LABOR STANDARDS.Q&A.ppt

LABOR STANDARDS
• E-E Relationship; Corporation (1999)
• FACTS: Teofilo Lacson was one of more than one hundred (100)
employees who were terminated from employment due to the closure of
LBM Construction Corporation (LBM).LBM was a sister company of
Lastimoso Construction, Inc. and RL Realty & Development
Corporation. All three (3) entities formed what came to be known as the
Lastimoso Group of Companies. The three (3) corporations were owned
and controlled by members of the Lastimoso Family; their incorporators
and directors all belonged to the Lastimoso family. The three (3)
corporations were engaged in the same line of business, under one
management, and used the same equipment including manpower
services.Teofilo Lacson and his co-employees filed a complaint with the
Labor Arbiter against LBM, RL Realty and Lastimoso Construction to
hold them jointly and severally liable for backwages and separation pay.
Lastimoso Construction, Inc. and RL Realty & Development Corporation
interposed a Motion to dismiss contending that they are Juridical entitles
with distinct and separate personalities from LBM Construction
Corporation and therefore, they cannot be held jointly and severally
liable for the money claims of workers who are not their employees.
Rule on the Motion to Dismiss. Should it be granted or denied? Why?
(5%)

Suggested Answer
• It is very clear that even if LBM Construction company, Lastimoso
Construction Company, Inc. and RL Realty & Development
Corporation all belong to the Lastimoso family and are engaged in
the same line of business under one management and used the
same equipment including manpower services, these corporations
were separate juridical entities. Thus, only the LBM Construction
Corporation is the employer of Teofelo Lacson. The other
corporation do not have any employer-employee relations with
Lacson. The case in question does not include any fact that would
justify piercing the veil of corporate fiction of the other corporations
in order to protect the rights of workers. In a case (Concept Builders,
Inc. v. NLRC. 257 SCRA 149), the Supreme Court ruled that it is a
fundamental principle of corporation law that a corporation is an
entity separate and distinct from its stockholders and from other
corporations to which it may be connected. But this separate and
distinct personality of a corporation is merely a fiction created by law
for convenience and to promote justice. So, when the notion of
separate juridical personality is used to defeat public convenience,
justify wrong, protect fraud or defend crime, or is used as a device to
defeat the labor laws, this separate personality of the corporation
maybe disregarded or the veil of corporate fiction pierced.

ALTERNATIVE ANSWER:
• Motion to Dismiss should be denied. In the case at bar,
the Labor Arbiter would be justified in piercing the
corporate veil and considering the three (3) corporations
as one and the same entity as the employer of Teofilo
Lacson because based on the facts "the three
corporations were owned and controlled by members of
the Lstimoso family; their incorporators and directors all
belonged to the Lastimoso family. The three (3)
corporations were engaged in the same line of business,
under one management and used the same equipment
including manpower services." The facts show that "the
notion of legal entity is used to defeat public
convenience, justify wrong, protect fraud, or defend
crime, the law will regard the corporation as an
association of persons, or in the case of two
corporations, will merge them into one.

E-E Relationship; Determined by Facts & Laws (2000)
• Banco de Manila and the Ang Husay Janitorial and Pest Control
Agency entered into an Independent Contractor Agreement with the
usual stipulations: specifically, the absence of employer-employee
relationship, and the relief from liability clauses. Can the Bank, as a
client, and the Agency, as an independent contractor, stipulate that
no employer-employee relationship exists between the Bank and the
employees of the Agency who may be assigned to work in the
Bank? Reason. (5%)
• SUGGESTED ANSWER:
• They can so stipulate if the relationship is indeed Job contracting.
Yet the stipulation cannot prevail over the facts and the laws. The
existence of employer-employee relationship is determined by facts
and law and not by stipulation of the parties. (Insular Life Assurance
Co.. Ltd. v. NLRC. 287 SCRA 476 (1998); Tabas v. California
Manufacturing Co. Inc., 169 SCRA 497 (1989)].

ALTERNATIVE ANSWER:
• Yes, they can stipulate provided that the contract of Independent
contractor is valid in accordance with Art 106 of the Labor Code.
• E-E Relationship; Elements (1996)
• 1) When does an employer-employee relationship exist?
• The Supreme Court, in a long line of decisions has consistently
ruled that the following are the elements of an employer-employee
relationship:
• A. Selection and engagement of the employee;
• B. Payment of wages;
• C. Power of discipline and dismissal; and
• D. Power to control the employee's conduct as regards his
employment.

ALTERNATIVE ANSWER:
• An employer-employee relationship
exists when a person (an employer)
who carries on a business, trade,
Industry, undertaking, or activity of any
kind uses the services of another
person (an employee) who, receiving
compensation, is under the employer's
orders as regards the employment.
•

E-E Relationship; GRO’s & Night Clubs (1999)
• FACTS: Solar Plexus Bar and Night Club allowed by tolerance fifty (50)
Guest Relations Officers (GRO) to work without compensation in its
establishment under the direct supervision of its Manager from 8:00 p.m. to
4:00 a.m. everyday, including Sundays and holidays. The GROs, however,
are free to ply their trade elsewhere at anytime but once they enter the
premises of the night club, they are required to stay up to closing time. The
GROs earned their keep exclusively from commissions for food and drinks,
and tips from generous customers. In time, the GROs formed the Solar
Ugnayan ng mga Kababaihang Inaapi (SUKI); a labor union duly registered
with DOLE. Subsequently, SUKI filed a petition for certification election in
order to be recognized as the exclusive bargaining agent of its members.
Solar Plexus opposed the petition for certification election on the singular
ground of absence of employer-employee relationship between the GROs
on one hand and the night club on the other hand.
• May the GROs form SUKI as a labor organization for purposes of collective
bargaining? Explain briefly. (5%).

SUGGESTED ANSWER:
• The GROs may form SUKI as a labor organization for purposes of
collective bargaining. There is an employer-employee relationship
between the GROs and the night club.
• The Labor Code (in Article 138) provides that any woman who is
permitted or suffered to work, with or without compensation, in any
nightclub, cock tail 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.
• In the case at bar, it is clearly stated that the women once they enter
the premises of the night club would be under the direct supervision
of the manager from 8:00 p.m. to 4:00 a.m. everyday including
Sundays and holidays. Such is indicative of an employer-employee
relationship since the manager would be exercising the right of
control.

E-E Relationship; Security Guards; Floating Status
(1999)
• FACTS: Asia Security & Investigation Agency (ASIA) executed a one-
year contract with the Baron Hotel (BARON) for the former to provide
the latter with twenty (20) security guards to safeguard the persons
and belongings of hotel guests, among others. The security guards
filled up Baron application form and submitted the executed forms
directly to the Security Department of Baron. The pay slips of the
security guards bore Baron's logo and showed that Baron deducted
therefrom the amounts for SSS premiums, medicare contributions and
withholding taxes. Assignments of security guards, who should be on
duty or on call, promotions, suspensions, dismissals and award
citations for meritorious services were all done upon approval by
Baron's chief Security officer.
• After the expiration of the contract with Asia, Baron did not renew the
same and instead executed another contract for security services with
another agency. Asia placed the affected security guards on "floating
status" on "no work no pay" basis. Having been displaced from work,
the Asia security guards filed a case against the Baron Hotel for illegal
dismissal, overtime pay, minimum wage differentials, vacation leave
and sick leave benefits, and 13th month pay.

Question
• Baron Hotel denied liability alleging that Asia is the employer of the
security guards and therefore, their complaint for illegal dismissal and
payment of money claims should be directed against Asia.
Nevertheless, Baron filed a Third Party Complaint against Asia.
• 1. Is there an employer-employee relationship between the Baron
Hotel, on one hand, and the Asia security guards, on the other hand?
Explain briefly, (3%)
• As a general rule, the security guards of a private security guard
agency are the employees of the latter and not of the establishment
that has entered into a contract with the private security guard agency
for security services. But under the facts in the question, Baron Hotel
appear to have hired the security guards, to have paid their wages, to
have the power to promote, suspend or dismiss the security guards
and the power of control over them, namely, the security guards were
under orders of Baron Hotel as regard their employment. Because of
the above-mentioned circumstances, Baron Hotel is the employer of
the security guards.

Question
• 2. Assuming that ASIA is the employer, is the act of ASIA
in placing the security guards on "floating status" lawful?
Why? (2%)
• It is lawful for a private security guard agency to place its
security guard on a "floating status" if it has no
assignment to give to said security guards.
• But if the security guards are placed on a "floating
status" for more than six (6) months, the security guards
may consider themselves as having been dismissed.

E-E Relationship; Self-Employed (2003)
• Pablo was a farm-hand in a plantation owned by ABC &
Co., working approximately 6 days a week for a good 15
years. Upon Pablo's death, his widow filed a claim for
burial grant and pension benefits with the Social Security
System (SSS). The claim was denied on the ground that
Pablo had not been a registered member-employee.
• Pablo's widow filed a petition before the SSS asking that
ABC & Co. be directed to pay the premium contributions
of Pablo and that his name be reported for SSS
coverage. ABC & Co. countered that Pablo was hired to
plow, harrow and burrow, using his own carabao and
other implements and following his own schedule of work
hours, without any supervision from the company.
• If proven, would this factual setting advanced by ABC &
Co. be a valid defense against the petition?

SUGGESTED ANSWER:
• ABC & Co. has a valid defense. Pablo should be an
employee of ABC & Co. to be under the compulsory
coverage of the SSS. To be an employee, Pablo should
be under the control of ABC & Co. as regards his
employment. But the facts show that he was not under
the control of ABC & Co. as regards his employment.
Among others, he had his own schedule of work hours,
without any supervision from the company. Thus, he is
an independent contractor and not an employee. An
independent contractor is not under the compulsory
coverage of the SSS. He maybe covered as a self-
employed person. But then as such, ABC & Co. has no
legal obligation to report Pablo for coverage under the
SSS because ABC & Co. is not Pablo's employer.

ANOTHER SUGGESTED ANSWER:
• It is not a valid defense, for Pablo could be considered
an employee of ABC & Co. The elements of hiring,
payment of wages, power to dismiss and power to
control are presumed from the fact that Pablo is working
6 days a week, for 15 years now. Pablo's use of his plow,
harrow, burrow, carabao and other implements and his
having his own schedule of work hours without any
supervision from the company do not erase the element
of control on the part of ABC & Co. because under the
"control test", it is enough that the employer's right to
control exists. It is not necessary that the same be
exercised by the employer, it is enough that such right to
control exists. (Religious of the Virgin Mary v. NLRC. 316
SCRA 614, 629 (1999)

E-E Relationship; Workers paid by Results
(2004)
• B. TRX, a local shipping firm, maintains a fleet of
motorized boats plying the island barangays of AP, a
coastal town. At day’s end the boat operators/crew
members turn over to the boat owner their cash
collections from cargo fees and passenger fares, less
the expenses for diesel fuel, food, landing fees and
spare parts.
• Fifty percent (50%) of the monthly income or earnings
derived from the operations of the boats are given to the
boatmen by way of compensation. Deducted from the
individual shares of the
• Are these boatmen entitled to overtime pay, holiday pay,
and 13th month pay? (5%)

SUGGESTED ANSWER:
• If the boatmen are considered employees, like
jeepney drivers paid on a boundary system, the
boatmen are not entitled to overtime and holiday
pay because they are workers who are paid by
results. Said workers, under the Labor Code are
not entitled, among others, to overtime pay and
holiday pay.
• In accordance with the Rules and Regulations
implementing the 13th month pay law, however,
the boatmen are entitled to the 13th month pay.
Workers who are paid by results are to be paid
their 13th month pay.

• No. The arrangement between the boat owner and the
boat operators/crew members partook of the nature of a
joint venture. The boatmen did not receive fixed
compensation as they shared only in the cash collections
from cargo fees and passenger fares, less expenses for
fuel, food, landing fees and spare parts. It appears that
there was neither right of control nor actual exercise of
such right on the part of the boat owner over the
boatmen. It is clear that there was no employer-
employee relationship between the boat owner and the
boatmen. As such, these boatmen are not entitled to
overtime pay, holiday pay and 13th month pay.

E-E Relationship; Working Student & School (1997)
• Ruben Padilla entered into a written agreement win
Gomburza College to work for the latter in exchange for
the privilege of studying in said institution. Ruben's work
was confined to keeping clean the lavatory facilities of the
school. One school day, Ruben got into a fist fight with a
classmate, Victor Monteverde, as a result of which the
latter sustained a fractured arm.
• Victor Monteverde filed a civil case for damages against
Ruben Padilla, impleading Gomburza College due to the
latter's alleged liability as an employer of Ruben Padilla.
• Under the circumstances, could Gomburza College be
held liable by Victor Monteverde as an employer of Ruben
Padilla?

SUGGESTED ANSWER:
• Gomburza College is not liable for the acts of
Ruben Padilla because there is no employer-
employee relationship between them. As provided
in the Rules and Regulations Implementing the
Labor Code "there is no employer-employee
relationship between students on one hand, and
schools, colleges, or universities on the other,
where students work with the latter in exchange for
the privilege to study free of charge, provided the
students are given real opportunity, including such
facilities as may be reasonable and necessary to
finish their chosen courses under such
arrangement."

ALTERNATIVE ANSWER:
• Gomburza College can be held liable by Victor Monteverde as
an employer of Ruben Padilla. Applying the control test, the
College is the employer of Padilla because in the latter's work
of keeping clean the lavatory facilities of the school, he is
under the control of the College as regards his employment.
• However, Ruben Padilla was not acting within his assigned
tasks. Art. 2180. New Civil Code provides: The obligation
imposed by Art. 2176 (Quasi-delicts) is demandable xxx (also
from) employers (who) shall be liable for the damages caused
by their employees xxx acting within the scope of their
assigned tasks, even though the former are not engaged in
any business or industry." It could be argued that Ruben
Padilla was not acting within the scope of his assigned tasks;
thus, his employer, Gomburza College is not liable.

Employment; Aliens; Requisites (1995)
• Phil-Norksgard Company, Inc., a domestic
corporation engaged in the optics business,
imported from Sweden highly sophisticated and
sensitive instruments for its laboratory. To install
the instruments and operate them, the company
intends to employ Borja Anders, a Swedish
technician sojourning as a tourist in the
Philippines.
• As lawyer of the company, what measures will
you take to ensure the legitimate employment of
Borja Anders and at the same time protect
Philippine labor. Discuss fully.

SUGGESTED ANSWER:
• To ensure the legitimate employment of Borja
Anders, a non-resident alien, I will apply at the
Department of Labor and Employment for the
Issuance of an employment permit claiming that
there is no one in the Philippines who can do the
work that Anders is being asked to do.
• At the same time, to protect Philippine labor, I
will see to it that Anders will have an understudy
who will learn, by working with Anders, how to
install and operate the highly sophisticated and
sensitive instruments from Sweden.

ALTERNATIVE ANSWER:
• To protect Philippine Labor, the Labor Code provides that the alien
employee shall not transfer Employment; Children; Below 15 yrs old
(2004) A spinster school teacher took pity on one of her pupils, a
robust and precocious 12-year old boy whose poor family could
barely afford the cost of his schooling. She lives alone at her house
near the school after her housemaid left. In the afternoon, she lets
the boy do various chores as cleaning, fetching water and all kinds
of errands after school hours. She gives him rice and P30.00 before
the boy goes home at 7:00 every night. The school principal learned
about it and charged her with violating the law which prohibits the
employment of children below 15 years of age. In her defense, the
teacher stated that the work performed by her pupil is not
hazardous, and she invoked the exception provided in the
Department Order of DOLE for the engagement of persons in
domestic and household service.
• Is her defense tenable? Reason. (5%)

SUGGESTED ANSWER:
• No, her defense is not tenable. Under Article 139 of the Labor Code
on "minimum employable age", no child below 15 years of age shall
be employed except when he works directly under the sole
responsibility of his parents or guardian, the provisions of the
alleged Department Order of DOLE to the contrary notwithstanding.
A mere Department Order cannot prevail over the express
prohibitory provisions of the Labor Code.
• [Note: Sec. 3, RA 9231 allows a child below 15 years of age to work for not more than 20 hours a
week; provided, that the work shall not be more than four (4) hours at any given day; provided,
further, that he does not work between 8 o'clock in the evening and 6 o'clock in the morning of the
following day; and provided, finally, that the work is not hazardous or deleterious to his health or
morals. THIS IS A RECENT LAW APPROVED ONLY ON JULY 28, 2003, which is beyond the cut-
off period of the Bar Exams]

Employment; Driver as Househelper & in a Commercial
Establishment (1998)
• The weekly work schedule of a driver is as follows:
Monday, Wednesday, Friday - Drive the family car to
bring and fetch the children to and from school. Tuesday,
Thursday. Saturday - Drive the family van to fetch
merchandise from suppliers and deliver the same to a
boutique in a mall owned by the family. Is the driver a
househelper? [3%]
• The same driver claims that for work performed on
Tuesday, Thursday and Saturday, he should be paid the
minimum daily wage of a driver of a commercial
establishment. Is the claim of the driver valid? [2%]

SUGGESTED ANSWER:
The driver is a househelper. A person is a househelper or is engaged
in domestic or household service if he/she renders services in the
employer's home which are usually necessary or desirable for the
maintenance and enjoyment thereof and includes ministering to the
personal comfort and convenience of the members of the
employer's household including the services of family drivers.
• A family driver who drives the family van to fetch merchandise from
suppliers and delivers the same to a boutique in a mall owned by the
family for whom he works should be paid the minimum daily wage of
a driver in a commercial establishment.
• The Labor Code (in Article 143) provides that no househelper shall
be assigned to work in a commercial, industrial or agricultural
enterprise at a wage or salary rate lower than that provided by law
for agricultural or non-agricultural workers.

Employment; Handicapped Employee (1998)
• A lady worker was born with a physical
deformity, specifically, hard of hearing, speech
impaired, and color blind. However, these
deficiencies do not impair her working ability.
• Can the employer classify the lady worker as a
handicapped worker so that her daily wage will
only be seventy-five percent (75%) of the
applicable daily minimum wage? [5%]

SUGGESTED ANSWER:
No, the employer cannot classify the lady worker as a handicapped
worker because according to the facts in the question, her
deficiencies do not impair her working ability. If her earning capacity
is therefore not also impaired, then she cannot be considered a
handicapped worker.
• Because of the above fact, the employer shall not pay her less than
the applicable daily minimum wage. (See Article 78 of the Labor
Code)
• ANOTHER SUGGESTED ANSWER:
• Yes, the employer can classify the lady worker as a handicapped
worker because her earning capacity may be impaired by her
physical deficiencies As such handicapped worker, the employer
may enter into an employment agreement with her whereby the rate
to be paid to her may be less than the applicable legal minimum
wage but not less than 75% of such wage.

Employment; Handicapped Employee (2000)
• Ana Cruz has a low IQ. She has to be told at least three
times before she understands her daily work
assignment. However, her work output is at least
• equal to the output of the least efficient worker in her
work section. Is Ms, Cruz a handicapped worker?
Explain. (5%)
• No, low IQ or low efficiency does not make the worker
"handicapped" in the contemplation of law. Handicap
means such physical or mental infirmity that impairs
capacity to work. The deficiency may also be due to age
or injury. (Art 78. Labor Code).

Employment; Handicapped Workers; Contractual Employee(2006)
• For humanitarian reasons, a bank hired several handicapped
workers to count and sort out currencies. Their employment contract
was for six (6) months. The bank terminated their employment on
the ground that their contract has expired prompting them to file with
the Labor Arbiter a complaint for illegal dismissal. Will their action
prosper? (5%)
• ALTERNATIVE ANSWER:
• Their action will not prosper because they are covered by the fixed
term employment contract which automatically lapsed at the end of
the 6month period (Brent School v. Zamora, G.R. No. 48494,
February 5, 1990; Art. 280, Labor Code). A contract of employment
for a definite period terminates on its own term at the end of its
period. It does not necessarily follow that the parties are forbidden
from agreeing on a fixed period of time for the performance of
activities usually necessary and desirable in the usual business of
the employer (Pangilinan v. Gen. Milling, G.R. No. 149329, July 12,
2004).

ALTERNATIVE ANSWER:
• Yes. Undeniably, handicapped workers are never on equal terms
with the bank as employer. In Philippine National Oil Company-
Energy Development Corporation v. NLRC, G.R. No. 97747, March
31, 1993, the Supreme Court set down two criteria under which fixed
contracts of employment do not circumvent security of tenure, to wit:
The fixed period of employment was knowingly and voluntarily
agreed upon by the parties, without any force, duress or improper
pressure being brought to bear upon the employee and about any
other circumstances vitiating his consent; or It satisfactorily appears
that the employer and the employee dealt with each other on more
or less equal terms with no moral dominance whatever being
exercised by the former on the latter.
• Even granting that the handicapped workers and the bank agreed to
term employment, it could not be said that they "dealt with each
other on more or less equal terms with no moral dominance
• whatever being exercised by the former over the latter."

Employment; Homeworkers (2000)
• Mrs. Josie Juan is the confidential secretary of the Chairman of the
Board of the bank. She is presently on maternity leave. In an
arrangement where the Chairman of the Board can still have access
to her services, the bank allows her to work in her residence during
her leave. For this purpose, the bank installed a fax machine in her
residence, and gave her a cellphone and a beeper. Is Mrs. Juan a
homeworker under the law? Explain. (3%)
• No, she is actually an office worker. She is not an industrial
homeworker who accepts work to be fabricated or processed at
home for a contractor, which work, when finished, will be returned to
or repurchased by said contractor. (Art. 155, Labor Code).

Employment; Househelpers (2000)
• Nova Banking Corporation has a resthouse and recreational facility
in the highlands of Tagaytay City for the use of its top executives
and corporate clients. The resthouse staff includes a caretaker, two
cooks and a laundrywoman. All of them are reported to the Social
Security System as domestic or household employees of the
resthouse and recreational facility and not of the bank. Can the bank
legally consider the caretaker, cooks and laundrywoman as
domestic employees of the resthouse and not of the bank? (3%)
• No, they are not domestic employees. They are bank employees
because the resthouse and recreational facility are business
facilities as they are for use of the top executives and clients of the
bank. [Art. 141, Labor Code; Apex Mining Co., Inc. v. NLRC, 196
SCRA 251 (1991); Traders Royal Bank v. NLRC. G.R. No. 127864,
December 22. 1999]

Employment; Minors (2006)
• Determine whether the following minors should be prohibited from
being hired and from performing their respective duties indicated
hereunder: (5%)
• A 17-year old boy working as miner at the Walwadi Mining
Corporation.
• It is absolutely Prohibited for any person below 18 years of age to be
employed in hazardous work, harmful to health and safety (Sec. 3,
Rule 12, Book 3, ties Implementing the Labor Code), including
construction work, logging, firefighting, mining, quarrying,
stevedoring, dock work, deep sea fishing and mechanized fishing
(Sec. 8[2], Rule 1, Book 4, Rules Implementing the Labor Code).
• An 11-year old boy who is an accomplished singer and
performer in different parts of the country.

SUGGESTED ANSWER:
• Under RA. 7610, Section 12, as amended by RA. No.
9231 states that: Employment of children — children
below 15 years of age shall not be employed (Art. 139,
Labor Code) except when the following conditions are
met:
• (a) When the child's participation in public entertainment
is essential;
• (b) There is a written contract approved by the DOLE
and signed by the child's parents or legal guardians, with
the express consent of the child; and
• (c) the employer who employs the child must secure a
work permit from the DOLE.
• A 15-year old girl working as a library assistant in a
girls' high school.

SUGGESTED ANSWER:
• She may work as a library assistant provided:
• (1) The employment does not endanger her life, safety, morals and
normal development;
• (2) She is given the opportunity for primary or secondary education;
and
• (3) The employment does not exceed 8 hours a day and 40 hours a
week (Sees. 12 & 14, RA. 7610, as amended by RA. 9231).
• A 16-year old girl working as model promoting alcoholic
beverages.
• Section 14, Article 8, RA. 7610, as amended by Section 5, RA. 9231
states that a child shall be prohibited to act as a model in any
advertisement directly or indirectly promoting alcoholic beverages,
intoxicating drinks, tobacco and its byproducts, gambling or any form
of violence or pornography.

Question
• A 17-year old boy working as a dealer in a casino.
• Section 14, Article 8, RA. 7610, as amended by Section 5, RA.
9231 prohibits the boy from working as a dealer in a casino as this
promotes gambling. Moreover, DOLE Dept. Order No. 04, series
of 1999, expressly prohibits employment of "teenagers" in
gambling halls.
• Employment; Minors; Hazardous Work (2002)
• You were asked by a paint manufacturing company regarding the
possible employment as a mixer of a person, aged seventeen
(17), who shall be directly under the care of the section
supervisor. What advice would you give? Explain briefly. (2%)

SUGGESTED ANSWER:
• I will advise the paint manufacturing company
that ft cannot hire a person who is aged
seventeen (17). Art 139 (c) of the Labor Code
provides that a person below eighteen (18)
years of age shall not be allowed to work in an
undertaking which is hazardous or deleterious in
nature as determined by the Secretary of Labor.
Paint manufacturing has been classified by the
Secretary of Labor as a hazardous work.

Employment; Radio-TV Show Host; Expiration of Term
(2005)
• 1) Malyn Vartan is a well-known radio-TV show host. She signed a
contract with XYZ Entertainment Network to host a one-hour daily
talk show where she interviews various celebrities on topical
subjects that she herself selects. She was paid a monthly
remuneration of P300,000.00. The program had been airing for
almost two years when sponsors' advertising revenues dwindled,
constraining the network to cancel the show upon the expiration of
its latest contract with Ms. Vartan. The talk-show host protested the
discontinuance of her monthly talent fee, claiming that it was
tantamount to her illegal dismissal from the network since she has
already attained the status of a regular employee. (6%)
• (a) As the network's legal counsel, how would you justify its decision
to cancel Ms. Vartan's program which in effect terminated her
services in the process?

ALTERNATIVE ANSWER:
• As the network's legal counsel, I will argue that Ms.
Vartan is under contract on a fixed term employment
basis. The network cancelled the show "upon the
expiration of its latest contract with Ms. Vartan." Hence,
this does not involve dismissal but an expiration of term.
(Felix v. Buenaseda, G.R. No. 109704, January 17,1995;
St. Theresa's School of Novaliches Foundation v. NLRC,
G.R. No. 122955, April 15, 1998)
• As the network's counsel, there was no termination of
her services, only the expiration of her contract, being an
independent contractor. (Sonza v. ABSCBN, G.R. No.
138051, June 10, 2004)

Question
• (b) As counsel for the talk-show host, how would you argue your
case?
• ALTERNATIVE ANSWER.
• As a radio-TV talk show host, Ms. Vartan is performing an activity
which is necessary and desirable in the usual trade or business of
XYZ Entertainment Network. Hence, Ms. Vartan is a regular employee
and cannot be terminated except for cause and only after due process.
The cancellation of the program is tantamount to closure but XYZ
Entertainment Network did not comply with the procedural
requirements of law, i.e., 30 days notice to Ms. Vartan and to DOLE
prior to the intended date of termination.
• As counsel for the talk show host, I will argue that she is a regular
employee. First, she performs job that is necessary and desirable to
the nature of the business of the employer; Second, she serves for at
least one (1) year which is an indication of regular employment.

Employment; Women; Anti-Sexual Harassment Act
(2000)
• A Personnel Manager, while interviewing an attractive female
applicant for employment, stared directly at her for prolonged
periods, albeit in a friendly manner. After the interview, the manager
accompanied the applicant to the door, shook her hand and patted
her on the shoulder. He also asked the applicant if he could invite
her for dinner and dancing at some future time. Did the Personnel
Manager, by the above acts, commit sexual harassment? Reason.
(3%)
• Yes, because the Personnel Manager, a man, is in a position to
grant or not to grant a favor (a job) to the applicant. Under the
circumstances, inviting the applicant for dinner or dancing creates a
situation hostile or unfriendly to the applicant's chances for a job if
she turns down the invitation. [Sec. 3(a)(3),
• R.A. No. 7877, Anti-Sexual Harassment Act].

Sexual harassment
• There is no sexual harassment because there was no solicitation of
sexual favor in exchange of employment. Neither was there any
intimidating, hostile or offensive environment for the applicant.
• Employment; Women; Anti-Sexual Harassment Act (2000)
• In the course of an interview, another female applicant inquired from
the same Personnel Manager if she had the physical attributes
required for the position she applied for. The Personnel Manager
replied: "You will be more attractive if you will wear micro-mini
dresses without the undergarments that ladies normally wear." Did the
Personnel Manager, by the above reply, commit an act of sexual
harassment? Reason. (3%)
• No, the Personnel Manager's reply to the applicant's question whether
she qualifies for the position she is applying for does not constitute
sexual harassment. The Personnel Manager did not ask for or
insinuate a request for a sexual favor in return for a favorable action
on her application for a job. But the Manager's statement may be
offensive if attire or physical look is not a criterion for the job being
applied for.

Alternative Answer
• Yes. The remarks would result in an offensive or hostile environment
for the employee. Moreover, the remarks did not give due regard to the
applicants' feelings and it is a chauvinistic disdain of her honor,
justifying the finding of sexual harassment [Villarama v. NLRC, 236
SCRA 280 (1994)]
• Employment; Women; Anti-Sexual Harassment Act (2004)
• A. Pedrito Masculado, a college graduate from the province, tried
his luck in the city and landed a job as utility/maintenance man at the
warehouse of a big shopping mall. After working as a casual employee
for six months, he signed a contract for probationary employment for
six months. Being well-built and physically attractive, his supervisor,
Mr. Hercules Barak, took special interest to befriend him. When his
probationary period was about to expire, he was surprised when one
afternoon after working hours, Mr. Barak followed him to the men’s
comfort room. After seeing that no one else was around, Mr. Barak
placed his arm over Pedrito’s shoulder and softly said: “You have
great potential to become regular employee and I think I can give you
a favorable recommendation. Can you come over to my condo unit on
Saturday evening so we can have a little drink? I’m alone, and I’m
sure you want to stay longer with the company.”
• Is Mr. Barak liable for sexual harassment committed in a work-related
or employment environment? (5%)

SUGGESTED ANSWER:
• Yes, the elements of sexual harassment are all present.
The act of Mr. Barak was committed in a workplace. Mr.
Barak, as supervisor of Pedrito Masculado, has
authority, influence and moral ascendancy over
Masculado.
• B. Given the specific circumstances mentioned in the
question like Mr. Barak following Masculado to the
comfort room, etc. Mr. Barak was requesting a sexual
favor from Masculado for a favorable recommendation
regarding the latter's employment.
• It is not impossible for a male, who is a homosexual, to
ask for a sexual favor from another male.

• I do not see any sexual favor being solicited. Having a
"little drink" in Mr. Barak's Condo Unit, as condition for a
"favorable recommendation is not one of the prohibited
acts enumerated in Sec. 3 (a) of R.A. 7877, otherwise
known as the Anti-Sexual Harassment Act of 1995.
• Employment; Women; Anti-Sexual Harassment vs.
Discrimination against Women (2003)
• Can an individual, the sole proprietor of a business
enterprise, be said to have violated the Anti-Sexual
Harassment Act of 1995 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.

Employment; Women; Discrimination by reason of Age
(1998)
• At any given time, approximately ninety percent (90%) of the
production workforce of a semiconductor company are females.
Seventy-five percent (75%) of the female workers are married and of
child-bearing years. It is imperative that the Company must operate
with a minimum number of absences to meet strict delivery
schedules. In view of the very high number of lost working hours due
to absences for family reasons and maternity leaves, the Company
adopted a policy that it will employ married women as production
workers only if they are at least thirty-five (35) years of age. Is the
policy violative of any law? [5%]
• Yes, it is violative of Article 140 of the Labor Code which provides
that no employer shall discriminate against any person in respect to
terms and conditions of employment on account of his age.

• The policy of the company to employ married women as production
workers only if they are at least thirty-five (35) years of age is valid.
There is no prohibition in the Labor Code for such an employer to
exercise this management function. There is a justifiable basis for
the company policy. i.e., the need for continuity of production with
minimum absences because of the peculiar business conditions and
needs of the company, i.e., very tight delivery schedules. The
company respects the institution of marriage as shown by the fact
that it employs married women. There is no violation of the
stipulation against marriage (Art. 136), and prohibited acts (Art. 137}
of the Labor Code.
• STILL ANOTHER SUGGESTED ANSWER:
• It may be noted that the policy is directed only to married women.
This may violate the spirit of Article 136 of the Labor Code which
provides that it shall be unlawful for an employer to require as a
condition of employment or continuation of employment that a
woman shall not get married.

Employment; Women; Discrimination by reason of
Marriage (1995)
• Fil-Aire Aviation Company (FIL-AIRE) is a new airline company
recruiting flight attendants for its domestic flights. It requires that the
applicant be single, not more than 24 years old, attractive, and
familiar with three (3) major Visayan dialects, viz: Ilongo, Cebuano
and Waray. Lourdes, 23 years old, was accepted as she possessed
all the qualifications. After passing the probationary period, Lourdes
disclosed that she got married when she was 18 years old but the
marriage was already in the process of being annulled on the
ground that her husband was afflicted with a sexually transmissible
disease at the time of the celebration of their marriage. As a result of
this revelation, Lourdes was not hired as a regular flight attendant.
Consequently, she filed a complaint against FIL-AIRE alleging that
the pre-employment qualifications violate relevant provisions of the
Labor Code and are against public policy.
• Is the contention of Lourdes tenable? Discuss fully.

SUGGESTED ANSWER:
• The contention of Lourdes is tenable. When she was not
hired as a regular flight attendant by FILAIRE because
she disclosed that she got married when she was 18
years old. The airline company violated the provision of
the Labor Code which states: "It shall be unlawful for an
employer to require as a condition of employment or
continuation of employment that a woman employee
shall not get married, or to stipulate expressly or tacitly
that upon getting married a woman employee shall be
deemed resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage."

Employment; Women; discrimination; illegal dismissal
(1997)
• Dinna Ignacio was hired by Stag Karaoke Club as a guest relations
officer. Dinna was also required to sing and dance with guests of the
club. In Dinna Ignacio's employment contract, which she signed, the
following stipulations appeared:
• • Compensation: Tips and commissions coming from guests shall be
subjected to 15% deduction.
• Hours of work: 5 P.M. up to 2 A.M. daily including Sundays and
Holidays
• Other conditions: Must maintain a body weight of 95 Ibs., remain
single. Marriage or pregnancy will be considered as a valid ground
for a termination of employment.
• A year later, Dinna Ignaclo requested to go on leave because she
would be getting married to one of the club's regular guests. The
management of the club dismissed her.
• Dinna filed a complaint for illegal dismissal, night shift differential
pay, backwages, overtime pay and holiday pay. Discuss the merits
of Dinna's complaint.

SUGGESTED ANSWER:
• The first issue to be resolved is: Is Dinna Ignacio an employee of the
Star Karaoke Club? Yes, she is an employee per the provision of the
Labor Code that states: "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 shall be considered an employee of such establishment for
purposes of labor and social legislation"(Art. 138). In Dinna's
conditions of employment have all the aforesaid characteristics. She
has been illegally dismissed. The Labor Code expressly provides,
that "It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman employee
shall not get married, or to stipulate expressly or tacitly that upon
getting married a woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of her
marriage." (Art. 136) Because of her illegal dismissal, she is entitled
to backwages from the time her compensation was withheld from
her to the time of her actual reinstatement. Dinna is not entitled to
night differential pay, overtime pay and holiday pay because she
belongs to one of those classes of employees who are not covered
by the provision of the Labor Code providing for these benefits. She
is a worker paid by results, since her compensation is determined by
the tips and commission that she receives from her guests.

Employment; Women; Sexual Harassment Act (2005)
• Carissa, a comely bank teller, was due for her
performance evaluation which is conducted every six
months. A rating of "outstanding" is rewarded with a
merit increase. She was given a "below average" rating
in the last two periods. According to the bank's personnel
policy, a third rating of "below average" will result in
termination. Mr. Perry Winkle called Carissa into his
office a few days before submitting her performance
ratings. He invited her to spend the night with him in his
rest house. She politely declined. Undaunted, Mr. Winkle
renewed his invitation, and Carissa again declined. He
then warned her to "watch out" because she might regret
it later on. A few days later, Carissa found that her third
and last rating was again "below average."

Question
• Carissa then filed a complaint for sexual harassment
against Mr. Winkle with the Department of Labor and
Employment. In his counter-affidavit, he claimed that he
was enamored with Carissa. He denied having
demanded, much less received any sexual favors from
her in consideration of giving her an "outstanding" rating.
He also alleged that the complaint was premature
because Carissa failed to refer the matter to the
Committee on Decorum and Discipline for investigation
and resolution before the case against him was filed. In
her reply affidavit, Carissa claimed that there was no
need for a prior referral to the Committee on Decorum
and Discipline of her complaint. Resolve the case with
reasons. (5%)

SUGGESTED ANSWER:
• I will hold Mr. Perry Winkle guilty of sexual harassment.
This resolution is predicated mainly upon the following
considerations:
• (1) Mr. Perry Winkle exercises authority, influence or
moral ascendancy over Carissa;
• (2) Mr. Winkle's insistence in inviting Carissa "to spend
the night with him in his rest house" implies a request or
demand for a sexual favor;
• (3) Mr. Winkle's warning clearly manifests that the refusal
of the sexual favor would jeopardize Carissa's continued
employment; and
• (4) Mr. Winkle's invitation for a sexual favor will result in
an intimidating, hostile, or otherwise offensive working
environment for Carissa.

Sexual harassment
• Carissa is correct in stating that there was no need for prior referral
to the Committee on Decorum and Discipline of her complaint
because nothing in the law precludes the victim of sexual
harassment from instituting a separate and independent action for
damages and other affirmative relief. (Sec. 6, R.A. No. 7877)
• Employment; Women; Sexual Harassment Act (2006)
• As a condition for her employment, Josephine signed an agreement
with her employer that she Josephine got married. She asked Owen,
the personnel manager, if the company can reconsider the
agreement. He told Josephine he can do something about it,
insinuating some sexual favors. She complained to higher
authorities but to no avail. She hires you as her counsel. What
action or actions will you take? Explain. (5%)

ALTERNATIVE ANSWER:
• I will file a criminal case against Owen for violation of RA. No. 7877,
otherwise known as the "Anti-Sexual Harassment Act of 1995." I will
also file a separate and independent action for damages against
Owen. By reason of the fact that the Company did not take
immediate action thereon, I will include the Company in the civil suit
for damages and make it jointly and severally liable with Owen.
• Aside from filing a criminal case against Owen for violation of the
Sexual Harassment Law (R.A. 7877) and a separate action for
damages, impleading the company, I will also file an action for
constructive dismissal against the Company since the employee
was placed in a job atmosphere imposing oppressive work
conditions contrary to public policy and morals.

Independent Contractor (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? (2%).

SUGGESTED ANSWER:
• Y's case against Z will not prosper, because Z is not the
employer of Y. The employer of "Y" is "X". "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" supervisors
and employees give 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.

• 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. (See Traders Royal Bank vs.
NLRC, December 2. 1999).
• 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, G.R. No. 103606, October 13, 1999, the Supreme Court,
ruled: As this Court has consistently ruled, the power Pandoy, an
electronics technician, worked within Pandoy is not correct. He is not
an employee because he does not meet the fourfold test for him to
be an employee of Perfect Triangle. All that he could claim is: he
worked within the premises of Perfect Triangle. Pandoy was NOT
engaged as an employee by Perfect Triangle. He was NOT paid
wages by Perfect Triangle. Perfect Triangle does NOT have the
power to dismiss him although Perfect Triangle may not continue to
allow him to work within its premises. And most important of all,
Pandoy was NOT under the control of Perfect Triangle as regards
the work he performs for customers.
• The Supreme Court has ruled: "In stark contrast to the Company's
regular employees, there are independent, free lance operators who
are of control is the most decisive determining the existence of
employee- employer relationship.

Independent Contractor vs. Labor-Only Contracting;
Four-Fold Test (2000)
• Metro Grocery Inc. arranged with Mr. Juan Dado, a
Barangay Chairman, to provide the grocery with workers
who will work as cashiers, bag boys, shelf counter
helpers and sanitation workers. The grocery will pay Mr.
Dado an amount equivalent to the direct and hidden
costs of the wages of each worker assigned, plus ten
percent (10%) to cover the administrative costs related
to their arrangement. Mr. Dado, in turn, will pay directly
the workers their wages. As far as the workers are
concerned, Mr. Dado is their employer. A group of
concerned workers consulted you if Mr, Dado is really
under the law their employer.
• How will you analyze the problem in order to formulate
your answer? (3%)
•
• What is the legal significance, if any, of the question of
the concerned workers as to who is their employer? (3%)

SUGGESTED ANSWER:
• I will analyze the problem by applying the four-
fold test of employer-employee relationship. I
will examine if Mr. Dado exercises power of
control or supervision over the workers'
manner and method of doing their work.
Control is the most important factor in
examining employer-employee relationship.
The other factors are hiring, payment of
wages, and power to dismiss, I will also
examine whether there was job contracting or
labor-only contracting.

ALTERNATIVE ANSWER:
• ) My analytical framework will be an analysis of
the law on Independent contractor and labor
only contracting.
• If there is a valid INDEPENDENT
CONTRACTOR situation, Mr. Dado will be the
direct employer, and the Metro Grocery will be
the indirect employer.
• If there is a LABOR-CONTRACTOR only
relationship, the Metro Grocery will be the
employer as it directly hired the employees.

SUGGESTED ANSWER:
• The legal significance is the
determination of employee-employer
relationship, which gives rise to certain
rights and obligation of both employer
and employee, such as SSS
membership, union membership, security
of tenure, etc.

Independent Contractor; Liabilities (2004)
A. Clean Manpower Inc. (CMI) had provided
janitorial services to the National Economic
Development Authority (NEDA) since April
1988. Its service contract was renewed every
three months. However, in the bidding held on
July 1992, CMI was disqualified and excluded.
In 1993, six janitors of CMI formerly assigned
at NEDA filed a complaint for underpayment of
wages. Both CMI and NEDA were impleaded
as respondents for failure to comply with NCR
Wage Orders Nos. 01 and 02, which took
effect on November 1, 1990 and January 2,
1992, respectively.

Question
• Should NEDA, a government agency subject to budgetary
constraints, be held liable solidarily with CMI for the payment of
salary differentials due the complainants? Cite the legal basis of
your answer. (5%)
• NEDA shall be held solidarily liable with CMI for the payment of
salary differentials due to the complainants, because NEDA is the
indirect employer of said complainants. The Labor Code provides
that xxx (A) person, partnership, association or corporation which,
not being an employer, contracts with an independent contractor for
the performance of any work, task, job or project" xxx "shall be
jointly and severally liable with his contractor or subcontractor to
such employees (of the contractor or subcontractor) to the extent of
work performed under the contract xxx." (Arts. 106 and 107, Labor
Code)

Labor-Only Contract vs. Job Contracting (1997)
• Distinguish between "job contracting" and "labor only contracting."
• When a person, not being an employer, contracts with an independent
contractor for the performance of any work, task, job or project, there
is "JOB CONTRACTING." When the independent contractor does the
work that is contracted out, he is not under the control of the person
who contracted out the work to be done.
• In "LABOR-ONLY CONTRACTING", a person supplies workers to an
employer. Said person does not have substantial capital or
investments in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by
such person are performing activities related to the principal business
of the employer to whom the workers are supplied.

Labor-Only Contractor (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 nor 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 Corp. 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. (2%)
• B. Who is liable for the claims of the workers hired by
Arnold? Explain briefly. (3%)

SUGGESTED ANSWER:
• 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. [Lim v. NLRC, 303 SCRA
432 (1999); Baguio v. NLRC, 202 SCRA 465(1991)]
• In the problem given, Arnold did not have sufficient capital or in
vestment for one. For another Arnold was not free from the control
and direction of Sta. Monica Plywood Corp. because all work
activities and schedules were fixed by the company.
• Therefore, Arnold is not a job contractor. He is engaged in labor-only
contracting.

SUGGESTED ANSWER:
• B. Sta. Monica Plywood Corp. is liable for the claims of
the workers hired by Arnold. A finding that Arnold is a
labor only contractor is equivalent to declaring that there
exist an 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. [Lim v. NLRC, 303 SCRA 432,
(1999); Baguio et al, v. NLRC, 202 SCRA 465 (1991)]
• Labor-Only Contractor vs. Independent Contractor
(1994)
• 1) What is a "labor-only" contract? 2) Distinguish the
liabilities of an employer who engages the services of a
bonafide "independent contractor" from one who
engages a "labor-only" contractor?

SUGGESTED ANSWER:
• "LABOR-ONLY" CONTRACT is a contract between an
employer and a person who supplies workers to such
employer where the person supplying workers does not
have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such
person are performing activities which are directly
related to the principal business of such employer. (Art.
106, Labor Code)
• 2) A person who engages the services of a bona fide
"INDEPENDENT CONTRACTOR" for the performance
of any work, task, job or project is the indirect employer
of the employees who have been hired by the
independent contractor to perform said work, task, job or
project.

Labor only contractor
• In the event that the independent contractor fails
to pay the wages of his employees, an indirect
employer, in the same manner and extent that
he is liable to employees directly employed by
him, is JOINTLY and SEVERALLY LIABLE with
the Independent contractor to the employees of
the latter to the extent of the work performed
under the contract.
• As for the person who engages the services of a
"labor only" contractor, the latter is considered
merely as an agent of the former who shall be
responsible to the workers hired by the "labor
only" contractor in the same manner and extent
as if he directly employed such workers.

ALTERNATIVE ANSWERS:
• a) An employer who engages the services of a bona
fide "independent contractor" is SOLIDARILY LIABLE
with his contractor or sub-contractor only for non-
payment or underpayment of wages and other labor
standards provisions of the Labor Code, whereas an
employer who engages a "labor-only" contractor is liable
for all benefits, terms and conditions of employment that
it normally grants to its regular or direct employees.
• b) An employer who deals with a bona-fide
independent contractor shall be liable only subsidiarily, if
the contractor or sub-contractor fails to pay the wages to
the workers in accordance with the Labor Code.
• Upon the other hand, an employer who deals with a
"labor-only" contractor shall be primarily responsible to
the workers in the same manner and extent as if the
latter were directly employed by him. (Arts 106-107,
Labor Code)

Recruitment & Placement; Cancellation; Certificate of
Registration; Travel Ban (2004)
• Concerned Filipino contract workers in the Middle East reported to
the Department of Foreign Affairs (DFA) that XYZ, a private
recruitment and placement agency, is covertly transporting
extremists to terrorist training camps abroad. Intelligence agencies
of the government allegedly confirmed the report.
• Upon being alerted by the DFA, the Department of Labor and
Employment issued orders cancelling the licenses of XYZ, and
imposing an immediate travel ban on its recruits for the Middle East.
XYZ appealed to the Office of the President to reverse and set aside
the DOLE orders, citing damages from loss of employment of its
recruits, and violations of due process including lack of notice and
hearing by DOLE. The DOLE in its answer claimed the existence of
an emergency in the Middle East which required prompt measures
to protect the life and limb of OFWs from a clear and present danger
posed by the ongoing war against terrorism.
• Should the DOLE orders be upheld or set aside? (5%)

SUGGESTED ANSWER:
• The DOLE order cancelling the licenses of XYZ is void
because a report that an agency is covertly transporting
extremists is not a valid ground for cancellation of a
Certificate of Registration (Art. 239, Labor Code) and
there is failure of due process as no hearing was
conducted prior to the cancellation (Art. 238, Labor
Code).
• The DOLE order imposing the travel ban is valid
because it is a valid exercise of police power to protect
the national interest (Sec. 3, Art. XIII, Constitution on full
protection to labor safety of workers) and on the rule
making authority of the Secretary of Labor (Art. 5, Labor
Code; Phil. Assn. of Service Exporters v. Drilon, 163
SCRA 386 11988]).

• The DOLE orders should be set aside. It is true
that the Migrant Workers and Overseas Filipinos
Act, particularly its Section 5, could be the basis
of the power of DOLE to effect a ban on the
deployment of OFWs by XYZ. If the ban,
however, is for the purpose of preventing XYZ
from transporting extremists to terrorist training
camps abroad, this is a police and national
security problem better dealt with by the police
or the Office of the National Security Adviser.
• More importantly, the cancellation of the license
of XYZ requires notice and hearing. Absent such
notice and hearing, the order of cancellation of
the Secretary of Labor and Employment is null
and void because of the denial of due process.

Recruitment & Placement; illegal recruitment to
economic sabotage (2005)
• (1) During the open forum following your lecture
to a group of managers and HRD personnel, you
were asked the following questions:
• (a) What qualifying circumstances will convert
"illegal recruitment" to "economic sabotage,"
thus subjecting its perpetrator or perpetrators to
a penalty of life imprisonment and a fine of at
least P500,000.00? Please explain your answer
briefly. (3%)

SUGGESTED ANSWER.
• Under Article 38(b) of the Labor Code, as amended by
P.D. No. 2018, it provides that illegal recruitment shall be
considered an offense involving economic sabotage if
any of the following qualifying circumstances exists:
• (1) When illegal recruitment is committed by a
SYNDICATE, requiring three or more persons who
conspire or confederate with one another in carrying out
any unlawful or illegal transaction, enterprise or scheme;
•
• When illegal recruitment is committed in a LARGE
SCALE, as when it is committed against three or more
persons individually or as a group. (People v. Navarra,
G.R. No. 119361, February 19, 2001; See also Sec. 6 of
R.A. No. 8042)

Recruitment & Placement; illegal recruitment;
Economic Sabotage (2002)
• When is illegal recruitment considered a crime of
economic sabotage? Explain briefly. (3%)
• According to Art. 28 of the Labor Code, illegal
recruitment is considered a crime of economic sabotage
when committed by a syndicate or in large scale.
• 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 which is an act of illegal recruitment.
• Illegal recruitment is deemed committed in large scale if
committed against three (3) or more persons individually
or as a group.

Recruitment & Placement; Large Scale Illegal
Recruitment (2005)
• Maryrose Ganda's application for the renewal other license to recruit
workers for overseas employment was still pending with the
Philippine Overseas Employment Administration (POEA).
Nevertheless, she recruited Alma and her three sisters, Ana, Joan,
and Mavic, for employment as housemates in Saudi Arabia.
Maryrose represented to the sisters that she had a license to recruit
workers for overseas employment. Maryrose also demanded and
received P30,000.00 from each of them for her services. However,
Maryrose's application for the renewal of her license was denied,
and consequently failed to employ the four sisters in Saudi Arabia.
The sisters charged Maryrose with large scale illegal recruitment.
Testifying in her defense, Maryrose declared that she acted in good
faith because she believed that her application for the renewal of her
license would be approved. Maryrose adduced in evidence the
Affidavits of Desistance which the four private complainants had
executed after the prosecution rested its case. In the said affidavits,
they acknowledge receipt of the refund by Maryrose of the total
amount of P120,000.00 and indicated that they were no longer
interested to pursue the case against Maryrose. Resolve the case
with reasons. (5%)

ALTERNATIVE ANSWER:
• Illegal recruitment is defined by law as any recruitment
activities undertaken by non-licenses or non-holders of
authority. (People v. Senoron, G.R. No. 119160, January
30,1997) And it is large scale illegal recruitment when the
offense is committed against 3 or more persons,
individually or as a group. (Article 38[b], Labor Code)
• In view of the above, Maryrose is guilty of large scale
illegal recruitment. Her defense of good faith and the
Affidavit of Desistance as well as the refund given will not
save her because R.A. No. 8042 is a special law, and
illegal recruitment is malum prohibitum. (People v. Saulo,
G.R. No. 125903, November 15, 2000)
• With the execution of the affidavit of desistance by the
complainants and the refund made by Maryrose, the case
against her for large scale illegal recruitment will surely
fail.

Recruitment & Placement; Non-Transferability of
License (1998)
• A Recruitment and Placement Agency declared voluntary
bankruptcy. Among its assets is its license to engage in business. Is
the license of the bankrupt agency an asset which can be sold in
public auction by the liquidator? [5%]
• No, because of the non-transferability of the license to engage in
recruitment and placement. The Labor Code (in Article 29) provides
that no license to engage in recruitment and placement shall be
used directly or indirectly by any person other than the one in whose
favor it was issued nor may such license be transferred, conveyed
or assigned to any other person or entity.
• It may be noted that the grant of a license is a governmental act by
the Department of Labor and Employment based on personal
qualifications, and citizenship and capitalization requirements. (Arts.
27-28, Labor Code)

Recruitment & Placement; Recruitment Agencies
(2002)
• Is a corporation, seventy percent (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. (2%)
• No. A corporation, seventy percent (70%) 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 of the Labor Code
requires at least seventy-five percent (75%).

Recruitment & Placement; Travel Agency; Prohibition
(2006)
• Wonder Travel and Tours Agency (WTTA) is a well-known travel
agency and an authorized sales agent of the Philippine Air Lines.
Since majority of its passengers are overseas workers, WTTA
applied for a license for recruitment and placement activities. It
stated in its application that its purpose is not for profit but to help
Filipinos find employment abroad. Should the application be
approved? (5%)
• The application should be disapproved, as it is prohibited by Article
26 of the Labor Code, to wit: "Article 26. Travel agencies and sales
agencies of airline companies are prohibited from engaging in the
business of recruitment and placement of workers for overseas
employment whether for profit or not."
• Page 66 of 108 Rule I, Part IIPOEA Rules and Regulations
Governing the Recruitment and Employment of Land-Based
Workers (2002) disqualifies any entity having common director or
owner of travel agencies and sales agencies of airlines, including
any business entity from the recruitment and placement of Filipino
workers overseas, whether they derive profit or not.

ALTERNATIVE ANSWER:
• No. Section 6 of RA No. 8042 considers the
following act as illegal recruitment: "(j) For an
officer or agent of a recruitment agency to
become an officer or member of the Board of
any corporation engaged in travel agency or to
engage directly or indirectly in the management
of a travel agency." The law considers the
operation of travel agencies and recruitment
agencies as incompatible activities.
• Wage Distortion (2002)
• A. How should a wage distortion be resolved (1)
in case there is a collective bargaining
agreement and (2) in case there is none?
Explain briefly. (3%)

SUGGESTED ANSWER:
• A. According to Art. 124 of the Labor Code, in
case there is a collective bargaining agreement,
a dispute arising from wage distortions shall be
resolved through the grievance machinery
provided in the CBA, and if remains unresolved,
through voluntary arbitration. In case there is no
collective bargaining agreement, the employers
and workers shall endeavor to correct such
distortions. Any dispute arising therefrom shall
be settled through the National Conciliation and
Mediation Board and if it remains unresolved
after ten (10) calendar days of conciliations, then
the dispute is referred to the appropriate branch
of the National Labor Relations Commission.

Wage; Reduction of Minimum Pay & Wages (2006)
• Can an employer and an employee enter into an
agreement reducing or increasing the minimum
percentage provided for night differential pay, overtime
pay, and premium pay? (5%)
• Article 100 of the Labor Code prohibits the elimination
and the diminution of benefits being enjoyed by
employees at the time the law was passed. The
employer and employee cannot enter into an agreement
to reduce the minimum percentage provided by law for
night differential pay, overtime pay and premium pay as
that would be against public policy. On the other hand,
an agreement increasing the percentage of benefits
would be valid for being beneficial to the employee.
However, Art. 227 of the Labor Code authorizes
diminution or reduction of benefits in case of an
impelling, reasonable justification arising out of an
emergency, exigency or business losses.

Wage; Wage Distortion; Definition & Elements (2006)
• When is there a wage distortion?
• A WAGE DISTORTION arises when an increase
in prescribed wage rates results in the
elimination or severe contraction of intentional
quantitative differences in wage or salary rates
between and among employee groups in an
establishment as to effectively obliterate the
distinctions embodied in such wage structure
based on skills, length of service, or other logical
bases of differentiation (Article 124, Labor Code
of the Philippines).

ALTERNATIVE ANSWER:
• There is wage distortion when the following four
elements concur:
• An existing hierarchy of positions with corresponding
salary rates;
• A significant change in the salary rate of a lower pay
class without a concomitant increase in the salary rate of
a higher one;
• The elimination of the distinction between the two levels;
and
• The existence of the distortion in the same region of the
country.
• Wage; Wage Distortion; Means of Solving (2006)
• How should a wage distortion be settled?

SUGGESTED ANSWER:
• In organized establishments, the wage distortion shall be
resolved through the GRIEVANCE PROCEDURE under
their collective bargaining agreement, and if it remains
unresolved, through VOLUNTARY ARBITRATION. On
the other hand, in establishments where there are no
collective bargaining agreements or recognized labor
unions, the employers and workers shall endeavor to
correct such distortion. Any dispute arising therefrom
shall be settled through the National Conciliation and
Mediation Board, and if it remains unresolved after ten
(10) calendar days of conciliation, shall be referred to the
appropriate branch of the National Labor Relations
Commission for COMPULSORY ARBITRATION (Article
124, Labor Code of the Philippines).

Wage; Wage Distortion; Not a ground for
Strike/Lockout (2006)
• Can the issue of wage distortion be raised in a notice of
strike? Explain. (10%)
• NO. Section 16, Chapter I of Rules Implementing RA
6727 provides that "Any dispute involving wage
distortions shall not be a ground for strike/lockout."
Article 124 of the Labor Code, as amended by Republic
Act 6727 prescribes a procedure for the correction of a
wage distortion, implicitly excluding strikes or lockouts or
other concerted activities as modes of settlement of the
issue. The legislative intent that wage distortion shall be
solved by voluntary negotiation or arbitration is made
clear in the rules (Ilaiv at Buklod ng Manggagawa v.
NLRC, G.R. No. 91980, June 27, 1991).

Wages; 13th month pay (1994)
• Concepcion Textile Co. included the overtime pay, night-
shift differential pay, and the like in the computation of its
employees' 13th-month pay. Subsequently, with the
promulgation of the decision of the Supreme Court in the
case of San Miguel Corporation vs. Inciong (103 SCRA
139) holding that these other monetary claims should not
be included in the computation of the 13thmonth pay,
Concepcion Textile Co. sought to recover under the
principle of solutio indebiti its overpayment of its
employees' 13th-month pay, by debiting against future
13th-month payments whatever excess amounts it had
previously made.
• (1) Is the Company's action tenable?

Question
• (2) With respect to the payment of the 13th-month pay
after the San Miguel Corporation, ruling, what
arrangement, if any, must the Company make in order to
exclude from the 13th-month pay all earnings and
remunerations other than the basic pay.
• 1) The Company's action is not tenable. The principle of
salutio indebiti which is a civil law concept is not
applicable in labor law. Thus, solutio indebiti is not
applicable to the instant case, (Davao Fruits
Corporations vs. National Labor Relations Commission,
et at. 225 SCRA 562)

ALTERNATIVE ANSWERS:
• a) The Company's action would be tenable if payment
was done by mistake, In which case recovery can be
done under the principle of solutio indebiti. But if there
was no mistake, the Company's action would be
untenable because it would violate Article 100 of the
Labor Code which prohibits elimination or diminution of
benefits.
• b) No. The Company's action is not tenable. The grant
by Concepcion Textile Co. of a better formula, more
favorable to the employee, constituted a valid offer by
the company as the offerer and the employees as the
offeree. There having been a meeting of the minds of the
parties, the rights and obligations arising therefrom were
valid. Thus, any amount received by virtue thereof could
not be recovered, much less taken away unilaterally. The
principle does not apply to the case at bar.

SUGGESTED ANSWER:
• 2} After the 1981 San Miguel ruling, the High
Court decided the case of Philippine Duplicators
Inc. vs.
• NLRC, on 11 November 1993, Accordingly,
management may undertake to exclude sick
leave, vacation leave, maternity leave, premium
pay for regular holiday, night differential pay and
cost of living allowance. Sales commissions,
however, should be included based on the
settled rule as earlier enunciated in Songco vs.
NLRC, 183 SCRA 610.

Wages; 13th month pay (1998)
• What would be your advice to your client, a
manufacturing company, who asks for your legal opinion
on whether or not the 13th Month Pay Law (Presidential
Decree No. 851) covers a casual employee who is paid
a dally wage? (5%)
• I will advise the manufacturing company to pay the
casual employee 13th Month Pay if such casual
employee has worked for at least one (1) month during a
calendar year. The law on the 13th Month Pay provides
that employees are entitled to the benefit of said law
regardless of their designation or employment status.
The Supreme Court ruled in Jackson Building-
Condominium Corporation v. NLRC, 246 SCRA 329,
(1995) interpreting P.D. No. 851, as follows: xxx
employees are entitled to the thirteenth-month pay
benefits regardless of their designation and irrespective
of the method by which their wages are paid.

Wages; Bonus (2002)
• B. The projected bonus for the employees of Suerte Co.
was 50% of their monthly compensation. Unfortunately,
due to the slump in the business, the president reduced
the bonus to 5% of their compensation. Can the
company unilaterally reduce the amount of bonus?
• Yes. The granting of a bonus is a management
prerogative, something given in addition to what is
ordinarily received by or strictly due the recipient.
• An employer, like Suerte Co., cannot be forced to
distribute bonuses when it can no longer afford to pay. To
hold otherwise would be to penalize the employer for his
past generosity. [Producers Bank of the Phil. v NLRC,
355 SCRA 489, (2001)]

• It depends. If there is a legal obligation on the
part of Suerte Co. to pay a bonus of its
employees equivalent to 50% of their monthly
compensation, because said obligation is
included in a collective bargaining agreement,
then Suerte Co. cannot reduce the bonus to 5%
of their monthly compensation. But if the
payment of the bonus is not a legal obligation
but only a voluntary act on the part of the
employer, said employer, unilaterally, can only
reduce the bonus from 50% to 5% of the
monthly compensation of its employees; the
employer can, in fact, not give any bonus at all.

Wages; 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
equivalents one-month basic pay and a Christmas bonus
equivalent to one-month basic pay since 1971. Upon the
effectivity of Presidential Decree (P.D.) No. 851 in 1975
which granted the 13th 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 13th 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 P.D.
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 midyear and Christmas
bonuses in addition to the 13th month pay?

SUGGESTED ANSWER:
• No. The grant of a bonus is a prerogative, not an
obligation, of the employer. (Traders Royal Bank v.
NLRC. 189 SCRA 274 (1990). 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. (Businessday v. NLRC. 221 SCRA 9
(1993).
• 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 13th month pay.
• Wages; Bonus; Nature (1995)
• What is a bonus? When is it demandable as a matter of
right? Explain.

SUGGESTED ANSWER:
• A bonus is money given in addition to an employee's usual
compensation. It may be given as a gratuity, as an act of liberality.
But a bonus is demandable as a matter of right if it is made a legal
obligation by law or in a collective bargaining agreement or in a
contract of employment or by its having been given for such a long
time such that the receipt of a bonus has ripened into a right.
• A bonus is an amount granted and paid to an employee for his
industry and loyalty which contributed to the employer's success and
realization of profit.
• (1) Grant of bonus is a prerogative, not an obligation of the
employer: and
• (2) It is entirely dependent on the employer's capacity to pay.
• Normally discretionary, it becomes part of the regular compensation
by reason of long and regular concession or when the bonus is
Included as among the benefits granted in a CBA.

Wages; Computation of Basic Salary (1997)
• Robert Suarez is a salesman for Star Pharmaceuticals,
Star Pharmaceuticals has applied with the Department of
Labor and Employment for clearance to terminate (by
way of retrenchment) the services of Suarez due to
financial losses. Robert Suarez, aside from his monthly
salary, receives commissions on the sales he makes. He
also receives allowances. The existing CBA between
Star Pharmaceuticals and the union, of which Robert
Suarez is a member, states that any employee
separated from employment for causes not due to the
fault of the employee shall receive from the company a
retirement gratuity in an amount equivalent to one
month's salary per year of service.
• Robert Suarez contends that in computing his separation
pay, his sales commission and his allowances should be
included in the monthly salary. Do you agree?

SUGGESTED ANSWER:
• I agree, with some conditions. In computing separation
pay, the monthly salary should include commissions
because commissions received by a salesman is part of
his salary.
• But for allowances to be included as part of salary, they
should be for services rendered or to be rendered, like a
cost of living allowance. But transportation and
representation allowances are not considered as part of
salary because they are to meet expenses for
transportation and representation. Thus, cost of living
allowances, but not transportation or representation
allowances, shall be included as part of salary in the
computation of separation pay.
• Note: Re: allowances as part of salary, in Santos vs. NLRC 154 SCRA 166, the Supreme Court
said: "in the computation of backwages and separation pay, account must be taken not only of
basic salary but also her transportation and emergency living allowances."

Wages; Computation; Holiday Pay (2002)
• On orders of his superior, Efren, a high-speed
sewing machine technician, worked on May 1,
Labor Day. If he worked eight (6) hours on that
day, how much should he receive if his daily rate
is P400.00? (2%)
• Efren should receive P800.00. Art 92 of the
Labor Code 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
rate.

Wages; Computation; Holiday Pay; Overtime Pay
(2002)
• This year, National Heroes Day (August 25) falls
on a Sunday. Sunday is the rest day of
Bonifacio whose daily rate is P500.00.
• A. If Bonifacio is required by his employer to
work on that day for eight (8) hours, how much
should he be paid for his work? Explain. (3%)
• B. If he works for ten (10) hours on that day, how
much should he receive for his work? Explain.
(2%)

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 a regular
holiday, should receive. Art. 94(c) of the Labor Code
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. P1,300.00 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.

Wages; Holiday Pay (2005)
• During the open forum following your lecture before members of
various unions affiliated with a labor federation, you were asked the
following questions (State your answers and your reasons therefor):
• (a) Araw ng Kagitingan and Good Friday are among the 10 paid
regular holidays under Article 94 of the Labor Code. How much will
an employee receive when both holidays fall on the same day? (4%)
• If unworked, the covered employees are entitled to at least 200% of
their basic wage, because to do otherwise would reduce the number
of holidays under EO No. 203. If worked, the covered employees are
entitled to compensation equivalent to at least 300% of their basic
wage because they are entitled to the payment not only of the two
regular holidays, but also of their regular wage, plus the premium
thereof. (DOLE Explanatory Bulletin on Workers' Entitlement to
Holiday Pay on 9 April 1993, Araw ng Kagitingan and Good Friday)

Wages; Money Claims (1998)
• How will you advise the mining
company on the following: 1) Can the
Mining Company defer payment of the
money claims until an appropriate
court has ruled on the conflicting
claims? [3%]
• 2) Can the Mining Company deduct
from the amount due to each miner an
amount equivalent to their debt and
remit the same to the Credit
Union?'(2%]

SUGGESTED ANSWER:
• I will advise the Mining Company to pay to the respective heirs of
the deceased miners whatever were the unpaid wages, overtime,
holiday and rest day compensation of said deceased miners without
the necessity of intestate proceedings. The claimants, if they are all
of age shall execute an affidavit attesting to their relationship to the
deceased and the fact that they are his heirs, to the exclusion of all
other persons. If any of the heirs is a minor, the affidavit shall be
executed on his behalf by his natural guardian or next of kin. The
affidavit shall be presented to the employer who shall make payment
through the Secretary of Labor or his representative. The
representative of the Secretary of Labor shall act as referee in
dividing the amount paid among the heirs. {See Art. 105 (b) of the
Labor Code)
• I will advise the Mining Company not to deduct from the amount
due to each miner the amount equivalent to his debt to the Credit
Union. The debts of a deceased worker to the Credit Union is not
one of the allowable deductions under the Labor Code, or any rules
and regulations of the Department of Labor and Employment. (See
Art. 113 of the Labor Code)

• Yes, if pursuant to CBA provision or authorized by worker in writing;
otherwise. No.
• Wages; Money Claims; Attorney’s Fees; Damages (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 ten
percent (10%) of the value of Santiago's separation pay. Is the
award of attorney's fees valid? State the reasons for your answer.
(2%).

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?
(3%).
• No, moral and exemplary damages can be awarded only if the
worker was illegally terminated in an arbitrary or capricious manner.
(Nueva Ecija Electric Cooperative Inc., Employees Assn., us. NLRC,
G.R. No. 116066, January 24, 2000; Cruz us. NLRC, G.R. No.
116384, February 7, 2000; Phil. Aeolus etc., vs. NLRC, G.R. No.
124617, April 28, 2000),

Question
• How will you advise the mining company on the following: 1) Can
the Mining Company defer payment of the money claims until an
appropriate court has ruled on the conflicting claims? [3%]
• 2) Can the Mining Company deduct from the amount due to each
miner an amount equivalent to their debt and remit the same to the
Credit Union?'(2%]
• I will advise the Mining Company to pay to the respective heirs of
the deceased miners whatever were the unpaid wages, overtime,
holiday and rest day compensation of said deceased miners without
the necessity of intestate proceedings. The claimants, if they are all
of age shall execute an affidavit attesting to their relationship to the
deceased and the fact that they are his heirs, to the exclusion of all
other persons. If any of the heirs is a minor, the affidavit shall be
executed on his behalf by his natural guardian or next of kin. The
affidavit shall be presented to the employer who shall make payment
through the Secretary of Labor or his representative. The
representative of the Secretary of Labor shall act as referee in
dividing the amount paid among the heirs. {See Art. 105 (b) of the
Labor Code)

Wages; Paid by Results; Holiday Pay (2002)
• Nemia earns P7.00 for every manicure she does in the
barber shop of a friend which has nineteen (19)
employees. At times she takes home P175.00 a day and
at other times she earns nothing. She now claims
holiday pay. Is Nemia entitled to this benefit? Explain
briefly (5%)
• No, Nemia is not entitled to holiday pay. Art. 82 of the
Labor Code 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.
•

• Yes. Nemia is entitled to holiday pay. The Supreme Court has ruled:
"As to the other benefits, namely, holiday pay, premium pay, 13th
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 (3)
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 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." [Labor Congress of the
Philippines v. NLRC, 290 SCRA 509 (1998)

Wages; Teachers; ECOLA (1997)
• Lita Cruz, a full time professor in San Ildefonso
University, is paid on a regular monthly basis. Cruz
teaches for a period of ten months in a schoolyear,
excluding the two month's summer break.
• During the semestral break, the University did not pay
Lita Cruz her emergency Cost of Living allowance
(ECOLA) although she received her regular salary since
the semestral break was allegedly not an integral part of
the school year and no teaching service were actually
rendered by her. In short, the University invoked the
principle of "no work, no pay".
• Lita Cruz seeks your advice on whether or not she is
entitled to receive her ECOLA during semestral breaks.
How would you respond to the query?

SUGGESTED ANSWER:
• There is no longer any law making it the legal obligation of an
employer to grant an Emergency Cost of Living Allowance (ECOLA).
Effective 1981, the mandatory living allowances provided for in
earlier Presidential Decrees were integrated into the basic pay of all
covered employees.
• Thus, whether the ECOLA will be paid or not during the semestral
break now depends on the provisions of the applicable wage order
or contract which may be a CBA, that many grant said ECOLA.
• ALTERNATIVE ANSWER;
• The "no work, no pay" principle does not apply. The teachers
receive their regular salaries during the semestral break. The law
granting emergency cost of living allowances was designed to
augment the income of the employees to enable them to cope with
the rising cost of living and inflation. It was enacted pursuant to the
State's duty to protect labor and to alleviate the plight of the workers.
To uphold the school's interpretation of the law would run counter to
the intent of the law and constitution (University of Pangasinan
Faculty Union v. University of Pangasinan, 127 SCRA 691).

Wages; Unpaid Wages; Preference of Credit in favor of
Employees (1995)
• 1. Under the Labor Code, is the right of first
preference a lien on the property of the insolvent
debtor in favor of the workers? Explain.
• The right of first preference in favor of workers is
not a lien on the property of the insolvent debtor.
The preference could be exercised only in the
event of bankruptcy or liquidation of an
employer's business.

ALTERNATIVE ANSWER:
• A preference does not attach to specific
properties. A lien creates charges on a particular
property. The right of first preference as regards
unpaid wages recognized by the Labor Code
does not constitute a lien on the property of the
insolvent debtor in favor of the workers. It is but
a preference of credit in their favor, a preference
in application.
• The Labor Code does not purport to create a
lien in favor of workers or employees for unpaid
wages either upon all of the properties or upon
any particular property owned by their employer.

Employees (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 Caspar, 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 Caspar, 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 of the Labor Code cannot be invoked in the
absence of any insolvency proceedings,
declaration of bankruptcy, or judicial liquidation.
(DBP v. Santos. 171 SCRA 138 (1989).
• No. What Art. 110 of the Labor Code 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. (Development Bank of the
Philippines v. Secretary of Labor. 179 SCRA 630
(1989).

• The Decision of the Labor Arbiter holding Premiere Bank (as
foreclosing mortgagee-creditor) subsidiarily liable for a money
obligation of XYZ & Co, (as mortgagor) to Caspar, its employee, has
no legal basis.
• 1. There is no privity of relationship between the Bank and Caspar. The
relationship, upon which the obligation to pay a sum of money is
based, is between XYZ (the mortgagor) and Caspar as its employee
arising from the Labor Code provision requiring an employer to pay
separation pay, re: other causes of employment.
• 2. At both times - Labor Arbiter Decision to pay separation pay and
foreclosure - XYZ & Co. was an existing business entity and neither
bankrupt or in liquidation, although its business operations after the
foreclosure ceased.
• 3. The decision of the Labo
• r Arbiter for XYZ & Co. to pay a sum of money to Caspar was based on
an action in personam, not in rem. enforceable against any party.
(Sundowner Corporation vs. drilon. 180 SCRA 14 (1989)
• 4. The reference in the Decision to "labor benefits due to an employee
is superior to the right of a mortgagee of property" is misplaced. The
preferential claim rule has no basis and runs contrary to law and
jurisprudence.

Employees (1995)
• Distinguish the mortgage created under the Civil Code
from the right of first preference created by the Labor
Code as regards the unpaid wages of workers. Explain.
• A MORTGAGE directly subjects the property upon which
it is imposed, whoever the possessor may be, to the
fulfillment of the obligation for which it was constituted. It
creates a real right which is enforceable against the
whole world. It is therefore a lien on an identified real
property.
• MORTGAGE CREDIT is a special preferred credit under
the Civil Code in the classification of credits. The
preference given by the Labor Code when not attached
to any specific property, is an ordinary preferred credit.

ALTERNATIVE ANSWER:
• If the asset of an employer which has become bankrupt or has been
liquidated has been mortgaged, the proceeds of the sale of said
mortgaged asset is first subject to the lien of the person to whom the
property is mortgaged. Said lien is superior to the first preference
enjoyed by the workers pursuant to the Labor Code.
• Wages; Unpaid Wages; Preference of Credit in favor of
Employees (1999)
•
• FACTS: Lowland Cement & Factory Company (LCFC) borrowed
P500M from the Development Bank of the Philippines and
mortgaged the entire company, inclusive of its land, buildings and
equipment, to guarantee the payment of the loan. However, because
of the economic conditions, LCFC incurred heavy losses and
eventually failed to pay DBP the required monthly amortizations over
a period of more than one (1) year. In due time, DBP foreclosed the
mortgaged assets of LCTC resulting in the closure of the company
and the displacement of all its employees for want of work.

Wage
• The LCFC Labor Union [Union] filed in behalf of the displaced
workers a labor case against DBP as the new owner of the defunct
cement factory for wage differentials, retirement pay and other
money claims. The Labor Arbiter decided in the favor of the Union.
DBP appealed to the NLRC.
• DBP contended in its appeal that its acquisition of the mortgage
assets of LCFC through foreclosure sale did not make it the owner
of the defunct Lowland Cement, and that the doctrine of successor-
employer is not applicable in this case, since DBP did not continue
the business operation of LCFC.
• The NLRC while finding merit in DBP's contention, nonetheless held
DBP liable to the extent of the proceeds of the foreclosure sale since
the Union's claims in behalf of the workers constitute a first
preference with respect thereto pursuant to article 110 of the Labor
Code.
•
• Is the NLRC correct in holding DBP liable to the extent of the
proceeds of the foreclosure sale? Explain briefly (5%)

SUGGESTED ANSWER:
• No. DBP is not liable. DBP has a lien over the properties
of LCFC which were mortgaged to DBP and said lien is
superior to the preference that the workers have under
the Labor Code (in Article 110)
• with respect to their claims as workers against LCFC.
• Panel: All claims must be filed in insolvency proceedings,
which are outside the jurisdiction of the NLRC (Republic
v. Peralta)
• Wages; Wage Distortion (1997)
• (a) Define Wage Distortion.
• (b) May a wage distortion, alleged by the employees but
rejected by the employer to be such, be a valid ground
for staging a strike?

SUGGESTED ANSWER
• (a) A WAGE DISTORTION is that brought about
where an increase in the prescribed wage rates
results in the elimination or severe contraction of
intentional quantitative differences in wage or
salary rates between and among employee
groups in an establishment as to effectively
obliterate the distinctions embodied in such
wage rates based on skills, length of service and
other logical bases of differentiation.

Wage Distortion
• b) No, the existence of wage distortion is not a valid
ground for a strike because Art. 124 of the Labor Code
provides for a specific method of procedure for
correcting wage distortion. Ilaw at Buklod ng
Manggagawa vs. NLRC, 198 SCRA 586, the Court said:-
• It goes without saying that these joint or coordinated
activities may be forbidden or restricted by law or
contract. For the particular instance of "distortions of the
wage structure within an establishment" resulting from
the application of any prescribed wage increase by virtue
of a law or wage order. Section 3 of Republic Act No.
6727 prescribes a specific, detailed and comprehensive
procedure for the correction thereof, thereby implicitly
excluding strikes or lockouts or other concerted activities
as modes of settlement of the issue.

ALTERNATIVE ANSWER:
• (b) A wage distortion, alleged by the employees but
rejected by the employer can be a valid ground for
staging a strike if it happens that in rejecting the
allegation of wage distortion, the employer refuses to
consider the issue under the grievance procedure
provided for in the applicable CBA, and later on through
Voluntary Arbitration. These acts of the employer could
be considered as a violation of its duty to bargain
collectively which is unfair labor practice (ULP). A ULP
strike is legal.
• Wages; Wages vs. Salary; Subject to Attachment
(1994)
• 1) Distinguish "salary" from "wages." 2) Are these
subject to attachment and execution?

SUGGESTED ANSWER:
• 1) The term "WAGES" applies to compensation for manual labor,
skilled or unskilled, while salary
• denotes a compensation for a higher degree of employment. (Gaa
vs. Court of Appeals, 140 SCRA 304),
• "WAGES" are those paid to any employee as his remuneration or
earnings payable by an employer for work done or to be done, or for
services rendered or to be rendered. On the other hand, "SALARY"
is used in the law that provides for a 13th-month pay. In this law,
basic salary includes all remuneration or earnings paid by an
employer to his employees for services rendered, but does not
include allowances or monetary benefits which are not considered
or integrated as part of the regular or basic salary. (Art. 97(f), Labor
Code; Sec, 2(b), P.D. No. 851)
• 2) Under Article 1708 of the Civil Code, only "wages" are exempt
from attachment or execution. Salaries are not exempt from
attachment or execution. (Gaa vs. Court of Appeals, 140 SCRA
304).

Wages; Waiver of Compensation (1996)
• 2) Jose applied with Mercure Drug Company for
the position of Sales Clerk. Mercure Drug
Company maintains a chain of drug stores that
are open everyday till late at night. Jose was
informed that he had to work on Sundays and
holidays at night as part of the regular course of
employment. He was presented with a contract
of employment setting forth his compensation on
an annual basis with an express waiver of extra
compensation for work on Sundays and
holidays, which Jose signed. Is such a waiver
binding on Jose? Explain.

SUGGESTED ANSWER:
• As long as the annual compensation is an amount that is
not less than what Jose should receive for all the days
that he works, plus the extra compensation that he
should receive for work on his weekly rest days and on
special and regular holidays and for night differential pay
for late night work, considering the laws and wage orders
providing for minimum wages, and the pertinent
provisions of the Labor Code, then the waiver that Jose
signed is binding on him for he is not really waiving any
right under Labor Law. It is not contrary to law, morals,
good customs, public order or public policy for an
employer and employee to enter into a contract where
the employees' compensation that is agreed upon
already includes all the amounts he is to receive for
overtime work and for work on weekly rest days and
holidays and for night differential pay for late night work.

ALTERNATIVE ANSWER:
• The waiver of benefits provided for by law is void. Art. 6
of the New Civil Code provides:
• "Rights may be waived, unless the waiver is contrary to
law, public order, public policy, morals or good customs.“
•
• Working Hours; Charitable Institution; Overtime Pay
(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 eleven (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?

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
eight (8) hours is entitled to overtime compensation.
• Working Hours; Charitable Institution; Weekly Rest
Period; (1998)
• A Ladies Dormitory run or managed by a charitable non-
profit organization claims that it is exempt from the
coverage of the Weekly Rest Period provision of the
Labor Code. Is the claim valid? [5%]

SUGGESTED ANSWER:
• No. The claim is not valid. The provisions on weekly rest periods in
the Labor Code cover every employer, whether operating for profit or
not. (See Article 91 of the Labor Code)
• Working Hours; Compressed Work Week (2005)
• (d) Under what conditions may a "compressed work week" schedule
be legally authorized as an exception to the "eight-hour a day"
requirement under the Labor Code? (4%)
• The conditions for an allowable "compressed work week" are the
following: the workers agree to the temporary change of work
schedule and they do not suffer any loss of overtime pay, fringe
benefits or their weekly or monthly take-home pay. (DOLE
Explanatory Bulletin on the Reduction of Workdays on
• Wages issued on July 23, 1985)

ALTERNATIVE ANSWER:
• "Compressed work week" is resorted to by the employer
to prevent serious losses due to causes beyond his
control, such as when there is a substantial slump in the
demand for his goods or services or when there is lack
of raw materials. (Explanatory Bulletin on the Reduction
of Workdays on Wages Issued by DOLE, July 23,1985)
•
• Working Hours; Night Shift Differential (2002)
• As a tireman in a gasoline station, open twenty four (24)
hours a day with only five (5) employees, Goma worked
from 10:00 P.M. until 7:00 A.M. of the following day. He
claims he is entitled to night shift differential. Is he
correct? Explain briefly. (3%)

Working Hours; Saturday Work (2003)
• 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 Collective Bargaining
Agreement (CBA), employees of the union 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 eight-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 of the Labor Code
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.
• Art, 88 of the Labor Code 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

Working Hours; Sick Leave; Overtime Pay (1997)
• Danilo Flores applied for the position of driver in the
motor-pool of Gold Company, a multinational
corporation. Danilo was informed that he would
frequently be working overtime as he would have to drive
for the company's executives even beyond the ordinary
eight-hour work day. He was provided with a contract of
employment wherein he would be paid a monthly rate
equivalent to 35 times his daily wage, regular sick and
vacation leaves, 5 day-leave with pay every month and
time off with pay when the company's executives using
the cars do not need Danilo's service for more than eight
hours a day, in lieu of overtime.
• Are the above provisions of the contract of employment
in conformity with, or violative of, the law?

SUGGESTED ANSWER:
• Except for the provision that Danilo shall have time off with pay
when the company's executives using the cars do not need Danilo's
service for more than eight hours a day, in lieu of overtime, the
provisions of the contract of employment of Danilo are not violative
of any labor law because they instead improve upon the present
provisions of pertinent labor laws.
• Thus, the monthly rate equivalent to 35 times the daily wage may be
sufficient to include overtime pay. There is no labor law requiring the
payment of sick and vacation leaves except the provision for a five-
day service incentive leave in the Labor Code.
• The 5-day-leave with pay every month has no counterpart in Labor
Law and is very generous. As for the provision in Danilo's contract of
employment that he shall receive time off with pay in lieu of
overtime, this violates the provision of the Labor Code which states
that undertime work on any particular day shall not be offset by
overtime work on any other day. Permission given to the employer to
go on leave on some other day of the week shall not exempt the
employer from paying the additional compensation required by the
Labor Code.

Working Hours; When Compensable; “While on Call”
(2004)
• Gil Bates, a computer analyst and programmer of Hard
Drive Company, works eight hours a day for five days a
week at the main office providing customers information
technology assistance.
• On Saturdays, however, the company requires him to
keep his cellular phone open from 8:00 A.M. to
• 5:00 P.M. so that the Management could contact him in
case of heavy work load or emergency problems
needing his expertise.
• May said hours on Saturdays be considered
compensable working hours “while on call”? If so,
should said compensation be reported to the Social
Security System? (5%)

SUGGESTED ANSWER:
• Said hours on Saturdays should be considered as
compensable working hours "while on call". In
accordance with the Rules and Regulations
Implementing the Labor Code, an employee who is not
required to leave word at his home or with company
officials as to where he may be reached is not working
while on call. But in the question, Gil Bates was required
to keep his cell phone open from 8:00 A.M. to 5:00 P.M.
Therefore, Bates should be considered as working while
on call, if he cannot use effectively and gainfully for his
own purpose the time from 8:00 A.M. to 5:00 P.M. on
Saturdays when he is required to keep his cellphone
open. The compensation actually received by Bates for
working while on call on Saturdays should be reported to
the Social Security System because under the Social
Security Law, compensation means "all actual
remuneration for employment."

• If Gil Bates can effectively utilize the Saturdays in his
own interest even "while on call", said hours on
Saturdays are not compensable. However, if during said
hours on Saturdays, Bates is actually required to attend
to urgent work to the extent of leaving what he is doing,
then the same are compensable working hours to the
extent of the actual hours of work rendered by him.
• The compensation paid by the company to Bates for said
hours worked on Saturdays should be reported to the
SSS. This is so because the basis of computing the SSS
contribution includes all actual remuneration, including
allowances and cash value of any compensation paid in
any medium other than cash.

Working Hours; When Compensable; “While on Call”;
Waiting Time (1997)
• Lito Kulangkulang and Bong Urongsulong are employed
as truck drivers of Line Movers, Inc. Usually. Lito is
required by the personnel manager to just stay at the
head office after office hours because he could be called
to drive the trucks. While at the head office. Lito merely
waits in the manager's reception room. On the other
hand. Bong is allowed to go home after office hours but
is required to keep his cellular phone on so that he could
be contacted whenever his services as driver becomes
necessary.
• Would the hours that Lito and Bong are on call be
considered compensable working hours?

SUGGESTED ANSWER:
• The hours of Lito and Bong while on call can be considered
compensable hours. The applicable rule is: "An employee who is
required to remain on call in the employer's premises or so close
thereto that he cannot use the time effectively and gainfully for his
own purpose shall be considered as working while on can. An
employee who is not required to leave word at his home or with
company officials where be may be reached is not working while on
call." Here, Bong is required to stay at the office after office hours so
he could be called to drive the trucks of the Company. As for Bong,
he is required to keep his cellular phone so that he could be
contacted whenever his services as driver as needed. Thus, the
waiting time of Lito and Bong should be considered are
compensable hours.
• Note: It could be argued that in the case of Bong who is not required to stay
in the office but is allowed to go home, if he is not actually asked by cellular
phone to report to the office to drive a car, he can use his time effectively
and gainfully to his own purpose, thus, the time that he is at home may
mean that there are not compensable hours

SUGGESTED ANSWER:
• Yes. Under Art 86 of the Labor Code, night shift
differential shall be paid to every employee for work
performed between 10:00 o'clock in the evening to six
o'clock in the morning.
• Therefore, Goma is entitled to nightshift differential for
work performed from 10:00 pm until 6:00 am of the day
following, but not from 6:00 am to 7:00 am of the same
day.
• The Omnibus Rules Implementing the Labor Code (In
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 five
(5) workers". Because of this provision, Goma is not
entitled to night shift differential because the gasoline

Wages; Waiver of Compensation (1996)
• (b) A wage distortion, alleged by the
employees but rejected by the employer
can be a valid ground for staging a strike if
it happens that in rejecting the allegation
of wage distortion, the employer refuses to
consider the issue under the grievance
procedure provided for in the applicable
CBA, and later on through Voluntary
Arbitration. These acts of the employer
could be considered as a violation of its

LABOR STANDARDS.Q&A.ppt

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