2013 (Labor Law) Bar Exam Questions: Question 2

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Gamma Company pays its regular employees P350.00 a day, and houses then in a dormitory inside its factory compound in Manila. Gamma Company also provides them with three full meals a day.

In the course of a routine inspection, a Department of Labor and Employment (DOLE) Inspector noted that the workers’ pay is below the prescribed minimum wage of P426.00 plus P30.00 allowance, and thus required Gamma Company to pay wage differentials.

Gamma Company denies any liability, explaining that after the market value of the company-provided board and lodging are added to the employees’ P350 cash daily wage, the employees’ effective daily rate would be way above the minimum pay required by law. The company counsel further points out that the employees are aware that their food and lodging form part of their salary, and have long accepted the arrangement.

Is the company’s position legally correct? (8%)


  1. No, the company’s position is legally untenable.

    Before the value of such facilities as food and lodging can be deducted from their salaries, the following requirements must be satisfied first:

    a.) proof must be shown that such facilities are customarily furnished by the trade;
    b.) the provision of deductible facilities must be voluntarily accepted in writing by the employee; and
    c.) facilities must be charged at fair and reasonable value.

    In this case, there being no proof that the above requisites have been substantially satisfied, the company’s position must necessarily fail.

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