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1. Donald Kwok vs. Philippine Carpet Manufacturing Corporation April 28, 2005

Petitioner filed a complaint against the respondent corporation for the recovery of accumulated
vacation and sick leave credits before the NLRC. Petitioner clung to the verbal contract with Mr. Lim,
the President of the respondent corporation and his father-in-law for his claims. Petitioner obtained
favorable judgment. In their appeal, respondent averred that the position the petition held was not
entitled cash conversions of vacation and sick leave credits. The decision of the Labor Arbiter was
reversed. The Court of Appeals affirmed the reversed decision.
Whether or not the verbal contract in favor of petitioner is valid.
NO. It is true that for a contract to be binding on the parties thereto, it need not be in writing unless
the law requires that such contract be in some form in order that it may be valid or enforceable or that
it be executed in a certain way, in which case that requirement is absolute and independent. (Art.
1356, NCC) But the court disbelieved petitioners testimony and gave credence and probative weight
to the collective testimonies of the employees and officers of the respondent corporation, including
Mr. Lim, whom the petitioner presented as a hostile witness. Even assuming that the petitioner was
entitled of such benefits, there was no record to show the record of absences to arrive at the actual
number of leave credits. There was no conformity of such agreement with the Board and if so, such
claim was already barred by prescription under Article 291 of the Labor Code.

2. Linton Commercial Co., Inc. vs. Hellera, October 10, 2007

Facts: Claiming financial losses, Linton implemented a compressed workweek by reducing from six
to three the number of working days with the employees working on a rotation basis.
Issue: Was there an illegal reduction of work hours?
Held: In Philippine Graphic Arts, Inc. v. NLRC, the Court upheld for the validity of the reduction of
working hours, taking into consideration the following: the arrangement was temporary, it was a
more humane solution instead of a retrenchment of personnel, there was notice and consultations
with the workers and supervisors, a consensus were reached on how to deal with deteriorating
economic conditions and it was sufficiently proven that the company was suffering from losses. The
Bureau of Working Conditions of the DOLE released a bulletin which states that a reduction of the
number of regular working days is valid where the arrangement is resorted to by the employer to
prevent serious losses due to causes beyond his control, such as when there is a substantial slump in
the demand for his goods or services or when there is lack of raw materials. Although the bulletin
stands more as a set of directory guidelines than a binding set of implementing rules, it has one main
consideration, consistent with the ruling in Philippine Graphic Arts Inc., in determining the validity of

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reduction of working hours that the company was suffering from losses. A close examination of
petitioners financial reports showed that while Linton suffered from losses for that year, there
remained enough earnings to sufficiently sustain its operations. Financial losses must be shown
before a company can validly opt to reduce the work hours of its employees. However, to date, no
definite guidelines have yet been set to determine whether the alleged losses are sufficient to justify
the reduction of work hours. If the standards set in determining the justifiability of financial losses in
retrenchment (Art 283) or suspension of work (Art 286) were to be considered, Arco would fail to
meet the standards. On the one hand, Article 286 applies only when there is a bona fide suspension of
the employers operation of a business or undertaking for a period not exceeding six (6) months; but
in this case, Linton continued its business operations during the effectivity of the compressed
workweek, which was more than 6 months. On the other hand, for retrenchment to be justified, any
claim of actual or potential business losses must satisfy the following standards: (1) the losses
incurred are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3)
retrenchment is reasonably necessary and is likely tobe effective in preventing expected losses; and
(4) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are
proven by sufficient and convincing evidence. Linton failed to comply with these standards.

3. Bisig Manggagawa sa Tryco vs. NLRC, October 18, 2008

Facts: Tryco Pharma Corp. is a manufacturer of veterinary medicines. Tryco and BMT (rank-in-file
union) signed separate MOA, providing for a compressed workweek. The MOA was entered into
pursuant to DO No. 21, Series of 1990, Guidelines on the Implementation of Compressed Workweek.
As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the
regular working hours, and no overtime pay shall be due and payable to the employee for work
rendered during those hours. However, should an employee be permitted or required to work beyond
6:12 p.m., such employee shall be entitled to overtime pay. Tryco informed the BWC of the DOLE of
the implementation of a compressed workweek in the company. Meantime, Tryco received a Letter
from the Bureau of Animal Industry of the Department of Agriculture reminding it that its production
should be conducted in San Rafael, Bulacan, not in its main office in Caloocan City. The concerned
employees were directed to report at the companys plant site. BMT opposed the transfer of its
members to San Rafael, Bulacan, contending that it constitutes unfair labor practice. In protest, BMT
declared a strike, claiming that the transfer was inconvenient and amounts to ULP.
Issue: Is Tryco guilty of unair labor practice?
Held: Absent any evidence that the Bureau of Animal Industry conspired with Tryco, the allegation is
not only highly irresponsible but is grossly unfair to the government agency concerned. The transfer
of its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the
letter of the Bureau of Animal Industry, was within the scope of its inherent right to control and
manage its enterprise effectively. Managements prerogative of transferring and reassigning
employees from one area of operation to another in order to meet the requirements of the business is,
therefore, generally not constitutive of constructive dismissal. Indisputably, in the instant case, the

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transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other
privileges of the petitioners. Mere incidental inconvenience is not sufficient to warrant a claim of
constructive dismissal. Personal inconvenience or hardship that will be caused to the employee by
reason of the transfer is not a valid reason to disobey an order of transfer.Moreover, the adoption of a
compressed workweek scheme in the company will help temper any inconvenience that will be caused
the petitioners by their transfer to a farther workplace.
The transfer orders do not amount to ULP. Contrary to BMTs claim, mere transfer of its members
will not paralyze and render the union ineffective. The union was not deprived of the membership of
the petitioners whose work assignments were only transferred to another location. There was no
showing or any indication that the transfer orders were motivated by an intention to interfere with the
petitioners right to organize. The MOA is enforceable and binding against the petitioners (esp. waiver
of overtime). Where it is shown that the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as a valid and binding undertaking. Notably, the MOA
complied with the following conditions set by the DOLE, under D.O. No. 21.

4. Legend Hotel (Manila) vs. Hernani S. Realuyo, July 18, 2012

- This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of
a hotel.
- August 9, 1999: Realuyo, whose stage name was Joey R. Roa, filed a complaint for alleged
unfair labor practice, constructive illegal dismissal, and the underpayment/nonpayment of his
premium pay for holidays, separation pay, service incentive leave pay, and 13 th month pay. He
prayed for attorneys fees, moral damages of P100,000.00 and exemplary damages for
- Roa averred that he had worked as a pianist at the Legend Hotels Tanglaw Restaurant from
September 1992 with an initial rate of P400.00/night; and that it had increased to
P750.00/night. During his employment, he could not choose the time of performance, which
had been fixed from 7:00PM to 10:00pm for three to six times a week.
- July 9, 1999: the management had notified him that as a cost-cutting measure, his services as a
pianist would no longer be required effective July 30, 1999.
- In its defense, petitioner denied the existence of an employer-employee relationship with Roa,
insisting that he had been only a talent engaged to provide live music at Legend Hotels
Madison Coffee Shop for three hours/day on two days each week; and stated that the economic
crisis that had hit the country constrained management to dispense with his services.
- December 29,1999: the Labor Arbiter (LA) dismissed the complaint for lack of merit upon
finding that the parties had no employer-employee relationship, because Roa was receiving
talent fee and not salary, which was reinforced by the fact that Roa received his talent fee
nightly, unlike the regular employees of the hotel who are paid monthly.
- NLRC affirmed the LAs decision on May 31, 2001.
- CA set aside the decision of the NLRC, saying CA failed to take into consideration that in Roas
line of work, he was supervised and controlled by the hotels restaurant manager who at certain
times would require him to perform only tagalong songs or music, or wear barong tagalong to
conform with the Filipinana motif of the place and the time of his performance is fixed. As to

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the status of Roa, he is considered a regular employee of the hotel since his job was in
furtherance of the restaurant business of the hotel. Granting that Roa was initially a
contractual employee, by the sheer length of service he had rendered for the company, he had
been converted into a regular employee.
CA held that the dismissal was due to retrenchment in order to avoid or minimize business
losses, which is recognized by law under Art. 283 of the Labor Code.

- WON there was employer-employee relationship between the two, and if so,
- WON Roa was validly terminated
- YES. Employer-employee relationship existed between the parties.
o Roa was undeniably employed as a pianist of the restaurant. The hotel wielded the
power of selection at the time it entered into the service contract dated Sept. 1, 1992 with
Roa. The hotel could not seek refuge behind the service contract entered into with Roa.
It is the law that defines and governs an employment relationship, whose terms are not
restricted to those fixed in the written contract, for other factors, like the nature of the
work the employee has been called upon to perform, are also considered.
o The law affords protection to an employee, and does not countenance any attempt to
subvert its spirit and intent. Any stipulation in writing can be ignored when the
employer utilizes the stipulation to deprive the employee of his security of tenure. The
inequality that characterizes employer-employee relationship generally tips
the scales in favor of the employer, such that the employee is often scarcely
provided real and better options.
o The argument that Roa was receiving talent fee and not salary is baseless. There is no
denying that the remuneration denominated as talent fees was fixed on the basis of his
talent, skill, and the quality of music he played during the hours of his performance.
Roas remuneration, albeit denominated as talent fees, was still considered as included
in the term wage in the sense and context of the Labor Code, regardless of how
petitioner chose to designate the remuneration, as per Article 97(f) of the Labor Code.
o The power of the employer to control the work of the employee is considered the most
significant determinant of the existence of an employer-employee relationship. This is
the so-called control test, and is premised on whether the person for whom the
services are performed reserves the right to control both the end achieved and the
manner and means used to achieve that end.
o Lastly, petitioner claims that it had no power to dismiss respondent due to his not being
even subject to its Code of Discipline, and that the power to terminate the working
relationship was mutually vested in the parties, in that either party might terminate at
will, with or without cause. This claim is contrary to the records. Indeed, the
memorandum informing respondent of the discountinuance of his service because of the
financial condition of petitioner showed the latter had the power to dismiss him from
- NO. Roa was not validly terminated.
o The conclusion that Roas termination was by reason of retrenchment due to an
authorized cause under the labor Code is inevitable.
o Retrenchment is one of the authorized causes for the dismissal of employees recognized
by the Labor Code. It is a management prerogative resorted to by employers to avoid ro
to minimize business losses. On this matter, Article 283 of the Labor Code states:

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Article 283. Closure of establishment and reduction of personnel. The employer

may also terminate the employment of any employee due to the installation of
labor-saving devices, redundancy, retrenchment to prevent losses or the closing
or cessation of operation of the establishment or undertaking unless the closing is
for the purpose of circumventing the provisions of this Title, by serving a written
notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. xxx. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six
(6) months shall be considered one (1) whole year.
o Justifications for retrenchment:
a. The expected losses should be substantial and not merely de minimis in extent;
b. The substantial losses apprehended must be reasonably imminent;
c. The retrenchment must be reasonably necessary and likely to effectively prevent the
expected losses; and
d. The alleged losses, if already incurred, and the expected imminent losses sought to
be forestalled must be proved by sufficient and convincing evidence.
o In termination cases, the burden of proving that the dismissal was for a valid or
authorized cause rests upon the employer. Here, petitioner did not submit evidence of
the losses to its business operations and the economic havoc it would thereby
imminently sustain. It only claimed that Roas termination was due to its present
business/financial condition. This bare statement fell short of the norm to show a valid
retrenchment. Hence, there was no valid cause for the retrenchment of
respondent. Since the lapse of time since the retrenchment might have rendered Roas
reinstatement to his former job no longer feasible, Legend Hotel should pay him
separation pay at the rate of one month pay for every year of service computed from
September 1992 until the finality of this decision, and full backwages from the time his
compensation was withheld until the finality of this decision.

Petition denied.
5. Hilario Rada vs. NLRC, January 9, 1992

205 SCRA 69 Labor Law Labor Standards Hours of Work OT Pay of a Project Based
In 1977, Hilario Rada was contracted by Philnor Consultants and Planners, Inc as a driver. He was
assigned to a specific project in Manila. The contract he signed was for 2.3 years. His task was to drive
employees to the project from 7am to 4pm. He was allowed to bring home the company vehicle in
order to provide a timely transportation service to the other project workers. The project he was
assigned to was not completed as scheduled hence, since he has a satisfactory record, he was recontracted for an additional 10 months. After 10 months the project was not yet completed. Several
contracts thereafter were made until the project was finished in 1985.
At the completion of the project, Rada was terminated as his employment was co-terminous with the
project. He later sued Philnor for non payment of separation pay and overtime pay. He said he is

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entitled to be paid OT pay because he uses extra time to get to the project site from his home and from
the project site to his home everyday in total, he spends an average of 3 hours OT every day.
ISSUE: Whether or not Rada is entitled to separation pay and OT pay.
HELD: Separation pay NO. Overtime pay Yes.
Separation Pay
The SC ruled that Rada was a project employee whose work was coterminous with the project for
which he was hired. Project employees, as distinguished from regular or non-project employees, are
mentioned in Section 281 of the Labor Code as those where the employment has been fixed for a
specific project or undertaking the completion or termination of which has been determined at the
time of the engagement of the employee.
Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the number
of projects in which they have been employed by a particular construction company. Moreover, the
company is not required to obtain clearance from the Secretary of Labor in connection with such
OT Pay
Rada is entitled to OT pay. The fact that he picks up employees of Philnor at certain specified points
along EDSA in going to the project site and drops them off at the same points on his way back from
the field office going home to Marikina, Metro Manila is not merely incidental to Radas job as a
driver. On the contrary, said transportation arrangement had been adopted, not so much for the
convenience of the employees, but primarily for the benefit of Philnor. As embodied in Philnors
memorandum, they allowed their drivers to bring home their transport vehicles in order for them to
provide a timely transport service and to avoid delay not really so that the drivers could enjoy the
benefits of the company vehicles nor for them to save on fair.

6. Lepanto Consolidated Mining Company vs. Lepanto Local Staff Union, August 20,

*Note: this case involves interpretation of CBA.


Section3.Night Differential pay.The Company shall continue to pay nightshift differential for
work during the first and third shifts to all covered employees within the bargaining unit as follows:
For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the basic rate. For the
Third Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be 15% of the basic rate.

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However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00 p.m.),
there [will] be no night differential pay added before the overtime pay is calculated.


Section9.Longevity pay.The company shall grant longevity pay of P30.00 per month effective
July 1, 1998 and every year thereafter.

During the effectivity of the first three CBAs, petitioner paid night shift differentials to other
workers who were members of respondent for work performed beyond 3:00 p.m. Petitioner also paid
night shift differential for work beyond 3:00 p.m. during the effectivity of the 4th CBA. However,
petitioner alleges that the payment of night shift differential for work performed beyond 3:00 p.m.
during the 4th CBA was a mistake on the part of its accounting department.

Respondent Union filed a complaint with the National Conciliation and Mediation Board,
alleging that petitioner failed to pay the night shift differential and longevity pay of respondents
members as provided in the 4th CBA. Petitioner and respondent failed to amicably settle the dispute
so they agreed to submit the issue to a voluntary arbitrator (VA).

VA ruled in favor of respondent (Union) that the inclusion of paragraph 3, Section 3, Article
VIII of the 4th CBA disclosed the intent of the parties to grant night shift differential benefits to
employees who rendered work beyond the regular day shift. The Voluntary Arbitrator ruled that if the
intention were otherwise, paragraph 3 would have been deleted.

CA affirmed VA and held that petitioners act disclosed the parties intent to include employees
in the second shift in the payment of night shift differential.

The issue is whether workers are entitled to night shift differential for work performed beyond
the regular day shift, from 7:00 a.m. to 3:00 p.m.


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YES. SC affirmed CA. The first paragraph of Section 3 provides that petitioner shall continue to
pay night shift differential to workers of the first and third shifts. It does not provide that workers who
performed work beyond the second shift shall not be entitled to night shift differential. The inclusion
of the third paragraph is not intended to exclude the regular day shift workers from receiving night
shift differential for work performed beyond 3:00 p.m. It only provides that the night shift differential
pay shall be excluded in the computation of the overtime pay.
The CA correctly ruled that petitioner failed to present any convincing evidence to prove that
the payment was erroneous. In fact, the Court of Appeals found that even after the promulgation of
the Voluntary Arbitrators decision and while the case was pending appeal, petitioner still paid night
shift differential for work performed beyond 3:00 p.m. It affirms the intention of the parties to the
CBA to grant night shift differential for work performed beyond 3:00 p.m.


The terms and conditions of a collective bargaining contract constitute the law between the
parties. If the terms of the CBA are clear and have no doubt upon the intention of the contracting
parties, the literal meaning of its stipulation shall prevail.

In order to ascertain the intention of the contracting parties, the Voluntary Arbitrator shall
principally consider their contemporaneous and subsequent acts as well as their negotiating and
contractual history and evidence of past practices.

7. Auto Bus Transport Systems, Inc. vs. Antonio Bautista, May 16, 2005

458 SCRA 578 Labor Law Labor Standards Service Incentive Leave Pay Curious Animal
Antonio Bautista was employed by Auto Bus Transport Systems, Inc. in May 1995. He was assigned to
the Isabela-Manila route and he was paid by commission (7% of gross income per travel for twice a
In January 2000, while he was driving his bus he bumped another bus owned by Auto Bus. He
claimed that he bumped the he accidentally bumped the bus as he was so tired and that he has not
slept for more than 24 hours because Auto Bus required him to return to Isabela immediately after
arriving at Manila. Damages were computed and 30% or P75,551.50 of it was being charged to
Bautista. Bautista refused payment.
Auto Bus terminated Bautista after due hearing as part of Auto Bus management prerogative.
Bautista sued Auto Bus for Illegal Dismissal. The Labor Arbiter Monroe Tabingan dismissed
Bautistas petition but ruled that Bautista is entitled to P78,117.87 13 th month pay payments and
P13,788.05 for his unpaid service incentive leave pay.

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The case was appealed before the National Labor Relations Commission. NLRC modified the LAs
ruling. It deleted the award for 13th Month pay. The court of Appeals affirmed the NLRC.
Auto Bus averred that Bautista is a commissioned employee and if that is not reason enough that
Bautista is also a field personnel hence he is not entitled to a service incentive leave. They invoke:
(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
SECTION 1. Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who are
paid in a fixed amount for performing work irrespective of the time consumed in the performance
thereof; . . .
ISSUE: Whether or not Bautista is entitled to Service Incentive Leave. If he is, Whether or not the
three (3)-year prescriptive period provided under Article 291 of the Labor Code, as amended, is
applicable to respondents claim of service incentive leave pay.
HELD: Yes, Bautista is entitled to Service Incentive Leave. The Supreme Court emphasized that it
does not mean that just because an employee is paid on commission basis he is already barred to
receive service incentive leave pay.
The question actually boils down to whether or not Bautista is a field employee.
According to Article 82 of the Labor Code, field personnel shall refer to non-agricultural employees
who regularly perform their duties away from the principal place of business or branch office of the
employer and whose actual hours of work in the field cannot be determined with reasonable certainty.
As a general rule, field personnel are those whose performance of their job/service is not supervised
by the employer or his representative, the workplace being away from the principal office and whose
hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific
amount for rendering specific service or performing specific work. If required to be at specific places
at specific times, employees including drivers cannot be said to be field personnel despite the fact
that they are performing work away from the principal office of the employee.
Certainly, Bautista is not a field employee. He has a specific route to traverse as a bus driver and that
is a specific place that he needs to be at work. There are inspectors hired by Auto Bus to constantly
check him. There are inspectors in bus stops who inspects the passengers, the punched tickets, and
the driver. Therefore he is definitely supervised though he is away from the Auto Bus main office.
On the other hand, the 3 year prescriptive period ran but Bautista was able to file his suit in time
before the prescriptive period expired. It was only upon his filing of a complaint for illegal dismissal,
one month from the time of his dismissal, that Bautista demanded from his former employer
commutation of his accumulated leave credits. His cause of action to claim the payment of his
accumulated service incentive leave thus accrued from the time when his employer dismissed him and
failed to pay his accumulated leave credits.
Therefore, the prescriptive period with respect to his claim for service incentive leave pay only
commenced from the time the employer failed to compensate his accumulated service incentive leave
pay at the time of his dismissal. Since Bautista had filed his money claim after only one month from
the time of his dismissal, necessarily, his money claim was filed within the prescriptive period
provided for by Article 291 of the Labor Code.

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Definition of Service Incentive Leave

Service incentive leave is a right which accrues to every employee who has served within 12 months,
whether continuous or broken reckoned from the date the employee started working, including
authorized absences and paid regular holidays unless the working days in the establishment as a
matter of practice or policy, or that provided in the employment contracts, is less than 12 months, in
which case said period shall be considered as one year. It is also commutable to its money equivalent
if not used or exhausted at the end of the year. In other words, an employee who has served for one
year is entitled to it. He may use it as leave days or he may collect its monetary value.

8. Sentinel Security Agency, Inc. vs. NLRC. September 3, 1998


The transfer of an employee involves a lateral movement within the business or operation of the
employer, without demotion in rank, diminution of benefits or, worse, suspension of employment
even if temporary. The recall and transfer of security guards require reassignment to another post and
are not equivalent to their placement on floating status. Off-detailing security guards for a reasonable
period of six months is justified only in bona fide cases of suspension of operation, business or
The Case

This is the rationale used by the Court in dismissing the two consolidated petitions
for certiorari before us, seeking the reversal of the Decision dated August 25, 1995, and the
Resolution date October 24, 1995, both promulgated by the National Labor Relations Commission [1] in
NLRC Case No. V-0317-94 (RAB VII-01-0097-94, RAB VII-020173-94, and RAB VII-01-0133-94).
In the action for illegal dismissal and payment of salary differential, service incentive leave pay
and separation pay filed by private respondents, Labor Arbiter Dominador A. Almirante rendered a
Decision, which disposed:[2]
WHEREFORE, premises considered[,] judgment is hereby rendered ordering xxx Sentinel Security
Agency, Inc. jointly and severally with xxx Philamlife, Cebu Branch, to pay complainants the total
amount of [s]ixty [t]housand [o]ne [h]undred [t]welve [p]esos and 50/100 (P60,112.50) in the
concept of 13th month pay and service incentive leave benefits as computed by our Labor Arbitration
Associate whose computation is hereto attached and forming part thereof. [3]
On appeal, the NLRC modified the labor arbiters Decision. The dispositive portion of the NLRC
WHEREFORE, the assailed Decision is hereby MODIFIED in so far as the award of 13 th month pay for
the previous years which is hereby excluded. Further, xxx Sentinel Security Agency, Inc. is hereby
ORDERED to pay complainants separation pay at the rate of month pay for every year of service and
for both xxx Philippine American Life Insurance, Inc. and Sentinel Security Agency, Inc. and/or
Daniel Iway to pay to the [complainants] jointly and severally their backwages from January 16, 1994
to January 15, 1995 and the corresponding 13th month pay for the said year. The monetary awards

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hereby granted are broken down as follows [into separation pay, back wages, 13 th month pay and
service incentive leave pay]:
x x x x x x x x x.[5]
The challenged Resolution denied reconsideration for lack of merit.[6]
The Facts

The undisputed factual backdrop is narrated by Respondent Commission as follows: [7]

The complainants were employees of Sentinel [Security Agency, Inc. hereafter referred to as the
Agency] since March 1, 1966 in the case of Veronico Zambo; October 27, 1975 in the case of Helcias
Arroyo; September 20, 1985 in the case of Adriano Cabano; February 1, 1990 in the case of Maximo
Ortiz; and Ortiz and November 1, 1967 in the case of Rustico Andoy. They were assigned to render
guard duty at the premises of [Philippine American Life Insurance Company] at Jones Avenue, Cebu
City. On December 16, 1993 Philippine American Life Insurance Company [the Client, for brevity],
through Carlos De Pano, Jr., sent notice to all concerned that the [Agency] was again awarded the
contract of [s]ecurity [s]ervices together with a request to replace all the security guards in the
companys offices at the cities of Cebu, Bacolod, Cagayan de Oro, Dipolog and Ilagan. In compliance
therewith, [the Agency] issued on January 12, 1994, a Relief and Transfer Order replacing the
complainants as guards [of the Client] and for then to be re-assigned [to] other clients effective
January 16, 1994. As ordered, the complainants reported but were never given new assignments but
instead they were told in the vernacular, gui-ilisa mo kay mga tigulang naman mo which when
translated means, you were replace[d] because you are already old. Precisely, the complainants lost
no time but filed the subject illegal dismissal cases on January 18, January 26 and February 4, 1994
and prayed for payment of separation pay and other labor standard benefits.
[The Client and the Agency] maintained there was no dismissal on the part of the complainants,
constructive or otherwise, as they were protected by the contract of security services which allows the
recall of security guards from their assigned posts at the will of either party. It also advanced that the
complainants prematurely filed the subject cases without giving the [Agency] a chance to give them
some assignments.
On the part of [the Client], it averred further that there [was] no employer-employee relationship
between it and the complainants as the latter were merely assigned to its Cebu Branch under a job
contract; that [the Agency] ha[d] its own separate corporate personality apart from that of [the
Client]. Besides, it pointed out that the functions of the complainants in providing security services to
[the Clients] property [were] not necessary and desirable to the usual business or trade of [the Client],
as it could still operate and engage in its life insurance business without the security guards. In fine,
[the Client] maintains that the complainants have no cause of action against it.
Ruling of Respondent Commission

Respondent Commission ruled that the complainants were constructively dismissed, as the recall
of the complainants from their long time post[s] at [the premises of the Client] without any good
reason is a scheme to justify or camouflage illegal dismissal.

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It ruled Superstar Security Agency, Inc. vs. National Labor Relations Commission [8] and A Prime
Security Services, Inc. vs. national Labor Relations Commission [9] were not applicable to the case at
bar. In the former, the security guard was placed on temporary off-detail due to his poor performance
and lack of elementary courtesy and tact, and to the cost-cutting program of the agency. In the latter,
the relief of the security guard was due to his sleeping while on duty and his repeated refusal to
resume work despite notice.
In the present case, the complainants case, the complainants were told by the Agency that they
lost their assignment at the Clients premises because they were already old, and not because they had
committed any infraction or irregularity. The NLRC applied RA 7641,[10] which gives retirement
benefits of one-half month pay per year of service to retirable employees, viz.:
xxx As stated earlier xxx, the complainants were in the service of [the Client] for nearly twenty (20)
years in the cases of Helcias Arroyo and for more than twenty (20) years in the cases of Veronico
Zambo and Rustico Andoy, which long years of service [appear] on record to be unblemished. The
complainants were then confronted with an impending sudden loss of earning for while the order of
[the Agency] to immediately report for reassignment momentarily gave them hope, there was in fact
no immediate reinstatement. While it could have been prudent for the complainants to wait, they
were set unstable and were actually threatened by the statement of the personnel in charge of [the
Agency] that they were already old, that was why they were replaced.
Against these glaring facts is the new Retirement Law, R.A. 7641 which took effect on January 7, 1993
giving retirement benefits of month pay per year of service to an employee upon reaching retirement
age to be paid by the employer, in this case at quiet a sizeable amount and in not so long due time as
some of the complainants were described as already old.
As complainants were illegally dismissed, the NLRC ruled that they were entitled to the twin
remedies of back wages for one (1) year from the time of their dismissal on January 15, 1994, payable
by both the Client and the Agency, and separation pay one-half month pay for every year of service
payable only by the Agency. Reinstatement was not granted due to the resulting antipathy and
resentment among the complainants, the Agency and the Client.
Hence, this petition.[11]
The Issues

In their memoranda, the Agency poses this question:[12]

xxx [W]hether xxx Sentinel is guilty of illegal dismissal[,]
On the other hand, the Client raises the following issues:[13]
Whether xxx [the complainants] were illegally dismissed by their employer, Sentinel Security Agency,
Inc., and in holding petitioner to be equally liable therefor.
Whether xxx petitioner is jointly and severally liable with Sentinel Security Agency, Inc., in the latters
payment of backwages, 13th month pay and service incentive leave pay to its employees xxx.


13 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )

In sum, the resolution of these consolidated petitions hinges on (1) whether the complainants
were illegally dismissed, and (2) whether the Client is jointly and severally liable for their thirteenthmonth and service incentive leave pays.
The Courts Ruling

The petition is partly meritorious.

First Issue: Illegal Dismissal

The private respondents transfer, according to Respondent Commission, was affected to

circumvent the mandate of Republic Act 7641 (New Retirement Law), which by then had already
taken effect, in view of the fact that the complainants had worked for both the Client and the Agency
for 10 to 20 years and were nearing retirement age. With this premise, the NLRC concluded that the
guards were illegally dismissed. The complainants add that the findings of the Commission match the
remarks of the personnel manager of the Agency, Feliciano Marticion; that is, that they were being
replaced because they were already old. They insist that their service records are unblemished; hence,
they could not have been dismissed by reason of any just cause.
We agree that the security guards were illegally dismissed, but not for the reasons given by the
public respondent. The aforecited contentions of the NLRC are speculative and unsupported by the
evidence on record. As the solicitor general said in his Manifestation in Lieu of Comment, the relief
and transfer order was akin to placing private respondents on temporary off-detail.
Being sidelined temporarily is a standard stipulation in employment contracts, as the availability
of assignment for security guards is primarily dependent on the contracts entered into by the agency
with third parties. Most contracts for security services, as in this case, stipulate that the client may
request the replacement of the guards assigned to it. In security agency parlance, being placed off
detail or on floating status means waiting to be posted. [14] This circumstance is not equivalent to
dismissal, so long as such status does not continue beyond reasonable time. [15]
In the case at bar, the relief and transfer order per se did not sever the employment relationship
between the complainants and the Agency. Thus, despite the fact that complainants were no longer
assigned to the Client, Article 287 of the Labor Code, as amended by RA 7641, still binds the Agency to
provide them upon their reaching the retirement age of sixty to sixty-five years retirement pay or
whatever else was established in the collective bargaining agreement or in any other applicable
employment contract. On the other hand, the Client is not liable to the complainants for their
retirement pay because of the absence of an employer-employee relationship between them.
However, the Agency claims that the complainants, after being placed off-detail, abandoned their
employ. The solicitor general, siding with the Agency and the labor arbiter, contends that while
abandonment of employment is inconsistent with the filing of a complaint for illegal dismissal, such
rule is not applicable where [the complainant] expressly rejects this relief and asks for separation pay
The Court disagrees. Abandonment, as a just and valid cause for termination, requires a
deliberate and unjustified refusal of an employee to resume his work, coupled with a clear absence of
any intention of returning to his or her work. [16] That complainants did not pray for reinstatement is
not sufficient proof of abandonment. A strong indication of the intention of complainants to resume
work is their allegation that on several dates they reported to the Agency for reassignment, but were

14 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )

not given any. In fact, the contention of complainant is that the Agency constructively dismissed
them. Abandonment has recently been ruled to be incompatible with constructive dismissal. We, thus,
rule that complainants did not abandon their jobs. [17] We will now demonstrate why we believe
complainants were illegally dismissed.
In several cases, the Court has recognized the prerogative of management to transfer an employee
from one office to another within the same business establishment, as the exigency of the business
may require, provided that the said transfer does not result in a demotion in rank or a diminution in
salary, benefits and other privileges of the employee; [18] or is not unreasonable, inconvenient or
prejudicial to the latter;[19] or is not used as a subterfuge by the employer to rid himself of an
undesirable worker.[20]
A transfer means a movement (1) from one position to another of equivalent rank, level or salary,
without a break in the service; [21] and (2) from one office to another within the same business
establishment.[22] It is distinguished from a promotion in the sense that it involves a lateral change as
opposed to a scalar ascent.[23]
In this case, transfer of the complainants implied more than a relief from duty to give them time
to rest a mere changing of the guards. Rather, their transfer connoted a reshuffling or exchange of
their posts, or their reassignment to other posts, such that no security guard would be without an
However, this legally recognized concept of transfer was not implemented. The agency hired new
security guards to replace the complainants, resulting in a lack of posts to which the complainants
could have been reassigned. Thus, it refused to reassign Complainant Andoy when he reported for
duty on February 2, 4 and 7, 1994; and merely told the other complainants on various dates from
January 25 to 27, 1994 that they were already too old to be posted anywhere.
The Agency now explains that since, under the law, the Agency is given a period of not more than
six months to retain the complainants on floating status, the complaint for illegal dismissal is
premature.This contention is incorrect.
A floating status requires the dire exigency of the employers bona fide suspension of operation,
business or undertaking. In security services, this happens when the clients that do not renew their
contracts with a security agency are more than those that do and the new ones that the agency
gets. However, in the case at bar, the Agency was awarded a new contract by the Client. There was no
surplus of security guards over available assignments. If there were, it was because the Agency hired
new security guards. Thus, there was no suspension of operation, business or undertaking, bona fide
or not, that would have justified placing the complainants off-detail and making them wait for a
period of six months. If indeed they were merely transferred, there would have been no need to make
them wait for six months.
The only logical conclusion from the foregoing discussion is that the Agency illegally dismissed
the complainants. Hence, as a necessary consequence, the complainants are entitled to reinstatement
and back wages.[24] However, reinstatement is no longer feasible in this case. The Agency cannot
reassign them to the Client, as the former has recruited new security guards; the complainants, on the
other hand, refuse to accept other assignments.Verily, complainants do not pray for reinstatement; in
fact, they refused to be reinstated. Such refusal is indicative of strained relations. [25] Thus, separation
pay is awarded in lieu of reinstatement.[26]
Second Issue:
Clients Liability


15 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )

The Client did not, as it could not, illegally dismiss the complainants. Thus, it should not be held
liable for separation pay and back wages. But even if the Client is not responsible for the illegal
dismissal of the complainants, it is jointly and severally liable with the Agency for the complainants
service incentive leave pay. In Rosewood Processing, Inc. vs. National Labor Relations Commission,
the Court explained that, notwithstanding the service contract between the client and the security
agency, the two are solidarily liable for the proper wages prescribed by the Labor Code, pursuant to
Article 106, 107 and 109 thereof, which we quote hereunder:
ART. 106. Contractor or subcontractor.Whenever an employer enters into a contract with another
person for the performance of the former[s] work, the employees of the contractor and of the latter[s]
subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor
to such employees to the extent of the work performed under the contract, in the same manner and
extent that he is liable to employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of
labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he
may make appropriate distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the parties involved shall
be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.
xxx In such cases [labor-only contracting], the person or intermediary shall be considered merely as
an agent of the employer who shall be responsible to the workers in the same manner and extent as if
the latter were directly employed by him.
ART. 107. Indirect employer.The provisions of the immediately preceding Article shall likewise apply
to any person, partnership, association or corporation which, not being an employer, contracts with
an independent contractor for the performance of any work, task, job or project.
ART. 109. Solidary liability.The provisions of existing laws to the contrary notwithstanding, every
employer or indirect employer shall be held responsible with his contractor or subcontractor for any
violation of any provision of this Code. For purpose of determining the extent of their civil liability
under this Chapter, they shall be considered as direct employers.
Under these provisions, the indirect employer, who is the Client in the case at bar, is jointly and
severally liable with the contractor for the workers wages, in the same manner and extent that it is
liable to its direct employees. This liability of the Client covers the payment of the service incentive
leave pay of the complainants during the time they were posted at the Cebu branch of the Client. As
service had been rendered, the liability accrued, even if the complainants were eventually transferred
or reassigned.
The service incentive leave is expressly granted by these pertinent provisions of the Labor Code:
ART. 95. Right to service incentive leave.(a) Every employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days and those employed in establishments regularly

16 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )

employing less than ten employees or in establishments exempted from granting this benefit by the
Secretary of Labor after considering the viability or financial condition of such establishment.
(c) The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or
any court [or] admnistrative action.
Under the Implementing Rules and Regulations of the Labor Code, an unused service incentive
leave is commutable to its money equivalent, viz.:
Sec. 5. Treatment of Banefit. - The service incentive leave shall be commutable to its money
equivalent if not used or exhausted at the end of the year.
The award of the thirteenth-month pay is deleted in view of the evidence presented by the Agency
that such claim has already been paid to the complainants. Obviously then, the award of such benefit
in the dispositive portion of the assailed Decision is merely an oversight, considering that Respondent
Commission itself deleted it from the main body of the said Decision.
WHEREFORE, the petition is DISMISSED and the assailed Decision and Resolution are
hereby AFFIRMED, but the award of the thirteenth-month pay is DELETED. Costs against
Davide, Jr., (Chairman), Bellosillo, Vitug, and Quisumbing, JJ., concur.
9. JPL Marketing Promotions vs. Ca, NLRC, July 8, 2005

G.R. No. 151966

July 8, 2005



summary JPL stopped direct merchandising in employees assigned location. They were
requested to wait for further notice for new reassignment. There was no
illegal dismissal mainly because the employees were the ones who severed
ties with JPL within the 6-month period allotted to the employers to resume
work or reassign its employees pursuant to art 286 of the LC.


17 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )

facts of the case

JPL is a domestic corporation engaged in the business of recruitment and placement
of workers, while 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 JPL clients.
13 Aug 96: 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 NLRC 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.
LA Rivera dismissed complaints for lack of merit
The LA said that Gonzales and Abesa applied with another store before the
6month 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.
LA said that it was their obligatioin 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 affirmed LA but ordered Separation pay, based on their last salary rate and
counted from the first day of their employment with the respondent JPL up to the
finality of this judgment; Service Incentive Leave pay, and 13th month pay,
computed as in No.1 hereof
CA affirmed

WON private respondents are entitled to separation pay, 13th month pay and service
incentive leave pay - YES
What should be the reckoning point for computing said awards. From the time the
employees severed their ties with JPL


The employee is granted separation pay:


18 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )

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 coemployees.
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
Under Sec. 4(b), Rule I, Book VI of the Implementing Rules to Implement the
Labor Code that 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 socalled 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.
The Court is not inclined in this case to award separation pay even on the
ground of compassionate justice.
The Court of Appeals relied on the cases wherein the Court awarded separation
pay to legally dismissed employees on the grounds of equity and social

19 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )

Said cases involved employees who were actually dismissed by their

employers, whether for cause or not. Clearly, the principle applies only
when the employee is dismissed by the employer, which is not the

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.
They were not given their 13th month pay and service incentive leave pay
while they were under the employ of JPL. Instead, JPL provided salaries which
were over and above the minimum wage.
The Court rules that the difference between the minimum wage and the actual
salary received by private respondents cannot be deemed as their 13th month pay
and service incentive leave pay as such difference is not equivalent to or of
the same import as the said benefits contemplated by law.
The computation for both benefits should only be up to 15 August 1996,
or the last day that private respondents worked for JPL.
To extend the period to the date of finality of the NLRC resolution would
negate the absence of illegal dismissal, or to be more precise, the want of
dismissal in this case. Besides, it would be unfair to require JPL to pay
private respondents the said benefits beyond 15 August 1996 when
they did not render any service to JPL beyond that date.
National Waterworks and Sewerage Authority vs. NWSA
Consolidated Union, August 31, 1964

FACTS: Petitioner National Waterworks & Sewerage Authority is a government-owned

and controlled corporation created under Republic Act No. 1383, while respondent
NWSA Consolidated Unions are various labor organizations composed of laborers and
employees of the NAWASA. The other respondents are intervenors Jesus Centeno, et al.,
hereinafter referred to as intervenors.
The Court of Industrial Relations (now NLRC) conducted a hearing on the controversy
then existing between petitioner and respondent unions specifically the implementation
of the 40-Hour Week Law (Republic Act No. 1880)
Respondent intervenors filed a petition in intervention on the issue of additional
compensation for night work.
The court ruled that The NAWASA is an agency not performing governmental
functions and, therefore, is liable to pay additional compensation for work on Sundays
and legal holidays conformably to Commonwealth Act No. 444, known as the EightHour Labor Law, even if said days should be within the staggered five-work days
authorized by the President; the intervenors do not fall within the category of
managerial employees as contemplated in Republic Act 2377 and so are not exempt
from the coverage of the Eight-Hour Labor Law

20 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )

ISSUE: Whether the intervenors are managerial employees within the meaning of
Republic Act 2377 and, therefore, not entitled to the benefits of Commonwealth Act No.
444, as amended;
Section 2 of Republic Act 2377 provides.
Sec. 2.This Act shall apply to all persons employed in any industry or occupation,
whether public or private, with the exception of farm laborers, laborers who prefer to be
paid on piece work basis, managerial employees outside sales personnel, domestic
servants persons in the personal service of another and members of the family of the
employer working for him.
The term managerial employee in this Act shall mean either (a) any person whose
primary duty consists of the management of the establishment in which he is employed
or of a customarily recognized department or subdivision thereof, or (b) any officer or
member of the managerial staff.
One of the distinguishing characteristics by which a managerial employee may be known
as expressed in the explanatory note of Republic Act No. 2377 is that he is not subject to
the rigid observance of regular office hours. The true worth of his service does not
depend so much on the time he spends in office but more on the results he
accomplishes. In fact, he is free to go out of office anytime.
Employees who have little freedom of action and whose main function is merely to
carry out the companys orders, plans and policies, are not managerial employees and
hence are covered by Commonwealth Act No. 444.
The philosophy behind the exemption of managerial employees from the 8-Hour Labor
Law is that such workers are not usually employed for every hour of work but their
compensation is determined considering their special training, experience or knowledge
which requires the exercise of discretion and independent judgment, or perform work
related to management policies or general business operations along specialized or
technical lines. For these workers it is not feasible to provide a fixed hourly rate of pay
or maximum hours of labor.
The intervenors herein are holding position of responsibility. One of them is the
Secretary of the Board of Directors. Another is the private secretary of the general
manager. Another is a public relations officer, and many chiefs of divisions or sections
and others are supervisors and overseers. Respondent court, however, after examining
carefully their respective functions, duties and responsibilities found that their primary
duties do not bear any direct relation with the management of the NAWASA, nor do
they participate in the formulation of its policies nor in the hiring and firing of its
employees. The chiefs of divisions and sections are given ready policies to execute and
standard practices to observe for their execution. Hence, it concludes, they have little
freedom of action, as their main function is merely to carry out the companys orders,
plans and policies.

11. Stolt-Nielsen Marine Service vs. NLRC, July 11, 1996


21 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )


Before us is a special civil action for certiorari filed by the petitioner seeking to
annul the decision of the labor arbiter and the resolution of the National Labor
Relations Commission (NLRC) (Third Division, Quezon City) finding that petitioner
illegally dismissed private respondent Renato Siojo from his employment. The labor
arbiter ordered petitioner to pay Siojo the unexpired portion of his contract equivalent
to three months salaries and attorneys fees. On appeal, the NLRC affirmed the decision
of the labor arbiter and later dismissed petitioners motion for reconsideration.
The relevant facts are as follows:
Sometime in January 1994, private respondent Renato Siojo was hired as a Second
Officer of Stolt Falcon, a vessel of petitioner Stolt-Nielsen Marine Services, Inc., for a
period of nine months with a basic salary of US$1,024.00. He boarded the vessel on
February 22, 1994, and immediately commenced to discharge his duties and
responsibilities as Second Officer. After working for just two months, however, he was
sent home and it was only upon his arrival in Manila that he learned of the reason for
his termination.
For its part, petitioner claimed that after a month on board the Stolt Falcon, Siojo
started committing acts of gross insubordination towards his superiors by refusing to
communicate with them with regard to navigation, safety, and cargo. He also allegedly
failed to acknowledge or relay to the relieving personnel/officer any bride night order
and wilfully refused to take part in cargo operations. Furthermore, on at least three
occasions, he refused to wear his safety hat during mooring and unmooring, in violation
of the companys safety procedures.
It was also alleged that Siojo refused to follow instructions given by the Chief Officer
regarding cargo operations and did not read the Cargo Safety Data Sheets, such that , on
one occasion, he blew the lines against a closed shore connection valve resulting in the
spillage of 100 litters of cargo into the deck air compressor tank.
Thus, on March 28, 1994, Siojo was summoned to explain his attitude to the master
of the vessel. He, however, allegedly became very agitated and rude, stating that he
should not be made to sign any statement. Convinced that Siojos acts of insubordination
and hostile attitude were prejudicial to the safety and operations of the vessel, and
finding that he failed to perform his duty as deck officer as confirmed by his
unsatisfactory ratings, his superiors recommended his discharge.
On the other hand, Siojo insisted that all the acts imputed to him were fabricated by
petitioner in order to avoid its liability for his illegal dismissal. In support of his
allegations, Siojo submitted photocopies of the ships logbook for the period March 25 to
April 11, 1994, showing that there was no report of any offense or violation of company
rules he had supposedly committed. He pointed out that the logbook had no entries of
the infractions he allegedly committed on March 27 and 28, 1994, respectively.
On June 21, 1996, Labor Arbiter Manuel Caday ruled that Siojo was dismissed
without just cause and without being accorded due process. The dispositive portion of
the decision reads:

22 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )

WHEREFORE, premises considered, judgment is hereby rendered declaring the

dismissal of the complainant illegal and ordering respondent Stolt Nielsen Marine
Services, Inc. to pay the corresponding salaries for the unexpired portion of his contract
but not exceeding the equivalent of three (3) months salaries or in the amount of
$3,072.00 which under the current peso dollar exchange rate is equivalent to
For having been compelled to hire services of counsel to prosecute his valid and just
claims, the respondent is further ordered to pay the complainant (sic), the equivalent of
10% of the recoverable award in this case.
All other claims are hereby dismissed for lack of merit.
Aggrieved by the labor arbiters decision, petitioner appealed to the NLRC. The latter
denied the appeal for lack of merit and affirmed the decision of the labor arbiter. The
NLRC likewise denied petitioners motion for reconsideration.
Hence, this petition for certiorari.
Petitioner claims that the labor arbiter and the NLRC committed grave abuse of
discretion in not considering its evidence and in finding that Siojo was illegally
On the labor arbiters and NLRCs appreciation of the facts, it is worth reiterating the
well-entrenched rule that when the conclusions of the labor arbiter are sufficiently
corroborated by the evidence on record, the same should be respected by appellate
tribunals since he is in a better position to assess and evaluate the credibility of the
contending parties.[2] Moreover, it should be noted that factual issues are not a proper
subject for certiorari, as the power of the Supreme Court to review labor cases is limited
to the issue of jurisdiction and grave abuse of discretion.[3]
In the case at bar, the findings of the labor arbiter Siojo was dismissed without just
cause and without being accorded due process is supported by the facts and evidence on
record. In support of his denial of the infractions he allegedly committed, Siojo
presented in evidence photocopies of the ships official logbook entries for the period
March 25 to April 11, 1994. Such entries failed to reflect any of the infractions allegedly
committed by Siojo; neither did they contain any statement regarding the investigation
supposedly conducted on board the vessel.
Petitioners evidence, on the other hand, consisting of the notice of investigation and
notice of termination which were authenticated by the Honorary Consulate General of
the Philippines in Rotterdam, Netherlands, appear to be irrelevant. The date of the
authentication appeared as 3/5/94 which the labor arbiter read as March 5, 1994. He
correctly disregarded such evidence since it is obvious that said notices were
authenticated even before the dates of the alleged infractions, that is, from March 26 to
28, 1994.
Petitioner explained that the date 3/5/94 actualy stands for May 3, 1994, as it is
customary in European countries to write dates in numbers with the first digit

23 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )

representing the day and the second digit, the month. In any case, the Philippine Consul
General in Rotterdam would not have authenticated the documents if they were indeed
anomalous or irregular.
On this point, it should be observed that the entries in official records made in the
performance of his duty by a public officer of the Philippines, or by a person in the
performance of a duty specially enjoined by law, are prima facie evidence of the facts
therein stated. This means that such evidence is satisfactory only if they are
uncontradicted by contrary evidence. In the case at bar, the employee refuted the
authenticity of the notices of investigation and termination, presenting for his part
photocopies of certain pages of the vessels logbook showing that there was, in fact, no
record of the violations he was accused of.
Furthermore, the labor arbiters finding that 3/5/94 meant March 5, 1994, not May
3, 1994, is logical since the documents were authenticated by Philippine consular
officials whose customary manner of writing dates in numbers is by making the first
digit represent the month, the second digit the day, and the last digits the year. Second,
petitioner could have presented other evidence to support its allegation that the
documents were indeed authenticated on May 3, 1994, but it did not. It is a basic rule in
evidence that each party must prove his affirmative allegation. [4] While technical rules
are not strictly followed in the NLRC, this does not mean that the rules on proving
allegations are entirely dispensed with. Bare allegations are not enough; these must be
supported by substantial evidence at the very least.
Petitioner further asserts that even assuming that Siojo was not afforded the
opportunity to explain his side, his discharge was not thereby rendered illegal since
there was just cause for his removal, that is, gross insubordination. In support of this
argument, petitioner relies on the ruling in Wenphil Corp. vs. NLRC[5], as reiterated
in Cathedral School of Technology vs. NLRC,[6] where it was held that an employee who
was dismissed for just cause but was not given an notice and hearing is not entitled to
reinstatement and back wages. In such case, the employer should be made to pay an
indemnity for his failure to observe the requirements of due process.
The rule is well established that in termination cases, the burden of proving just and
valid cause for dismissing an employee rests on the employer and his failure to do so
shall result in a finding that the dismissal is unjustified. [7] In the present case, petitioner
failed to prove by substantial evidence that Siojo indeed committed acts of
insubordination which would warrant his dismissal. Its reliance on Wenphilis, therefore,
misplaced since in that case, there was just cause for the employees dismissal.
Article 277 of the Labor Code provides, inter alia:
(a) xxx xxx xxx"
"(b) Subject to the constitutional right of workers to security of tenure and their
right to be protected against dismissal except for a just and authorized cause
and notice under Article 283 of this Code, the employer shall furnish the
worker whose employment is sought to be terminated a written notice
containing a statement of causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with assistance of his

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representative if he so desires in accordance with company rules and

regulations promulgated pursuant to guidelines set by the Department of
Labor and Employment. xxx
In particular, Rule XXIII , Book V of the Omnibus Rules Implementing the Labor
Code states:
Section 2. Standards of due process: requirements of notice. In all cases of termination
of employment, the following standards of due process shall be substantially observed:
I. For termination of employment based on just causes as defined in Article 282 of the
(a) A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or rebut
the evidence presented against him; and
(c) A written notice of termination served on the employee indicating that
upon due consideration of all the circumstances, grounds have been
established to justify his termination.
xxx xxx xxx."
In sum, to effect a completely valid and unassailable dismissal, the employer must
show not only sufficient ground therefore, but must also prove that procedural due
process had been observed by giving the employee two notices. [8] In this, petitioner was
remiss, hence, it should suffer the consequences.
DISMISSED. Accordingly, the decision of the labor arbiter dated June 21, 1996, and the
resolution of the NLRC dated November 14, 1996, are hereby AFFIRMED with the
MODIFICATION that petitioner is ordered to pay private respondent Siojo his salary for
the entire unexpired portion of the employment contract, that is, one thousand twentyfour US dollars ($1,024.00) multiplied by seven months, for a total of seven thousand
one hundred sixty-eight US dollars (US$7,168.00), or its equivalent in Philippine pesos
plus interest and attorneys fees. No pronouncement as to costs.

12.Abduljuahid R. Pigcaulan vs. Security and Credit Investigation,

January 16, 2012


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Canoy and Pigcaulan were both employed by SCII as security guards and were
assigned to SCIIs different clients. Subsequently, however, Canoy and Pigcaulan filed
with the Labor Arbiter separate complaints for underpayment of salaries and nonpayment of overtime, holiday, rest day, service incentive leave and 13th month
pays. Respondents, however, maintained that Canoy and Pigcaulan were paid their just
salaries and other benefits under the law; that the salaries they received were above the
statutory minimum wage and the rates provided by the Philippine Association of
Detective and Protective Agency Operators (PADPAO) for security guards; that their
holiday pay were already included in the computation of their monthly salaries; that
they were paid additional premium of 30% in addition to their basic salary whenever
they were required to work on Sundays and 200% of their salary for work done on
holidays; and, that Canoy and Pigcaulan were paid the corresponding 13 th month pay for
the years 1998 and 1999. Labor arbiter favored to the Petitioner and NLRC affirmed the
decision of the labor arbiter. Respondent appeal to the Court of Appeals set aside the
ruling of the NLRC and Labor Arbiter. Hence, the present Petition for Review
on Certiorari.

I. The Honorable Court of Appeals erred when it dismissed the

complaint on mere alleged failure of the Labor Arbiter and the NLRC to
observe the prescribed form of decision, instead of remanding the case for
reformation of the decision to include the desired detailed computation.
II. The Honorable Court of Appeals erred when it [made]
complainants suffer the consequences of the alleged non-observance by
the Labor Arbiter and NLRC of the prescribed forms of decisions
considering that they have complied with all needful acts required to
support their claims.
III. The Honorable Court of Appeals erred when it dismissed the
complaint allegedly due to absence of legal and factual [bases] despite
attendance of substantial evidence in the records.

The Verification and Certification of Non-Forum Shopping attached to the
petition was executed by Pigcaulan alone, it was plainly and particularly indicated under
the name of the lawyer who prepared the same, Atty. Josefel P. Grageda, that he is
the Counsel for Petitioner Adbuljuahid Pigcaulan only. In view of these, there is
therefore, no doubt, that the petition was brought only on behalf of Pigcaulan. Since no
appeal from the CA Decision was brought by Canoy, same has already become final and
executory as to him. Canoy failed to show any reasonable cause for his failure to join
Pigcaulan to personally sign the Certification of Non-Forum Shopping. It is his duty, as
a litigant, to be prudent in pursuing his claims against SCII, especially so, if he was
indeed suffering from financial distress.
The Labor Arbiter and the NLRC erred in this regard. The handwritten itemized

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computations are self-serving, unreliable and unsubstantial evidence to sustain the

grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated
as they are, there is no way of verifying the truth of the handwritten entries stated
therein. Written only in pieces of paper and solely prepared by Canoy and Pigcaulan,
these representative daily time records, as termed by the Labor Arbiter, can hardly be
considered as competent evidence to be used as basis to prove that the two were
underpaid of their salaries. We find nothingcontention that he had rendered service
beyond eight hours to entitle him to overtime pay and during Sundays to entitle him to
restday pay. Hence, in the absence of any in the records which could substantially
support Pigcaulans concrete proof that additional service beyond the normal working
hours and days had indeed been rendered, we cannot affirm the grant of overtime pay to
Pigcaulan is entitled to holiday pay, service incentive leave pay and proportionate
13th month pay for year 2000. Article 94 of the Labor Code provides that Every worker
shall be paid his regular daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers. While Article 95 of the
Labor Code provides Every employee who has rendered at least one year of service shall
be entitled to a yearly service incentive of five days with pay. Hence for he rendered
service for more than a year already. Furthermore, under Presidential Decree No. 851,
he should be paid his 13th month pay. As employer, SCII has the burden of proving
that it has paid these benefits to its employees. The CA is not correct in dismissing
Pigcaulans claims in its entirety.
Consistent with the rule that all money claims arising from an employeremployee relationship shall be filed within three years from the time the cause of action
accrued,[34] Pigcaulan can only demand the amounts due him for the period within three
years preceding the filing of the complaint in 2000. Furthermore, since the records are
insufficient to use as bases to properly compute Pigcaulans claims, the case should be
remanded to the Labor Arbiter for a detailed computation of the monetary benefits due
to him.
13.Cebu Institute of Technology vs. Hon. Blass Ople, December 18, 1987

A case was filed against CIT by, Panfilo Canete, et al., teachers of CIT, for non-payment
of: a) cost of living allowances (COLA) under Pres. Dec. Nos. 525, 1123, 1614, 1678 and
1713, b) thirteenth (13th) month pay differentials and c) service incentive leave. CIT
maintained that it had paid the allowances mandated by various decrees but the same
had been integrated in the teacher's hourly rate. It alleged that the payment of COLA by
way of salary increases is in line with Pres. Dec. No. 451. It also claimed in its position
paper that it had paid thirteenth month pay to its employees and that it was exempt
from the payment of service incentive leave to its teachers who were employed on
contract basis. Minister of Labor and Employment issued the assailed Order and held
that the basic hourly rate designated in the Teachers' Program is regarded as the basic

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hourly rate of teachers exclusive of the COLA, and that COLA should not be taken from
the 60% incremental proceeds of the approved increase in tuition fee.
In a nutshell, the present controversy was precipitated by the claims of some school
personnel for allowances and other benefits and the refusal of the private schools
concerned to pay said allowances and benefits on the ground that said items should be
deemed included in the salary increases they had paid out of the 60% portion of the
proceeds from tuition fee increases provided for in section 3 (a) of Pres. Decree No. 451.

Petitioner assails the aforesaid Order in this Special Civil Action of certiorari with
Preliminary Injunction and/or Restraining Order. The Court issued a Temporary
Restraining Order on December 7, 1981 against the enforcement of the questioned
Order of the Minister of Labor and Employment.

Whether or not allowances and other fringe benefits of employees may be charged
against the 60% portion of the incremental proceeds provided for in sec. 3(a) of Pres.
Dec. No. 451.


This Court has consistently held, beginning with the University of the East case, that if
the schools have no resources other than those derived from tuition fee increases,
allowances and benefits should be charged against the proceeds of tuition fee increases
which the law allows for return on investments under section 3(a) of Pres. Dec. No. 451,
therefore, not against the 60% portion allocated for increases in salaries and wages.

In University of Pangasinan Faculty Union v. University of Pangasinan, supra:

... The sixty (60%) percent incremental proceeds from the tuition increase are to be
devoted entirely to wage or salary increases which means increases in basic salary.
The law cannot be construed to include allowances which are benefits over and above
the basic salaries of the employees. To charge such benefits to the 60% incremental
proceeds would be to reduce the increase in basic salary provided by law, an increase
intended also to help the teachers and other workers tide themselves and their families
over these difficult economic times.

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While coming to the aid of the private school system by simplifying the procedure for
increasing tuition fees, the Decree imposes as a condition for the approval of any such
increase in fees, the allocation of 60% of the incremental proceeds thereof, to increases
in salaries or wages of school personnel. This condition makes for a quid pro quo of the
approval of any tuition fee hike by a school, thereby assuring the school personnel
concerned, of a share in its proceeds. The condition having been imposed to attain one
of the main objectives of the Decree, which is to help the school personnel cope with the
increasing costs of living, the same cannot be interpreted in a sense that would diminish
the benefit granted said personnel.

14.CBTC Employees Union vs. The Honorable Jacobo C. Clave, January

7, 1986


Respondent: THE HONORABLE JACOBO C. CLAVE, Presidential Executive Assistant,
Ponente: J. DE LA FUENTE
Facts: Petitioner Commercial Bank and Trust Company Employees' Union (CBTC)
lodged a complaint with the Department of Labor, against private respondent bank
(Comtrust) for non-payment of the holiday pay benefits provided for under Article 95
(now Article 94) of the Labor Code.
Failing to arrive at an amicable settlement at conciliation level, the parties opted
to submit their dispute for voluntary arbitration. On 22 April 1976, the Arbitrator
handed down an award on the dispute in favor of petitioner union. The next day, 23
April 1976, the Department of Labor released Policy Instructions No. 9, a policy
regarding the implementation of the ten (10) paid legal holidays. Said bank interposed
an appeal to the National Labor Relations Commission (NLRC), contending that the
Arbitrator demonstrated gross incompetence and/or grave abuse of discretion when he
failed to apply Policy Instructions No. 9. This appeal was dismissed on 16 August 1976.
Private respondent then appealed to the Secretary of Labor. On 30 June 1977, the Acting
Secretary of Labor reversed the NLRC decision. On the principal issue of holiday pay,
the Acting Secretary, guided by Policy Instructions No. 9, applied the same
retrospectively, among other things.

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Issue: Whether or not the monthly pay of the covered employees already includes what
Article 94 of the Labor Code requires as regular holiday pay benefit in the amount of his
regular daily wage.
Held: In excluding the union members the benefits of the holiday pay law, public
respondent predicated his ruling on Section 2, Rule IV, Book III of the Rules to
implement Article 94 of the Labor Code promulgated by the then Secretary of Labor and
Policy Instructions No. 9. In Insular Bank of Asia and America Employees' Union
(IBAAEU) vs. Inciong, this Court's Second Division, speaking through former Justice
Makasiar, expressed the view and declared that the section and interpretative bulletin
are null and void, having been promulgated by the then Secretary of Labor in excess of
his rule-making authority. The questioned Section 2, Rule IV, Book III of the Integrated
Rules and the Secretary's Policy Instruction No. 9 add another excluded group, namely,
'employees who are uniformly paid by the month'. While the additional exclusion is only
in the form of a presumption that all monthly paid employees have already been paid
holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is
to be valid. An administrative interpretation which diminishes the benefits of labor
more than what the statute delimits or withholds is obviously ultra vires. Ruled in favor
of the petitioners. Presidential Executive Assistant and the Acting Secretary of labor are
set aside, and the award of the Arbitrator reinstated.

15.Asian Transmission Corporation vs. The Hon. Court of Appeals,

March 15, 2004

The Department of Labor and Employment (DOLE), through Undersecretary
Cresenciano B. Trajano, issued an Explanatory Bulletin, wherein it clarified, that
employees are entitled to 200% of their basic wage, which, apart from being Good
Friday, and, therefore, a legal holiday, is also Araw ng Kagitingan, which is also a legal
holiday, even if unworked. Despite the explanatory bulletin, petitioner Asian
Transmission Corporation opted to pay its daily paid employees only 100% of their basic
pay. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested. In
accordance with Step 6 of the grievance procedure of the Collective Bargaining
Agreement existing between petitioner and BATLU, the controversy was submitted for
voluntary arbitration. The Office of the Voluntary Arbitrator rendered a decision
directing petitioner to pay its covered employees "200% and not just 100% of their
regular daily wages for the unworked.
In deciding in favor of the Bisig ng Asian Transmission Labor Union (BATLU),
the Voluntary Arbitrator held that Article 94 of the Labor Code provides for holiday pay
for every regular holiday, the computation of which is determined by a legal formula
which is not changed by the fact that there are two holidays falling on one day; and that
that the law, as amended, enumerates 12 regular holidays for every year, and should not

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be interpreted as authorizing a reduction to nine the number of paid regular holidays

"just because April 9 (Araw ng Kagitingan) in certain years, is also Holy Friday or
Maundy Thursday."
The Court of Appeals upheld the findings of the Voluntary Arbitrator, holding
that the Collective Bargaining Agreement between petitioner and BATLU, the law
governing the relations between them, clearly recognizes their intent to consider Araw
ng Kagitingan and Maundy Thursday, on whatever date they may fall in any calendar
year, as paid legal holidays during the effectivity of the CBA and that "there is no
condition, qualification or exception for any variance from the clear intent that all
holidays shall be compensated.
The Court of Appeals further held that "in the absence of an explicit provision in
law which provides for [a] reduction of holiday pay if two holidays happen to fall on the
same day, any doubt in the interpretation and implementation of the Labor Code
provisions on holiday pay must be resolved in favor of labor."
Hence, this petition.
whether or not daily-paid employees are entitled to be paid for two regular
holidays which fall on the same day
Holiday pay is a legislated benefit enacted as part of the Constitutional
imperative that the State shall afford protection to labor. Its purpose is not merely "to
prevent diminution of the monthly income of the workers on account of work
interruptions. In other words, although the worker is forced to take a rest, he earns what
he should earn, that is, his holiday pay. It is also intended to enable the worker to
participate in the national celebrations held during the days identified as with great
historical and cultural significance.
Independence Day (June 12), Araw ng Kagitingan (April 9),National Heroes Day
(last Sunday of August), Bonifacio Day(November 30) and Rizal Day (December 30)
were declared national holidays to afford Filipinos with a recurring opportunity to
commemorate the heroism of the Filipino people, promote national identity, and deepen
the spirit of patriotism. Labor Day (May 1) is a day traditionally reserved to celebrate the
contributions of the working class to the development of the nation, while the religious
holidays designated in Executive Order No. 203 allow the worker to celebrate his faith
with his family.
As reflected above, Art. 94 of the Labor Code, as amended, afford a worker the
enjoyment of 12 paid regular holidays. The provision is mandatory, regardless of
whether an employee is paid on a monthly or daily basis.
Since a worker is entitled to the enjoyment of 12 paid regular holidays, the fact that two
holidays fall on the same date should not operate to reduce to 11 the 12 holiday pay
benefits a worker is entitled to receive.
It is elementary, under the rules of statutory construction, that when the
language of the law is clear and unequivocal, the law must be taken to mean exactly
what it says. In the case at bar, there is nothing in the law which provides or indicates
that the entitlement to 12 days of holiday pay shall be reduced to 11 when two holidays
fall on the same day.

31 | L a b o r L a w 1 C a s e D i g e s t ( 4 t h B A T C H )

In any event, Art. 4 of the Labor Code provide that all doubts in the
implementation and interpretation of its provisions, including its implementing rules
and regulations, shall be resolved in favor of labor. For the working mans welfare
should be the primordial and paramount consideration. Moreover, Sec. 11, Rule IV,
Book III of the Omnibus Rules to Implement the Labor Code provides that "Nothing in
the law or the rules shall justify an employer in withdrawing or reducing any benefits,
supplements or payments for unworked regular holidays as provided in existing
individual or collective agreement or employer practice or policy. From the pertinent
provisions of the CBA entered into by the parties, petitioner had obligated itself to pay
for the legal holidays as required by law.