1987 BAR EXAMINATION

Question No. 1:
Rosa Cartagena, a 14-year old orphan, was hired as a domestic helper by Elvira
Pacheco, a friend of Rosas aunt, who could no longer support her. The aunt and Elvira
agreed that Rosa would serve the Pachecos for three years, with the clear understanding
that the Pachecos would see her through high school.
The Pachecos never sent Rosa to high school. After two years of unfulfilled
promises for her education, Rosa went back to her aunt, who confronted Elvira about her
breach of their agreement. The aunt demanded that Rosa be paid the cash equivalent of
the three years of high school education that Rosa was denied. Elvira contended that
Rosa quit before the end of the fixed employment period and, therefore, is not entitled to
anything. The aunt filed a complaint against the Pachecos.
If you were the labor arbiter, how would you decide the case?
Answer:
As the Labor Arbiter, assuming Rosas aunt as her guardian, I will hold that
Rosas quitting was justifiable and that the Pachecos should pay the cash equivalent of at
least two (2) years of high school education.
Rosas quitting is justifiable. The Labor Code (in Art. 142) provides that the
original contract of domestic service shall not last for more than two (2) years. The
original contract of Rosa with the Pachecos was fixed for three (3) years. Thus, this
contract should be considered as only for two (2) years. Rosa, therefore, may not be
considered as terminating the contract before the expiration of its term. She left after two
(2) years.
She also left for a justifiable reason. Her employers were not complying with
what they agreed they shall do under the contract, namely, to see her through high school.
Under the Labor Code (in Art. 146), it is the legal obligation of the employer to
give to his househelper who is under the age of eighteen (1) years (Rosa is fourteen (14)
years old) an opportunity for at least elementary education. Further, the Code (in the
same Art.) provides that the cost of such education shall be part of the househelpers
compensation, unless there is a stipulation to the contrary.
But what Rosa here is claiming is the cost of high school and not just elementary
education. There is no law prohibiting the employer from obligating himself to give
more than just elementary education, which the employer did in the case. Thus, the
employer should comply with what he agreed to do under the contract he entered into.

Question No. 2:
The Overseas Construction Company, a domestic corporation with a recruitment
license, hired two thousand Filipino workers and assigned them to its construction project
in Kuwait. They were given free housing, work clothing and food.
The master employment contract approved for them by the Philippine Overseas
Employment Agency (POEA) stipulated that they were to work at the overseas jobsite
For twelve (12) hours per day and that they were accordingly to be paid wages higher
than the POEA-approved schedule of pay rates. The individual employment contracts
also contained the same stipulations. And during the predeparture briefings at the
companys Mandaluyong plant site, the workers were told about these stipulations. By
actual computation, the wages paid at the overseas jobsite were at least twenty-five
percent (25%) more than the POEA-approved rates. Moreover, the record shows that the
workers did not always render the full twelve (12) hours of work stipulated in the
employment contract.
Back home after completing their one-year overseas assignment, the workers
engaged your services as their lawyer to prosecute a complaint with the POEA for
recovery of unpaid overtime work. What would your advice be?
Answer:
Before I will give advice, I will first find the answer o this basic question: Were
the workers actually paid for their overtime work when they received wages that were at
least twenty-five percent (25%) more than the POEA-approved rates?
The answer is No if the 25% added to the POEA-approved rate (which we assume
is a rate for a day of eight (8) hours work that they work overtime in their twelve (12)
hour day (a 12-hour work day is 4 hours in excess of an 8-hour work day) should be 50%
more of such POEA-approved rate. The four (4) hours of work is 50% of the normal
weight (8) hours of work a day plus 25% of such additional 50% for the purposes of
paying the overtime rate.
There is also the night differential pay to take into account because a 12-hour shift
will include working hours from 10:00 p.m. to 6:00 a.m. If the higher0than-the POEAapproved rate is computed as indicated above, I will advise the workers not to sue for
they have already been paid for their overtime work.
If the higher-than-the POEA-approved rates is not, however, computed as
indicated above, the fact that the POEA approved the contracts and that the workers
agreed to the rates they receive will not be a bar to a complaint for unpaid overtime pay,
the right to which cannot be waived.

Another Suggested Answer:

The rate approved by the POEA has built-in overtime pay. Thus, there is no basis
for the claim for overtime pay.
Question No. 3:
Lydia Cancio was on her sixth and last month as a probationary employee of the
Banco Seguridad when she was confirmed to be pregnant. Being unmarried and wanting
to become a regular employee, she initially kept her pregnancy a secret from her
employer. She was subsequently appointed a regular employee on the first month of her
pregnancy.
Because of morning sickness, however, Lydia frequently absented herself from
work. After two more months, the personnel manager told her that her habitual absences
had become so intolerable that she would have to go. Replying that her absences were
cause by her pregnancy, Lydia asked for a leave of absence, which was denied. She
nevertheless went on leave and was dismissed for going on leave without prior
permission.
Lydia filed a complaint for illegal dismissal, praying that she be reinstated. The
Bank contested the complaint on the ground that she was not dismissed because of her
pregnancy but because of her absence without leave.
Decide.
Answer:
The dismissal is illegal. The labor Code (in Art. 137[2]) very clearly provides: It
shall be unlawful for any employer to discharge (a) woman (employee) on account of her
pregnancy, or while on leave or in confinement due to her pregnancy.
Of course, in the case, the woman employee asked for a leave of absence because
of her pregnancy but this request was denied and she went on leave anyway.
The employer should have granted her request for leave, the request being made
because of her pregnancy.
Dismissal after she went on leave without prior permission is too harsh a
punishment for the pregnant woman who was absent without leave.

Question No. 4:

Lawyer Antonio Martin recently formed a law partnership with five other lawyerfriends of his. They hired two office secretaries, an accounting clerk-cashier, one
bookkeeper, and two messengers. You are among three associate attorneys. The
workweek is Monday to Friday. There is no vacation leave but sick leave is 15 days
for every year of continuous and satisfactory service.
Managing partner Martin is preparing a set of personnel policies in terms and
conditions of employment for the staff and has asked you to give him a brief memo on
the questions listed below.
(a) Should the law firm schedule a rest day for he employees, including you?
(b) Is the law firm required to grant to its employees holiday pay and service
incentives leave?
Explain fully.
Answer:
(a) There is no need under the Labor Code to schedule a rest day. The Code (in
Art. 91) requires an employer to provide each of his employees a weekly rest day after
every six consecutive normal work days. Hence, the workweek is such that it is for five
days. The Saturdays and Sundays when the employees are not required to work more
than satisfy the required weekly rest day.
(b) The law firm has only nine (9) employees including its three (3) associate
attorneys. The six partners are not employees.
Thus, it is a service establishment employing not less than ten (1) workers. The
Labor Code (in Art. 94 for holiday pay and Art. 95 for service incentive leaves) exempts
service establishments regularly employing less than ten (10) workers from the
application of its provisions on holiday pay and on service incentive leaves.
Question No. 5:
All the employees of Aliw Trading, Inc. are monthly salaried, and have been such
since 1974, when the Labor Code of the Philippines took effect. Whenever they would
work overtime, the accounting department would compute the daily equivalent of the
daily equivalent of the employees monthly salary by using 301 days as divisor.
However, for deductions due to absences not otherwise covered by the 15-day vacation
leave policy of the company, the divisor used is 313 days. The workweek is Monday to
Saturday.

In 1985, the employees filed a complaint for non-payment of holiday pay and
service incentive leave after years of unsuccessfully trying to convince Aliw Trading
management to grant holiday pay and the five-day service incentive pay. In the past,
whenever a demand for payment of holiday pay was presented by the employees,
management would invariably deny liability but on the other hand would give a nominal
salary adjustment.
(a) If you were counsel for Aliw Trading, what defenses would you raise?
(b) If your were the labor arbiter hearing the case, how would you resolve the
issues?
Answer:
(a) As counsel for Aliw Trading, I will contend: As regards holiday pay, when
the company uses 313 as the divisor in computing the daily equivalent of an employees
monthly salary, (in computing deductions due to absences not covered by its 15-day
vacation leave policy) the Company thereby considers that only the 52 weekly rest days
(which are Sundays) are the only days considered as paid; even if they are unworked
days. So, there is no need to again pay holiday pay.
As to the 5-day service incentive leave, I will contend that the Labor Code (in Art.
95(b) provides that the provision on service incentive leaves shall not apply to those
already enjoying the benefit, namely, those enjoying vacation leaves with pay at leave
five (5) days.
The Company here has a 15-day vacation policy and should, therefore, be already
deemed as giving the 5-day service incentive leave.
(b) As the Labor Arbiter, I will rule that the Company is liable to pay holiday pay.
We will base this ruling on the ground that the Company uses 301 as a divisor in
computing the daily equivalent of an employees monthly salary (in computing overtime
pay). Thus, the Company considers both the 52 weekly rest days and 12 holidays as
unpaid days. Thus, the Company should pay holiday pay.
As for the service incentive leave, I will rule that with its 15-day vacation leave
policy, the Company, pursuant to the Labor Code, (in Art. 94[b}) is already giving the 5day service incentive leave to its employees.
Question No. 6:
Jun de Gracia, a second year law student and personnel assistant in the Peoples
Bank and Trust Company, never liked his superior, the personnel manager, who was
always putting him down. When his patience ran out, he walked up to his boss during

office hours and slugged him to unconsciousness. He was dismissed. The personnel
manager filed a complaint for damages against Garcia with the Regional Trial Court of
Quezon City. In retaliation, de Gracia filed a complaint for illegal dismissal with the
Department of Labor and Employment.
The counsel of de Gracia then filed a motion to dismiss the damage suit, alleging
that the labor arbiter before whom the illegal dismissal case is pending has exclusive
jurisdiction over the case for damages.
Decide,
Answer:
The Motion to Dismiss the complaint for damages against de Gracia filed with the
Regional Trial Court should not be granted. The fact that there is a complaint for illegal
dismissal with a Labor Arbiter filed by de Gracia is not ground for dismissal of the
damage suit filed with the Regional Trial Court.
The two cases can be considered distinct from each other.
The case before the Regional Trial Court is based on the slugging by de Gracia of
his superior, the personnel manager who filed the damage suit. This, therefore, is a case
based on the Civil Code, not on the Labor Code, and is thus, within the jurisdiction of the
regular courts.
On the other hand, the complaint of illegal dismissal is within the jurisdiction of
the Labor Arbiter. The Labor Arbiter could have included in the exercise of his
jurisdiction also the damages arising from the manner in which the employer dismissed
an employee. But it may be noted: The damage suit here arises from what the employee
did to the personnel manager, not what the employer did to the employee. This is an
added reason why the damage suit filed by the personnel manager against de Gracia is
properly within the jurisdiction of the Regional Trial Court.
Another Suggested Answer:
The case arose from employer-employee relations and is therefore under the
original and exclusive jurisdiction of the Labor Arbiter.
Another Suggested Answer:
To avoid multiplicity of suits, the case which arose from employer-employee
relations should be heard by the Labor Arbiter who has jurisdiction of the case.

Question No. 7:
In accordance with the provisions of the collective bargaining agreement, the
Republic Labor Union (RLU) submitted to the Zenith Drug Company a union board
resolution authorizing the deduction from the wage of each of the unions two thousand
members a special assessment in the sum of twenty pesos to help pay for the expenses of
the RLU president during his observation tour of New Zealand.
When the company honored the authorization and implemented the deductions,
more than a thousand of the employees complained and sought your assistance. What
legal advice would you give and what action would you take on behalf of the employees?
Answer:
I will advise the complaining employees that they should file a complaint against
the Company for making the illegal deductions of P20.00 from their wages.
According to the Labor Code (in Art. 113) of the legal deductions that an
employer may make from the wages of his employees are: (a) In cases where the worker
is insured with his consent by the employer, and the deduction is to recompense the
employer for the amount paid by him as premium on the insurance; (b) For union dues, in
cases where the right of the worker or his union to check-off has been recognized by the
employer or authorized in writing by the individual worker concerned; and (c) In cases
where the employer is authorized by law or regulations issued by the Secretary of Labor.
The deductions made by the employer are not for union dues.
Another Suggested Answer:
I will advise the complaining employees that they should file a complaint against
the members of the union board of directors for violating the rights and conditions of
membership in a labor organization by levying a special assessment without its being
authorized by a written resolution of majority of all union members at a general
membership meeting called for the purpose.
Question No. 8:
After years of harmonious employer-employee relations, the Moonbeam Textile
Mfg. Co. had its first union, the militant Kapisanan Ng Mga Unyonista (KMU). A
certification election was a certainty. The aggressiveness of the solicitation drive by the
KMU was to be matched by the intensity of the companys neutralization efforts.

The company developed a multipronged neutralization plan. This called for

department managers and supervisors to talk to their subordinates, individually and in
groups, telling them about the companys employee-oriented policies and about the
burdens of membership in a militant union. There would be posters on the plant walls
and on prominent places on the plant premises warning of the dangers of communism and
accusing KMU of being a communist front. Other posters would contain such teasers as
GO KMU AND LOSE YOUR FREEDOM, MOONBEAM FILLS YOUR POCKETS,
KMU EMPTIES IT, A VOTE FOR KMU IS A VOTE FOR UNEMPLOYMENT.
After two weeks of this kind of campaign, the company would announce the payment of
the traditional annual across-the-board wage increases but advanced by two months,
while the year-end bonus will be increased by 50% over last years.
The company sought your advice about its neutralization plan and its
implementation by the Company is an unfair labor practice. The Company is there
interfering with, restraining or coercing its employees in the exercise of their right to self
organization, which is an unfair labor practice under the Labor Code (in its Art. 248[a]).
The right to self-organization does not only mean the right to form, join or assist
labor organizations. It also includes the rights of employees to choose the labor
organization which is to represent them for purposes of collective bargaining and for
mutual aid and protection.
In its neutralization plan, especially in its economic inducements, e.g. advance
payment of wage increases and increased bonus, the Company is interfering with,
restraining or coercing its employees of their right to choose in a certification election
who shall be the collective bargaining representative of its employees. This is clearly an
unfair labor practice.
Question No. 9:
The Bisig ng mga Manggagawa (BMM) and the Visayan Oil Mfg. Co. are parties
to a collective bargaining agreement containing a union security provision which
stipulates that all employees within the bargaining unit shall join the UNION within 30
days from the signing of the agreement. On the date of the agreement was signed, and
in fact even before the signing, the majority group of employees in the bargaining unit
were members of the Kapisanan Ng Mga Unyonista (KMU).
When the KMU members failed to join the BMM within the stipulated period of
thirty days, BMM demanded the termination of their employment. The company acceded
to the demand and dismissed the KMU members. The KMU filed a complaint for unfair
labor practice, alleging that the dismissals and the application of the union-security clause
were contrary to law.
Decide.

Answer:
When the company acceded to the demand of BMM and dismissed the KMU
members, an unfair labor practice was committed.
A union security provision which stipulates that all employees within the
bargaining unit shall join the UNION (meaning BMM which is the collective bargaining
representative) within 30 days from the signing of the agreement is not violation of the
Labor Code. It is authorized by the Code (in Art. 248(e) which provides that nothing in
this Code or any other law shall stop the parties (to a CBA) from requiring membership
in a recognized collective bargaining agent as a condition for employment. This is
known as a union security clause.
This provision, however, also further provides that a union security clause cannot
be applied to those employees who are already members of another union at the time of
the signing of the collective bargaining agreement.
The union security clause, cannot, therefore, be applied to KMU members who
were members of KMU on the date the CBA was signed, and in fact, even before the
signing.
Question No. 10:
Ten sessions after the start of contract negotiations, the panel representatives of
Island Bank & Trust Company and the Island Bank Employees Association (IBEA)
tacitly recognized a deadlock had been reached. That was when the IBEA members
started their daily noise barrage.
At a signal, usually a whistle blown by a union member in every floor of the 15storey offices of the bank, cacophony of sounds could be heard reverberating throughout
the building as union members rang small bells they brought with them, hit metal pans
and waste cans, or simply clapped their hands and shouted. This exercise would last
about five minutes. Depositors at the banks lobby would get annoyed and leave; visitors
at the other offices expressed irritation and complained to management.
The bank wrote the IBEA that the noise barrage violated the current collective
bargaining agreements waiver of the prohibition against picketing and interruptions in
operations during the term of the agreement. The IBEA replied that picketing is a
protected concerted activity and that the agreement has expired since negotiations for a
renewal had been in progress.

The bank consulted you as its retained counsel. What would your legal advice be
and what legal action, if any, would you recommend?
Answer:
As retained counsel, I will advise the bank to file a ULP charge against IBEA.
The IBEA, by its noise barrage is committing interruption in operations
during the term of the CBA.
The CBA which prohibits such interruptions is still in force and in effect in spite
of the fact the it has expired. According to the Labor Code (in Art. 253) it shall be the
duty of both parties to keep the status quo and to continue in full force and effect the
terms and conditions of the existing agreement during the 60-day period prior to the
expiration date of the CBA during which the parties could negotiate a new CBA and/or
until a new CBA is reached by the parties. Thus, a CBA is violated when the IBEA
undertakes its noise barrage which are interruptions of operations prohibited by the
CBA. Such violation is a ULP.
IBEA is not engaged in picketing in its noise barrage. Picketing means giving
publicity to the existence of, or the facts involved in a labor dispute, whether by
advertising, speaking, patrolling or by any method not involving fraud or violation. A
noise barrage, therefore, cannot be considered picketing as a protected concerted
activity.
Question No. 11:
Southseas Garments Corporation suspended its operations and laid off its 500
workers on December 1, 1986, after it received word that the contracts being negotiated
abroad did not materialize and the current work being done had been finished.
On May 2, 1987, the company resumed operations. Most of the workers reported
for work after having been given notice to report. Clara Libunao, a sewing machine
operator, did not receive any notice but learned of the resumption of work from a fellow
worker. On May 16, 1987, she notified the company that she would like to resume work.
The company refused to accept her back, presumably because she was already 60 years
old.
Clara filed a complaint for illegal dismissal.
Decide.
Answer:

Clara was illegally dismissed. In the case, the suspension of operations of the
Corporation was for a period of not exceeding six (6) months. It was actually only for
five (5) months. Thus, in accordance with the Labor Code (n Art. 286), there was no
termination of employment. In such a case, the employer shall reinstate to his former
position without loss of seniority rights any employee who indicates his desire to resume
his work not later than 1 (1) month from the resumption of operations of his employer.
Clara notified the Corporation that she would like to resume work on May 16 or within
one (1) month from the resumption of the operations of the Corporation on May 2.
Another Suggested Answer:
Clara cannot complain that she has been illegally dismissed, if the refusal of the
company to accept her back is because she was already 60 years old.
Implementing the Labor Code, the Rules and Regulations provide that in the
absence of a CBA or other applicable agreement concerning terms and conditions of
employment which provides for a retirement age at an older age, an employee may be
retired upon reaching the age of sixty (60) years.
Thus, the company may consider her retired after she becomes 60 years old.
Therefore, there is no illegal dismissal.
Question No. 12:
Orlando Corridor, messenger of Fast Tract Company for the past ten years, was
investigated administratively for taking a snack in Cuba before delivering an important
document to a customer. The customer at first complained about the delay but later
forgave Corridor in a handwritten note to him by the customers manager.
Claiming that Fast Track, known nationwide for its rapid delivery services, was
placed in an embarrassing position by Corridors conduct. The company insisted on his
dismissal in disregard of counsels advice. The personnel manager, however, succeeded
in getting Cordero to sign a release and quitclaim and to accept separation pay.
Cordero filed a complaint for unfair labor practice against Fast Track. His
convincing evidence was a revelation: it showed that everything that he was blamed for
was a pretext to dismiss him because it was he who started the organization of the Fast
Track Employees Union among the hundred or so messengers o the company. The
company argued that the release and quitclaim as well as an acceptance of separation pay
barred Corderos cause of action.
Decide.

Answer:
The company is guilty of unfair labor practice if it is a fact that Cordero was
dismissed, not because at one time, he first took a snack and was therefore delayed in
delivering a document to a customer. It is noted: the customer forgave him and told the
company about his being forgiven.
Thus, it is, therefore, evident that the above incident was only a pretext, that
indeed the real reason was because Cordero started to organize a union among his fellow
messengers of the company.
He dismissal is clearly a ULP. According to the Labor Code (in Art. 248[a]) it is
unlawful for an employer to discriminate in regard to wages, hours or work and other
terms and conditions of employment in order to encourage or discourage membership in
any labor organizations.
The fact that Cordero signed a release and quitclaim and accepted separation pay
does not bar Corderos cause of action. Employees sometimes sign releases and
quitclaim and accept separation pay. They urgently need the money that the separation
pay represents their daily expenses. They should not, therefore, be considered as waiving
their right to complain against unfair labor practice committed by their employers.
Question No. 13:
Buster Sison, a 55-year old employee of Telecom Facilities, Inc., wanted to retire.
He talked to the personnel manager, who agreed. The necessary papers were drawn up,
and Sison was paid retirement benefits equivalent to 75% of his last basic monthly salary
for every year of service. Sison enjoyed post-retirement life for more than three years,
until his retirement benefits were exhausted. Expecting to get more from Telecom, Sison
filed a complaint for recovery of separation pay under the Labor Code.
Decide.
Answer:
Sison is not entitled to separation pay under the Labor Code. The Labor Code (in
Arts. 283 and 284) provides the instances when the employer is to pay separation pay
namely, when he terminated the employment of an employee because of the installation
of labor savings devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation not due to serious business losses, or when an employee has been

found to be suffering from any disease and his continued employment is prohibited by
law or is prejudicial to his health as well as the health of his com-employees.
Sisons termination was not brought by any of the above authorized causes. He
voluntarily retired, and he accepted what was paid him, by the company which paid
retirement benefits not because it was under legal obligation to do so, there being no
CBA or any agreement providing for such payment.
Because of all the above, he is not entitled to separation pay.
If he waited so that he retired at age 60, he could have taken advantage of a
provision in the Rules and Regulations for the payment of termination pay equivalent to
at least one half month salary for every year of service, but this is even less that 75% he
received when he retired at age 55.

Question No. 14:

Josimar Bignay was hired on August 28, 1986, as a six-month probationary
secretary of Marila Trading Company. Five months after, the personnel officer notified
Josimar that her performance fell below standards and would have to be released upon
the expiration of the probationary period of her employment. She promised to do better,
which she confirmed in writing, asking that her probationary status be extended by three
more months. The company acceded.
At the end of the three-month extended probationary employment, Josimar claimed that
she attained regular status after six months of employment pursuant to the Labor Code.
What would you advise the company if it consulted you?
Answer:
I will give the advice that Josimar has not become a regular employee. After her
probationary period, such employment could be terminated because her performances fell
below the standards of the Company.
It is true that the Labor Code (in Art. 281) provides that probationary employment
shall not exceed six months unless it is covered by an apprenticeship agreement
stipulating a longer period, or according to decisional law, on the basis of the agreement
of the employer and the employee.
It is further provided in the Labor Code (in the above cited article) that an
employee who is allowed to work after a probationary period shall be considered a
regular employee.

In the case, at the end of the six (6) months period, the probation employment of Josimar
could have been terminated because his performances fell below standards.
But, acting favorably on her promise in writing that she will do better, her
probationary period was extended by the Company for three more months. The
Company should not be made to suffer for its generous act. When Josimar failed to live
up to her promise that she will do better, the act of the Company terminating her
employment because her performance was still below standard is valid.
Question No. 15:
Ricardo Diestro is an accounting clerk in Aqua Sport Trading Company, receiving
three thousand pesos a month as basic salary. In addition, he gets a free lunch valued at
thirty pesos per day and free uniforms. Diestro frequently worked overtime, for which
the payroll clerk computed for him his extra overtime pay on the basis of his monthly
salary. When Diestro failed to receive a pay increase, he started questioning the basis for
computing his overtime pay. He argued that the cost of the free lunch and the value of his
t-shirts should be included, His claims having been denied, he filed a complaint with the
Regional Office of the Department of Labor.
Decide.
Answer:
Diestro is not entitled to have his overtime pay computed not only on the basis of
his basic salary but also on the basis of the cost of the free lunch and the value of the Tshirts given by the Company added to the basic salary.
The Labor Code (in Art. 90) provides that for purposes of computing overtime
and other additional remuneration, the regular wage of an employee shall include the
cash wage only, without deduction n account of facilities provided by the employer. The
value of the free lunch and the t-shirts is not cash wages.
Question No. 16:
Philippine Daily News prints and publishes The Daily News, copies of which are
circulated through dealers in metro Manila. These dealers, who are single proprietors
exclusively distributing The Daily news but handling competing dailies for a fixed
amount per copy sold, engage the services of newsboys. These newsboys are given a
specified number of copies to sell every day within a six hour period in the morning,
After this period, the newsboys are free to sell other newspapers or go to school or
engage in other activities. Each newsboy is paid fifty centavos for every copy sold.

As counsel for Philippine Daily news, would you advise your client to report the
dealers and the newsboys as its employees pursuant to the Social Security Act?
Answer:
I would advise Philippine Daily News that there is no need to report the dealers
and the newsboys as its employees pursuant to the Social Security Act.
Under the Social Security Act (as provided in Sec. 8[c] an employer is a person
who uses the services of another person who is under his (employers) orders under as
regards the employment.
In the case, the dealers and newsboys are not under the control of the Philippine Daily
news as regards how the newspapers are distributed by the dealers and how the newsboys
sell the newspapers. It may also be noted: the dealers as single proprietors distribute
competing dailies; the services of newsboys are engaged by the dealers, not by the
Philippine Daily news.
But the dealers and the newsboys may be covered under the Social Security Act as
self-employed persons.
Question No. 17:
Union Drug Company has a sick leave policy, contained in a collective bargaining
agreement requiring the accumulation of five days of the 15 days sick leave earned
annually. Thus, an employee could use only 10 days of earned sick leave every year. The
accumulated leave is convertible into cash when employment is terminated for any cause
but may be used upon prior application with and approval by the company.
Pedro San Juan, an employee of the company, applied for sickness benefits under
the Social Security act when he fell ill of pneumonia and his ten-day company sick leave
had been exhausted. He System denied the application.
Decide.
Answer:
The System should not have denied the application for sickness benefits under the
Social Security Act.
The act (in Sec. 14[b]) provides that sickness benefits shall begin to be paid only after all
sick leaves of absence with full pay to the credit of the employee were exhausted when
the 10-day company sick leaves were exhausted.

The remaining five days of the 15-day sick leave under the CBA were to be
accumulated and convertible unto cash when employment is terminated for any cause
although the accumulated sick leaves may be used upon prior application with and the
approval of the Company. These conditions means that the 5-day sick leaves cannot be
automatically used. Thus, it could not be first exhausted before the payment of sickness
benefits under the Social Security Act.
Question No. 18:
Mona Lim, married employee of Realty Corporation, is paid a basic salary and in
addition, a monthly living allowance separate from the statutory cost of living allowance.
She receives quarterly bonuses, which are purely discretionary grants by the
management; an, as part of company policy, gets reimbursements for all transportation
expenses she incurs in connection with her sales duties. Her daily meal allowance is a
fixed amount regardless of place of assignment.
The company has been reporting Monas basic monthly salary as her
compensation, which is less than one thousand pesos. When the SSS learned that Mona
was receiving other forms of income, it assessed the company for everything paid or
granted to the employee as part of her compensation.
If you were consulted by the company, what advice would you give your client?
Answer:
We will advise Realty Corporation that pursuant to Exec. Order No. 102,
compensation is now defined as including all actual remuneration for employment,
including the mandated cost of living allowance, as well as the cash value of any
remuneration paid in any medium other than cash, except that part of remuneration in
excess of three thousand pesos received during the month.
Given the above very comprehensive definition of compensation, the SSS
correctly assessed the company for everything it paid to the employee as part of
compensation, including not only the basic salary, but also the monthly living allowance,
the statutory cost of living allowance, quarterly bonuses and daily meal allowance which
is a fixed amount regardless of place of assignment.
But the reimbursement for all transportation expenses incurred by the employee in
connection with her sales duties is not part of compensation.
Question No. 19:

Leonardo Marasigan started working for Madrid Development Corporation in August

1984 when it was being organized and had no fixed offices. The company did not ask for
his Social Security registration number, nor did it report him to the SSS. He died a year
later, and his widow filed a claim for death benefits with the Social Security System.
While following up the claim, the widow discovered that it was only in November 1985
when he was reported by his employer to the Social Security System and the premiums
covering the entire period from August 1984 were remitted.
Leonardos widow came to you for assistance. What would your legal advice be?
Answer:
I will advise Leonardos widow that as the primary beneficiary, she is entitled to
receive the death benefits from the Social Security System.
Leonardo may have died in August 1985, and it was only in November 1985
when he was reported by his employer to the System. But premiums covering the entire
period from August 1984 when remitted. Besides, according to the Social Security Act
(in Sec. 24), the fact that the SSS has not previously received a report about an employee
from his employer or a contribution paid in his name by his employer, is not fatal to his
rights to benefits.
Leonardo had 12 monthly contributions in the 12 months that he was covered by
the System before he died. He, therefore, has not paid at least thirty six (36) monthly
contributions prior to the semester of death which under the Social Security Act (Sec. B)
would have entitled the widow as primary beneficiary, is entitled to a lump sum benefit
equivalent to thirty five times the monthly pension.
Question No. 20:
Gregorio Reposo, a 59-year old government employee and member of the
Government Insurance System could not wait for his retirement benefits and thought of
enjoying them in advance of his retirement at age 60 by borrowing 80% of the retirement
benefits from a friendly money lender, assigning to him the entire amount of his expected
benefits. He obtained the approval of the assignment from the GSIS.
Reposos spent the proceeds on a business venture that failed. A supplier sued Reposos
for unpaid materials and attempted to proceed against his retirement benefits.
Reposo seeks your assistance in an effort to shield his retirement benefits. What
legal advice would you give?
Answer:

I will advise him that because he had assigned the entire amount of his expected
benefits to a money lender from whom he borrowed money representing 80% of his
retirement benefits, and had obtained the approval of the assignment from GSIS, said
benefits are now duly assigned to said lender.
The Revised Government Service Insurance Act (in Sec. 33) provides that the
benefits granted by the Act shall not be subject, among others, to attachment,
garnishment, levy or other processes. This, however, shall not apply to obligations of the
member of the System, or to the employer, or when the benefits granted herein are
assigned by the member with the authority of the System.
But as the above provision of the Act states, the retirement benefit is not subject to
attachment, garnishment, levy or other processes that the supplier may ask for.