Songco, et al. vs.

National Labor Relations Commission

G.R. Nos. 50999-51000
(March 23, 1990)
FACTS: Zuelig filed an application for clearance to terminate the services of Songco, and others, on the ground of retrenchment due to financial
losses. During the hearing, the parties agreed that the sole issue to be resolved was the basis of the separation pay due. The salesmen received
monthly salaries of at least P400.00 and commission for every sale they made. The Collective Bargaining Agreements between Zuelig and the union
of which Songco, et al. were members contained the following provision: "Any employee who is separated from employment due to old age,
sickness, death or permanent lay-off, not due to the fault of said employee, shall receive from the company a retirement gratuity in an amount
equivalent to one (1) month's salary per year of service."
The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay equivalent to their one month salary (exclusive of commissions, allowances,
etc.) for every year of service with the company.
The National Labor Relations Commission sustained the Arbiter.
ISSUE: Whether or not earned sales commissions and allowances should be included in the monthly salary of Songco, et al. for the purpose of
computing their separation pay.
RULING:
In the computation of backwages and separation pay, account must be taken not only of the basic salary of the employee, but also of the
transportation and emergency living allowances.
Even if the commissions were in the form of incentives or encouragement, so that the salesman would be inspired to put a little more industry on jobs
particularly assigned to them, still these commissions are direct remunerations for services rendered which contributed to the increase of income of
the employee. Commission is the recompense compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee,
when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. The nature of the work of a
salesman and the reason for such type of remuneration for services rendered demonstrate that commissions are part of Songco, et al's wage or
salary.
The Court takes judicial notice of the fact that some salesmen do not receive any basic salary, but depend on commissions and allowances or
commissions alone, although an employer-employee relationships exists.
If the opposite view is adopted, i.e., that commissions do not form part of the wage or salary, then in effect, we will be saying that this kind of
salesmen do not receive any salary and, therefore, not entitled to separation pay in the event of discharge from employment. This narrow
interpretation is not in accord with the liberal spirit of the labor laws, and considering the purpose of separation pay which is, to alleviate the
difficulties which confront a dismissed employee thrown to the streets to face the harsh necessities of life.
In Soriano vs. NLRC (155 SCRA 124), we held that the commissions also claimed by the employee (override commission plus net deposit incentive)
are not properly includible in such base figure since such commissions must be earned by actual market transactions attributable to the petitioner
[salesman]. Since the commissions in the present case were earned by actual transactions attributable to Song, et al., these should be included in
their separation pay. In the computation thereof, what should be taken into account is the average commission earned during their last year of
employment.

MAYON HOTEL & RESTAURANT vs. ROLANDO ADANA, et al.

G.R. No. 157634
May 16, 2005
FACTS:
Petitioner Mayon Hotel & Restaurant (MHR) hired herein 16 respondents as employees in its business in Legaspi City. Its operation was suspended
on March 31, 1997 due to the expiration and non-renewal of the lease contract for the space it rented. While waiting for the completion of the
construction of its new site, MHR continued its operation in another site with 9 of the 16 employees. When the new site constructed and MHR
resumed its business operation, none of the 16 employees was recalled to work.
MHR alleged business losses as the reason for not reinstating the respondents. On various dates, respondents filed complaints for underpayment of
wages, money claims and illegal dismissal.
ISSUES:
1. Whether or not respondents were illegally dismissed by petitioner;

2. Whether or not respondents are entitled to their money claims due to underpayment of wages, and nonpayment of holiday pay, rest day premium,
SILP, COLA, overtime pay, and night shift differential pay.
HELD:
1. Illegal Dismissal: claim for separation pay
Since April 1997 until the time the Labor Arbiter rendered its decision in July 2000, or more than three (3) years after the supposed temporary layoff, the employment of all the respondents with petitioner had ceased, notwithstanding that the new premises had been completed and the same
resumed its operation. This is clearly dismissal or the permanent severance or complete separation of the worker from the service on the initiative
of the employer regardless of the reasons therefor.
Article 286 of the Labor Code is clear there is termination of employment when an otherwise bona fide suspension of work exceeds six (6)
months. The cessation of employment for more than six months was patent and the employer has the burden of proving that the termination was for
a just or authorized cause.
While we recognize the right of the employer to terminate the services of an employee for a just or authorized cause, the dismissal of employees
must be made within the parameters of law and pursuant to the tenets of fair play. And in termination disputes, the burden of proof is always on the
employer to prove that the dismissal was for a just or authorized cause. Where there is no showing of a clear, valid and legal cause for termination of
employment, the law considers the case a matter of illegal dismissal.
If doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter the
employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. It is a time-honored rule that in
controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing
should be resolved in the formers favor. The policy is to extend the doctrine to a greater number of employees who can avail of the benefits under
the law, which is in consonance with the avowed policy of the State to give maximum aid and protection of labor.
2. Money claims
The Supreme Court reinstated the award of monetary claims granted by the Labor Arbiter.
The cost of meals and snacks purportedly provided to respondents cannot be deducted as part of respondents minimum wage. As stated in the
Labor Arbiters decision.
Even granting that meals and snacks were provided and indeed constituted facilities, such facilities could not be deducted without compliance with
certain legal requirements. As stated in Mabeza v. NLRC, the employer simply cannot deduct the value from the employees wages without
satisfying the following: (a) proof that such facilities are customarily furnished by the trade; (b) the provision of deductible facilities is voluntarily
accepted in writing by the employee; and (c) the facilities are charged at fair and reasonable value. The law is clear that mere availment is not
sufficient to allow deductions from employees wages.
As for petitioners repeated invocation of serious business losses, suffice to say that this is not a defense to payment of labor standard benefits. The
employer cannot exempt himself from liability to pay minimum wages because of poor financial condition of the company. The payment of minimum
wages is not dependent on the employers ability to pay.

International School Alliance of Educators vs. Hon. Quisumbing

[333 SCRA 13 (2000)]
Facts:

International School, Inc., pursuant to Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign
diplomatic personnel and other temporary residents. To enable the School to continue carrying out its educational program and improve its standard
of instruction, Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected by it either
locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their
employment, except laws that have been or will be enacted for the protection of employees.
The School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The
School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire: (a) What is one's domicile?
(b) Where is one's home economy? (c) To which country does one owe economic allegiance? (d) Was the individual hired abroad specifically to work
in the School and was the School responsible for bringing that individual to the Philippines? Should the answer to any of these queries point to the
Philippines, the faculty member is classified as a local hire; otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local- hires. These include housing, transportation, shipping costs, taxes, and home
leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference
on two "significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The
compensation scheme is simply the School's adaptive measure to remain competitive on an international level in terms of attracting competent
professionals in the field of international education.
Issue:
Whether or not local hire teachers shall enjoy same salary as foreign hire teachers where they perform the same work. This calls for the applicability
of the principle of equal pay for equal work.
SC Ruling:
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides: The States Parties to the present
Covenant recognize the right of everyone to the enjoyment of just and favorable conditions of work, which ensure, in particular: ( a) Remuneration
which provides all workers, as a minimum, with: (i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in
particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work;
The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work." Persons who
work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. This rule applies to
the School.
The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-hires. The Court finds this
argument a little inconsiderate. If an employer accords employees the same position and rank, the presumption is that these employees perform
equal work. If the employer pays one employee less than the rest, it is not for that employee to explain why he receives less or why the others
receive more. The employer has discriminated against that employee; it is for the employer to explain why the employee is treated unfairly.
In this case, the employer has failed to discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or effectively
than the local-hires. Both groups have similar functions and responsibilities, which they perform under similar working conditions. Thus the
employees are entitled to same salary for performance of equal work.

Planas Commercial vs NLRC (2005) G.R. 144619

Facts:
In September 1993, Morente, Allauigan and Ofialda and others filed a complaint for underpayment of wages, non payment of overtime pay, holiday
pay, service incentive leave pay, and premium pay for rest day and holiday and night shift differential against petitioners in the Arbitration Branch of
NLRC. It alleged that Cohu is engaged in the business of wholesale of plastic products and fruits of different kinds with more than 24 employees.
Respondents were hired on January 1990, May 1990 and July 19991 as laborers and were paid below the minimum wage for the past 3 years. They

were required to work for more than 8 hours a day and never enjoyed the minimum benefits. Petitioners filed their comment stating that the
respondents were their helpers.
The Labor Arbiter rendered a decision dismissing the money claims. Respondents filed an appeal with the NLRC where it granted the money claims.
Petitioners appealed with the CA but it was denied. It said that the company having claimed of exemption of the coverage of the minimum wage shall
have the burden of proof to the claim.
Petitioners insist that C. Planas Commercial is a retail establishment principally engaged in the sale of plastic products and fruits to the customers for
personal use, thus exempted from the application of the minimum wage law; that it merely leases and occupies a stall in the Divisoria Market and the
level of its business activity requires and sustains only less than ten employees at a time. Petitioners contend that private respondents were paid
over and above the minimum wage required for a retail establishment, thus the Labor Arbiter is correct in ruling that private respondents claim for
underpayment has no factual and legal basis. Petitioners claim that since private respondents alleged that petitioners employed 24 workers, it was
incumbent upon them to prove such allegation which private respondents failed to do.
Issue: WON petitioner is exempted from the application of minimum wage law.
Held: Petitioners have not successfully shown that they had applied for the exemption.
R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage rate of all workers and employees in the private
sector. Section 4 of the Act provides for exemption from the coverage, thus: Sec. 4. (c) Exempted from the provisions of this Act are household or
domestic helpers and persons employed in the personal service of another, including family drivers. Also, retail/service establishments regularly
employing not more than ten (10) workers may be exempted from the applicability of this Act upon application with and as determined by the
appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. Whenever an application for
exemption has been duly filed with the appropriate Regional Board, action on any complaint for alleged non-compliance with this Act shall be
deferred pending resolution of the application for exemption by the appropriate Regional Board.
In the event that applications for exemptions are not granted, employees shall receive the appropriate compensation due them as provided for by
this Act plus interest of one percent (1%) per month retroactive to the effectivity of this Act.

Pag-asa Steel Works, Inc. vs. CA Case Digest

G.R. No.166647
March 31, 2006
Facts: Petitioner Pag-Asa Steel Works, Inc. is a corporation duly organized and existing under Philippine laws and is engaged in the manufacture of
steel bars and wire rods. Pag-Asa Steel Workers Union is the duly authorized bargaining agent of the rank-and-file employees.
RTWPB of NCR issued a wage order which provided for a P 13.00 increase of the salaries receiving minimum wages. The Petitioner and the union
negotiated on the increase. Petitioner forwarded a letter to the union with the list of adjustments involving rank and file employees. In September
1999, the petitioner and union entered into an collective bargaining agreement where it provided wage adjustments namely P15, P25, P30 for three
succeeding year. On the first year, the increase provided were followed until RTWPB issued another wage order where it provided for a P25.50 per
day increase in the salary of employees receiving the minimum wage and increased the minimum wage to P223.50 per day. Petitioner paid the
P25.50 per day increase to all of its rank-and-file employees.
On November 2000, Wage Order No. NCR-08 was issued where it provided the increase of P26.50 per day. The union president asked that the
wage order be implemented where petitioner rejected the request claiming that there was no wage distortion and it was not obliged to grant the wage
increase. The union submitted the matter for voluntary arbitration where it favored the position of the company and dismissed the complaint. The
matter was elevated to CA where it favored the respondents. Hence, this petition.
Issue: Whether or not the company was obliged to grant the wage increase under Wage Order No. NCR-08 as a matter of practice.
Ruling: The Court favors the petitioner that wage increase shall not be granted by virtue of CBA or matter of practice by the company. It is submitted
that employers unless exempt are mandated to implement the said wage order but limited to those entitled thereto. There is no legal basis to
implement the same across-the-board. A perusal of the record shows that the lowest paid employee before the implementation of Wage Order #8 is
P250.00/day and none was receiving below P223.50 minimum. This could only mean that the union can no longer demand for any wage distortion
adjustment. The provision of wage order #8 and its implementing rules are very clear as to who are entitled to the P26.50/day increase, i.e., "private
sector workers and employees in the National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase
of Twenty-Six Pesos and Fifty Centavos (P26.50) per day," and since the lowest paid is P250.00/day the company is not obliged to adjust the wages
of the workers.
The provision in the CBA that "Any Wage Order to be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the
wage increase adverted above" cannot be interpreted in support of an across-the-board increase. If such were the intentions of this provision, then
the company could have simply accepted the original demand of the union for such across-the-board implementation, as set forth in their original
proposal. The fact that the company rejected this proposal can only mean that it was never its intention to agree, to such across-the-board
implementation. Wage Order No. NCR-08 clearly states that only those employees receiving salaries below the prescribed minimum wage are
entitled to the wage increase provided therein, and not all employees across-the-board as respondent Union would want petitioner to do.

Considering therefore that none of the members of respondent Union are receiving salaries below the P250.00 minimum wage, petitioner is not
obliged to grant the wage increase to them.
Moreover, to ripen into a company practice that is demandable as a matter of right, the giving of the increase should not be by reason of a strict legal
or contractual obligation, but by reason of an act of liberality on the part of the employer. Hence, even if the company continuously grants a wage
increase as mandated by a wage order or pursuant to a CBA, the same would not automatically ripen into a company practice.

Philippine Duplicators Inc. vs. NLRC

GR 110068 February, 15, 1995
FACTS:
(Note, the case was very procedurally technical, walang facts, nasa ratio na)
Case differentiates between Productivity Bonuses vs. Commissions
Productivity bonuses are generally tied to the productivity or profit generation of the employer corporation. Productivity bonuses are not directly
dependent on the extent an individual employee exerts himself. A productivity bonus is something extra for which no specific additional services are
rendered by any particular employee and hence not legally demandable, absent a contractual undertaking to pay it.
Sales commissions are intimately related to or directly proportional to the extent or energy of an employee's endeavours. Commissions are paid
upon the specific results achieved by a salesman-employee. It is a percentage of the sales closed by a salesman and operates as an integral part of
such salesman's basic pay.
ISSUE:
1 WON
The
commissions
received
by
the
salesmen
were
part
of
the
wages to be considered for their 13th month pay. - Yes
2 WON Productivity bonus shall be considered as part of wages in 13 th month pay - No
HELD:
1 The commissions were an integral part of the pay of the workers, considering that the fixed wage was only 30% of what they were normally
receiving.
2

Productivity bonuses are generally tied to the productivity, or capacity for revenue production, of a corporation; such bonuses closely
resemble profit-sharing payments and have no clear director necessary relation to the amount of work actually done by each individual
employee. More generally, a bonus is an amount granted and paid ex gratia to the employee; its payment constitutes an act of enlightened
generosity and self-interest on the part of the employer, rather than as a demandable or enforceable obligation. Since productivity bonus is
not demandable, then it cannot be considered part of basic salary when time comes to compute 13 th month pay.
Additional payments made to employees, to the extent they partake of the nature of profit-sharing payments, are properly excluded from
the ambit of the term "basic salary" for purposes of computing the 13th month pay due to employees. Such additional payments are not
"commissions" within the meaning of the second paragraph of Section 5 (a) of the Revised Guidelines Implementing 13th Month Pay.
The Supplementary Rules and Regulations Implementing P.D. No. 851 subsequently issued by former Labor Minister Ople sought to clarify
the scope of items excluded in the computation of the 13th month pay; viz.:
Sec. 4. Overtime pay, earnings and other remunerations which are not part of the basic salary shall not be included in the
computation of the 13th month pay.

Boie-Takeda Chemicals, Inc. vs. de la Serna

228 SCRA 329, Dec. 10, 1993

Facts: P.D. No. 851 provides for the Thirteen-Month Pay Law. Under Sec. 1 of said law, all employers are required to pay all their employees
receiving basic salary of not more than P 1,000.00 a month, regardless of the nature of the employment, and such should be paid on December 24
of every year. The Rules and Regulations Implementing P.D. 851 contained provisions defining 13-month pay and basic salary and the
employers exempted from giving it and to whom it is made applicable. Supplementary Rules and Regulations Implementing P.D. 851 were
subsequently issued by Minister Ople which inter alia set items of compensation not included in the computation of 13-month pay. (overtime pay,
earnings and other remunerations which are not part of basic salary shall not be included in the computation of 13-month pay). Pres. Corazon
Aquino promulgated on August 13, 1985 M.O. No. 28, containing a single provision that modifies P.D. 851 by removing the salary ceiling of P
1,000.00 a month. More than a year later, Revised Guidelines on the Implementation of the 13-month pay law was promulgated by the then Labor
Secretary Franklin Drilon, among other things, defined particularly what remunerative items were and were not included in the concept of 13-month
pay, and specifically dealt with employees who are paid a fixed or guaranteed wage plus commission or commissions were included in the
computation of 13th month pay)
A routine inspection was conducted in the premises of petitioner. Finding that petitioner had not been including the commissions earned by
its medical representatives in the computation of their 1-month pay, a Notice of Inspection Result was served on petitioner to effect restitution or
correction of the underpayment of 13-month pay for the years, 1986 to 1988 of Medical representatives. Petitioner wrote the Labor Department
contesting the Notice of Inspection Results, and expressing the view that the commission paid to its medical representatives are not to be included in
the computation of the 13-moth pay since the law and its implementing rules speak of REGULAR or BASIC salary and therefore exclude all
remunerations which are not part of the REGULAR salary. Regional Dir. Luna Piezas issued an order for the payment of underpaid 13-month pay for
the years 1986, 1987 and 1988. A motion for reconsideration was filed and the then Acting labor Secretary Dionisio de la Serna affirmed the order
with modification that the sales commission earned of medical representatives before August 13, 1989 (effectivity date of MO 28 and its
implementing guidelines) shall be excluded in the computation of the 13-month pay.
Similar routine inspection was conducted in the premises of Phil. Fuji Xerox where it was found there was underpayment of 13th month
pay since commissions were not included. In their almost identically-worded petitioner, petitioners, through common counsel, attribute grave abuse
of
discretion
to
respondent
labor
officials
Hon. Dionisio dela Serna and Undersecretary Cresenciano B. Trajano.
ISSUE:

Whether

or

not

commissions

are

included

in

the

computation

of

13-month

pay

HELD: NO. Contrary to respondents contention, M.O No. 28 did not repeal, supersede or abrogate P.D. 851. As may be gleaned from the language
of MO No. 28, it merely modified Section 1 of the decree by removing the P 1,000.00 salary ceiling. The concept of 13th Month pay as envisioned,
defined and implemented under P.D. 851 remained unaltered, and while entitlement to said benefit was no longer limited to employees receiving a
monthly basic salary of not more than P 1,000.00 said benefit was, and still is, to be computed on the basic salary of the employee-recipient as
provided under P.D. 851. Thus, the interpretation given to the term basic salary was defined in PD 851 applies equally to basic salary under M.O.
No. 28. The term basic salary is to be understood in its common, generally accepted meaning, i.e., as a rate of pay for a standard work period
exclusive of such additional payments as bonuses and overtime. In remunerative schemes consists of a fixed or guaranteed wage plus commission,
the fixed or guaranteed wage is patently the basic salary for this is what the employee receives for a standard work period. Commissions are given
for extra efforts exerted in consummating sales of other related transactions. They are, as such, additional pay, which the SC has made clear do not
from part of the basic salary.
Moreover, the Supreme Court said that, including commissions in the computation of the 13th month pay, the second paragraph of Section 5(a) of
the Revised Guidelines on the Implementation of the 13th Month Pay Law unduly expanded the concept of "basic salary" as defined in P.D. 851. It is
a fundamental rule that implementing rules cannot add to or detract from the provisions of the law it is designed to implement. Administrative
regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law they are intended to
carry into effect. They cannot widen its scope. An administrative agency cannot amend an act of Congress.
JPL MARKETING PROMOTIONS vs CA Case Digest
[G.R. No. 151966

July 8, 2005]

FACTS
JPL Marketing and Promotions is a domestic corporation engaged in the business of recruitment and placement of workers. On the other hand,
private respondents Noel Gonzales, Ramon Abesa III and Faustino Aninipot were employed by JPL as merchandisers on separate dates and
assigned at different establishments in Naga City and Daet, Camarines Norte as attendants to the display of California Marketing Corporation , one
of petitioners clients.
On 13 August 1996, JPL notified private respondents that CMC would stop its direct merchandising activity in the Bicol Region, Isabela, and
Cagayan Valley effective 15 August 1996. they were advised to wait for further notice as they would be transferred to other clients. However, on 17
October 1996, private respondents Abesa and Gonzales filed before the National Labor Relations Commission Regional Arbitration Branch (NLRC)
Sub V complaints for illegal dismissal, praying for separation pay, 13th month pay, service incentive leave pay and payment for moral damages.
Aninipot filed a similar case thereafter.

Executive Labor Arbiter Gelacio L. Rivera, Jr. dismissed the complaints for lack of merit. The Labor Arbiter found that Gonzales and
Abesa applied with and were employed by the store where they were originally assigned by JPL even before the lapse of the six (6)-month period
given by law to JPL to provide private respondents a new assignment. Thus, they may be considered to have unilaterally severed their relation with
JPL, and cannot charge JPL with illegal dismissal. The Labor Arbiter held that it was incumbent upon private respondents to wait until they were
reassigned by JPL, and if after six months they were not reassigned, they can file an action for separation pay but not for illegal dismissal. The
claims for 13th month pay and service incentive leave pay was also denied since private respondents were paid way above the applicable minimum
wage during their employment.
NLRC. agreed with the Labor Arbiters finding that when private respondents filed their complaints, the six-month period had not yet expired, and
that CMCs decision to stop its operations in the areas was beyond the control of JPL, thus, they were not illegally dismissed. However, it found that
despite JPLs effort to look for clients to which private respondents may be reassigned it was unable to do so, and hence they are entitled to
separation pay.
The Court of Appeals dismissed the petition and affirmed in toto the NLRC resolution. While conceding that there was no illegal dismissal, it
justified the award of separation pay on the grounds of equity and social justice.
Issue
Whether or not the respondents are entitled to separation pay?
Held
Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of dismissals due to any of these reasons: (a)
installation of labor saving devices; (b) redundancy; (c) retrenchment; (d) cessation of the employer's business; and (e) when the employee is
suffering from a disease and his continued employment is prohibited by law or is prejudicial to his health and to the health of his co-employees.
However, separation pay shall be allowed as a measure of social justice in those cases where the employee is validly dismissed for causes
other than serious misconduct or those reflecting on his moral character, but only when he was illegally dismissed.
In addition, Sec. 4(b), Rule I, Book VI of the Implementing Rules to Implement the Labor Code provides for the payment of separation pay
to an employee entitled to reinstatement but the establishment where he is to be reinstated has closed or has ceased operations or his present
position no longer exists at the time of reinstatement for reasons not attributable to the employer.
The common denominator of the instances where payment of separation pay is warranted is that the employee was dismissed by the
employer. In the instant case, there was no dismissal to speak of. Private respondents were simply not dismissed at all, whether legally or illegally.
What they received from JPL was not a notice of termination of employment, but a memo informing them of the termination of CMCs contract with
JPL. More importantly, they were advised that they were to be reassigned. At that time, there was no severance of employment to speak of.
Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of the operation of a business or undertaking for a period not
exceeding six (6) months, wherein an employee/employees are placed on the so-called floating status. When that floating status of an employee
lasts for more than six months, he may be considered to have been illegally dismissed from the service. Thus, he is entitled to the corresponding
benefits for his separation, and this would apply to suspension either of the entire business or of a specific component thereof.
As clearly borne out by the records of this case, private respondents sought employment from other establishments even before the expiration
of the six (6)-month period provided by law. As they admitted in their comment, all three of them applied for and were employed by another
establishment after they received the notice from JPL. JPL did not terminate their employment; they themselves severed their relations with JPL.
Thus, they are not entitled to separation pay.
Nonetheless, JPL cannot escape the payment of 13th month pay and service incentive leave pay to private respondents. Said benefits are
mandated by law and should be given to employees as a matter of right.

Honda Philippines., Inc., vs. Samahan ng Malayang Manggagawa sa Honda

G.R. No.145561 June 15, 2005
Facts: The case stems from the collective bargaining agreement between Honda and the respondent union that it granted the computation of 14th
month pay as the same as 13th month pay. Honda continues the practice of granting financial assistance covered every December each year of not
less than 100% of the basic salary. In the latter part of 1998, the parties started to re-negotiate for the fourth and fifth years of the CBA. The union
filed a notice of strike on the ground of unfair labor practice for deadlock.
DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration. The striking employees were ordered to return to
work and management to accept them back under the same terms prior to the strike staged. Honda issued a memorandum of the new computation
of the 13th month and 14th month pay to be granted to all its employees whereby the 31 long strikes shall be considered unworked days for purpose
of computing the said benefits. The amount equivalent to of the employees basic salary shall be deducted from these bonuses, with a
commitment that in the event that the strike is declared legal, Honda shall pay the amount.
The respondent union opposed the pro-rated computation of bonuses. This issue was submitted to voluntary arbitration where it ruled that the
companys implementation of the pro-rated computation is invalid.
Issue: Whether or not the pro-rated computation of the 13th and 14th month pays and other bonuses in question is valid and lawful.
Ruling: The Court ruled that the pro-rated computation is invalid.

The pro-rated computation of Honda as a company policy has not ripened into a company practice and it was the first time they implemented such
practice.
The payment of the 13th month pay in full month payment by Honda has become an established practice. The length of time where it should be
considered in practice is not being laid down by jurisprudence. The voluntary act of the employer cannot be unilaterally withdrawn without violating
Article 100 of the Labor Code.
The court also rules that the withdrawal of the benefit of paying a full month salary for 13th month pay shall constitute a violation of Article 100 of the
Labor Code