) stipulated that they were to work at the overseas jobsite
for 12 hours per day and that they were accordingly to be paid wages higher than the POEA-
approved schedule of par rates. The individual employment contracts also contained the same
stipulations. And during the predeparture briefings at the company’s Mandaluyong plant site,
the workers were told about this stipulations. By actual computation, the wages paid at the
overseas jobsite were at least 25% more than the POEA-approved rates. Moreover, the record
shows that the workers did not always render the full 12 hours of work stipulated in the
employment contract.

Back home after completing their one-year overseas assignment, the workers engaged your
services as their lawyer to prosecute a complaint with the POEA for recovery of unpaid
overtime work. What would your advice be?

ANSWER:

Before I will give advise, I will find the answer to the basic question: Were the workers
actually paid for their overtime work when they received wages that were at least 25% more
than the POEA-approved rates?

The answer is No if the 25% added to the POEA-approved rate (which we assume is a rate for
a day of eight hours work is only 25% of such POEA-approved daily waged rate. This is because
what should be paid to the workers for the 4 hours that they work overtime in their 12 hour day
(a 12-hour work day is 4 hours in excess of an 8-hour work day)should be 50% more of such POEA-
approved rate. The four hours of work is 50% of the normal weight 8 hours of work a day plus
25% of such additional 50% for purposes of paying the overtime pay.

There is also the night differential pay to take into account because a 12-hour shift will
include working hours from 10:00 pm to 6:00 am. If the higher-than-the-POEA approved rate is
computed as indicate above, I will advise the workers not to sue for they have already been paid
for their overtime work.

If the higher-than-the-POEA-approved rates is not, however, computed as indicated above,

the fact that the POEA-approved the contracts and that the workers agreed to the rates they
receive will not be a bar to a complaint for unpaid overtime pay, the right to which cannot be
waived.

Another Suggested Answer:

The rate approved by the POEA has built-in overtime pay. Thus there is not basis for the
claim for overtime pay.
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TITLE II – WAGES
ARTICLES 83 - 129
2003

Question No. XII LS – BANKRUPTCY (ART 110)

2003

Premiere Bank, a banking corporation, being the creditor-mortgagee of XYZ & Co., a
garment firm, foreclosed the hypothecated assets of the latter. Despite the foreclosure, XYZ &
Co. continued its business operations. A year later, the bank took possession of the foreclosed
property. The garment firm’s business operations ceased without a declaration of bankruptcy.
Jose Gaspar, an employee of XYZ & Co. was dismissed from employment due to the cessation of
business of the firm. He filed a complaint against XYZ & Co. and the bank. The Labor Arbiter,
after hearing, so found the company liable, as claimed by Jose Gaspar, for separation pay.
Premiere Bank was additionally found subsidiarily liable upon the thesis that the satisfaction of
labor benefits due to the employee is superior to the right of a mortgagee of property. Was
the Labor Arbiter correct in his decision?

SUGGESTED ANSWER:

No. The preference of credits established in ART 110, LC, cannot be invoked in the
absence of any insolvency proceedings, declaration of bankruptcy, or judicial liquidatin.

Another Suggested Answer:

No. What Article 110, LC establishes is not a lien but a preference of credit in favor of
employees. Unlike a lien, a preference of credit does not create a charge upon any particular
property of the debtor.

Question No. VII JOB CONTRACTING – ART 106 2002

Sta. Monica Plywood Corporation entered into a contract with Arnold for the milling of
lumber as well as the hauling of waste wood products. The company provided the equipment
and tools because Arnold had neither tools and equipment not capital for the job. Arnold, on
the other hand, hired his friends, relatives and neighbors for the job. Their wages were paid
by Sta. Monica Plywood Corporation to Arnold, based on their production or the number of
workers and the time used in certain areas of work. All work activities and schedules were
fixed by the company.

A. Is Arnold a job contractor? Explain briefly.

B. Who is liable for the claims of the workers hired by Arnold? Explain briefly.

SUGGESTED ANSWER:
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A. No. In two cases decided by the Supreme Court, it was held that there is “job
contracting” where (1) the contractor carries on an independent business and undertakes the
contract work in his own account, under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal in all matters
connected with the performance of the work except as to the results thereof; and (2) the
contractor has substantial capital or investment in the form of tools, equipment, machineries,
work premises and other materials which are necessary in the conduct of his business.

In the problem given, Arnold did not have sufficient capital or investment for one. For
another Arnold was not free from the control and direction of Sta. Monica Plywood Corp.
because all the work activities and schedules were fixed by the company.

Therefore, Arnold is not a job contractor. He is engaged in labor-only contracting.

B. Sta. Monica Plywood Corp. is liable for the claims of the workers hired by Arnold. A
finding that Arnold is a job-only contractor is equivalent to declaring that there exists employer-
employee relationship between Sta. Monica Plywood Corp. and workers hired by Arnold. This is
so because Arnold is considered a mere agent of Sta. Monica Plywood Corp.

Question No. XIII ART 106 2001

‘a) “X” is a bona fide service contractor providing manpower services to various
companies, possessing the necessary capital and equipment needed to effectively carry out its
commitments. “Y” is an employee of “X” and assigned to work as a janitor in Company “Z”. In
the course of Y’s assignment, Z’s supervisors and employees would give verbal instructions to Y
as to how and where to perform his work. X pays Y salary. Subsequently, Y’s services were
terminated by X. Y sued Z for illegal dismissal. May Y’s case against Z prosper? Why?

SUGGESTED ANSWER:

Y’s case against Z will not prosper, because Z is not the employer of Y. The employer of Y is
Z.

Y would be an employee of Z if X here is a labor-only contractor but X is not a labor-only

contractor. He possesses the necessary capital and equipment needed to effectively carry out
its commitment as a service contractor.

Applying the control test, the fact that Z’s supervisor and employees giver verbal
instructions to Y as to how and where to perform his work does not necessarily mean that
thereby he is under the control of Z as regards his employment as long as X, as service
contractor, actually directs the work of Y. It should also be noted that X pays the salary of Y as
the employee of the former.

Another Suggested Answer:

Yes, Y’s case against Company Z will prosper. Company Z will be deemed the direct
employer because the Company directly and specifically controlled the manner by which the
work should be done and, and by doing so also the result.
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The presence of the element or factor of control, which is the most important factor in
determining the existence of an employer-employee relationship is present. In Religious of the
Virgin Mary vs. NLRC, October 13, 1999, the Supreme Court, ruled:

“As this Court has consistently ruled, the power of control is the most decisive
factor in determining the existence of employer-employee relationship.”

‘b) In 1960, Juan hired Pablo to drive for the former’s lumber company. In 1970, Pablo got
sick and was temporarily laid-off. In 1972, Pablo recovered and resumed working for the same
lumber company, now run by Juan’s wife since Juan had already passed away. In 1996, Pablo
retired. When Pablo applied for retirement benefits with the SSS that same year, he
discovered that the lumber company never enrolled him as an employee, much less remitted his
contributions that were deducted from his salary. The lumber company agreed to pay for
Pablo’s contributions plus penalties prescribed under Article 1150 of the Civil Code. (Art 1150
provides “The time for prescription of all kinds of actions, when there is no special provisions
which ordains otherwise, shall be counted from the day they may be brought.”) Is the Lumber
company’s contention correct? Why?

SUGGESTED ANSWER:

The lumber company’s contention is not correct.

The SSS Law (SEC 22 [b]) provides that the right to institute the necessary action
against an employer may be commenced within 20 years from the time the delinquency is known
or the assessment is made by the SSS, or from the time the benefit accrues, as the case may be.

Question No. XVII 2001

‘a) Eduardo Santiago, a project worker, was being assigned by his employer, Bagsak
Builders, to Laoag, Ilocos Norte. Santiago refused to comply with the transfer claiming that it,
in effect, constituted a constructive dismissal because it would take him away from his family
and his usual work assignments in Metro Manila. The Labor Arbiter found that there was no
constructive dismissal but ordered the payment of separation pay due to strained relations
between Santiago and Bagsak Builders plus attorney’s fees equivalent to 10% of the value of
Santiago’s separation pay.

Is the award of attorney’s fees valid? State the reasons for your answer.

SUGGESTED ANSWER:

No, the award of attorney’s fees is not valid. According to the Labor Code (ART 111 [a]),
attorney’s fees may be assessed in cases of unlawful withholding of wages which does not exist
in the case. The worker refused to comply with a lawful transfer order, and hence, a refusal to
work. Given this fact, there can be no basis for the payment of attorney’s fees.

‘b) Could the labor arbiter have validly awarded moral and exemplary damages to Santiago
instead of attorney’s fees? Why?
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Another Suggested Answer:

No, moral and exemplary damages can be awarded only if the worker was illegally
terminated in an arbitrary or capricious manner.

Question No. 4 ART 128 1993

The Bantay- Salakay Security Agency (BSSA) employed 10 security guards and assigned them
to Surot Theater which contracted BBSA for its security needs.

On November 3, 1988, the 10 security guards of BSSA addressed to the Office of the
President, a letter-complaint against their employer for non-compliance with RA 6640 providing
for an increase in the statutory minimum wage and salary rates or employees and workers in
the private sector. The letter was endorsed to the Secretary of Labor who, in turn, referred
the matter to the Regional Director of Makunat City in Region XII where the 10 security guards
resident and where their employer conducts business. The Office of the Regional Director
conducted an investigation and called for a hearing with all the parties present. Therefrom,
the Regional Director found that there were indeed violations committed by BBSA against the
10 security guards, such as underpayment of 5 days incentive leave pay. BSSA and Surot
Theatre were directed to comply with the labor standards and ordered BSSA and Surot Theater
to pay jointly and severally to the 10 security guards their respective claim of P10,000 each or
an aggregate amount of P100,000. BSSA and Surot Theater filed a Petition for Certiorari before
the Supreme Court seeking to annul the decision of the Regional Director on the ground of
grave abuse of discretion in assuming jurisdiction over the case. Will the Petition of Certiotari
prosper? Decide with reason.

ANSWER:

It is to be noted that the Regional Director assumed jurisdiction before the effectivity of RA
6715 (which is March 21, 1989). Thus, applying ART 128, LC, the petition for certiorari will not
prosper.

Under said article of the Labor Code, the Secretary of Labor or his duly authorized
representatives – and Regional Directors are duly authorized representatives – have visitorial and
enforcement powers. Thus, a Regional Director not only has visitorial powers, i.e. to visit the
premises of an employer and examine his records, he also has enforcement powers, i.e. based on
the findings of labor regulation officers or industrial safety engineers made in the course of
inspection. A Regional Director has the power to order and administer, after due notice and
hearing compliance with the labor standards, provisions of the Labor Code. Thus, he could issue
writs of execution to the appropriate authority for the enforcement of his orders, except in
cases where the employer contests the findings of the labor regulations officer and raises issues
which cannot be resolved without considering evidentiary matters that are not verifiable in the
normal course of inspection.
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Therefore, pursuant to ART 128, LC, the Regional Director was only exercising his visitorial
and enforcement powers in the case of BBSA and Surot Theater. Thus, he has jurisdiction to do
what he did.

In a dissenting opinion, Chief Justice Narvasa said that even after the effectivity of RA 6715,
the Regional Director has jurisdiction to act on claims exceeding P5,000.

The petition for certiorari will prosper under RA 6715, its provision limiting the power of
Regional Directors to money claims not exceeding P5,000 per employee, the Regional Director no
longer has the power to act on money claims exceeding P5,000 per employee, even if the same
power is exercised pursuant to his visitorial and enforcement power under the Labor Code (ART
128) where the P5,000 limitation is not found.

Question No. 10 WAGES 1993

Mer Alco is a staff engineer of Vetsin Factory, Inc. since September 1980. In 1982, BP 73,
otherwise known as The Omnibus Energy Conservation Law, was passed, requiring
establishments such as Vetsin Factory, Inc. to appoint an employee as its Energy Manager whose
duties consist of evaluating energy conservation activities of the company, submitting energy
consumption reports to the Dept of Energy and coordinating with the said department
concerning utility efficiency of the establishment. Pursuant to the requirement of the Omnibus
Energy Conservation Law, Mer Alco was appointed by Vetsin Factory, Inc. as Energy Manager.
Except for the above duties enjoined by law to be performed by the Energy Manger Mer Alco is
also practically doing the same responsibilities attached to the position of a staff engineer. For
3 years, Mer Alco performed the role of an Energy Manager receiving the same salary as that
received by him when he was still a Staff Engineer. In 1986, Mer Alco filed a compliant before
the NLRC for underpayment of salary for 3 years claiming that his promotion from Staff
Engineer to Energy Manager necessarily entitled him to a corresponding salary increase even
though BP 73 (Omnibus Energy Conservation Law) did not provide for the salary or increase in
the salary of the employee to be appointed as Energy Manager. Mer Alco invoked the principle
that doubts in the interpretation and implementation of Labor Laws should be resolved in favor
of labor.

The Labor Arbiter sustained Engineer Mer Alco’s position and ordered Vetsin Factory, Inc.
to increase the salary commensurate to the position he was appointed and promoted to.

Write a dissenting opinion on the decision of the Labor Arbiter upholding Mer Alco’s
position that salary should be correspondingly raised by reason of his promotion as well as
sustaining the applicability of the principle that interpretation and implementation of Labor
Laws should be resolved in favor or labor.

ANSWER:

I dissent. The decision of the Labor Arbiter ordering Vetsin Factory, Inc. to increase the
salary of Mer Alco commensurate to the position he was appointed and promoted to has no basis
whatsoever.
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There is no provision in BL 73 making it the legal obligation of an employer to increase the
salary of his employee once the latter is made an Energy Manager pursuant to BP 73.

The determination of the salary of an employee is management’s prerogative. In the case

of Vetsin Factory, Inc., the employer has not decided to give an increase to Meralco. The
employer cannot be compelled to make such decision.

As to the application of the principle that doubts in the interpretation and implementation
of Labor Laws should be resolved in favor of labor, the principle cannot be invoked. Except
when a law like a Minimum Wage Law fixes what minimum wages are to be paid by employers, or
on all law like the Salary Standardization Law for government employees which fixes the
compensation of the employees occupying certain positions. It is the employer who unilaterally
determines what the compensation to give to his employees.

Alternative Answer:

The Labor Arbiter’s decision for increase in the salary of Mer Alco is without legal basis.
Labor Arbiters have no power of compulsory arbitration, only authority to adjudicate claims of
workers which are founded upon contract, or upon awards, or upon provisions of law granting
specific benefits.

The principle relied upon applies only to the interpretation of a law, contract or other legal
acts mandating payment of benefits. In this case, the claim to an increase has no basis in law,
in contract or in company practice.

Question No. 12 ART 111 1993

How much attorney’s fees may a lawyer assess a culpable party in cases of unlawful
withholding of wages?

ANSWER:

In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s
fees equivalent to ten percent (10%) of the amount of wages recovered. (ART 111, LC)

Question No. 3 ART 107 1992

Jose Pescador had been employed by the Forward Security Agency since 1998 and was
assigned to Freedom Enterprises, Inc. with which the agency has a service contract. On June
30, 1992, he resigned from the agency and subsequently filed a complaint with the Labor
Arbiter against the agency and the company (Freedom Enterprises) for money claims arising out
of his employment. The agency admitted its liability for said claims. The Company moved to
dismiss Pescador’s complaint, contending that Pescador was not an employee of the Company
and that the agency, pursuant to the service contract, was exclusively and solely liable for
Pescador’s claims.

Rule on the company’s motion to dismiss.

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SUGGESTED ANSWER:

The company’s motion to dismiss is without merit.

The assignment of Pescador to Freedom Enterprises, Inc. made the latter the indirect
employer of Pescador. As such indirect employer, under the Labor Code, the company is jointly
and severally liable with the Forward Security Agency to the extent of the work performed by
Pescador for the Freedom Ent., Inc. (ART 107, LC).

But because of the service contract entered into by the agency and the company whereby
the agency agreed that it shall be exclusively and solely liable for the claims of Pescador as an
employee of the agency, the company can sue the agency for whatever the company, as indirect
employer may pay Pescador.

Question No. 7 ART 97 1992

Pedro Tiongco was a salesman for 10 years of Lakas Appliance Company (LAC). Due to
business reverses, the Company laid off Tiongco and three other salesmen and offered them
separation pay based on their monthly basic salary of P5,700.00. The 3 salesmen accepted their
separation pay and signed individual quitclaims stating, among others, that they have no more
claims or causes or action whatsoever against LAC. The quitclaims were duly notarized,
Tiongco refused to accept his separation pay and instead, demanded that the said pay should be
computed on the basis of his monthly basic salary and his sales commissions. Upon LAC’s
rejection of Tiongco’s demand, Tiongco filed the appropriate complaint with the Labor Arbiter.

a) As Labor Arbiter, how will you resolve Tiongco’s complaint. Reasons.

SUGGESTED ANSWER:

As Labor Arbiter, I will grant the demand that Tiongco be paid his separation pay computed
on the basis of his monthly basic salary and his sales commissions. The sales commissions under
the Labor Code is part of the “wage” that the salesmen are entitled to receive for services
rendered. Wages may be fixed or ascertained on a time, task, piece or commission basis. (ART
97, LC)

b) If Tiongco obtains a favorable decision will the three other salemen be entitled to
separation pay differential? Reasons.

Alternative Answer:

No. If the acceptance of their separation pay by the 3 other salesmen and their signing
individual quitclaims that stated that they have no more claims or causes of actions whatsoever
against LAC (where the quitclaims were even duly notarized) as voluntarily, they can no longer
ask for a recomputation of their separation pay according to the favorable decision secured by
Tiongco.
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The salesmen signed a quitclaim that are not contrary to law, morals or public policy. Not
all quitclaims are invalid as against public policy if they are voluntarily entered into and
represents a reasonable settlement.

Question No. 14 ART 87 / 88 1992

A manufacturing company operates on a 6-day work week. It employs 200 workers whose
regular workday is 8 hours. On May 1, 1990,the company and Union “M”, the employees
bargaining agent, agreed that the workday by 7 hours from Monday to Wednesday and 9 hours
from Thursday to Saturday. The agreement was ratified by all the employees. In 1991 Union
“M” lost its majority status and Union “P” was certified as bargaining representative. Union
“P” filed a claim against the Company for unpaid overtime pay of the 200 employees from May
1, 1990 when they started working 9 hours per day, 3 days a week. Invoking the 1990
agreement, the Company moved to dismiss the claim of Union “P”.

Decide with reasons.

SUGGESTED ANSWER:

The claim of Union “P” is valid. The Labor Code is very clear. Undertime work on any
particular day shall not be offset by overtime work on any other day. (ART 88, LC)

The right arising from the above provision, meaning, entitlement to overtime pay for one
hour for working 9 hours per day, 3 days a week (ART 87, LC) cannot be considered as waived by
a CBA, even if the CBA is ratified by the employees concerned. The waiver in this instance is
against the law, morals, and public policy. The law must prevail over the CBA.

Question No. 8 ART 128 & 129 1991

In a letter to the Regional Director of Region VII of the DOLE, employee Ricardo Malalang
claims that his employer, the Visayan Sea Products Corp. has not compensated him for various
legal benefits, including overtime pay, holiday pay, 13th month pay and other monetary benefits
totaling P6,000.

Despite the fact that the amount claimed exceeds P5,000, how may the Regional Director
exercise jurisdiction over the case? Why?

ANSWER:

The power of the Regional Director over money claims may arise under ARTS 128 or 129,
LC.

Under ART 129, for the Regional Director to exercise jurisdiction, the aggregate money
claims of an employee should not exceed P5,000.

Under ART 128, as the duly authorized representative of the Secretary of Labor, the
Regional Director has the power to order and administer, after due notice and hearing,
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compliance with the labor standards provisions of the Labor Code and other labor legislation
based on the findings of labor regulation officers made in the course of inspection and issue
writs of execution to the appropriate authority for the enforcement of their orders, except in
cases where the employer contests the findings of the labor regulation officer and raises issues
which cannot be resolved without considering evidentiary matters that are not verifiable in the
normal course of inspection.

Article 128 applies where the employer-employee relationship exists.

Question No. 11 LABOR-ONLY CONTRACTOR - ART 106 1991

Kilos Union filed a PCE among the 100 rank and file employees of Steel Company. Opposing
the petition, the company claimed that 30 of the employees are contractual employees having
been supplied by the Sikat Employment Agency and should, therefore, be barred from taking
part in the election. The Union countered that the Sikat Employment Agency is a labor-only
contractor which merely served as agent in recruiting for the company the 30 employees.

b) What facts must be proved to show that the Sikat Employment Agency is engaged in
labor-only contracting? What is the consequence of such a showing?

ANSWER:

Sikat Employment Agency is engaged in labor-only contracting if it does not have substantial
capital or investments, in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited or placed by Sikat Employment Agency are performing
activities which are directly related to the principal business of the employer, namely, Steel
Company.

If Sikat Employment Agency is only a labor-only contractor, it shall be considered as an

agent of the Steel Company. Said company shall be responsible to the so-called contractual
workers in the same manner and extent as if said workers are directly employed by the Steel
Company.

Question No. 10 ART 106 1990

The Smarty Food Company is engaged in the restaurant and catering business. Having
invested a substantial amount of money to establish its business, the company decided to avoid
its legal responsibilities in connection with the selection of employees, their social security and
other labor relations problems. To this end, the company engaged the services of Jack Perez,
doing business under the name of San Jacinto Manpower Agency, to supply it with cooks,
waiters, waitresses, dishwashers, and other workers. Jack Perez does not have a separate
regular business office. He operates his business from his own house. Under this economic
arrangement, Jack Perez pays the wages of the workers assigned to the company directly and
reports said workers to the SSS as his own employees. He charges the Smarty Food Company a
monthly fee depending on the number of workers serving the company. After two years, all the
workers assigned by Jack Perez to the company joined the United Restaurant Workers Union.
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Soon thereafter, the labor union sought recognition from the Smarty Food Company and
requested for collective bargaining negotiations. Thereupon, the company terminated its
service contract with San Jacinto Manpower agency and prevented the latter’s workers from
entering the company premises. To keep its business going, the Smarty Food Company assured
its manpower needs from another service agency. The labor union then filed a complaint for
unfair labor practice under Article 248 [a] of the Labor Code against the Smarty Food Company.

Has the Smarty Food Company succeeded in avoiding its labor relations obligations to the
workers of San Jacinto Manpower Agency? Is the company guilty of ULP? Give your reasons.

ANSWER:

Smarty Food Company has not succeeded in avoiding its labor relations obligations to the
workers of San Jacinto Manpower Agency. Under the facts of the case in question, the cooks,
waiters, waitresses, dishwashers, and other workers supplied by San Jacinto Manpower Agency
are employees of Smarty Food Company and not of the Agency because said workers are
performing activities which are directly related to the principal business of Smarty which is
engaged in the restaurant and catering business. It is also noted that the Agency does not have
substantial capital or investment in the form of tools, equipment, machineries and work
premises. It does not have a separate regular business office and merely operates its business
from the house of the owner/operator of the Agency. Thus, under the above circumstances,
under the Labor Code (ART 106), the Agency is engaged in “labor-only” contracting and should
therefore be considered merely as an agent of the employer, meaning Smarty Food Co.

Because of the fact that Smarty is the employer of the cooks, waiters, waitresses,
dishwashers, and other workers, the Company was guilty of ULP when it terminated their
services by terminating its service contract with the Agency. The Company thereby
discriminated against its workers to discourage membership in any labor organization which is an
ULP. The Company also committed an unfair labor practice when it violated its duly to bargain
collectively by refusing to meet with the United Workers Restaurant Workers Union which was
organized by the workers of the Company.

Question No. 11 HOURS OF WORK 1988

Manila Laundry is a mechanized operation. It relies on washing machines, driers, and

mechanical ironing/pressing machines for sheets. In the period of extensive brown-outs, its
machines could not be used regularly. The Secretary of Commerce and Industry proposed a
Voluntary Loss Control Plan so that firms with high electric power needs could schedule one
shut-down day per week so that the available energy could be better allotted to reduce the
uncertainties of when brown-outs would occur and interrupt work in process. Manila Laundry
joined the plan and set one shut-down day each week. Its union protested and demanded that
they be paid their basic wage for the shut-down day. The company declined and a case was
filed for non-payment of wages.

a) The case is assigned to you as Labor Arbiter. Decide.

b) if the cause of the one day shut-down each week had been due to the very frequent
break-down of equipment would your decision be the same? Explain.
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ANSWER:

a) If the contract of employment of the workers provides that the workers are to be paid on
a daily basis, and there is no provision in the contract that they are guaranteed to work for a
certain number of days per week, the fact that Manila Laundry joined a plan that scheduled one
shut-down day per week does not mean that Manila Laundry is under legal obligation to pay the
daily wage of the workers for the one shut-down day that they do not work. There is no law that
imposes this obligation of an employer. The general rule is: “no work, no pay”. The Rules and
Regulations implementing the Labor Code provide that the time during which an employer is
inactive by reason of interruption in his work beyond his control shall be considered time worked
either if the imminence of the resumption of work requires the employees presence at the place
of work or if the interval is too brief to be utilized effectively and gainfully in the employees
own interest. This Rule can not be applied here because there is adequate notice about the one
shut down day.

b) My decision will be the same as in (a) above. The applicable rule will still be No work No
pay.

Question No. 3 ART 137 1987

Lydia Cancio was on her sixth and last month as a probationary employee of the Banco
Securidad when she was confirmed to be pregnant. Being unmarried and wanting to become a
regular employee, she initially kept her pregnancy a secret from her employer. She was
subsequently appointed a regular employee on the first month of her pregnancy.

Because of morning sickness, Lydia frequently absented herself from work. After two more
months, the personnel manager told her that her habitual absences had become so intolerable
that she would have to go. Replying that her absences were caused by her pregnancy, Lydia
asked for a leave of absence, which was denied. She nevertheless went on leave and was
dismissed for going on leave without prior permission.

Lydia filed a complaint for illegal dismissal, praying that she be reinstated. The Bank
contested the complaint on the ground that she was not dismissed because of her pregnancy but
because of here absence without leave.

Decide.

ANSWER:

The dismissal is illegal. The Labor Code (ART 137 [2]) very clearly provides: It shall be
unlawful for any employer to discharge (a) woman (employee) on account of her pregnancy, of
while on leave or in confinement due to her pregnancy.

Of course, in the case, the woman employee asked for leave of absence because of her
pregnancy but this request was denied and she went on leave anyway.
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The employer should have granted her request for leave, the request being made because of
her pregnancy.

Dismissal after she went on leave without prior permission is too harsh a punishment for the
pregnant woman who was absent without leave.

TITLE III – WORKING CONDITIONS FOR SPECIAL GROUPS OF

EMPLOYEES
ARTICLES 130 - 155
2003

Question No. XV SEXUAL HARASSMENT - DISCRIMINATION 2003

Can an individual, the sole proprietor of a business enterprise, be said to have violated the
Anti-Sexual Harassment Act of 1985 if he clearly discriminates against women in the adoption
of policy standards for employment and promotions in the enterprise? Explain.

SUGGESTED ANSWER:

When an employer discriminates against women in the adoption of policy standards for
employment and promotion in his enterprise, he is not guilty of sexual harassment. Instead, the
employer is guilty of discrimination against women employees which is declared to be unlawful
by the Labor Code.

For an employer to commit sexual harassment, he – as a person of authority, influence or

moral ascendancy – should have demanded, requested or otherwise required a sexual favor from
his employee whether the demand, request or requirement for submission is accepted by the
object of said act.

In the question, no such act was committed by the sole proprietor.

Question No. 13 ART 138 1989

Club Paris is an entertainment entity that operates a night club along Roxas Boulevard.
The club provides food and drinks which are served by women who are dressed like Playboy
Bunnies. In the employment contract of each woman, the following provisions appear:

Compensation - All tips, commission and other

forms of payment received from
customers minus 10%.
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“Hours of work - 6 PM to 3 AM, daily, including
Sundays and holidays;

“Other conditions - Must remain single; marriage

or pregnancy is valid cause of
dismissal.”

Maria Bituin applied and was hired by the Club. She signed the employment contract
containing the aforesaid provisions. Six months later, she asked for maternity leave with pay.
Instead of granting her maternity leave, the management of the Club fired her. Bituin sued the
Club for illegal dismissal, backwages, overtime pay and holiday pay. Decide.

ANSWER:

First of all, it should be stated: Bituin is an employee of Club Paris: According to the Labor
Code (ART 138) any woman who is permitted or suffered to work, with or without compensation
in any night club, cocktail lounge, massage clinic, bar or similar establishment, under the
effective control or supervision of the employer for a substantial period of time as determined
by the Secretary of Labor shall be considered as an employee of such establishment for purposes
of labor and social legislation.

Bituin was illegally dismissed. Pregnancy is not a just cause for the termination of
employment. In fact, the Labor Code provides that it shall be unlawful for an employer to
discharge a woman employee on account of her pregnancy.

She is entitled to backwages. The compensation given to Bituin was “all tips”, commission
and other forms of payment from customers minus 10%. These cannot be considered
compensation, at most, they could be considered as service charges which Bituin can keep. She
is, thus, entitled to be paid at least the minimum wage.

Since her working hours are from 6PM to 3AM, she works 9 hours a day. She is entitled to
overtime pay, and also from 10PM, to a night shift differential.

She is also entitled to premium pay since she works 7 days a week, and thus, works on her
weekly rest day, and also on regular holidays. For the latter, she should be paid at 200% of her
basic rate.

Alternative Answer:

Bituin is not an employee because Playboy Bunny is

Question No. 14 ART 167 1988

The facts in this problem will have a bearing on the solution of problem XV. Please keep
the essential facts in mind.

Pascual Pasacao was employed as a plumber by the Colossal Construction Corp. in 1965. He
was then single. When he was registered with the SSS, he designated his father Juan and his
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mother Maria, who were over 60 and dependent on him for support, as his beneficiaries.
Colossal religiously remitted all employee and company contributions required by SSS law.

He married Damiana de Juan in 1967, and also declared her as beneficiary. Even if he was
married, and because he was making a lot of money on overtime, he continued supporting his
parents. A son, Pedrito, was born to the couple in 1968, and a daughter, Marita, in 1970. He
declared both to the SSS as his beneficiaries. In 1975, he was promoted as foreman to a project
in Mountain Province. He stayed there for 2 years and during that time, he had a relationship
with Juliana Abay, by whom he had a child, Pascualito in 1976. He signed Pascualito’s birth
certificate.

Unknown to him, Damiana had an affair while he was away and bore a daughter, Ariadne,
in 1977. She represented to his employer that Ariadne was her child by Pascual and the
personnel clerk of the company reported the child to the SSS as another beneficiary. When
Pascual returned to Manila, he found out about Adriade, and sent Damiana away from the
conjugal home with the child. She left and lived with Ariadne’s natural father. However,
Pascual did not file legal separation proceedings against Damiana.

Pascual did not know about the registration of Ariadne as an SSS beneficiary. He then
brought Juliana to his home in Manila with their child, Pascualito. She was mother to all his
children.

In 1979, the then Ministry of Labor issued regulations on Occupation Health and Safety
requiring construction workers to bear safety helmets on an approved design, while they
worked in job sites. Colossal issued safety helmets imported from the US to all its workers,
including foreman. These helmets were guaranteed to resist impacts and absorb shocks for at
least 5 years if constantly exposed to sunlight. Under company rules, all workers on job sites
must wear their safety helmets only when executives of the company were on job site, or when
labor inspectors would check compliance with labor rules. In 1987, Pascual was supervising the
raising of a pallet filled with PVC pipes to the 12th floor of the building they were working on.

A Colossal project engineer was around so Pascual had put on his 8-year old safety helmet.
However, Pascual did not close the chin strap to secure the helmet to his head. A cable
snapped and whiplashed. It missed the engineer by inches and smashed into Pascual’s helmet.
The helmet cracked but the cable did not touch Pascual’s head. However, because of the
impact, Pascual lost his balance and fell on the ground. The helmet flew off and he hit his
head on the pavement. As a result of the injuries that he sustained, he was paralyzed. While
the attending physicians said that there was hope for his eventual recovery if he could follow a
program of therapy, there was no certainty when that would be. Since Pascual was a valued
employee, the company wanted to do all it could for him and his family.

You are counsel of the company. The President of the firm, who was briefed you on the
situation in Pascual’s family, asks you to help the personnel clerk file a claim for Pascual’s
benefits so it could augment the disability pay that the company was paying him. In filing out
the form, you find a blank for beneficiaries.

a) Whom should you write down as beneficiaries?

b) To what benefits would Pascual be entitled? Explain your answer.

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c) Under what conditions may the SSS suspend the grant of these benefits to Pascual?

ANSWER:

a) The disability suffered by Pascual is work-connected. Thus, the applicable law are the
provisions in the Labor Code on employees compensation and the State Insurance Fund. (ART
166-208). In one of these provisions (ART 167 [8]) “beneficiaries” means the dependent spouse
until he/she remarries and dependent children (legitimate, legitimated or legally adopted or
acknowledged child) who are primary beneficiaries. In their absence, the dependent parents
and subject to the restriction imposed on dependent children, the illegitimate children and
legitimate descendants, who are secondary beneficiaries.

Applying the above definition, Damiana, the legal spouse of Pascual could have been a
primary beneficiary but since she is not living with Pascual, Damiana is not a dependent spouse.

Pedrito and Marita are primary beneficiary as dependent children if they are not yet over 21
years of age but they are unmarried and not gainfully employed.

Pascualito, the illegitimate son, is a secondary beneficiary. Also secondary beneficiaries are
the dependent parents Juan and Maria.

b) He would be entitled to permanent total disability benefit in the form of employees

compensation. His paralysis of at least two limbs is considered permanent total disability (ART
182 [3]), and it is employees compensation that will be given because the disability is work-
connected. It arose out of and in the course of employment. But he could not be entitled to
this benefit if he has been notoriously neglected. There could be basis for notorious negligence.
He should follow very well about wearing a helmet while at work.

c) The grant of permanent total disability may be suspended if Pascual is gainfuly

employed, or recovers from his permanent total disability or fails to present himself for
examination at least once a year upon notice by the SSS.

Question No. 1 ART 142, 146 1987

Rosa Cartagena, a 14-year old orphan, was hired as a domestic helper by Elvira Pacheco, a
friend of Rosa’s aunt, who could not longer support her. The aunt and Elvira agreed that Rosa
would serve the Pacheco’s for three years, with the clear understanding that the Pachecos
would see her through high school.

The Pachecos never sent Rosa to high school. After two years of unfulfilled promises for
her education, Rosa went back to her aunt, who confronted Elvira about her breach of cash
equivalent of the three years of high school education that Rosa was denied. Elvira contended
that Rosa quit before the end of the fixed employment period and, therefore, is not entitled to
anything. The aunt filed a complaint against the Pachecos.

If you were the labor arbiter, how would you decide the case?

ANSWER:
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BAR EXAMS IN LABOR AND SOCIAL LEGISLATION
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As the Labor Arbiter, assuming Rosa’s aunt as her guardian, I will hold that Rosa’s quitting
was justifiable and that the Pachecos should pay the cash equivalent of at least two years of
high school education.

Rosa’s quitting is justifiable. The Labor Code (ART 142) provides that the original contract
of domestic service shall not last for more than 2 years. The original contract of Rosa with the
Pachecos was fixed for 3 years. Thus, this contract should be considered as only for 2 years.
Rosa, therefore, may not be considered as terminating the contract before the expiration of its
term. She left after 2 years.

She also left of a justifiable reason. Her employers were not complying with what they
agreed they shall do under the contract, namely, to see her through high school.

Under the Labor Code, (ART 146), it is the legal obligation of the employee to give to his
househelper who is under the age of 18 years (Rosa is 14 years old) and opportunity for at least
elementary education. Further, the Code (in the same Article) provides that the cost of such
education shall be part of the househelpers compensation, unless there is a stipulation to the
contrary.

But what Rosa here is claiming is the cost of high school and not just elementary education.
There is no law prohibiting the employer from obligating himself to give more than just
elementary education, which the employer did in the case. Thus, the employer should comply
with what he agreed to do under the contract he entered into.

Question No. 3 ART 137 1987

Lydia Cancio was on her sixth and last month as a probationary employee of the Banco
Securidad when she was confirmed to be pregnant. Being unmarried and wanting to become a
regular employee, she initially kept her pregnancy a secret from her employer. She was
subsequently appointed a regular employee on the first month of her pregnancy.

Because of morning sickness, Lydia frequently absented herself from work. After two more
months, the personnel manager told her that her habitual absences had become so intolerable
that she would have to go. Replying that her absences were caused by her pregnancy, Lydia
asked for a leave of absence, which was denied. She nevertheless went on leave and was
dismissed for going on leave without prior permission.

Lydia filed a complaint for illegal dismissal, praying that she be reinstated. The Bank
contested the complaint on the ground that she was not dismissed because of her pregnancy but
because of here absence without leave.

Decide.

ANSWER:

The dismissal is illegal. The Labor Code (ART 137 [2]) very clearly provides: It shall be
unlawful for any employer to discharge (a) woman (employee) on account of her pregnancy, of
while on leave or in confinement due to her pregnancy.
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BAR EXAMS IN LABOR AND SOCIAL LEGISLATION
Compiled by: CYRILL ACEBRON – DOCTOR
Of course, in the case, the woman employee asked for leave of absence because of her
pregnancy but this request was denied and she went on leave anyway.

The employer should have granted her request for leave, the request being made because of
her pregnancy.

Dismissal after she went on leave without prior permission is too harsh a punishment for the
pregnant woman who was absent without leave.