1988 BAR EXAMINATION

Question No. 1:
(a) Which Articles of the 1987 Philippine Constitution contain provisions
affecting labor?
(b) Which laws of the Republic of the Philippines give substance to the rights of
workers?
Answer:
(a) The provisions on labor in the 1987 Constitution are the following:
1. The State affirms labor as a primary economic force. It shall protect the rights
of workers and promote their welfare. Art. II, Sec. 18.
2. The right of the people, including those employed in the public and private
sectors, to form unions, associations, or societies for purposes not contrary to
law shall not be abridged, Art. III, Sec. 8.
3. The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all. Art. XIII, Sec. 3.
It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce their mutual compliance
therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable returns on investments, and to expansion
and growth. (Art. XIII, Sec. 3)
4.

The State shall protect working woman by providing safe and healthful
working conditions, taking into account their maternal functions, and such

facilities and opportunities that will enhance their welfare and enable them to
realize their full potential in the service of the nation.
In addition to the above provisions, there are also provisions in the Constitution
mandating the promotion of full employment (Art. II, Sec. 9 and Art. XII, Sec. 1) and of
social justice (Art. X, Sec. 10) which all promote the welfare of labor, Art. XV on the
Family Code also has a provision on the right of the family to a living wage and income.
(Sec. 2[3])
(b) The laws that give substance to the right of workers are:
1. Labor Code of the Philippines
2. Laws that deal with minimum wages like Rep. Act No. 6640 and the law
that deals with the 13th month pay i.e., Pres. Decree No. 851.
3. Social Security Laws like the Social Security Law, the Revised Government
Service Insurance Act and the Revised Medical Care Act also the law on
PAGIBIG.
4. Laws that deal with government employees, like the Civil Service Decree,
and the provisions in the Administrative Code that give benefits to
government employees like maternity leave and other leave benefits.
Question No. 2:
On January 3, 1988, Sea Breeze Restaurant, Inc. (SBRI) hired Juan Reyes as a
probationary kitchen helper. He received and cleaned food ingredients delivered by
suppliers and store them in freezers, cleaned kitchenware and utensils, and kept the
kitchen tidy. On July 1, 1988, he was sent to the companys doctor for a complete
medical examination. Thereafter, he continued working. On July 8, 1988, the doctor
submitted his report finding Juan to have minimal pulmonary tuberculosis (TB).
(a) Within the time frame of the problem, was there any change in Juans
employment status?
(b) When did the change occur?
(c) Why did it occur?
(d) Can the company still terminate Juan as a probationer?
(e) Under what conditions may Juan be terminated considering his health?
Explain.
(f) Based on your analysis of the factual and legal situation, what course of action
would you advise the company to take?
Answer:
(a) There was a change in the employment status of Juan, from probationary to
regular employment.

(b) July 4, 1988, after his six-month probationary period.

(c) The Labor Code (art. 281) provides that an employee who is allowed to work
after a probationary period shall be considered a regular employee.
(d) The company can terminate Juan, but no longer as a probationary employee,
but as a regular employee since his six (6) month probationary period has expired.
(e) Juan may be terminated considering the fact that he has minimal pulmonary
tuberculosis. The Labor Code (Art. 284) provides that an employer may terminate the
services of an employee who has been found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health as well as his
co-employees.
(f) Based on my analysis outline above, I will advise the Company to dismiss the
employee but pursuant to the Rules and Regulations implementing the Labor Code, the
Company should not terminate the employment of its employee on the ground of his
disease unless there is a certification by a competent public health authority that the
disease is of such nature or at such a stage that it cannot be cured within a period of six
(6) months even with proper medical treatment.
Question No. 3:
Julian Ramos started with Philippine Mines, Inc. as a laborer in 1965. He rose to
become a shift supervisor. Company rules and regulations governing employee conduct
within its mine compound and the residential area and barracks for workers provide that a
commission of a third offense in any year, even if the first two were merely punished
with warning, reprimand, or suspension, would result in dismissal.
By June 10, 1987, Julian had been warned once and reprimanded once. On July
15, 1987, Julian quarreled with a company guard in the mines residential area.
Investigated by the personnel manager, Julian admitted the offense. He was dismissed on
July 17, 1987 for violating company rules and regulations and gross misconduct. He
filed a case for illegal dismissal with backwages on July 22, 1987. The parties stipulated
on the above facts before the Labor Arbiter and submitted the case for decision.
(a) You are the Labor Arbiter. Decide the case.
(b) If instead of quarreling with a guard, he was caught taking scrap lumber from
the premises of the mine and taking it home for fuel, would your answer be the same?
Explain.
Answer:
(a) I will decide the case, ruling that the dismissal is illegal, if the quarrel which
Julian had with a company guard was just a small quarrel, say, just an exchange of words,
after which Julian and the company guard parted as friends. It would be too harsh; it
could be violation of the security of tenure of an employee, especially in this case, of an

employee who has been with the Company for over 20 years, to punish him with
dismissal just because he had committed a third offense within a year. It should also be
noted that quarrel was in the miners residential area and not in the working area of the
miners. These third offense rules of the company rules and regulations should not be
literally implemented. It is serious misconduct that is a just cause for termination. Thus,
if the quarrel was a serious one: it was Julian who provoked the quarrel; he inflicted
physical injuries on the security guard, then the quarrel could be just cause for
termination.
(b) I would rule that the act of Julian taking scrap lumber from the premises of
the mine and taking it home for fuel will be a just cause for terminating him. It is noted
that Julian is a shift supervisor. He should be a model for other employees. Thus, I will
consider his act of taking home scrap lumber as serious misconduct.
Question No. 4.
This problem is related to Problem No. 5. Please bear the essential facts in mind as
they apply to both numbers.
Porfirio, Estela, Crisostomo, Marita and Jose Ramirez were brothers and sisters. All were
stockholders, directors and officers of the Pagaspas Marketing Co., Inc. (PMCI). PMCI
sold office machines and supplies. It employed 20 sales persons, 10 deliverymen, 20
service personnel and 10 administrative employees. On December 10, 1987, 45 rank and
file workers of the company formed and registered a labor union. They sent a letter to
Pagaspas demanding recognition as bargaining agent of all workers, enclosing check-off
authorization forms of the union members, and a set of economic demands. PMCI
refused to recognize the union. The union president went to you, as labor adviser of the
federation which they were planning to affiliate with.
(a) He wants your opinion on what the union may lawfully do to compel
management to come to the bargaining table at that point. What will your advice be?
(b) The union president tells you that they prefer to go on strike. He wants to
know the legal requirements that the union must comply with so the strike will be legal.
What advise will you give?
Answer:
(a) I will advise the union president to file a petition for certification so that after
being certified as the collective bargaining representative, the union would go back to
PMCI and ask it to bargain collectively with the union. If PMCI persists in its refusal to
bargain collectively, I will advise the Union to file a case of unfair labor practice against
PMCI since a refusal to bargain collectively is a ULP.

(b) I will tell the union president that these are the requisites that should be
complied with if a strike is to be legal:
(1) The union should file a notice of strike with the Bureau of Labor
Relations (assuming PMCI is in metro Manila). A copy of the notice should also
be served upon PMCI. The union should not actually go on strike until after 30
days (if the strike is because of a deadlock) or 15 days (if the strike is because of
the ULP committed by PMCI, i.e., its refusal to bargain collectively) after filing a
notice of strike.
(2) There should be a strike vote, either at a meeting or through a
referendum. A majority of the union members on the bargaining unit should
approve the declaration of a strike. The union should furnish the Bureau of Labor
Relations of the notice of meeting where a strike vote will be taken. The union
should also inform the Bureau about the result of the voting at least seven (7) days
before the intended strike.
Question No. 5:
After complying with the legal requirements for a lawful strike, the union filed a
notice of strike. Conciliation produced no agreement. The workers struck and picketed
the companys stores foe 3 months with no results. During the strike, the Ramirezes
formed a new corporation, Maharlika Distributors, Inc. It leased a new store site, bought
stocks from PMCI, and hired the 15 workers who did not join the strike and 6 new
workers. Later without filing an application to close PMCI, it ceased operations.
The union filed a case for unfair labor practice, demanded the reinstatement of all
workers with backwages and sue PMCI and the members of the Ramirez family as
individual respondents for damages. The Ramirezes moved to dismiss the case against
them, as PMCI was a corporate entity, so their inclusion as respondents in their personal
capacities violated the theory of independent corporate personality since there was no
basis for piercing the corporate veil.
If you were counsel for the union, what arguments would you use in your
opposition to the Motion to Dismiss?
Answer:
The Ramirezes could be held personally liable because as members of the same
family, they were organizing another corporation to evade the liability that PMCI will
have by virtue of its commission of a ULP, i.e. refusing to bargain collectively with the
union which has the bargaining representatives of the employees. The act Ramirezes is
evidence of bad faith on their part, which in turn is a justification for piercing the
corporate veil to prevent injustice. (A.C. Ransom Case)

Question No. 6:
On May 2, 1988, General Finance Corp. (GFC) was placed under SEC
rehabilitation receivership at it was illiquid. Its 100 employees were kept on the payroll
until May 15, 1988, when 75 of them were placed on leave without pay by the receiver.
GFCs management met with its Board and stockholders to review a rehabilitation plan
so GFC could resume operations emphasizing collection efforts, investors and creditors
agreed to reschedule payments to them as GFC was solvent. With these agreements, the
management filed a rehabilitation plan with the receiver, who endorsed it to the SEC.
Under the plan, GFC would retain all its workers and resume its operations as soon as it
achieved adequate liquidity. Because of the plan, the union asked that all its members be
paid salaries during the time that they were laid off and GFC was preparing to re-open,
whether or not they were at work. The company agreed, endorsed the request to the
receiver who recommended its payment to the SEC. The SEC approved the request. On
August 1, 1988, the receiver paid all union members salaries from May 16, 1988 up to
July 31, 1988 whether or not they had worked during the period.
(a) Hearing of this, the non-union members consulted with you on whether they,
being also on lay-off, could ask for their salaries for the period. What is your opinion?
(b) Is the receiver the employer of GFCs workers in this case?
(c) To collect the back salaries of the non-union members, on who shall you
make demand?
(d) If your demand is declined, where will you file the case on behalf of the nonunion members?
Answer:
(a) The non-union members could ask for their salaries for the period that the
union members were paid their salaries. The non-union members should not be
discriminated against because such will be an unfair labor practice; it is a form of
discrimination in regard to wages, hours of work, and other terms and conditions of
employment in order to encourage or discourage membership in a labor organization,
which is an unfair labor practice according to the Labor code (in Art. 248).
(b) The receiver could be considered the employer of GFCs workers.
According to the Labor Code (in Art. 212[c]) an employer encludes any person acting
in the interest of an employer, directly or indirectly. The receiver here is acting in the
interest of GFC.

(c) I can file a case for the back salaries of the non-union members either against
GFC or the receiver or better still, against both, because GFC or the receiver, could be
considered here as employer.
(d) I will file the case before the Labor Arbiter. The case here is a money claim
of workers based on the non-payment or underpayment of wages which is one of the
cases under the original and exclusive jurisdiction of Labor Arbiters, pursuant to the
Labor Code (Art. 212).
Alternative Answer:
I will file the case before SEC which has jurisdiction over the case since it is
against a corporation under receivership.
Question No. 7:
The facts in this problem and in VIII are related. Please keep them in mind when
you analyze these two numbers.
Damian Damaso was one of 75 machinists of City Rebuilders Machine Shop
(CRMS). He had worked as a lathe operator there since February 15, 1975. Lathe men
process metal to fine tolerances of thousandths of an inch. If tolerances are not met, work
is re-done at great cost. Defective work released to customers cause breakdown on
equipment in which they are used. Juan worked an average of 300 days per year at a
daily wage of P100.00 plus COLA mandated by law. If there are no rejects on what he
processes, he get a P15 bonus for each item done right. In the last 2 months, 10% of his
output either needed re-work or were rejected. He claimed his lathe was defective.
However, the second shift man using the same machine produced work meeting
standards. Damian did not earn any bonuses, and received a written warning. Feeling
oppressed, he went to the Kamao ng Manggagawa. A registered labor federation to ask
for advice on the mechanics of organizing a union, and worker rights and duties when
they organize.
You are a labor organization adviser of Kamao.
(a) He asks how CRMS can be unionized.
(b) Outline to Damian the steps in forming a legitimate labor union.
Damian wants to know
(a) If he can join the Kamao as a member;
(b) What his obligations would be if he is accepted; and
(c) If as a member, he can ask management to recognize Kamao as bargaining
agent of CRMS workers.

What will you tell Damian?

Answer:
I will tell Damian the following:
(a) CRMS can be unionized by the machinists organizing a union and having this
union registered with the Bureau of Labor Relations or affiliated with a registered labor
organization so that the union could be a legitimate labor organization which has rights
under the Labor Code (Art. 242) including the right to act as the representative of its
members for the purpose of collective bargaining.
(b) The steps in forming a legitimate union are:
1. Workers form a union by adopting a Constitution and by-laws and later on
electing the officers provided for in the Constitution.
2. The union which is organized should be registered or affiliated with a
registered union so that it will be legitimate labor organization, acquires a legal
personality and shall be entitled to the rights and privileges granted by law to legitimate
labor organizations upon issuance of the certificate of registration based on the following
requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meetings and the
list o workers who participated in such meetings;
(c) The names of all its members comprising at least twenty percent (20%)
of all the employees in the bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years,
copies of its annual financial reports; and
(e) Four (4) copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification, and the list of the members who
participated in it.
(c) Damian can join Kamao, if he wishes to join the labor federation. There is no
legal obstacle against a worker directly joining a labor federation, if the labor federations
Constitution and By-Laws provide in such direct membership.
The obligations of Damian as a member of Kamao depend on what obligation the
Constitution and By-Laws impose on its members which usually includes the payment of
union dues.
Kamao can be recognized as the bargaining agent of CRMS workers if Kamao is
designated or elected as such bargaining agent by the majority the bargaining unit

composed of the CRMS workers. But it is not Damian who can ask management to
recognize Kamao as a Bargaining agent; it should be Kamao.
Question No. 8:
A supervisor of the CRMS saw Damian leave Kamaos headquarters. Sensing
that Damian would organize a union, he reported what he saw to management. Damian
did not know he was seen. Management acted on the report. The next day, his foreman
found Damians work unacceptable quality and below output standards. He was given a
second warning. The following day, work exceeding allowed tolerances were again
found. He was suspended for a week and thus, was unable to start organizing a union.
When he came back, his work was again found deficient and 50% was rejected and
condemned as waste. He was given a 15-day notice of termination on August 1, 1988, to
take effect on August 16, 1988 and paid for 15 days of accumulated leave; banned from
entering company premises effective immediately; and given termination pay equal to 12
days wages per year of service, computed on his daily wage for 13 years. He reported
what had happened to Kamao. The matter was referred to you again for assistance.
(a) Damian wants to know if he was unlawfully terminated. Explain.
(b) Damian asks if he had been given all his termination entitlements.
Answer:
(a) Damian was unlawfully terminated. There could be just cause for his
termination if his work are of unacceptable quality and below output standards which
could be considered as gross and habitual neglect of duties which is a just cause for
termination. But the facts show that CRMS was intent on terminating Damian not
because of his poor performance but because he was organizing a union. Thus, the act of
CRMS is an unfair labor practice. The dismissal is illegal.
(b) If there is just cause for the termination of Damian, CRMS has no obligation
to pay him any terminal entitlement, like termination pay. But, he should be paid
whatever rights may have accrued, like, in this case, the pay to 15 days of accumulated
leave.
If there is no just cause for the termination of Damian, he has the right to
reinstatement without loss of seniority rights and to his backwages computed from the
time his compensation was withheld from him up to the time of his reinstatement (art.
279).

Question No. 9:
Zapato Custom-made Shoes, Inc. (ZaCSI) made shoes to customer specification
and repair them. As a service to customers, a shoe shine stand was operated on its
premises. There were 10 shoe shine boys at the stand. They owned their shoe shine
boxes with cleaning agent polish, brushes, and rags. Walk-in customers willing to wait
were led by the shoe shine boys to a seat at the stand where he waited while the boy
shined the shoes. After the shoes were cleaned, the boy asked the customer to pay to the
receptionist. Customers not willing to wait left the shoes with the stands receptionist
who gave a receipt with the price for the service and pick-up date and time indicated.
The boys were free to get shoes to be shined from the receptionist when there were no
waiting walk-ins. For each pair shined, the boys got markers corresponding to the price
for their service. ZaCSIs staff did not interfere with, not supervise, how the boys went
about their tasks. At days end, the markers held by each boy were tallied and paid for.
The boys signed a receipt to acknowledge full payment for work done.
A labor federation organized ZaCSI and filed a petition for a consent election.
The boys, sympathizing with the workers, joined the union. At the pre-election
conference, the lawyer for ZaCSI moved to exclude the boys as voters.
(a) As Med-Arbiter handling the case, rule on the objection.
(b) Would your ruling be different if in this case, ZaCSI provided the boys with
the shoe shine boxes and their contents. Explain.
Answer:
(a) As Med-Arbiter, I will rule that the shoe shine boys should be excluded as
voters in the consent election. The shoe shine boy are not employees of ZaCSI and thus
could not be considered as employees belonging to bargaining unit who will designate or
select a bargaining representative. They are not employees of ZaCSI because according
to the given facts, they are not under the control of ZaCSI which is an essential element
for the existence of employer-employee relationship. In the statement of facts, it is said
that ZaCSIs staff did not interfere with, nor supervise how the boys went about their
task."
(b) My ruling will not be different even if ZaCSI provided the boys with the shoe
shine boxes and their contents. ZaCSI, by this act, is not yet exercising control over
them. It is the existence or non-existence of control that is determinative of the existence
of employer-employee relationship.

Question No. 10:

Mr. Aristedes Epol was elected as President, Chief Executive Officer, and Board
Chairman of Transnational Insurance Corporation on May 31, 1988. At that time, he
owned 51% of the companys voting stock. Under the By-Laws of the company he had a
one-year term of office from June 1, 1988 to June 1, 1989. On July 15, 1988, Mr. Ramos
agreed with the other stockholders to re-organize the composition of officers by having
the Board declare all positions of officers vacant, elect a new set of officers, with himself
as President and Chief Executive. Mr. Epol would be re-elected only to the ceremonial
post of Board Chairman, Mr. Epol got a Notice of Special Meeting of the Board to elect a
new set of corporate officers. He consults you as lawyer.
He asks if he is covered by the Labor Code and Constitutional guarantees of
security of tenure of workers. He theorizes that since he was elected for a fixed one-year
term, he enjoys tenure for the term.
(a) What is your view? Reasons.
Mr. Epol, despite your opinion, observes that the Constitutional issue was not
raised in those cases. He is adamant that you seek recourse to prevent his removal as
President and Chief Executive Officer before his term expires.
(b) Where will you file the case?
Answer:
(a) Mr. Epol is not covered by the Labor Code and Constitutional guarantees of
security of tenure of workers. He is not an employee. He is a corporate officer and his
tenure is subject to the Constitution and by-laws of the corporation and the Corporation
Code.
(b) I will file the case before the Securities and Exchange Commission which has
jurisdiction over the case. Whether or not Mr. Ramos and the other stockholders legally
re-organized out Mr. Epol is an intra-corporate dispute. Since it is an intra-corporate
dispute which is involved, it is the SEC which has jurisdiction.
Question No. 11:
Manila Laundry is a mechanized operation. It relies on washing machines,
dryers, and mechanical ironing/pressing machines for sheets. In the period of extensive
brownouts, its machines could not be used regularly. The Secretary of Commerce and
Industry proposed a Voluntary Loss Control Plan so that firms with high electric power
needs could schedule one shut-down day per week so that the available energy could be
better allotted to reduce the uncertainties of when brown-outs would occur and interrupt

work in process. Manila Laundry joined the plan and set one shutdown each week. Its
union protested and demanded that they be paid their basic wage for the shutdown day.
The company declined and a case was filed for non-payment of wages.
(a) The case is assigned to you as Labor Arbiter. Decide.
(b) If the cause of the one-day shut-down each week had been due to the very
frequent breakdown of equipment would your decision be the same? Explain.
Answer:
(a) If the contract of employment of the workers provides that the workers are to
be paid on a daily basis, and there is no provision in the contract that they are guaranteed
to work for a certain number of days per week, the fact that Manila Laundry joined a plan
that scheduled one shut-down day per week does not mean that Manila Laundry is under
legal obligation to pay the daily wage of the workers for the one shut-down day that they
do not work. There is no law that imposes this obligation on an employer. The general
rule is no work, no pay. The Rules and Regulations implementing the Labor Code
provide that the time during which an employer is inactive by reason of interruptions in
his work beyond his control shall be considered time worked either if the imminence of
the resumption of work requires the employees presence at the place of work or if the
interval is too brief to be utilized effectively and gainfully in the employees own interest.
This Rule cannot be applied here because there is adequate notice about the one
shutdown day.
(b) My decision will be the same as in (a) above. The applicable rule will still be
No work, No pay.
Question No. 12:
The Manila Shipyard Co., Inc. (MSC) repaired, modified, or built 16 wooden and
metal ships per year. Starting with 10 employees in 1935, its work force grew to 250 by
1940 except for the period of World War II up to 1946, averaged that number until 1985.
Newly hired workers only had basic job skills as carpenters, welders, metal workers,
plumbers or engine mechanics. To keep workers whose job skills are developed over
the years loyal, and to avoid the costs of training new hires, in 1950 MSC announced an
unfunded retirement and pension plan for all regular workers. Copies of the plan were
given to all regular employees when it was started, and to those who became regular
employees later. The plan gave employees an optional, illness, and mandatory retirement
benefit. Benefits varies by age and service length. The plan was non-contributory on the
part of employees. Since 1955, MSC paid pension plan benefits to qualified workers
who applied for them.

In 1970, a union was organized in MSC. After a consent election with a majority
of votes for the union, it was recognized. A collective bargaining agreement was signed.
The CBA gave a termination allowance to workers who are separated from MSCs
service, except those terminated for cause under MSCs rules and regulations. The
termination allowance benefit was granted if workers were terminated and was graduated
in amount based on length of service.
After the Labor Code came into effect in 1974, MSCs retirement and termination
compensation practices did not change.
The 1974 CBA and later ones, up to the 1981, were ratified by the workers and
registered with the Bureau of Labor Relations, Ministry of Labor and Employment.
Workers who retired after the first CBA went into effect got termination allowance
benefits in addition to pension plan benefits.
(a) From the given facts, and applying the provisions of the Labor Code and
jurisprudence (up to December 1987), what terminal benefits are available to MSC
workers now?
(b) What are the wage supplements under the Labor Code?
(c) Are the pension plan and termination allowance benefits wage supplements?
Explain your answer.
(d) Can MSC workers claim the terminal benefits you enumerated above
cumulatively? Why?
Answer:
(a) The terminal benefits available to MSC workers are the pension plan benefits
that began to be paid in 1950 plus the termination allowance benefits granted under CBA,
(b) Wage supplements are those benefits given to employees by their employer, in
addition to the basic, cash wage, for work done or to be done, or for services rendered or
to be rendered.
(c) In a way, pension plan and termination allowance could be considered as age
supplements. While they are not specifically given for work done or to be done or for
services rendered or to be rendered, since they are given only when a worker retires or
otherwise ends his service, pension plan and termination allowance benefits could also be
considered as being paid for past work or service rendered.
(d) Yes because as to the pension plan, they should be paid pursuant to the Labor
Code (Art. 100) which provides that nothing in this Book shall be construed to eliminate
or in any way diminish supplements on other employees benefits being enjoyed at the

time of promulgation of this Code. As for the termination allowance benefits, they
should be paid because they are pursuant to CBA.

Question No. 13:

Ngipin Toothpaste Co., Inc. manufactured and sold toothpaste in the market. It
considered labor contracting as a cost reduction move. The plan was for the company to
continue manufacturing the toothpaste in its facilities up to the stage where it was already
packed in labeled plastic tubes and capped. These would then be taken to the homes of
women in a militant squatter area near the plant. The women would be given the filled
tubes and flat, die-cut cardboard pieces with intended folds printed with the label. These
flats cost P0.30 per piece. The women would form the boxes, apply paste to one side
so it would hold together as a box, and then put the filled tubes into it. Management
thought it was good idea as it would give employment and help bring the women into the
money economy. The job was not hard to learn. The women would do all the work at
home in their free time.
The companys personnel staff took up the concept with the leader of the squatter
womens group who agreed it was a good idea. They showed her how the job was to be
done. She learned the work immediately. She said that the women would be willing to
accept the homework, but they would insist on being paid in accord with the law. She
also told the companys representatives that to help reduce their headaches in the
operation, she was willing to be their main contractor and she would sub-contract the
work to her neighbors. She also said that she wants that the housewives whom she
engages be allowed to use the labor of the children in their homes to increase the number
of the boxes that they can assemble, and the tubes that they can box.
Management was concerned about boxes that would be very dirty as these would
be spoils. They had no idea what sort of legal problems they should resolve, and
compensation arrangements they must make with the women or the lady volunteering to
be the main contractor, so they consulted you as a lawyer.
Management asks for your advice on the following matters:
(a) Would the women who are engaged to form the boxes and pack toothpaste
tubes into them be considered employees of the company? Reasons.
(b) Can the woman workers use their children regardless of age, to help them
perform their tasks? Reasons.
(c) May the company deduct spoilage costs of Po0.30 per very dirty box and the
value of tubes lost or not accounted for it is provided for in the contract for piecework?
Answer:

(a)

The more specific name of the women here could be industrial

homeworkers. In here, the workers receive articles or materials to be
processed or fabricated in or about a house and thereafter, these articles and
materials are returned after they are processes or fabricated (Art. 153). As
such industrial homeworkers, they are no employees because their so-called
employer does not have control over those they (the industrial
homeworkers) will do their work. But the Labor Code (Art. 154) provides
that regulations or orders should be issued to assure the minimum terms and
conditions of employment applicable to industrial homeworkers.

(b)

If the children here work directly under the sole responsibility of his parent
or guardian, and their employment does not in any way interfere with their
schooling, they could work regardless of their young age.

(c)

The Labor Code (in Art. 114) provides that no employer shall require his
worker to make deposits from which deductions shall be made for the
reimbursement of loss or damage to tools, materials for equipment supplied
by the employer, except where the employer is engaged in such trades,
occupation or business where the practice of making deduction or requiring
deposits is a recognized one or is necessary or desirable as determined by
the Secretary of Labor in appropriate rules and regulations. Thus, if the
Secretary of Labor has adopted the necessary rules and regulations
mentioned above, the deduction for spoilage will be legal.

Question No. 14:

The facts in this problem will have a bearing on the solution of problem XV. Please
keep the essential facts in mind.
Pascual Pasacao was employed as a plumber by the Colossal Construction Corp. in 1965.
He was then single. When he was registered with the SSS, he designated his father Juan
and his mother Maria, who were over 60 and dependent on him for support, as his
beneficiaries. Colossal religiously remitted all employee and company contributions
required by the SSS law.
He married Damiana de Juan in 1967, and also declared her as beneficiary. Even
if he was married, and because he was making a lot of money on overtime, he continued
supporting his parents. A son, Pedrito, was born to the couple in 1968, and a daughter,
Marita, in 1970. He declared both to the SSS as his beneficiaries. In 1975, he was
promoted as foreman to a project in Mountain Province. He stayed there for 2 years and
during that time, he had a relationship with Juliana Abay, by whom he had a child,
Pascualito in 1976. He signed Pascualitos birth certificate.
Unknown to him, Damiana had an affair while he was away and bore a daughter,
Ariadne, in 1977. She represented to his employer that Ariadne was her child by Pascual

and the personnel clerk of the company reported the child to the SSS as another
beneficiary. When Pascual returned to Manila, he found out about Ariadne, and sent
Damiana away from the conjugal home with the child. She left and lived with Ariadnes
natural father. However, Pascual did not file legal separation proceedings against
Damiana.
Pascual did not know about the registration of Ariadne as an SSS beneficiary. He
then brought Juliana to his home in Manila with their child, Pascualito. She was mother
to all his children.
In 1979 the then Mistry of Labor issued regulations on Occupation Health and
Safety requiring construction workers to bear safety helmets imported from the United
States to all its workers, including foreman. These helmets were guaranteed to resist
impacts and absorb shocks for at least 5 years if constantly exposed to sunlight. Under
company rules, all workers on job sites must wear their safety helmets continuously.
Pascual, being macho, would put on his helmet only when executives of the company
were on the job site, or when labor inspectors would check compliance with labor rules.
In 1987, Pascual was supervising the raising of a pallet filled with PVC pipes to the 12 th
floor of the building they were working on.
A Colossal project engineer was around so Pascual had put on his 8-year old
safety helmet. However, Pascual did not close the chin strap to secure the helmet to his
head. A cable snapped and whiplashed. It missed the engineer by inches and smashed
into Pascuals helmet. The helmet cracked but the cable did not touch Pascuals head.
However, because of the impact, Pascual lost his balance and fell to the ground. The
helmet flew off and he hit his head on the pavement. As a result of the injuries that he
sustained, he was paralyzed. While the attending physicians said that there was no hope
for his eventual recovery if he could follow a program of therapy, there was no certainty
when that would be. Since Pascual was a valued employee. The company wanted to do
all it could for him and his family.
You are counsel of the company. The President of the firm, who has briefed you
on th4e situation in Pascuals family, asks you to help the personnel clerk file a claim for
Pascuals benefits so it could augment the disability pay that the company was paying
him. In filling out the form, you find a blank for beneficiaries.
(a) Whom should you write down as beneficiaries? Why?
(b) To what benefits would Pascual be entitled? Explain your answer.
(c) Under what conditions may the SSS suspend the grant of these benefits to
Pascual?
Answer:

The disability suffered by Pascual is work-connected. Thus the applicable law

are the provisions in the Labor Code on employees compensation and the State Insurance
Fund. (Arts. 166-208). In one of these provisions (Art. 167[8]) beneficiaries mean the
dependent spouse until he/she remarries and dependent children, (legitimate. Legitimated,
or legally adopted or acknowledged child) who are primary beneficiaries. In their
absence, the dependent parents and subject to the restriction imposed on dependent
children, the illegitimate children and legitimate descendants, who are secondary
beneficiaries.
Applying the above definition, Damiana, the legal spouse of Pascual could have
been a primary beneficiary but since she is not living with Pascual, Damiana is not a
dependent spouse.
Pedrito and Marita are primary beneficiary as dependent children if they are not
yet over 21 years of age but they are unmarried and not gainfully employed.
Pascualito, the illegitimate son, is a secondary beneficiary.
beneficiaries are the dependent parents Juan and Maria.

Also secondary

(a) He would be entitled to permanent total disability benefit in the form of

employees compensation. His paralysis of at least two limbs is considered
permanent total disability (Art. 192[3]), and it is employees compensation
that will be given because the disability is work-connected. It arose out of
and in the course of employment. But he could not be entitled to this benefit
if he has been notoriously neglected. There could be basis for notorious
negligence. As a foreman he should be a model to his co-employee. He
should follow very well about wearing a helmet while at work.
(b) The grant of permanent total disability may be suspended if Pascual is again
gainfully employed, or recovers from his permanent total disability or fails to
present himself for examination at least once a year upon notice by the SSS.
Question No. 15:
(a)

If Pascual were covered by GSIS, who would be his dependents?

(b) Who are Pascuals (a) Primary, and (b) secondary beneficiaries under PD No.
1146, the Revised GSIS Act of 1977?

Answer:

(a) His dependent would be the legitimate children (Pedrito and Marita) and the
illegitimate child (Pascualito) who are not yet 21 years of age, if they are unmarried, or
not gainfully employed, and the legitimate parents (Juan and Maria) who are wholly
dependent upon Pascual for support.
Damiana, the legal spouse is not dependent because she is not living with Pascual
and could therefore be considered as not dependent for support on Pascual.
(b) The primary and secondary beneficiaries of Pascual, if he is covered by GSIS,
except that Pascualito, the illegitimate child, will be a primary beneficiary and not just
secondary beneficiary.