(Labor Law Rev Digests) (Batch 1)

Labor Law Review |Sobrevinas | August December 2014|Page
APEX MINING CO. v. NLRC

22 April 1991
Justice Gancayco
Lindain
SUMMARY: Sinclitica Candido was employed by Apex Mining

Company to perform laundry services at its staff house. On
December 18, 1987, while she was attending to her assigned task
and she was hanging her laundry, she accidentally slipped and hit
her back on a stone. Candidos immediate supervisor offered her
5,000 pesos to quit her job, but she refused the offer. She was
subsequently dismissed. Candido filed a request for assistance with
the DOLE. The Supreme Court said that Candido is not a house
helper or domestic servant under Rule XIII, Section 1 (b), Book 3
of the Labor Code. She was an employee of the company entitled
to the privileges of a regular employee.
DOCTRINE: The criteria is the personal comfort and enjoyment of

the family of the employer in the home of said employer. While it
may be true that the nature of the work of a househelper, domestic
servant or laundrywoman in a home or in a company staffhouse
may be similar in nature, the difference in their circumstances is
that in the former instance they are actually serving the family
while in the latter case, whether it is a corporation or a single
proprietorship engaged in business or industry or any other
agricultural or similar pursuit, service is being rendered in the
staffhouses or within the premises of the business of the employer.
In such instance, they are employees of the company or employer
in the business concerned entitled to the privileges of a regular
employee.
staff house located at Masara, Davao Del Norte. In the beginning,

she was paid on a piece rate basis. Subsequently, she was paid
on a monthly basis.
On December 1987, while she was hanging her laundry,
she accidentally slipped and hit her back on a stone. She
reported the incident to her immediate supervisor and to the
personnel officer. CANDIDO was permitted to go on leave for
medication. The Immediate supervisor offered CANDIDO 5,000
pesos to persuade her to quit her job. CANDIDO refused the offer.
Apex Mining did not allow her to return to work. She was
dismissed in February 1988. CANDIDO filed a request for
assistance with DOLE. The labor arbiter (LA) required the two
parties to submit a position paper.
LA DECISION: Ruled in favor of CANDIDO. (Asked Apex to pay
salary differential, emergency living allowance, 13 th month pay
differential, separation pay one month for every year of service
from 1973 to 1988.)
NLRC DECISION: Affirmed LA ruling.
ISSUE: Is the househelper in the staff houses of an industrial
company a domestic helper or a regular employee of the said
firm? REGULAR EMPLOYEE
RATIO:
1. The definition under Rule XIII, Section 1(b), Book 3 1 of the
Labor Code does not include househelp or laundrywomen
working in staffhouses of a company, like CANDIDO who attends
to the needs of the companys guests. Also, the definition, by the
same token, does not include the driver, houseboy, or gardener
exclusively working in the company, the staffhouses and its
premises.
1 The term "househelper" as used herein is synonymous to the term "domestic
FACTS:
Sinclitica Candido (CANDIDO) was employed (May 1973)
by Apex Mining Company to perform laundry services at Apexs
servant" and shall refer to any person, whether male or female, who renders
services in and about the employer's home and which services are usually
necessary or desirable for the maintenance and enjoyment thereof, and ministers
exclusively to the personal comfort and enjoyment of the employer's family.

The said definition contemplates such househelper or
domestic servant who is employed in the employers house to
minister exclusively to the personal comfort and enjoyment of
the employers family.
The criterion is the personal comfort and enjoyment of the
family of the employer in the home of said employer. While it
may be true that the nature of the work of a househelper,
domestic servant or laundrywoman in a home or in a company
staffhouse may be similar in nature, the difference in their
circumstances is that in the former instance they are actually
serving the family while in the latter case, whether it is a
corporation or a single proprietorship engaged in business or
industry, service is being rendered in the staffhouses or within
the premises of the business of the employer. In such instance,
they are employees of the company or employer in the business
concerned entitled to the privileges of a regular employee.
2. The mere fact that the househelper or domestic servant is
working within the premises of the business of the employer and
in relation to or in connection with its business, as in its
staffhouses for its guest, warrants the conclusion that such
househelper or domestic servant is and should be considered as
a regular employee of the employer and not as a mere family
househelper or domestic servant as contemplated in Rule XIII,
Section l(b), Book 3 of the Labor Code, as amended.
RULING: WHEREFORE, the petition is DISMISSED and the
appealed decision and resolution of public respondent NLRC are
hereby AFFIRMED. No pronouncement as to costs.
Remington Industrial Sales

Corporation v Erlinda
Castaeda
November 20 2006
Ponente: Puno, J.
Leigh Siazon
SUMMARY: Castaeda alleged that she was illegally

dismissed as a cook. Remington alleged that she was not a
regular employee: she only cooked meals for the other
employees, and she was actually the domestic helper of
Antonio Tan (managing director). SC ruled that she was an
employee who was illegally dismissed. That she works
within company premises, and that she does not cater
exclusively to the personal comfort of Tan, is reflective of
the existence of the Remingtons right of control over her
functions, which is the primary indicator of the existence of
an employer-employee relationship.
DOCTRINE: The mere fact that the househelper or
domestic servant is working within the premises of the
business of the employer and in relation to or in connection
with its business, as in its staffhouses for its guest or even
for its officers and employees, warrants the conclusion that
such househelper or domestic servant is a regular
employee of the employer and not as a mere family
househelper or domestic servant.
FACTS:
- Castaeda instituted a complaint for illegal dismissal plus
several monetary claims against Remington, a company
engaged in business of trading in construction materials. The
complaint impleaded Antonio Tan in his capacity as Managing
Director of Remington. She alleged that:
o She started working in August 1983 as company cook with
a P4,000 salary
o She worked 6 days a week, starting at 6:00am until
5:30pm or later
o On January 15 1998 she reported for work at the new site
where Remington relocated in Caloocan City, only to be
informed that her services were no longer needed.
- Remington denied that it illegally dismissed Castaeda,
alleging that

She was a domestic helper and not a regular employee.
She worked as a cook, which has nothing to do with
Remingtons business
o Her duty was merely to cook lunch and merienda, after
which her time was hers to spend
o Remington did not exercise any degree of control and
supervision over her work
o She was the one who refused to report for work when
Remington moved to Caloocan
Labor Arbiter: dismissed complaint. Castaeda was a
domestic helper under the personal service of Antonio Tan.
Her work was not usually necessary and desirable in the
ordinary course of trade and business of Remington, and the
latter did not exercise control over her functions. Also, it was
she who refused to go to Caloocan when Remington
transferred offices; therefore, she could not have been
illegally dismissed.
NLRC: reversed LA decision. Castaeda was an employee: her
work as cook inured not for the benefit of Tans family, but
solely for the Remington employees.
o Her employment is bolstered by a certification issued by
the corporate secretary, certifying that she is their
bonafide employee.
o As to the illegal dismissal: Castaedas refusal to join the
workforce due to poor eyesight could not be considered
abandonment of work or voluntary resignation.
o Under Art. 287 of the Labor Code, an employee who
reaches the age of 60 has the option to retire or to
separate from the service with payment of separation
pay/retirement benefit. When Castaeda filed the
complaint, she was already 60 years old. She is thus
entitled to be paid her separation pay/retirement benefit
equivalent to 1/2 month for every year of service.
o Ordered the payment of: Salary differential - P12,021.12.
Service Incentive Leave Pay - 2,650.00. 13th Month Pay
differential - 1,001.76 Separation Pay/retirement benefit 36,075.00 (Total P51,747.88)
o
Both parties filed MR. Castaedas was granted, and the

award of retirement pay was increased, to P62,437.50.
Remington filed Petition for Certiorari, which the CA
dismissed. Remington filed petition for review.
ISSUES/HELD: (not including procedural issues)

WON Castaeda is Remingtons regular employee: REGULAR
EMPLOYEE
WON Castaeda was illegally dismissed: ILLEGALLY DISMISSED
RATIO:
FIRST ISSUE:
Remington contends that Castaeda is Antonio Tans domestic
helper and not a regular employee of the company; that it did not
exercise control and supervision over her functions; and that
Castaedas work as a cook was not necessary or desirable in its
usual line of business. The SC rejected this, citing Apex Mining
Company Inc. v NLRC:
Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the
terms "househelper" or "domestic servant" are defined as follows:
The term househelper is synonymous to domestic servant and shall
refer to any person who renders services in and about the employers
home and which services are usually necessary or desirable for the
maintenance and enjoyment thereof, and ministers exclusively to the
personal comfort and enjoyment of the employers family.
xxx
xxx
xxx
The criteria is the personal comfort and enjoyment of the family of the
employer in the home of said employer. While it may be true that the
nature of the work of a househelper, domestic servant or laundrywoman
in a home or in a company staffhouse may be similar in nature, the
difference is that in the former, they are actually serving the family,
while in the latter, whether it is a corporation or a single proprietorship,
service is being rendered in the staffhouses or within the premises of the
business of the employer. In such instance, they are employees of the

company or employer in the business concerned entitled to the
privileges of a regular employee.
The mere fact that the househelper or domestic servant is working
within the premises of the business of the employer and in relation to or
in connection with its business, as in its staffhouses for its guest or even
for its officers and employees, warrants the conclusion that such
househelper or domestic servant is and should be considered as a
regular employee of the employer and not as a mere family househelper
or domestic servant as contemplated in Rule XIII, Section 1(b), Book 3 of
the Labor Code, as amended.
The situs and nature of Castaedas work as a cook, who caters

to the needs of Remingtons employees, makes her fall squarely
within the definition of a regular employee under the doctrine in
the Apex Mining case. That she works within company premises,
and that she does not cater exclusively to the personal comfort of
Tan and his family, is reflective of the existence of Remingtons
right of control over her functions, which is the primary indicator
of the existence of an employer-employee relationship.
It is also wrong to say that if the work is not directly related to
the employer's business, then the person performing such work
could not be considered an employee of the latter. The
determination of the existence of an employer-employee
relationship is defined by law according to the facts of each case,
regardless of the nature of the activities involved. It would be
unjust if we were to hold that despite the fact that Castaeda
was made to cook for the Remington employees, she was merely
a domestic worker of Tan.
SECOND ISSUE
Remington contends that there was abandonment when
Castaeda refused to report for work when they transferred to
Caloocan, claiming that her poor eyesight would make long
distance travel a problem; thus, it cannot be held guilty of illegal
dismissal. The SC also rejected this.
A regular employee enjoys the right to security of tenure under

Article 279 and may only be dismissed for a just or authorized
cause, otherwise the dismissal becomes illegal and the employee
becomes entitled to reinstatement and full backwages.
Abandonment is a just cause for termination of employment by
the employer under Article 282. Two factors should be present: 1)
the failure to report for work or absence without valid or
justifiable reason; and 2) a clear intention to sever employeremployee relationship, manifested by overt acts from which it
may be deduced that the employee has no more intention to
work. The intent to discontinue the employment must be shown
by clear proof that it was deliberate and unjustified, which
Remington failed to do. In termination cases, the burden of proof
rests upon the employer to show that the dismissal is for a just
and valid cause. doubt exists between the evidence presented by
the employer and the employee, the scales of justice must be
tilted in favor of the latter.
Petition denied.
San Miguel Brewery Sales

Force Union (PTGWO) v. Ople
February 8 ,1989
Ponente: Grio-Aquino, JJ.
Al Mohammadsali
SUMMARY:
SMC implemented a new distribution system where its beer
products were sold to wholesalers directly from the sales
offices. The labor union contested this on the ground that it
affects the take-home pay of salesmen and their truck
helpers. MOLE dismissed the complaint. SC affirmes MOLE.
DOCTRINE:
Management prerogatives are valid when they exercised in
good faith for the advancement of the employer's interest
and not for the purpose of defeating or circumventing the
rights of the employees under special laws or under valid

agreements.
MOLE dismissed the complaint with notice of strike. He

said that SMCs actions were part of its overall plan to
improve efficiency and economy and at the same time
gain profit to the highest. This was not to discourage
union organization or diminish its influence.
Hence, the petitioners recourse to the SC.
ISSUES/HELD:
WON SMCs CDS marketing scheme violates the CBA? No.
FACTS:
San Miguel Corporation (SMC) and San Miguel Brewery
Sales Force Union (Union) had an existing CBA (effective
May 1, 1978 until January 31, 1981) where this clause is
incorporated: Art. IV, Section 1. Employees within the
appropriate bargaining unit shall be entitled to a basic
monthly compensation plus commission based on their
respective sales.
In September 1979, the company introduced a marketing
scheme known as the "Complementary Distribution
System" (CDS) whereby its beer products were offered for
sale directly to wholesalers through San Miguel's sales
offices.
The Union filed a complaint for ULP in the Ministry of
Labor, with a notice of strike, on the ground that the CDS
was contrary to the existing marketing scheme whereby
the Route Salesmen were assigned specific territories
within which to sell their stocks of beer, and wholesalers
had to buy beer products from them, not from the
company. They argue that CDS violates the CBA because
the introduction of the CDS would reduce the take-home
pay of the salesmen and their truck helpers, as the
company would be competing with them.
RATIO:
It is not a violation of the CBA because it is a valid
exercise of management prerogatives.
Except as limited by special laws, an employer is free to
regulate, according to his own discretion and judgment, all
aspects
of
employment,
including
hiring,
work
assignments, working methods, time, place and manner
of work, tools to be used, processes to be followed,
supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers and the
discipline, dismissal and recall of work.
Even as the law is solicitous of the welfare of the
employees, it must also protect the right of an employer
to exercise what are clearly management prerogatives.
The free will of management to conduct its own business
affairs to achieve its purpose cannot be denied.
So long as a company's management prerogatives are
exercised in good faith for the advancement of the
employer's interest and not for the purpose of defeating
or circumventing the rights of the employees under
special laws or under valid agreements, they will be
upheld.
SMCs offer to compensate the members of its sales force
who will be adversely affected by the implementation of
the CDS by paying them a so-called "back adjustment
commission" to make up for the commissions they might

lose as a result of the CDS proves the company's good
faith and lack of intention to bust their union.
Sime Darby Pilipinas v NLRC

and Sime Darby Salaried
Employees Association (ALUTUCP)
April 15, 1998

Ponente: Bellosillo, J.
Kitty
SUMMARY: Sime Darby issued a memorandum which

changed the work schedule of its employees and eliminated
their paid on call lunch break. The union filed a case for
ULP, discrimination, and evasion of liability. LA dismissed.
NLRC reversed. SC ruled in favor of petitioner, stating that
the petitioner was not guilty of committing ULP but was
merely exercising its management prerogative.
DOCTRINE: Management is free to regulate, according to
its own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, time,
place and manner of work, processes to be followed,
supervision of workers, working regulations, transfer of
employees, work supervision, lay off of workers and
discipline, dismissal and recall of worker.
FACTS:
Sime Darby Pilipinas, petitioner, is engaged in the

manufacture of automotive tires, tubes and other rubber
products. The respondent, Sime Darby Salaried Employees
Association (ALU-TUCP) is an association of the monthly
salaried employees of the petitioner at its Marikina

factory.
Prior to the controversy, the workers in the factory worked
from 7:45am to 3:45pm with a 30-minute paid on call
lunch break.
August 14, 1992: Petitioner issued a memorandum
advising the employees that except for those in the
Warehouse and Quality Assurance Department, a change
in work schedule would become effective on September
14, 1992.
o 7:45am to 4:45pm; Monday to Friday; Lunch break
12:00nn to 3:30pm
o 7:45am to 11:45pm; Saturday
o No more paid on call lunch break
Respondent filed a case in behalf of its members with the
Labor Arbiter for ULP, discrimination and evasion of
liability pursuant to the resolution of the SC in Sime Darby
International Tire Co. Inc. v NLRC.
LA dismissed the complaint on the ground that the change
in schedule and the elimination of the paid lunch break
constituted a valid exercise of management prerogative.
The LA also said the benefits granted to the workers did
not have the effect of diminishing benefits previously
granted as the working time remained at 8 hours. He also
held that the employees would be unjustly enriched if
they continued to be paid for their lunch break even
though they were no longer on call.
Private respondent appealed to the NLRC which sustained
the LAs decision and dismissed the appeal.
Upon respondents MR, the NLRC reversed its previous
decision. It considered the SC decision in the
aforementioned Sime Darby case of 1990 as the law of
the case wherein the petitioner was ordered to pay the
money value of these covered employees deprived of
lunch and/or working time breaks.
Petitioner went up to the SC alleging that the public

respondent committed grave abuse of discretion
amounting to lack or excess of jurisdiction.
SolGen filed, in lieu of comment, a manifestation and
motion recommending that the petition be granted,
alleging that the August 14 memo was not discriminatory
of the union members, nor did it constitute ULP on the
part of the petitioner.
ISSUES/HELD:
1. Did the petitioner commit unfair labor practice? NO.
RATIO:
The right to fix the work schedules of the employees rests
principally on their employer. In this case, the employer
cited as reason for the adjustment the efficient conduct of
its business operations and its improved production. Since
the employees are no longer required to work during this
new one-hour lunch break, there is no more need for them
to be compensated for this period. SC agreed with LA that
the new work schedule fully complied with the daily work
period of 8 hours without violating the Labor Code.
o Also, the new schedule applied to all employees in
the factory and not just union members.
As shown by the records, the change
effected by management with regard to
working time is made to apply to all factory
employees engaged in the same line of
work, whether or not they are members of
the respondent union. There is no prejudice
to the right of self-organization.
The ruling in the earlier Sime Darby case is not applicable
here as the issue there involved the matter of granting
lunch breaks to certain employees while depriving others
of the same break.
Every business enterprise endeavors to increase its
profits. In the process, it may devise means to attain that
goal. Even as the law is solicitous of the welfare of the
employees, it must also protect the right of an employer

to exercise what are clearly management prerogatives.
o Management is free to regulate, according to its
own discretion and judgment, all aspects of
employment, including hiring, work assignments,
working methods, time, place and manner of work,
processes to be followed, supervision of workers,
working regulations, transfer of employees, work
supervision, lay off of workers and discipline,
dismissal and recall of workers. Management
retains the prerogative, whenever exigencies of the
service so require, to change the working hours of
its employees.
Interphil Employees Union

vs. Interphil Laboratories
Dec. 19, 2001
Ponente: Kapunan, J.
Angelo Zantua

SUMMARY:
Employees work stoppage after the companys refusal to
discuss the period of the new CBA. They alleged that there
was no illegal strike as they stopped working after
rendering work for 8 hours, which was the stated work
schedule in the CBA. The SC ruled that the long standing
12-hr shift has effectively changed the CBAs provision on
work schedule.
DOCTRINE:
The working hours (even if stated in the CBA) may be
changed by management prerogative. The company
implemented the 12-hr shift due to the nature of the
business and demands of the clients. The unequivocal
adherence to this by the employees is deemed as waiver of
the 8-hr shift.
FACTS:
ILEU-FFW is the sole and exclusive bargaining agent of the rankand-file employees of the pharmaceutical company. Months
before the expiration of the CBA, 2 union officers met with the
VP-HRD regarding making the new CBA effective for 2 years but
were denied.
The next day, the employees stopped working, leaving the
containers and raw materials unsealed. The 6am-6pm workers
left at 2pm while the 6pm-6am workers left at 2am. After told to
wait for the formal negotiations, they continued the overtime
boycott and even engaged in work slowdown.
Company filed a case with NLRC illegal strike. Preventive
mediation at NCMB failed. Union filed notice of strike. DOLE Sec
issued an assumption order RTW order to workers while the
company will accept all striking workers. DOLE Secs finding,
adopting the LAs decision there was illegal strike. MR denied.
Certiorari and MR with CA denied. Petition for review on certiorari
with the SC.
ISSUES/HELD:
1. WON the CA and DOLE Sec committed erred in

disregarding the parol evidence rule in the evaluation of
evidence.
RATIO:
The union said that the CA and LA disregarded the parole vidence
rule when they upheld the companys allegation that the work
schedule was 6am-6pm and 6pm-6am. The CA and LA should not
have admitted any evidence contrary to what the CBA states,
Section 1. Regular Working Hours A normal workday shall
consist of not more than eight (8) hours. The regular working
hours for the Company shall be from 7:30 A.M. to 4:30 P.M. The
schedule of shift work shall be maintained; however the company
may change the prevailing work time at its discretion, should
such change be necessary in the operations of the Company. All
employees shall observe such rules as have been laid down by
the company for the purpose of effecting control over working
hours.
SC - The reliance on the parol evidence rule is misplaced. In labor
cases before the NLRC or LA, the rules of evidence prevailing in
courts of law or equity are not controlling. Rules of procedure and
evidence are not applied in a very rigid and technical sense in
labor cases. Hence, the LA is not precluded from accepting and
evaluating evidence other than, and even contrary to, what is
stated in the CBA.
Moreover, the latter part of Sec.1 states that the working hours
may be changed at the discretion of the company if it is
necessary for its operations. The 24-hr daily work schedule, in
place since 1988, is in place due to the nature of the business
and demands of its clients.
The employees are deemed to have waived the 8-hr schedule
since they followed, without any question or complaint, the 12-hr
shift before and during the effectivity of the CBA. The 12-hr shift
effectively changed the CBAs stated working hours. As the
employees assented by practice to this, they cannot claim now
that the overtime boycott is justified because they were not
obliged to work beyond eight hours.

Other issues: The DOLE Secs jurisdiction was upheld A263(g) of
the Labor Code. Illegal strike was committed by the union.
Arica vs. NLRC

Date: February 28, 1989
Ponente: Froessel, J.
Mara V.
SUMMARY: Workers Arica et. al file a case against

StanPhilCo so that the latter would pay for the 30 minute
waiting time they spend at the company preparing for work.
The Court cites that this practice of the workers were long
unpaid by custom and the decision of the Ministry of Labor
in another case involving their labor union against the
company operates as a bar to the litigation of this one by
virtue of res judicata.
DOCTRINE: (Waiting Time)
The thirty (30)-minute assembly is a deeply- rooted,
routinary practice of the employees, and the proceedings
attendant thereto are not infected with complexities as to
deprive the workers the time to attend to other personal
pursuits. They are not new employees as to require the
company to deliver long briefings regarding their respective
work assignments. Their houses are situated right on the
area where the farm are located, such that after the roll
call, which does not necessarily require the personal
presence, they can go back to their houses to attend to
some chores. In short, they are not subject to the absolute
control of the company during this period, otherwise, their
failure to report in the assembly time would justify the
company to impose disciplinary measures. The CBA does
not contain any provision to this effect; the record is also
bare of any proof on this point. This, therefore,
demonstrates the indubitable fact that the thirty (30)minute assembly time was not primarily intended for the
interests of the employer, but ultimately for the employees
to indicate their availability or non-availability for work
during every working day.
FACTS:
Arica et al filed a case against Standard Phil Fruits
Corporation with the Labor Arbiter to have the 30 minutes
assembly time (from 5:30 -6:00a am)by the workers considered
as compensable on the following grounds:
1. It is a roll call, followed by distribution of work
assignments.
2. It is time spent for them to accomplish the Laborers Daily
Accomplishment Report.
3. It is time spent by workers to get the working materials
from the stockroom.
4. It is the time spent by workers travelling from the
stockroom with the tools to get to the fields.
StanPhilCo on the other hand avers that the same case
has already been ruled upon by the NLRC in the case of
Associated Labor Union vs. Standard Fruit Corp where the
Minister of Labor held (and should be considered res judicata)
that:
The thirty (30)-minute assembly time long
practiced and institutionalized by mutual consent of the
parties under Article IV, Section 3, of the Collective
Bargaining Agreement cannot be considered as waiting
time within the purview of Section 5, Rule I, Book III of the
Rules and Regulations Implementing the Labor Code.
Public respondent NLRC, on January 30, 1987, issued a
resolution denying for lack of merit petitioners' motion for
reconsideration. Hence this petition for review on certiorari filed
on May 7, 1987.
ISSUES/HELD:
2. WON the 30 minute assembly time long practice can be
considered waiting time or work time and therefore
compensable? No.
RATIO:
Labor Law Review |Sobrevinas | August December 2014|Page 10
1. It is clear that herein petitioners are merely reiterating the

very same claim which they filed through the ALU and
which records show had already long been considered
terminated and closed by this Court in G.R. No. L-48510.
Therefore, the NLRC can not be faulted for ruling that
petitioners' claim is already barred by res-judicata.
2. Moreover, as a rule, the findings of facts of quasi-judicial
agencies which have acquired expertise because their
jurisdiction is confined to specific matters are accorded
not only respect but at times even finality if such findings
are supported by substantial evidence
Rada v. NLRC
09 January 1992
Ponente: J. Regalado
Roe Anuncio
SUMMARY:
Petitioner was hired by Respondent for a project as a driver.
His contract was renewed/extended for a few times until it
finally expired without having been further renewed. He
filed for non-payment of separation pay, as well as for
unpaid overtime pay. He claims overtime pay for the time
he spent driving for the other employees to and from work.
SC says said travel time constitutes compensable work
hours and should herein be accordingly considered as
overtime work.
DOCTRINE:
Travel time spent by an employee for the benefit of the
employer is compensable.
FACTS:
Petitioner's initial employment with this Respondent was
under a "Contract of Employment for a Definite Period"
whereby Petitioner was hired as "Driver" for the
construction supervision phase of the Manila North
Expressway Extension, Second Stage for a term of "about

24 months effective July 1, 1977.
Petitioner's first contract of employment expired on June
30, 1979. Meanwhile, the main project, MNEE Stage 2,
was not finished on account of various constraints.
A second Contract of Employment for a Definite Period of
10 months was executed between Petitioner and
Respondent.
Respondent renewed Petitioners contract of employment
Accordingly, a third contract of employment was
executed.
This third contract of employment was subsequently
extended for a number of times, the last extension being
for a period of 3 months, that is, until December 31, 1985.
Upon the expiration of the contract, Petitioner applied for
"Personnel Clearance" with Respondent. Petitioner also
released Respondent from all obligations and/or claims,
etc. in a "Release, Waiver and Quitclaim.
Petitioner filed a Complaint for non-payment of separation
pay and overtime pay, alleging that he was illegally
dismissed and that he was not paid overtime pay although
he was made to render three hours overtime work form.
LA rendered a decision: company to reinstate the
complainant to his former position without loss of seniority
rights and other privileges with full backwages from the
time of his dismissal to his actual reinstatement;
company to pay the complainant overtime pay for
travel time in transporting other employees to and
from work.
NLRC reversed the LA decision.
ISSUES/HELD:
3. WON the time spent by Petitioner driving other employees
to and from work constitutes work time and should be
compensated as overtime work: YES
RATIO:
Re the claim for overtime compensation, petitioner is
entitled.

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 petitioner's 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 the employer,
herein private respondent.
Memo of Respondent company:
The herein Respondent resorted to the above transport
arrangement
because
from
its
previous
project
construction supervision experiences, Respondent found
out that project delays and inefficiencies resulted from
employees' tardiness; and that the problem of tardiness,
in turn, was aggravated by transportation problems, which
varied in degrees in proportion to the distance between
the project site and the employees' residence. So the
company opted to allow employees to use the project
vehicle for convenient transportation.
The assigned task of fetching and delivering employees is
indispensable and consequently mandatory, then the time
required of and used by petitioner in going from his
residence to the field office and back, that is, from 5:30
a.m. to 7:00 a.m. and from 4:00 p.m. to around 6:00 p.m.,
which the labor arbiter rounded off as averaging three
hours each working day, should be paid as overtime work.
REMERCO vs. Minister of

Labor
Date: February 28, 2985
Ponente: Cuevas J.
Mara V.
SUMMARY: Private respondents Zenaida Bustamante, Luz

Raymundo and Ruth Corpuz were the employees of
Remerco Garments Manufacturing, who refused to render
overtime work and was summarily dismissed by the
company. Now they filed a case of illegal dismissal against
the company. SC rules in their favor.
DOCTRINE: (Weekly Rest Periods)
The New Labor Code is clear on this point. It is the duty of
every employer, whether operating for profit or not, to
provide each of his employees a rest period of not less than
twenty four (24) hours after every six (6) consecutive
normal work days. 14 Even if there really existed an urgency
to require work on a rest day, (which is not in the instant
case) outright dismissal from employment is so severe a
consequence, more so when justifiable grounds exist for
failure to report for work.
FACTS:
Petitioner Remerco Garments Manufacturing seeks the
nullification of the decision 1 of the Minister of Labor and
Employment dated January 21, 1981, declaring the dismissal of
Zenaida Bustamante, Luz Raymundo and Ruth Corpuz, (its
employees) illegal, and ordering their reinstatement to their
former positions without loss of seniority rights and privileges
and with full backwages. The said decision set aside, on appeal,
the order 2 of Acting Director, National Capital Region, MOLE,
dated March 6, 1978, granting petitioner's clearance application
to terminate the employment of its three (3) employees.
It appears that Luz Raymundo was required to work on
October 15, 1978, a Sunday, despite her request for exemption
to work on that Sunday, her rest day. Her request was
disapproved. For failure to report for work despite denial of her
request, she was notified of her dismissal effective upon
expiration of her suspension. Thereafter or more specifically on
October 16, 1978, petitioner filed a clearance application to
dismiss her on grounds of insubordination. Raymundo opposed

said application by filing a complaint for illegal dismissal and for
money claims.
With respect to Zenaida Bustamante, she failed to report
for work despite the expiration of her suspension on October 23,
1978. Petitioner contends that said failure constitutes
abandonment which it later invoke as ground for clearance
application to dismiss her from employment filed on November
10, 1978. Like Raymundo, Zenaida Bustamante opposed the
clearance application by filing a complaint for illegal dismissal
claiming that her alleged failure to report for work was due to
illness, as in fact, she was treated by one Dr. Lorenzo Yuson for
fever and severe stomach ache on October 15, 1978. Ruth
Corpuz, like the two aforenamed co-respondents of hers, was also
given a warning for refusal to render overtime work on another
date, August 30, 1978. She was subsequently dismissed on
October 4, 1978 for having written a chalk mark on a nylon jacket
for export allegedly a violation of Rule 26 of petitioner's rules and
regulations, which provides: "Employees are strictly prohibited
from defacing or writing on walls of the factory, toilets or any
other company property." The clearance application for her
dismissal was filed only on October 5, 1978 which she also
opposed by filing a complaint for illegal dismissal.
On March 6, 1979, the Acting Director of National Capital
Region, MOLE, issued an order granting petitioner's application
for clearance to terminate the employment of private
respondents and dismissing their complaints for lack of merit. On
January 20, 1981, the Minister of Labor rendered a decision
reversing the appealed order and directed petitioner to reinstate
private respondents Luz Raymundo, Zenaida Bustamante and
Ruth Corpuz to their former positions without loss of seniority
rights and privileges and with full backwages.
ISSUES/HELD:
4. WON there are sufficient ground to uphold the dismissal of
the 3? No.
RATIO:
1. While it is true that it is the sole prerogative of the

management to dismiss or lay-off an employee, the
exercise of such a prerogative, however, must be made
without abuse of discretion, for what is at stake is not only
private respondents' positions but also their means of
livelihood.
2. In the case of Luz Raymundo, she was charged of
insubordination for allegedly refusing to work on a
Sunday, October 15, 1978, which was her rest day. In fact,
she was granted a clearance slip. The disapproval of her
request by top management reasonably creates the
impression of a hostile attitude. Petitioner has not shown
that Luz Raymundo's failure to report for work on that
Sunday, October 15, 1978, constitutes one of the just
causes for termination under Article 283 of the New Labor
Code.
3. Zenaida
Bustamante
allegedly
abandoned
her
employment by failing to report for work after the
expiration of her suspension on October 23, 1978. Like Luz
Raymundo, her one week suspension arose from her
failure to report for work on a Sunday. It is a recognized
principle that abandonment of work by an employee is
inconsistent with the immediate filing of a complaint for
illegal dismissal. 12 It would be illogical for Zenaida
Bustamante to abandon her job and then immediately file
an action seeking her reinstatement. At that time.
4. The lack of sympathetic understanding of the underlying
reasons for their absence aggravated by the indecent
haste attendant to the efforts of petitioner to terminate
the services of private respondents portray a total
disregard of the constitutional mandate of "security of
tenure" and "just and humane conditions of work" which
the State is mandated to protect. The New Labor Code is
clear on this point. It is the duty of every employer,
whether operating for profit or not, to provide each of his
employees a rest period of not less than twenty four (24)
hours after every six (6) consecutive normal work days.
Even if there really existed an urgency to require work on

a rest day, (which is not in the instant case) outright
dismissal from employment is so severe a consequence,
more so when justifiable grounds exist for failure to report
for work.
5. The
objections
raised
grounded
on
procedural
technicalities devoid of merit. The mere failure to furnish
copy of the appeal memorandum to adverse party is not a
fatal defect. We have consistently adhered to the principle
clearly held in Alonso vs. Villamor that "technicality when
it deserts its proper office as an aid to justice and
becomes its great hindrance and chief enemy, deserves
scant consideration from court." In a more forceful
language, Mr. Chief Justice Enrique M. Fernando, speaking
for the Court, in Meracap vs. International Ceramics
Manufacturing Co., Inc. 16 stated "for the strictly juridical
standpoint, it cannot be too strongly stressed, to follow
Davis in his masterly work, Discretionary Justice, that
where a decision may be made to rest on informed
judgment rather than rigid rules, all the equities of the
case must be accorded their due weight. Finally, labor law
determinations, to quote from Bultmann, should be not
only secundum retionem but also secundum caritatem. "
San Miguel Corp. vs. CA

January 30, 2002
J. Kapunan
Jerome Marcelo
SUMMARY: SMC did not pay non-Muslim employees their

regular Muslim holiday pay (factory was in Iligan City). Regional
Director Macaraya issued a compliance order directing SMC to
consider Muslim holidays as regular holidays and to pay both
its Muslim and non-Muslim employees holiday pay of 200% of
basic salary. DOLE Main Office: Regional Director Order
affirmed. CA: Modified the holiday pay from 200% to 150%. SC:
CA affirmed.
DOCTRINE: There is no distinction between Muslims and nonMuslims as regards payment of benefits for Muslim holidays.
Wages and other emoluments granted by law to the working man are
determined on the basis of the criteria laid down by laws and certainly
not on the basis of the workers faith or religion.
FACTS: On 17 October 1992, the DOLE Iligan District Office,

conducted a routine inspection in the premises of San Miguel
Corporation (SMC) in Sta. Filomena, Iligan City. It was discovered
that there was underpayment by SMC of regular Muslim holiday
pay to its employees. SMC contested the findings so DOLE
conducted summary hearings. Still, SMC failed to submit proof
that it was paying regular Muslim holiday pay to its employees.
Alan Macaraya, Director IV of DOLE Iligan District Office issued a
compliance order directing SMC to consider Muslim holidays as
regular holidays and to pay both its Muslim and non-Muslim
employees holiday pay within 30 days from receipt of order.
The SMC appeal to the DOLE main office was dismissed for
having been filed late. This dismissal of the appeal was later on
reconsidered in the order of 17 July 1998 after it was found that
the appeal was filed within the reglementary period. However,
the appeal was still dismissed for lack of merit and the order of
Director Macaraya was affirmed. SMC went to the SC for
relief via a petition for certiorari. The SC referred the petition to
the CA.
SMC did not deny that it was not paying Muslim holiday pay to its
non-Muslim employees. SMC merely contends that its non-Muslim
employees are not entitled to Muslim holiday pay.
CA Ruling: The order dated 17 December 1993 of Director
Macaraya and Order dated July 17, 1998 of Undersecretary
Espaol is hereby MODIFIED with regards the payment of Muslim
holiday pay from 200% to 150% of the employee's basic salary.

Let this case be remanded to the Regional Director for the proper
computation of the said holiday pay.
(b) The employer may require an employee to work on any

holiday but such employee shall be paid a compensation
equivalent to twice his regular rate; x x
ISSUE/HELD
1. WON non-Muslim employees are entitled to Muslim
holiday pay. YES
SMC argues that Art. 3(3) of PD 1083 provides that "(t)he
RATIO
Muslim holidays are provided under Articles 169 and 170, Title I,
Book V, of PD 1083 (Code of Muslim Personal Laws):
However, there should be no distinction between Muslims and

non-Muslims as regards payment of benefits for Muslim holidays.
The CA did not err in sustaining Undersecretary Espaol who
stated: Assuming that the respondents position is correct, then by the
Art. 169. Official Muslim holidays. - The following are hereby

recognized as legal Muslim holidays:
(a) Amun Jadd (New Year), which falls on the first day of the
first lunar month of Muharram;
(b) Maulid-un-Nab (Birthday of the Prophet Muhammad), which
falls on the twelfth day of the third lunar month of Rabi-ulAwwal;
(c) Lailatul Isr Wal Mirj (Nocturnal Journey and Ascension of
the Prophet Muhammad), which falls on the twenty-seventh day
of the seventh lunar month of Rajab;
(d) d-ul-Fitr (Hari Raya Puasa), which falls on the first day of the
tenth lunar month of Shawwal, commemorating the end of the
fasting season; and
(e) d-l-Adh (Hari Raya Haji),which falls on the tenth day of
the twelfth lunar month of Dhl-Hijja.
Art. 170. Provinces and cities where officially observed.
(1) Muslim holidays shall be officially observed in the Provinces
of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North
Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such
other Muslim provinces and cities as may hereafter be created;
(2) Upon proclamation by the President of the Philippines,
Muslim holidays may also be officially observed in other
provinces and cities.
The foregoing provisions should be read in conjunction with Art.

94 of the Labor Code, which provides:
Art. 94. Right to holiday pay. (a) 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;
provisions of this Code shall be applicable only to Muslims x x x."
same token, Muslims throughout the Philippines are also not entitled to
holiday pays on Christian holidays declared by law as regular holidays.
We must remind the respondent-appellant that wages and other
emoluments granted by law to the working man are determined on the
basis of the criteria laid down by laws and certainly not on the basis of
the workers faith or religion.
At any rate, Art. 3(3) of PD 1083 declares that "x x x nothing

herein shall be construed to operate to the prejudice of a non-Muslim."
Also, the 1999 Handbook on Workers Statutory Benefits,

approved by then DOLE Sec. Laguesma categorically stated:
Considering that all private corporations, offices, agencies, and entities
or establishments operating within the designated Muslim provinces and
cities are required to observe Muslim holidays, both Muslim and
Christians working within the Muslim areas may not report for work on
the days designated by law as Muslim holidays.
Regarding the jurisdiction of the Director Macaraya, Article 128,

Section B of the Labor Code, as amended by RA 7730 provides:
Article 128. Visitorial and enforcement power. xxx
(b) Notwithstanding the provisions of Article 129 and 217 of this
Code to the contrary, and in cases where the relationship of
employer-employee still exists, the Secretary of Labor and
Employment or his duly authorized representatives shall have
the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation
based on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course of the

inspection. The Secretary or his duly authorized representative
shall issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer
contests the findings of the labor employment and enforcement
officer and raises issues supported by documentary proofs which
were not considered in the course of inspection.
Here, Director Macaraya acted as the duly authorized

representative of the Secretary of Labor and Employment and it
was within his power to issue the compliance order to SMC. In
addition, the SC agrees with the Solicitor General that SMC did
not deny that it was not paying Muslim holiday pay to its nonMuslim employees. Indeed, SMC merely contends that its nonMuslim employees are not entitled to Muslim holiday pay. Hence,
the issue could be resolved even without documentary proofs. In
any case, there was no indication that Director Macaraya failed to
consider any documentary proof presented by SMC in the course
of the inspection.
RULING: WHEREFORE, in view of the foregoing, the petition is
DISMISSED.
Jose Rizal College v. NLRC &

Natl Alliance of
Teachers/Office Workers
Dec. 1, 1987
Ponente: Paras, J.
L. Agliam
SUMMARY:
Petitioner JRC seeks to annul the NLRC decision declaring
that private respondents NATOW (hourly paid faculty
members) are entitled to holiday pay. While SC exempted
petitioner from paying private respondents their pay for
regular holidays, it ordered petitioner to pay private
respondents on days declared as special holidays for some
reason classes are called off or shortened for the hours they
are supposed to have taught, whether extensions of class
days be ordered or not.
DOCTRINE: (Holiday Pay)
Regular holidays specified by law are known to both school
and faculty members as no class days; and so, the latter do
not expect payment for said unworked days. But when a
special public holiday is declared, the faculty member paid
by the hour is deprived of expected income, and so they
must be paid, whether or not extensions (i.e. make-up
classes) are ordered.
FACTS:
Petitioner is a non-stock, non-profit educational institution
duly organized and existing under the laws of the
Philippines. It has 3 groups of employees:
1) personnel on monthly basis - with uniform monthly
salary throughout the year, irrespective of the
actual number of working days in a month without
deduction for holidays;
2) personnel on daily basis - paid on actual days
worked and they receive unworked holiday pay;
and,
3) collegiate faculty - paid on the basis of student
contract hour. Before the start of the semester
they sign contracts with the college undertaking to
meet their classes as per schedule.
Respondents NATOW filed with the Ministry of Labor a
complaint against JRC for alleged non-payment of holiday
pay from 1975 to 1977.
Labor Arbiter decision:

1) monthly paid employees - presumed to be already
paid the 10 paid legal holidays and are no longer
entitled to separate payment for the regular
holidays;
2) daily paid employees - entitled to be paid the 10
unworked regular holidays according to the
pertinent provisions of the Rules and Regulations
Implementing the Labor Code
3) Collegiate faculty paid by the student contract
hour - NOT entitled to unworked regular holiday
pay considering that these regular holidays have
been excluded in the programming of the student
contact hours
NLRC decision: modified above #3 decision; declared that
teaching personnel paid by the hour are ENTITLED to
holiday pay
ISSUES/HELD:
WON the school faculty who according to their contracts are paid
per lecture hour are entitled to unworked holiday pay (NO to
regular holiday pay; YES to special holiday pay)
RATIO:
The petitioner is under obligation to give pay even on
unworked regular holidays to hourly paid faculty members
subject to the terms and conditions provided in the
following provisions:
1) Art. 94 of the Labor Code provides:
Art. 94. Right to holiday pay (a) 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;
(b) The employer may require an employee to work on
any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate;
2) Implementing Rules and Regulations,, Rule IV, Book
III, provides:
SEC. 8. Holiday pay of certain employees. (a)

Private school teachers, including faculty members of
colleges and universities, may not be paid for the
regular holidays during semestral vacations. They
shall, however, be paid for the regular holidays during
Christmas vacations. ...
Regular holidays specified by law are known to both

school and faculty members as no class days; and so, the
latter do not expect payment for said unworked days.
However, both the law and the IRR governing holiday pay
are silent as to payment on Special Public Holidays.
The declared purpose of the holiday pay is the prevention
of diminution of the monthly income of the employees on
account of work interruptions. It is defeated when a
regular class day is cancelled on account of a special
public holiday and class hours are held on another
working day to make up for time lost in the school
calendar.
When a special public holiday is declared, the faculty
member paid by the hour is deprived of expected income,
and it does not matter that the school calendar is
extended in view of the days or hours lost, for their
income that could be earned from other sources is lost
during the extended days.
Similarly, when classes are called off or shortened on
account of typhoons, floods, rallies, and the like, these
faculty members must likewise be paid, whether or not
extensions are ordered.
Union of Filipro Employees v

Vivar
January 20, 1992
Ponente: Guttierez Jr, J.
De Leon
SUMMARY:
This labor dispute stems from the exclusion of sales personnel
from the holiday pay award and the change of the divisor in the
computation of benefits from 251 to 261 days.
DOCTRINE:
The law requires that the actual hours of work in the field be
reasonably ascertained. The requirement that "actual hours of
work in the field cannot be determined with reasonable
certainty" must be read in conjunction with Rule IV, Book III of
the Implementing Rules
The criteria for granting incentive bonus are: (1) attaining or
exceeding sales volume based on sales target; (2) good
collection performance; (3) proper compliance with good market
hygiene; (4) good merchandising work; (5) minimal market
returns; and (6) proper truck maintenance.
The divisor assumes an important role in determining whether
or not holiday pay is already included in the monthly paid
employee's salary and in the computation of his daily rate.
FACTS:
1. Filipro, Inc. (now Nestle) filed with the NLRC a petition for declaratory
relief seeking a ruling on its rights and obligations respecting claims
of its monthly paid employees for holiday pay in the light of the
Court's decision in Chartered Bank Employees Association v. Ople.
2. Arbitrator Vivar rendered a decision directing Filipro to pay its
monthly paid employees holiday pay pursuant to Article 94 of the
Code, subject only to the exclusions and limitations specified in
Article 82 and such other legal restrictions as are provided for in the
Code.
3. Filipro filed a motion for clarification seeking (1) the limitation of the
award to three years, (2) the exclusion of salesmen, sales
representatives, truck drivers, merchandisers and medical
representatives (hereinafter referred to as sales personnel) from the
award of the holiday pay, and (3) deduction from the holiday pay
award of overpayment for overtime, night differential, vacation and
sick leave benefits due to the use of 251 divisor.
a. The Union answered that the award should be made effective
from the date of effectivity of the Labor Code, that their sales
personnel are not field personnel and are therefore entitled to
holiday pay, and that the use of 251 as divisor is an established
employee benefit which cannot be diminished.
b. The arbitrator issued an order declaring:
that the effectivity of the holiday pay award shall retroact to
November 1, 1974, the date of effectivity of the Labor Code

that the company's sales personnel are field personnel and, as
such, are not entitled to holiday pay.
with the grant of 10 days' holiday pay, the divisor should be
changed from 251 to 261 and ordered the reimbursement of
overpayment for overtime, night differential, vacation and sick
leave pay due to the use of 251 days as divisor.
c. The petitioner insists that respondent's sales personnel are not
field personnel under Article 82 of the Labor Code.
d. The respondent company asserts that under Article 82, field
personnel are not entitled to holiday pay. Said article defines
field personnel as "non-agritultural 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."

4. It is undisputed that these sales personnel start their field work at
8:00 a.m. after having reported to the office and come back to the
office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.
5. The petitioner maintains that the period between 8:00 a.m. to 4:00
or 4:30 p.m. comprises the sales personnel's working hours which
can be determined with reasonable certainty.
ISSUES/HELD:
1. Whether or not the sales personnel are entitled to holiday pay;
2. Whether or not, concomitant with the award of holiday pay, the
divisor should be changed from 251 to 261 days and whether or not
the previous use of 251 as divisor resulted in overpayment for
overtime, night differential, vacation and sick leave pay.
RATIO:
1. No. The sales personnel are field workers and thus not entitled to
holiday pay.
The law requires that the actual hours of work in the field be
reasonably ascertained. The company has no way of determining
whether or not these sales personnel, even if they report to the
office before 8:00 a.m. prior to field work and come back at 4:30
p.m, really spend the hours in between in actual field work.
Moreover, the requirement that "actual hours of work in the field
cannot be determined with reasonable certainty" must be read in
conjunction with Rule IV, Book III of the Implementing Rules
- (e) Field personnel and other employees whose time and
performance is unsupervised by the employer . . .
- The aforementioned rule did not add another element to the Labor
Code definition of field personnel. The clause "whose time and
performance is unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose actual hours
of work in the field cannot be determined with reasonable
certainty.
The
petitioner claims that the fact that these sales personnel are
given incentive bonus every quarter based on their performance is

proof that their actual hours of work in the field can be determined
with reasonable certainty.
- The Court thinks otherwise. The criteria for granting incentive
bonus are: (1) attaining or exceeding sales volume based on sales

target; (2) good collection performance; (3) proper compliance
with good market hygiene; (4) good merchandising work; (5)
minimal market returns; and (6) proper truck maintenance.
- Sales personnel are given incentive bonuses precisely because of
the difficulty in measuring their actual hours of field work. These
employees are evaluated by the result of their work and not by the
actual hours of field work which are hardly susceptible to
determination.
2. The divisor to be used in computing holiday pay shall be 251 days.
The arbitrator ruled that:
- the divisor should be changed from 251 to 261 days to include the
additional 10 holidays and the employees should reimburse the

amounts overpaid by Filipro due to the use of 251 days' divisor.
- When the claim of the Union for payment of ten holidays was
granted, there was a consequent need to abandon that 251 divisor.
To maintain it would create an impossible situation where the
employees would benefit with additional ten days with pay but
would simultaneously enjoy higher benefits by discarding the same
ten days for purposes of computing overtime and night time
services and considering sick and vacation leave credits.
Therefore, reimbursement of such overpayment with the use of
251 as divisor arises concomitant with the award of ten holidays
with pay.
The divisor assumes an important role in determining whether or not
holiday pay is already included in the monthly paid employee's
salary and in the computation of his daily rate.
- In the petitioner's case, its computation of daily ratio since
September 1, 1980, is as follows:
monthly rate x 12 months
251 days
The
use of 251 days' divisor by respondent Filipro indicates that
holiday pay is not yet included in the employee's salary, otherwise
the divisor should have been 261.
The
daily rate, assuming there are no intervening salary increases, is
a constant figure for the purpose of computing overtime and night

differential pay and commutation of sick and vacation leave credits.
Necessarily, the daily rate should also be the same basis for
computing the 10 unpaid holidays.
The respondent arbitrator's order to change the divisor from 251 to
261 days would result in a lower daily rate which is violative of the
prohibition on non-diminution of benefits found in Article 100 of the
Labor Code. To maintain the same daily rate if the divisor is adjusted
to 261 days, then the dividend, which represents the employee's
annual salary, should correspondingly be increased to incorporate
the holiday pay.
There is thus no merit in respondent Nestle's claim of overpayment
of overtime and night differential pay and sick and vacation leave
benefits, the computation of which are all based on the daily rate,
since the daily rate is still the same before and after the grant of
holiday pay.
- Nestle's invocation of solutio indebiti due to its use of 251 days as
divisor must fail. All doubts in the implementation and
interpretation of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor.
- Additionally the company was on a 6-day working schedule, the
divisor used by the company was 303, indicating that the 10
holidays were not paid. When Filipro shifted to a 5-day working
schedule it had the chance to rectify its error, if ever there was one
but did not do so. It is now too late to allege payment by mistake.
Nestle insists that the reckoning period for the application of the
holiday pay award is 1985 when the Chartered Bank decision
became final and executory, and not from the date of effectivity of
the Labor Code. Although the Court does not entirely agree with
Nestle, we find its claim meritorious.
- In IBAAEU v. Inciong, the Court declared that Section 2, Rule IV,
Book III of the implementing rules and Policy Instruction No. 9,
issued by the then Secretary of Labor on February 16, 1976 and
April 23, 1976, respectively, and which excluded monthly paid
employees from holiday pay benefits, are null and void.
- The "operative fact" doctrine realizes that in declaring a law or rule
null and void, undue harshness and resulting unfairness must be
avoided. Applying the doctrine, it is not far-fetched that Nestle,
relying on the implicit validity of the implementing rule and policy
instruction before this Court nullified them, and thinking that it was
not obliged to give holiday pay benefits to its monthly paid
employees, may have been moved to grant other concessions to

its employees, especially in the collective bargaining agreement.
- The grant of holiday pay be effective, not from the date of
promulgation of the Chartered Bank case nor from the date of
effectivity of the Labor Code, but from October 23, 1984, the date
of promulgation of the IBAA case.
VIVIAN Y. IMBUIDO, petitioner,

vs. NATIONAL LABOR RELATIONS
COMMISSION, INTERNATIONAL
INFORMATION SERVICES, INC.

and GABRIEL LIBRANDO,
respondents
March 31, 2000
Ponente: Buena, J.
Paula Parungao
SUMMARY: Imbuido, a project employee, was allegedly

illegally dismissed by ISSI for participating in filing a
petition for certification election with the BLR. SC held that
Imbuido obtained the status of a regular employee, and
thus, was illegally dismissed.
DOCTRINE: Once a project or work pool employee has

been: (1) continuously, as opposed to intermittently, rehired by the same employer for the same tasks or nature
of tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the
employer, then the employee must be deemed a regular
employee, under Art. 280, LC.
FACTS:
Vivien Imbuido was employed as a data encoder by
International Information Services, Inc., (IISI) a domestic
corporation engaged in the business of data encoding and
keypunching, from August 26, 1988 until October 18, 1991

when her services were terminated.
From 26 August 1988 until 18 October 1991, Imbuido

entered into 13 separate employment contracts with ISSI,
each contract lasting only 3 months. Aside from the basic
hourly rate, specific job contract number and period of
employment, each contract contains the following terms
and conditions:
"a. This Contract is for a specific project/job contract only
and shall be effective for the period covered as abovementioned unless sooner terminated when the job contract
is completed earlier or withdrawn by client, or when
employee is dismissed for just and lawful causes provided
by law. The happening of any of these events will
automatically terminate this contract of employment.
Slxmis
"b. Subject shall abide with the Companys rules and
regulations for its employees attached herein to form an
integral part hereof.
"c. The nature of your job may require you to render
overtime work with pay so as not to disrupt the Companys
commitment of scheduled delivery dates made on said job
contract."
In September 1991, Imbuido and 12 other employees of
ISSU allegedly agreed to the filing of a petition for

certification election involving the rank-and-file employees
of ISSI under Lakas Manggagawa sa Pilipinas (LAKAS).
8 October 1991, the petition was filed with the BLR.
Subsequently, Imbuido received a termination letter from
Edna Kasilag, ISSI Administrative Officer, allegedly "due to
low volume of work"
Imbuido filed a complaint for illegal dismissal with service

incentive leave pay and 13th month differential pay with
the NLRC Arbitration Branch.
LA Aquino ruled in favor of Imbuido and ordered her
reinstatement without loss of seniority rights and privileges
and the payment of backwages and service incentive leave
pay.
On appeal, NLRC reversed the LA, ruling that Imbuido was a
regular employee under Art. 280, LC judging from the
function and work for which she was hired. The NLRC held
that the complainant [Imbuido], while hired as a regular
worker, is statutorily guaranteed, in her tenurial security,
only up to the time the specific project for which she was
hired is completed." Hence, the NLRC concluded that
"[w]ith the specific project "at RCBC 014" admittedly
completed, the complainant [petitioner herein] has
therefore no valid basis in charging illegal dismissal for her
concomittant (sic) dislocation."
ISSUES/HELD:
1. WON Imbuido is a project employee. YES.

RATIO:
Imbuido is a project employee.
The principal test for determining whether an employee is
a project employee or a regular employee is whether the
project employee was assigned to carry out a specific
project or undertaking, the duration and scope of which
were specified at the time the employee was engaged for
that project. A project employee is one whose 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 or where the
work or service to be performed is seasonal in nature and
the employment is for the duration of the season.
In the recent case of Maraguinot, Jr. vs. NLRC, SC held that
"[a] project employee or a member of a work pool may
acquire the status of a regular employee when the
following concur:
1) There is a continuous rehiring of project employees even
after [the] cessation of a project; and
2) The tasks performed by the alleged "project employee"
are vital, necessary and indispensable to the usual
business or trade of the employer."
The evidence on record reveals that Imbuido was employed
by ISSI as a data encoder, performing activities which are

usually necessary or desirable in the usual business or
trade of her employer, continuously for a period of more
than 3 years, from August 26, 1988 to October 18, 1991
and contracted for a total of 13 successive projects.
"[H]owever, the length of time during which the employee
was continuously re-hired is not controlling, but merely
serves as a badge of regular employment." Based on the
foregoing, Imbuido has attained the status of a regular
employee of ISSI.
SC notes the following:
The decision does not burden an employer the duty of rehring a project employee even after the completion of the
project. What this decision merely accomplishes is a
judicial recognition of the employment status of a project or
work pool employee in accordance with what is fait
accompli, i.e., the continuous re-hiring by the employer of
project or work pool employees who perform tasks
necessary or desirable to the employer's usual business or
trade.
All that we hold today is that once a project or work pool
employee has been: (1) continuously, as opposed to
intermittently, re-hired by the same employer for the same
tasks or nature of tasks; and (2) these tasks are vital,
necessary and indispensable to the usual business or trade
of the employer, then the employee must be deemed a
regular employee, pursuant to Article 280 of the Labor
Code and jurisprudence. To rule otherwise would allow
circumvention of labor laws in industries not falling within
the ambit of Policy Instruction No. 20/Department Order No.

19, hence allowing the prevention of acquisition of tenurial
security by project or work pool employees who have
already gained the status of regular employees by the
employer's conduct."
Being a regular employee, Imbuido is entitled to security of
tenure and could only be dismissed for a just or authorized
cause, as provided in Article 279, LC, as amended:
"Art. 279. Security of Tenure In cases of regular
employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the
time of his actual reinstatement."
The alleged causes of Imbuidos dismissal (low volume of

work and belatedly, completion of project) are not valid
causes for dismissal under Articles 282 and 283, LC. Thus,
she is entitled to reinstatement without loss of seniority
rights and other privileges, and to her full backwages,
inclusive of allowances, and to her other benefits or their
monetary equivalent computed from the time her

compensation was withheld from her up to the time of her
actual reinstatement.
With regard to claim for service incentive leave pay,
Imbuido is entitled to service incentive leave pay, as
provided in Article 95, LC:
"Article 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.
Court ruled in favor of the petitioners/ employees.

DOCTRINE: The clear policy of the Labor Code is to grant service
incentive leave pay to workers in all establishments, subject to a
few exceptions. Sec. 2, Rule V, Book III of the IRR provides that
every employee shall be entitled to a yearly service incentive leave
of five days with pay. It 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 contract, 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.
xxx xxx xxx."
Fernandez v. NLRC
28 January 1998
Justice Panganiban
Lindain
SUMMARY: The eleven petitioners in this case filed a complaint for

illegal dismissal against Agencia Cebuana-H. Lhuillier and/ or
Margueritte Lhuillier. The Agencia Cebuana is a sole proprietorship
operated by Margueritte Lhuillier. The petitioners demanded an
increase in their salaries since Lhuilliers business was making
good. The petitioners also alleged that Margueritte Lhuillier was
evading payment of taxes by making false entries in her records of
account. Lhuillier threatened them that something would happen to
their employment if they would report her to the BIR.
Subsequently, Lhuillier suspected them of stealing jewelry from the
pawnshop and verbally informed them not to report for work as
their employment had been terminated. The petitioners did not
report for work. The Labor Arbiter held that there was illegal
dismissal. It ordered Lhuillier to pay separation pay, service
incentive leave pay with full backwages without qualification. The
NLRC remanded the case for further proceedings. The Supreme
FACTS:
Petitioners are employed by Agencia Cebuana-H. Lhuillier and
Margueritte Lhuillier. They filed a complaint for illegal dismissal against
Lhuillier. The first set of petitioners (Fernandez and others) alleged that
prior to and during early July 1990, they demanded from Lhuillier an
increase in their salaries since Lhuilliers business was making good and
that she was evading payment of taxes by making false entries in her
records of account. Subsequently, Lhuillier suspected them of stealing
jewelry. Lhuillier verbally informed them not to report for work as their
employment had been terminated. After 4 days, they filed the instant
complaint.
Petitioners Marilyn Lim and Joseph Canonigo (second set of
petitioners) alleged that they demanded increases in their salaries since
they noted that Lhuilliers business was profitable. They also informed
Lhuillier that they intended to join the Associated Labor Union. Lhuillier
subsequently advised them to resign as they were reportedly
responsible for some anomalies at the Agencia Cebuana-H Lhuillier.
Lhuilliers position: a) Lhuillier received a report that Lim sold to
a company consumer her own jewelry, in violation of the house rules;
Lim admitted having committed the violation complained of; she
tendered an irrevocable letter of resignation; in effect, there was no
illegal dismissal; b) As to the other petitioners, the pawnshop was found
to have lost the amount of 174,000 pesos because the petitioners overdeclared the weights and values of certain items of jewelry pawned to

the company; said petitioners did not report for work 2 days after
Lhuillier found out about the over-declaration.
(Procedural) Trial on the merits ensued and hearings were
scheduled on July 5, 8, and 12, 1991. On July 8, counsel for Lhuillier
failed to appear to cross-examine Marilyn Lim.
LA DECISION: Ruled in favor of the employees; ordered Lhuillier to pay
separation pay, service incentive leave pay with full backwages without
qualification, moral damages (P 100,000), exemplary damages (P
100,000), plus attorneys fees (10% of the total award) and P 30, 000 for
litigation expenses
NLRC DECISION: Remanded the case to the labor arbiter for further
proceedings. This was to allow Lhuillier to formally present her evidence
and to allow petitioners to cross-examine Lhuilliers witnesses.
ISSUES:
1. Did the NLRC acquire jurisdiction over the appeal notwithstanding the
alleged insufficiency of the appeal bond? YES
2. Were private respondents (Lhuillier) deprived of the due process of
law by law arbiter? NO
3. [RELEVANT] Were petitioners illegally dismissed? YES (However, Lim
and Canonigo were validly dismissed)
4. [RELEVANT] Assuming petitioners were illegally dismissed, was the
computation of backwages, service incentive leave pay and damages
valid and correct? YES
RATIO:
Issue 1
Lhuillier/ employer: Although the total monetary award in their favor
was P1,078,200.55, Lhuillier posted a cash bond in the amount
of P752,183.00 only. In computing the monetary award for the purpose
of posting an appeal bond, Lhuillier relied on Rule VI, Section 6 2, of the
2 Section 6.
Bond. In case of the decision of a Labor Arbiter involves a monetary

award, an appeal by the employer shall be perfected only upon the posting of a
cash or surety bond issued by a reputable bonding company duly accredited by
the Commission or the Supreme Court in an amount equivalent to the monetary
award.
The Commission may, in meritorious cases and upon Motion of the Appellant,
reduce the amount of the bond. However, an appeal is deemed perfected upon
1990 New Rules of Procedure of the NLRC and excluded the award for
damages, litigation expenses and attorneys fees.
Petitioners/ employees: The said rule cannot prevail over Article 223 3 of
the Labor Code, which does not provide for such exclusion.
Supreme
Court: There is no conflict
between the two
provisions. Article 223 lays down the requirement that an appeal bond
should be filed. The implementing rule, on the other hand, explains how
the appeal bond shall be computed. The rule explicitly excludes moral
and exemplary damages and attorneys fees from the computation of
the appeal bond.
The rule requiring the employer to post a cash or surety bond to
perfect his appeal assures the workers that they will receive the money
judgment awarded to them upon the dismissal of the employers
appeal. It also discourages employers from using an appeal to delay or
even evade their obligation to satisfy the just and lawful claims of their
employees.
Hence,
deducting
from
the
total
monetary
award
of P1,078,200.55 the amount of P200,000.00 for moral and exemplary
damages, P98,018.25 for attorneys fees and P30,000.00 for litigation
expenses, the amount of the bond should be P750,182.55. Thus, the
appeal bond actually posted in the amount of P752,183 is even more
than the amount of appeal bond that may be required from private
respondents under Respondent NLRCs rules.
Issue 2
Lhuillier/ employer: Labor arbiter erred in stating that the absence of
their counsel during the July 8 and July 12 hearings resulted in the
waiver of their right to cross-examine the other partys witness and their
right to present evidence.
the posting of the bond equivalent to the monetary award exclusive of moral and
exemplary damages as well as attorneys fees.
3 In case of a judgment involving a monetary award, an appeal by the employer

may be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the Commission in the amount
equivalent to the monetary award in the judgment appealed from.

Petitioners/ employees: Lhuillier was able to submit its position paper
with supporting affidavits and documents. Lhuillers counsels failure to
appear on July 8 and July 12 hearings, without any justification or motion
for postponement, warranted the submission of the case for decision
pursuant to Sec. 11, Rule V4 of the 1990 New Rules of Procedure of NLRC.
Supreme Court: Lhuillier was able to file position papers and the
documents in support thereof, and all these were duly considered by the
labor arbiter. Indeed, the requirements of due process are satisfied
where the parties are given the opportunity to submit position papers.
In any event, Respondent NLRC and the labor arbiter are
authorized under the Labor Code to decide a case on the basis of the
position papers and documents submitted. The holding of an adversarial
trial depends on the discretion of the labor arbiter, and the parties
cannot demand it as a matter of right. The filing of position papers and
supporting documents fulfilled the requirements of due process.
The essence of due process is simply an opportunity to be heard,
to explain ones side, or to seek a reconsideration of the action or ruling
complained of. In the case at bar, Lhuillier was given ample opportunity
to do just that but failed
Issue 3
Lhuillier/ employer: There was no illegal dismissal. Petitioners
abandoned their employment. They did not report for work without any
excuse.
Petitioners/ employees: Lhuillier told them not to report for work
because their employment had been terminated. Thus, they did not
report for work the following day. Then, they filed their respective
complaints before the Regional Arbitration Board of NLRC.
Supreme Court: There was no abandonment. To succeed in pleading
abandonment as a valid ground for dismissal, the employer must prove
(1) the intention of an employee to abandon his or her employment and
(2) an overt act from which such intention may be inferred; i.e., the
employee showed no desire to resume his work. Mere absence is not
sufficient. The employer must prove a deliberate and unjustified refusal
4 (c)
In case of two (2) successive unjustified non-appearances by the

respondent during his turn to present evidence, despite due notice, the case shall
be considered submitted for decision on the basis of the evidence so far
presented.
of the employee to resume his employment without any intention of

returning.
Lhuillier failed to prove the two elements. The claim of
abandonment was inconsistent with the immediate filing of petitioners
complaint for illegal dismissal and prayer for reinstatement. Said
petitioners were illegally dismissed, with neither just cause nor due
process.
As regards Marilyn Lim and Joseph Canonigo, there was no illegal
dismissal. Marilyn Lims admission of the offense charged (see facts)
shows that she was not coerced to resign. Besides, the fact that her
complaint for illegal dismissal was filed long after her resignation on
February 24, 1990 suggests that it was a mere afterthought. Like
Petitioner Lim, Joseph Canonigo did not immediately file a complaint for
illegal dismissal, doing so only on July 23, 1990. He voluntarily tendered
his resignation on the assurance of separation pay.
Issue 4
Solicitor general: The award of service incentive leave should be limited
to 3 years, based on Art. 2915 of the Labor Code.
Petitioners/ employees: Art. 291 of the LC speaks of the prescription of
filing an action upon monetary claims within 3 years from the time the
cause of action accrued, but it is not a prescription of a period of time for
the computation of monetary claims.
Supreme Court: 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. [Sec. 3, Rule V, Book III, IRR of
the Labor Code]
It is also commutable to its money equivalent if not used or
exhausted at the end of the year.[Sec. 5, Rule V, Book III, IRR of the
5 ART. 291.
Money Claims. -- All money claims arising from employer-employee

relations accruing during the effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued; otherwise they shall be forever
barred.

Labor Code] 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. To limit the award to three years, as the solicitor
general recommends, is to unduly restrict such right. The law indeed
does not prohibit its commutation.
Since a service incentive leave is clearly demandable after one
year of service -- whether continuous or broken -- or its equivalent
period, and it is one of the benefits which would have accrued if an
employee was not otherwise illegally dismissed, its computation should
be up to the date of reinstatement as provided under Section 279 6 of the
Labor Code.
However, the IRR clearly state that entitlement to benefit
provided under this Rule shall start December 16, 1975, the date the
amendatory provision of the [Labor] Code took effect. Hence,
petitioners, except Lim and Canonigo, should be entitled to service
incentive leave pay from December 16, 1975 up to their actual
reinstatement.
As to the reinstatement and backwages, the Supreme Court has
held that illegally dismissed employees are entitled to reinstatement and
full backwages. If reinstatement is not possible, the employees are
entitled to separation pay and full backwages. Accordingly, the award
to petitioners of backwages for three years should be modified in
accordance with Article 2797 of the Labor Code, as amended by R.A.
6715, by giving them full backwages without conditions and limitations,
the dismissals having occurred after the effectivity of the amendatory
law on March 21, 1989.
6 ART. 279.
Security of Tenure. -- An employee who is unjustly dismissed from

work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalentcomputed from the time his compensation is
withheld from him up to the time of his actual reinstatement.
7 Article 279.
Security of Tenure. [as amended by Section 34 of RA 6715]. -- In

cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee
who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to the time of his actual
reinstatement.
RULING: WHEREFORE, the petition is hereby GRANTED and the assailed

Decision and Resolution are REVERSED and SET ASIDE. The labor
arbiters decision is REINSTATED with MODIFICATIONS, such that the
award of separation pay is deleted and the service incentive leave pay is
computed from December 16, 1975 up to petitioners actual
reinstatement. Full backwages, including the accrued thirteenth month
pay, are also awarded to the nine petitioners -- Leiden Fernandez,
Brenda Gadiano, Gloria Adriano, Emelia Negapatan, Jesus Tomongha,
Eleonor Quianola, Asteria Campo, Florida Villaceran and Florida Talledo
-- from the date of their illegal dismissal to the time of their actual
reinstatement. Petitioners Lim and Canonigo, whom we find to have
voluntarily resigned, are not entitled to any benefit.
JPL Marketing Promotions v

CA, NLRC, Noel Gonzales,
Ramon Abesa III, and
Faustino Aninipot
July 8 2005
Ponente: Tinga, J.
Leigh Siazon

SUMMARY: JPL, in the business of recruitment, assigned
private respondents to work in CMC. JPL notified private
respondents that CMC was going to close down, but that JPL
would reassign them. Private respondents got other jobs
then filed a case against JPL. SC ruled that the private
respondents were not entitled to separation pay as they
were never dismissed. However, JPL had to pay 13th month
pay and service incentive leave pay. Said benefits are
mandated by law and should be given to employees as a
matter of right.
DOCTRINE: Service incentive leave is a yearly leave
benefit of 5 days with pay, enjoyed by an employee who
has rendered at least one year of service. Unless
specifically excepted, all establishments are required to
grant service incentive leave. At least one year of service
shall mean service within 12 months, whether continuous or
broken reckoned from the date the employee started
working. While computation for the 13th month pay should
begin from the first day of employment, the service
incentive leave pay should start a year after
commencement of service, for it is only then that the
employee is entitled to said benefit.
FACTS:
- JPL is engaged in the business of recruitment and placement
of workers. Gonzales, Abesa and Aninipot (private
respondents) were employed by JPL as merchandisers and
assigned at different establishments as attendants to the
display of California Marketing Corporation (CMC).
- On August 13 1996, JPL notified private respondents that CMC
would stop its merchandising activity, effective August 15
2006. They were advised to wait for further notice as they
would be transferred to other clients. However, on October 17
2006, private respondents filed before the NLRC complaints
for illegal dismissal, praying for separation pay, 13th month
pay, service incentive leave pay and payment for moral
damages.
Labor Arbiter dismissed the complaints:

o Gonzales and Abesa were employed even before the lapse
of the 6-month period given by law to JPL to provide
private respondents a new assignment. They unilaterally
severed their relation with JPL.
o It was incumbent upon private respondents to wait until
they were reassigned by JPL. If after 6 months they were
not reassigned, they can file an action for separation pay
but not for illegal dismissal.
o The claim for 13th month pay and service incentive leave
pay was denied since private respondents were paid way
above the minimum wage during their employment
NLRC affirmed LA that private respondents were not illegally
dismissed. However, because JPL was not able to reassign
them, they were entitled to separation pay.
JPL filed petition for certiorari with CA. CA dismissed petition.
o No illegal dismissal, but CA justified the award of
separation pay on the grounds of equity and social justice
o Rejected JPLs argument that the difference in the
amounts of private respondents salaries and the
minimum wage should be considered the service incentive
leave and 13th month pay
JPL filed petition for review.
o The case does not fall under any of the instances where
separation pay is due
o Assuming arguendo that they are entitled to the benefits
award, the computation should only be from their first day
of employment with JPL (August 15 1996) up to the date
of termination of CMCs contract, and not up to the finality
of the NLRC resolution (July 27 2000).
o Erroneous to compute service incentive leave pay from
the first day of their employment up to the finality of the
NLRC resolution, since an employee has to render at least
1 year of service before he is entitled to the same. Thus,
service incentive leave pay should be counted from the
second year of service.

-
Private respondents also alleged that they were deprived of

due process because the notice of termination was sent to
them only 2 days before actual termination. To this, JPL
replied that they merely sent a memo notifying private
respondents about the end of merchandising of CMC.
ISSUES/HELD:
1) WON private respondents are entitled to separation pay, 13th
month pay, and service incentive leave pay? Only to 13th month
and service incentive
2) Granting that they are so entitled, what should be the
reckoning point for computing said awards: for 13th month pay
first day of employment. For service incentive leave pay 1
year after commencement of service
RATIO:
AS TO SEPARATION PAY
Separation pay is authorized only in cases of dismissals due to
these reasons:
- Under arts. 283 and 284 of the Labor Code:
(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 or his coemployees health
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.
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 is no longer feasible
In all these instances, the employee was dismissed by the

employer. In the instant case, private respondents were not
dismissed, whether legally or illegally. What they received from

was not a notice of termination of employment, but a memo
informing them of the termination of CMCs contract with JPL.
They were also advised that they were to be reassigned.
Furthermore, Art. 286 allows the bona fide suspension of the
operation of a business for a period not exceeding 6 months,
wherein employees are placed on the so-called floating status.
When that floating status lasts for more than 6 months, he may
be considered to have been illegally dismissed from the service,
entitling him to separation pay. However, in this case, private
respondents sought employment from other establishments even
before the expiration of the 6-month period. JPL did not terminate
their employment; they themselves severed their relations with
JPL. Thus, they are not entitled to separation pay.
AS TO 13TH MONTH AND SERVICE INCENTIVE LEAVE PAY
JPL cannot escape the payment of 13th month pay and service
incentive leave pay. Said benefits are mandated by law and
should be given to employees as a matter of right. PD 851, as
amended, requires an employer to pay its rank and file
employees a 13th month pay not later than 24 December of
every year. On the other hand, service incentive leave, as
provided in Art. 95 of the Labor Code, is a yearly leave benefit of
5 days with pay, enjoyed by an employee who has rendered at
least one year of service. Unless specifically excepted, all
establishments are required to grant service incentive leave to
their employees. The term at least one year of service shall
mean service within 12 months, whether continuous or broken
reckoned from the date the employee started working.
Private respondents were not given their 13th month pay and
service incentive leave pay. 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.
While computation for the 13th month pay should properly begin
from the first day of employment, the service incentive leave pay
should start a year after commencement of service, for it is only
then that the employee is entitled to said benefit. On the other
hand, the computation for both benefits should only be up to 15
August 1996, or the last day that private respondents worked for
JPL. These benefits are given by law on the basis of the service
actually rendered by the employee. There is no cause for
granting said incentive to one who has terminated his
relationship with the employer.
Petition is GRANTED IN PART. CA decision MODIFIED. The award of
separation pay is deleted. JPL is ordered to pay private
respondents their 13th month pay commencing from the date of
employment up to 15 August 1996, as well as service incentive
leave pay from the second year of employment up to 15 August
1996.
Sugue v. Triumph
International (Phils.), Inc.
January 30, 2009
Ponente: Leonardo-De Castro, J.
Al Mohammadsali
SUMMARY:
Two employees were absent from work and this absence
was charged against their vacation leave credits. They also
filed applications for leave which were denied to due to noncompliance with imposed conditions. The SC eventually
ruled that the conditions imposed were valid.
DOCTRINE:
In the grant of vacation and sick leave privileges to an
employee, the employer is given leeway to impose
conditions on the entitlement to the same as it is not a
standard of law, but a prerogative of management. It is a
mere concession or act of grace of the employer and not a
matter of right on the part of the employee. Thus, it is well
within the power and authority of an employer to deny an
employees application for leave and the same cannot be
perceived as discriminatory or harassment.
FACTS:
Virgina Sugue was respondents Assistant Manager for
Marketing and Renato Valderrama was one of
respondents Direct Sales Manager. In 1999, respondents
sales declined. Sales target, which were set by Valderrama
himself , were not met. The low sales performance was
the subject of correspondence between Valderrama and
the top management,
Sugue and Valderrama filed a complaint with the NLRC
against Triumph for payment of money claims arising from
allegedly unpaid vacation and sick leave credits, birthday
leave and 14th month pay for the period 1999-2000.
On 19 June 2000, Sugue and Valderrama attended a
preliminary conference of the case they filed. They did not
file a leave and used company car and driver. They were
asked to explain where they were in the morning of 19
June 2000. Sugue and Valderrama said they went to the
preliminary conference of the case and thought that they

could use company time.
Triumph charged Sugue and Valderramas one-half day
absence to their vacation leave credits.
Valderrama was absent from July 3 to July 5. He filed an
application for sick leave, which was denied because
Valderrama failed to present a medical certificate. The
company policy requires such a certificate for sick leave
for more than one day.
Valderrama applied for leave for his executive check-up.
This was denied because of the arrival of the companys
regional manager (international region).
Sugue filed an application for leave for July 14 and 15, but
the approval of the same was conditioned on her
submission of the 2001 Marketing Plan.
Sugue also applied for leave for his executive check-up.
This was also denied because of the arrival of the
companys regional manager (international region).
When Valderrama left (claiming constructive dismissal),
Sugue complained that she was asked to report to
Temblique, who she claims was her assistant and
therefore she is being demoted.
Valderrama and Sugue then filed another complaint for
constructive dismissal.
LA ruled in their favor. On appeal to the NLRC, the LA was
reversed. On certiorari to the CA, the LAs decision was
reinstated with the modification of deletion of the
attorneys fees and reduction of moral damages.
Sugue and Valderammas heirs (Valderrama died
sometime during the pendency of the case) appealed to
the SC to question the modification of the LA decision.
Triumph appealed to question the NLRC reversal and
reinstatement of the LA decision.
ISSUES/HELD:
1. WON Sugue and
dismissed? No.
Valderrama
were
constructively
2. WON Sugue and Valderrama application for leaves were

validly denied? Yes.
3. WON the crediting of their half-day absence to their leave
credits was valid? Yes.
RATIO:
Sugue and Valderrama were not constructively dismissed.
The circumstances do not warrant a finding of
constructive dismissal.
Explained below are the explanation for Triumphs actions.
Anent Sugues claims that she was demoted, this was
found to be unfounded by the Court. The person to whom
she was to report to was not under Sugue, but he was in
the same level as Valderrama (Sugues boss).
Sugue and Valderrama wanted to have their executive

check-ups when their regional manager (officer from
abroad) was in town. It was fair for the company to require
them to be present because of their function. They had to
coordinate and meet with the regional manager. They
were not precluded to have their check-up after the
regional manager leaves.
Valderramas rejected sick leave application are also valid.
It was shown that he did not comply with the company
policy on the application for sick leave. He failed to
present a medical certificate.
Sugues rejected application was also valid considering
that what was required of her was actually part of her
functions. The preparation and submission of the
marketing plan was a valid condition to be imposed.
In the grant of vacation and sick leave privileges to an
employee, the employer is given leeway to impose
conditions on the entitlement to the same as it is not a
standard of law, but a prerogative of management. It is a
mere concession or act of grace of the employer and not a

matter of right on the part of the employee. Thus, it is well
within the power and authority of an employer to deny an
employees application for leave and the same cannot be
perceived as discriminatory or harassment.
Sugue and Valderramas absence from work to go to the

preliminary conference of their first case was not
compensable time. Triumph was justified in charging the
absence to their vacation leave credits.
The age-old rule governing the relation between labor and
capital or management and employee is that a "fair day's
wage for a fair day's labor." If there is no work performed
by the employee there can be no wage or pay, unless of
course, the laborer was able, willing and ready to work but
was illegally locked out, dismissed or suspended.
Mayon Hotel & Restaurant,

Pacita O. Po, and/or Josefa
Po Lam v Rolando Adana,

Chona Bumalay, Roger
Burce, Eduardo Almares,
et.al.8
April 15, 1998
Ponente: Bellosillo, J.
Kitty
SUMMARY: Mayon Hotel and Restaurant initially operated

at Rizal Street with 16 employees. In April 1997, their
operations ceased and they moved to a new location. Only
9 of the 16 were employed at the new location. The 16
employees filed complaints for underpayment of wages and
other money claims with the LA. LA ruled in favor of the
petitioner. NLRC reversed. Respondents filed an MR with the
NLRC which was denied. They then went up to the CA on
certiorari. CA ruled in favor of the respondents. Petitioners
MR was denied and they went up to the SC. SC ruled in
favor of the respondents. There was illegal dismissal in this
case and the respondents were entitled to their money
claims.
DOCTRINE: (in relation to syllabus topic) A profit share is in
the nature of a service charge when the amounts received
are not fixed and the same are not paid on a monthly basis.
FACTS:
8 Mayon Hotel & Restaurant, Pacita O. Po, and/or Josefa Po Lam v

Rolando Adana, Chona Bumalay, Roger Burce, Eduardo Almares, Amado
Almaes, Edgardo Torrefanca, Lourdes Camigla, Tedoro Laurenaria,
Wenefredo Loveres, Luis Gaudes, Amado Macandog, Paterno Llarena,
Gregorio Nicerio, Jose Attractivo, Miguel Torrefranca and Santos
Bronola)
Petitioner Mayon Hotel & Restaurant is a single proprietor

business registered in the name of the petitioner Pacita
Po, whose mother, petitioner Josefa Po Lam, manages the
establishment. The hotel and restaurant employed around
16 employees.
March 31, 1997: Hotel operations of the business were
suspended due to the expiration and non-renewal of the
lease contract for the rented space occupied by said hotel
and restaurant at Rizal Street. It continued its operations
at a new location on Elizondo Street, Legazpi City. Only 9
of the 16 employees continued working there.
April to May 1997: The 16 employees filed complaints for
underpayment of wages and other money claims against
petitioners.
July 14, 2000: Executive Labor Arbiter Gelacio Rivera
rendered a Joint Decision in favor of the employees who
awarded substantially all of the money claims of the
respondents and held that respondents Loveres,
Macandog, and Llarena were entitled to separation pay,
while resondents Guades, Nicerio, and Alamares were
entitled to retirement pay.
NLRC reversed the LA. Respondents filed an MR with the
NLRC which was denied.
Respondents filed a petition for certiorari with the CA
which rendered the now assailed decision.
Petitioners filed an MR with the CA which was denied.
Petitioners went up to the SC.
ISSUES/HELD:
5. Were respondents Loveres, Guades, Macandog, Atractivo,
Llarena and Nicerio illegally dismissed? YES.
6. Are respondents entitled to money claims due to
underpayment of wages, and nonpayment of holiday pay,
rest day premium, SLIP, COLA, overtime pay, and night
shift differential pay? YES.
RATIO:
On illegal dismissal

o
The cessation of employment for more than six

months was patet and the employer had the
burden of proving that the termination was for a
just or authorized cause, pursuant to Art. 286 of
the Labor Code.
Petitioners initially claimed with the LA that it could
not be illegal dismissal because the lay-off was
merely temporary and due to the expiration of the
lease contract over the old premises of the hotel.
After the LA ruled that there was already illegal
dismissal when the lay-off had exceeded 6 months,
it raised a new argument stating that the failure to
reinstate the employees could not be attributed to
the petitioners as the fact that the employees were
out of work was due to circumstances beyond the
petitioners control.
While the closure of hotel operations in April 1997
may have been temporary, the evidence on record
belie any claim of the petitioners that the lay-off
was merely temporary. Rather, the SC held that
evidence showed that petitioners meant for it to be
permanent.
The illegal dismissal complaints were filed
immediately after the closure of operations
on Rizal Street.
Petitioners made no mention in their
position paper with the LA that they had
any intent to recall the respondents to work
upon the completion of the new premises.
Petitioners made allegations in various
pleadings that the respondents were
responsible for mismanagement of the
establishment and for abuse of trust and
confidence.
These
accusations
are
inconsistent with a desire to recall them to
work.
Petitioners memorandum on appeal also
averred that the case was filed not
because of the business being operated by

them or that they were supposedly not
receiving benefits, but because of the fact
that the source of their livelihood, whether
legal or immoral, was stopped on March 31,
1997.
Petitioners, in the same pleading, alleged
that there was only temporary cessation or
suspension of operations but also stated the
separation was due to severe financial
losses and reverses leading to closure of
the business and that petitioner Po had to
close shop.
The LA had the uncontroverted finding that
the petitioner terminated all the oter
respondents by not employing them when
the establishment relocated to their new
side on Penaranda Street.
o While the aforementioned factors may be
inconclusive individually, when taken together,
they lead to the conclusion that petitioners really
intended to dismiss all respondents
o Even assuming that the closure was due to a
reason beyond the control of the employer, it still
had to accord to its employees some relief in the
form of severance pay.
o Under these circumstances, the award of damages
was proper. As a rule, moral damages are
recoverable where the dismissal of the employee
was attended by bad faith or fraud or constituted
an act oppressive to labor, or was done in a
manner contrary to morals, good customs or public
policy.
On money claims.
o SC agreed with the CA and LA that the respondents
have set out with particularity in their complaint,
position paper, affidavits, and other documents the
labor standard benefits they are entitled to, and
o
o
which they alleged the petitioners failed to pay

them. Thus, the burden was on the petitioners to
prove that they have paid these money claims.
Despite repeated orders from the LA petitioners
failed to submit the pertinent employee files,
payrolls, records, remittances and other similar
documents which would show that respondents
rendered work entitling them to payment for
overtime work, night shift differential, premium
pay for work on holidays and rest day, and
payment of these as well as the COLA and the SILP
documents which are not in respondents
possession but in the custody and absolute control
of petitioners
By choosing not to fully and completely
disclose information and present the
necessary documents to prove payment of
labor standard benefits due to respondents,
petitioners failed to discharge the burden of
proof
Petitioners claimed that the cost of food and
snacks provided facilities to respondents should
have been included in reckoning the payment of
respondents wages. They claimed that these
benefits made up for whatever inadequacies there
may have been in compensation.
They specifically invoked Sec. 5 and 6 of
Rule II-A which allowed the deduction of
facilities provided by the employer through
an appropriate Facility Evaluation Order
issued by the Regional Director o the DOLE.
Petitioners also averred that they give 5% of the
gross income each month as incentives.
SC ruled that the cost of meals and snacks
purportedly provided to respondents cannot be
deducted as part of respondents minimum wage.
While
petitioners
submitted
Facility
Evaluation Orders issued by the DOLE
Regional Office, the cost of meals in the

Order cannot be considered as applicable to
the respondents. The latter were never
interviewed by the DOLE as to the quality
and quantity of the food, nor was it shown
that the respondents voluntarily acecepted
them.
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
employee's 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.
There was also uncontroverted testimony of
respondents on record that they were
required to eat in the hotel and restaurant
so that they will not go home and there is
no interruption in the services of Mayon
Hotel & Restaurant.
The SC also did not agree with the petitioners that
the 5% gross income of the establishment can be
considered as part of the respondents wages.
LA: While complainants, who were
employed in the hotel, receive[d] various
amounts as profit share, the same cannot
be considered as part of their wages in
determining their claims for violation of
labor standard benefits. [The] [so-]called
profit share is in the nature of share from
service charges charged by the hotel. This
is explained by [respondents] when they

testified that what they received are not
fixed amounts and the same are paid not
on a monthly basis. Also, [petitioners] failed
to submit evidence that the amounts
received by [respondents] as profit share
are to be considered part of their wages
and had been agreed by them prior to their
employment.
Further, how can the
amounts receive[d] by [respondents] be
considered as profit share when the same
[are] based on the gross receipt of the
hotel[?] No profit can as yet be determined
out of the gross receipt of an enterprise.
Profits are realized after expenses are
deducted from the gross income.

(Labor Law Rev Digests) (Batch 1)

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