VII

Nico is a medical representative engaged in the promotion of pharmaceutical products and medical
devices for Northern Pharmaceuticals, Inc. He regularly visits physicians' clinics to inform them of the
chemical composition and benefits of his employer's products. At the end of every day, he receives a
basic wage of PhP700.00 plus a PhP150.00 "productivity allowance." For purposes of computing Nico's
13th month pay, should the daily "productivity allowance" be included?

Suggested Answer:

NO.

Under the 13th month pay law, other allowances and monetary benefits not considered part of an
employee’s basic salary are excluded from the computation of the 13th month pay of an employee. The
productivity allowance of Nico amounting to Php 150.00 is not part of his basic salary amounting to Php
700.00. Therefore, the daily productivity allowance given to Nico shall not be included in the
computation of his 13th month pay.

VIII
Nathaniel has been a salesman assigned by Newmark Enterprises (Newmark) for nearly two years at the
Manila office of Nutrition City, Inc. (Nutrition City). He was deployed pursuant to a service agreement
between Newmark and Nutrition City, the salient provisions of which were as follows:

a) the Contractor (Newmark) agrees to perform and provide the Client (Nutrition City), on a non-
exclusive basis, such tasks or activities t h a t A are considered contractible under existing
laws, as may be needed by the Client from time to time;

b) Contractor shall employ the necessary personnel like helpers, salesmen, and drivers who are
determined by the Contractor to be efficiently trained;

c) the Client may request replacement of the Contractor's personnel if quality of the desired
result is not achieved;

d) the Contractor's personnel will comply with the Client's policies, rules, and regulations; and

e) the Contractor's two service vehicles and necessary equipment will be utilized in carrying out
the provisions of this Agreement.

When Newmark fired Nathaniel, he filed an illegal dismissal case against the wealthier company,
Nutrition City, Inc., alleging that he was a regular employee of the same. Is Nathaniel correct?

Suggested Answer:

No. Nathaniel is incorrect. Under Department Order No. 18-A of the Department of Labor and
Employment, a Contractor refers to any person or entity, including cooperative, engaged in a legitimate
contracting or subcontracting arrangement providing either services, skilled workers, temporary workers
or a combination of services to a principal under a Service Agreement. Moreover, there is an employer-
employee relationship between the contractor and the employees it engaged to perform the specific job,
work or service being contracted.

There is a legitimate contracting arrangement between Newmark and Nutrition City whereby it can
be gleaned from their service arrangement that the former will perform and provide task, activities and
personnel to the latter. Hence, there is an employer-employee relationship between Newmark and
Nathaniel. Therefore, Nathaniel is incorrect in alleging that he was a regular employee of Nutrition City.

XII
Nena worked as an Executive Assistant for Nesting, CEO of Nordic Corporation. One day, Nesting
called Nena into his office and showed her lewd pictures of women in seductive poses which Nena found
offensive. Nena complained before the General Manager who, in turn, investigated the matter and
recommended the dismissal of Nesting to the Board of Directors. Before the Board of Directors, Nesting
argued, that since the Anti-Sexual Harassment Law requires the existence of "sexual favors," he should
not be dismissed from the service since he did not ask for any sexual favor from Nena. Is Nesting correct?

Suggested Answer:

No, Nesting is incorrect. The Anti-Sexual Harassment Law does not exclusively require the
presence of sexual favor in order to justify the dismissal of Nesting. Nesting being the CEO of Nordic Corp.
possesses authority over Nena as his executive assistant. The act of showing lewd pictures of women in
seductive poses within the office of Nesting which Nena found offensive creates an intimidating, hostile
and offensive working environment for the latter. Therefore, even there is no sexual favor from Nesting,
by his acts, creates an intimidating, hostile, and offensive working environment, he should be dismissed
from service for violating the Anti-Sexual Harassment Law.